U.S. Hotel Industry Sees Promising Turnaround in Labor Market Dynamics

The U.S. hotel industry has faced significant labor challenges in recent years, exacerbated by inflation and economic uncertainty. However, as of mid-2025, the labor market has seen a noticeable improvement. The unemployment rate in the U.S. has stabilized between 4% and 4.2% over the past year. Hotel operators are now optimistic about continued progress in hiring and employee quality.

Improvements in Hiring Processes

Kerry Ranson from the Raines Company noted a time to fill positions reduced from 22-23 days to approximately 10 days. This improvement is attributed to a larger pool of potential employees, partly due to layoffs in other sectors, such as government and large corporations like Amazon. Additionally, the average age and experience level of applicants have increased, enhancing the overall quality of potential hires.

Varying Experiences Across Companies

While some companies report improvements, others face challenges. Gabriel Perez from The Indigo Road Hospitality Group observed a mismatch in the quality of applicants, with inexperienced individuals applying for high-level positions. This trend began in the fall of the previous year and is believed to be driven by economic uncertainty. Conversely, O’Mally Foster from Vision Hospitality Group mentioned a steady employment rate since mid-2023 but highlighted issues with inexperienced hires lacking essential people skills.

Wage Adjustments and Economic Factors

In response to inflation, which peaked last year, hoteliers have had to increase wages to remain competitive. Although inflation has cooled, with April’s rate at 2.3%, the lowest since February 2021, wage adjustments vary by location. Significant wage increases are necessary to attract workers in smaller markets with limited labor pools, such as Destin, Florida, and Franklin, Tennessee. In contrast, larger markets like Nashville and Atlanta have seen only modest increases.

Immigration Policies and Industry Impact

Recent U.S. immigration policies, including increased deportations and ICE crackdowns, have created uncertainty in the hospitality labor market. The Supreme Court’s decision to revoke temporary legal status for over 500,000 immigrants has intensified these challenges. Nearly 3 million immigrants work in the leisure and hospitality industry, making up 21% of the workforce. Companies like Vision Hospitality are supporting their employees and educating managers on handling legal challenges effectively.

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