A new survey of restaurateurs and hoteliers shows that industry profitability and operations continue to be hampered by a range of factors.
The Michigan Restaurant & Lodging Association (MRLA) last month released the results of a recent operational survey of the hospitality industry it conducted on topics related to labor, inflation, commodities, housing and supply chain as the industry continues to rebuild after two years of the pandemic. decimation.
The last similar survey of hotel operators was conducted in August 2021.
“While there is growing evidence that the worst is behind us, the data from this survey clearly shows that the hospitality industry continues to operate in a particularly challenging environment,” said the President and CEO of the MRLA, Justin Winslow. “Inflation, the supply chain and an inadequate workforce (combine) to suppress profitability and jeopardize a much-needed comeback for Michigan hotels and restaurants.”
Winslow compared the industry to a hospital patient who has just come out of the emergency room and is now dealing with a host of chronic illnesses, and the main condition that needs to be addressed is inadequate labor force participation. .
He said a targeted campaign to “educate, train and recruit a world-class hotel workforce” is needed, and the MRLA hopes to partner with the governor and the legislature to quickly achieve this goal.
“I think for this industry … the rate at which it has raised wages is more than double the amount of the economy as a whole, in terms of all companies raising wages over the past year, and despite that , and despite offering more signing bonuses and better perks, this industry is still (struggling). Four out of five restaurants and hotels don’t have enough staff to meet the demand that’s out there,” Winslow said.
“It’s a challenge and something we’re trying to fight here at the association in the long term. We established a training institute to try to help that process, to help properly recruit and train the workforce that this industry has right now, and so that’s something we’re focusing on a lot here.
Other key findings
- 80.5% of respondents are operating with an insufficient supply of labor to meet demand, with one in five establishments more than 30% below requirements.
- 59% are operating with fewer hours or days due to insufficient staff, but this is down 18% from last August.
- 99% have increased their salaries in the last 12 months, with 40% of operators having increased their salaries by more than 15% during this period. Larger salary increases increased significantly from August.
- 77% of operators have experienced commodity inflation over the past 12 months above 10%.
- 87% of restaurants have increased their menu prices in the past 12 months, most between 5% and 10%, and most have increased twice in that time.
- 74% of hotels have increased room rates in the last 12 months: 5% to 10% was the most selected range, but more than 20% followed closely behind.
- 60% of all operators said “inadequate affordable housing” for their specific workforce was a challenge, with 89% of hotel operators saying so.
- 62% report being profitable right now, but 61% report a decline in profitability over the past six months. Only 21% now say their business is at risk of closing permanently in the next six months.
“We’ve been surprised by the extent to which the availability of affordable housing is negatively impacting the hotel workforce across the state,” Winslow said. “It would appear that this problem is no longer strictly limited to tourism-centric locations (such as Traverse City and Harbor Springs, where many homes have become short-term rentals), suggesting the need for a legislative solution to solve this problem before. gets worse.”
Winslow pointed to efforts such as a statewide bipartisan coalition called Housing Michigan, which advocates for legislation that would help with the housing shortage for the workforce. It is made up of business and interest groups, builders, government entities and more, and the executive committee includes the Grand Rapids Area Chamber of Commerce, which has long recognized the crisis in the west of Michigan and works to find solutions.
“We hope to see positive results,” Winslow said.
He added that what the hospitality industry needs more than anything right now “is stability, so that it can make informed decisions that will help it operate profitably in the long term.”
“And I just don’t think we have (that) environment yet; this is where we are,” he said.
The survey was conducted May 2-9 by the MRLA and included 146 responses from Michigan restaurant and hotel operators, representing more than 500 locations and nearly 15,000 employees statewide. Both MRLA members and non-members had the opportunity to complete the survey.
The full report is on line.
Founded in 1921 as the Michigan Restaurant Association and now known as the Michigan Restaurant & Lodging Association, the MRLA provides services to Michigan’s hospitality industry. The association represents more than 5,000 restaurants and lodging establishments in Michigan. Michigan’s hospitality industry employs more than 595,000 people and generates nearly $40 billion in annual sales.