Connecticut, US, 1st November 2024, ZEX PR WIRE, Hospitality industry expert Scott Yandrasevich is raising awareness about the serious impact inflation is having on the hospitality sector, emphasizing the unique challenges it presents for business owners and management teams. As inflation continues to rise, Yandrasevich is advocating for more recognition and support for the industry, which has already faced significant economic hurdles in recent years.
“The hospitality industry has always been vulnerable to market fluctuations, but with inflation hitting record highs, the pressure on businesses is greater than ever,” Yandrasevich said. “For those in management and ownership roles, balancing rising costs with maintaining service quality is becoming increasingly difficult.”
The U.S. inflation rate in 2023 reached 3.7%, according to the Bureau of Labor Statistics (BLS), with the hospitality industry particularly affected by increasing costs for food, energy, and labor. Food prices alone have surged by 6.7%, making it harder for hotels, restaurants, and event venues to manage their supply chains without passing costs onto consumers. Additionally, the cost of energy has risen 12.6%, significantly impacting operating expenses for businesses in hospitality, which rely heavily on utilities for heating, cooling, and lighting large venues.
Yandrasevich explains that these rising costs create a ripple effect. “Management teams are facing the tough decision of whether to raise prices and risk losing customers, or absorb the costs, which can severely impact profit margins. Many small and medium-sized businesses are operating on thin margins already, so inflation could be the tipping point.”
The American Hotel & Lodging Association (AHLA) reports that 71% of hotels are currently experiencing higher operating costs due to inflation, with 90% of operators saying these rising costs are their top concern. Furthermore, labor costs have jumped significantly, with hospitality wages rising by 6.1% in 2023 as businesses struggle to attract and retain talent in a competitive job market. “Labor shortages are still a major issue, and with inflation driving up wages, it’s become even more difficult for businesses to find and keep skilled employees,” Yandrasevich said.
As inflation squeezes profitability, Yandrasevich is calling for business owners, investors, and policymakers to take action in supporting the hospitality sector through these challenging times. “We need to invest in strategies to combat inflation’s effects. This includes looking at operational efficiencies, supply chain management, and perhaps even policy intervention to stabilize prices. If we don’t address these issues head-on, we could see many more closures, especially among smaller businesses,” he noted.
He also emphasized the importance of government and industry collaboration to provide relief and long-term solutions. “Federal relief programs, tax incentives, and industry partnerships will be crucial to helping hospitality businesses weather the storm. We need targeted support that addresses the specific challenges this sector faces, from rising operational costs to labor shortages.”
Inflation’s continued rise not only threatens the bottom line of hospitality businesses but also the jobs of millions of workers in the industry. With the hospitality sector employing over 16 million people in the U.S., according to the BLS, a widespread economic impact could be devastating for employees, consumers, and local economies alike.
As inflation continues to affect the industry, Scott Yandrasevich remains focused on raising awareness and advocating for more robust support for hospitality professionals and business owners navigating this difficult economic landscape.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Economics Bot journalist was involved in the writing and production of this article.