woman with luggage checking in to hotel

Employment and the Next Lodging Industry Downturn

Speculation continues to swirl around the lodging industry regarding the likelihood of a slowdown beginning as early as 2020. Fueled by panels at industry conferences and commentary in the trade press, questions remain as to how widespread and long lasting such a downturn might be.

Given the industry is essentially cyclical, an eventual downturn appears to be more or less inevitable, although the next contraction will follow an unusually extended period of growth and profitability.

Complicating the industry situation is the strength of the national — and even global — economy, along with consumer confidence, employment data and the impact of ongoing trade wars, all in light of the 2020 U.S. presidential election.

A recurring theme at the Hotel Data Conference sponsored by STR this summer had to do with employee recruitment and retention in light of a downturn. While it’s true during periods of expansion as well as contraction, the famous dictum attributed to J.W. Marriott Jr. is especially true during downturns: “If you take care of your associates, they’ll take care of your guests.”

Well-looked-after guests result in higher guest satisfaction scores and more positive reviews on social media, which typically translate into more repeat bookings, increased trial usage due to positive word of mouth, higher occupancy and greater profits.

Consider the challenge of finding and hiring people with strong interpersonal skills. The most promising approach is to seek applicants who consider entry-level hotel jobs to be a stepping stone to a career in hospitality.

Considering that international travelers are likely to remain a reliable guest segment in many markets, downturn or not, it makes sense for hotels to pursue multicultural candidates who can help communicate with guests in their languages of choice.

Providing training is essential to retaining motivated employees because it helps satisfy their desire to pursue a career path. Cross-training is a good option because it not only satisfies the employee expectations but expands their ability to handle new and different tasks on property.

Putting Wellness Into Practice

When the International Spa Association released its annual growth report recently, the U.S. spa industry numbers were encouraging, with revenue up nearly 5%, the number of spas up 1.8% to 22,160, spa visits up 1.6% to 190 million and employment also up 1.6% to 378,000.

Given such continuing growth, it’s clear that spas, fitness facilities and the overall practice of wellness have become increasingly important contributors to the success, not only of the spa segment, but to the lodging industry as a whole, given that so many spas are located within hotels and resorts.

Granted, full-service spas are most likely to be found at luxury and upper upscale hotels and resorts, where, if well managed, they can attract a steady stream of repeat guests and prove highly profitable.

But even midpriced and limited-service hotels can benefit from adopting a comprehensive approach to wellness, applying it to both guests and employees. It doesn’t take much space to add a treatment room to an existing fitness center or swimming pool area where freelance therapists, working as independent contractors, could administer massages.

Short of adding a spa treatment room to the hotel, front desk staff should be ready to tell guests about nearby off-site spas, jogging trails walking paths and other fitness-oriented facilities. Meanwhile, management should ensure the hotel fitness center, which many guests use religiously, is maintained in excellent condition.

For franchised hotels, individual owners can go beyond minimum brand requirements for fitness facilities when it makes sense based on location and return on investment.

Food is a big component of the wellness equation. Higher-end hotels that specialize in wellness typically offer specialty menus that offer a wide selection of low-fat, low-sugar and gluten-free choices made with fresh, organic, non-GMO ingredients.

Similarly, limited and select-service brands that include complimentary breakfast can go “above and beyond” by adding healthy and nutritious options such smoothies made with all-natural, fresh ingredients to brand minimum requirements that typically include sugary cereals, white bread for toast and pastries.

For wellness strategies to succeed, hotels must involve their employees. In this period of low unemployment when i it’s increasingly harder to recruit and retain qualified employees, hotels can make themselves more attractive workplaces by promoting a healthy lifestyle and overall sense of wellness for the staff.

Too few hotels offer break rooms where associates can gather to find some peace and quiet and recharge their batteries. Even those hotels that do provide break rooms typically relinquish their worst space: a cramped, dark and windowless room. The ideal space would be bright, open and airy with as much natural light as possible. A quiet area would be reserved for associates who wish to practice their favorite relaxation techniques.

Of course, if employees don’t receive breaks at all, there isn’t much need for a break room. But in current environment, hotels often find themselves short-staffed, especially during peak times, and associates are asked to forego their much-needed breaks all together. In an ideal situation, the hotel would offer wellness, yoga and tai chi classes between shifts.

At the end of the day, the more nurturing the work environment, the more likely associates will be to not only remain on the job but go that “extra mile” and be their most productive.

Hilton Garden Inn New York Times Square South exterior at night

Why Branded Hotels?

An argument can be made for both independent and branded hotels. Issues including location, price point, target demographics and competitive set all figure into the decision that owners and operators must make when building or acquiring a property.

I witnessed a very persuasive argument for branded hotels during the annual NYU International Hospitality Industry Investment Conference in New York earlier this summer.

