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The Future of the Hospitality Industry

Every other day, you read a headline about labor shortages hurting restaurants and hospitality. In some places, companies are recruiting 14-year-olds, while others are offering big signing bonuses. Many restaurants are closing their doors several days a week because they don’t have enough staff to stay open, further hurting businesses that have managed barely to stay afloat during the pandemic. And government benefits that have supported those who’ve lost their jobs have ebbed away. So, why this dearth of workers? And why is it persisting? And if it continues, what does that mean for service?

Today we’re speaking to Patricia Ghamami, General Manager of the Drake Hotel Devonshire and Motor Inn, about working in the service industry today and tomorrow.

Transcript

Melinda: Hi, I’m Melinda, and you’re listening to Think Retail.

Every other day, you read a headline about labor shortages hurting restaurants and hospitality. In some places, companies are recruiting 14-year-olds, while others are offering big signing bonuses. Many restaurants are closing their doors several days a week because they don’t have enough staff to stay open, further hurting businesses that have managed barely to stay afloat during the pandemic. And government benefits that have supported those who’ve lost their jobs have ebbed away. So, why this dearth of workers? And why is it persisting? And if it continues, what does that mean for service?

Today we’re speaking to Patricia Ghamami, General Manager of the Drake Hotel Devonshire and Motor Inn, about working in the service industry today and tomorrow. Welcome.

Patricia: Thank you. Great to be here.

Melinda: So, to set the stage for our conversation, can you just tell us what’s happening? What you’ve seen happening with staffing and hiring during the last 18 months, and how it compares to pre-pandemic?

Patricia: Yeah, sure. I think that it’s pretty common knowledge. I mean, as you said earlier, it’s all over the news. The truth is that this is an unprecedented pattern, in terms of employment and finding talent in the industry, in the sense that there is a severe shortage of applicants. Anytime a posting is made up of, in fact, any level. Whether it’s middle to high-level management, or just entry-level positions, you have very few applicants. Quite often, the level of skill or experience that goes up against bringing to the table, is minimal at best. And even with those applicants, there are quite often very specific restrictions as to their availability, or the kind of salary they’re willing to accept, or the kind of positions they are willing to take. So, really unprecedented times. Previously, you would quite often have a good selection of highly talented and skilled people to choose from in any position. So, it’s really turned on its head, if you will.

Melinda: Yeah. And it’s not just the foodservice industry. I mean, this is across all frontline service sector, retail positions. A lot of blame for this has been placed on government support for people who found themselves out of a job during the pandemic. But now that those supports are drying up, do you see any change happening?

Patricia: There’s been a marginal change that we’ve noticed at least. I think the truth is that the CERB probably gave some people the opportunity to take marginal pay cut and stay at home for various reasons, whether if there was a true concern about serving the public during the pandemic, which is a real concern – it’s a health issue, and it’s understandable. Or that people were just burnt out from all the years of working in an industry that’s really taxing both physically and frankly speaking, oftentimes, emotionally and psychologically. So, CERB was a catalyst, I think, for a long-coming problem that I think we’ve all been aware of. But frankly speaking, there was never a simple solution to the problem, and nobody really had a viable proposition to even address the problem. So, now we’re faced with a situation where it’s everyone’s reality, and we have to find a way to deal with it because I don’t think it’s going away anytime soon. So, no. To answer your question, I don’t think CERB was the defining factor in what’s happening now.

Melinda: Right. And I think some people did use the pandemic as an opportunity to upskill or to make a change moving into something like, you know, a professional position, where they’re behind a desk and could work from home. We’re also seeing some of that too.

Okay, so people may not be coming back to work, but what about customers? And if they’re coming back, how is this impacting the experience that they’re having and the pressure on current staff?

Patricia: Yeah, we definitely see a resurgence of demand, you know, from the industry in terms of products and services. Clearly, we’re not at 100 percent capacity, but there is certainly much more demand than there is supply, if you will, in terms of just opportunity to serve and to sell. People have been cooped up for now, gosh, two years, you know, off and on, and so everybody’s keen to get out there and do something. And obviously, quite often, the hospitality sector is a place where people tend to get away to, whether it’s hotels, restaurants, entertainment, clubs, bars, and so on, and so forth. So the demand is definitely there. The ability to service the demand is not anywhere near there. So, we’re often finding that we have to reduce our capacities. We have to not have our full inventory available for sale. You know, we’ve had to reduce offers because we just simply can’t keep up with the volume of work that’s demanded, which in turn, again, puts undue pressure on the people who are back trying to get back into the business. Quite often, those who are employed in the business now just don’t have the experience and skill to do the level of volumes that we’re seeing, and so the problem keeps compounding, you know, the unnecessary pressures put on people.

