Hoteliers Name Supply and Cost of Labor Their Top Challenges

Group demand was named as both a challenge and a strength by hotel and travel professionals in STR's new Hospitality Industry Sentiment survey.

Hotelier Outlook Check In
Photo Credit: M.Dörr & M.Frommherz for Adobe Stock

The availability and high cost of labor were the top challenges named by hotel and travel professionals in the new Hospitality Industry Sentiment survey from lodging-data provider STR. The new study is based on data from 200 respondents from around the globe, who were surveyed Nov. 29 to Dec. 11, 2022.

While labor challenges topped concerns around the world, outside North America, hospitality professionals named energy/utility costs as their number-two concern; that was much less frequently named a concern by North American respondents. Labor costs are somewhat more of a concern in North America, where that is the second-biggest challenge. Concerns regarding consumer confidence and behavior in the coming year are being felt by hoteliers around the globe.

STR Hotel Sentiment Challenges
Photo Credit: STR

Perhaps not surprisingly, group demand can be either a challenge or a strength for hotel professionals. While 22 percent of respondents in North America (and 23 percent elsewhere) named limited group-travel demand as a challenge, more than one in four of all respondents said strong group demand is a strength right now — suggesting a relatively uneven recovery in group business across geography and hotel types.

From the planner perspective, despite the labor challenges faced, hotelier efforts to improve staffing have paid off: The percentage of planners who find staff levels lacking dropped by a percentage point in the most recent Northstar Meetings Group/Cvent Meetings Industry PULSE Survey. However, planners are increasingly concerned about higher-than-expected hotel rates and F&B costs — both of which likely reflect the higher cost of labor on the hotel side.

Hoteliers, meanwhile, pointed to strong leisure demand, increased guest spending and blended business/leisure opportunities as the greatest strengths currently driving their business.

STR Hotel Sentiment Strengths
Photo Credit: STR

"Over a third of respondents noted 'bleisure' travel as a positive dynamic to their business," said STR research analyst Brannan Doyle. "Other notable boosts included the chance to perform property renovations, lifts in hotel rooms rates and the possibility of travel price inflation easing in 2023."

Doyle added that a third of respondents expect to meet or surpass 2019 hotel occupancy levels in the first quarter of this year, while 46 percent anticipate doing so by the end of 2023.