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Tight Labor Market Adds Strain For B-N Hotel Industry

Marriott exterior
Carleigh Gray
The Marriott hotel in Uptown Normal.

The Bloomington-Normal hotel industry ended 2018 with the lowest occupancy rate of any metro area in Illinois. And things aren’t much better halfway through 2019.

The market's average occupancy rate in May 2019 was around 47%, flat from a year ago, said Ray Ceresa, president of the Bloomington Normal Hotel & Lodging Association. And the rooms that are booked are bringing in less money. The average room rate has dropped $3, as hotels offer discounts to book rooms. That’s millions in lost revenue marketwide, Ceresa said.

“(Hotels) are trying to get heads in beds to pay the bills, make their payroll, and pay their property taxes,” he said. “It drives rates down, and others will follow.”

There are several reasons for the persistent low occupancy, Ceresa said. State Farm’s hubs in Atlanta, Phoenix, and Dallas have cut into corporate travel through Bloomington, he said. Key employers like Mitsubishi have moved out of town. And Grossinger Motors Arena has few bookings scheduled for the rest of the year, he said. Others have argued the market is saturated with too many hotels.

Tight Labor Market

Low occupancy isn’t the only challenge facing the local hotel industry.

With the Bloomington-Normal jobless rate around 4%, Ceresa said hotels are having trouble finding enough workers to fill housekeeping, maintenance, and food and beverage server jobs.

Hotel managers have also noticed a decline in available immigrant workers, said Ceresa, who is general manager of the DoubleTree by Hilton in Bloomington.

“It used to be, if someone would quit or not show up or get fired, we’d just ask around and say, ‘Hey, we need more people,’ and we’d have employees ready to work the next day. We’d interview them and get them started right away,” Ceresa said. “That’s not the case anymore.”

WGLT reported last week that wages in McLean County are not rising as fast as they are statewide or in other parts of the country, including the Leisure and Hospitality sector. But with occupancy rates down 11% over the past seven years, the math doesn't make it easy to give out raises, Ceresa said.

“We discuss raising wages all the time. It’s constant. And we do raise wages periodically,” Ceresa said. “I want to pay all my employees $15 an hour. I’d pay them $20 an hour if I could. But the reality is, we just can’t.”

Illinois’ minimum wage will increase from $8.25 today to $15 by 2025. Ceresa said local hotels will have to raise their prices significantly to absorb that.

Hotel Industry Interview Full Segment

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Ryan Denham is the digital content director for WGLT.