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The U.S. travel sector once again faces a pre-pandemic problem that would have been unthinkable even weeks ago: a worker shortage.
Delta cancelled about 100 flights due to pilot shortages earlier this month. At the same time, it opened up middle seats, which had been blocked as a pandemic safety measure, a month earlier than planned to accommodate higher passenger volume. Uber reported last week customer demand is returning faster than driver availability, and it plans to increase driver incentives to boost labor, according to a filing with the U.S. Securities and Exchange Commission.
Hoteliers, especially in leisure markets like Cape Cod and the Hamptons, are predicting a summer of record crowds and understaffing. Many of these operators rely on workers coming from outside the country on H-2B or J-1 visas, which became available at the end of March after a Trump administration ban lifted. But international travel restrictions and logjams at consulates are expected to prevent a normal rate of worker approvals.
“There are definitely going to be labor shortages,” said David Sherwyn, a hospitality human resources and law professor at Cornell University’s School of Hotel Administration. “It’s certainly something to be concerned about this summer.”
The demand for travel workers roared back to life largely due to vaccination rates in the U.S. accelerating faster than previously expected.
Nearly 121 million Americans have received at least one dose of the vaccine, according to the U.S. Centers for Disease Control and Prevention Monday afternoon. U.S. President Joe Biden’s goal of 200 million doses administered by his first 100 days is up from an initial 100 million-dose target.
That provides more confidence to get out on the open road or friendly skies and generates potentially overwhelming leisure travel demand. Business restrictions are lifting in many states, and the CDC gave the green light earlier this month for fully vaccinated Americans to travel.
U.S. hotel occupancy rates have hovered just shy of 60 percent for several weeks now, and it got even higher in popular Sun Belt markets like Miami, Tampa, and San Diego. Hotel occupancy averaged nearly 68 percent last week in San Diego, 76 percent in Miami, and 84 percent in Tampa, according to STR.
Nearly 1.6 million passengers went through a U.S. airport security checkpoint on Sunday, significantly less than the 2.4 million on the same day in 2019 but also exponentially higher than the nearly 91,000 seen in 2020, according to the U.S. Transportation Security Administration.
Strong numbers like that are a major reason for employers across all travel sectors to suddenly start calling back employees furloughed earlier in the pandemic. A big problem is sometimes the workers are no longer available.
Where the Workers Went
The travel industry’s labor shortage problem may seem strange, given organizations like the American Hotel & Lodging Association claim the pandemic wiped out 10 years of job growth. Hotel unemployment, while down from a nearly 49 percent high last April, is still at nearly 20 percent — well above the 6 percent national average. Figures like that don’t exactly indicate hotel owners would be scrambling to find employees.
“Seasonal resorts use a lot of labor from overseas,” Sherwyn said. “In the old days, they’d use a lot of college students, but internships took over waiting tables and pools and things like that.”
Many travel business owners in vacation markets like Cape Cod relied on the J-1 and H-2B worker visa program for foreign nationals to come work at restaurants or hotels in the summer. A quarter of the 20,000 seasonal workers to Cape Cod come from overseas on these visas, the Provincetown Independent reports.
The Trump administration’s ban on the program lifted at the end of March, but there isn’t much expectation for more workers this summer. Pandemic restrictions on international travel and uncertainty on when that might lift likely means another year without this crucial workforce.
Other factors include the extension of an extra $300 in weekly unemployment benefits that was included in the latest round of coronavirus relief. Analysts see that measure, which expires in early September, as one reason some workers in the hospitality space may stay away from jobs like driving for Uber or certain restaurant jobs with lower wages.
“There are unintended but understandable consequences, and this is one of them,” Sherwyn said.
Other job shortages may have more to do with previous employees moving away from a market or leaving the industry entirely. Many hotel and restaurant owners temporarily suspended operations during the pandemic until demand was high enough to justify the costs of maintaining the business. Workers sometimes didn’t wait for reopening day.
“Restaurant owners in primary cities, where the restaurants closed for a period of time, noticed long-time employees have left town, and those owners have had to attempt to re-staff,” said Leora Lanz, chair of the graduate hospitality program at Boston University.
Summer Shortage or Long-Term Problem
The U.S. services industry, which includes hospitality workers, expanded at its fastest rate on record in March, according to the Institute for Supply Management. The hotel sector alone added 40,000 jobs. Restaurants and bars added 176,000 jobs, but there are signs it may not be enough heading into summer.
Restaurants in South Florida are packed, and owners are desperately seeking more staff in markets like Key West, which saw travel demand soar in the last year even without traffic from cruise ships.
It isn’t quite clear if this is a labor shortage issue that goes away by Labor Day.
“A significant portion of that underemployment in certain areas for the hospitality and recreational sector will ameliorate when, or if, that unemployment benefit goes away,” said Evan Weiss, chief operating officer at LW Hospitality Advisors.
But there are other factors at play that could permanently drive more workers away from the travel sector. The Biden administration’s next big-ticket item, a $2 trillion infrastructure plan, is expected to be a major jobs creator. That could be a headache for travel operators trying to get workers back, as construction jobs pay a lot more than hospitality jobs, Sherwyn said.
“A lot of those workers are transferrable. The skills are transferrable,” he added. “If you’re looking to maximize the money, it could lead to a price war.”
In the meantime, the labor shortage could be a benefit to hospitality students who, only months ago, were wondering if there would even be a job waiting for them on the other side of graduation.
“I’m personally hoping these are opportunities for our hospitality students to step up and take on some of these roles because the help is needed,” Lanz said. “Think about how it went: We went from not having enough talent before the pandemic to having an oversupply of talent but not enough occupancy. Now we’re back again to not having enough talent. We need people.”