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 The new Administration has already rescinded the DACA program , and unless Congress can pass a law to allow the nearly 700,000 DACA recipients to maintain some form of legal status, nearly 1,000 people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.

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Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.