By Sean Grundy
If the White Lotus taught us anything, it’s that giving guests a premium experience comes with substantial stress for hotel employees. This was never truer than during the COVID-19 pandemic. When COVID hit the U.S. in 2020, nearly 80% of hotels furloughed or laid off their staff. and when these hotels finally reopened for business, they found it to be difficult to impossible to get their staff to return.
The Bureau of Labor Statistics reported that by 2021, the hospitality industry had the highest rate of employees quitting vs. all other industries. Many left for retail, healthcare and manufacturing jobs that offered higher and more stable pay. The problem has persisted even as hotels have raised hourly wages to their highest all-time levels. In a 2023 survey by the American Hotel & Lodging Association, an eye-opening 79% of hotels reported being understaffed.
The following factors make it particularly challenging to recruit and retain hotel employees:
- Uncertainty in the industry: COVID layoffs and a lingering reduction in business travel led many long-time hospitality employees to seek more stable job opportunities.
- Health concerns: Hotel employees have been on the front lines of the pandemic from the start, increasing their exposure to the virus and creating concerns for their health and safety.
- Wage and benefit concerns: Many hotel employees have argued that salaries, benefits and general working conditions are better outside of the hospitality industry.
The dire situation has prompted innovative hospitality companies to look outside the service industry for solutions. In particular, they looked to the strategies that corporations have used for years to keep white-collar office workers happy (or at least happy enough) in their jobs, and applied those strategies to hospitality for the first time. As a result, many hotel employees—from concierges to cleaners—suddenly have access to an array of perks and benefits which were once reserved for office workers at financial services and technology companies.
Here are some of the innovative strategies that hotels are successfully using to attract and retain their employees in this incredibly challenging market:
- Sign-on bonuses: Taking a play out of the finance and consulting playbook, many hospitality companies have begun offering sign-on bonuses to attract new staff. For example, IHG has been offering signing bonuses of $500-1,000 to new hires in the U.S. and Canada.
- Referral bonuses: Many hotels have added cash bonuses for successful employee referrals (or increased the size of existing bonus programs). The average referral bonus now stands at approximately $1,000, with Marriott, Hyatt, Hilton and many others contributing here.
- Professional education: Hospitality companies are investing in their employees by offering upskilling and training programs to help them develop new skills and advance their careers. For example, Accor launched its “Accor Academy” in 2021, which offers a variety of training and development programs to help employees grow and advance within the company. Similarly, IHG announced “IHG Academy” which provides training and development opportunities for employees, including tuition reimbursement for relevant courses and certifications.
- Programs to support employees’ mental health: In recent years, corporations have expanded healthcare benefits to include mental health services, and some hospitality firms have been leaders here as well. Prior to the pandemic, Marriott implemented an initiative called “TakeCare” which focuses on promoting employee well-being and work/life balance. Since the pandemic, Marriott has further developed their flexible scheduling, physical and mental wellness, and employee assistance programs.
- Free food and beverages: While free meals for employees have long been a key perk of working not just at leading tech companies like Google, but also at certain 5-star hotel chains such as the Ritz-Carlton, more hotels have begun offering this meaningful benefit. Hotel staff can now both eat and drink like employees at the world’s wealthiest tech companies.
Many of these perks were once associated with high-flying careers on Wall Street or in Silicon Valley, but have spread to white-collar jobs across industries and throughout the country over the last decade. While their expansion into the service industry is a natural outcome of a tight labor market, these changes are likely to last. The corporate world has demonstrated that once employees get used to a benefit, it’s very difficult to take that benefit away from them without remuneration.
Sean Grundy is cofounder/CEO of Bevi, which since its inception in 2013, has helped thousands of organizations across North America save more than 300 million plastic bottles collectively and has raised over $160 million in venture capital to disrupt the bottled beverage industry.
This is a contributed piece to Hotel Business, authored by an industry professional. The thoughts expressed are the perspective of the bylined individual.
