'Employee labor market' forces hotels to work harder to recruit, retain staff

11/29/2017

Each year, the Omni Nashville Hotel brings in up to 25 students from countries such as the Philippines and India under one-year work visas.

They help to fill food and beverage positions, and, starting next year, will be used in front desk, guest services and other front-of-the-house roles.

"With all of the new hotels and restaurants, the supply of workforce has been far exceeded by the number of new rooms and seats," said Dan Piotrowski, area managing director for the Omni Nashville.

In addition to turning overseas for relief, hotels in the Nashville area and statewide are forging partnerships with high schools and higher learning institutions to meet their workforce needs. They're also having to raise wages and increase benefits to compete. And they're generally putting more emphasis on grooming their own talent from within for future roles.

"You've got to take care of your people and that means more than just wages and benefits," said John Fleming, general manager of the Renaissance Nashville Hotel. "That's flexible schedules — all that kind of good stuff. We're part of Marriott, so we’ve got a whole lot of different programs."

Just under 100,000 hotel jobs in Tennessee

There are an estimated 94,371 hotel jobs statewide at 1,310 properties, according to the American Hotel & Lodging Association. The industry supports $2.6 billion in federal, state and local taxes and $6.1 billion of labor income, including $1.2 billion at hotel operations.

Since 2010, average employment in the hospitality industry is up 21 percent while overall wages are up 38 percent, according to the Tennessee Department of Labor and Workforce Department.

In the 865 area code, which covers Knoxville and the surrounding area, traveler accommodations employed 9,548 people in the second quarter of 2017, according to data from the Knoxville Chamber.

That’s 2 percent of all area jobs, providing a $208 million payroll and bringing in $639 million in direct sales. That works out to an average wage of nearly $22,000 per year, about half the overall average pay in the Knoxville area.

But the local lodging industry also contributed to the existence of 5,230 indirect and 4,126 “induced” jobs at the same time, according to Chamber data.

'An employee labor market'

While Nashville's growth has helped to draw more hotel developers, the side effect of higher cost of living, inadequate transportation infrastructure and more rival job opportunities for workers creates challenges for the hospitality sector.

"As the cost of living continues to rise, that also becomes a challenge to attract a workforce to the region," Piotrowski said, citing affordability as a growing challenge.

Judy Z. King, a principal in Franklin-based consulting firm Quality Management Services Inc., said hotels are often competing for the same experienced employees. "In order to be able to be fully staffed and maintain the desired level, additional resources will have to be dedicated to training and development," she said. "It's definitely an employee labor market. It's not an employer favorable labor market."

In one sign of a tight market, a hospitality industry job fair held at Nashville's Music City Center last month attracted roughly 150 attendees. That was down from 250 attendees for a similar event a year ago and 500 at The Westin Nashville hiring event in March 2016.

"Low unemployment in Davidson County means a smaller number of job seekers across many industries, including ours, and those individuals have more options available to them when considering a new position," said Bonna Johnson, an official of the Nashville Convention & Visitors Corp. "As a result, employers in the hospitality industry are being more creative in offering benefits like better pay, ESL (English as a second language) classes, transit assistance and tuition reimbursement."

Consultant King cites a client in North Carolina spending 12 hours at a job fair where only four people showed up to talk about opportunities.

"It used to be 10 candidates for one position," she recalled. "Now, we're running a deficit for some positions, so people who apply for one position if they look like a viable candidate are offered other positions than what they applied for."

Sevier County lodging, restaurants

“In Sevier County, we have approximately 450 lodging facilities,” said Joe Fall, department head of Hospitality Business at Walters State Community College’s Sevier campus. Visitors primarily want a safe, well-known place to sleep before going out to other activities, such as eating at an area restaurant – of which there are also about 450, Fall said.

There are also about 125 tourist-oriented businesses and attractions, and 670 general retail establishments in Sevier County.

“All in all, about 58 percent of the jobs in Sevier County are tourism-related, in those areas I just spoke of,” Fall said.

He’s been in the area since 2000, and has seen both visits and related businesses grow. Now mom-and pop motels are on their way out, as bigger, fancier national hotel brands move in, Fall said.

“Obviously, these people need educated employees, or experienced employees,” he said.

Hospitality businesses want employees who can see the industry’s big picture, while today’s students want to know why they’re told to do something, Fall said.

Add that to the overall tight labor market, allowing skilled workers to go where the money and corporate culture are better, and it’s no surprise that companies compete for good employees, he said.

Businesses spend at least twice as much on attracting new customers as keeping current ones, Fall said.

“Well, if you think about it, an employee is a customer of the business,” Fall said.

Universities and high schools part of solution

Learning institutions are playing a role in helping hotels and the overall hospitality industry to meet staffing needs. Statewide, there are more than 25 culinary arts programs at high schools under the National Restaurant Association Educational Foundation's ProStart initiative, which involves a two-year curriculum.

