WORKFORCE PROFILE: Feature from the SUMMER 2024 ISSUE of STAY Magazine
While it’s something we have heard many times, a discussion about the state of labour in the Canadian tourism sector (which for the purposes of this article includes the hotel industry) can’t begin without reiterating just how drastic an impact the pandemic had on the industry and the country’s overall economy.
According to a report from The Ontario Tourism Education Corporation (OTEC), in 2020, during the height of the pandemic, employment in the tourism sector fell to 1.62 million workers (from around 2.062 million Canadians employed in the tourism sector in 2019) and the number of active tourism businesses in Canada rapidly fell by 21.9 per cent. By 2021, employment rose just 2.2 per cent to 1.66 million workers.
Today, things are definitely looking up. Many experts say that the overall state of the tourism workforce has improved, but to what degree?
Understanding the challenges
There remain challenges that employers are facing in the labour market and both policymakers and industry professionals are seeking ways to improve the labour market and understand ways to thrive moving forward.
The tourism sector was one of the hardest-hit sectors when it came to pandemic-related unemployment—including a mass exodus from the hospitality sector (both foodservice and accommodations). During this economic shutdown, the tourism labour force—in particular, women, racialized workers, and immigrant workers—was profoundly affected by the loss of employment and income.
These employment issues would continue long after the shutdown began, with many employees finding work in other industries outside of tourism and failing to return to the industry.
The tourism sector accounts for almost 9.5 per cent of the total employment in Canada and is an important driver of the economy. The workforce exodus disproportionately affected career-oriented professionals. These employees sought stable, permanent, and reliable work and the disruption of the pandemic only served to highlight the volatile nature of the sector during global crises.
Tourism HR Canada found that many of these workers, especially those who found employment in other sectors, were unlikely to return to their previous jobs in tourism. And for those who could be drawn back, their expectations around working conditions and compensation have changed, making it vital for hospitality businesses to attract them with new incentives, policies and programs designed to support career seekers for the long term.
The recovery has exceeded expectations
In 2023, the Canadian hotel industry experienced a recovery across all major markets in Canada, exceeding pre-pandemic levels in key performance indicators such as Average Daily Rate (ADR), Revenue per Available Room (RevPAR), and Occupancy.
Tourism HR Canada has highlighted a steady recovery in tourism employment, reaching over 2 million workers as of December 2023. The current growth is robust in sectors like recreation and entertainment, travel services, and food and beverage services. Although there are some ongoing challenges with hiring and retaining workers, it is expected that employment numbers will soon surpass 2019 numbers.
Post-COVID, as demand for tourism services and products increases and international travellers return, reattracting the displaced workforce is a key priority for the sector.
Industry sentiment
According to Destination Canada in Q4 2023, total tourism revenue exceeded 2019 levels, generating nearly $109.5 billion by the end of 2023. This represents the recovery of the tourism sector from the COVID-19 pandemic, one year earlier than projected. The industry, post-recovery, is expected to grow faster than the general economy at 5.8 per cent.
According to Marc Ercolao, economist at TD Economics, Canada’s job market will continue to cool in 2024, but it should hold up better than in previous cyclical downturns.
Climbing unemployment rates across the nation will be predominantly driven by still-solid growth in labour supply as opposed to a mass deterioration in hiring.
Pockets of public-sector industries are still notably tight. Meanwhile, private-sector hiring has slowed markedly over the past several months.
Wage growth is expected to moderate as employment slows, unemployment tracks higher, and job vacancies decline further. However, rising union wages may delay this moderation.
Across the provinces, Alberta and the Atlantic region should outperform as still-decent employment growth can better keep pace with labour force gains. Ontario, Quebec, and British Columbia (B.C.) will likely suffer from a more pronounced slowdown in hiring.
Valerie Upfold, founder and principal of Val Upfold Inc. says, “There are still a lot more openings than people are hiring for, but this is generally how the industry works. In 2022 there were bidding wars for labour because everybody needed people, even for hourly workers. A lot of that has to do with restaurants and accommodations stepping up their game when it came to providing health benefits, focusing on mental health and well-being. The result was that people did come back to the industry and they were getting paid more than before.”
Upfold continues, “Hotels are faring better than the food service side. Speaking to human resource departments in hotels, there hasn’t been as much of a slowdown when it comes to hiring as there is in the restaurant industry—[hotels] are moving ahead and hiring.” She adds that she hears the same sentiment when speaking to other consulting firms who work with hotels and restaurants.
“The labour market has improved over a few years ago, with more applications per job posting.” Roz Blaker, area vice president, owner and franchise services at Marriott Hotels Canada says, “However there is no doubt that a shortage of skilled labour remains in sectors of our industry, and labour markets overall remain tight. Marriott has taken aggressive actions to reach more of the talent in the marketplace and make it easier for applicants to start a career by streamlining our application process and implementing new technology.”
Understanding barriers and opportunities
When it comes to addressing some of the barriers facing potential employees interested in the hospitality industry, skills training is essential to providing the candidates with the tools they need to face the modern-day consumer.
Accommodation businesses in Canada, like many globally, face challenges in managing customer expectations post pandemic, to a degree that is often more acute than in other industry segments.
