Is the hotel business peaking as travel slows down?


Key takeaways

  • Bookings for hotel shifts are down year-on-year in several major metropolitan areas
  • Hourly pay is increasing in areas where hospitality employment hasn't kept up with rising demand
  • Lower-skill roles have seen the biggest increases in pay for flexible work at hotels

A recent report by Bank of America suggests that Americans are starting to spend less on travel on a month-by-month basis, even as the spring and summer travel season should be kicking in. Indeed, travel and other leisure industries are facing a variety of headwinds this year relative to last year. There's less pent-up demand from the pandemic, much of the extra saving built up during the pandemic has been spent, prices and interest rates continue to climb, and the overall climate of uncertainty is making some consumers more cautious. Even if they're not traveling less, they're trading down to spend less.

Demand for labor on our platform is one of the earliest indicators of the direction of activity in the sector. Our Partners book shifts in line with seasonal trends but also fluctuations in demand. So here's what we've seen so far this season.

Austin is rocking out

Bookings for hotel shifts at the same locations are down year-on-year in some of the nation's biggest metropolitan areas, including Los Angeles and New York. As a whole, demand for flexible work among hotels looks decidedly mixed:

17 May 2023 hotel shifts

But bookings have skyrocketed in the Austin area, which has been one of the favorite destinations for companies and workers since the pandemic began. The total number of employed people in Austin is now 14% higher than it was before the pandemic began. Yet this stunning increase hasn't been fully reflected in leisure and hospitality jobs, which have grown by only 11%. Someone has to fill the gap, especially when newly arriving workers shack up at hotels before they can find permanent homes.

A paradox in pay

Increases in demand for labor are usually reflected in pay, so it's not surprising to see Austin leading the pack:

17 May 2023 hotel pay by region

Averaging across roles, hotel shifts in Austin are now paying about 8% more than they did last year. (We haven't included housekeeping roles, since we began offering them in most markets just this year.) Yet in the rest of the country, changes in shift volumes haven't always translated into changes in pay.

In Atlanta, for example, there has been a surge in the supply of labor for flexible work, in part as a result of the enormous inflation in consumer prices that the area has experienced. Atlantans have needed to work extra hours to make ends meet. But this surge of supply has been big enough to send hourly pay rates downward, even while demand has risen as well.

If we look at hourly pay for different roles, a somewhat surprising trend emerges: pay for lower-skill roles is rising more quickly than pay for higher-skill roles:

17 May 2023 hotel pay by role

This is the opposite of what we'd typically expect when there's an increase in the supply of labor for flexible work. Many of the workers who make up that supply won't have the specialized skills to be, say, a bartender or a line cook. And yet the biggest pay increases came for general labor and bussers. So what happened?

The answer goes back again to the migration of workers. A lot of the people who moved south to places like Austin and San Diego were white-collar, remote workers who wouldn't necessarily be in the market for general labor shifts at hotels. In places like these, the population increased without a commensurate increase in the supply of people willing to do lower-skill work.

The scarcity of international migrants since the start of the pandemic has exacerbated the issue, especially in the South. Overall migration numbers rebounded in 2022, but thanks in large part to efforts aimed at higher-skill workers. Even with declining demand from consumers, it will take some time before the staffing gaps have closed at hotels all across the country.


Realtime metrics

These metrics, derived from data aggregated across the Instawork platform, compare the two weeks starting 5/4/2023 to the previous two weeks. To control for the overall growth of the Instawork marketplace, only shifts involving businesses that booked shifts in both periods are included:

  • $0.02 rise in hourly pay
  • 0.0% point change in share of short-notice shifts
  • 1.5 hours drop in hours per existing worker

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