Arizona's punch-drunk hospitality sector may face new barrage on the November ballot

The hospitality sector nationwide has been hit hard.

UPDATED SEP 4, 2024

Hospitality staffing levels, which were significantly impacted during the COVID-19 pandemic, have yet to fully recover.

Glendale, Arizona: The nation's hospitality industry seems to have taken on mythical proportions with the 2024 presidential candidates. Both Donald Trump and Kamala Harris seem firm in their commitmment to drop taxes on tips. That attention from the very top seems to have had a trickle down effect, especially in Arizona where the hosptality industry has been bufetted by a rise in the cost of living and other challenges. Employers in the sector are struggling to retain workers, with many pointing to increased competition and a need for higher wages to keep up with living expenses.

Arizona's minimum wage currently stands at $14.30 per hour, but many hospitality businesses, particularly hotels, are finding it hard to compete for workers. Staffing levels, which were significantly impacted during the COVID-19 pandemic, have yet to fully recover, leaving hotels and event centers understaffed and forcing current employees to work longer hours.

This issue coincides with the construction of the Mattel Adventure Park near State Farm Stadium in Glendale. The stadium itself has hosted major events such as two NCAA Final Fours, three Super Bowls, and numerous Fiesta Bowl college football games, adding further demand to the region's hospitality industry.

In response to these challenges, an initiative is being pushed forward to address wages and working conditions in the hospitality sector. The proposal includes three key provisions: raising the minimum wage to $20 per hour, implementing a cap on the workload for room attendants, and ensuring that service charges imposed by hotels and event centers are passed on to the workers.

Advocates of the initiative, backed by the Worker Power organization, recently submitted 9,000 signatures to place the measure on the ballot for the upcoming November election, far exceeding the required 6,000 signatures. They argue that fair wages are essential for retaining employees and improving service quality, which in turn will benefit businesses in the long run.

However, the initiative is facing legal opposition, with the city attempting to block the measure. Officials argue that it addresses more than one issue, making it ineligible for the ballot. The Arizona Supreme Court is now set to decide whether the initiative will proceed.

Union workers picket outside of the Grand Hyatt San Francisco hotel on September 03 in San Francisco, California. Over 10,000 hotel union workers are striking at 25 hotels in 9 US cities as they demand higher wages, fair workloads and reversing cuts implemented during the COVID pandemic. (Photo by Justin Sullivan/Getty Images)

Why is the US hospitality industry in crisis?

Labor Shortages

One of the most pressing challenges is a shortage of workers. Many hospitality employees who were laid off during the pandemic have not returned, leading to understaffing in hotels, restaurants, and event venues. The industry is struggling to attract new talent, as workers seek better wages, benefits, and work-life balance. According to the U.S. Bureau of Labor Statistics, there are still millions of unfilled positions in the sector.

Wage Pressure

With rising inflation and cost of living increases, hospitality businesses are facing growing pressure to raise wages to attract and retain staff. Many workers have left the industry in search of better-paying and less stressful jobs, leading to an increased focus on wage reform.

Rising Operational Costs

Inflation has not only affected wages but also the overall operational costs of running hotels and restaurants. Energy, food, and supply prices have all seen significant increases, impacting profitability.

Changing Consumer Preferences

Consumers' preferences and behaviors have shifted post-pandemic. Many travelers now prioritize health, safety, and flexibility in bookings. There is also a growing demand for personalized and tech-enhanced experiences, such as contactless check-ins and mobile ordering. Meeting these new demands requires investment in technology and staff training

Uncertain Recovery in Business Travel

Business travel, a key revenue driver for the hospitality industry, has not fully recovered. Virtual meetings and remote work have reduced the demand for corporate travel, conferences, and events. As a result, hotels and airlines that depend on business travelers are seeing slower-than-expected recovery

Sustainability Expectations

There is increasing consumer pressure for businesses to adopt sustainable practices, such as reducing energy use, minimizing food waste, and eliminating single-use plastics. While beneficial for long-term business reputation, these initiatives often require substantial upfront investments.