Don’t let the rise in the hotel industry’s unemployment rate fool you. This was one of the strongest months for hotel hiring since the start of the pandemic.
The U.S. hotel industry added 75,000 jobs in June, the second-highest rate of monthly employment growth since the start of the pandemic.
The boost in hiring arrives after months of hotel owners and operators noting employment levels were nowhere close to where they needed to be to accommodate the expected explosion in summer leisure travel demand.
While the June jobs report is a win for the hotel sector, the industry’s leading lobbyist group notes there is still a significant gap between hotel employment today and where it was pre-pandemic.
“It’s just a slow, steady climb, and we continue to lag the rest of the economy,” said American Hotel & Lodging Association CEO Chip Rogers. “In that climb, are things better than they were six months ago? Absolutely. But we’re not out of the danger zone yet.”
The hotel industry’s unemployment rate actually went up last month to 17.6 percent, which is still significantly higher than the 5.8 percent national average. The hospitality and leisure sector is still 2.2 million jobs short of February 2020 levels.
Twenty-one of the top 25 U.S. hotel markets are still in a recession or depression, Rogers added while calling on Congress to pass an industry-specific aid package to help hotel operators in those hard-hit regions.
“The jobs numbers are good, but we still definitely have challenges and issues,” said Evan Weiss, chief operating officer at LW Hospitality Advisors. “You have a lack of foreign workers coming in, a significant amount of seasonal restaurants, hotels, and bars reopening as well as larger hotels in major markets reopening.”
But economists noted there are some good reasons for the rise in the hotel unemployment rate, like a very slight increase in the labor force participation rate of people actively seeking jobs.
The overall leisure and hospitality sector added 343,000 jobs last month, accounting for 40 percent of the June job gains to the U.S. economy. Hotels are expected to continue an all-out push to get more workers to meet demand.
The U.S. hotel industry had an average 69.9 percent occupancy last week and was just shy of 8 percent off pre-pandemic rooms revenue levels, according to STR. Overall hotel performance heading into summer is much better than the 27 to 33 percent declines off pre-pandemic revenue levels seen this spring, according to a Truist Securities report from last week.
Walt Disney Co. is offering $1,000 signing bonuses to housekeepers and kitchen staff at its Florida theme parks months after laying off 32,000 employees due to pandemic-related plummets in demand. Hotel executives previously told Skift signing bonuses as high as $2,000 were common in recent months as a recruiting tool.
What’s to Blame?
The industry’s labor shortage crisis garnered debate around what is causing it at a time when leisure and hospitality employment is still about 13 percent off pre-pandemic levels.
Many hotel companies point the blame at the extra $300 in weekly federal unemployment benefits in place through early September as a result of the $1.9 trillion coronavirus relief package passed earlier this year.
But some early data suggests this claim may not be entirely true. Job search activity is below the national trend line in the 12 states that opted out earlier this month of the extra federal unemployment benefits, according to data compiled by the job listing platform Indeed.
Economists have similarly doubted unemployment benefits are the sole cause of the labor shortage and instead note lack of childcare, continued fear of the virus, and higher wages found in other industries like retail all play a part in keeping former hotel workers away.
“Even though you do have a lot of people returning to work, you have other industries pulling people out of hospitality on a long-term basis,” Weiss added.
Andrea Grigg, head of global hotel asset management at JLL, notes there has been an uptick in applications in some of the states that opted out of the extra unemployment benefits early; however, the “numbers, quality, and volume” of applications aren’t at the levels one would have expected.
She still thinks it is too early to entirely rule out the added benefits as a factor in the labor shortage crisis.
“It is undoubtedly a larger and more complex issue. Improving wages, training, and working conditions for lower-wage workers is top of mind across the industry — it has always been a top priority. It is also important to note that supervisory positions are equally challenging to fill in the current environment. New perks and signing bonuses schemes have not lured employees to return to their posts,” Grigg added via email. “Throwing money (via endless wage increases) at [the] labor shortage won’t necessarily fix the problem — there must be a sense of balance and reasonableness. A return to normal across the industry will take some time.”
[UPDATE]: Following publication, Skift interviewed Rogers beyond his emailed statement included in an earlier version of this story. This story has been updated.
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Photo credit: Hotels saw significant job gains last month, but the industry has to maintain the momentum to meet summer travel demand. PxFuel