Extended wait times, limited services, and increased costs: The impact of staffing shortages on your summer getaway

As you embark on summer travel, you may notice that car rental costs are sky-high, your favorite eatery has limited hours, and hotel check-in lines are particularly lengthy. With the U.S. easing travel restrictions thanks to CDC guidance for vaccinated travelers, the hospitality sector is experiencing unprecedented demand.

Following over a year of vacant hotel rooms, restaurant closures, and minimal travel, the travel and hospitality sectors faced a major slowdown in 2020. Now, however, the industry is heating up like never before, potentially struggling to meet the surging demand.

TPG, in collaboration with Healthline Media (part of TPG's parent company, Red Ventures), has released a study on summer travel trends. Findings reveal that half of U.S. adults (50%) are likely to take at least one summer vacation between June and September this year, a figure that climbs to 54% among those who are vaccinated.

While tourist destinations are eager to welcome back visitors and their spending, they recognize that the journey may have some obstacles ahead.

"Rebuilding a thriving travel and hospitality workforce is crucial — an industry that contributes billions to state and local taxes," states Caroline Beteta, president & CEO of Visit California. "Nonetheless, the summer travel outlook is promising, and attractions across the Golden State are eager to host guests once more."

Across the nation, hospitality businesses are grappling with staffing shortages and delays in supplies, forcing hotels, car rental services, ride-hailing companies, theme parks, cultural venues, and restaurants to limit their hours, offerings, or overall service.

Although airlines appear to be weathering labor shortages, likely due to ongoing federal support, other sectors struggle to meet rising demand. Travelers should brace for potential hiccups during summer travel this year.

Here’s what to anticipate regarding labor and supply challenges within the hospitality sector.

What’s driving the high costs of car rentals?

When travel ground to a halt in March 2020, many car rental companies responded to declining revenues by offloading parts of their fleets. Avis Budget, for instance, reported selling 250,000 vehicles as of February 2021. While companies like Hertz plan to rejuvenate their fleets with a recent $4 billion funding announcement, they face supply challenges due to a global semiconductor shortage impacting car production, as reported by The New York Times.

If you’ve attempted to book a rental car recently, you may have encountered sky-high prices or completely booked locations. Some travelers have even turned to renting U-Hauls or trucks from home improvement stores as a last resort to secure transportation at their travel destinations.

"In reaction to COVID-19, many [car] rental companies scaled back their fleets and are struggling to ramp up again due to shortages in the automotive industry and a significant surge in demand for rental cars, especially in popular outdoor destinations like Wyoming, Montana, Hawaii, Alaska, and Florida," explained Steve Sintra, VP NA of booking platform KAYAK. "The interplay of supply and demand is a major factor, contributing to the fluctuating prices we’re witnessing nationwide."

Why are numerous restaurants still closed on certain days?

Even though most states and cities have lifted capacity restrictions, restaurant owners nationwide continue to face challenges in fully reopening their establishments.

Restaurants in NYC are grappling with various issues that hinder their ability to operate consistently. "The economy's reopening is positive for the city's dining scene, but the road to recovery is lengthy after countless small businesses closed, many others are at risk, and roughly 40 percent of jobs in the industry remain lost compared to pre-pandemic levels," says Andrew Rigie, executive director of the NYC Hospitality Alliance. "Despite high unemployment, restaurants are finding it tough to hire, as many are competing for a limited pool of workers all at once."

Lindsey Hill, owner of Miss American Pie in Brooklyn, currently works with her husband as the sole staff members without pay. "I've posted job listings on various websites, Facebook groups, and culinary school boards, but received minimal responses," she shares. "We've had to limit our hours to just three days a week due to the staffing shortage."

Cecilia Di Paolo, owner of Naked Dog in Brooklyn, shares a similar struggle. "Hiring staff right now is nearly impossible. In the past, posting a job ad would yield about 30 to 35 responses, allowing us to conduct interviews and make solid hires," she explains. "Now, we receive zero to two replies, mostly from individuals lacking experience seeking their first job."

Even prominent chefs are finding it hard to recruit talent. Award-winning chef Dan Kluger, who runs Loring Place and Penny Bridge in NYC, mentions staffing difficulties and supply chain issues. "We've had to close some meal times due to staff shortages. Costs for everything from food and beverages to supplies have surged, and we've invested heavily in upgrades and PPE. Still, we’re only reaching about 60 percent of our sales potential, and without sufficient staff, getting to 100 percent is impossible," he states.

The staffing challenges extend beyond NYC. Jacquee Renna-Downing, co-owner of La Quinta Cliffhouse in La Quinta, California, recounts how, after laying off staff during closures, she struggled to rehire them. Many preferred to stay on unemployment, were concerned about safety, were tired of managing rude customers defying mask rules, or had found other employment. She also faces supply shortages, leading to smaller menus that have reduced guest returns due to limited choices," she notes.

