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Hotel Hiring Rebounds as U.S. Tourism Overcomes Slump

Jobless Americans are using increased tourism as a pathway back to employment, finding jobs at hotels and motels as those facilities step up hiring to meet growing demand.

“With more people on the road, we’ll need more people working in hotels,” said Jan Freitag, a senior vice president at Smith Travel Research Inc. He cited a 4.1 percent increase in first-quarter hotel bookings from a year ago as a “very positive sign” that U.S. tourism is rebounding.

The Federal Reserve reported the shift in its most recent survey of current economic conditions, with data collected on or before April 2 indicating “strong” trends in several districts. St. Louis -- which encompasses all of Arkansas and parts of Missouri, Mississippi, Tennessee, Kentucky, Indiana and Illinois -- reported that hotel-service companies “announced plans to expand operations and hire new workers.”

A rise in leisure and business travel is “creating employment opportunities all across the country in the travel industry that is helping in the job recovery and benefiting the economy,” said David Huether, senior vice president of economics and research at the U.S. Travel Association in Washington.

About 7.6 million people, or 5.7 percent of the U.S. workforce, held tourism-related jobs in March, the association estimates. The travel industry accounted for “a substantial component” -- 2.7 percent -- of 2010 gross domestic product, according to a Jan. 19 statement from the White House.

Diverse Skills

These companies need people with diverse skills for jobs that can’t be outsourced, Huether said. The number of Americans working at hotels, motels and casino hotels rose 2.9 percent in February to 1.6 million from the same month in 2010, outpacing a 2.7 percent increase for all employees, data from the Labor Department show.

Marriott International Inc. (MAR), the largest publicly traded U.S. hotel chain, has forecast that its U.S. staff will rise 6 percent this year to 212,000 from about 200,000 as of Dec. 31, Laura Paugh, senior vice president of investor relations, said in a telephone interview. Marriott operates hotels in all 50 states, and bookings nationwide have been “quite strong,” with growth driven by leisure, foreign and business travelers.

The “good news” is that Marriott is “filling jobs when they become vacant,” a change from the 18-month recession that ended in June 2009, when the Bethesda, Maryland-based company was reducing hours, Paugh said. “Occupancy is high enough that most people are working a full shift again.”

‘Pretty Solid’ Recovery

That’s a reflection of a “pretty solid” mid-cycle recovery in lodging that began in mid-2009, said Joel Simkins, an analyst in New York at Credit Suisse Group AG. Occupancy, at 63.6 percent in March, is approaching historic rates, as the return of business travel, which “really got hammered” during the recession, is driving the rebound in bookings, he said.

After years as a care giver, Angela Cook found work at a hotel in 2010, when the 43-year-old Los Angeles resident participated in a five-day training program to place jobless black workers in union hospitality positions. She says she needed a “boost of confidence” to jumpstart her career; she was on welfare and “looking for work was very discouraging.”

The program made Cook “more employable,” she says, and upon completion, she was hired as a cocktail server at the Wilshire Grand Hotel. While she was laid off when the hotel closed for renovations in December, she got a job last month with the Sheraton Universal in Universal City, California, where she’s a banquet server for events including weddings, parties and business meetings.

High-End Comeback

The high-end market has “come back the quickest,” and this probably will trickle down to road-side and economy motels, which also may add to their staffs, said Simkins, who maintains an “outperform” recommendation on Marriott and Starwood Hotels & Resorts Worldwide Inc. (HOT)

U.S. lodging operators booked a record 1.07 billion rooms in the 12 months ended March 31, up 4.4 percent from a year earlier, based on data from Smith Travel Research. This “unprecedented demand” comes as construction of new rooms is at a 20-year low, so the increase is accommodated almost exclusively at existing locations, Freitag said.

Foreigners account for 14 percent of travel spending, and about half of last year’s increase in industry employment was driven by these tourists, Huether said, citing association estimates. That’s because they’re likely to stay in hotels and eat out regularly while vacationing, he said.

Marriott’s International Guests

The number of such guests at Marriott’s U.S. hotels rose 7 percent during the last 12 months, with visitors from China and Brazil up 32 percent and 16 percent, Paugh said. While Americans still account for about 95 percent of domestic business, the company “would love to see the number of international arrivals increase.”

That may happen following President Barack Obama’s Jan. 19 executive order to increase tourism by making it easier for Chinese and Brazilian visitors to enter the country. Obama asked the State and Homeland Security Departments to develop a plan to accelerate visa applications for these countries, recommending the process be cut to three weeks from four months.

This is the industry’s “hot topic du jour” as hotel operators are “salivating” at the prospect of more visitors from these nations, particularly in so-called gateway markets such as New York or Miami, Simkins said. While hotels in Florida have seen a “real explosion in travel from Latin and South America,” he’s cautious about Europe, because of the region’s sovereign-debt crisis.

Rising Gasoline Prices

Rising gasoline prices in the U.S. may curtail the affordability of travel for some Americans during the summer, Huether said. The average gallon of regular unleaded is up about 20 percent to $3.86 -- 13 cents off a three-year peak -- from a low of $3.21 in December, according to Heathrow, Florida-based AAA, the largest U.S. motoring organization.

Higher prices historically have been “a non-issue” for Wyndham Worldwide Corp. (WYN), although some say they prompt shorter trips, Chairman and Chief Executive Officer Stephen Holmes said at a March 19 conference hosted by JPMorgan Chase & Co. The Parsippany, New Jersey-based company is “so geographically dispersed,” it can accommodate travelers “whether they make a 300-mile trip or a 400-mile or 700-mile trip.”

Wyndham, the fourth-largest publicly traded U.S. chain, is scheduled to report first-quarter earnings tomorrow, followed by Choice Hotels International Inc. (CHH), manager of Comfort Inn and Econo Lodge, on April 26.

Low-Wage Jobs

Some of the jobs being created have low wages and no benefits, with hotels operating at smaller staffs than in the past, said Annemarie Strassel, a communications coordinator with Unite Here, a New York-based union representing industry workers. Employment still is 223,900 off the July 2008 peak, Commerce data show.

Even so, the industry’s employees tend to be younger and more diverse -- ethnically and educationally -- than others, Huether said. Many people who are jobless lack a college degree, so tourism “provides opportunities to the very portion of our population looking for work.”

Unemployment was 25 percent in March for teenagers 16 to 19 years old and 12.6 percent for people who haven’t finished high school. The national rate, at 8.2 percent, has stalled above 8 percent since February 2009, Labor Department data show.

Cook, a high school graduate, makes $8 an hour plus tips in her new job, which she says is “great” even though she’s part- time, so she supplements her income with care-giving work that pays $9 an hour. She hopes to increase her hours to become eligible for health insurance soon, she says.

The improving economy is leading to more events at hotels such as Cook’s. Marriott’s full-service locations generate as much as 40 percent of domestic revenue from event travelers, and there’s been “an awful lot of strength” particularly for group meetings, Paugh said, with attendance strong and cancellations down.

The chain has plans to add as many as 15,000 rooms in the U.S. this year, which is “really meaningful” to generating more employment, she said. “The hotel industry is a great job creator.”

To contact the reporters on this story: Anna-Louise Jackson in New York at ajackson36@bloomberg.net; Anthony Feld in New York at afeld2@bloomberg.net

To contact the editor responsible for this story: Anthony Feld at afeld2@bloomberg.net

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