In the last few years hoteliers faced a more complex regulatory landscape. The industry scored a major victory in November when a Federal Court struck down the Department of Labor’s (DOL), which threatened to increase overtime costs dramatically for small businesses. This ruling is a huge relief to small business owners across America, especially as the cost of operating continues to increase for hoteliers. This ruling, while a victory, is important because it shows how this overtime rule could have affected not only hoteliers, but employees as well who depend on their career progression within the industry.
Hotel Overtime Rules: An expensive mandate
According to the proposed DOL changes, hotels would be required to pay overtime wages for salaried workers earning up to $58.656 per year. This is an increase from the old threshold of $35.568. The DOL’s proposed changes to overtime rules would have required hotels to pay overtime wages to salaried workers earning up to $58,656 annually, compared to the previous threshold of $35,568. This was a 65 percent increase in the salary threshold for overtime, and an adjustment which likely forced many hotels to reclassify their employees to hourly status. The AHLA supported the DOL’s initial increase of $43,888. However, the greater shift would have had a devastating effect on the industry. It could have eliminated mid-level jobs and increased labor costs.
Many hotels offer mid-level employees and managers the opportunity to advance from their entry-level jobs to leadership positions. The proposed DOL rule, however, would have imposed a heavy financial burden on smaller businesses and forced them to reduce these advancement opportunities. The DOL’s proposed rule would have placed a significant financial burden on small businesses, forcing them to cut these opportunities for advancement.
AHLA and other businesses argued this radical change would harm employees more than help them. In a letter to legislators in 2024, the letter expressed concern that employees who earn a salary would be deprived of their benefits and workplace status. A federal court nullified the rule, and the threshold for overtime was reset. The decision allows hoteliers to continue providing meaningful career opportunities, and compensation that is competitive without having the financial burdens of an overtime rule.
Investment in people: Wages and benefits for hotel employees
In the hospitality industry, there are many opportunities to advance your career. In the lodging industry in particular, employees can often move up from lower-paying positions to more responsible and higher-paying ones. AHLA is fighting the overtime rule to promote growth in the hospitality sector, and not only protect the bottom line.
Hotel wages have reached a record high in the first 10 month of 2024. Hotel wages increased by more than 10% faster since the pandemic than average. To attract and retain employees, hotels have expanded their benefits by offering flexible hours, signing-on bonuses and retention bonuses as well as access to amenities at the hotel and discounts on stays. Hoteliers are committed to making hospitality a lucrative and appealing career.
FTC Fee Disclosure Rule: Transparency and Consumers
Another significant event has taken place in the industry of hospitality, along with the ruling in the overtime case. Federal Trade Commission recently released a new rule on fee disclosure that impacts how hotels display mandatory charges, like resort, destination or cleaning fees. AHLA, which has been advocating for a national standard requiring all lodging establishments, such as short-term rental companies, metasearch websites, online travel agents, and hotels to disclose fees up front, is aligned with the FTC’s new rule.
The new rule ensures all mandatory charges are displayed clearly at the time you book, eliminating any surprises. This allows consumers to compare prices more accurately and make better decisions. The FTC rule standardizes fee disclosure in the lodging industry. This will increase transparency, simplify booking for customers, and level the playing fields for hotels.
The FTC rule will require hotels and the entire lodging industry to disclose these charges upfront so that guests are aware of what they’ll be charged for their stay. The FTC’s rule is designed to increase consumer confidence, and provide a clearer pricing structure for the hospitality industry.
Hoteliers and consumers: The road ahead
Hoteliers can take a big step forward with the new overtime regulations and FTC’s fee disclosure rule. Hoteliers can offer career opportunities and keep labor costs low with the overtime rule. The FTC’s new regulations ensure pricing transparency for guests, while also allowing hotels to continue providing job opportunities. The industry is committed to fairness for both employees and customers.
With its emphasis on people – whether employees or customers – the hospitality industry continues to face a difficult regulatory environment. AHLA advocates for hotels to maintain a healthy balance between financial obligations, career opportunities and delivering an exceptional guest experience. These regulatory victories ensure that the hotel industry’s future is bright. Hoteliers will continue to set an example for employment and customer service.
