Continued growth in the hotel and restaurant job market over the past 10 years in Northwest Arkansas has resulted in a tug of war for employees, but the leader of the state’s hospitality association calls it par for the course.
The region had the sixth-highest growth rate in leisure/hospitality jobs from August 2006 to August 2016, according to recent data from the U.S. Bureau of Labor Statistics. And that’s during a period when most areas across the country posted growth in the sector.
In fact, the data show hospitality employment growth in 105 out of 106 labor markets over the 10-year span. Memphis was the only area that didn’t post gains, losing 8% of its leisure/hospitality workforce and ending up with about 66,600 jobs.
Employment in the Fayetteville-Springdale-Rogers metro area was up 42%, reaching an estimated 24,500 jobs within the industry, as of August.
Austin, Texas, showed the greatest increase in hospitality jobs during the time period, rising 60% to reach 121,500. Also ahead of NWA on the bureau’s list were Houston, Cape Coral-Fort Myers, Fla., Raleigh, N.C., and Provo, Utah.
Annette Nichols, general manager of Hyatt Place in Rogers, acknowledged “tremendous” growth in NWA’s hospitality industry since she started work at the hotel 11 years ago. An AmeriSuites location at the time, it was one of five or six hotels in Rogers, she said. Now, the city has 11 properties with at least 75 rooms, according to the Northwest Arkansas Business Journal’s list of largest hotels.
The industry has grown significantly statewide. Looking at a longer time span, 26 years between April 1990 and April 2016, Arkansas posted a 77% increase in hospitality jobs, according to the bureau.
A good portion of that growth, Nichols said, has been in NWA. Her perspective on the statewide industry is uniquely rounded out by her position on the lodging board for the Arkansas Hospitality Association and her knowledge of operations at several hotels in downtown Little Rock that are also run by McKibbon Hospitality, the management company operating the Hyatt in Rogers. Little Rock came in at No. 43 in the ranking of hospitality job growth, with its hotel and restaurant employment numbers at an estimated 34,100, up 22% from 2006.
Nichols said she appreciates the booming growth in NWA, but it has left hotels scrambling to staff front desk, assistant management and housekeeping positions. “With each new restaurant and each hotel our pies get a little smaller on employees,” she said. “Employment is up in the hospitality industry. Employees, not so much.”
While the area population is growing quickly – the U.S. Census Bureau found the region added about 30 people per day from July 2014 to July 2015, for example – Nichols said the staffing pool hasn’t kept up with that pace.
Montine McNulty, executive director of the AHA, agrees that NWA is leading the way statewide for hospitality and tourism but contends the squeeze on competing employers is nothing new.
She said the industry commonly struggles with staff shortages and high turnover, and she credited the booming scene in NWA for driving higher hourly wages.
In fact, as some businesses braced for bottom-line hits that accompanied the raise for the Arkansas minimum wage to $8.50 on Jan. 1, Nichols said the salaries for Hyatt employees already exceeded the new rate. She estimates that since she started at the hotel, staff income and bonuses have increased by 60%.
How Many is Too Many?
Nichols doesn’t assert the hotel market is saturated in NWA, as it was a few years ago, but she believes it might be time to start slowing down on adding more hotels until more leisure activities and destinations are created. While a pipeline of corporate travelers from those doing business with Wal-Mart Stores and its vendors might have provided some insulation for the regional hotel market during the Great Recession, Nichols said there is room for growth in the leisure travel market.
At the Hyatt, there are particular days or weeks of the year that are sellouts, during Arkansas Razorback home football games against popular Southeastern Conference rival teams, for example. However, most of the time more than half of its rooms are empty, at 30% to 40% occupancy for three or four days out of the week, and she argues that most other hotels are in the same boat.
“When the economy boosts, people start looking for potential developments right away,” she added. “When developers come in and see that they can’t get a hotel room because they didn’t call ahead on a Tuesday or a Wednesday, and everybody’s full, the first inclination is, ‘Oh my gosh, they need another hotel.’ But that’s not looking at the big picture.”
McNulty defers to developers to make sound decisions on when and where to build new hotels in NWA, but she believes there’s more room in the area hotel market. “That’s from an overall industry point of view, though,” she said. “If I were in the hotel business, I might feel differently.”
More Modern Hotels
Shash Goyal, the majority owner and CEO of Little Rock firm I Square Management, has two hotels under construction in NWA. Element by Westin, with 107 rooms and a focus on sustainability, is planned to open in Bentonville this summer, and a 94-room Fairfield Inn and Suites by Marriott location is planned to open in Fayetteville later this year.
“The market in NWA is growing, and the demand is also growing. The market is a little slow in absorbing in new supply, but it’s not close to saturation,” Goyal said. “I think the market needs good-quality, modern hotels which is the new trend in all fast-growing markets.”
McNulty said hotel investors in general take an adequately broad view of the market, evaluating long-term occupancy rates and other factors, and that the market “takes care of itself.” She added, “People (hotel operators) just have to up their games when it comes to marketing.”
The AHA provides job training within the industry statewide, and it has a hand in hospitality education in high schools and colleges, in addition to its legislative lobbying efforts for the trade.
The association also supports the Arkansas Department of Parks and Tourism in addressing the leisure travel market as a major potential growth area.
The tourism department has actively campaigned to bring large conferences and corporate events into the state, while promoting and supporting a growing number of tourism attractions that have been a shot in the arm for the region’s hotels and restaurants.
“Over my tenure, the face of NWA as far as visitor experience has changed tremendously,” McNulty said. “It’s changed in terms of what there is to see and do, and it’s changed in terms of its image.
“People see a NWA as having a high quality of life. They want to try NWA,” McNulty added. “It’s exciting and beneficial for the entire state.”