Hotel Brand CEOs Recognize Low Pay, Non-Flexible Hours Exacerbate Labor Struggle

ATLANTA — Now more than ever, hotel brand CEOs are paying closer attention to what both hotel-level employees and corporate teams need in order to succeed at their jobs.

During the “C-Suite Conversations” panel at the 2022 Hunter Hotel Investment Conference, President and CEO of American Hotel & Lodging Association Chip Rogers asked panelists a series of rapid-fire questions about demand recovery, labor, inflation and more.

The tighter labor market has forced G6 Hospitality to continue to raise pay rates and increase employee benefits, CEO Rob Palleschi said.

“In most cases, we’re not able to transfer that cost over to the customer, where we increase [room rates]. We are keeping at pace with the market, but it’s not exceeding what we pay, so it’s impacting our owners’ profitability,” he said.

Wyndham Hotels & Resorts President and CEO Geoff Ballotti said the topic of how to attract people to the hotel industry has long been at the forefront.

“People do not view this as the easiest place to work, the best place to work necessarily. It was an issue before we came into this pandemic,” he said. “We had a million unemployed coming into this pandemic. We fell to 4 million unemployed. It’s been improving, but it’s still our biggest issue.”

Ballotti said it’s the entire industry’s responsibility, especially when meeting in-person at conferences, to formulate ways to better promote the hotel industry to those seeking jobs.

The reality is the hotel industry is competing against big-box retailers that are paying $15 to $25 per hour, he said. What matters most to hotel-level employees is their pay, he added.

“As an industry, we’ve underpaid. We need to be compensating competitively,” he said. “A signing bonus has, for our franchisees, been one of the most effective tools throughout this pandemic in terms of attracting our housekeepers, room attendants and our guest-service agents.”

Palleschi said his senior leaders in the corporate office are more motivated by pay and signing bonuses as they already had some degree of flexibility in their schedules.

George Limbert, president of Red Roof, said in today’s day and age, giving employees some flexibility and power to take control of their schedules helps solve childcare issues.

The availability and cost of childcare skyrocketed during the pandemic, Palleschi added.

“It is a contributing factor to our [employee] turnover. We may be able to get those team members in, we may be able to make them content for a short period of time, but ultimately it boils down to childcare cost and availability,” he said.

At Wyndham, Ballotti said team members at the corporate level have the option to work Tuesday through Thursday in the office and Mondays and Fridays at home.

Tom Buoy, interim CEO and executive vice president of Radisson Hotel Group, Americas, said “you have to create a flexible work environment,” especially for those who are in the gig economy or working multiple jobs.

Buoy said both corporate and line-level employees also want to see concrete value in the work they are doing.

“We don’t refer to our corporate office as a corporate office, we refer to it as a solution center,” he said. “We want to provide our franchisees and our owners with really compelling solutions. Once you create a value-based culture, I think that becomes captivating.”

If there is no value, he said individuals will walk out the door after six months on the job.

Demand recovery largely hinges on the type of hotel it is and where in the country it’s located, Rogers said.

Limbert said the economy lodging segment, in which his hotels operate, recovered quicker than the rest.

“We didn’t take as big of a hit [as the broader industry during the pandemic]. We started beating 2019 levels before anyone else,” he added.

Ballotti said that Wyndham’s economy and midscale segments have domestically recovered. But in terms of overall recovery, he said “absolutely not.”

CEOs on the panel predicted that business travel will recover either during 2023 or after.

“[Tourism Economics’ Adam] Sacks made a great point that recovery should be defined in terms of real [average daily rate] and real [revenue per available room],” Ballotti said. “I still think this has a long, long way to go.”

Palleschi said momentum is there and the recovery is already starting. He predicted business travel will be at a lull in the summer. However, in the fall it will pick up and a robust demand surge will hit in January and February of 2023.

When asked if inflation, specifically rising gas prices, would have a negative effect on the summer leisure season, CEOs agreed it wasn’t cause for serious concern.

Buoy said fatigue has set in and people are ready to travel again even if the cost of gas has increased between 10% and 15%.

Limbert said Red Roof is seeing a trend of “shrinkcations,” where travelers aren’t going as far, but they’re still traveling.

In terms of whether inflation has impacted development projects, Palleschi said it’s not.

“We’re just not seeing it on the ground. We put 51 properties on the market in January, and we sold almost a billion dollars worth of properties in about eight weeks,” he said. “So there’s demand out there; we’re seeing an impressive pipeline in terms of openings and properties are still converting.”

That’s also true for Wyndham and Radisson.

Wyndham has had a record year of new construction signings in 2021, Ballotti said. In fact, he said now is a great time to develop select-service hotels.

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