written by Kevin Banas
CHICAGO – As a food service designer, I usually caution friends and clients in the hospitality industry to be wary doomsayers and fatalists. Turbulent and difficult times call for resignation in the face of difficulty, planning and contingency in the face of the unknown, and sensible optimism in the face of dire portents. Uncertainty may be the defining characteristic of these last two years, but as I have pointed out elsewhere: rising spending in travel and hospitality is a clear indication of consumers’ desire to vacation again. If we look at some of the scariest boogeymen haunting the economy today closely enough, I think we will see that underneath it all there is good reason for hotels in particular to be optimistic about their future.
The Bad: Coronavirus
The surge in cases caused by the emergence of the Omicron variant of the Coronavirus has been extremely unfortunate. In many places it has stifled economic recovery as people take time to boost their vaccinations, all while dealing with uncertainty over their children’s return to schools, their work from home versus the office, and shortages on the grocery shelves. Altogether a very frightening mess that delays our return to normalcy.
The Good News
Although we are not out of the woods yet, as of this writing rates of Omicron cases are on their second week of decline in major metropolitan areas such as Chicago and New York. Dr. Anthony Fauci reports that transmission data suggests the variant will peak mid-February, leaving hope for the hospitality industry that we can be through the worst of it before reaching what would traditionally be the peak travel season in the US. Responsible hotel operators must still exercise stringent safety precautions, such as contactless payments, hand sanitizer stations, masking requirements, and diligent housekeeping, to foster a sense of safety for their guests.
The Bad: Inflation and Supply Chain Insecurity
The resurgent Coronavirus has impacted labor supply more dramatically than many Americans perceive. In China, potential outbreaks have resulted in draconian lockdowns of entire neighborhoods and cities, while closer to home our just-in-time supply and inventory and delivery methods have made us surprisingly vulnerable to even small labor disruptions. Somebody must unload those shipping containers, stock those shelves, and weld that steel. Shortages in products have been so widespread as to contribute significantly to inflation, all of which makes it just a little bit more expensive to run a hotel every day.
More Good News
Unfortunately, when it comes to untangling the supply chain, there isn’t much a hotel operator can do to help apart from waiting patiently for it to work itself out. The good news is that it will, albeit at different times for different industries. Broadly speaking, a Washington University report from November predicts that much of the logistical and scarcity issues will resolve by the middle of this year, though heavy manufacturing might not see a return to normal until 2023. Resolving product scarcity will be the best step towards stemming further inflation, but as we await that, the Federal Reserve is poised to step in with interest rate adjustments meant to fight back against further weakening of the dollar.
The Bad: Labor Shortages
We are now in our second year of a tightening labor market, with mounting anecdotal evidence of hiring difficulties, rising wages, and public dissatisfaction from workers. Uncertainty abounds here as much as elsewhere during the pandemic: it is difficult to derive meaning from statistics when unemployment remains high but so too do available jobs. The hospitality industry, already characterized by high rates of turnover in employment, has been hit by this notably hard. Businesses have had to cut hours, while chain establishments have seen unrest and, in some cases, their very first successful unionization pushes. Between the inherent risk of working in a customer-facing position at this time, the increased demands placed upon them, and in many places, the low wages; one cannot blame hospitality workers from asking if their jobs are worth the current risk.
The Good News
The good news here is that when it comes to competing for and attracting new employees, the hotel industry has a number of strengths others don’t. Hotels have large guest facilities that allow for proper social distancing. Hotels historically offer wages that are better than those found in many other hospitality establishments such as quick service restaurants. While some businesses are now dealing with their very first branches successfully unionizing, many national hotel chains are already union establishments, well accustomed to the challenges (and I would argue, benefits) of collective bargaining. It is likely in our current environment that hotel operators will need to offer more to attract top tier applicants, but they should also remember to aggressively market the benefits of a career in the hotel industry to potential employees.
None of the challenges we are collectively facing are insurmountable, and this is what gives me cause for optimism. Travel and leisure have always been responsive to the economy, but as tides roll in and out, booms boom and then bust, we soldier on. There is not only room to continue our recovery even as we face these challenges, but opportunity to grow, too.
Kevin Banas is project manager, CINI • LITTLE INTERNATIONAL, INC., Chicago.