Skift Take
Some sectors will feel the labor shortfall versus surging travel demand more acutely than others. Solutions will be complex — and protracted.
After a nightmarish Covid-ridden past year-and-a half, executives at hotels, short-term rentals, destinations and even airlines in the U.S. are facing the acute pain of missed opportunity this summer when many predict the travel and tourism industry will see one of the strongest surges in demand on record.
On the traveler side of the equation, there will be sold out destinations, sub-par service at overrun hotels and restaurants, elbow-to-elbow seating on flights, and attractions that will be impossible to visit because entry lines will be endless, and parking lots packed bumper to bumper.
Chalk a lot of it up to the great labor shortage of the summer of 2021.
"The shortage in labor across the industry could place travel providers at risk of not being able to bring back capacity fast enough to meet demand, which could lead to a loss in revenue," said Jason Guggenheim, BCG's global head of travel. "Further, it also creates delivery risk, with service interruptions, cancellations and elements of the product experience closed or operating at limited hours, such as certain restaurants at a resort may not have staff to open despite the hotel being at capacity."
But can't travel companies fix this labor supply-and-demand disconnect by offering higher wages? It's not that simple, according to Guggenheim.
"Travel companies are and will pay more to bring back the right amount of labor, but demand is still volatile and so ensuring they bring back labor thoughtfully is critical for their cost structure and ability to generate positive margins and cashflows," Guggenheim said. "Almost every travel company has a weaker balance sheet now relative to pre-pandemic, placing a greater emphasis on producing positive cash flow and slowly reducing the burden of a weakened balance sheet."
Here's a sector by sector look at the travel demand and labor shortage disconnect in the U.S.
Labor Shortages Stymie Hotel Owners
Major hotel companies expect this summer to be the bes
