322 | Rethinking Recruitment and Recovery: Hotel labor shortage hamstrings industry’s comeback

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CONTRACT WORKERS: Some lodging industry experts advise owners and operators to recruit multi-skilled contractors or gig workers as the sector faces a shallow labor pool. The post-pandemic recovery will be long and uncertain unless industry leaders rethink staffing amid current hiring challenges. For those seeking jobs in hospitality, the more versatile your experience and skills the better your chances of restarting your career.

Hoteliers need to care for their worn-out employees and start to rebuild their bench, say experts

Most employers were probably not surprised to learn that April’s unemployment rate showed little improvement over the month before, increasing by 266,000 jobs versus the one million some economic analysts were anticipating.

Hotel owners and operators don’t have to be told there is a labor shortage in the hospitality industry. They deal with the reality of employment stagnation every day.

While some blame the federal government’s extended unemployment benefits for the shallow labor pool others say hotel owners and operators are purposely keeping staff levels low as they slowly and methodically ramp up business.

A study by Strategic Solution Partners revealed just a little more than half of hoteliers surveyed expect staffing to reach 75 percent of pre-pandemic levels by the third quarter of this year.

To deal with staffing challenges, Strategic Solution Partners as well as other experts advise hoteliers to change the way recruitment and retention were done pre-crisis.

RETHINKING RECRUITMENT AND RECOVERY: More than 3 million hospitality jobs remain unfilled, pushing the unemployment rate in the lodging industry to 13.8 percent. Hotels are hiring but few people are applying. Some business owners blame extended unemployment benefits while others say the reason for the shallow labor pool is more complex and they advocate that industry leaders rethink pre-pandemic employment models. Episode 322 of Lodging Leaders podcast explores the labor challenges facing hoteliers and what experts are advising, including totally rethinking traditional employment models now and post-pandemic.

April’s unemployment rate held steady at 6.1 percent, the U.S. Department of Labor’s Bureau of Labor Statistics reported earlier this month.

Adam Sacks, president of Tourism Economics, last week told the audience at the Hunter Hotel Investment Conference that when factoring in the number of people who have dropped out of the workforce or are underemployed, real unemployment is around 10 percent.

The jobless rate is even greater in the lodging sector, Sacks said, where unemployment is 13.8 percent. The coronavirus pandemic has sunk the hotel industry’s employment to where it was 30 years ago.

The labor challenge dominated the talk at the Hunter conference held in Atlanta May 10-12.

Some panelists praised state government decisions to end federal pandemic unemployment benefit programs. According to reports, 13 states so far plan to end extended benefits in June and July.

But the benefits scheme is not the only reason for the labor shortage, Sacks and other experts advise.

Many school districts have not fully reopened and child-care programs have closed or only partially reopened, which leaves working parents to choose to return to the workforce or stay home with their children.

Some front line employees remain fearful of contracting COVID-19 on the job.

And in many more cases, lodging professionals and front-line workers alike who were laid off or terminated in 2020 have left the industry. They’ve taken jobs in such sectors as health care, pharmaceuticals, residential real estate and senior living. Many line-level employees have gone to work in retail stores and warehouses such as Walmart and Amazon.

HIRING BONUS: DJ Rama, president of Auro Hotels in Greenville, South Carolina, participates in a ‘Main Street’ panel May 11 at the Hunter Hotel Investment Conference in Atlanta. Rama said his company is offering $600 hiring bonuses to prospective housekeepers as his company struggles to fill line-level jobs.

To gauge the sentiment and job status of lodging employees, Lodging Leaders earlier this month conducted a brief survey on Facebook and LinkedIn.

  • Most respondents were laid off or terminated as a result of the pandemic.
  • One third have not returned to work.
  • Of those who have returned to work, one third are in a different job role than before being laid off and a little more than a tenth are performing more than one role.
  • Of those whose jobs were eliminated, more than half are seeking new jobs in hospitality while the rest have exited the industry.

As Sacks revealed, the coronavirus crisis hit the hotel industry the hardest.

In an interview with Lodging Leaders, Del Ross, chief revenue officer at Hotel Effectiveness, an Atlanta technology company that helps hotels manage labor costs, said pre-pandemic the U.S. lodging sector employed 8.3 million in hospitality as well as ancillary services.

“At our lowest point, we were about 23 percent of that,” Ross said. Hospitality jobs began to return last summer when owners and operators brought back 4 million laid-off workers.

“But the remaining 4 million people made up the bulk of the long-term unemployed in the U.S.,” Ross said. “Those jobs are still the lost jobs that we’re seeing with the chronic unemployed.”

In mid-March and early April hoteliers brought back another one million people as leisure travelers hit the road. Hotels’ need for workers was immediate and operators were surprised by the difficulty in bringing laid-off workers back or recruiting new employees.

