Hotel Construction is Booming—Or, It Should Be

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Robison Wells

Hotel construction plans are, on paper, on track to be the highest growth trend since 2007. The hotel industry has reported year-over-year increases in growth in occupancy, average daily rates, and revenue per available room, according to STR, a group which monitors trends in the hospitality sector. In October there were 1500 hotel projects under construction in the United States.

So what’s the catch?

It’s the old looming specter of lack of skilled labor. Hotel companies are reporting a lack of skilled labor for electricians, carpenters, and other hourly labor positions.

Working on a total of 205,000 rooms, we’re only 7,000 short of 2007’s peak of 211,000 rooms under construction in December of 2007—just before the recession. Hyatt Hotels is hoping to increase its properties 6.5%-7.5% in the coming year, but is running up against an inflexible, bottom-of-the-barrel workforce that can’t sustain the growth that the company is trying for.

In August, the Associated General Contractors of America reported that labor shortages were the primary concern of 80% of contractors.

“Workforce shortages remain one of the single most significant threats to the construction industry,” Stephen E. Sandherr, CEO of the AGC, said in a press release. “However, construction labor shortages are a challenge that can be fixed, and this association will continue to do everything in its power to make sure that happens.”

There is good news on the horizon—in the long term, at least. The Bureau of Labor Statistics estimates that skilled labor positions will grow 11% by 2028, as opposed to 5% in all other sectors.

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