Dodie Stephens, communications director for Explore Asheville, North Carolina's convention and visitors bureau, emphasizes, "It's important for travelers to understand that some restaurants are currently opting to close for one to two days a week. This decision often aims to provide existing staff with much-needed time off. In some cases, family members and college students of restaurant owners are stepping in to assist."

Why is it difficult to get a cab from the airport?

Ride-hailing services like Lyft and Uber are facing a shortage of drivers, which is affecting their capacity to meet consumer demand. "With rising vaccination rates in the U.S., we are noticing that the demand for rides is outpacing the availability of drivers," Uber stated in an April 12 filing with the U.S. Securities and Exchange Commission.

Cab drivers are among the most vulnerable to contracting COVID-19, as they share a confined car space with numerous passengers each shift. This situation is likely contributing to staffing shortages in ride-hailing, limousine, and other car service sectors this year. Many drivers have transitioned to delivery services, where they face less direct contact. Uber's delivery segment achieved record earnings of $52 billion in March 2021.

Be prepared for potential delays when booking or hailing a ride, and prices may rise as well. It’s advisable to book airport pickups as far in advance as possible, consider leaving a car at the airport, arranging for a friend to pick you up, or using public transportation.

Why is my hotel check-in line so lengthy, and why hasn’t my room been cleaned yet?

Hotels and resorts are facing hiring difficulties as they reopen or try to reach full capacity. During a recent first-quarter earnings call, Hilton CEO Christopher Nassetta stated, "[Staffing is] one of the biggest challenges, especially here in the U.S., where finding labor is tough, and it's limiting our recovery at times due to a lack of staff to service our properties."

Considering factors like children out of school and ongoing unemployment benefits, Nassetta suggested that conditions might improve post-summer. "I believe it will be challenging until September. By then, mass vaccinations should be completed, kids will return to school, and people will feel safe to return to work and earn a paycheck," he added.

Hyatt has also highlighted that employee shortages are hindering a full recovery. "We have seen a significant demand for additional staffing but are struggling to fill those positions quickly, especially in high-demand room markets," stated Joan Bottarini, CFO of Hyatt Hotels Corp., during Hyatt's first-quarter earnings call in May. She expects stabilization later in the year.

When TPG inquired about Hyatt's staffing issues, a spokesperson mentioned: "Hyatt's commitment to care has navigated us through this crisis and shapes our recovery path. We aim to help our employees return to their regular schedules as soon as possible. With the increasing number of fully vaccinated individuals, we anticipate strong hotel demand this summer and fall, which will provide numerous hours for our dedicated teams. Hyatt also supports The American Hotel & Lodging Association's efforts to pass the Save Hotel Jobs Act, a grant program designed to restore hotel jobs, pay workers, and aid in economic recovery."

A significant challenge in the hotel labor market is the temporary worker visa ban implemented by the Trump Administration last year, which President Biden recently allowed to lapse. Although this ban has ended, many embassies remain understaffed. For example, the U.S. embassy in Turkey has announced that it will not be able to process visas in time for the summer season. Many seasonal tourist spots depend on an influx of foreign workers from countries such as Ecuador and Turkey through the Summer Work Travel program. Wisconsin is a leader in bringing international college students to work at summer resorts, raising concerns about staffing levels to meet the upcoming demand.

What are the reasons behind some theme parks closing on certain days?

Similar to restaurants, certain theme parks and attractions are reducing their operating hours due to staffing shortages. Upon reopening for the season on May 14, Cedar Point amusement park in Sandusky, Ohio, faced long lines and closed attractions. The park cited staffing issues as the cause and announced it would be closed on Tuesdays and Wednesdays throughout June. In a statement, the park mentioned new employee incentives aimed at attracting more workers.

"We have created over 300 full-time, year-round roles with benefits for our food and beverage team. Additionally, we've introduced a $500 sign-on bonus for seasonal employees and have increased the hourly wage for all seasonal and part-time positions to $20, marking a 100% increase from the wage rates of 2020," stated a message shared on the park's social media channels.

Certain destinations are taking this opportunity to attract visitors to lesser-known attractions.

"Explore Asheville expects a sustained interest in visiting the area as spring and summer flourish in the Blue Ridge Mountains. We anticipate that outdoor areas, which were popular during the pandemic, such as the Blue Ridge Parkway, will continue to appeal to both tourists and locals," states Stephens. "This is a chance for Explore Asheville to direct visitors to less-frequented locations. Our goal is to showcase adventures and natural sites that might not initially come to mind, highlighting unique activities throughout the region."

In conclusion

Be prepared for elevated prices, closures, long queues, and other delays as you plan or set off on your long-awaited vacations this spring and summer. We’re still facing significant challenges due to major staffing shortages and supply issues that are likely to persist through the summer. Our best tip: Bring your patience and enjoy the journey!