It's no secret that the hotel industry is currently struggling with a major shortage of skilled labor. The problem stems from a combination of tighter immigration controls, an increase in the number of guest rooms available, and a thriving occupancy rate. Finding and keeping qualified employees is now incredibly competitive, and more than one million hotel jobs are unfilled across the U.S., according to an impact analysis by Oxford Economics for the American Hotels and Lodging Association (AHLA). This is taking a toll on the basic amenities guests expect. Could a cross-industry talent exchange be the solution to hospitality's labor shortage? We believe the idea has merit, and that success will depend on hotels' ability to think outside the recruitment box.

Why Hotels Are Getting Hit

So why is the labor shortage affecting the hotel industry, in particular, to the extent that it culminated in the "perfect storm" in 2019? Reasons for this are numerous, including:
  • Ongoing industry growth. While growth remains fairly stable at between 1 and 2 percent per year, it hasn't actually declined since 2009 and won't do so in 2020, according to STR and Tourism Economics' latest forecast. While that's good news for the industry, it combines with other factors to create something of a double whammy.
  • High staff turnover patterns, which result from the stressful and challenging nature of the business.
  • Generational issues, with older employees leaving the workforce either to retire or to move to less hectic pastures. New research also shows 75% of millennials believe constantly changing jobs advances their careers. Up to 45% are unlikely to stay in the industry longer than 5 years, compared with 72% of older workers.
  • Dependence on the shrinking immigrant labor market caused by educated, U.S.-born workers shying away from low-skilled positions with long hours and low wages.
  • Rising salary expectations, particularly among younger staff, which is at odds with hotels' traditionally-narrow profit margins.

These issues are by no means specific to the United States, either; reports show New Zealand, Australia, India, and the United Kingdom all grappling with similar shortages. Hotels can address this challenge by finding new ways to improve employee retention, rethinking the hiring process, and considering recruiting from other industries.

Cross-Industry Recruitment Isn't New

The idea of a cross-industry talent exchange isn't new. For some years now, industries under pressure have recognized that they need to innovate to stay ahead. Introducing new leadership can create exciting growth opportunities, bring fresh perspectives and encourage creative thinking. Emerging industries like digital health, for example, are forced to rely on recruitment from outside to survive, because top talent in their line of work often doesn't exist yet.

Various other industries have successfully embraced this practice to date, hiring senior executives from similar-and in some cases, completely different-industries. Some years ago Starwood hired a new CEO from the beer brewing industry, and executives from retail routinely move into the restaurant management. Transfers like these show that there's value in bringing thinking from another industry to help a business become stronger and more competitive. It also benefits companies to build resilience, which can see them through challenging economic times.

Boutique hotels are particularly ripe for a cross-industry talent exchange, and many have already implemented this philosophy effectively. While the sector has limited influence on the industry because of its small size, the cumulative action is significant and it could be a reason why boutique hotels overall are flourishing. This is a segment unencumbered by the same large structures as the bigger chains. The boutique hotel market has entrepreneurial flexibility and can test different ways of operating more easily. An example of this is PALI group, which is now breaking into the market with very small boutique hotels. These are almost bed-and-breakfast size, but they still have a Food and Beverage component.

Looking for new talent outside any industry brings new ideas and processes, which makes the operations more efficient. One primary example of an industry currently targeting hotel executives is the healthcare environment, particularly hospitals and clinics. The reasoning behind this is that both industries carry an element of hospitality and therefore both need leaders who have the "hospitality quotient." Checking a patient into hospital has similar importance to a guest entering a hotel. This creates a reciprocal dynamic, because if there's a missing factor in the hotel industry that can be gained elsewhere, it probably applies vice versa, too.

The key to bringing in talent from outside the industry is to develop a systematic process for identifying the skill sets you need and where you should look for those competencies. Make sure you take into account candidates' cultural fit and transferability. Be prepared to invest more time in onboarding and supporting new hires than you would if you were recruiting from within the industry. It's an investment that will pay off over the long term.

Where Hotel Executives Could Come From

Technology has become such a large part of the business world's evolution that there's an obvious opportunity for hotels to benefit from cross-industry hiring. Hospitality is doing a good job of being on the forefront of technology in certain areas, and we're starting to see hotel chains dipping their toes into food service robots and digital check-ins. Properties are getting smarter about how they use guest analytics, and incorporating technology into their management structures and efficiencies. They are enhancing day-to-day operations and guest services with options like mobile room cards, integration with hotel networks, and online ordering from room service.

There are even some hotel technology companies that have begun mining data and selling it, which means the resources are available although we aren't yet using them to their fullest potential. We're also not yet seeing, say, GE executives joining hotels at the C-Suite or boardroom level.

While technology executives are the most obvious candidates for a cross-industry talent exchange, hotels can feasibly recruit from almost any industry or sector. Marketing has many commonalities across industries, from the shift to digital that overlaps with technology, through print marketing, events, social media, and targeted advertising. The principles remain the same regardless of who the target audience is and the product or service on offer. Financial and HR executives enjoy a similar widespread demand for expertise, because although the methodologies might differ, the basic premises don't.

