Though the coronavirus outbreak hammered the U.S. economy on a whole, the hospitality industry perhaps got the worst of it. Not only did hotel occupancy rates plunge to record-low levels in 2020, but countless restaurants saw their revenue take a hit as capacity limits forced them to turn away guests.
But now, things are looking up to some degree. With much of the U.S. population being vaccinated and pandemic-related restrictions largely being lifted, hotels and restaurants have a prime opportunity to recover. In fact, travel has already picked up in recent weeks, while diners are no doubt eager to return to restaurants after a year of being limited to delivery and takeout.
There's just one problem -- restaurants and hotels are grappling with a major labor shortage. And if the issue doesn't resolve itself soon, it could really hinder the hospitality industry's recovery.
Workers are going elsewhere
Hotels and restaurants need workers to stay afloat. But right now, workers aren't interested.
In a recent Joblist survey of 13,000 job seekers, more than half of U.S. hospitality workers said they won't be going back to their old jobs, and more than one-third aren't even considering working in the industry again. The reasons? For some, it's a matter of wanting higher pay. For others, it boils down to wanting a less physically demanding job and improved benefits.
When we think about what working in the hospitality industry is like, it's easy to see what it's a hard sell during a pandemic. Now that mask mandates have been lifted, working at restaurants and hotels poses even more of a danger to employees. And given that the industry is notorious for stingy pay, it's easy to see why so many workers would rather explore their options elsewhere.
In fact, according to the U.S. Labor Department, hospitality job openings reached a record high in May, which is a clear indication that restaurants and hotels are struggling to hire. And while boosted unemployment benefits, which are set to remain in place through early September in parts of the country, may be playing a role in that, it's also clear that hospitality workers have simply had enough and are eager to explore options outside the industry.
Of course, the longer this attitude prevails, the more it's apt to hurt real estate investors with hospitality REITs (real estate investment trusts) in their portfolios. Hotel REITs have taken a serious hit over the past year, and the only way the industry can recover is to enjoy a surge in bookings. But it takes adequate staff to accommodate that influx of guests.
Similarly, if restaurants start closing in the absence of workers, it could leave commercial landlords with vacancies to fill. Plus, shuttered businesses can hurt local property values, so even if those landlords can withstand the financial hit of losing out on rental income, other investors could still suffer.
Now the good news is that restaurant and hotel operators can take steps to address their ongoing labor shortage -- namely, by raising wages and offering other incentives to lure workers back in. But unless that happens on a broad level, the industry could be in for a very long road as it tries to stage a much-needed recovery.