Hoteliers must face reality: Wages need to go up
 
Hoteliers must face reality: Wages need to go up
28 FEBRUARY 2019 8:57 AM

Labor is at the top of every hotel industry leader’s concerns. One way to help move it from the list of things that keep them awake at night is to offer competitive wages to attract and retain quality employees.

The No. 1 issue facing hoteliers around the globe is never going to go away. Judging from the reactions of top executives from around the world, the labor crunch in the hotel industry is here to stay.

At the risk of being the bearer of bad news, or worse yet Mr. Obvious, these executives need to come to the realization that the only way to make the situation workable to any degree is open their purse strings.

Even in a world that is constantly becoming more automated, hotels are among the core industries that need people to make them tick. Robots be damned! Hotel guests need—and want—human interaction during their stays.

The lack of a sufficient labor pool to fill open jobs at hotels is an issue that goes directly to the top. Five years ago, labor challenges were barely a whisper on CEO panels at major industry investment conferences. Now the issue is repeated over and over and over from the main stages at the most prestigious conferences around the world.

During conference speaking gigs I’ve had during the past year or so, I repeatedly asked the audience how many of them are facing a labor shortage and have positions they are unable to fill. More than two-thirds of the hands in the room go up. Every time. Regardless of the continent, regardless of the classes of hotels represented by attendees.

As experiential travel consumes more and more consumers, hoteliers are doing everything possible to make their properties the end-all, be-all awe-inspiring locations for the “Instagrammable moments” guests seek. Yes, location and design elements and all the other things hotels are spending money on to create unforgettable memories for guests are important. But more often than not, it’s how guests were treated and how hotel employees respond to them that create the most cherished memories.

Just about every hotel leader talks about the importance of company culture these days. Company executives go to great lengths to educate and encourage their employees to be a part of a meaningful corporate culture.

But culture is a two-way street—especially in the hotel industry. Guests know when they’re being bamboozled by an insincere employee who isn’t embracing the carefully crafted cultures designed by their companies. It’s actually pretty easy to spot. We’ve all been exposed to those employees who go through the motions.

Much of the issue is rooted in compensation. Quite simply, the hotel industry needs to up its game to attract—and retain—the type of employees it desperately seeks. Whether it’s a housekeeper, a general manager or a corporate revenue manager, money talks. And right now, getting better pay from other industries is enticing many quality employees to walk. One senior revenue manager I know tells the story of how she had to let an excellent employee walk because a competitor offered them $30,000 more per year in salary. That’s the competitive nature of today’s marketplace.

The unemployment rate in the U.S. stands at about 4%—so the leverage is in the hands of employees because there are more jobs available than there are people to fill them. More employees than ever are saying “pay me more or I’m leaving” because there are many opportunities to find work. The slide below, which a number of STR speakers are using as part of their presentations (including me), summarizes the situation well as it shows that there were nearly a million open positions in hospitality and food service industries at the end of 2018. (STR is the parent company of Hotel News Now.)

The hotel industry is a street-corner business in all respects, wages included. The going rate in Sebring, Florida, is different from that in Secaucus, New Jersey. And that’s different from wages in Seattle. So rather than wait until higher minimum wage is regulated across the country, the hotel industry can take a giant step ahead by beefing up wages to attract people.

It’s not like hotel companies aren’t spending money trying to woo top-notch people and make them comfortable. Flex schedules, advancement and opportunities to move to other properties are big enticements for prospective employees. One major northern resort recently bought a neighboring motel to house employees that need it, especially those that are still able to obtain visas to work in the U.S.

Hotel owners and operators are in a precarious position. They must ensure they have the most robust bottom line possible while understanding they have to spend money to make money.

Yep, it’s easy for me to spend other peoples’ money. I’m certain some of my industry friends are rolling their eyes and mumbling under their breath as they read this. But few arguments can be made about the importance of people working in hotels to serve guests. In many instances they’re the difference between a hotel being a desirable destination versus being a commodity.

Email Jeff Higley at jhigley@hotelnewsnow.com or find him on Twitter @jeffhigley1 or on LinkedIn.

The opinions expressed in this blog do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

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