Why US hotels are missing more than 238,000 employees

Tourism is back in the United States – but hotel workers are not.

Hotels and resorts learnt to operate with leaner staffing models during the pandemic. Three years later, Covid-19-era band-aids like self-service kiosks and less frequent housekeeping have now become the new normal for many firms seeking to cope with rising labour costs and perpetual vacancies.

While employment in a variety of industries has now surpassed 2020 levels, the accommodation industry currently employs about 238,000 fewer workers than before the health crisis – a hole that is likely to persist.

Companies are seeing these initiatives “as a solution to the efficiency issues”, said Mr Alexi Khajavi, president for hospitality, travel and wellness at Questex, an information services firm. But there is “also just simply the fact that they don’t think that the labour issues are going to be fixed any time soon”.

Nowhere in the US is the fallout more apparent than in Las Vegas, where one in four people are employed in the leisure and hospitality sector. The shortfall of more than 17,000 workers in the city’s accommodation industry has left the unemployment rate at 6.1 per cent – the highest among any major metropolitan area in the country – despite job growth in other industries.

Technology is on full display across Las Vegas. Major hotels allow guests to access their rooms without much, human interaction, with self-check-in and mobile-entry. Drink-dispensing machines are mixing up cocktails at resorts like the MGM Grand. And robots named Elvis and Priscilla are making room deliveries at Marriott International’s Renaissance. 

The distrust towards new technologies and cost-saving measures could ultimately help spark the Culinary Workers Union’s first citywide strike in almost four decades. Contracts covering 40,000 union members just expired, and a strike vote is scheduled for this week.

As drink-dispensing machines have gained ground in recent years, Ms Holly Lang, 45, has seen close to 20 bartenders look for new jobs. Starting at about US$40,000 (S$54,700), companies can get one of Smart Bar USA’s automated dispensing machines fully installed, and its employees trained to use it. 

The machines can dispense drinks quickly, with the help of fewer bartenders. But Ms Lang, a unionised server who has been working at MGM Grand for nearly two decades, said the new technology requires her to balance more tasks. Machines can get clogged or do not process the orders she puts in, putting her in a tough spot with customers, she said.

“We’ve kind of had to take on the role of bartending even though that wasn’t something that we actually signed up for,” said Ms Lang. 

The service robotics industry is projected to reach US$216 billion in 2030 as staffing shortages accelerate the need for automating processes like customer service and cleaning, according to the research company GlobalData. 

Smart Bar co-managing member Barry Fieldman said his products were not developed to replace workers but to make their jobs easier instead. Bartenders can make more drinks, earning more money for themselves and the business. It is “a win-win proposition”, he said.

Recent cyber attacks at both MGM Resorts International and Caesars Entertainment show how technological advancements can also come with new challenges. The attack disrupted MGM’s websites, its reservations and payments systems as well as some slot machines at its casinos. 

Fewer guest services

Many hotels, however, are just providing fewer guest services, whether that is less frequent housekeeping or reduced operating hours for the front desk, bar and pool. More than one in four hotel operators said the front office function would be phased out of their properties within the next five years, according to a recent survey.

From dockworkers to screenwriters, employees have long fought to make sure that new technologies and cost-saving practices are not introduced at the expense of their jobs. In September, the United Auto Workers launched an unprecedented strike against the nation’s three largest automakers. Though the pandemic warranted a new approach for hotels, worker animosity has escalated as these policies have endured. 

“Companies – not just here in Vegas, but across the country – are capitalising on the pandemic,” said Mr Ted Pappageorge, secretary-treasurer at the culinary union. “We’re seeing these massive corporations try to eliminate labour and replace it with technology, or simply reduce services and attempt to modify the guests’ behaviour to service themselves.”

Nationally, many hotels say they have been trying to increase headcount – they just have not had much luck. A May survey by the American Hotel & Lodging Association (AHLA) showed 82 per cent of hotels were experiencing staffing shortages, most notably in housekeeping.

“Those are numbers we never saw pre-pandemic,” said AHLA president and chief executive officer Mr Chip Rogers. 

Hotels also see initiatives like digital customer service and flexible housekeeping schedules as a way to improve the guest experience. “Technology’s not going anywhere, and I think that has been a great benefit,” Mr Rogers said.

While the Culinary Workers Union’s latest contract already included protections such as free retraining when new technologies are introduced, not all hospitality workers in Las Vegas are unionised. More broadly, less than 3 per cent of all leisure and hospitality workers nationwide were union members in 2022.

“If we weren’t here, Las Vegas wouldn’t exist,” said Ms LaDonna Teeters, 59, a unionised bartender who has spent 27 years at Park MGM. “We want to be able to go back to just having one job so that we can continue to make the guest experience that much stronger and more memorable.” 

The union is a key force not only economically but also politically: It has garnered attention for its size, its door-knocking campaigns and its potential to swing key elections in the battleground state of Nevada. 

For those who lost their jobs in recent years, it can be hard to find one with similar pay and skill level in the increasingly diversifying Las Vegas economy. Only one in four of the city’s adults have a college degree, and recent job creation in sectors like healthcare and manufacturing has emphasised the skills gap.

“Those 20,000 jobs are not coming back in the way that they were pre-pandemic,” said Mr Stavan Corbett, interim executive director for economic and workforce development at the College of Southern Nevada. Instead, they are coming back in new sectors or even new job titles within hospitality.

“A lot of those individuals potentially don’t qualify for the job they had two years ago, and did for 15, 20 years,” he said.  

MGM, the largest employer in Nevada, illustrates some of the nuance of lingering staffing shortages. The company is on track for another record recruiting year after hiring more than 22,000 workers in 2022, but workers do not stay in the job for long, said Ms Rebecca Smith, vice-president of talent acquisition at MGM. 

Three years after the worst of the Covid-19-era worker shortages, and MGM still has “mass numbers that we need to fill at all times”, she said.

Looking ahead, there is hope for a pickup in accommodation employment.

Customer satisfaction is oftentimes directly linked to staffing levels, and new hotels – like the one Fontainebleau is opening later in 2023 in Las Vegas – will offer thousands of fresh job opportunities. Mr Mark Tricano, president of Fontainebleau Las Vegas, said they have received over 45,000 applications for the roughly 240 positions it had posted. 

“What we’re realising now is that, structurally speaking, we are still woefully under the amount of employment we need,” said Mr Khajavi of Questex. BLOOMBERG