The current labor shortage that is affecting a variety of industries is one of the biggest pain points for hotel owners and operators these days. With that in mind, Hotel Management invited a number of hotel industry and AAHOA executives to discuss the situation they find themselves in and what they are doing to help manage the shortages. The roundtable event was held during the annual AAHOA convention and tradeshow, which was held in August at the Kay Bailey Hutchison Convention Center. Participants were [from left]: Aly El-Bassuni, COO at Radisson Hotel Group Americas; Carolyn Dent, managing director of the Omni Dallas Hotel, the host hotel for the AAHOA convention; Dean Heyl, VP of government affairs for AAHOA; Biran Patel, outgoing chairman of AAHOA and partner in BHP Investments Co.; Elaine Simon, senior managing editor of Hotel Management; Lisa Lombardo, chief people and culture officer with HDG Hotels; Raj Trivedi, managing principal of TST Capital; and Pete Patel, president and CEO of Promise Hotels.
The word of the summer has been “labor”—finding employees, training them appropriately and ultimately retaining their services, each of which brings its own complications.
“What’s very interesting is it’s not just us,” said Carolyn Dent, managing director of the Omni Dallas Hotel. “It’s every industry and that affects what we do. It has been very difficult over the past year and a half to be able to provide the service that we normally would in a full-service convention hotel.”
The reasons for the employee shortage are many and varied, according to the panel. One is the extra unemployment benefits that have been offered during the pandemic.
“The people receiving those unemployment checks, two thirds of them would be in better shape,” said Dean Heyl, AAHOA’s VP of government affairs. “Then at $300, we’re still looking at 50 percent of those folks being in better shape. Do the math. You can't argue with it that you are competing now against the government for employees.”
Lisa Lombardo, chief people & culture officer for HDG Hotels, agreed that the boosted benefits made a difference.
“When [Fla. Gov.] DeSantis turned off that additional $300, we immediately saw an uptick in our online applications and walk-ins,” she said. “I don’t think it’s a coincidence.”
Lombardo also pointed to the fact that with schools going remote and childcare options closed, many parents could not go back to work even though they wanted to: “I believe that as the school year starts again and as schools get back into session, there will be some improvement.”
Hotels are losing a significant number of employees to other industries, as well. Part of that is tied to new employment options that have boomed during the pandemic, according to Raj Trivedi, managing principal at TST Capital: food delivery, car services such as Uber and Lyft, and logistics (including Amazon).
“Cleaning rooms is not an easy job. People that had a language barrier, they chose to come clean rooms because they could do it in privacy,” he said. “All of a sudden, you have warehouses where you simply are going in packing stuff and moving things onto a different conveyor belt. They're giving you a lot more money and it is an easier job.”
In addition, the hotel industry’s hours can be a turnoff, according to Aly El-Bassuni, COO for Radisson Hotel Group Americas.
“There are industries out there that also need labor that don't require weekends and nights and overnights and working through holidays,” he said. “That's another point of competition that we have to contend with as an industry.”
And while the industry’s actions during 2020 were necessary to keep the industry afloat, layoffs and furloughs left a bad taste in many employee’s mouths, Dent said.
“I think there were a lot of our associates that were very hurt that they got furloughed and wondered, ‘Why did you keep some people and not others?’” she said. “We also thought we were going to bring everybody back in June of that same year but it didn't happen until a year later. I think people lost faith in companies and they just felt that we didn't have their back [even though] they had been working tirelessly.”
The issue of wages is one that elicits strong viewpoints among hoteliers these days. But as Heyl and Trivedi pointed out, hotels don’t have any more to give in terms of wages at this point.
“Ultimately, it's about pay, right? If McDonald's is offering $3 more than what we're paying, at some point, they're going to move,” said Pete Patel, president and CEO of Promise Hotels. “What do we do as an industry? We have to figure out how to charge more. We did a really good job as an industry back in March, April and May. As an industry, we pushed our rates. Why can't that be sustained? If that's sustained, we charge more, we can pay our people.”
HDG has not raised wages during the pandemic beyond an increase in the state-mandated minimum wage in Florida, where all of the company’s properties are located.
“In that current environment, increasing a rate of pay was not going to take folks who were not already inclined to return to the workforce,” Lombardo said. “What it did do is start, in all of our local micro-economies, this robbing Peter to pay Paul. You were competing with the Chick-fil-A's, the Hobby Lobby's, and all of those folks who were large entities.”
The industry tends to forget there were labor issues prepandemic, according to Trivedi, although it was a different sort of labor issue.
“We were at a 50-year all-time low as far as unemployment, so the labor pool was not as wide as it is now,” he said. “To retain talent or find good talent was hard. We were at a wage war at that time to find a sales director or GM from another property and pay them more. There are wage wars between properties all the time.”
Panelists offered a number of suggestions for making the best of a bad labor situation.
Beyond looking just at wages, the U.S. needs immigration reform, according to Trivedi.
“Political rhetoric in the last administration scared off legitimate immigration, also temporary labor,” he said. “Historically, our industry has survived on temporary labor and systematic immigration. We are a country of immigrants, we have been able to remain competitive by having labor imported with the right tool. I think we need to have some policies in place which allow us to bring in temporary labor that is willing to work and make the ends meet at a fair price, whatever the minimum wage is.”
Heyl, who formerly worked at the U.S. Department of Labor, said association health plans are one way to save money on the back end of the equation.
“One of the things that the previous administration tried to push was association health plans,” he said. “They only ran for a year before they got shut down, but most states that did do it, such as Nevada, saw 30 to 40 percent cost savings as opposed to individual market. Something like that could be available to small businesses where they can pull together because the administration on health insurance is really expensive just to have a person. But if you can pull together and get that aggregate, [you can save money.].”
Lombardo said her company has had success hiring employees under the age of 18, which it had not been inclined to do before the pandemic.
“Who can’t collect unemployment? Those under the age of 18,” she said. “We brushed up on the labor laws and started providing opportunities.”
She also pointed out that hotels need to make sure they are following up on policies that are already in place.
“Are we really collecting our pet fees? Are we charging for all the people in the room? If you have safe keys, pantries, how are we maximizing revenue there?” she said. “I think we're all having to polish up on where those opportunities to find revenue because labor is going to cost more and we're going to have this transition until we can settle back and recalculate. But there's opportunity for us to learn how to be smarter about it—charging for late checkout, making sure that every cancellation, you're definitely getting that rate. Airlines do it, why aren't we? Maybe this is an opportunity for us to evolve and kind of catch up. We haven’t been pressured like this [before].”
Pete Patel agreed that the airlines could be a source of inspiration in terms of cost controls and fees.
“They figured out a way to cost control, no more free food and things like that. When COVID hit, we started talking about that as an industry. What is going to be lasting in our industry? Should we charge for housekeeping? I think we absolutely should. But if brand A says, ‘Yeah, we're allowing you,’ and brand B doesn't, how do you [make that work]? The airline industry definitely did a great job after 9/11 coming together.”