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A Tricky Factor for Meeting Budgets: Labor

As hospitality employees return to work, their wage increases are greatly outpacing those in other industries. The increased cost to suppliers could affect pricing for various event elements.

For planners who aim to hold in-person meetings between now and early 2022, the good news is that staff growth at hotels, restaurants, entertainment venues, and visitor-service businesses is strong. According to the U.S. Department of Labor, hiring in the leisure and hospitality industry is nearly double the rate of the rest of the private sector. On average, hospitality businesses have been adding headcount at a monthly rate of 9.2 percent since June. 

But the bad news for planners is that all this hiring comes at a cost. The proof: The Labor Department found that weekly wages in leisure and hospitality are 15 percent higher than they were two years ago, versus 10.2 percent higher across the rest of private sector.

Higher labor costs are likely to factor into the approaches of hotel sales teams as they negotiate contract terms with event planners. Further, this comes in an environment where the rebound of leisure travel combined with demand from postponed meetings is creating compression in certain meeting destinations.

Melissa Layton, principal of Operation Altitude, a Colorado destination management company, recently told Destination Colorado that “I am seeing a lack of availability in late 2021 and into 2022 at hotels and venues based on groups rescheduling their events from 2020 and 2021. Compounding the problem is that it’s difficult to get timely responses. Many salespeople were furloughed during Covid, and hotels and venues appear to still be understaffed [in sales].”

Given the rise both in space demand and front-line labor costs, planners might want to warn executives that budget flexibility could be necessary when negotiating terms for upcoming meetings.

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