As the tourism industry returns, 3 million workers wait for a callback

Business is rebounding quickly across the country at hotels, restaurants and airlines, but millions of employees have been left behind as companies seek to lock in pandemic changes to their models and slash labor costs in the future.

For a year, hotels, airlines, casinos and restaurants - at least those that remained in business - have made do with far fewer workers, often well under half of the number they employed before the pandemic. Customers have adjusted, with hotel guests checking themselves in on mobile apps and restaurant patrons content with picking up takeout.

Employment has begun to recover, with 13.8 million people employed in leisure and hospitality jobs this March, according to the Bureau of Labor Statistics. That’s up from 8.7 million last April after mass layoffs took place.

But that’s still 3 million jobs short of where the industry was before the pandemic, and it remains to be seen how many of the industry’s still out-of-work employees will get a call back with business and international travel to the United States still nearly nonexistent. And some large employers are signaling they plan to make do with fewer employees as they experiment with new business models that allow them to cut labor costs.

Hilton’s chief executive said recently that he’s focused on reducing labor costs at the chain’s 6,400 hotels.

“The work we’re doing right now in every one of our brands is about making them higher-margin businesses and creating more labor efficiencies,” Hilton chief executive Chris Nassetta told investors in February. “When we get out of the crisis, those businesses will be higher-margin and require less labor than they did pre-covid.”

The world’s largest hotel chain, Marriott, is testing “contactless arrival kiosks” at hotels in New York, Louisiana and Miami, along with colossal vending machines to replace convenience stores.

Only time will tell what long-term effect such changes will have on jobs. Hilton spokesman Nigel Glennie said that “the one thing we know for sure is that Hilton is a business of people serving people.” Marriott spokeswoman Connie Kim said the company’s kiosks “will not impact staffing levels.”

“The new technology provides flexibility for guests who prefer to stay contact-lite, while maintaining the option to be serviced by a hotel associate one-on-one if needed,” she said.

How many of these changes will become widespread is unclear. What’s certain is that the $1 trillion tourism and travel industry, which was among the hardest hit of all sectors of the U.S. economy, is now seeing growth as housebound travelers, flush with savings, reemerge.

During the first week of April, more than 10 million travelers passed through security at American airports, 12 times the number during the same week last year, according to the Transportation Security Administration.

People are heading south in particular, where they are finding warm weather and less restrictive health protocols. Among the top 25 U.S. markets, hotels that are open in Tampa (82 percent) and Phoenix (77 percent) reported the highest March occupancy levels. The lowest were Boston (39 percent) and Minneapolis (38 percent), according to the data firm STR.

“Spring has been good in Florida and Texas,” said STR’s Jan Freitag.

The number of visitors to Las Vegas has risen three straight months, according to the city’s tourism agency. Gambling revenue on the Strip was up 8 percent in February over January and probably will rise further after Nevada raised capacity limits on March 15.

“I think the propensity and desire to travel is still real - people want to get out and about,” said analyst Michael Bellisario of Robert W. Baird and Co.

The reopening has prompted acute hiring blitzes. United Airlines reopened its flight training school on April 6 in expectation of needing more pilots. The IHOP chain announced plans to hire as many as 10,000 people as customers return to indoor eating. Amusement parks are hiring thousands of seasonal workers.

But enough companies have used the pandemic to refine technologies and practices in order to serve customers with fewer people that laid-off workers are wondering whether they’ll ever get the call to come back.

Nely Reinante is a 45-year-old mother of three living in one of the nation’s tourism hot spots, Hawaii. A Filipino American, she has 10 years of experience as a housekeeper, including three years at the Hilton Hawaiian Village, in Waikiki, where she worked until the pandemic arrived.

She said she often cleaned 10 to 15 rooms a day and felt she was a big part of making hotel guests feel welcome.

“Our guests pay hundreds of dollars every night they stay. They deserve to get the best experience and the best service,” she said. “They are coming to enjoy the special treatment of Hawaii.”

She is wondering how much service the hotel will be offering guests in the future, and whether it will need her again. When the pandemic arrived a year ago, the hotel sent her and her co-workers home on furlough. Since then, Hilton and other hotel chains have experimented with serving guests with dramatically fewer staff members, including housekeeping.

Some high-end hotels are only cleaning rooms every other night, instead of nightly. Such a change could result in the hotel employing half the number of housekeeping staff, jobs that are typically filled by women of color, including many immigrants. Nationally that would mean the permanent loss of millions of jobs.

Reinante said she thinks the hotel has hired less than half of the roughly 700 housekeeping staff it used to have. If she cannot return to work soon, she said, her family of five may have to give up their apartment and move into a two-bedroom unit where her sister-in-law lives.

“If we are not called back then we will be permanently laid off,” she said.

D. Taylor, president of the Unite Here union representing 300,000 hotel, casino and food service employees, said the hotel industry had been looking for a reason to cut labor costs before the pandemic arrived. He said the industry risked going through a transformation akin to that of airlines after the 9/11 attacks: from offering customers a personalized experience to ruthless efficiency in the form of endless fees and upcharges.

Taylor said 60 to 70 percent of his members remain unemployed. “Are some people getting called back? Sure. But what we are seeing a lot, especially in the hotel industry, is to have a largely jobless recovery.”

How much the slimming of these services will remain in place once travel more fully returns is unknown because they are far from fully recovered, largely because many of them rely on some business travel, which remains nearly nonexistent.

Business travel and international travel to the United States, which remains meager, will need to come back to see a larger share of jobs return, said Tori Emerson Barnes of the U.S. Travel Association. “It’s just not going to be enough to fill the hole until we get international travel and business meetings and events back,” she said.

The cruise industry has barely come back at all. Nearly 30 million people took a cruise in 2019. Since July only about 400,000 passengers have set sail, mostly in Europe and Asia.

About 1 in 20 American hotels still have not fully reopened, according to Kalibri Labs, and the rate is more than double that in big cities. Without any business travel, hotel owners have leased their ballrooms out on the cheap to cheerleading competitions and soccer teams. They’ve rented blocks of rooms long-term to colleges and universities in need of more dorm space for social distancing purposes.

“We are still in what anyone would categorize as a crisis in terms of employment,” said Chip Rogers, president and chief executive of the American Hotel & Lodging Association.

For all the recent success in Las Vegas, the number of visitors who arrived in February, 1.5 million, is still less than half of the 3.3 million who traveled there the previous February. Nearly all casinos nationally are still operating under capacity restrictions.

Reinante is not the only member of her family to lose work during the pandemic; she said one of her sons lost his job in the restaurant industry, another sector that has been operating with much fewer staff. Restaurants have relied heavily on takeout and drive-through business for the past year, and chains have advanced touch-screen displays and mobile apps that sometimes allow them to employ fewer people.

Almost all restaurant owners, 91 percent, are looking to automation technology to help streamline their kitchen operations in 2021, according to a recent survey by the payment company Square. Three-quarters of restaurants plan on offering contactless ordering and payment options for customers no matter how they order. Some restaurateurs are creating “ghost kitchens,” offering chef-quality meals for takeout.

A permanent slimming of staff will only work for businesses if their customers are okay with it. Millions of unemployed service workers are hoping that’s true.

“If you go somewhere, you want your house to be clean when you come back. Same with guests,” says Reinante.

But she still hasn’t gotten the call to come back.