In an article published a few years ago here, I explored whether the hospitality industry is truly facing a talent shortage or experiencing a structural opportunity to rethink how talent is developed, retained and deployed. Since then, market conditions have only reinforced that conclusion: Workforce readiness is no longer a secondary operational concern. It is becoming a material variable in hotel investment performance.
Let's explore why.
Workforce readiness as a risk variable
Hospitality employment has rebounded unevenly since the pandemic. Demand has returned.
Labor participation, however, has not fully kept pace. According to 2024 reports from the U.S. Bureau of Labor Statistics, leisure and hospitality employment remains below pre-pandemic levels, even as room supply and development pipelines continue to grow.
What's real for many owners and developers:
● Longer pre-opening hiring cycles
● Delayed ramp-up periods
● Increased overtime and contract labor costs
● Higher early-stage turnover
According to the American Hotel & Lodging Association’s 2024 State of the Industry Report, nearly 70% of hotel operators report ongoing staffing challenges, with frontline and supervisory roles most difficult to fill. These shortages are not limited to urban cores; they are often more pronounced in secondary and tertiary markets where labor pools are thinner and training infrastructure is limited.
From an investment perspective, this shifts workforce availability from an operational concern to a development risk factor that can directly affect underwriting assumptions and asset performance.
We know this. Is tech the way around this?
Technology has changed the labor equation
The hospitality sector has embraced technology at an accelerating pace. Property management systems are more intuitive. Revenue optimization tools are now standard across brands and asset classes. Mobile check-in, in-room technology, even room service robots point to a future of hotels needing robust digital ecosystems.
Such development has not reduced labor dependency, however. It has simply changed the nature of our work.
Here's part of what remains challenging:
Deloitte’s 2024 Hospitality Outlook reports that while more than 70% of hotel operators increased technology spending, fewer than 40% made comparable investments in workforce training. This imbalance creates a gap between system capability and staff readiness (cue the “talent gap” rhetoric).
Research from McKinsey Global Institute reinforces this trend: Automation in service industries tends to reconfigure jobs rather than eliminate them. Employees are required to manage more complex workflows, interpret data and deliver higher-touch service in increasingly digitized environments.
For hotel operators, the result is a paradox: Greater technological sophistication paired with higher human capital requirements (often in an environment where staff is already spread too thin!). Properties that fail to invest in training and skill development often experience lower new tech adoption, higher error rates and diminished returns on technology investments.
But is the onus to upskill talent squarely on the shoulders of hotel developers?
Workforce development as an economic lever
Beyond individual properties, workforce development plays a measurable role in regional economic performance. Research from the Urban Institute and the National League of Cities indicates that regions with coordinated workforce development strategies experience:
● Higher employment stability
● Lower employee churn
● Reduced reliance on public assistance
● Stronger local economic multipliers
This has direct relevance for hotel development, particularly in markets where public incentives, zoning approvals or community benefit agreements are part of the entitlement process. Increasingly, municipalities are evaluating projects not only on projected tax revenue, but also on workforce impact and long-term employment quality.
In this context, workforce development becomes part of the broader economic development equation rather than a back-of-house function. It's an approach that award-winning GM and author Donte Johnson has used, proving that “when we're at our best, we create spaces that uplift neighborhoods, expand opportunity and build pathways for the people who make our cities vibrant.”
As more effort is given to develop frontline workforce, strategies to sustain local talent are equally due.
The strategic role of career coaching
Career coaching, particularly for early-career professionals and individuals transitioning into the industry, is one of the more underutilized tools in hospitality workforce strategy. To gauge this, I conducted a straw poll of more than 50 first-generation professionals working in customer-facing roles in the Washington, D.C., area. The result: 92% had never even considered career coaching. According to the International Coaching Federation, 70% of individuals who receive coaching report measurable improvements in work performance and engagement. Unlike traditional spot-date training programs, coaching extends training to focus on:
● Skill alignment and role clarity
● Performance development
● Career mobility
● Leadership readiness
Gallup research further shows that employees who feel supported in their professional development are significantly more likely to remain with their employer.
For hospitality operators, this has direct financial implications. The Cornell Center for Hospitality Research estimates that turnover costs can range from 30% to 50% of an employee’s annual compensation. Reducing even a fraction of that turnover through structured development and coaching yields measurable returns.
More importantly, coaching supports internal mobility, allowing properties to build supervisory and management talent from within rather than relying solely on external hiring.
This kind of data exploration frames career coaching as a non-negotiable!
Hospitality operations must begin to realize workforce stability as a performance indicator that's interlinked with average daily rate, revenue per available room and occupancy.
Workforce stability as a performance indicator
Properties with stable teams consistently demonstrate:
● Higher guest satisfaction scores
● Stronger brand compliance
● Lower training and onboarding costs
● Greater resilience during market fluctuations
Cornell research has shown a direct correlation between employee turnover and service quality, with negative impacts on guest experience and profitability. In this sense, workforce stability functions as a form of operational insurance.
For investors, this reframes workforce investment as a value-protection strategy rather than a discretionary expense.
Implications for development and investment strategy
As hospitality continues to evolve, workforce readiness must become integrated with asset performance. Markets with strong training pipelines, accessible career pathways and aligned workforce ecosystems are better positioned to support sustainable hotel growth.
For developers and investors, this suggests a shift in due diligence priorities:
● Evaluating labor availability alongside demand drivers
● Assessing training infrastructure during site selection
● Incorporating workforce planning into pre-opening strategy
● Viewing career development as a retention and risk-mitigation tool
The industry’s next phase of growth will not be defined solely by design, brand or location. It will be shaped by how effectively properties develop, retain and elevate the local talent who operate them.
In that sense, workforce readiness is no longer a secondary concern. It is a core component of hospitality investment performance.
Glenda Lee is managing partner of CitiLife Development, parent company of hospitality marketing firm TBT Hospitality and workforce development program #LetsWORK.
This column is part of ISHC Global Insights, a partnership between CoStar News and the International Society of Hospitality Consultants.
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