The demand outlook for the U.S. hotel industry this year doesn't exactly look too hot right now, and I'm hoping as hotel company leaders figure out their new plans, they remember their commitments made to employees.
I would be remiss if I didn't say that of course no one knows exactly what's going to happen. But that doesn't mean we can't try to look ahead, basing our predictions on what has happened before and what is happening right now.
But we know, right now, that every publicly traded hotel brand company and real estate investment trust has lowered their revenue per available room outlook for the year. We know airlines has suspended their outlook as well.
Look to other earnings calls and reports from companies that directly serve consumers. I imagine you'll see similar worries about consumer spending this year.
Is this a blip? Who knows, but what's going right now is enough to cut into the confidence many company executives felt just months ago.
Several weeks ago, I wrote an opinion piece imploring hotel companies not to immediately cut employees if things take a turn for the worse. Since things have not yet turned around, I would follow that up by saying they should also not try to take full advantage of a reverse in the labor market.
Companies across the U.S. faced higher personnel costs during the recovery from pandemic as businesses reopened because they had open positions and no one to fill them, so they offered higher wages. You could argue employees took advantage of the situation, and perhaps that is true to some degree, but it's important to keep in mind that productivity in the U.S. grew leaps and bounds over the last several decades while wages didn't.
The federal minimum wage is still, in 2025, $7.25 an hour. That wage went into effect in July 2009, nearly 16 years ago. The National Council of State Legislatures reports that there are 34 states, territories and districts that have minimum wages above the federal rate. That means all the others are at $7.25 an hour because they either have no minimum wage on their own or have theirs set lower.
Now, to be a competitive employer, many companies have offered wages higher than the federal minimum or their own state's minimum wage.
That absolutely puts more pressure on profit margins, especially when these wage increases happened during a relatively short period of time.
But I remember back when I graduated from college in the spring of 2008. Perfect time to look for a job. I lucked out with a job at a local paper, but I know many others in my graduating class struggled. A lot of people, both those seeking to start their careers as well as those years into their jobs but recently laid off, struggled.
With so many applicants for each job opening, companies could be extra picky with their hiring process. Sure, you want to be careful with who you hire, but there were so many application and interview horror stories. The hoops people had to jump through just to make it to the next round, only to end up being ghosted.
Starting wages back then also not great. Yes, it was a recession, but some companies definitely took advantage of the narrative to hold wages down.
So, you could argue it goes back and forth to some degree. What about trying to break this cycle and create some degree of stability?
When things get bad, companies should do all they can to hold on to their workers and offer as much of the wages and benefits as they can. Continue to try to help employees grow their careers. Keep up with the training. Keep up with the support. Show them that even when times are tough, employees and the work they do are valued.
Why did the hotel industry have such a hard time hiring hotel staff during the pandemic recovery, even when offering higher wages? It was, at least in part, because they didn't feel valued. So many of them were let go or furloughed immediately. It's taken years of hiring efforts, improved training and promote-from-within policies to demonstrate the value of hospitality work, and there are still open jobs.
According to the American Hotel & Lodging Association's 2025 State of the Industry Report, it took four years for the industry to hire back more than 467,000 direct employees out of the more than 680,000 employees "lost" due to the pandemic in one year from 2019 to 2020. I think lost is doing a lot of work in that sentence, by the way. We know what happened to them.
A December survey by AHLA found 64.9% of respondents still dealt with staffing challenges.
Show them you value them, and there's a higher chance they'll show it back. Be loyal to them, and they'll be loyal to you. It's a bit of an oversimplification, but it's worth a shot.
I've heard countless hotel execs say they want to be an employer of choice. That's an easy thing to say, but it's a difficult thing to do, especially when the demand outlook isn't so sunny. Hopefully, it won't come to that.
You can reach me at bwroten@hotelnewsnow.com.
The opinions expressed in this column do not necessarily reflect the opinions of CoStar News or CoStar Group and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to contact an editor with any questions or concern.