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U.S. HOTEL DEMAND declined by 0.5 percent year over year in the third quarter of 2023, according to CBRE. Simultaneously, there was a matching 0.5 percent increase in supply. The combined effect of these factors led to a 1 percent decrease in occupancy. ADR increased by 0.6 percent during the quarter, marking the slowest improvement since the pandemic recovery began 10 quarters ago, the CBRE data revealed. RevPAR decreased by 0.3 percent, as a modest decline in occupancy was partially offset by the rise in ADR. Despite sustained consumer spending, hotel demand and pricing power in Q3 were hampered by competition from alternative lodging sources like short-term rentals and cruise lines, along with an uptick in outbound international travel. According to the report, hotel wage growth in September outpaced the national average of 4.3 percent, registering at 4.7 percent, but declined from 7 percent at year-end 2022. Average hourly hotel wages fell nearly $10 below the national average, suggesting ongoing pressure for wage increases.

AS THE LABOR shortage continues, hotels are offering more incentives to attract new employees, according to a survey by the American Hotel & Lodging Association. They include higher wages, more benefits and greater scheduling flexibility. AHLA's Front Desk Feedback survey of more than 500 hoteliers, conducted Jan. 10 to 17, found that 79 percent of responding hotels were experiencing staffing shortages. Also, 71 percent of respondents are increasing wages, 64 percent are offering greater flexibility with hours and 33 percent are expanding benefits. Despite that, 81 percent said they are still unable to fill open positions. Also, 79 percent of respondents are experiencing a staffing shortage, severely so for 22 percent. The most critical staffing need is housekeeping, with 43 percent ranking it as their top hiring need. At the same time, in September, 87 percent of respondents said they were short staffed, 36 percent severely, with 43 percent ranking housekeeping as their top hiring need at the time. Respondents are attempting to fill an average of seven positions per property, down from 10 vacancies per property in September. "Recruiting enough workers continues to be the top challenge for many hoteliers, and this is leading to historic career opportunities for hotel employees," said Chip Rogers, AHLA president and CEO.

THE NEW JERSEY legislature has passed legislation that will place new requirements regarding employees when a hotel changes hands. Hospitality and business associations are objecting to the law, saying it will hinder hotels' recovering in the state. Assembly Bill 6246 will, among other things, require new owners of a hotel to keep all employees on staff for at least 90 days after the purchase without reducing their wages or benefits. The bills also would require the previous owners to provide a list of all employees' names, addresses, hiring dates, phone numbers, wage rates and employment classifications at least 30 days before the change in control, according to the legislation. It also sets terms for how the new owners can reduce staff if necessary during the retention period as well as how violations of the law should be addressed. The proposed law is well intended, but flawed, Ray Cantor, vice president of government affairs for the New Jersey Business & Industry Association told Center Square newspaper.

U.S. HOTELS WILL generate $46.71 billion in state and local tax revenue, more than ever before, according to a survey from the American Hotel & Lodging Association and Oxford Economics. Occupancy is expected to continue its recovery, the report said, but challenges remain. Average U.S. hotel occupancy is projected to reach 63.8 percent in 2023, just under 2019's level of 65.9 percent, according to AHLA. However, the labor shortage is expected to continue this year as hotels seek to fill jobs lost in the pandemic. As of December, national average hotel wages were at historic highs of more than $23 an hour and hotel benefits and flexibility are better than ever. Nearly 100,000 hotel jobs are currently open across the nation, according to job search site Indeed. "Hotels are making significant strides toward recovery, supporting millions of good-paying jobs and generating billions in state and local tax revenue in communities across the nation," said Chip Rogers, AHLA president and CEO. "To continue growing, we need to hire more people. Fortunately, there's never been a better time to be a hotel employee, with wages, benefits, flexibility and upward mobility better than ever before."

THE U.S. DEPARTMENT of Labor's definition of who qualifies as independent contractors, due to take effect in March, is meant to ensure that workers are treated fairly, according to the department. However, the American Hotel & Lodging Association says the new rule limits independent contractors to work and impact hotels' ability to find workers. The new rule under the Fair Labor Standards Act aims to prevent misclassification of workers that can affect workers' rights to minimum wage and overtime pay, "facilitates wage theft, allows some employers to undercut their law-abiding competition and hurts the economy at-large," the Labor Department said in a statement. It uses a multifactor analysis of six factors defining a worker's relationship with an employer, such as the worker's opportunities for profit or loss; the financial stake and nature of any resources a worker has invested in the work; the degree of permanence of the work relationship; the degree of control an employer has over the individual's work; how essential the work is to the employer's business; and the worker's skill and initiative.

