Labor shortage is an outright crisis for hospitality industry: Best Western Hotels CEO – Yahoo Finance

BWH Hotel Group CEO David Kong sits down exclusively with Yahoo Finance’s Akiko Fujita to discuss his upcoming retirement, recovery of the hotel sector, and the labor shortage facing the hospitality industry.
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JULIE HYMAN: There’s a big change at the top for one of the world’s largest hotel chains. BWH Hotel Group CEO and President David Wong– David Kong, excuse me, is retiring at the end of the year after nearly 20 years in that role, the longest-serving executive in the industry. Kong spoke exclusively with our Akiko Fujita about his decision and why he’s choosing to step away right now.
DAVID KONG: First of all, I’m not retiring for good. I like to think that I have some runway left. I am just looking to leave Best Western after 20 years. That’s a long time. And during that time, we’ve done so many amazing things and built such wonderful platforms. The company is in great shape, has a great foundation.
And I always want to leave at the peak of my career. And last year, as you mentioned, was the most challenging time for just about anybody’s career. And we’ve not only survived it, we’ve excelled. The company actually did extremely well. We didn’t have to tap into our reserves at all. In fact, we added to our reserves.
And our guest satisfaction ratings are high. Our revenue production is great. So I’m leaving the company in great hands and a great state.
AKIKO FUJITA: David, I want to get into the state of the industry in just a bit. But it is worth noting on this occasion, 17 years in your current role. You started as a dishwasher or busboy, if I recall correctly, in the industry. And when you think about the transformation for the company, at the time where you took on this role, you had one brand. Now you’ve got nearly 20 brands.
As you look back on these years, talk to me about the transformation that you have seen in the industry and why you think that the BWH group has been able to stay relevant, especially within a younger demographic.
DAVID KONG: Yeah, very good question. Well, first of all, I am an immigrant. I came to this country with nothing. I had no friends. I had no connection, no money. I was a dirt poor student. I had to immediately get a job as a dishwasher and busboy.
And look at what’s happened to me. Now I’m the CEO of one of the biggest hotel companies in the world. So it speaks to the dynamic opportunities this industry offers. It really empowers bold dreams and enables people to pursue those dreams without hesitation.
So I’m grateful to the opportunities the industry has provided. As well, I’m grateful to Best Western for affording me the opportunities to grow and prosper in my career.
If you look back in the last 40-some years that I’ve been in the industry, the industry has changed a lot. But one thing that has remained constant is it’s a hospitality industry. It’s about people. It’s about taking care of people that stay with us and taking care of people that work in the hotel industry.
The industry has gone through many ups and downs that it’s always survived. It’s extremely resilient and strong. And likewise, we are surviving this pandemic and recovering very nicely.
At this time, things look bright. Technology adoption is something that the industry has not really embraced. But now, because of the pandemic, it’s speeding up technology adoption. So there are a lot of things that are happening that are very exciting. And it’s just a great time to be in the industry right now.
AKIKO FUJITA: Let’s talk about the challenges facing Best Western right now. Labor certainly front and center in the hospitality industry. You look at the most recent jobs numbers, zero jobs added in leisure and hospitality in the last month. There are more job openings than workers. How long do you think until you are able to fill the openings right now? And what does that mean in terms of the challenge this presents for the way with which you run the company?
DAVID KONG: The labor has always been a challenge for many years. And after the pandemic, it’s an outright crisis at this point. And it’s not just our industry. And it’s not just related industry. It’s almost in every industry it is a problem.
The fact that in the US, we have 10 million jobs open, and the unemployment rate is about 5.4% and 5.5%, when at one point, we were at 3.5%, you see what the problem is. There are people that are reluctant to come back to the workforce. So it’s affecting many, many different industries.
The hospitality industry needs to reinvent itself in the way that we compensate people, in the way that we pay, in the way that we provide benefits to be more competitive, because right now, we’re just not competing with us with the same industry for the talent, but we’re competing with other industries, other industries, meaning Google and Amazon and the like, that are very generous in what they do. So we have to step up and be much more competitive in that sense.
The other thing that we need to do as an industry is to reinvent our image. It’s not known as an industry that provides a lot of opportunities. And people tend to think that they’re going to be stuck in their jobs. But you look at me as an example. And I’m a wonderful example to illustrate that the industry actually affords a lot of upward mobility and a lot of opportunities for people that want it.
So we have to get the word out that not only do we provide opportunities, but we also value diversity and inclusion. And you look at me, how I can move up the ladder, it’s a great example. We just need to get the word out.
AKIKO FUJITA: When you talk about the image of the industry, of course, we’re talking about more of the traditional hotel names as we know it. But you’ve got competition from the likes of Airbnb. When you think about the way in which behaviors have changed over the pandemic, Airbnb has said their long-term stay is the fastest-growing sector for them right now. How do you compete with something like that when the demand in terms of how people use hotels and stays have evolved over the course of the pandemic?
DAVID KONG: Yeah. I’ve always thought of Airbnb as a big disruptor. It is really, in many ways, forcing all of us out of our game. And the reason Airbnb can say that is because of the remote workforce that’s been prevalent after the pandemic. A lot of people–
Like today, I just talked to someone who was supposed to be working in Chicago but is now in Hawaii and has been in Hawaii for three months. He moved there three months ago. And he’s working remotely. And that organization didn’t even know.
So Airbnb is empowering that kind of work arrangement, where people are, in some ways, allowed to work remotely or encouraged to work remotely. So it’s empowering that to happen. But in the long run, I think we will each find our space. There are people that are reluctant to stay within Airbnb for a variety of reasons and are more comfortable with amenities as well as the safety and security that hotels provide.
So we will each find our niche. And in the end, I think things will work out. But I welcome competition. I think the industry wants it. And it’s a way for all of us to provide a better experience and improve the guest experience.
AKIKO FUJITA: And David, really quickly, going back to what you just said, you said the competition isn’t just others in the industry, but you’re competing with tech names like a Google. Are you starting to see some of that migration? The traditional labor pool you would have tapped into, are they now moving away from the industry?
DAVID KONG: Yes. We’ve seen, even in our company, when we had the pandemic and, regrettably, had to lay off some people, many of them actually went to work somewhere else. They went to work for Amazon or Walmart or Google.
It’s not just in technology. But a lot of even entry-level positions that we used to be able to tap into, that talent is being siphoned off by them. So I’m already seeing that. And I think that will continue unless we improve the way that we compensate people and provide those upward mobility opportunities.
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