The Labor Episode: How the Omni Hotel Chain Is Dealing With Hiring Right Now

Labor Shortages

The hospitality industry is grappling with significant labor shortages, a challenge that has intensified post-pandemic. Kurt Alexander, CFO of Omni Hotels, highlights the difficulty in hiring, particularly in states where enhanced unemployment benefits continue. He notes a dramatic increase in job applications in states like Florida, where such benefits have ended, suggesting these subsidies impact the labor supply 1. The industry is witnessing wage growth, yet the effect on hiring remains marginal, as many potential workers weigh the risks of COVID exposure and the value of unemployment benefits against returning to work 2.

The marginal value of going to work for dollar 15 an hour versus being on enhanced unemployment at dollar 15 an hour, it's a really hard value proposition.

--- Kurt Alexander

This situation underscores the complex dynamics at play in the current labor market.

   

Pre-COVID Trends

Pre-COVID labor trends in the hospitality sector were already challenging, with high turnover and a demand for skilled culinary staff. Kurt Alexander explains that the pandemic has exacerbated these issues, reducing Omni's workforce from 22,000 to 1,800 employees at its peak 3. The labor shortage is driven by both increased demand for services and a limited supply of willing workers, as many employees are hesitant to return to roles that involve high-risk public interaction 4.

We have been so short staffed. But in a lot of our hotels now, over the summer months, we're running rates that are up 20 30% versus 2019.

--- Kurt Alexander

This has forced hotels to rethink their operational strategies to maintain service quality amidst staffing constraints.

   

Hiring Strategies

Omni Hotels is employing innovative strategies to attract and retain employees amidst ongoing labor market difficulties. Kurt Alexander mentions initiatives like virtual job fairs, offering free nights, and providing culinary workers with tools as incentives 5. Despite these efforts, the company faces challenges due to a significant reduction in workforce during COVID, with many employees opting for unemployment benefits over returning to work 6.

Ultimately, at the end of the day, wages are probably the number one factor, although I would tell you, and our HR team would certainly tell you, that people want more than just a paycheck.

--- Kurt Alexander

This highlights the need for a comprehensive employee value proposition beyond just competitive wages.

   

Workforce Dynamics

The pandemic has catalyzed a shift in workforce dynamics, with many workers gravitating towards flexible gig economy roles. Kurt Alexander observes a secular shift towards jobs offering immediate pay and flexible hours, challenging traditional employment models like those in hospitality 7. Virtual job fairs have become a norm, yet attendance remains low, highlighting the ongoing supply issue 8.

This access to your earnings more quickly and work when you want. And I think that is a secular shift that's here to stay.

--- Kurt Alexander

Employers must adapt to these changes to remain competitive in attracting talent.