Key factors contributing to these challenges:
Since the pandemic, there has been a heightened awareness and expectation for cleanliness and safety standards. Hotels and other accommodation businesses are under pressure to maintain rigorous sanitization protocols, which often involve additional costs and staffing requirements. Customers now expect visible and continuous efforts to ensure environments are safe, which can be difficult and expensive to sustain.
As the the hotel sector has recovered from severe labour shortages, those shortages affected the ability to meet service standards that customers expected. This is vastly improved today, however.
The pandemic accelerated the need for digital solutions in booking, check-in, customer service, and even in-room technology. Adapting to these technological expectations requires significant investment from accommodation businesses. While technology can enhance efficiency and customer experience, the transition can be rocky and expensive, especially for smaller operators.
Post-pandemic, there is significant price sensitivity among travellers. Accommodation businesses face the dual challenge of needing to increase prices to cover higher operational costs (like enhanced cleaning protocols and wages to attract labour) while also facing pressure from consumers looking for discounts and deals. This can squeeze profit margins and make it difficult to meet both operational needs and customer expectations.
The pandemic has altered what guests value in their travel experiences. There is a greater emphasis on experiences over mere accommodations, with a demand for personalization and unique offerings. This shift requires accommodation businesses to rethink their service offerings, which can be a complex and resource-intensive process.
“At Marriott, we aim to remove any barriers to entry into our industry and our company, and some ways of doing this are early interaction with the youth in our country through programs that are partnered with universities and gateway programs such as ‘Be our Guest’ in the Toronto area and other programs that aim to find the best talent currently in Canada and also attract valuable newcomers to Canada.”
When it comes to highlighting the opportunities in the industry, Upfold mentioned that the industry must find ways to attract the youth and a part of that is changing the biases around the tourism and hospitality industry.
Education in hospitality and tourism is also evolving to meet the new demands of the industry. For instance, schools like the School of Hospitality and Tourism at Southern Alberta Institute of Technology emphasize the importance of both traditional management skills and modern demands like technology and luxury services management. The school has been recognized for its high-quality programs and the success of its graduates in the hospitality sector
“Being able to highlight what all the benefits are in hospitality is so important—it’s a more social environment, employees get exposure to other cultures, there are often discounts and you’re involved in an exciting work environment. We could also do more to promote transferrable skills.”
While Upfold acknowledges that the industry as a whole has gotten better at explaining the benefits, she believes that they have to continue to refine that messaging and make sure it is communicated.
There is still work to be done to enhance the perception of a career in tourism and a creative approach to compensation will likely need to be developed, to retain young people in the sector.
Blaker suggests, “Governments can support through investment in training and education in these industries, including post-secondary schools in hospitality and culinary programming. Assistance is always welcome to help promote the many career opportunities in hospitality and tourism, critical as the tourism sector in Canada represents [a significant percentage] of the Canadian workforce.”
In Marriott’s case, they partner with colleges and universities to showcase opportunities for career advancement through internships and their management trainee program to integrate new graduates and set them up for career advancement within the company and industry.
Women, racialized individuals and immigrants were some of the most negatively impacted by the labour issues caused by the pandemic. In the first two months of the pandemic, the drastic employment loss among women was noted to be at “a level not seen in over 40 years,” according to a study by Beyond Recovery in British Columbia.
Some ways that hotels are addressing employees’ needs are through programs and initiatives such as a focus on workplace flexibility and holistic wellness programs focused on physical, mental and financial well-being.
Upfold says, “Hospitality has traditionally been behind in salary and benefits so we’ve had to step up the game there.” Being an industry that works a lot of hours, recognizing this and offering more flexibility around scheduling is beneficial. She adds, “Ten years ago as an employee you would have to be completely open to scheduling requests, but because of the labour shortage, employers now need to offer more flexibility. It is generally a younger workforce, more Generation Z and younger Millennials who prioritize work-life balance and equity and transparency.” Another consideration is offering hybrid opportunities for office employees who work in departments such as marketing and human resources to stay on par with what other employers outside of the industry are doing.
A resilient sector on the road to recovery
According to “The Canadian Hotel Market Report” by Avison Young, over the past year, the commercial real estate market continued its rebound from the pandemic, showcasing the resilience and strengthened efficiency of hotels. Despite economic pressures, hotels have shown they can adapt to challenging times and emerge successful. Looking ahead, challenges could arise with travellers looking to spend less due to uncertainty in the economy.
Over the next four years, Ontario’s tourism labour market is forecasted to grow, with openings being created from expansion demand due to economic growth and replacement demand from employees leaving their occupations. At the same time, an increase of 78,000 new workers is expected to join the labour force as new migrants, graduates and re-entrants.
Tourism SkillsNet Ontario, the Tourism Industry Association of Ontario and the Ontario Tourism Education Corporation put together the following labour-related recommendations for the industry: promoting tourism as a career, recruiting beyond the domestic labour pool, and using data-driven decision-making. A key policy win such as the Ontario Immigrant Nominee Program cap being expanded, to reach 18,000 by 2025 is just one example of the work being done to encourage a healthy labour force moving forward.
Read more about hotel workforce projections from the Hotel Association of Canada.
Sources:
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