Hotels limiting availability, raising rates to offset staffing shortages

Published: Jul. 21, 2022 at 7:39 PM EDT
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RICHMOND, Va. (WWBT) - With the summer travel season in full swing, you’ll be hardpressed to find a vacation or flight that hasn’t skyrocketed in price due to inflation and shortages.

Hotel and lodging are also seeing a spike in room costs despite there technically being more rooms available, but experts say you’ll be paying a lot more for that, too, just so that that business can profit.

John Cario says the Hilton Downtown did pretty decently business-wise this past April, but the hotel manager says it wasn’t because they had more reservations.

“Our April 2022 finally hit April 2019 levels,” Hilton said. “But it wasn’t on occupancy; it was on the room rate.”

Cario says even though travel has picked up, staffing at hotels hasn’t kept up the same pace, which is why hotels have to offer fewer rooms at a higher price. So, although The Hilton and hotels like it had more space to offer - which typically drives down the room rate - Cario says that every hotel is working with less staff these days.

Essentially hotels haven’t bounced back from the economic slowdown brought by the pandemic.

“Travelers may see some of their favorite places sold out, but perhaps it’s not that they’re sold out. It’s just that hotels had to turn off inventory to catch up and get ready for the next bigger demand times,” Cario said. “So yes, rates do go up to offset some of that demand.”

Cario says this is a state-wide issue. He says travelers can expect hotel rates to be as much as 10 to 20 percent than normal.

Coming out of the pandemic when business was coming back, we were excited; however, staff didn’t return,” Cario said. “A lot of our staff left for other industries, left the industry or retired.”

Eric Terry with the Virginia Restaurant Lodging and Travel Association says to expect that to be the norm no matter where you go this summer.

“If you can’t service it, you can’t sell it,” Terry said. “The hotel industry is having to adjust rates just to compensate for the cost of labor and other costs they’re incurring.”

According to the American Hotel and Lodging Association (AHLA), nearly all hotels see a similar phenomenon.

According to a new member survey conducted by the AHLA, 97 percent of survey respondents indicated they are experiencing a staffing shortage, 49% severely so. The most critical staffing need is housekeeping, with 58% ranking it as their biggest challenge.

According to the AHLA, there are as many as 130,000 open positions nationwide.

“We’ve had to put a length of stay restrictions in place, and we’ve had to raise the rate to slow some of the demand because, again, we’re short-staffed to turn the rooms, clean the rooms and operate the hotel,” Cario said.

In response, hotels have offed incentives. Nearly 90% have increased wages, 71% offer greater flexibility with hours, and 43% have expanded benefits.

In response to the higher room rates, Cario says hotels will offer more perks to entice customers to make repeat reservations.

In a press release, the AHLA has expanded its advertising initiative known as “A Place to Stay” to 14 cities, including Atlanta, Chicago, and Dallas.

“If you’ve ever thought about working at a hotel, now’s the time because the pay is better than it’s ever been. The benefits are better than they’ve ever been, and the opportunity is better than it’s ever been,” said AHLA President & CEO Chip Rogers. “The expansion of AHLA Foundation’s ‘A Place to Stay’ recruitment campaign will help us bring this message to the masses at a crucial time, helping expand the hotel industry’s pool of prospective workers and grow our talent pipeline.”

To soften the financial blow of higher than normal room rates, Cario says consumers can also expect hotels to begin offering more perks to entice customers to make repeat visits.

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