If every unemployed person in the country found a job, we would still have over two million open jobs, according to the U.S. Chamber of Commerce. Bureau of Labor statistics released Jan. 9, 2024, indicate 8.8 million job openings and 6.3 million unemployed workers.
The hospitality industry knows the employee shortage all too well. In fact, leisure/hospitality experienced the highest quit rates of all industries in December at 4.1 percent. The accommodation and food services subsector quit rate for this industry has consistently been above 4.5 percent since July 2021. However, the cautious optimism expressed by panel participants at Americas Lodging Investment Summit’s Boardroom Outlook on People is warranted: the Chamber reported that “since November 2020, leisure and hospitality has maintained the highest hiring rate among all industries, ranging between 6 percent to nearly 19 percent. This hiring rate remains significantly higher than the national average, which stood at 3.7 percent in September 2023.”
At ALIS, Stephanie Ricca, Hotel News Now editorial director, moderated a panel about the most critical component of the hospitality industry: people. Sloan Dean, Remington Hospitality CEO; Andy Ingraham, president & CEO of the National Association of Black Hotel Owners, Operators & Developers; Pat Pacious, Choice Hotels International president & CEO; and Mark Tamis, Aimbridge Hospitality global president, participated.
Employment by the Numbers
“The industry overall had a lot of repair work to do after the devastating yet necessary layoffs of 2020,” Ricca said. “Would you say that, in general, employment in the U.S. hotel industry today has right-sized, based on where we are now and what your company priorities are? Or do you think that there's still a lot of work to do to get hiring back to those same numbers? Or, is ‘same’ off the table, and now you're looking at something different?”
“Making this an attractive industry is Mission One,” Tamis said. “Creating those opportunities for our associates is what we think about every day. Having almost 600,000 applications and 40,000 hires, we've gotten back to the point at any given time about 90 percent of our positions are filled.”
Ricca asked if percentage of open positions filled versus percentage overall was a metric the panelists looked at, “knowing that you'll never reach 100?”
“Absolutely,” Dean said. “If you break it down into the measurable components of labor, first, we've seen wage cool off. Our wage growth for Q4 the prior year was basically flat. We've seen the wage pressure, compounded growth rates back to 19 and 30 percent. We've seen that stabilize. Also, we've seen our open jobs come down, we don't have as many open jobs as we've had in the past quarter. And we've seen our utilization of overtime come down. We want to get that under 2 percent of total wages, and we've seen that drop over the last quarter. Pre-COVID at Remington, about 8 percent of our total labor was contract labor. It's almost double that now—around 15, 16 percent. We haven't seen that tick down yet. That's going to be a key indicator as we go into ’24. … I think the name of the game for a lot of operators is can we hang on to the productivity gains we got for the last several years as we move forward? This renormalization of the labor market we want to hold on to, because it's an offset to the wage inflation we've experienced.”
“I would say in our franchised hotels a year ago would have been about 70 percent,” Pacious said. “Jobs with build, that's closer to 85 percent. So it is building back. When we look at our corporate staff, we've actually been in growth mode. We have 300 more people today than we had a year ago. And that's really a function of the growth we've had as a company. But it's also because our people are staying with us and they're not leaving. The corporate benchmark for attrition rate is 20 percent. Our attrition rate last year was 8 percent. People want to work for companies that are in growth mode. This is an industry that a lot of people are attracted to. … Hospitality is a great place to grow your career and I think we’re starting to see people who've been here a while grow their careers, but also we're attracting new talent back to the hotel space.”
Continuous Improvement
Ingraham said he stays up at night thinking about diversity in the industry. “Are we becoming more diverse, particularly in the executive, corporate suite? In an industry where you have a huge [number] of employees, there seems to be an off balance.…How do we work with our partners to find that right mix to make sure that there's opportunity? We're thinking of doing the Rooney Rule, where for every GM, you must interview one African American or one minority, so therefore you grow the pool.”
Tamis said that Aimbridge is always thinking about continuous improvement. “We set benchmarks for year-over-year improvement. We want to improve by at least 5 percent year over year in our diversity pool. We're close. We're not quite there yet. It's a continuous and constant effort,” he said.
Dean stressed the need for grass roots solutions for some challenges—addressing the foundational issues that create a diversity gap to begin with. He shared that Remington property housekeeping and F&B roles are held largely by minority Spanish-speaking individuals. English fluency challenges, as well as exposure to fundamentals of running a business can often hold employees back. To meet that need, Remington started an English-as-a-second-language program to help those individuals "rise up."
Pacious said that the challenge to find employees is not shared just among hospitality entities.
“We're not just competing against the hotel industry. We have locations where you're competing against other employers in that marketplace. Choice Hotels, Hilton [and] Marriott [are] all based in Washington, D.C. We are competing against the federal workforce and their benefits programs to get people into our organization. You have to look at it broadly—what are employees’ other options and associates’ other options? What is the federal government offering them that we might need to be thoughtful about? That is something we benchmark against,” Pacious said.
Mental wellness support is something that has become more of an ask for associates, as well, he continued. “[People are] coming in wanting to know what the support structure looks like. If I need to take care of a parent or a sick child … Those [approaches] used to be more draconian and one-size-fits-all, now it's created much more flexibility. A lot of our programs allow people to take their own well-being days when they feel overwhelmed or they feel family stress. We track those numbers, we share them with our associates and we encourage them to use those tools to make their lives better.”
Sharing the Hospitality Story
All panelists agreed that the hospitality industry offers an infinite number of possibilities for career growth.
“I started as an hourly housekeeping supervisor with Four Seasons in Las Colinas, [Texas],” Tamis noted. “All of us on the stage, we all started in different positions. One of my friends in the industry started as a bellman and today runs one of the biggest full-service operations. It really is an industry where you can start at the lowest level and then get to the highest level.”
Dean agreed, saying that people in their teens and 20s now want to travel more and care less about materialistic items like a nice car. “We need to sell that as a not only a lifestyle, but also as ‘come work in that fun industry.’ Running a $30 million a year hotel, essentially a small business, you're basically an entrepreneur.”
“Are we better off today than we were 10, 15, 30 years ago?” asked Ingraham. “The answer is yes. But we still have a lot of work to do. We've got to sell to young people, that same experience that they're looking for is in our industry. We can send people around all over the globe and they will get experience at the same time, building a career [while] helping us create a new industry, a much more diverse industry and [one that is] much more inclusive.”