You are currently viewing Local hospitality has recovered thanks to sales Local hospitality has recovered thanks to sales and wages, but not jobs

Local hospitality has recovered thanks to sales Local hospitality has recovered thanks to sales and wages, but not jobs

From an economic point of view, measuring tourism is a bit risky.

Outside of an “experimental” national account from the US Department of Commerce, government statisticians do not track a sector labeled “tourism.” In fact, economic activity related to tourism intersects with several established economic activities: accommodation, restaurants, retail trade, transportation, arts and entertainment.

Expenditure surveys generally indicate that tourists deposit their money in the sectors listed in the order above. In other words, tourists generate the highest percentage of revenue for accommodation operators, but less and less for the following sectors.

Of course, it depends on the locale. Tourists account for a much larger share of food service, retail, and arts sales in Jackson Hole than in Spokane.

Since Eastern Washington University does not have access to an ongoing survey of tourist spending in the three major cities, the most obvious proxy is activity in the first two on the list: tourist establishments. accommodation and catering establishments.

Their totals overstate the amount spent by tourists, as they include the activities not only of business travelers but also of local residents. This latter effect might be slight for accommodation operators, but not for local restaurants, bars and cafes.

Faced with these admittedly substantial warnings, what can be said of the recent offer of accommodation and catering in the two departments and therefore of tourist activities?

The “cleanest” metric comes from Benton-Franklin Trends data on accommodation retail sales. At around $85 million in 2021, local business sales in the industry rebounded from the pandemic low of $50 million in 2020. The total, however, is still below the 2019 peak of 92.7 million. of dollars.

The employment recovery in the accommodation sector has been much more muted. Total average employment in the two counties in 2021 was 889. That’s an improvement of just 52 workers from 2020. And the 2021 average was 165 (-23%) lower than the 2019 peak.

Combining accommodation with restaurants to form the hospitality sector, we arrive at a more robust rebound: 2021 brought a substantial improvement over 2020, but still down from the peak of 2019, down about 400 jobs, or 4%.

In contrast, total average employment in 2021 in both counties was down about 1% from the 2019 peak.

Average annual earnings in hospitality, however, tell a different story.

They jumped by nearly a third (31%) between 2017 and 2021. Across all industries, average annual earnings grew, but at a considerably slower pace of around 18%. Of course, average hospitality earnings in 2017 were very low, at $18,570.

There are many reasons why wages in the industry have been so low: minimum entry skill requirements, the prevalence of part-time work and, until recently, the relative abundance of workers. The dramatic increase in earnings can likely be attributed to a sharp drop in the number of applicants, leading to an increase in hourly wages. It is also likely that the hours worked per week have increased.

To better understand the relatively low salaries of hotel establishments in the larger Tri-Cities, it may be worth digesting a few characteristics of its workforce.

First, the ranks of its workers are disproportionately made up of young people.

Census data shows that the average share of the entire local labor force occupied by young people (aged 14-24) over the past five years has been about one in seven (14, 4%).

The share of the hotel workforce held by very young workers over the same period was almost three times higher, at 39%.

Inexperienced workers generally do not demand the same wages as those who have been in the workforce for years.

Second, the local hospitality workforce biases Hispanics, according to the census.

In recent years, the share of Hispanic/Latino(a) workers in the local workforce has been approximately 28%. Share of Hispanics/Latino(as) in hotel workforce: 31%.

Language barriers and relatively low levels of education have probably contributed to a greater weight of this key population in reception services. It will be interesting to see if the weighting disappears over time.

Third, the hospitality industry generally faces a high turnover rate. (This could be an effect as well as a cause.)

Data from the last four quarters of available data (2020 Q2 – 2021 Q1) reveals that the average turnover rate in a given quarter for all sectors of the local economy was 10%.

Or, one in 10 workers changed jobs during the average 90-day period.

Of all the sectors, the hotel industry produces the highest rate: 16%, or one worker in six, has changed jobs. Compare that to the local finance and insurance industry, where quarterly revenue was just 6%.

2021 ended with local hotel sales exceeding those of the pre-pandemic peak of 2019, thanks to catering establishments.

Hospitality sales this year are expected to be even higher.

Earnings for its workers should continue to climb. Still, the job count may still not match 2019.

While sales headaches may fade for these companies, employee turnover is still a challenge. Future data will tell if higher salaries will reduce the hotel industry’s high churn.

Patrick Jones is executive director of the Institute for Public Policy & Economic Analysis at Eastern Washington University. Benton-Franklin Trends, the institute’s project, uses local, state, and federal data to measure local economic, educational, and civic life in Benton and Franklin counties.

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