With travel demand accelerating rapidly, the hospitality industry is experiencing a new challenge: labor shortages resulting in sharply rising labor cost, which consumes as much as 60%-80% of RevPAR (CBRE). In the U.S. alone, hotels need to hire 600,000 more employees by summer to be able to meet demand (BIS.gov). Right now there are 171,800 open positions on LinkedIn for hospitality jobs in the U.S.

Wages in hospitality operations - frontline position such as housekeeping, front desk, wait staff, line cooks, etc. - are up more than 20% since April 2020 (Hotel Effectiveness). Hotels and restaurants alike are offering sign-up bonuses, higher wages and even cash payments to candidates just to come for an interview. In the same time productivity is down due to influx of inexperienced staff, since many of the experienced hospitality professionals left the industry due to furloughs and layoffs during the pandemic.

The question is, how can the hospitality industry solve the current labor shortages and unsustainable labor cost through technology innovations, automation, mobility, robotization and next gen technology applications?

Dave Berkus
Dave Berkus
Managing Partner at Wayfare Ventures LLC

Short term or long term?  In the short term, raise wages and prices to match.  Our industry has shamelessly underpaid its line workers for as long as we can measure, and surely longer.  Who wouldn't be willing to pay 10% more for meals and 3% more for rooms to assure continued service and higher quality workers?

In the longer term, there are entrepreneurial companies working today on automated responses to mundane tasks such as touchless check-in for hotels and restaurants, automated dishwashing, cleanup and even some food prep areas. For restaurants, table service is due for a complete rethinking now that the tools are available for direct-to-kitchen ordering.  That alone would reduce server table roundtrips by half.  Not to advocate robotic table delivery, but that too is a possibility that will separate hotels and restaurants by class of service.

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