HOTEL OWNERS MUST treat young associates better as labor is the hot-button issue in the hospitality industry, according to a blog post by HotStats. Increasing wages for entry-level work and promoting career advancement are also vital toward attracting young talent, it added. The blog post said that total payroll on a per-available-room basis is still around two times less in 2021 compared to 2019, according to HotStats data. Year-to-date October 2021, total payroll PAR in the U.S. is $43.46 compared to $85.86 two years ago. "Not only should a hotel care about customers, its number one target market is internal associates," said Leora Halpern Lanz, assistant dean, academic affairs and associate professor of the practice at Boston University's School of Hospitality Administration, in the blog. "If they're treated well, word gets out that it's a good place to work. The industry needs to evaluate why people are working 14-hour days because they're being worn down. There has to be an element of work/life balance." Kyle Allison, host of the Hospitality MD podcast, said that the hotel industry needs to tweak its legacy messaging.

THE U.S. DEPARTMENT of Homeland Security will make available more than 64,000 additional H-2B temporary nonagricultural worker visas for fiscal year 2023. The extra visas will help the hotel and travel industries meet continuing labor shortages, according to the U.S. Travel Association. DHS also will issue its normal allotment of 66,000 H-2B visas as well as the 64,716 extra visas. The visas, which permit employers to temporarily hire noncitizens to perform certain labor in the U.S., became available at the beginning of October. Also, the agency created the new Worker Protection Taskforce to make sure the H-2B visa workers are not exploited. "The Department of Homeland Security is moving with unprecedented speed to meet the needs of American businesses," said Alejandro Mayorkas, secretary of Homeland Security. "At a time of record job growth, this full year allocation at the very outset of the fiscal year will ensure that businesses can plan for their peak season labor needs. We also will bolster worker protections to safeguard the integrity of the program from unscrupulous employers who would seek to exploit the workers by paying substandard wages and maintaining unsafe work conditions."

AAHOA IS CONTINUING its advocacy efforts with new meetings with members of Congress. On Sept. 27, representatives from the association met with Sen. John Hickenlooper, Democrat from Colorado, in Washington at his Capitol Hill office. Hickenlooper, who sits on both the Small Business Committee and the Senate Commerce Committee, met with AAHOA to discuss Small Business Administration loan limit increases as well as fairness and transparency in the franchise industry, according to AAHOA. In Hickenlooper's home state of Colorado, 39.5 percent of all hotels in the state are owned by AAHOA members, comprising 520 hotels and 55,861 rooms, according to a recent study for AAHOA by Oxford Economics. Those hotels provide $5 billion in wages and other compensation, along with approximately 54,490 direct jobs and 101,000 total impact jobs in the state. They provide $8.5 billion in contribution to the state's GDP, and $2.3 billion in federal, state and local taxes along with $201 million in total lodging taxes.

SOME 87 PERCENT of hotels are now experiencing a staffing shortage and 36 percent said they witness severe shortage, according to a survey by the American Hotel & Lodging Association. However, the situation has improved now compared to May when 97 percent of respondents said they struggled to recruit staff. As many as 43 percent of the hotels said that the most critical staffing need is housekeeping, the AHLA survey found. To address the crisis, 81 percent of hotels have increased wages to potential hires, 64 percent are offering greater flexibility with hours, and 35 percent have expanded benefits, the survey said. But 91 percent said they are still unable to get adequate staff. Now, hotels are trying to fill an average of 10.3 positions per property, which was 12 vacancies in May. In May, 49 percent of those surveyed said they are severely short-staffed and 58 percent admitted housekeeping was the biggest challenge.