“First thing they found out is that people that they didn’t bring back from the prior summer, they got other jobs. They’re gone. They’re not coming back to hotels. So their best people, their experienced people, aren’t available anymore,” Ross said. “They’re not refusing to take jobs, they’ve moved on.”

HISTORY OF LABOR COSTS: Rachel Rothman, head of hotels research and data analytics at CBRE Hotels Research on May 11 shared industry statistics at the Hunter Hotel Investment Conference in Atlanta. CBRE’s chart shows the history of labor costs at hotels from 2007 through 2019, when labor costs increased nearly 4 percent. Today, Del Ross at Hotel Effectiveness says hourly pay at hotels jumped by 10 percent over the past month. (Chart: CBRE Hotels Research)

That leaves hoteliers with the biggest challenge – recruiting new employees. This puts pressure on wages. Ross said Hotel Effectiveness has charted over the past month a 10-percent increase in wages for line-level workers as well as new recruits.

The pay strategy creates compression between the wages new hires receive and what current employees, including managers, earn. Housekeeping managers, for example, earning $15 an hour see new-hire wages go from $10 to $13 an hour. That would give any manager pause about the value of his or her job. “So we’re actually seeing across-the-board upward wage pressure,” Ross said.

While hoteliers seem desperate to attract job candidates, the picture is skewed by the number of experienced hospitality employees who want to return to work. They respond to numerous postings but they don’t hear back from employers.

Ross said he believes the dichotomy is created by hoteliers who need line-level employees right now. They’re so focused on filling those jobs, they’re not hiring for management roles. Meantime, general managers and others in operations have been picking up the slack – turning rooms, checking in guests and doing maintenance work.

The practice of forcing managers to do line-level tasks is not sustainable, Ross said, as the operations team faces burn out. Hoteliers, he said, are “better off bringing in some additional leadership to share the burden of recruitment and onboarding and managing new people.”

HOUSEKEEPING PAY RAISES: Hotel Effectiveness charted wage increases for hotel housekeepers over the past 12 months, noting the trend for these employees is a good indicator of rising labor costs across the board.

Versatility is Key

Ross advises those who seek to return to management roles in hospitality, consider taking a line-level job for now as it puts one in a better position to get the higher-paying position as the hotel business recovers.

In fact, employment consultants say the more versatile a hospitality job candidate is the higher chance he or she will be hired.

The coronavirus pandemic has impacted hotels at every level and hospitality executives need to think and act creatively to rebuild the rank-and-file along with their leadership teams to begin to generate revenue.

That’s the viewpoint of Strategic Solution Partners which conducted a hospitality industry survey and shared its findings in a report titled “Rethinking the Recovery.”

The report is comprehensive and its findings reveal the industry’s talent loss went deep. Ninety-five percent of hospitality teams experienced layoffs or furloughs. Half of hoteliers surveyed lost more than half their staff. And corporations reduced their teams by 60 percent.

Hoteliers surveyed said they’re looking for candidates who are multi-disciplined. They note it’s essential to business recovery that prospective new recruits and even employees they laid off and want to bring back are skilled at more than one job.

Bill Scanlon is founder and president of Strategic Solution Partners, which helps companies’ hiring processes and offers consulting across a range of disciplines. The survey was conducted with SearchWide Global, an executive search firm, and SalesBoost, a skill-based learning platform.

The report is an annual practice but this year the results are more meaningful than ever.

As the industry positions itself for a post-pandemic recovery, hotel companies want to build a starting bench with employees who are versatile and experienced.

Like Ross observed, hoteliers want and need to hire people back but their selectiveness in whom they’re hiring has created a complicated mess.

“This goes back to the talent cuts in the very beginning,” Scanlon said. “Not only did you get rid of all of the property-level people, you got rid of the people that supported them on the regional level. And then you get rid of the people that supported them at the corporate level.”

Middle-management job cuts have enabled companies to save on costs, Scanlon said. The return of the leisure traveler is challenging hoteliers’ pandemic staffing models because the demand is uneven, filling up hotels on weekends but emptying out mid-week, which business travelers previously claimed.

Hotels are “trying to run an operation that’s a two- or three-day operation instead of a seven-day-a-week operation. So that makes it difficult to bring people back,” Scanlon said.

He is also aware of hospitality professionals who lost their jobs in the pandemic applying to numerous positions only to be ignored by prospective employers. He suspects it’s because the companies no longer have human resources departments and hotel companies are not rebuilding management infrastructure just yet.

“There are a lot of things going on right now that aren’t working in favor of people being hired back.”

As the Strategic Solution Partner study reveals, versatility is a strong asset in getting rehired in the hospitality industry.

But Scanlon notes many experienced folks have transferred their well-honed skills to land jobs outside of the lodging industry.

“The talent loss is very deep across the board and it’s left everybody pretty much hamstrung,” he said. “Multiple disciplinary skill sets are going to be needed going forward. The recovery is going to be very long and unpredictable.”

