Our survey shows that leaders have an opportunity to solve the industry’s labor challenges by accommodating changing worker priorities.
The US hotel industry continues to be affected by the aftershocks of COVID-19. During the pandemic, far more hotel workers than employees in any other industry were laid off or had their working time reduced. When the conditions for travel and tourism improved, most guests returned—but many employees have chosen not to.
The resulting hotel labor shortage means that employers must pay a premium for workers. But that’s not the only consequence. To counter rising hotel industry labor costs, many companies are cutting back elsewhere, reducing concierge and shuttle services, food and beverage offerings, and the myriad other benefits that guests used to take for granted. This, in turn, erodes the guest and employee experience. The combination of higher costs and lower revenues can put a severe squeeze on hotel profits.
What will it take in a post-pandemic world to change this state of affairs and enable the US hotel industry to attract new employees, retain current ones, and win back former staff? To answer this question, BCG, New York University’s Jonathan M. Tisch Center of Hospitality, and the American Hotel and Lodging Association earlier this year consulted industry leaders to identify the root causes of the current labor challenges and suggest solutions. We then surveyed 1,200 current, former, and prospective hotel industry employees, and employees of adjacent industries such as restaurant and retail, to test the leaders’ ideas on how the industry can better attract and retain workers.
The survey aimed to offer hotel industry leaders new insights by asking broad questions (such as about job priorities and respondents’ reasons for choosing to work in the industry) and seeking respondents’ reactions to specific ideas that participants in the earlier consultation had suggested. We divided our survey sample into four cohorts so that we could test targeted options.
We found that the hotel industry has an opportunity to solve its labor challenges by improving its flexibility, creating more varied entry routes for new workers, and developing clearer pathways to career advancement. Here are some of our main findings in more detail.
Transparent Compensation Pathways Are Especially Popular
When we asked survey respondents to rank the factors that were most important to them when considering a job in the US hotel industry, financial compensation unsurprisingly came first across all of the cohorts we surveyed. Nevertheless, our survey indicated that respondents weren’t exclusively ech
We presented respondents who ranked “wages and pay” as a top four factor for considering a job in the hotel industry with six options that the industry might take to improve its handling of remuneration. Of these, transparent pathways to pay raises and bonuses was especially popular, with a net 90% of respondents in favor, making it one of the most positively rated options across the entire survey. Our findings indicate that employees want to see positive work performance rewarded through higher compensation. It also suggests that bonus and recognition programs that align hotelier and employee goals more closely—rewarding staff when their actions lead to higher guest review scores or repeat bookings, for example—could be a win-win for the industry and its employees.
A net 88% of respondents approved of continuous benchmarking to ensure that remuneration in the hotel industry was equal to or above that for comparable jobs in similar industries. And a net 86% supported actions that ensured that remuneration was sufficient for employees to depend for their living on a single job rather than having to work multiple jobs.
All Cohorts Highly Value Schedule Flexibility
Our survey respondents identified schedule flexibility as the next-most important consideration after remuneration (out of eight possible factors listed) for a job in the industry. For several years, hotel companies have promoted practices that enhance flexibility, increase employee mobility, and ensure that properties have sufficient staff to deal with issues such as fluctuations in seasonal demand.
However, practices such as “nomadic” flexibility—which allows staff to work for several months at one location and then rotate to another—and scheduling that gives employees the option of working noncontiguous shifts within the same day received only slightly better than neutral ratings from survey respondents who ranked schedule flexibility as a top-four factor in gauging the desirability of a job in the hotel industry. In contrast, both the ability to decide which days and what time of the day to work and the ability to determine how many hours to work each week received net positive support of around 90%.
Our findings suggest that the industry must change how it recruits and manages employees if it is to accommodate their priorities. For example, instead of just recruiting for a cashier or front desk associate, employers could also specify that they want to hire for specific days of the week or times of the day. To facilitate these changes, technology that makes it easier to swap shifts, redeploy workers, and ensure appropriate skills coverage across a hotel property—easing the burden on managers—will be essential.
Finally, flexibility was about twice as important as childcare support to current employees and potential entrants. Although childcare was more important to young people still making career choices than to any other cohort, the desire for flexibility extends far beyond caregivers.
Inclusion and Belonging Actions Could Boost Retention
An important theme of our discussions with industry leaders centered on how the industry must act to improve racial, ethnic, and gender diversity and foster a greater sense of inclusion and belonging if it is to attract and retain staff. This reflects ongoing industry conversations about prioritizing efforts to recruit a diverse workforce and foster a working environment that helps individuals from all backgrounds to succeed.
Significantly, respondents rated the factor “inclusion and belonging” as less important than we had expected. But even though this factor didn’t rank among the top factors across all cohorts, it was still meaningful. In addition, inclusion and belonging were more important to potential entrants and current hotel employees (over 30% of whom ranked it among their top four factors) than to former employees, suggesting that industry action in these areas could help employers to retain staff.
Another way to get a handle on the true importance of inclusion and belonging in the hotel industry is to look at how current and former hotel employees gained entrance to it. Our survey found that the leading route into the industry was through employee referral. Creating a diverse and inclusive workforce will enable a more diverse set of potential employees to join by using their networks and connections, thereby strengthening the industry over time
At the same time, far fewer current and former hotel employees in our survey said their pathway into the industry started at school than we had expected. This suggests schools could create greater awareness of the benefits of hotel work among their students. But this would require the hotel industry to engage more proactively with school leaders, career guidance counselors, and career services officers.
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Our findings suggest that the US hotel industry can become a far more attractive employer by taking action in certain well-defined areas. Some of these measures, such as greater flexibility, are likely to resonate across a wide range of individuals, from current employees to potential industry entrants. Others will have a more targeted appeal. Consequently, hotel companies should think carefully about which actions will work best for specific employee groups. And although individual employers could unilaterally adopt some measures, others—such as the introduction of new technologies, outreach programs, and transformative marketing initiatives—will require cooperation across many organizations. By taking these steps today, the industry can build the diverse, committed, and high-quality workforce that it will need to flourish in the future.
Courtesy BCG By Vanja Bogicevic, Oliver Bonke, Bruno Eeckels, Adam Goldberg et al
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