Small Leisure & Hospitality Businesses Face Hiring Challenges

December 16, 2014

Tim O’Beirne, general manager of the Hamilton-Turner Inn in Savannah, Georgia, has added three new people to his 21-employee staff over the past year. But while the upscale boutique hotel has received 25 to 50 applications for each opening, finding qualified people with a customer-service mentality who are good at talking with guests has been a troublesome challenge.

“It was difficult finding the caliber of person I’m interested in,” O’Beirne says. “We garner very high [room] rates, so our staff members need to be able to deal with people.”

O’Beirne fears that finding high-quality workers will become even more challenging in the months and years ahead as several new large hotels open in Savannah and there is talk of opening a casino on a nearby island.

O’Beirne’s hiring challenges likely echo what many leisure and hospitality businesses in the South and across the United States are facing right now. The ADP Workforce Vitality Index created in conjunction with Moody’s Analytics—which measures workforce dynamics such as job growth, wage growth and turnover across a range of industries—shows that leisure and hospitality businesses have made a strong comeback in recent months. Small leisure and hospitality businesses in the South have shown particularly strong growth.

That’s not surprising, says Gregory Daco, lead U.S. economist for Oxford Economics, a company that consults for corporations and the government on economic trends. Daco says the South was hit harder by the U.S. financial crisis and the Great Recession in recent years and has therefore taken longer to recover economically.  “The Northeast wasn’t hit as hard and recovered faster,” Daco says. “You would expect the South now to be recovering.”

Daco points to government data that shows that consumers are increasingly spending money on leisure, food, travel and entertainment, which has propelled growth among these businesses. He expects to see even greater acceleration in hiring, wage growth and employee turnover among leisure and hospitality businesses over the next few years, thanks to an improving U.S. job market.

"Turnover isn't necessarily a negative," Daco adds, "because it means consumers are feeling confident enough to switch jobs."

Nauman Haque, a research director for CEB, a corporate advisory company, says his company’s most recent survey of business owners (from July 2013) shows that the number-one “pain point” for small leisure and hospitality businesses has been finding quality help. “The economy is picking up and they’re having less trouble getting customers and selling things, but they’re having more problems with quality of labor,” Haque says.

Andrew Kneale, owner of Harrison’s Restaurant in Stowe, Vermont, has also experienced such problems. He’s found it particularly difficult to find experienced kitchen staff such as cooks and sous chefs over the past three years. About six years ago, Kneale listed a chef position on Craigslist and got 200 applications. But a recent chef opening—which offered a $900 weekly salary and a ski pass at a local resort—attracted just four applicants.

Other local restaurant owners have expressed similar problems hiring kitchen staff, Kneale says. They think it’s because several new restaurants have opened in the area and because some nearby large ski resorts can offer their employees full benefits, and free or discounted stays at other resorts in their nationwide networks—perks a small family-owned restaurant like Harrison’s can’t afford.

In response to his hiring issues, Kneale says he recently gave his kitchen staff a raise. “We have raised our wages to entice them to stay and not go somewhere else,” he adds.

About the Report: The ADP Workforce Vitality Index is a comprehensive, quarterly measure of U.S. workforce dynamics that looks at key labor market indicators, such as employment growth, job turnover, wage growth and hours worked. This report yields deeper insights into workforce dynamics and trends than previously available.

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For media inquiries about the ADP Workforce Vitality Report, please call 201-400-4583 or email Allyce Hackmann.