Oftentimes, the clients and the guests are frustrated with long waits or, you know, lower standard service, or product, whether because, you know, product availability has been compromised or the service level is not where they’re used to having it. And so they get frustrated. And there’s this new phenomenon of very abusive behavior, that perhaps isn’t a new phenomenon, but it’s just we’re seeing it much more prevalent now than it has been in the past. All of these things compound the existing issue of people not wanting to go back to work in these sectors. So, yeah, definitely, there are more people wanting to be served than there are people to service them.

Melinda: So I want to talk a little bit more about, you know, pre-existing condition, if we want to call it that of customer aggression that, yes, definitely existed. But over the past two years, yes, people have been cooped up and desperately want to be outside, desperately want to be doing something fun. And I do think… I’m just speaking for myself here. Definitely lost some of our social graces. And just remembering how to interact with people in the appropriate way, it’s taking some reconditioning. But I also think back to my days working in service industry, that line between acceptable behavior and the customer always being right, and balancing that with being customer-centric. Do you think that we need to re-establish that line a little bit? If we could just talk a little bit about that, I’d love to hear your thoughts.

Patricia: Yeah, I have to agree with you. There’s definitely been a history of that notion of customer is “always right.” And sometimes the conditions under which customers have demanded attention or service has crossed the boundary of what we consider acceptable behavior. I think what I’m seeing now is the frequency and the intensity at which this is happening. You’re right, there’s always been a marginal group of people who’ve just behaved badly, if you can say that, you know, when dealing with people who are of service to them. But now what I’m seeing is that it’s just far too frequently, and the level of aggression is just, you know, beyond acceptable. And so what that does is that it just wears away at already fragile states of mind of people who are in the service industry. And it happens so frequently, that they just are not able to cope with it. So, yes, that’s always existed, but I definitely think that this is a fairly new phenomenon in terms of the level at which it’s happening. The intensity at which it’s happening.

Melinda: And how are you seeing… You know, if you have examples of a successful response to this. Or how are companies dealing with this?

Patricia: Yeah, I’m actually quite amazed at what I’ve seen in terms of response to this. I mean, this goes across sectors that I would have never dreamed would have this issue. Such as my doctor’s office, for instance, you know, on their automated messaging systems. In fact, every office I’ve called, whether if it’s government offices or doctors’ offices, or essential services of any kind, one of the first things you hear in the automated messaging systems is a warning that there’s a zero-tolerance policy for any aggressive behavior. And that the person attending to you may just hang up the call if you’re aggressive. I’ve never seen this before.

I really welcome this. I think that this is a great opportunity across all sectors, including hospitality, to really set a new baseline for respect and giving people dignity in whatever position they hold. I think this is a great opportunity to make our industry a more palatable industry to work for because, to be honest, I think part of the problem is that not enough respect has been given to many of these positions. People have assumed that these are positions of no skill. And now we’re seeing those results of individuals who have no training or little training or little years of experience in the industry, trying to do what skilled professionals have done for many years. And that’s why seeing the real difference between the services that are being offered, the quality of it, the consistency of it, and their ability to just deliver service.

Melinda: Yeah, even the term “low skilled jobs” or “unskilled work,” that title, that type of language is being challenged. And I think that it’s, you know, a good thing that that’s happening. And I also think that as a customer, if you put yourself… If you really are customer-centric and you’re thinking about that restaurant, and say you’ve got 100 seats in the restaurant, and 98 of those people don’t want that customer to be catered to either. They want that customer to be told, “I’m sorry, that’s not acceptable behavior.” I’ve been in that position where I’m seeing the server be verbally abused and be yelled at. And I don’t want that person in the restaurant. I’d rather have the manager ask that person to leave. So I think there’s also thinking about this other 98 percent instead of thinking about that one individual who’s choosing to disrupt the evening for everybody.

