In 2025, hospitality operators are navigating a strained labor market that’s shaped by persistent understaffing, rising labor costs, and shifting worker expectations. While overall employment in the hospitality and leisure sector is at an all-time high, some industries are still struggling to recover to their pre-pandemic levels. Restaurants, hotels, and event spaces, for example, are some of the hardest hit by understaffing challenges, while industries like cruise lines report a surplus of qualified applicants.
Still, across the board, inflation, global supply disruptions, and evolving employee expectations are forcing hospitality operators to rethink how they attract and retain talent.
To gain a competitive edge, many businesses are going beyond short-term fixes and thinking strategically about workforce development and differentiation. From AI-driven recruitment tools to education perks, operators are adopting innovative solutions to these labor market challenges. Employers who stand out in 2025 are those thinking creatively–beyond just a paycheck–about how they can cultivate more flexible, supportive, and career-focused workplaces.
In 2025, challenges like inflation, trade barriers, and labor market dynamics are defining the hospitality landscape. However, those impacts are felt quite unevenly across industries in the hospitality and leisure sector. Let’s take a closer look at how hospitality industries are faring so far in 2025, and how some of these industries are experiencing labor challenges.
The leisure and hospitality sector peaked in February 2020 with 16.9 million jobs. By March 2025, the sector has finally surpassed that number, reaching 16.991 million jobs, according to the Bureau of Labor Statistics. However, hiring trends across hospitality industries vary significantly.
The U.S. Bureau of Labor Statistics classifies Leisure and Hospitality as a super sector made up of two distinct sectors:
While both sectors fall under the Leisure and Hospitality super sector, they contain diverse industries with unique labor markets, automation trends, and consumer behaviors.
The food and beverage industry makes up nearly three-quarters of the leisure and hospitality workforce. As the industry continues rebounding from pandemic disruption, recent years have shown steady—but slowing—employment growth.
The chart below illustrates how food and beverage employers are continuing to expand their teams in response to rising consumer demand and sales, even as the rate of job creation has slowed since 2023. It also highlights projected gains for 2025, which signal a more stable, though still competitive, labor market for the industry.
| Total Sales | Jobs Added | Total Employment | Employment Growth Rate | |
| 2023 | $1.407 trillion | 309,000 | 15.219 million | 2.03% |
| 2024 | $1.469 trillion | 172,500 | 15.527 million | 1.11% |
| 2025 Projection | $1.528 trillion | 200,000 | 15.9 million | 1.26% |
2025 figures are projected. While both sales and employment are rising, the rate of job growth has slowed since 2023.
Restaurant positions are reaching pre-pandemic levels, with the industry sitting 1.4% above peak employment (February 2020). Despite 2025 projections, job losses of 50,000 between January and February 2025 was the weakest two-month period in more than four years. While March added 29,800 net jobs, there is a significant softening in the restaurant industry. Overall, the first quarter of 2025 has resulted in a net loss of 25,500 jobs, the worst performance since Q4 2020, though it’s unclear what that indicates for longer-term trends.
Although more broadly the hospitality and leisure sector has returned to pre-pandemic employment levels, that recovery has not been uniform. Some industries—particularly those centered around experiences and events—have seen substantial gains, while others remain sluggish.
The chart below compares changes in employment in the main hospitality and leisure sectors since February 2020. It highlights a significant divide: Arts, Entertainment, and Recreation has added nearly 200,000 jobs beyond its pre-pandemic peak, while Accommodation and Food Services, which includes restaurants and hotels, still lags by almost 100,000 jobs—that’s despite the strong performance of the food and beverage industry. This imbalance points to lingering hiring challenges and shifts in automation across sectors.
| Accommodation & Food Services (source) | Arts, Entertainment, & Recreation (source) | Overall | |
| Job change since pre-pandemic peak (as of April 2025) | -93,900 | +197,700 | +103,800 |
The difference between these two sectors’ recovery is even more striking considering employment totals. According to the U.S. Bureau of Labor Statistics, as of April, 2025 there are a total of:
What can explain this dramatic difference?
