Hotel industry inches toward stability in labor market after years of strain

The labor outlook in the hotel industry is starting to turn a corner after several years of intense challenges.

As recently as last year, increasing inflation and job strikes across the U.S. placed immense pressure on hotel operators faced with handing out higher wages than ever to a depleted talent pool compared to pre-pandemic levels.

The unemployment rate across the U.S. in general has steadily hovered between 4% and 4.2% for the past year.

However, as 2025 nears its midpoint, hotel operators are expressing optimism in the labor market five months in, with hopes of continued improvements as the year goes on.

Kerry Ranson, president of operations and partner at South Carolina-based Raines Company, said last year it would take, on average, about 22 or 23 days to fill an open position. That number is now closer to about 10 days.

Layoffs from government positions and big companies like Amazon are leading to a larger pool of potential employees, he said.

It's also helping with the dilution of the talent pool.

The average age of hotel job applicants is rising as well. Ranson said over the past 15 months, the average applicant is more than five years older than the previous average. With age comes more experience and maturity, he said.

"Quality of applicants is increasing," Ranson said, noting that today's applicants have more applicable skill sets than they did.

He cited general managers as a good example. When those roles are filled from within the hotel or company, he notices that both the new GM and the backfill hire are generally more qualified than they were in the past.

"From a skill set perspective, the applicants and what we're filling with are head and shoulders above what we saw over the last several years," he said.

This hasn't been everyone's experience, however.

Gabriel Perez, chief operating officer of lodging at The Indigo Road Hospitality Group, said he's found that the quality of applicants for top positions has been lacking or misplaced.

Specifically, he said his company notices applications from candidates with zero hospitality experience applying for area manager roles.

"It's puzzling to me to see the disconnect," he said.

Perez said this deterioration of quality started last fall. The reason for this is "a mixed bag," and there isn't necessarily a concrete answer for this just yet. One theory is uncertainty in the economy driving new applicants to shoot for a higher job with more security, even if they don't meet the qualifications.

The quantity of potential workers is growing, though, he said.

"We're seeing tons of applicants, a great amount of applicants, but so often completely unqualified," he said. "I can see that there's a lot more people looking for jobs. Whether they're qualified or not for those jobs is a whole different thing."

O'Mally Foster, chief people officer at Vision Hospitality Group, said employment has been steady at the company since about midway through 2023.

But he, like Perez, has seen the downside of employees with no hospitality industry experience.

The chaos of restaffing post-pandemic meant accepting employees new to the industry. This has led to situations where employees oversell themselves then try to solve problems on their own once they get the job, Foster said.

"What we are realizing is that there is a gap in experiential knowledge, and people just have not had the experience," Foster said. "And the other side of that is they're trying to fill in some of those experiential gaps with just what they believe."

People skills are one critical vulnerability Foster pointed out, noting that many of the younger people filling entry-level jobs simply lack the requisite interaction skills for a hospitality position.

"Because we had such a weird time in COVID and how people were interacting with one another, some of those people skills are lacking," he said. "Especially with younger individuals ... that is something that we see very, very quickly, if there is a gap in this human connection piece."

On the flip side, as the pool of candidates continues to grow, hotel management companies have been able to be more selective in their hiring process.

"I'm going to be a little more choosy," Foster said. "We've had a couple of jobs that we've posted and we have been much more selective than we would have been in '23."

Looking past some of the lingering headaches, Perez said labor is in a better place now than it was last year.

"I'm hopeful, I'm optimistic," Perez said. "Certainly, it's not as bad as it was a few years ago or a year ago. I'm seeing some leveling on the expectations of the candidates, something more aligned with the reality of what the industry is. I would say near- to long-term, that'll be beneficial."

Toward the end of last year, inflation was one of the biggest pressures on labor in hospitality. It forced hoteliers to increase wages to compete with other industries, squeezing profit margins for workers who in many cases were less qualified than in the past.

Inflation in the U.S. has generally cooled down as of late. April's annual inflation rate of 2.3% was the lowest its been since February 2021, according to U.S. Bureau of Labor Statistics data.

Perez said whatever impact inflation had on labor in the industry, it's already happened. He said it's led to more people being available while also being less selective when it comes to their offerings.

"Inflation has brought down the expectations to a certain level of reality," he said.

This doesn't mean the industry is in the clear, however. Uncertainty around tariffs launched by the United States could pose additional problems, he said.

"That creates uncertainty from us as operators and hoteliers as to what do we do next? How do we deploy what and who do we hire?" he said. "However, even with that scenario, there are tons of roles and positions in the industry that we need to have filled, even if that wasn't the case."

Foster said wage increases have been dependent on the market. Cities such as Destin, Florida; and Franklin, Tennessee, don't have a large labor pool, so Vision has had to push its wages up there to attract workers.

"Where we have those [labor] pools, yes, we've seen where we have to really keep pushing the dollar and pushing the increase in wages because you just don't have the market for it," he said.

In larger markets, such as Nashville and Atlanta, there's been a slight demand for higher wages but not a major increase, he said.

Raines does wage surveys across its markets to compare their numbers with companies such as rental car services, retail stores and grocery stores, Ranson said. He said in the past, they might've been 20% behind those industries when it comes to wages, but that gap is closing.

"What we're seeing is the gap is tighter and in some situations, we're on par," he said. "We've moved our pay scales and our benefit packages. ... We're seeing a steadying that's starting to happen out there."

Since U.S. President Donald Trump took office in January, cracking down on illegal immigration has been a major focus area for his administration. The administration set the goal of deporting 1 million immigrants annually, which would more than triple the previous record.

Immigration and Customs Enforcement, colloquially known as ICE, has been conducting raids across the United States to detain immigrants without the proper documentation.

On Friday, the Supreme Court allowed the Trump administration to revoke the temporary legal status of more than 500,000 immigrants from Cuba, Haiti, Nicaragua and Venezuela who received permission to temporarily live and work in the U.S. A federal district court had initially placed a hold on this revocation while those affected contested the executive order.

According to 2023 data from the U.S. Census Bureau, nearly 3 million immigrants worked in the leisure and hospitality industry, representing 21% of the industry's workforce.

Foster said he is seeing the effects of this. He referenced an employee who was a step away from getting citizenship only to be told that it would be put on pause.

"There is an increased amount of fear among people because they just don't know," he said. "They're bombarded with information left and right, and they don't know."

He said Vision is very supportive of all of its employees and above all wants to be a comforting presence in whatever way possible. Vision has been educating its managers on the laws and practices in place so they can better handle a situation if it's thrown their way.

"We don't want our managers doing anything that could put anybody in harm's way," he said. "We don't want managers doing anything that they feel is right that could put them in harm's way. So, we've done a lot of education as well to say, 'Hey, let us help you understand what we know from what's happening with the law, so that you can be educated to communicate to our associates, and that you all can have very open dialogue."

Raines hasn't run into any threats when it comes to its employees, but Ranson said the company has had conversations about how to be prepared if it were to happen.

"It's been at the forefront for us, how we would handle it," he said. "We've had a lot of conversations with HR and in the field" but haven't experienced it yet.

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