Hotel Execs Have Mixed Feelings on Labor Outlook - CoStar

Excerpt from CoStar

During a meeting of the Lodging Industry Investment Council, hotel executives spoke about ongoing labor challenges and how wages are expected to continue to grow, albeit at a slower pace.

Hotel industry leaders continue to grapple with the duality of labor: It's both improving and more difficult.

During a meeting of the Lodging Industry Investment Council, hotel executives spoke about how the labor environment is shifting and what challenges remain.

While he’s not close to the hotel operations side, Rob Leven, chief operating officer at Procaccianti Group and TPG Hotels and Resorts, said it seems there has been some relief, and hotels have been able to reduce the amount of contract labor they’ve had to use in recent years and hire more permanent staffing.

He said he’s cautiously optimistic that the industry won’t see a 40% increase in labor costs over the next several years as it has seen over the past three. Signs indicate that pressure should lessen.

“Labor’s been a challenge for as long as I’ve been in this industry, and it’ll continue to be a challenge finding quality people, keeping quality people,” Leven said. “All of that is always going to be our business.”

Some of that relief has come from changes in the number of job openings, Aperture Hotels CEO Charles Oswald said. A recent labor report said there was a spread of about 2.5 million open jobs versus the number of unemployed people at the end of 2023 compared to 6 million the year before.

“We’re in a different labor environment from that standpoint, through this process and some white-collar downsizing and things that have happened in the industry that have maybe alleviated some pressure toward our ability to go out and find hourly labor service, industry labor,” he said.

At the same time, Oswald said he doesn’t believe labor unions will let up. There’s been an overall increase in the number of union petitions.

“When 350 Starbucks stores organize, including Alpharetta, Georgia, that’s crazy,” he said. “No one would have ever seen something like that coming just a few years ago.”

This is an environment in which employees are trying to get paid more for doing less, he said. In markets such as Los Angeles, there’s talk about limiting the number of rooms or square footage housekeepers can clean. There’s talk of moving minimum wage up to $31 an hour.

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