The increase in demand for hotel rooms during the COVID-19 pandemic has been a double-edged sword for the U.S. hotel industry.

While more demand means increased revenue for hotels, the demand in many cases is too much for hotels to handle amid a labor shortage crisis. Higher demand has allowed hotels to raise rates, but higher rates also raise guest expectations, which can be difficult to meet with smaller staffs.

Hotel executives on the “Boardroom Outlook: Operations” panel at the Americas Lodging Investment Summit shared how their companies are addressing these challenges.

Omni Hotels & Resorts President Peter Strebel said for the first time in his career, he can’t sell out hotels because there aren’t enough staff members. There’s more demand than the hotels can accommodate.

Some markets are more difficult to hire in than others, he said. In places like Amelia Island in Florida, there isn’t a large enough population to find employees. On top of that, the J1 and H2B visa programs still haven’t reopened.

Omni has tried sign-on bonuses, retention bonuses and more paid time off to attract and keep employees, Strebel said. In Ottawa, the company tested raising its 2019 wage of $14 per hour for housekeepers to $20, leading the market.

“We filled all our positions,” he said. “I think you’re going to have to pay to play.”

However, he questions whether that model is sustainable. While no other hotel is offering that much yet, someone else will make the move and eventually go higher, he said.

The hotel industry needs to take a look at its pay scale and benefits package, said David Kong, president and CEO of BWH Hotel Group. The industry is not competitive. Many employers point to the enhanced unemployment benefits, and while that plays a part, the country has close to 6% unemployment and many companies are still looking to hire.

The hotel industry also has a reputation problem.

“On average, probably half the people that work in the industry were laid off last year,” Kong said. “Who would want to work for an industry that has laid off that many people during a downturn? That’s not a good option for a lot of people.”

When hotel companies made furloughs and layoffs last year, that was about financial survival. Labor was the highest cost and, therefore, the easiest to reduce immediately, said Joseph Bojanowski, president and CEO of PM Hotel Group. It turned out that many hotel company employees have highly transferable skills.

“So off they went to other places,” he said. “Instead of working in restaurants, they were driving delivery for restaurants.”

To counter that, the hotel industry needs to recognize skills across other industries that are transferable to hotels, he said. Retail has been taking it on the chin and might not recover well, and those employees tend to be friendly and helpful — the core skill sets hotel employers are looking for.

“We lost 20% to 30% permanently of our employment workforce in this industry, and we’ve got to find a way to get that back,” he said. “I think you look at the applicant pools, and we look at where those skills are transferable back into our industry and start targeting those as well.”

Compensation needs to move, Aimbridge Hospitality President and CEO Mike Deitemeyer said, but while he’s been a proponent of increasing the minimum wage, he added hotels aren’t in a position to raise hourly rates 40%-plus across the board.

Aimbridge is experimenting with gig work as a different approach to appeal to prospective employees, he said.

One form is gig pay that gives all associates a portion of their pay each day to help compete against Uber and DoorDash.

In the other model — designed for markets in which Aimbridge has a large presence, such as 40 to 50 hotels — the company trains employees for different positions within hotel, and the employees make their own schedules around their home and school life, posting when they are available to pick up certain shifts, and is paid following each shift.

Aimbridge is also examining employee benefits for part-time and non-eligible employees, Deitemeyer said.

“It’s something that is available to give them comfort and peace of mind and to rebuild some of that trust,” he said.

During the pandemic, there was a rapid adoption of technology, especially through mobile devices with apps for restaurant takeout and delivery, Kong said.

“That has set new guest expectations when they will travel to our hotels,” he said, adding that applies to both the booking experiences as well as the on-property experience.

Texting among guests and hotel staff can improve the guest experience as well as create revenue opportunities for the hotel, Kong said. With demand high and hotels short-staffed, guests who call the front desk with a request will be disappointed when someone isn’t able to answer right away, he said. Texting gives hotel staff time to accommodate guests and provide the service they need.

Allowing guests to request early check-in or late check-out for a $30 fee adds flexibility while also generating revenue for the hotel, he said.

Because of the drop in revenue during the pandemic, owners have tried to cut back on costs by delaying property improvement plans and rolling back other brand requirements, including daily housekeeping, Kong said. At the moment, many travelers are not comfortable with housekeepers going into their rooms during their stay, but over time and depending on the chain scale segment, that may change.

As average daily rate recovers, particularly in the full-service segment, guests will have certain expectations and changes to housekeeping might not be acceptable, Bojanowski said. Across the board, guest satisfaction scores are down in services when they’re spending more than $300 a night.

“You want some food and beverage options, you want housekeeping when you want it, and you want a human to be nearby when you need that type of service,” he said.

Upper-upscale and luxury hotels require a high-touch, anti-technology approach to hospitality, Strebel said.

“As more and more brands go with the less service and not cleaning rooms, there might be a better opportunity for a brand like [Omni] to even more differentiate itself and get a higher rate,” he said.