Hotel Industry Bounces Back Due to Lower Ancillary Costs, Less Chaos

As hotel giants around the country continue to report positive numbers on their respective second-quarter earnings calls – MGM Resorts International just about left its CEO speechless with its latest record-breaking results – it’s become clearer that the lodging industry is one part of the travel sector that is thriving in the wake of the pandemic.

In fact, one might say that hotels are taking great advantage of what they don’t have compared to the airlines.

No high overhead costs such as rising and unstable fuel prices.

No fixed space issues that are causing the chaos we have seen in airports.

And little to no staffing shortages.

It’s hard for airlines to do much about the first two reasons; it’s virtually impossible to do anything about the third reason. The aviation industry can’t just fill a pilot shortage like it’s an injury to a baseball team with a ‘next man up’ philosophy. The next man up among pilots and airline mechanics and even flight attendants involve a lengthy wait as those positions require much training.

That’s not a knock on hotel workers, it’s just reality and a huge plus for lodging.

“In the case of labor in hospitality, your shortage is probably more with less-skilled workers than in the case of the aviation industry,” David Tarsh, spokesperson for travel data analytics company Forward Keys, told Reuters News Service. “If you’re short of cabin crew and you’re short of security people in the airport, you can’t just increase wages and suddenly fill these roles. People also need to be trained.”

JetBlue Airways reported a quarterly earnings loss this week, and both United and Delta reported a profit that fell below expectations.

Yet also this week, Marriott International announced earnings and said it beat Wall Street expectations with a net income of almost $700 million.

“Marriott’s second quarter results highlight consumers’ love for travel,” Marriott CEO Anthony Capuano said. “We reported outstanding results, as momentum in global lodging recovery continued.”