- Over a third of accommodation businesses cite ‘rising labor costs’ as primary risk over the next year
- Staff hiring, benefits, and training are part of cutbacks due to cost increases
- Businesses increasing reliance on technology such as mobile apps and AI chatbots for guest communication
A new report has been launched by Expert Market looking at the state of the accommodation industry – showing that rising operational costs are impacting hiring levels as well as staff benefits and training.
The Accommodation Industry Report surveyed more than 400 accommodation businesses on the state of the industry, their biggest upcoming challenges, and how they aim to address them.
‘Rising labor costs’ was found to be a primary risk facing operations for just over a third (34%) of accommodation businesses, followed by ‘Rising maintenance costs’ (27%), and rising interest rates (19%). Almost half (48%) said ‘Staffing Issues’ were a main risk, adding to cost pressures as ‘increasing staff salaries’ was stated as the primary way to address this, according to 34%.
These varied cost rises are having a notable impact on staffing as well as employee benefits and training, at a time when the accommodation industry is experiencing the highest industry quit rates since 2022.
When asked which areas rising business costs had affected most, cutting back on ‘hiring and & staffing levels’ was the main one for almost half of franchise (49%) businesses, and over a third of independents (34%). A quarter of accommodation businesses are reducing investment into employee benefits & welfare, as well as staff training – stated by 18% of franchises and 10% of independents.
This is echoed by accommodation professionals of franchise and independent models – ‘Staff recruitment, retention and training’ was the top challenge for both. Franchise professionals were particularly affected as more than half (51%) stated this, compared to 29% of those from independents.
Staffing issues and costs related to labor were also highlighted as the most significant operational risks in the coming year by both franchise and independent businesses.
The report found that accommodation businesses are aiming to use some technology to keep costs down and rely less on staff.
When asked about the changes expected to be made in the next 5 years, ‘Relying more on mobile apps to communicate with guests’ and ‘Increasing the use of automated room amenities’ came out on top from 14% of those surveyed. Automating guest communication is a key theme – 5% said they’d ‘rely more on AI chatbots for guest communication’, particularly as 12% said they’d like ‘less reliance on front desk for customer support’.
Expert Market’s Editor, Chris Maillard, comments:
“During an economically tough time, the accommodation industry has a huge set of challenges ahead, balancing staff and facility needs.
The report shows that people are the key element to a successful accommodation business. However, with the highest quitting rates of any industry, this will not be easy to manage – especially as rising costs are impacting staff hiring, benefits, and training. It has to be a mix of hiring people who love this type of work, and retaining them with good salaries and incentives.
Implementing new technology such as mobile apps and chatbots into operations should help shoulder the increased burden on staff.”
Please see the full Accommodation Industry Report findings and business recommendations here: https://www.expertmarket.com/accommodation/industry-trends-key-challenges-and-future-predictions
Additional information:
- Expert Market is a leading business solutions provider, with over a decade worth of experience.
- The survey was conducted in 2024 among 417 US-based Accommodation professionals, including owners and managers from both independent and franchise owned accommodation businesses. This sample size ensures statistically robust and representative data for the industry.
