The Future of Independent Contractors in the Hospitality Industry

By Mark Heymann Chairman & CEO, Unifocus | June 11, 2017

While the workplace continues its rapid move towards a "gig economy," recent National Labor Relations Board rulings have made it tougher for employers to classify workers as independent contractors vs. employees. That could change, however, under the new administration, which has signaled it could scale back federal protections of workers in favor of more employer-friendly policies. Add to that the uncertain future of healthcare requirements and the big questions are: Will independent contractors find a steady place in the hospitality industry? And what will be the advantages and disadvantages of working as a contractor versus a full-time employee?

The traditional workplace is fast giving way to a "gig economy." A 2016 study co-sponsored by research and advisory firm Ardent Partners and software company SAP Fieldglass found that close to 38 percent of that year's total workforce consisted of non-employee workers, up from 29 percent in 2011. What's more, another software company study, this one by Intuit, projected that by 2020 a full 40 percent of workers will be contract, temporary or self-employed. The Intuit 2020 Report also revealed that more than 80 percent of large corporations have plans to "substantially increase their use of a flexible workforce."

This brave new world is being fueled by both sides of the employee/employer relationship – on the one hand the lifestyle desires of Millennials, who now represent the majority generation in the workforce, and on the other the need for organizations to operate lean in an environment where service, rather than machine-controlled manufacturing operations, dominates the economy. This need for flexibility has major implications for the hotel industry.

The Millennial influence

Compared to previous generations, Millennials have different objectives and are less risk averse in their careers. They embrace a more transient lifestyle, waiting longer to settle down and start a family than their boomer counterparts. Fewer care about owning a home or car – acquisitions that were once considered badges of adulthood and that drove ambition in the workplace. According to Ernst & Young Global Generations Research, Millennials value work-life balance highly and in order to attain it, 65 percent are willing to forgo promotions, 44 percent would accept pay cuts, and as many as 77 percent would change jobs.

In its 2016 Millennial Career Survey, The National Society of High School Scholars polled Millennials ages 15-32 to determine the factors they consider in choosing an employer. In the category of salary and perks, flexible work hours/schedule topped the list at 70 percent, well above benefits (60 percent), base salary (46 percent) and performance bonuses (19 percent). Work-life balance (69 percent) was the number one priority under work atmosphere/environment. Millennial-friendly businesses like Google and Walt Disney have answered the call with more flexible hours and places of work. And Netflix is among the companies that have done away with restricting time off, implementing unlimited vacation policies (with certain caveats).

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.