When the pandemic began, travel ground to a halt. Without tourists, hotels, gift shops and restaurants in destinations all over the U.S. struggled to stay in business. With no customers, employees were let go. Leisure and hospitality jobs accounted for 34% of all pandemic job losses, the largest percentage of any U.S. industry.
After two years of social distancing and working from home — and a couple of derailed reopenings because of the delta and omicron variants — many Americans are ready to travel again.
As a result, hospitality workers are in high demand. The service industry labor market, which tended to favor employers, is now giving workers leverage to negotiate for better pay and benefits.
To understand this phenomenon, we need to take a closer look at supply and demand in the travel and hospitality industries.
“There’s a theory of the vicious cycle of tourism and we’re in that cycle right now,” said Maggie Daniels, professor of tourism and events management at George Mason University.
The cycle is driven by a mismatch between supply and demand, one that’s overwhelming businesses and resulting in diminished experiences for customers and workers alike.
On the demand side, “people have been delaying their vacations, they’ve been delaying their family events for two years, and they are just ready to cut loose,” said Daniels.
There’s so much pent-up demand that popular tourist destinations are being overwhelmed. Take national parks. “There’s a carrying capacity issue, that has been far exceeded, and the parks are scrambling. They’re underfunded, they’re understaffed,” Daniels said.
For visitors, this means crowds, lines, higher prices and a whole lot of frustration. Which brings us to the supply side, where front-line workers bear the brunt of customer dissatisfaction.
Many of them have left the industry. The nonprofit U.S. Travel Association reports that leisure and hospitality employment is down 8% from pre-pandemic levels, with 1.8 million job openings waiting to be filled as of December 2021.
The employees who remain are increasingly overworked and businesses are understaffed.
But according to Larry Yu, professor of hospitality management at The George Washington University, in some ways it’s a good time to be a hospitality industry worker.
“The pandemic really made the industry aware that what we call the human resources, and now we use the term ‘talent,’ are even more critical for business,” he said.
Businesses have started offering better pay and benefits. “The hospitality sector is one of the sectors showing the highest jump in its pay increase,” Yu pointed out.
This can be a challenge for small businesses, and some of them are getting creative.
In the tiny town of Copper Harbor, Michigan, Don and Peg Kauppi own The Mariner North, a restaurant and lodge. The majority of their patrons are tourists who visit the area for outdoor recreation like mountain biking and snowmobiling.
The Kauppis have about 10 year-round employees, a number that rises to as many as 40 during the busy seasons of summer and winter. Hiring is a challenge.
“In fact, it’s gotten increasingly difficult in the last couple years. This industry doesn’t have a lot of contractual jobs that provide year-round comfort and benefits,” said Peg Kauppi.
On top of the industry-wide labor shortages brought about by the pandemic, Copper Harbor has its own unique geographic challenges.
“There’re transportation issues. We’re 35 miles away from what might be called a small town,” Kauppi explained.
On top of that: “Affordable housing is non-existent in Copper Harbor,” she said. “With the increase in business from tourism and outdoor recreation, we find that we need more staff but there’s no housing for them.”
The Kauppis provide housing for some of their workers and also help with transportation, lending bikes to summer staff members to help them get around town.
In Bar Harbor, Maine, a coastal town just outside of Acadia National Park, Christian Cuff co-owns a seasonal farm-to-table restaurant, Sweet Peas Café. Cuff says restaurants are feeling the pressure to provide better pay and benefits.
“I feel like there’s a little bit of a coming to God, right now, in the restaurant industry, of like, we have to come up with a way to do health care, we have to come up with a way to offer benefits, paid time off, a real hourly wage that allows people to live above the poverty line,” he said.
This isn’t a new issue for the restaurant industry, Cuff said, but the pandemic has made it a focal point.
“The pandemic, more than anything else, has set people’s priorities and they’ve said: ‘Listen, if I’ve got to re-examine my day to day life, here’s what I need, here’s what I want, and here’s what I’m willing to negotiate.’”
Even before the pandemic, Cuff was offering paid time off and weekly bonuses to help offset employees’ healthcare expenses. He’s seeing other restaurants catch up.
“We thought we were way ahead of the game and we’re realizing that no, we’re on par with what everyone’s going to have to be doing. So, it’s tough but it’s exciting. It’s like you’re riding a wave, you think you’re on top but you see the big boy behind you,” he said.
Sweet Peas Café is fully staffed and, according to Cuff, ready for the busy summer season. But Maggie Daniels at George Mason University expressed concern that many businesses, workers and travelers are in for a chaotic summer vacation.
“From the lens of many business owners, they will be so thrilled to see people coming back. I believe that the outlook is very positive in terms of revenue generation,” she said. She’s worried about human resources, and the ability of businesses to attract and retain employees.
“These organizations are really going to have to step it up. They’re going to have to make these experiences meaningful for their employees,” Daniels said. “They’re going to have to protect them and put protections in place to look out for their well-being and personal happiness.”
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