Other industries besides retail that offer a career path leading to hotels are consumer packaged goods (CPG), supply chain management or logistics, transportation, loyalty, food technology, management consulting, healthcare, and property management. The present push for environmental sustainability means many hotels could choose to revamp their waste management practices, revisit their procurement policies, or completely change their F&B and housekeeping inventory control. This could open the door for executives from any industries related to these divisions to make the foray into hotel management at a senior, strategic level. The same principle can apply to almost any sector, though, because the business world is becoming more interconnected every day.

Pros, Cons, and Points to Consider

Needless to say, once you have the right people in place it's important to address retention and make sure you keep them. Your new recruits could help you in this respect, too, if you've sourced them from organizations that focus on labor issues more than the hotel industry does.

Companies such as Deloitte and McKinsey, for example, have flexible, modular work schedules aimed at accommodating young families and others who have different leave-of-absence requirements. Facebook also does this, with three-month sabbaticals offered every five years. These factors are very appealing to employees at all levels of the company, and often help to prevent people who could easily exit the workforce or industry from leaving.

The introduction of executives from other industries brings fresh blood and a new management philosophy to organizations that might be stuck in old ways. Revamping a company's culture needs to come from the top and be reinforced at every level, and it can be extremely challenging for existing employees to be able to adapt.

Employers aren't the only ones who win with this strategy, either. Moving to a new industry gives candidates unique career growth opportunities outside the traditional paths. They have the option to learn a new industry, hold a more senior-level position, and get started on a new track. At the same time, it's important for a potential employer to understand why a candidate might want to take on a new challenge, particularly during a labor shortage. There's obviously a measure of risk involved for both sides, and this should be thoroughly explored and hedged against if possible.

Exciting Future Possibilities, a.k.a. "Crazy Ideas"

The recent rise in demand for experiences as part of a destination's offering shows how the industry is changing. Hotels are already looking to attract employees with expertise in setting up these opportunities, and the changing face of the concierge function is an example of how this will impact job descriptions. Airbnb now offers a budding service for travel experiences that are more individual and authentic than the typical mass-produced, group tour packages. By using technology and platforms to source the experiences, we could see recommendation engines like Netflix or Match.com getting involved to match variables with other data.

Cryptocurrency's potential to take over the world's banking systems in the not-too-distant future could mean hotels need to recruit people with solid blockchain backgrounds. Whether a chain develops its own currency from scratch, or simply piggybacks on an established option like Bitcoin or Ethereum, qualified and experienced executives will be critical for the venture's success.

In the entertainment arena, many hotels are investing more in smart TVs and other tech services. With the rise in streaming, many hotels provide Netflix and Disney for guests. Cinemas are decreasing in popularity, and live theater shows on Broadway and London's West End are increasingly being filmed for showing to a wider audience. There's no reason why chains like Starwood or Marriott shouldn't opt to buy out or start their own entertainment channel, commission exclusive shows, and build out their presence in the streaming industry.

For those hotels that retain their food service offering, the high levels of competition among restaurants could lead to increased demand for choreography and other skills used in places like Las Vegas. And the current trend for many retailers to offer financial services means there's no reason hotel chains can't do the same. In the event of another banking collapse, trusted hotel chains that offer savings and checking accounts, insurance options, and credit cards managed by a stable provider are likely to have it made. An example of this is the financial services offered by the Canadian President's Choice Bank, commonly shortened to PC Financial , which is the financial services subsidiary of the Canadian supermarket chain Loblaws.

Another possible future scenario is for hotel loyalty programs to partner with insurers to offer healthcare cover to their members. This could open the door for a flood of people with insurance and healthcare administration experience to cross the floor, so to speak. And it's certainly an option some hotels might already be considering-after all, if a store chain can offer members of its loyalty program a discounted rate to join a national fitness company, why shouldn't a hotel chain offer discounted membership of a health insurance company?

Easier Said Than Done

As usual, the pudding's proof is in the eating, and making a cross-industry talent exchange actually happen is easier said than done. To implement this type of strategic shift, hotel companies will have to find ways to make joining their ranks attractive to candidates.

Currently, not many people are changing jobs in the market. Wage growth has been steady and there's a strong sense of "if the economy is headed for some ups and downs, why rock the boat?" There's also the cost factor. For hotels to offer the type of opportunities that will draw the right recruits could be expensive enough to affect profitability.

Raising prices to combat the cost isn't always an option, so it's important to find a balance. Offerings like free Wednesday lunches for staff, summer Fridays, and family and friends' discounts on accommodation are some ways hotels are already leveraging intangible perks and inspiring leadership.

Taking the Plunge

With another recession looking more likely every day, taking the plunge of a non-traditional approach could help hotels weather the coming storm a bit better. Instead of the usual cost-cutting, which often results in a brain drain and a weaker organization overall, companies need to take some risks. Hiring a top mind from another organization or industry is proactive, brings a new perspective, challenges the status quo, and is the healthiest way to approach whatever the future holds.

Of course, current industry leaders will always be considered for these roles. It does provide an opportunity to resolve the insular situation the industry currently relies on, however, where executives are recycled through the sector over and over again. A cross-industry exchange is also a more comfortable method of widening the talent pool for many hoteliers than hiring executives from other countries. While there are now plenty of qualified applicants available to U.S. hotels from other nations, in the current political climate many U.S. companies don't routinely support visa applications unless the circumstances are exceptional.

The sky's the limit for hotels that can navigate the labor shortage effectively, while those that don't are likely to lose more than just a few good people. Which category will your organization fall into in 2020?

Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com