The job market in 2022 was unpredictable, to say the least.
All industries had to compete for talent, inflation reached a 40-year high, and despite the looming threat of a worldwide recession, the market regularly saw job increases well above what economists predicted, and the unemployment rate in America dropped to 3.7 percent.
During the onset of the pandemic, few industries were impacted as much as the hospitality industry. This led to a swift rebound after vaccines became widely available and economies started to recover. Now, three years removed from that initial lockdown, the industry is faced with a new set of challenges.
HERE ARE THREE OF THE BIGGEST CHALLENGES FACING THE HOSPITALITY INDUSTRY IN 2023.
- THERE WILL BE CONTINUED LABOR SHORTAGES
Following the COVID-19 pandemic, there was a dramatic slowdown in the hospitality industry. There was an obvious impact on local economies and the country as a whole. In 2022, we saw a rebound in travel and in the restaurant and retail industries following the introduction of vaccines and the reopening of countries and local economies. But there was still a significant lack of proper staffing for the hospitality industry as a whole.
According to a report from American Hotel & Lodging Association last summer, 97% of hotels reported staffing shortages, and the restaurant and retail workforce is down roughly 6.1% from pre-pandemic levels. That’s something that we expect to continue for the hospitality industry into 2023. The most recent Employee Situation Summary released in December 2022 saw an increase of jobs at 263,000 with an unemployment rate of 3.7 percent. The looming threat of recession has led many businesses to implement a hiring freeze, but so far the job market remains largely unchanged. The jobs-to-openings ratio is currently about 1.7 to 1, so any employers still looking to hire will have to deal with a competitive job market.
- THE COST OF TRAVEL WILL LIKELY INCREASE
The cost of travel, hotels and airfare is predicted to increase yet again in 2023.
Business travel airfare is on track to rise nearly 50% year over year from 21-22, according to a report from travel management company CWT and the Global Business Travel Association. The company says that next year fares are set to increase by more than 8%. This, coupled with a recession could threaten to stall a rebound in the hospitality industry.
- EVERYTHING WILL BE SHIFTING TO MOBILE
The hospitality industry needs to be prepared for a generation that has been forever changed by the pandemic. Consumers are used to shopping online, ordering food online and booking travel online. A report from McKinsey showed that e-commerce surged 30% in the first three months of the pandemic.
If customers are going to spend money with your business, they want to do it in a way that is easy and most convenient for them, which they have shown is almost entirely online. In order for hospitality to keep up with the trends, they will need to make sure their offerings are available for purchase online.
It will be a challenge for businesses in the hospitality industry to thrive in this current climate, but understanding the challenges that we’re facing and preparing for it can help get you through the worst of it.
We’ve covered tips for the restaurant industry to prepare for a recession and you can also check out more of these cost-saving measures that will help you add to your cash reserves.