How Immigration, Trade, and Tariff Policies Will Impact the Hotel Industry (and How to Prepare)
The hospitality industry thrives on movement of people, goods, and services. But with recent shifts in U.S. policy under the current administration, hoteliers and developers are facing new challenges that could reshape the way they operate. Immigration restrictions, trade policies, and tariffs are already affecting labor availability, supply chains, and project costs. So, what does this mean for the hotel industry? More importantly, how can businesses prepare and pivot?
The Immigration Squeeze: A Growing Labor Shortage
The hospitality industry has long relied on immigrant labor, particularly for roles in housekeeping, food service, and maintenance. With stricter immigration laws, a decrease in work visa approvals, and increased enforcement actions, hotels are struggling to find and retain workers. The H-2B visa program, crucial for seasonal hospitality staff, has seen significant reductions, leaving many properties short-staffed.
How to Prepare:
Invest in Workforce Development: Establish training programs to attract local workers and provide career growth opportunities.
Improve Retention Strategies: Competitive wages, better benefits, and professional development can help mitigate turnover.
Advocate for Balanced Immigration Reform: Industry associations and business owners should engage with policymakers to push for policies that address labor shortages.
Trade Wars and Supply Chain Disruptions
Trump’s "reciprocal tariff" strategy means that countries imposing tariffs on U.S. goods are now facing their own. While this is aimed at leveling the playing field, it creates uncertainty for hotels sourcing furniture, fixtures, and equipment (FF&E) from abroad. Increased tariffs on Chinese imports, for example, have driven up the cost of materials used in hotel renovations and new developments.
How to Pivot:
Diversify Supply Chains: Source from multiple countries or explore domestic alternatives to reduce tariff exposure.
Bulk Purchasing & Long-Term Contracts: Locking in prices and securing inventory can help manage costs in uncertain times.
Reassess Procurement Strategies: Working closely with suppliers to find cost-effective alternatives can minimize financial impact.
Tariffs Driving Up Project and Operational Costs
Construction materials, hotel amenities, and even food and beverage supplies have seen cost hikes due to tariffs on imports. For an industry already operating on tight margins, this poses a significant challenge, particularly for independent hotel owners and smaller brands.
How to Adapt:
Adjust Budgeting and Forecasting: Factor in tariff-related costs when planning for renovations and operational expenses.
Explore Domestic Sourcing: While domestic options may sometimes be more expensive, avoiding tariffs could make them more viable in the long run.
Increase Cost Efficiency: Energy-efficient upgrades, waste reduction initiatives, and operational automation can help offset rising expenses.
Stay Informed and Agile
For hoteliers, developers, and hospitality professionals, staying ahead of policy changes is crucial. By understanding the evolving landscape and implementing strategic pivots, businesses can safeguard their operations and even uncover new opportunities in the process. Engaging in local industry groups, monitoring legislative updates, and maintaining flexible business strategies will be key to navigating this uncertain time.
