At the beginning of 2021, the national average room-night demand for hotels was more than 30% below pre-pandemic levels. But by December of that year, demand had edged above December 2019, capping a year of recovery in the hospitality sector with the busiest December on record.
However, the recovery in accommodations employment did not keep pace with the return in hotel demand as industry employment in December 2021 was still 23% below the employment level one year earlier. Demand recovery was strongest in rural areas, as travelers gravitated to outdoor locations in search of fewer crowds and the chance for more social distancing.
As a result, the accommodations industry experienced a 30% increase in average room nights per employee.
Hotel industry employment bottomed in May 2020, reduced almost by half from the same month in 2019. Employment rose gradually for nearly a year but was still well below pre-pandemic levels when demand growth accelerated in spring 2021. As a result, many hotels were understaffed for the demand that materialized and spent the rest of the year trying to hire staff and return to normal employment levels.
The challenge of hiring additional staff has been compounded by pandemic-induced changes in the workforce during the second half of 2021. That period gave rise to the so-called Great Resignation, a term coined to describe a significant rise in the quit rate, the percentage of U.S. workers who quit their jobs according to the Bureau of Labor Statistics.
Combining data on hotel demand and industry employment offers a glimpse into how much the workload for industry employees has increased versus pre-pandemic levels. Demand nights per employee is a ratio of average daily demand in December and accommodations industry employment. The national ratio in December 2021 was 1.87 demand nights per employee, up 30% from 1.43 demand nights in December 2019.
In fall 2021, the quit rate reached the highest levels since BLS began tracking the measurement more than 20 years ago. The quit rate in the accommodations and food services industry was approximately double the national average and reached all-time highs in the second half of 2021.
Maine, Alaska and Vermont were among the top states for demand growth in December and are home to some of the smallest populations in the U.S., leading to particularly large increases in workload.
Given these trends, it is not surprising that hotel workers are experiencing burnout and demanding higher wages. In 2022, the quit rate should slow as operators increase wages and salaries. But it is likely some hotel jobs will never come back to their previous staffing levels as operations have gotten more efficient and some tasks are simply no longer needed. As a result, the demand nights per employee ratio should remain elevated for the foreseeable future.