Hotel brand CEOs acknowledge that low wages and inflexible hours exacerbate labor struggle

ATLANTA — More than ever, CEOs of hotel brands are paying greater attention to what hotel employees and company teams need to be successful in their jobs.

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

The tight labor market has forced G6 Hospitality to continue raising pay rates and increasing employee benefits, CEO Rob Palleschi said.

“In most cases, we are unable to pass this cost on to the customer, where we increase [room rates]. We keep pace with the market, but it doesn’t exceed what we pay, so it impacts our owners’ profitability,” he said.

Wyndham Hotels & Resorts President and CEO Geoff Ballotti said the topic of how to attract people to the hospitality industry has long been front and center.

“People don’t see this as the easiest place to work, the best place to work necessarily. That was a problem before we got into this pandemic,” he said. “We had a million unemployed in this pandemic. We’ve gone down to 4 million unemployed. It’s gotten better, but it’s still our biggest problem.”

Ballotti said it’s incumbent on the industry as a whole, especially in face-to-face meetings at conferences, to come up with ways to better promote the hospitality industry to job seekers.

The reality is that the hospitality industry competes with big-box retailers who pay $15 to $25 an hour, he said. What matters most to hotel workers is their salary, he added.

“As an industry, we have underpaid. We have to compensate competitively,” he said. “A signing bonus has been one of the most effective tools for our franchisees throughout this pandemic to attract our housekeepers, room attendants and customer service agents.”

Palleschi said his top executives at headquarters were more driven by compensation and signing bonuses because they already had a degree of flexibility in their schedules.

George Limbert, president of Red Roof, said that today, giving employees flexibility and the power to take control of their schedules helps solve childcare issues.

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

“It’s a contributing factor to our [employee] turnover. We may be able to bring those team members in, we may be able to make them happy for a short time, but ultimately it comes down to the cost and availability of childcare,” did he declare.

At Wyndham, Ballotti said enterprise-level team members have the flexibility to work Tuesday through Thursday at the office and Monday and Friday at home.

Tom Buoy, Acting CEO and Executive Vice President of Radisson Hotel Group, Americas, said “you need to create a flexible work environment,” especially for those who are in the gig economy or work multiple jobs.

Buoy said company and line employees also want to see tangible value in the work they do.

“We don’t call our headquarters a headquarters, we call it a solutions center,” he said. “We want to offer our franchisees and our owners solutions that are really compelling. Once you create a culture based on value, I think it becomes captivating.”

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

Whether demand recovers depends largely on the type of hotel and where in the country it is, Rogers said.

Limbert said the budget accommodation segment, in which its hotels operate, has recovered faster than others.

“We haven’t taken as many hits [as the broader industry during the pandemic]. We started to beat 2019 levels before anyone else,” he added.

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

The CEOs on the panel predicted that business travel will pick up either in 2023 or after.

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

Palleschi said the momentum was there and the recovery was already beginning. He predicted business travel would experience a lull this summer. However, in the fall it will pick up again and a strong surge in demand will occur in January and February 2023.

When asked if inflation, particularly rising gas prices, would have a negative effect on the summer leisure season, CEOs agreed there was no need to worry. seriously.

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

Limbert said Red Roof is seeing a trend of “shrinkage,” where travelers don’t go as far, but they still travel.

As to whether inflation has had an impact on development projects, Palleschi said no.

“We just don’t see it on the ground. We put 51 properties on the market in January and sold almost $1 billion worth of properties in about eight weeks,” he said. “So there’s demand there; we’re seeing an impressive pipeline in terms of openings and properties are still converting.”

This is also true for Wyndham and Radisson.

Wyndham had a banner year for new construction signings in 2021, Ballotti said. In fact, he said now was the perfect time to develop select-service hotels.

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