The coronavirus pandemic did a number on the hospitality industry, and hotel REITs (real estate investment trusts) took a massive hit as occupancy rates hit record lows. A lack of tourists hit Hawaii particularly hard. In the absence of visitors, Hawaii's once-low unemployment rate of under 4% rose to 15% during the pandemic.
But now, things are changing. With travel restrictions lifted and vaccines free flowing, visitors are flocking to Hawaii in droves. There's just one problem -- there aren't enough hospitality workers to welcome them back.
Tourism numbers are up
During the week of June 1-8, Hawaii saw 2,000 more arrivals than it did during the same week in 2019. And high demand is driving hotel prices up, with some rooms at luxury resorts being able to command close to $3,000 a night.
This uptick in tourism is, in theory, great news for Hawaii's hotels, restaurants, and entertainment providers -- not to mention real estate investors with Hawaii vacation homes in their portfolios. But a lack of workers is causing a crunch the state hasn't experienced before.
Now hotel rooms are difficult to come by, restaurants need to be booked weeks ahead of arrivals, surf lessons and other popular outdoor activities are sold out for much of the summer, and car rentals are so sparse that tourists are resorting to renting U-Hauls just to get around town. And while Hawaii needs revenue from tourism, it also needs to address its labor shortage quickly to recover from the pandemic in full.
But enticing workers is easier said than done. There are an estimated 40,000 open hotel and restaurant jobs that need to be filled, according to the State of Hawaii Workforce Development Division, but many prospective employees are staying away for one big reason: boosted unemployment.
While many states have pulled the plug on the $300 weekly unemployment boost March's American Rescue Plan put into place through early September, Hawaii has not. As such, many hospitality workers who are out of the labor force may, at present, be earning more money via their unemployment benefits than they would at an actual job.
Furthermore, it's estimated that 16,000 workers have disappeared from Hawaii’s labor force since the pandemic began, according to the Economic Research Organization at the University of Hawaii. And because the hospitality industry was so brutally battered, many laid-off workers have, over the past year, opted to leave the industry and find work elsewhere.
A tricky situation
Hawaii needs tourism to thrive, and an influx of visitors will be a good thing for the state once its labor force is robust enough to keep up with demand. But right now, managing hoards of tourists is proving to be tricky for hotels, restaurants, and local businesses alike. In fact, businesses throughout the state are so desperate for workers that they’re offering job incentives like hiring bonuses for people to come on board.
Once boosted unemployment benefits run out in early September, more workers may seek out hospitality jobs. But whether Hawaii can manage its summertime tourist boom in the interim is yet to be determined.