How New Immigration Policies are Impacting Hotels
The Perfect Storm
By Leon Fresco Partner, Holland & Knight LLP | November 26, 2017
The book and the movie, The Perfect Storm, was based on real events involving crewmen on a ship faced with trying to traverse the Atlantic Ocean during the middle of a storm where a nor'easter had absorbed a hurricane and formed its own unique meteorological phenomenon that was more menacing than either storm would have been individually.
In the hospitality industry, a very similar confluence of storms is occurring, but in this case, it involves several different immigration policies of the new Administration that are all operating together to threaten the profitability of the hospitality industry by reducing revenue and increasing labor costs. These changes are forming a perfect storm of their own that all hospitality industry professionals must learn to recognize and address if they are to successfully navigate this tumultuous period. This article briefly explores the labor and demand challenges separately, and then provides suggestions that individuals in the hospitality industry can potentially take to best position themselves in this difficult environment.
Challenges Facing the Hospitality Industry Regarding Labor Costs
Labor cost challenges have been a well-known phenomenon to the hospitality industry. As a significant segment of the hospitality industry has traditionally been seasonal, it has always been challenging to find competent workers at reasonable wages who are willing and able to move from one location to another location based on the seasonal demands of the hospitality industry. For this reason, the hospitality industry has traditionally relied upon supplemental labor provided by foreign nationals.
Over the past few years, two categories of foreign nationals in the United States, those on the Deferred Action for Childhood Arrivals (DACA) program and those with Temporary Protected Status (TPS), have provided over 150,000 workers to the hospitality industry. These workers have provided a much needed source of flexible labor supply as the leisure and hospitality sectors have added over 700,000 workers in the past five years according to the Bureau of Labor Statistics.
As of the date of publishing of this article, the existence of both of these programs is in serious doubt. The new Administration has already rescinded the DACA program , and unless Congress can pass a law to allow the nearly 700,000 DACA recipients to maintain some form of legal status, nearly 1,000 people will lost their status each day beginning on March 6, 2018. Similarly, the new Administration has announced that protection is no longer necessary for the nearly 300,000 individuals from Haiti and Central America who currently benefit from Temporary Protected Status. Accordingly, even if TPS status is extended for another short period, it is clear that the program is eventually headed toward discontinuation. If both of these programs are eliminated, the hospitality sector will immediately have to replace more than 150,000 jobs that will immediately become open due to the fact that current workers have lost their legal immigration status.