The hotel industry is unlikely to fully recover from the COVID-19 pandemic-caused labor shortage anytime soon as it battles with retailers, restaurants and others for workers, while also dealing with a bumpy demand recovery.
About 500,000 direct hotel operations jobs lost during the pandemic in the U.S. will not have returned by the end of the year, according to a new study from the American Hotel & Lodging Association (AHLA). The U.S. hotel industry is expected to directly employ 1.86 million people by year-end, compared to 2.3 million prior to the pandemic in 2019.
The AHLA doesn't project the industry to return to pre-pandemic staffing levels until at least 2023.
Marriott CEO Anthony Capuano told Yahoo Finance Live his company has been dealing with labor shortage issues just like peers.
"Labor in markets where demand is accelerating rapidly is a bit of a challenge for us. So if you look at Florida, Texas, Arizona and California the good news is there is a lot of leisure demand in those markets, but we are competing with labor. We are competing with our traditional hotel competitors and there are some industries that have thrived during the pandemic and they need more workers," Capuano explained.
Capuano said the company has had to raise wages to get the workers it needs to service returning travelers.
A component of the slow pace of the hotel jobs recovery also reflects operators looking to preserve profits amid a new normal state of revenue and occupancy.
In its study, the AHLA pegged U.S. hotel occupancy to hit 55.9% this year, down a whopping 10 percentage points compared to 2019. Occupancy rates are seen recovering slightly to 61.7% in 2022.
"While some full-service hotels begin breaking even at 50% occupancy, this does not account for mortgage debt service costs, leaving most hotels still well below their break-even point," points out the AHLA.
Hotel revenues also remain under pressure. U.S. room revenue is forecast to hit $125.3 billion this year, down $44 billion from pre-pandemic levels. In 2020, U.S. hotel room revenue crashed 50% to $85.5 billion amid COVID-19 travel restrictions.
The concern on the outlook for hotels is further reflected in the stock prices of the key players. Shares of Marriott, Hilton, Choice Hotels and Host Hotels have all lagged the S&P 500 this year.