HOLLYWOOD BEACH, Florida — The availability and cost of labor rank as the biggest issues for hotel owners, according to a new survey from the Hospitality Asset Managers Association.
Speaking with Hotel News Now at the association's spring conference, members of the HAMA board of directors said labor problems have been fueled by workers moving out of hotels and into other industries entirely.
Derrick Yee, vice president of asset management for aparthotel company Placemakr, said the industry was suffering labor shortages prior to the pandemic, but they were mostly limited and manageable. Now the problem is broad and the math doesn't work out well for hotels.
"We just have more jobs but fewer people," he said. "So we need to attract them. We also probably need to talk about immigration. We have a lot less people coming into the country that would probably be interested in taking some of our jobs."
In the survey, roughly 90% of respondents ranked "labor availability" as one of the top three challenges in the industry, followed by wage increases (70%), supply-chain disruption (62%) and demand growth in a distant fourth place (40%).
Less than 5% ranked brand costs as a top issue, although that has been viewed as a pressing concern for HAMA members in previous years.
While the limited availability and the high cost of labor are obviously related, HAMA board members said the solution to the problem isn't simply higher pay.
"Increasing the wages hasn't driven people to these jobs," said Carly Thorp, vice president of asset management for Colorado-based real estate development and investment firm McWhinney.
Chad Sorensen, managing director and executive vice president of Beverly, Massachusetts-based asset management company CHMWarnick, agreed.
"That was the solution we tried to apply, higher wage rates," he said. "What we ended up with was the same level of open positions and employees that are getting paid more."
He said labor shortages need to be a top issue not just for owners but for hotel brands that are hoping to retain a favorable outlook from consumers.
"We're almost at a flash point here with the brands trying to recover their customer service scores," he said.
While many guest services were scaled back during the pandemic, including the frequency of housekeeping, guests are increasing and expecting a pre-pandemic level of service.
"So it's not just the lack of labor, but it's how do you balance that with what the consumer is telling us," he said. "And the brands don't seem to be aligned in how they're approaching that, which from an ownership perspective is really troubling."
Dina Winder, senior vice president of asset management for Highgate, echoed a sentiment shared by many in the hotel industry right now that employees need to see working in hotels promises more than just a low-wage, dead-end job.
"We need to showcase how you can progress and how you can develop in this industry," she said.
Matthew Arrants, principal of The Arrants Company and current HAMA president, said stories that illustrate that fact aren't hard to find across the hotel industry.
"I can't think of a single general manager who didn't come up through the industry," he said. "Nobody switched from being a lawyer to a hotel general manager."
Larry Trabulsi, executive vice president at CHMWarnick, said part of the solution is recognizing the hotel industry labor model needs to change at a fundamental level.
"So much [of the problem] is about getting back to what we did in 2019, and that doesn't work," he said. "If you're a hotel that had three restaurants, you're probably not going to have three restaurants in the new world. You don't have the staff for it."
It comes down to how hotels can operate more efficiently, assuming smaller staffs even at periods of higher demand.
"We definitely have to figure out a way to do it with less labor," Trabulsi said.
The survey broadly paints the picture of a hotel ownership community that is hopeful returns will near but not quite reach pre-pandemic levels in 2022, with a healthy appetite for acquisitions and investments.
Among members surveyed, 62% believe U.S. hotels will reach 2019 revenue levels in 2023, with performance lagging slightly in top 25 markets, where the rebound is expected by 2024.
Meanwhile, more than 88% said they are "actively pursuing acquisitions" with little-to-no discount expected in pricing for full-service hotels compared to pre-pandemic prices. And the cost for buying select-service assets is going up, according to roughly half of respondents.
In all, 75% of asset managers surveyed are feeling more optimistic about the broad hotel recovery following the initial wave of the omicron variant.