Hiring But Handcuffed: Hotel industry scours limited employment pool

Tim O'Reilly: Hotels are poaching staff from competing properties.

Gordon Elliott: "COVID has winners and it has losers — and it creates demand."

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Hotels across the country and in Springfield have been hit hard by COVID-19 – arguably unlike any other industry. The American Hotel & Lodging Association estimates the leisure and hospitality industry lost over 3 million jobs during the pandemic and the government restrictions and travel bans have wiped out 10 years of job growth.

Now, however, as the spring travel season continues and COVID rates diminish, the hotel industry in Springfield is looking to restock its staffing levels.

“That’s a welcome indicator that recovery is underway in the hospitality industry that was devastated after travel came to a near standstill in 2020,” said Tracy Kimberlin, president and CEO of the Springfield Convention & Visitors Bureau Inc., in a news release last month.

According to CVB data, the Springfield hotel industry lost 40% of its workforce, as it went from 22,100 employees in March 2020 to 13,100 workers the next month. The bureau’s latest estimates indicate the workforce is back up to 19,700 employed.

Hotel operators say many employees are having to cover multiple positions in order to keep hotel rooms open for travelers.

“We’ve really overstressed our entire workforce,” said Tim O’Reilly, CEO and managing partner of O’Reilly Hospitality Management LLC, which owns 38 properties in 10 states. “And I’m hearing that in every industry. We have some really good people who are having to work incredible numbers of hours. It is an unsustainable situation. We are doing everything possible to hire and recruit people.”

Staffing reload
Gordon Elliott, CEO of regional hotel operator Elliott Lodging Ltd., said the need for workers is a primary challenge for the industry this year.

Elliott and his team are working to rebound from a 35% revenue drop across Elliott Lodging’s 22 southwest Missouri hotels.

“It nosedived right after the lockdowns went into effect,” he said.

Elliott Lodging found stability, he said, from its properties near the highway traffic on Interstate 44, people getting away to Branson and trucking industry workers.

Now, Elliott wants to hire, but he identified one major obstacle: the extra $300 in federally funded unemployment benefits in Missouri.

Originally slated to continue until September, Gov. Mike Parson this month decided to cut off the additional payments on June 12, according to the governor’s office.

Parson, as well as officials with the Missouri Chamber of Commerce and Industry, have connected the federal program benefits to labor shortages in the state.

“They can make more on unemployment than they can make working,” said Earl Steinert, president of EAS Investment Enterprises Inc., which owns the three Hampton Inn and Suites and a Home2 Suites in Springfield. “That’s the biggest nightmare now.”

Steinert said the extra unemployment assistance was disincentivizing people from getting back to work.

He’s responded by adding roughly $1.25 to hourly wages at his properties – despite his hotel room rates being lower than they were two years ago and his occupancy rates averaging a subpar 57%, he said.

“The business is coming back,” Steinert said, noting his job vacancies are down to a handful.

O’Reilly at OHM is reluctant to blame the extra unemployment payments for labor issues.

“I don’t think anyone knows exactly if the $300 federal unemployment has made people not want to work or not come to work or not seek employment,” he said. “You know, obviously, it’s a complicated problem with child care and how long people have been out of the workforce.”

O’Reilly said one effect of the limited job pool is hotels going head-to-head for staff.

“It’s turned very competitive,” O’Reilly said, noting he’s seen people leave for jobs with just a small increase in pay elsewhere. “There are people brazenly walking into some of our facilities and trying to recruit out of them. It’s not always honorable.”

O’Reilly said OHM has several hundred open positions in Springfield, including restaurants and other leisure and hospitality businesses.

The firm has been offering sign-on and referral bonuses to attract workers, as well as increasing paid time off for part-time staff. He declined to disclose the bonus amounts, citing variances by state.

Congressional action
On the national level, the Save Hotel Jobs Act has been proposed to get hotel workers back to work and jump-start the tourism economy, according to the AHLA.

Proponents of the bill that seeks $20 billion in funding point to two key provisions: grants to cover payroll and benefits expenses for three months – in exchange for the hotel operators giving their laid-off workers the right to be recalled; and “worker-friendly” tax credits to cover 50% of costs associated with a series of safety measures – such as personal protective equipment, technology designed to reduce the impact of the pandemic and increased testing for employees.

AHLA and the Unite Here hospitality workers union in North America have given their support for the act, as AHLA officials say hotels are the only major hospitality and leisure segment yet to receive any direct aid.

The AHLA reports as of April 28 the act had been introduced to Congress.

Bullish on bookings
However, Springfield-area hoteliers, while not outright denying that the bill would have any efficacy, do not seem to be banking on its arrival.

“Hotels don’t need any assistance currently,” Steinert said.

Still, Steinert suggested full recovery would take some time, noting his most active hotel is at roughly 80% capacity, but the other three are at 50% occupancy. A factor is that salespeople are not traveling as much.

“Our bread and butter is salesmen, and a lot of the salesmen are still not traveling. And some of them may never travel,” he said. “They may have got virtual stuff now. Meetings aren’t going on like they normally do.”

Elliott expressed a cautious yet optimistic outlook.

“My expectations are that Springfield will have a pretty fair year,” he said, pointing to second quarter revenue up 10% from the same period in 2019.

“COVID has winners and it has losers,” said Elliott, “and it creates demand.”