. The Hospitality Industry's Labor Shortage | Northstar Meetings Group

The Hospitality Industry's Labor Shortage

Hotels are facing a record scarcity of workers, and guests are starting to notice the impact on everything from a shortage of front-desk staff to fewer F&B outlets. Is there a solution?

A new hotel in Salt Lake City goes on a recruiting blitz for entry-level workers in order to staff up. The number of applicants who respond: zero.

A lodging group in Maine closes two of its inns because it simply can't find enough workers to keep the properties running.

Several New York City hotels replace room service with food-delivery apps, citing staff shortages.

What's behind these stories? The hospitality industry is facing a record scarcity of workers, in large part because of a sharp drop in the number of immigrant job applicants and employees. Guests are starting to notice the impact on everything from a shortage of front-desk staff to fewer F&B outlets. And industry executives are calling on the government to take action.

"We are at a critical moment for our industry," says Chip Rogers, president and CEO of the American Hotel and Lodging Association. "Demand has never been higher, but we are also facing the tightest labor market in a generation." In remarks following President Trump's 2020 State of the Union address on Feb. 4, AHLA renewed calls for immigration reform, noting that "the domestic labor market alone cannot meet our workforce needs."

How serious is it? The U.S. Labor Department estimated recently that the leisure and hospitality industry has roughly 1 million job openings, a significant increase from about 600,000 positions in 2015 and 350,000 in 2009. 

In 2018, the rate of immigrants coming into the U.S. declined by 70 percent, the biggest drop in more than a decade, which a number of analysts attribute to policy changes that have made it harder for foreign workers to get visas. With unemployment hovering around 3.5 percent, a 50-year low, the timing couldn't be worse for the hospitality business.

Immigrants account for 31 percent of the industry's workforce, although they make up just over 13 percent of the U.S. population, according to the Deloitte 2019 Travel and Hospitality Industry Outlook.

Hotels, restaurants, caterers and others integral to the meetings business are now struggling with how to fill essential jobs. Surveys confirm that this is a top priority for hospitality companies. In 2016, fewer than 25 percent of hotel members of the Washington (State) Hospitality Association cited recruiting workers as their biggest challenge; in 2018, more than a third named hiring as their top concern.

Hotels Speak Out  

Industry leaders are airing their frustrations with the impasse in Washington that has led to the shortage.  

Marriott president and CEO Arne Sorensonhas criticized the "anti-foreign" attitude coming out of Washington in recent years, which he says gives the impression that "it's harder to get into the U.S." And Jonathan Tisch, chairman and CEO of Loews Hotels, has called for a "rational, coherent national immigration policy."

arne-sorrenson-marriott
Marriott's Arne Sorensen has been critical of the federal government's "anti-foreign" attitude.

While deploring an increase in xenophobia, most hospitality leaders support the general goal of stronger borders. However, prompted by the Trump administration's deployment of U.S. troops to the Mexico border in 2018 to block entry of thousands of Central American migrants, U.S. Chamber of Commerce president Tom Donohuewarned that "the U.S. is fundamentally out of people," and the industry he hails from, trucking, is one of more than 15 in which the shortage has reached critical levels. In a speech at the association's Washington headquarters, Donahue suggested that the scenario could be relieved by brokering an immigration reform deal that would be supported by both Congress and the White House. However, he conceded, "I'll be the first to admit that our current political climate makes [a compromise] easier said than done." 

While major hotel chains are generally loath to get involved with highly partisan or controversial issues, 2019 saw more hospitality officials questioning U.S. immigration policies, such as capping the number of visas for temporary workers. A turning point might have come when Immigration and Customs Enforcement reportedly sought permission from hoteliers to use some of their properties as temporary detention centers, in advance of a series of planned raids to round up an estimated 2,000 undocumented U.S. residents last summer. 

Hilton was one of a half-dozen major hoteliers that immediately sought to nix the idea. "Our hotels are not designed to be used as detention centers, and we reject the idea of using them for this purpose," the company said in a statement.
ICE reportedly did carry out some raids, but just how many people were apprehended is unknown, given resistance from New York and other cities that have sanctuary laws protecting residents from such actions. 

The Visa Question

Nearly 15 million Americans work in tourism and hospitality, estimates the U.S. Labor Department. The category is the fifth-largest industry in America, covering hotels, theme parks and restaurants. About 8 million are specifically in the hotel business. 

Current immigration and visa policies not only discourage international tourists and business travelers, but also hinder businesses from finding the workers on which their industry relies."

According to New American Economy, a national business coalition, "Many of these jobs depend on our immigration and visa systems... Many employers face difficulties in finding enough American workers to staff resorts and attractions, particularly ones in rural communities. Current immigration and visa policies not only discourage international tourists and business travelers, but also hinder businesses from finding the workers on which their industry relies."

One way to ease the crunch in the near term would be to allow more people to enter the U.S. as temporary workers through alternatives like the H-2B visa program, for nonagricultural workers, which was created in 1986 under President Reagan. Many employers say the current supply of these visas is inadequate; Congress has capped it at 66,000 per year, but it should be closer to 90,000 to meet demand. Recently, under pressure from politicians like Maryland Gov. Larry Hogan, lawmakers agreed to a temporary increase to 96,000 total for the current fiscal year. 
The J-1 is another short-term visa option, aimed at students or educators who enter the U.S. for exchange programs; hotels often rely on the program to fill summer jobs. 

Any employer hiring someone using either of these visas must certify that they are unable to fill the position with a U.S. resident. For hotels, that's not a difficult case to make; in fact, many low-wage jobs once filled by teenagers or college students are not drawing interest in today's tight labor market.

