Ever since Holiday Inns founder Kemmons Wilson invented the family automobile vacation, the hotel industry has relied on the middle class for the bulk of its business. For decades, the core leisure customer for most hotels was the family of four on their annual vacation. Dad was probably an hourly union-wage worker in manufacturing or a mid-level white-collar worker. Mom either also worked or was a stay-at-home parent during the kids’ younger years. These families weren’t rich but they enjoyed many comforts of the consumer age, including the ability to travel and stay in hotels.
In the past decade, and especially since the start of the recession in 2008, that middle-class core customer has become more scarce, a development that can have major implications for the hotel business, particularly for properties in the midscale and below segments. According to a recent report from the National Employment Law Project, the economy has been adding jobs every month but with a disturbing trade-off. According to the report, while the majority of jobs lost during the economic downturn were mid-wage, mid-skill jobs—the kind of employment that enables your core customers to take their family vacations each year—most of the jobs added since the turnaround are low-paying, minimum wage-type positions.
The numbers are staggering: lower-wage occupations accounted for 21% of job losses during the recession but 58% of jobs created during the turnaround. Conversely, mid-wage occupations were 60% of recession losses but only 22% of recovery growth. This disparity directly affects all industries that rely on a strong middle class for the bulk of their business. In the lodging sector, that’s the thousands of economy and midscale hotels that cater to value-conscious travelers.
Luckily for them, this good jobs deficit probably won’t hurt luxury or upper upscale hotels. The report says the number of high-wage jobs lost in the recession just about matches the number of these jobs restored in the recovery. Every other hotel owner and operator has cause to worry.
Unfortunately, there is little you as a hotelier can do to shift this trend in a more positive direction. However, since all Americans—even ones whose financial situation was thrown into turmoil because of the recession—still have a desire to travel, you should devise marketing programs, rate schedules and value-added opportunities at your hotels to cater to those who are still traveling, even if they have a lot less to spend on their vacations.