PROVIDENCE – Rhode Island’s hospitality industry continues to recover from the shutdowns it faced in 2020, although the pace has slowed considerably as new economic factors put pressure on the state’s employees and consumers.

The Rhode Island Hospitality Association hosted a Economic Outlook breakfast Wednesday, detailing to its membership the current statistics on the food service, lodging and recreation industry locally and nationally. Representatives from the National Restaurant Association and Pinnacle Advisory Group, a hotel asset management firm, gave in-depth reports on the hospitality industry’s post-pandemic recovery and predictions for the industry’s near future.

Employee retention and recruitment remain a top concern

The major theme of the morning was the impact current economic pressures are having on the hospitality industry, especially its workforce. In his presentation on the current state of the restaurant industry, National Restaurant Association Vice President of Research and Knowledge Chad Moutray said that while some sectors have regained the number of employees lost during the pandemic, others have been slower to recover, especially the full-service restaurant industry. Additionally, the number of job openings in the restaurant industry remains greater than the number of unemployed workers able to fill those positions, as it has been since 2021

RI Hospitality Association Chief Operating Officer Heather Singleton, whose presentation specifically highlighted workforce issues faced by the industry, explored these problems in more depth using numbers from a report on Rhode Island Employment Trends and Workforce Issues in 2022-2023, which was published this April. Through this, Singleton noted that while the minimum wage and median wage in Rhode Island are both higher than it is nationally, the accommodation and food services sector had one of the lowest average annual wages of any sector in the state, which Singleton attributed largely to the fact that the sector employs more people under the age of 25 than any other sector. However, the report also showed that the industry is aging, as 15.9% of the sector was identified as being 55 years old or older in 2023 compared to 7% in 2003. In fact, 66% of those employed in accommodation and food service jobs were 25 years old or older in 2023, compared to 57% in 2003.

Singleton also pointed to the lack of employee well-being and engagement as an issue, both for the hospitality industry but also for the nation as a whole. Singleton showcased a recent Gallup report on the State of the Global Workplace, which claimed that 77% of employees globally are either not engaged or actively disengaged with their work, costing the global economy about $8.9 trillion. To combat this, Singleton pointed to training programs the association provides to boost engagement, which the Gallup report suggests could reduce absenteeism and turnover while increasing employee well-being and productivity.

Restaurants and hotels notice increased customer price sensitivity

Both reports coming out of the restaurant and hotel industry that morning indicated a growing split in consumer habits as consumer anxiety over the state of the economy increases. Kate Mashburn of Pinnacle Advisory Group revealed that, on a national level, luxury and upscale hotels and accommodations have experienced continued growth while budget and middle-cost travel is decreasing as consumers are becoming more price-conscious compared to just after the pandemic. Additionally, a survey the National Restaurant Association conducted among restaurant operators indicated increasing concerns about the economy as well as increasingly pessimistic outlooks on general business conditions.

Statewide, the hotel industry is steady, with year-to-date occupancy rates hitting just one percentage point under the national average of 63% for July 2024, with Warwick’s occupancy rate projected to reach up to 69% by the end of 2024. Mashburn attributes this partially to increased activity coming out of T.F. Green Airport.

Meanwhile, on Aquidneck Island, occupancy rates have decreased since 2023 owing to increases in supply, namely the opening of the Gardiner House in September 2023, the Wayfinder hotel’s phased reopening and Newport Harbor Island Resort’s reopening in April 2024.

Overall outlook still positive for 2030

Despite these concerns, the hospitality industry’s job market is continuing to see positive growth. Moutray’s presentation showed that, by July 2024, employment in restaurants finally surpassed what it had been before February 2020. Similarly, Singleton’s presentation showed that the accommodations and food service sector had the largest change in annual employment of any industry sector in the state between 2021 and 2022.

The report and Singleton’s presentation also projected the sector would increase employment by 35.3% between 2020 and 2030. Within the hospitality sector, employment in Food Preparation and Serving Related jobs is expected to increase the most of any other sector in the state, with cooking, serving, bartending and quick service counter positions among the top in employment increases.