Business is ready to boom, but…..
Staffing shortages could hamper growth for hospitality sector
Foodbuy has announced a new partnership with the Hotel Association of Canada in an effort to help support the industry.
After 18 months of devastation the hospitality sector is on the rebound and is bouncing back faster than most experts predicted, with results expected to return, and even surpass, pre-COVID-19 levels sometime during 2023.
Several factors have led to the changing forecasts. A wave of pent-up demand is being released into the market now that travel restrictions have lifted and Canadians have travel top of mind. That, combined with two years of savings from staying home and not journeying abroad, equals a surge in demand.
Canadians’ love of travel and the forced travel restrictions that were in place during the pandemic have led to what is being termed ‘Revenge Travel’. People are traveling to make up for lost time, to reconnect with people and places and it is saving the day for the travel, tourism and hospitality sectors.
Domestic travel growth is forecasted to continue. Corporate and international travel is also expected to grow in 2023. According to a recent Google search, Canadian travel is up 100% year over year. Airlines are also projecting record-high travel for this year.
However, the immediate and unexpected high demand for travel has caused havoc across the entire system. Airports have struggled to accommodate passengers’ needs. According to a CNN poll of international airport flight delays, Toronto and Montreal ranked the worst, taking the top two spots, with
Vancouver coming in 10th. Hotels are also struggling to keep up with demand but for a different reason
With restrictions easing, the industry could have returned to pre-pandemic levels even faster with consensus estimating the missed growth opportunities to be 15%, to as high as 25%, if the sector could have hired enough staff to meet these demands on-time.
Foodbuy asked Susie Grynol, President & CEO of the Hotel Association of Canada (HAC), about the challenges facing the industry. “Other industries were able to remain operational during COVID-19 – even if they had to curtail hours. The hotel sector, on the other hand, essentially went into dormancy.
When we were finally able to reopen we faced a huge surge in demand right out of the gate. Trying to go from zero to sixty that quickly has been operationally challenging.” Staffing is THE key challenge now and going forward. According to Grynol, “What we have now is an industry that’s trying to deal with a massive increase in demand but does not have the labour force in place to meet that demand. That remains our single biggest barrier to growth.
“There are several compounding issues at play. Remember, we were almost completely closed, so many employees had to find other work to feed their families. When we finally did reopen, we were the last sector to rehire. Since then, the unemployment rate had also dropped to just 5% and many people had moved out of urban areas. This incredibly tight labour market has led to a lowered appetite for service jobs and significant limitation in available workers.”
Going forward, without making changes, the sector’s recovery and growth will be hampered. “We have the potential to have a record-breaking summer this year,” said Grynol. “Our challenge is that we may not be able to service this incredible demand. The tourism sector’s labour shortfall sits at 200,000 vacancies today. If you factor in the added demand anticipated for this summer, there will be a gap of approximately 360,000 workers. Compared to the health care and construction sectors, two priority sectors for the government, the labour shortfall is exponentially higher.”
Changing immigration policies key to survival Immigration policies at the federal and provincial levels are key advocacy issues for the Hotel Association of Canada and its provincial counterparts. Pre-existing shortages and the slowdown of immigration over the pandemic are both adding significant pressure for hotel operators.
Grynol put the issue into focus. “Despite talk of a recession, we know we will face record levels of demand, and our team is laser-focused on labour force issues such as immigration. What we learned from the 2008 recession is that travel patterns generally remain steady despite economic downturns. Travel is one of the last expenses our customer base is willing to cut, making our sector counter-cyclical.
“As the government builds back from the pandemic, we’ve got this interesting juxtaposition between ideal market conditions for growth and employment while also facing the most difficult labour conditions that we’ve ever experienced. Reconciling those two things is our challenge.”
We asked Grynol if the government was listening. “Yes, they are listening. I am in regular contact with key ministers who impact tourism and they understand that our sector has been disproportionately hit by the pandemic and they want to help us build back up. Most recently, we met with Minister Fraser, (Sean Fraser, Minister of Immigration, Refugees and Citizenship) to discuss tailored immigration solutions for our sector.
“We are proposing a series of short- and medium-term solutions. Most urgently we are working on a program to help connect new Ukrainian arrivals, many of whom will be arriving with a three-year work permit, with hotel jobs. As a longer term solution, we are asking the government to create a specialized permanent immigration stream for tourism and hospitality workers to support the industry’s recovery and growth.”
The government has made some other important policy changes that HAC has pushed for in the last few months including issuing work permits for spouses of temporary foreign workers, increasing foreign student working hours from 20 to 40 hours, and extending work permits for recent grads who are applying for Permanent Residency. While these measures will help, a tailored program under the Temporary Foreign Workers Program is the most efficient way for the hotel sector to access
enough workers to capitalize on demand this summer and they need it quickly.
In the mid-to-long term, HAC is pushing for adjustments in the immigration system to better match skills shortages in Canada. “COVID-19 shutdowns have led to a mass exodus in all hotel positions from executives to cooks, cleaning staff, and back of house support workers. Canadians just don’t want to work in front line positions and we can’t fill those positions through the current immigration program because it favours those with multiple degrees.”
Immigration is a key sector issue where the industry will definitely need full government collaboration to optimize 2023 growth expectations from coast-to-coast.