A Hospitality Works link to the Nashville Convention & Visitors Corp's visitmusiccity.com website allows hotels and other members of the Tennessee Hospitality and Tourism Association to post jobs for viewing by the public. The trade group also offers scholarships to students pursuing degrees in hospitality-related fields, including $15,000 this year.

The 25 culinary arts programs statewide include the Gaylord Opryland Academy of Hospitality at McGavock High School, which is staffed by employees from Gaylord Opryland Resort & Convention Center.

"The academy's focus on career exploration, job shadowing and internships has helped many students discover an array of career paths in hospitality," hotel spokeswoman Jenny Barker said. "A lot of our seasonal hires have come out of that program."

Gaylord Opryland also taps into university outreach initiatives, internships and other programs through its operator Marriott International to help to meet its workforce needs.

TSU student and Saudi Arabia native Suhayb Hawsawi

At the higher education level, Nashville State Community College, Tennessee State University and Columbia State Community College in the Nashville area are among learning institutions with programs geared toward preparing students for hospitality jobs.

Saudi Arabia native Suhayb Hawsawi, who is concentrating his studies at TSU's College of Business on hospitality management, is approaching his fifth month as an intern at the Homewood Suites by Hilton Nashville Vanderbilt on West End Avenue.

Hawsawi, who arrived in Nashville three years ago, said he was drawn to the hospitality industry by job opportunities worldwide and his love for serving people.

"I would like to be a general manager one day as well as run my own hotel brand," he said.

In East Tennessee, Walters State Community College offers a two-year associate of applied science technical degree in hotel management and restaurant management, which is like a business administration degree focusing on hospitality. The program currently has 15 to 20 students.

Many community college students work entry-level jobs in lodging while taking classes, and the hospitality program serves essentially as “pre-screening” for good employees,  said Joe Fall, head of Walters State's hospitality business department and an associate professor of hospitality management.

That’s why he gets 50 to 100 calls per semester from area hospitality businesses wanting to hire his students.

“Job placement is beyond 100 percent,” Fall said.

Entry-level hotel jobs in Sevier County bring $8.50 to $12 per hour, he said.

“Probably closer to the $10 mark,” Fall said. “And, in some cases, access to benefits.”

Someone with a degree, looking for a guest services manager position, can expect $13 to $14 per hour – about $28,000 per year, plus benefits, he said.

“That’s a livable wage here in Sevier County,” Fall said.

The tight labor market makes immigrant labor even more important to the hotel industry. Last year, 1,800 foreign students came to Tennessee on J-1 exchange visitor visas to work in the state on the Summer Work Travel program. They were among 3,862 overall J-1 visa holders who came to the state for programs ranging from going to school to being physicians in local communities.

"It's not like they're going to displace American workers," industry consultant King said, citing the abundance of job opportunities in the sector.

Coming soon but selling short

More than 20,000 new hotel rooms are currently planned in and around Tennessee’s three largest cities, with the three-quarters of them intended for Nashville, according to Hendersonville-based STR, a hotel industry research firm.

Five hotels, totaling 576 rooms, are under construction around Knoxville, while 19 more with 1,900 total rooms are in some stage of planning.

Eight hotels with 843 rooms are underway in Memphis and its immediate area, with 24 more – with 2,547 rooms – in planning.

And in Nashville, 36 hotels are under construction with a combined total of 5,472 rooms. An additional 75 hotels, with 9,056 rooms, are in the planning stages.

Greg Adkins, president and CEO of the Tennessee Hospitality & Tourism Association, says the lodging industry is the basis for other tourism endeavors: nobody will come to Tennessee attractions if they have nowhere to stay.

“We’re one of the driving economic engines in the state,” Adkins said. But the state doesn’t put enough into promoting Tennessee hotels or tourism in general, he said.

What Tennessee should spend on tourism marketing

The state now spends a little over $10 million a year on tourism marketing – less than the combined marketing budgets of convention and visitors’ bureaus in Knox and Sevier counties, Adkins said.

Tennessee should spend as much on tourism marketing as Michigan does, he said: $33 million this year. Tennessee’s total state budget is $37 billion annually, compared to Michigan’s budget of $56.5 billion.

Each dollar spent on promoting tourism gets a $16 return, Adkins asserts; so more state marketing would drive up sales tax revenue.

He blames state legislators for consistently inadequate funding – and said marketing is usually the first thing cut from the state budget when times are lean.

“It’s just asinine to me. I don’t understand it and I never have,” Adkins said. “That’s the last thing you should cut.”

Source: Knoxville News Sentinel, by Getahn Ward and Jim Gaines

The East Tennessee Economic Development Agency markets and recruits business for the 15 counties in the greater Knoxville-Oak Ridge region of East Tennessee. Visit www.eteda.org

 

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