Patricia: Yeah, I totally agree. And I think creating workplaces that are safe and nurturing and respectful, where people can live and work with dignity and pride, is exactly what this industry and any other industry suffering from these consequences right now, needs. We need to make people feel good about going to work and feel good about being of service and take pride in what they’re able to contribute every single day. And if anything, this time has shown us the value of the individuals who work in this, like you said, traditionally called low skilled or no skilled. Now we realize that that’s a total farce. That there is no such thing as no skilled labor, and that the people who we desperately need in times like this, are exactly those people.

Melinda: Yeah, yeah.

Patricia: So yeah, it’s a great opportunity to reset. And I’m really looking at it as that. You know, I’m really hoping that we come out of this with a whole new paradigm, you know?

Melinda: Right. And you sort of gave us a good view of how many resumes you may be getting, and what the quality of those resumes compared to the pre-pandemic. And I think employers in every sector are experiencing a similar trend. And it has been an employers market for such a long time. It does require a bit of a rethink about, as an employer, how do you not just hire people? First of all, you’ve got to recruit them and hire them, but then once you have them there, how do you keep them? You’ve found someone you really like, how do you keep them in their role? What are you seeing happen here, and what do you think should happen?

Patricia: Well, I think we need to rethink the traditional models and also the sort of mindset we’ve had around who is the optimal candidate for a position. And we also really need to think about sort of the life journey or life expectancy of each position that we hire for. In my industry, what we often find… And I think this is pretty much the same across any industry. You often end up hiring, you know, young people who are either straight out of school or just have limited work experience into entry-level positions, in which, historically, we’ve had the luxury of holding people for several years in that same role, and sort of having enough stability in the organization that we didn’t have to be agile, and, move people along some kind of spectrum quickly and continue to train them and develop them and entice them to stay through those various avenues of opportunity. Now, what we’re seeing is that, partly, it’s a generational thing, and partly, is that it’s just the way the world is post-pandemic. That people just have higher expectations for themselves. They’re happy to get on board, learn the skills quickly. They want to be continuing to grow, they want to continue to be challenged, they want to see pay increases fairly quickly, and, you know, they don’t want to be just doing the same rudimentary tasks day in, day out for years.

So, I think we have to be quick on our feet. We have to rethink this model that we’ve worked under for decades now. You know, totally have to rethink that, and be progressive. Like I said earlier, create environments that are nurturing, and positive, and rewarding. And also, I really think that the pay traditionally, in hospitality, particularly, there’s been a sense that equitable pay has been an issue. Part of the problem is that, you know, quite often in various positions in hospitality, you rely on tips. And tips are great because, unfortunately, many people opt not to claim them as salary or revenue. And what ends up happening in a time like a pandemic is that, obviously, what you’ve claimed as your income, is what’s on paper. So when situations like this arise, you have nothing to fall back on in terms of government support, employment insurance, so on and so forth.

So that’s always been also something that we’ve talked about in the industry. You know, this whole tip. The sort of duality of this concept. You know, it’s good in some ways, and it’s not in other ways. So I would say, equitable pay, better working conditions, just both mental, emotional, psychological conditions that are more positive, and continuing to develop people, and not taking talent for granted, and having them feel stale and unchallenged in their positions.

Melinda: Yeah. And that’s a common theme, even in the professional world, where young people come in. And the lifespan of a young hire who’s fresh out of school is half of what it was maybe even five years ago. So, it’s a very common theme.

So in the service industry, I have seen, you know, on social media and in the news, some companies, especially in fast-casual and in fast food, recruiting teenagers to fill this gap. And I’ve also seen recruiting seniors. So it’s very interesting. Two very different demographic groups. What do you make of this? What are the pros and cons, and what do you think about it?

Patricia: Honestly, I’m a big fan of the idea. And I really hope that, you know, as I sort of get prepared for the next reopening, if you will, that I’m able to use this kind of strategy to optimize my organization here. I think it’s wonderful for many reasons. First of all, I think there are so many misconceptions around age, both young and old. I think we traditionally have believed that teenagers are not mature enough, responsible enough, reliable enough, so on and so forth. And “elderly” as we call them, don’t have enough energy. They’re, again, not reliable enough, may fall sick, may be inconsistent, so on and so forth. I think both are no longer true.

So, I think there’s a real opportunity there. And I really love the idea of cross-generational teams. I think that the older generations bring wisdom and calm and, you know, knowledge through the years. Quite often, they’re completely overqualified for these positions, and they’re doing it either as a way to stay productive and healthy or as a way of having a small revenue stream. And then the younger people will bring the energy and the enthusiasm and creativity. And obviously, they’re the future of any organization. So, I think it’s a wonderful mix. And I hope that I can find a way to implement this in my organization. In fact, it is something that I’ve been toying with, and it’s just a question of how we reach these sectors to market to them in terms of employment and opportunities.