STAFFING PROBLEMS CONTINUE for 97 percent of American Hotel & Lodging Association members, according to a recent survey. In response, AHLA is expanding its "A Place to Stay" multi-channel advertising campaign to help with recruitment. AHLA's member survey also found that the staffing shortage is severe for 49 percent of respondents. For 58 percent, finding housekeepers is their biggest challenge. Nearly 90 percent of respondents have increased wages to help meet the demand. Also, 71 percent are offering greater flexibility with hours, and 43 percent have expanded benefits. As a result, in the last three months the respondents say they have hired an additional 23 new employees per property, but are also trying to fill an additional 12 positions. Still, 97 percent say they have been unable to fill open positions. "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 Chip Rogers, AHLA president and CEO.

IN JUNE, GOPPAR for U.S. hotels reached its highest level since October 2019, according to STR. All profitability metrics were up in the month compared to the month before. GOPPAR was $91.23 for the month, up from $88.63 reported in May. In April GOPPAR stood at $90.96. EBITDA PAR was $69.53 for June, TRevPAR was $226.10 and labor costs per room were $68.40. "Each of the key bottom-line metrics increased from May due to a rise in room rates as well as improved revenue from F&B and groups," said Joseph Rael, STR's senior director of financial performance. "Profit margins have held strong the past 12 months but have been slightly reduced recently due to rising wages and costs. Hotels have brought back services, amenities and F&B operations that were previously reduced, which have increased profits overall but at lower margins. While F&B revenues remain strong, catering and banquet revenue has lagged with improvement in recent months due to rising group demand."

HOTEL EMPLOYEES NOW have their own day, Sept. 1, thanks to the American Hotel & Lodging Association. AHLA had the date included in the National Day Calendar as part of its effort to increase recruitment of new hospitality workers. National Hotel Employee Day will be celebrated annually to thank hotel employees for their hard work and dedication and recognize the role they play in the nation's travel, tourism and hotel industries, according to AHLA. AHLA's launching of the day is in response to the struggle U.S. hotels are facing to quickly fill more than 120,000 open hotel jobs by offering current and prospective employees higher wages, with better benefits, and more flexibility. "On this inaugural National Hotel Employee Day, we thank America's nearly two million hotel employees. Every day in communities across the nation, hotel employees' service and dedication help facilitate some of Americans' most important life events - from wedding receptions to family reunions and vacations," said Chip Rogers, AHLA president and CEO. "Now is the time to consider one of the more than 200 enriching careers in the hotel industry."

GOPPAR FOR U.S. hotels dropped in July but once again exceeded 2019 levels for the fourth consecutive month, according to STR. The summer peak still brought an increase in demand, but the cost of ramping up to meet that demand cut into profit margins. GOPPAR was $78.30 for the month, down from $91.23 reported in June. It was $88.63 in May and stood at $90.96 in April. EBITDA PAR was $55.29 for July, TRevPAR was $209.66 and labor costs per room were $67.27. "While each of the key bottom-line metrics decreased slightly from June on a per-available-room basis, total profits increased with peak summer room demand and revenues," said Raquel Ortiz, STR's director of financial performance. "Profit margins were stronger than July 2019 for both full- and limited-service hotels, but GOP margins were at lower levels than the previous four months. The dip in margins can be attributed to higher expenses associated with more ramped-up operations as well as the general rise in costs around the country. Rising wages are being somewhat balanced by hotels using more contract labor and reducing benefits costs."

THE 2020 COVID-influenced lodging industry recession resulted in some noticeable changes to the way hotels provide F&B service. Social distancing regulations forced operators to be creative in the way they served food and beverages to guests. Rising wage rates and sharp increases in the cost of food and beverage products compelled hotel managers to find ways to control costs. The inability of hotels to attract employees to fill the positions eliminated during the recession required creative solutions to improve productivity and offer more with less. These factors resulted in the following hotel food and beverage trends during the subsequent recovery period: The increased offering of kiosks and grab-and-go venues The closing of traditional three-meal-a-day restaurants A reduction in the menus, number of seats, and hours of remaining F&B venues Reductions in in-room dining and mini-bar service The conversion of food and beverage space to other revenue generating purposes To learn how these recent changes in hotel food and beverage operations have impacted revenues and expenses, we have analyzed the operating statements of 2,500 U.S. full-service, resort, and convention hotels that participated in CBRE's annual Trends in the Hotel Industry in 2021 and 2022. In 2022, these 2,500 properties averaged 285 rooms in size, and achieved an occupancy of 64.7 percent, along with an ADR of $225.60. To provide more current information, we also relied on the monthly operating statements of 1,200 properties during the period January through June of 2023.

