A new report by the Cornell Hotel and Restaurant Administrative Management (CRAM) predicts a major boom in hotel construction in China for the next few years, and a corresponding boom in the workforce to staff it. The report says new hotel construction will grow at a rate of 27% in 2013, compared to a 22% growth in 2012.

Smaller hotel rooms are on the way with the advent of smaller, more efficient air travel that will clubbed with increasing population and rising costs of living. With the drop in the demand for hotel rooms in the next three years, the hotel occupancy rates are expected to fall from the current 79% to the low 60% in 2015.

With the world’s population continuing to grow, and with more people owning computers, tablets and smartphones, the global hotel industry could experience an unprecedented surge in demand. According to a report by PriceWaterhouseCoopers (PwC), the number of business travelers could double by 2030 to more than 2 billion, with the rise in demand for leisure travelers. However, this rising demand has been accompanied by a 22 percent increase in supply, which could lead to a shortage of hotel rooms, according to the PwC report. PwC’s analysis predicts there will be a shortage of hotel rooms for business travelers by 2030, and a shortage for leisure travelers by 2035.

The American Hotel & Lodging Association (AHLA) recently published a report and a state-by-state breakdown of job loss that indicate the hotel industry’s recovery might not be as clear-cut as the return of leisure travel.

According to the study, hotel room income would decrease $44 billion this year compared to pre-pandemic levels in 2019, with occupancy down 10%. While leisure travel is improving, corporate travel, which accounts for the majority of the hotel industry’s income, may take until 2024 to completely recover.

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New Study Predicts Hotel Slump, Worker Shortage

The research also discovered a significant employment gap, with one out of every five direct hotel operations positions lost during the epidemic not returning by the end of the year. The figure, almost 500,000, indicates a massive labor deficit.

The domestic hotel sector may take years to recover. The AHLA and the Asian American Hotel Owners Association are hosting a Virtual Action Summit this week to meet with members of Congress and urge them to support efforts to expand the Employee Tax Retention Credit, establish fair per diem rates, and pass the Save Hotel Jobs Act, which focuses on giving hotels payroll grants and offering tax breaks on things like required personal protective equipment.

“Despite an uptick in leisure travel, midway through 2023 we’re still seeing that the road to a full recovery for America’s hotels is long and uneven. These findings show the economic devastation still facing hotel markets and underscore the need for targeted relief from Congress for hotel workers and small businesses,” said Chip Rogers, president and CEO of AHLA.

New Study Predicts Hotel Slump, Worker Shortage Chip Rogers, President/CEO, American Hotel & Lodging Association (Photo via American Hotel & Lodging Association)

“Hotels and their workers have shown incredible resilience in the face of historic economic difficulties, but we need Congress’ assistance to get back on track, whether it’s via the Save Hotel Jobs Act, fair per diem rates, or extending the scope of the Employee Retention Tax Credit. That is why the industry has come together to support our Virtual Action Summit,” Rogers added.

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