Hotel Recovery Stymied by Severe Labor Shortage

Nearly all hotels are experiencing a labor shortage and half say they are severely understaffed, according to a new member survey by the American Hotel & Lodging Association. 

AHLA said 97% of survey respondents indicated they are experiencing staff shortages and are unable to fill open positions, while 49% said they’re severely understaffed. Housekeeping staff was cited as the most critical staffing need for hotels by 58% of respondents.

Almost 90% of the AHLA survey respondents said they have increased wages, 71% are offering greater flexibility of work hours and 43% have expanded benefits in an effort to attract more hotel workers.

AHLA estimates there are more than 130,000 open hospitality jobs nationwide. The AHLA Foundation recently announced it will double its financial commitment to the national advertising campaign, “A Place to Stay,” the group is conducting in 14 cities to raise awareness of the need for hotel workers.

“If you’ve ever thought about working at a hotel, now’s the time because the pay is better than it’s ever been, the benefits are better than they’ve ever been and the opportunity is better than it’s ever been,” said Chip Rogers, AHLA president/CEO, in a statement accompanying the survey results.

The prolonged labor shortage threatens to crimp a brightening recovery outlook for the hotel industry, which was clobbered during the pandemic.

At the end of last month, CBRE raised its 2022 national forecast for hotel sector performance, citing better-than-expected fundamentals and below-average supply growth as well as strong domestic leisure travel, GlobeSt.com reported.

The largest brokerage now is projecting that hotel RevPAR will reach 2019 nominal levels by Q3 2022, moving up its previous forecast of Q3 2023 by an entire year. RevPAR actually exceeded the pre-pandemic average of $184 in December, but then fell about 20% below the 2019 level during Q1 2022.

CBRE now is forecasting average daily room rate (ADR) growth of 29.7%, a 41.8% increase in demand and a 75.06% increase in RevPAR this year nationally.

The company said ADR will once again exceed 2019 levels following a “pause” during Q1 2022, citing an anticipated recovery in inbound international travel, the resumption of more business travel and higher inflation as drivers of higher hotel rates.

“Higher room rates will lead to a quicker return to 2019’s nominal ADR levels. But, from a profitability perspective, inflation will be a headwind through higher utilities, supplies and labor,” said Rachael Rothman, CBRE’s head of hotel research and data analytics, in a statement.