The lodging industry collectively took the opportunity to celebrate Hilton Worldwide during the conference in honor of its 100th anniversary.

One hundred years is a significant milestone for a company in any industry. Over a century, the name Hilton has become synonymous with hotels in the public’s mind. Hilton not only is one of the world’s most well-known brands, more important, consumers have a largely positive impression of the company.

Eight years a celebration of similar import will be held when Marriott International celebrates its 100th birthday.

Longevity for Hilton and Marriott has translated into success, both with consumers as well as with hotel owners and developers, the latter of whom literally pay to ride the coattails of these companies’ sterling reputations. The reputation also opens the doors and wallets of banks and other funding sources that provide franchisees with the capital they need.

Strong name recognition has facilitated the international expansion of well-known U.S. hotel brands. U.S.-based travelers, for example, tend to feel more comfortable when booking a recognized hotel brand name when booking accommodations in far-off destinations.

More recently, the lodging industry has gone through a period of tremendous brand expansion, the strategy being to create dozens of new brands to target various travelers’ needs and demographic preferences.

To help ensure the strategy’s success, the companies did not risk the likelihood that some potential consumers would equate the hotel name with its franchisor. So the brands added secondary identification to each hotel that shares the company name. Instead of Tru or AC Hotels, their franchisors dub them Tru by Hilton and AC Hotels by Marriott.

To be fair, this kind of sub-branding has gone on for a while (think Homewood Suites by Hilton or Courtyard by Marriott), but its use with new brands takes the strategy to a new level. Consumers, after all, may not have any idea of Tru or AC’s specific brand promise, but at the end of the day it may not matter; that’s how much they trust the parent company.

lineup of hotel employees

Confronting the Labor Shortage

When Jonathan Tisch, conference chair of the 41st annual NYU International Hospitality Industry Investment Conference, opened the event last month in New York, he wasted no time in addressing a core issue currently facing the lodging industry: dealing with the country’s current entry-level labor shortage or as he put it, “keeping our talent pipeline full.”

While politicians celebrate reports that this spring’s national unemployment rate has dipped to a 50-year low of 3.6 percent, the dwindling labor pool means hotel general managers are struggling to fill openings across the board.

Agriculture, retail and construction, among the others, also are struggling. Closely tied to recruitment is retention: for every associate who stays on the job and thrives — seeing their job lead to an eventual career path — there is one less vacant position to fill.

As it happens, a number of widely known hotel company CEOs over the years got their start in the industry, working in entry-level positions such as dishwasher, bellman and night auditor.

In his remarks, Tisch offered a number of strategies for coping with the challenging situation. Two stood out: First, he urged hoteliers to make diversity and inclusion is a core goal. If for no other reason, he said they should make sure their teams are as diverse and inclusive as their guests.

There’s another good reason for hoteliers to promote diversity. We’re welcoming more and more international guests. It, therefore, makes good business that hotels offer multilingual staff.

For those who say automation and robotics is the answer to low unemployment, I say that’s wishful thinking.  At its core, hospitality has been and is likely to remain all about the human touch.

Exterior of the Jacob K. Javits Convention Center

The Convention Center Connection

The ongoing $1.5 billion expansion of New York’s Jacob K. Javits Convention Center is a reminder of just how connected meeting facilities are to the health of the city’s hotel industry, which provides accommodations for the thousands of attendees, sponsors and support staff, frequently for multiple-night stays.

The Javits project will add 1.2 million more square feet of exhibition space, bringing the venue total to 3.3 million square feet. The work includes construction of a 58,000-square-foot ballroom, which the center claims will be the largest on the East Coast.

The “convention-center connection” benefits hotels large and small, from the 500-plus-room “big box” full-service convention hotels to much smaller limited- and select-service hotels. The latter can benefit from convention business, too, if managed effectively.

Large citywide conferences and events are the lifeblood of convention centers. Accordingly, local convention and visitor bureaus typically work on behalf of their client hotels by assembling “room blocks” to house attendees. Hotels are invited to participate, and most wisely agree.

Considering that the lead time for a big conference can be two or three years, participating in the room block gives a hotel a base of business on the books for a fixed number of nights far in the future. In industry parlance, these bookings represent “found business”  or, more to the point, “money in the bank.”

While many who attend conferences will opt to stay at full-service convention hotels for the convenience of being able to order room service or dine inside the building, others will be happy to book a limited- or select-service hotel if only they’re traveling on a budget because such hotels are priced substantially lower than their full-service cousins.

Conferences present hotels with opportunities to attract additional bookings. Given the appeal of a destination like New York, Chicago, Miami or San Francisco, some attendees may wish to arrive a few nights early or stay a few nights afterward, possibly with their significant other. If offered an attractive “pre-con” and “post-con” rate, they’re likely in many cases to book a limited- or select-service hotel, since that part of their stay will be on their own dime.