A new crisis is brewing for the accommodations industry, as the travel economy emerges out of the ashes of 2020.
The big COVID aftershock to hospitality will be a severe staffing shortage characterized by the impossible nightmare of backfilling the staff lost during the pandemic.
“Filling higher-end positions is easier. Finding the operations staff to run our properties is becoming impossible. The economics no longer work.” Explained one of our partners in Orlando, Florida.
The situation was already bad before COVID. Global hotel chains were making public outcries at industry conferences to ‘do something’ about the talent bottleneck impacting the industry.
COVID has exacerbated the situation to potentially untenable levels. In the U.S., the hospitality industry lost thirty percent of its workforce in 2020. Workers have either reskilled and have moved on, or hesitate to go back for a number of reasons.
Chief among them are the massive investments on the part of the government to prop up the economy with stimulus checks and extended unemployment benefits for those that had previously worked for heavily impacted industries.
Accommodations operators clearly need to make the economics work in order to survive.
COVID created an unprecedented demand crunch. The Post-COVID era will be characterized by a supply crunch in labor and delivering on the type of product and experience that guests have grown to expect out of a hotel or rental.
The two big cost variables when it comes to staffing are location and property type:
Location – Highly seasonal tourism markets (e.g. Orlando, Florida) are particularly vulnerable to this Summer’s pending staffing crunch. Labor is in shortest supply when demand comes all at once.
In Orlando, the challenge extends to the big theme parks, namely Disney. “Even Disney, the local employer of choice, is unable to find the staff it needs”, explained our partner.
Property Type – Hotels have common areas, front desks, and restaurants. Short-term rentals and vacation homes have less staffing overhead (no front desk or restaurants).
Here come the robots?
A 2019 study (published in March) conducted by the University of Houston predicted that by 2030, about 25 percent of the routine tasks [in the hospitality industry] will be conducted by robots.
Think robotic housekeepers, porters and baggage handlers, concierges, security guards, line cooks, room service, bartenders, waiters, etc.
However, the researchers of this study could not have anticipated the impact COVID would have on hotel supply and demand. Three potential scenarios are emerging as a result of COVID:
1- a) the share of hospitality jobs that will eventually go to robots could be higher than 25 percent b) the shift to robotics could come faster than anticipated and c) there will simply be fewer hotels – partly as a result of higher staffing costs.
The big challenge is cost and investments. COVID has left hospitality operators in tatters. Negative to thin operating margins leave little to zero budget for robotics and automation.
As a result, we anticipate that more operators will continue to falter, even as travel demand returns.
Disciplined, well capitalized, and institutionally connected investors will have the means to survive the big staffing crunch and reinvent the hospitality experience.
Hotels vs. alternative accommodations
Hotels and home & apartment-style rentals will diverge even further on customer experience, as robotics comes front and center in hospitality.
Hotels have the imperative and means to automate operations. Building and room design e.g. stacked floors and standardized rooms in a hotel can allow for some truly remarkable applications of robotics in a hotel setting.
Guest experience in alternative accommodations will likely stay similar to what it has always been – a low-touch, intimate experience for the guest. Vacation homes and short-term rentals also have automation challenges due to the decentralized nature of the product.
Each vacation home property is unique. There are also physical and geographic obstacles for robots in a distributed configuration, with units scattered on different floors and locations.
What can will inevitably be automated or outsourced – particularly for those operating in tight labor markets.
Perhaps the bigger trend in automation and staffing in hospitality is happening on the back end e.g. accounting, marketing, and customer experience outsourcing.
Operators are doing what they can to stay agile amid uncertainty.
What happens to hospitality on the front end will depend heavily on labor market dynamics.
Extenteam is the #1 trusted outsourcer for property management professionals operating short-term rentals, vacation homes, multifamily communities, and boutique hotel properties. Our dedicated remote agents work exclusively for you to supercharge your guest services, reservations, leasing, digital marketing, accounting, and other critical support functions.
Contact us to schedule a free consultation.