The Labor Episode: How the Omni Hotel Chain Is Dealing With Hiring Right Now

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

So Tracy, obviously one of our big themes so far for the podcast, and I guess for the economy overall, has been the sort of like shortages and bottlenecks that people have experienced across business, across supply chains in the wake of the crisis.

Tracy Alloway (0:36)

Bottlenecks everywhere and in everything, it feels like sometimes. And of course, one of those bottlenecks is in the labor market.

Joe Weisenthal (0:45)

Yeah, exactly right. Like this is, I would say, the one other sort of like big thing that we have yet to really talk about, which is that numerous businesses, largely in leisure and hospitality, but not just that area, have voiced, I don't know if frustration is the word, but have certainly found hiring to be much more difficult than they expected, especially coming out of a downturn.

And even much more difficult than it was pre-crisis. So the economist of all kinds of theories for why, but it's clearly a phenomenon of this environment that makes this moment distinct and is posing challenges to various managers and bosses and companies.

Tracy Alloway (1:27)

Yeah, so I'm obviously not in the States. So I've sort of been watching this issue from afar. It's not such a big thing in Hong Kong, as far as I can tell, but I've seen some of the anecdotes about this, like signs on the front of fast food restaurants saying that they can't open today because they don't have enough employees or some of their employees didn't show up.

I also know it's a very heated issue at the moment with, it's sort of like a classic labor versus capital kind of issue at this point with a lot of the companies blaming workers and saying they don't wanna come back to work because they're afraid of getting COVID or because maybe they're getting unemployment benefits through the government and so they don't feel compelled to go to work. And then the worker's saying, well, if you really want us to come back, why don't you actually do something to encourage us and raise wages? I mean, that's the obvious thing for them to do. So yeah, it's an interesting one. And I'm very, very intrigued about this particular issue and how it's playing out over in the States.

Joe Weisenthal (2:33)

Yeah, exactly right. And we have seen pretty dramatic wage growth in the leisure and hospitality sectors.

Employers are jacking up wages to bring people back, but it seems like the effect has only been marginal so far. And we hear from a lot of economists, so they have their charts and they say, well, here's the effective UI and here's the effective childcare and so forth. But sometimes it's also really good to actually talk to someone in the hiring process and get away from all of the theory that economists like to talk about. In fact, I think we prefer it here. It's more interesting to talk to people who are involved in shipping or trading lumber or anything that someone with a lot of charts and theories.

Tracy Alloway (3:14)

We've definitely gone very granular this year. The other thing I was thinking, it kind of gets into the overall topic of whether or not behavior has changed after the pandemic.

Is this a fundamental shift in how people are approaching work? Like going forward, are there just going to be fewer people who want to work in hospitality for whatever reason? Or is this actually a temporary bottleneck or supply shortage that is going to eventually work itself out?

Joe Weisenthal (3:47)

Yeah. And just to your point, there are like signs everywhere. Like not only does every place up has a sign, but like you go to a grocery store and it says in advance, like sorry for the slow service in the line. We're having every place has a warning about that. It's really wild. Anyway, let's get into it. Cause I'm very excited. We're going to be speaking with someone who's like right in the heart of all this going on. We're going to be speaking with Kurt Alexander. He is the CFO at Omni Hotels, which is a big hotel chain that has about 50 locations in North America, all very high end. And we're going to get into the nitty gritty of hiring and operations at a hotel in this environment. So Kurt, thank you very much for joining us.

Kurt Alexander (4:29)

Hey, good morning Joe. Thanks for having me.

Joe Weisenthal (4:32)

Yeah, thank you so much for coming on. Before we get into the sort of like environment right now, let's say like go back to say August of 2019 or February 2020 before COVID, why don't you just sort of like describe a little bit about labor turnover and the sort of like, the labor needs and the general needs of a hotel chain like Omni.