FORMER AAHOA CHAIRWOMAN Jagruti Panwala testified recently before Congress on the Department of Labor's proposal to raise the overtime salary exemption threshold for executive, administrative, and professional employees under the Fair Labor Standards Act. Panwala, now a board member for American Hotel & Lodging Association, argued that the proposed change would actually limit hotel employees' opportunities and does not take into account economic differences between regions of the country. In August, DOL proposed raising the threshold from $35,568 to an estimated $60,209 in 2024 according to AHLA based on the department's projections. That equals a nearly 70 percent increase, and AHLA said that means all employees making under that amount must be paid overtime for any hours worked over 40 in one week. The DOL proposal also would automatically increase the threshold every three years thereafter based on the 35th percentile of earnings for full-time salaried workers in the lowest-wage census region, currently the South.

MORE ASSOCIATIONS ARE joining the American Hotel & Lodging Association in protesting the National Labor Relations Board's recently issued final ruling on the definition of joint-employer status. The ruling essentially broadens the definition to any "entity that has an employment relationship with the employees," and AAHOA, AHLA and the other associations say it could damage the current franchise business model. NLRB's new standard, issued last week, defines a joint employer to be any company that shares or codetermines one or more essential terms and conditions of employment. Those include: Wages, benefits, and other compensation. Hours of work and scheduling. The assignment of duties to be performed. The supervision of the performance of duties. Work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline. The tenure of employment, including hiring and discharge. Working conditions related to the safety and health of employees.

PROPOSED FEDERAL REGULATIONS defining a "joint-employer standard" would have a "chilling effect" on the hospitality industry and franchises in general, according to the American Hotel & Lodging Association. The National Labor Relations Board's latest version of the standard could define two companies as joint employers if they both control certain elements of employees' terms and conditions. The period for comments on the proposed regulations ended Nov. 21 and the would rescind and replace the joint-employer rule that took effect on April 27, 2020. That previous rule established that "a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer's employees" to be considered a joint employer. However, a ruling by the U.S. Court of Appeals for the D.C. Circuit in July reversed that rule. Now, under the new rule, "two or more employers would be considered joint employers if they 'share or codetermine those matters governing employees' essential terms and conditions of employment,' such as wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment, and work rules," according to NLRB.

PRESIDENT BIDEN'S STATE of the Union address before Congress on March 7 touched on several issues hotel industry associations have been advocating for a while. AAHOA and the American Lodging and Hotel Association both issued responses to the speech and AAHOA held its 2024 Spring National Advocacy Conference during the week of March 14. The issues at hand include the extension of tax credits, handling of junk fees for greater disclosure and transparency and raising the federal minimum wage. During SNAC, more than 200 AAHOA leaders and members spent two days in Washington, D.C. The conference opened with a legislative learning session at the Ronald Reagan Building and International Trade Center, followed by an evening Congressional Reception at the Cannon House Office Building and then a full day of Congressional meetings. "Each year we continue to see the relationships grow between our AAHOA Members and their elected officials," said Laura Lee Blake, AAHOA president and CEO. "Our twice-yearly advocacy conferences are quickly becoming the foundation for shaping and driving national policy, and our members are making it happen."

THE STATE OF the U.S. hotel industry is strong going into 2024, according to American Hotel & Lodging Association's 2024 State of the Hotel Industry report. Average hotel occupancy is expected to reach nearly 63.6 percent in 2024, a slight increase from the 62.9 percent in 2023 but below the 65.8 percent rate recorded in 2019. Nominal RevPAR is also anticipated to rise to $101.82 in 2024, up by 4 percent from 2023 and over 17 percent from 2019. AHLA projects hotels will pay employees a record sum of over $123 billion in wages, salaries, and compensation in 2024, surpassing $118 billion in 2023 and $102 billion in 2019. Hotels are expected to add approximately 45,000 employees this year, while the industry's workforce remains nearly 225,000 below the almost 2.37 million employed in 2019, the AHLA report said. The report, projecting persistent challenges for hoteliers in the face of nationwide labor shortages as they approach 2019 occupancy levels, draws on data and analysis from Oxford Economics. It was developed in collaboration with AHLA Premier Partners: STR, Avendra, Ecolab, Encore, JLL, Oracle, and Towne Park.