Melinda: Yeah. Anecdotally, there was a coffee shop in my old neighborhood that employed an elderly man. By elderly, I mean, he was quite elderly. He was in his ‘70s. And he wanted to be a barista. And he was lonely. I talked to him about it, and he said, “No, I live on my own now. My wife passed away.” And they allowed him to work four-hour shifts. You know, everybody else was working seven, eight, nine-hour shifts, and they let him work a four-hour shift. And he loved it, and everybody loved him. Everybody loved him. Everybody knew him, everybody loved him. And it was the first time I’d ever seen someone that old working in the service industry.

Patricia: Fantastic.

Melinda: But it wasn’t a big company that has sort of like all these rules and regulations. It was a little local shop that had the ability to say, “Okay, you want to work here, how many hours do you think you can manage, and we’ll make it work for you?” And it was really special to have him there.

Patricia: Of course. You know, honestly, there are places that I can think of many, many years ago, The Bay in particular, really, sort of comes to mind. I do recall even a couple of decades ago, going in and quite often, the ladies that would work the floor were either retired or semi-retired or close to retirement age, and they were always extremely engaged, really helpful, very happy to be at work, you know? And I recall thinking, you know, what a great opportunity to just have people who really want to be there. You know, they don’t need to be there but really want to be there for whatever reason. And also, you know, I crossed an Uber driver, same thing. In his ‘70s, and he drove because he loved engaging with people. And he did it for three, four hours a day. And not because he needed to, but because he wanted to. He just wanted to be out and about and get to know people, and so on. Yeah, I love the idea.

Melinda: Okay. So on the other end of the spectrum, we have robots. And, you know, if you read any sort of trend magazine, they are constantly talking about AI, “they’re going to come in, they’re going to take our jobs.” I mean, it is true in some cases. And, you know, manufacturing, has taken a real hit with automation coming in, but in other industries, we’re quite a long ways off from a robot takeover. But there is a reality that automation can help to support staff and it can help to get through… You know, we’ve seen different industries use automation to handle this. So, what about the service industry and automation, where do you see it having a role and when do you think it may arrive?

Patricia: Yeah, I think we’re still quite aways away in the service industry. I think that AI certainly has its place. We see things such as, you know, general inquiry on our website being sort of outsourced to the bot, but even that bot is still heavily reliant on our team feeding it data. So, we’re ways away, I think. Recently a hotel launched in Asia. I don’t want to give you wrong information. It was either in Shenzhen, China, or somewhere in Japan, that is supposedly fully automated. So, I think there will be the sort of niche market where those kinds of anomalies might happen, but I don’t think we’re anywhere near that, to be honest. I just think with the service industry, the interactions and the possibilities are so infinite that I don’t imagine any AI that’s affordable being at that level at the moment.

Melinda: Right. I think, like, affordability. Here, often you see these different, videos, or read articles, about this incredible AI and how it does this and it does that, but it’s a one-off and it’s a very specific environment. And the cost is obviously… You know, it’s not scalable at any measure. And I also think that what we’ve seen in banking is definitely going to be relevant, where… You know, banking was like, “We’re going to digitize everything, and everything’s going to be automated, and everyone’s going to be banking on their phone, and they’re going to be going to the ATM, and everything’s digital.” But then it comes at the cost of that interaction and that relationship. And now banks are kind of doing a 180, and saying, “Oh, now we need to have the best salespeople, and we need to have the best people on the floor. We’ve got to have the best service.” Because all of a sudden, they all became the same because the apps all worked the same, and the ATMs all worked the same. It was all automated…

Patricia: No differentiation.

Melinda: There was no differentiation.

Patricia: Yeah.

Melinda: And there’s also no relationship. If you think about for the average person, some of the big financial decisions that they’re going to be making in their life, they want to talk to a person, they don’t want to talk to a robot.

Patricia: I certainly don’t.

Melinda: So, I think it’s good learning to look at the financial industry and see like, “Will we want to go to a completely automated hotel?” Probably not. There’s ways, and automation can help, but are we going to want that? As people, I don’t think we will. Especially not post-pandemic. We all just want to be around other people right now.

