Labor Costs, Inflation and Hotel Profit Crosscurrents

PKF Consulting | CBRE Hotels | November 23, 2015

By Jack Corgel, Ph. D. and Ryan Speed How the future profitability of U. S. hotels may be influenced by simultaneous improvement of labor market conditions and increasing inflation is the subject of this edition of Hotel Currents™. A narrowing of the gap between the demand and supply of labor, as evidenced by the declining unemployment rate usually results in upward pressure on wages as should the ongoing political actions to elevate minimum wages. Wage growth has been sluggish during the recovery from the Great Recession. However, Moody's Analytics chief economist Mark Zandi recently stated in a company report that "a pickup in w...