The DACA Dilemma

To understand what all this means in personal terms, consider the uncertainty over the fate of the Dreamers, those undocumented immigrants who as young children were brought illegally to the U.S. by their parents. 

Since 2012, they've been protected from deportation under the Deferred Action for Childhood Arrivals Program, or DACA; the idea was that they would ultimately be given a path to citizenship. An estimated 1.3 million immigrants were eligible, and more than 700,000 registered, per DACA records. About half work in hospitality, retail and construction, so it was not surprising that when DACA was launched, Marriott, for one, supported the initiative, with a stated goal "to provide the permanent solution that DACA individuals deserve so they can remain valuable contributors to our society and country."  

In a letter to Senate leaders, who were debating the issue in the last session, the American Hotel and Lodging Association said finding a permanent solution for the DACA beneficiaries is "the most immediate immigration priority."

But in September 2017, President Trump announced his intent to terminate the program, which opponents had criticized as a form of amnesty, even though DACA recipients are required to enroll in higher-education programs (many have high school and college degrees) and must pass law-enforcement checks to ensure they don't have criminal records. The prospect of a massive deportation, as well as the much-publicized plight of Dreamers who had never known a home other than the U.S., sparked a backlash and multiple lawsuits in states around the country. 

Proposed federal legislation known as the Dream Act would have brought closure by lifting the threat of deportation, but it has languished in Congress, and the U.S. Supreme Court is expected to make a ruling on various DACA cases before this summer. While Trump has said he would protect the Dreamers if the program were overturned in court, their futures remain in limbo. 

Other hotel industry officials have taken up this cause. In a letter to Senate leaders, who were debating the issue in the last session, the American Hotel and Lodging Association said finding a permanent solution for the DACA beneficiaries is "the most immediate immigration priority." The group noted that the hotel business is a significant employer of DACA recipients, and deportations would cause a significant disruption to the American workforce and economy.

Restaurant Wars

The U.S. Immigration and Customs Enforcement agency's crackdown on illegal immigration is hitting the food-service industry particularly hard.

Recent actions by the federal government go well beyond the occasional ICE raid to check documents. Last year, eateries around the country lost staff after a wave of "no-match letters" were sent by the Social Security Administration, informing employers if workers' tax-form data didn't match its records, which can signal a lack of legal immigration status. Restaurants faced an unpalatable choice: Fire valued workers who couldn't fix the discrepancy, or ignore the notices and risk criminal charges.

This has happened before. In 2007 the Department of Homeland Security got serious about using no-match letters for immigration enforcement, and the National Restaurant Association and other groups successfully sued to stop the practice, arguing that the rule was discriminatory. The practice remained dormant until last year.

Restaurants are facing the same labor shortage as hotels; they'll need 14 percent more workers by the end of this decade, but the U.S.-born workforce is only expected grow by 10 percent. 

Lest anyone think this is just about dishwashers or other low-wage positions, fully 45 percent of restaurant chefs are foreign born, as are 24 percent of restaurant managers, according to data from the restaurant association.

Alternatives to People

Hotels are easing the problems caused by worker shortages with some creative workarounds. Some have discontinued room service and replaced that function with food-delivery apps like Door Dash. Others rely on self-service check-in and checkout. And they're promoting labor-saving green initiatives, encouraging guests to reuse their sheets and towels, or forgo housekeeping services altogether.

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The hospitality industry has explored using service robots, with spotty results.

The industry has explored using service robots, with spotty results. One notorious example came not long ago at a hotel in Japan. The "Henn – Na" Hotel (which, appropriately enough, means "strange") acquired more than 200 robots and programmed them to perform all manner of chores, from mixing drinks to delivering bags and answering guest questions.

The move backfired when the machines couldn't answer simple queries, or woke up guests in the middle of the night by mistaking sounds like snoring for voice commands. And some of the robot luggage carriers were too slow or malfunctioned, even leaving bags on the street. 

Advances in robot functionality are on their way, but humans can't be replaced just yet. "This is, above all, a hospitality business," says industry consultant Joan Eisenstodt, "and what's a hospitality business without people?"

Mixed Messages and Motives

Protecting Dreamers and keeping the American workforce robust join more earthly concerns in hospitality. "It's no secret that hotels are notoriously low-paying employers for workers on the lower end of the scale, in roles like housekeeping and food service," says Jonathan Howe, senior and founding partner at the Chicago law firm of Howe & Hutton, which specializes in hospitality matters. "Hotels pride themselves on being able to deliver consistent service, but a menial job in hospitality doesn't have the appeal that a higher-paid position might have elsewhere." 

Jonathan T. Howe Esq.
Jonathan T. Howe Esq.

This particularly holds for the resort sector, where demand for workers can fluctuate wildly depending on the time of year. And some employers, knowingly or not, have relied on undocumented workers. "A lot of [companies] have looked the other way when people come in seeking employment," says Howe. 

Employers now are under pressure to use E-Verify, the voluntary federal program for checking the immigration status of new hires. Many are reluctant to do so, however; if they learn that employees have presented false papers, they would be obligated to fire them. 

"The industry needs to make more of a case for why we need immigrants,"  says Eisenstodt. Otherwise, she adds, "We are not going to have the people to prepare the food, to clean the rooms, to do all those essential things." 

Eisenstodt would like hotels to do more to help immigrants advance their careers, beyond training specifically designed for foreign-born employees. Concrete steps might include providing English as a Second Language (ESL) courses and other training programs that would give workers a path to more responsibility and higher-paying jobs.

But that won't help in the long run if immigration continues to decline, notes Eisenstodt. "Our birthrate is down, legal immigration is down. We need to sound the alarm over what would happen to this industry if immigration is halted even further."