VERSATILE EMPLOYEES: Hotel companies are seeking job candidates who are multi-skilled, according to a survey by Strategic Solution Partners and its cohorts who advocate for outsourcing contracted or gig workers to fill in the talent gaps as the hotel industry strives toward a post-pandemic recovery. (Chart: Strategic Solution Partners’ ‘Rethinking the Recovery’)

Think, Respond Differently

Pre-pandemic, the national unemployment rate was 3.5 percent. And hospitality businesses faced employee recruitment and retention challenges with more than 800,000 jobs going unfilled.

Today, the American Hotel & Lodging Association reports more than 3 million industry jobs lost in the pandemic have yet to return.

Strategic Solution Partners and its cohort companies say industry leaders have to think differently about the post-pandemic workforce.

They suggest hospitality employers consider how and why the gig worker became a trend and adjust to that mindset to build their teams. Another study by Strategic Solution Partners and its cohorts reveals a significant number gig or contract workers in the hospitality industry are highly skilled people who value a work-life balance.

These are not younger people, either. Millennials or those 22 to 37 years old account for less than 20 percent of the survey respondents. Three quarters of the contractors surveyed are 45 to 65 years old.

Overall, Rethinking the Recovery reports the 2019 reliance on in-house full-time-equivalent jobs needs to move aside for the 2021 flexible in-house and outsourced hybrid staffing model in which the talent base is versatile, workers can be brought on board as demand dictates and employee  roles can be extended across disciplines as well as properties.

Hoteliers surveyed said they want employees with versatile technology skills, interdisciplinary expertise and leadership skills.

“What we tried to do with this study is educate people to think out of the box,” Scanlon said. “What people are struggling with right now is trying to understand where do they go and how do they go?”

Scanlon and his study cohorts recommend hoteliers fill in the staffing gaps with on-demand solutions by using gig or contract workers to step in as needed. “We look at it as reinforcing rather than outsourcing,” he said. “It’s not outsourcing the talent.

It’s reinforcing your strategy.”

‘One Crisis to the Next’

Tammy Gillis knows outsourcing skilled employees has helped hotels deal with hiring challenges pre-pandemic. It’s even more important in a post-pandemic recovery. She founded Gillis Consulting and Training eight years ago to provide remote sales teams for hotels and to train in-house sales people.

Gillis has been busy lately helping hotels ramp back up their sales and marketing teams and craft new strategies. Because she’s on the ground floor with a couple hundred properties, Gillis has observed the crisis up close and personal.

“There was a labor shortage before the pandemic. Now it’s just amplified,” she said.

Gillis shares an observation that some hoteliers and hotel companies might find hard to hear: Many people who lost their jobs in 2020 were not only financially impacted by job loss, they were also hurt by the manner in which hoteliers managed the process.

In addition, workers who kept their jobs during the pandemic crisis have become jaded about their jobs. Used to be, working in hospitality had a certain level of prestige, but Gillis fears that’s faded amid the coronavirus crisis as those who kept their jobs are worn out.

“Our industry has lost some of that luster,” she said. “We’ve got some work to do in terms of making this an attractive industry to come back to.”

TURNOVER RATES: Hotel Effectiveness tracks the turnover rates for hotel jobs and notes room attendant (yellow line) is the most difficult role in which to retain employees. But the chart also shows that pre-pandemic the turnover rate was high for many hospitality jobs. Hotel Effectiveness and other hiring and retention experts say, pandemic aside, the industry must address the reasons why people leave the jobs.

Build Your Bench

Gillis said the reasons for the labor shortage are varied and makes the challenge complex. But now is the time for hotel owners and operators to begin to do what it takes to ramp up their staff.

“It’s a complicated issue, but the main message is you can’t wait. You have to start building your bench now.”

Many hotel operators and management companies kept sales and marketing teams onboard throughout the pandemic, but they deployed the team members to take on jobs outside their departments.

That’s understandable, Gillis said, but now is the time to reposition each department to respond to the recovery ahead.

“The challenge is, and we’re seeing it across the board, the salespeople that were saved and weren’t let go have been redeployed to operations,” she said. “I talked to a director of sales about a month ago, who said, ‘Thank goodness they kept me but I’m working 50 hours in the front desk.’

“We have to re-energize and retool the people we’re bringing back and the people who stayed. Imagine the leisure family or the traveler that is so excited after being in lockdown for a year to take that vacation. But that does not match the excitement going on at the front desk or at a hotel that has been in crisis mode for year.

“So what are we doing to invest in our people across all roles to get them ready for the rebound of travel? From a skillset, a mindset, and just to say, ‘Thank you for hanging in there. Thank you for staying in this industry. We’ve got your back. We’re committed to making sure you have the training and the tools, and it will get better.’

“And that is where we need to shift from crisis mode to planning for that recovery and taking care of our people.”

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