Writer: Felipe Rivas
2 min read July 2021 — With vaccine availability increasing mobility and events resuming, travel is expected to increase and so is the demand for hotels. In interviews with Invest:, Residence Inn Raleigh Downtown General Manager Pete Byers and The Umstead Hotel & Spa General Manager Jim Beley share their thoughts on the state of the industry and outlooks for the future.
What have been the greatest takeaways from the pandemic disruption?
Peter Byers: In general, we learned a lot about how we were doing business and how we were able to adjust in a new environment. We had to take on the challenges of creating new protocols and processes and maintain our commitment to sanitation, which was a big deal and still is. Some people may call this window dressing for our customers but there were real protocols that we needed to put in place to instill that confidence in our customers. We also learned a lot about the people who work with us and in our hotels. Letting go of 75% of our team in such a short time was a tough period. For the folks who stayed, we remained open the whole time and learned more about each other from working closely through those hard times.
Jim Beley: The market has changed dramatically. The fact is our business mix has drastically changed. Historically corporate travelers made up the bulk of our weekday occupancy, but with company travel restrictions still in place it has been slow to return. Fortunately the leisure travel segment has been stronger than ever with the increase of domestic vacations. This high demand has pushed leisure guests into the lower rated weekdays to avoid the high demand weekends. Which has allowed the luxury and resort markets to thrive achieving revenue numbers comparable to pre COVID numbers by filling the corporate void with higher rated leisure business at lower occupancy levels. This shift has not come without its own set of challenges. With more guests occupying each room and each wanting to utilize our restaurant, spa and pool outlets. For our type of property, that gets concerning in terms of questions surrounding if we have enough availability in the spa, pool or dining room. People want the full experience when they come to our hotel. We’re adjusting to what our guests expect when they come to a luxury hotel but it’s very different than before.
How has your operation navigated through the current labor shortages?
Byers: The labor issue is highly prevalent in the hospitality sector. The past year has provided little incentive for motivating anyone to come back to work. We have used all of the traditional routes when hiring associates: online job postings, brand job postings, job fairs, websites and so forth. We’ve used signing bonus offers and have increased wage scales for existing associates in an effort to retain those we have and to help attract new talent. We’ve had members who have gone down to the local Walmart with flyers and hand those out in an effort to get people interested. Is this innovative? No, but it’s just getting your feet on the ground, trying to do your best to find folks who are interested. What we’ve found is that folks aren’t as readily available right now for different reasons. But as time goes by, I think more people will become more confident and make themselves more available to re-enter the workforce.
Beley: In the first quarter of 2021, we reevaluated all of our starting wages, implementing a large increase in starting wages. We were starting culinarians at $13.50 an hour and now we are starting them at $17.50 an hour. Housekeepers were starting at $10 an hour and are now at $13 an hour. Those represent more than double-digit increases that we’ve implemented to attract more people. I would comment, however, that even though the flow of applicants is slower than what we would want, the quality of people that we are selecting is good.
What is your outlook for the next 12 to 18 months?
Byers:We are already seeing economic trends turn upward this year. Raleigh is a big festival town with many large events throughout the year. One of our biggest festivals involves the International Bluegrass Music Association’s World of Bluegrass festival which is returning this September. The event is one of Raleigh’s biggest, bringing more than 200,000 visitors in 2019 and accounted for an economic impact of over $18 million. The return of Bluegrass and many other festivals will continue to be key in moving the economic needle into the next two years. I also believe we will begin to see our business travel ramp up this fall at a slightly greater pace that has been projected previously. It will take more time to regain historic levels but we’ll start to see it increase. A lot of the reporting earlier this year pointed toward 2024 or 2025 being the recovery year for business travel but I think it’ll be quicker than that based on what I’ve seen.
Beley: Without any setbacks, I believe that in 2022 we will most likely be back to the levels that we last saw in 2019. That’s my forecast. What could hinder that situation is if companies continue to mandate the amount of business travel. But from what I hear, business travel is going to come back in a solid way in the third quarter of this year.
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