Patricia: Correct. And the consumer also. Like, if you think about where wealth is being held at the moment, the most discretionary income is still in the hands of that generation who are quite resistant, actually, to even the technology, the basic technologies of, you know, online bookings and online payment portals and so on. So I think it would be quite naive to think that we can quickly and easily and seamlessly go into a digital world of AI attending to all of our needs. I don’t see that happening. Not anytime soon.

Melinda: Yeah, I have to agree with you. I don’t know if you saw the 14-minute video that Mark Zuckerberg put out about the Metaverse. But I was like, “I don’t know. Are tech companies…are they delusional?” Because I don’t see that as ever being something that people are… Maybe I’m completely wrong, but I hope that that’s… I do think the Metaverse will happen, I just hope that that’s not what it looks like.

Patricia: Yeah. It didn’t sound too exciting. I wasn’t sold. I wasn’t running out there to get in the Metaverse or anything.

Melinda: Okay. So in the short term, obviously there are some no-brainer tactics, you know, pay more, use financial incentives, and expand the talent pool. But longer-term, do you have some thoughts on what are the things that are going to attract and keep customer-facing workers in the service industry?

Patricia: I think creating that positive, nurturing sort of dignified environment to work in. I honestly think that that’s probably the first thing that people talk about when they… You know, often there’s talk about burnout in our industry. Part of having a dignified life is to be given the right to have a balanced life, in terms of work and life. Unfortunately, in the hospitality sector, we’re all just like warriors. We’re passionate about service, we’re passionate about our product, so we work ourselves to death, practically, and get burned out, and then just don’t ever want to go back to the industry. So, we have to find some level of balance, I think. And in order to do that, I think we just need to rethink our operating models, you know? And I think there is some opportunity there, and we’re just going to have to get creative about it.

I think equitable pay is something that, again, you know, has to be looked at. I don’t know. To be honest with you, I could not claim to be a human resources expert. I don’t know the sort of rates and salary grades and so on. I couldn’t speak to that, that much. But, again, when you talk to the industry professionals, that often tends to be a bone of contention. I think just because of how difficult the work is, there doesn’t seem to be, in their perception, an equitable pay associated to their positions.

And then, a sense of purpose and meaning. You know, nobody wants to go to work and feel like they’re “low skilled, no skilled people,” and that they’re easily replaceable, and that what they do doesn’t have meaning. I think that, if anything, the pandemic has taught us, is that, our societies as a whole, our well-being, depends on these people who attend to us, and to our needs every single day. Literally, our well-being depends on them. So, I think that should be a source of pride and it should be a source of accomplishment. And I think a lot of that has to do with how people are treated, both from employers and from consumers’ perspective.

I’ve been really lucky to work with amazing companies, Drake being one of them, where people are valued, their skills are valued, their opinions are valued. And I think the more we create those environments, and we make them baseline, that’s an absolute bare minimum. It should be. And if we’re able to do that, I think that the industry and the work is so noble and so interesting and fun, that we could see a resurgence of interest in it.

Melinda: Absolutely. I think it’s also a generational thing, where younger people want to be inspired and they want inspiring leaders. They want to work for organizations that they believe in. The cause behind that organization. That sort of like, why did this founder of this organization just have to open up a hotel and restaurant, and why are they so passionate? And they want to buy into that passion and share in it and feel that they’re contributing to it. Again, it’s not just the service industry, it’s across all industries. And I had a really interesting conversation with Ron Thurston, he’s in the retail sector in Apparel, and he’s written a book called Retail Pride, and it’s about this very thing, where often you have people who have these accidental careers, where maybe they went to university for something else, and then they stumble into the service sector, and they end up so passionate, they love it so much, that it becomes this whole career path that they never sort of imagined happening for them. And that happens when that magic, when that purpose is all there. So, I think that’s a great place to end our conversation. So, thanks so much.

Patricia: Pleasure.

Melinda: As companies from across all kinds of categories face similar challenges in customer service roles, taking this moment in time as an opportunity to make these jobs better may seem like a big ask when there have been so many other curveballs thrown at us throughout the pandemic. But as birth rates continue to drop around the globe and our aging population stops working, this problem is poised to persist. It’s not going away. Brands that are willing to reimagine these roles will be able to then reimagine service in a way that allows both the customer and the staff to enjoy the best of food and hospitality again. Thanks for listening.