Broadly speaking, the Accommodation and Food Service sector was hit especially hard by pandemic-related job losses, and it will take longer to recover from those losses.
However, hotels illustrate an interesting nuance in this recovery story: while they’ve struggled with hiring, many hotel operators are reconsidering what being fully staffed looks like. Pandemic-era service reductions—like less frequent housekeeping and limited breakfasts—combined with new technology-driven efficiencies have led some hotel operators to permanently streamline operations. As a result, the lower employment levels we see today may reflect not just ongoing shortages, but a lasting shift in some staffing models.
You know, like it or not … the pandemic has kind of taught us a lot. We’ve become a lot more efficient.
(Source)
What This Means: Some industries are evolving their operations to work with fewer staff. Evaluate automation and service changes you could make at your business to better handle understaffing.
For industries struggling with labor-related issues, costs have emerged as one of the most pressing challenges. According to the U.S. Bureau of Labor Statistics, while average hours worked per employee has remained stable at 25.5 hours per week, pay hasn’t. In the leisure and hospitality industry, average hourly earnings have risen from $16.84 in January 2020 to $22.53 in January 2025, outpacing inflation by about 8.6%.
Even modest compensation increases can drive significant cost burdens for operators, leading some to consider creative compensation—such as retention bonuses, team performance incentives, or flexible shift scheduling.
The chart below summarizes how widespread labor cost concerns are amongst operators.
| Experienced higher labor costs in the past year? | Do you expect this trend to continue? | Are labor costs a major challenge for your business? |
| Yes – 92% | Yes – 89% | Yes – 74% |
Tariff and trade policy changes in early 2025 will likely hit businesses hardest that rely on imported goods or plan to expand.
Within the hospitality sector, the hardest-hit sectors will likely include restaurants and hotels. In restaurants, where the average operator has only 14 to 16 days of cash on hand, the unpredictability may drive significant reductions in hiring. For hotels—which often rely on imported goods for furnishing, linens, construction materials, and electronics—higher tariffs may drive reduced hiring in areas like housekeeping, guest services, or maintenance. If inflation rises, consumers may limit discretionary spending and become more price-sensitive, further impacting these sectors as they respond to tariffs by raising prices.
The cruise sector, in contrast, is more shielded from tariffs than other hospitality sectors because they often buy supplies at foreign ports, which are exempt from import tariffs.
While the hospitality industry overall is facing external factors impacting the hiring landscape, the severity of understaffing itself varies widely by industry.
This chart examines restaurants, hotels, and travel agencies to highlight how significantly understaffing issues diverge among hospitality and leisure industries.
Note: Other industries in the sector, like cruise lines, report not experiencing understaffing challenges at all. According to the Cruise Lines International Association, “For every job opening onboard a cruise ship, cruise lines receive 100 applicants, …[while] the retention rate across the industry is upward of 80 percent” (source).
While many in the hotel industry are taking steps to adapt to a new normal, the majority are still actively looking to hire. About 67% hotel operators report understaffing, with around 12% experiencing understaffing that is so severe it threatens their ability to stay open. Compared to 45% of restaurants and only 19% of travel agencies, this data reveals a stark contrast in the degree of labor market strain between industries. These gaps underscore the different realities faced by hospitality and leisure industries in 2025 and beyond.
The reasons behind hiring challenges and turnover are multifaceted. From more structural issues, like seasonality and low wages, to emerging trends, like competition from the gig economy, operators must have a multi-pronged approach to address employee concerns and, in turn, improve retention.
The chart below highlights some of the major reasons workers are leaving the hospitality sector, which should be tackled by operators who want to improve their workforce strategy.
| Low wages | Demographic changes |
| Lack of flexibility | Seasonality and unpredictability of the work |
| High stress and burnout | Changes to legal immigration pathways |
| Competition with other industries | Consumer demand |
| The gig economy | Lack of adequate benefits |
(source)
Overall, the number of employees who left the hospitality industry in 2024 was 204% above the national average quit rate. Top employers are examining workplace culture, hours, pay, and benefits to help remedy the workforce exodus.
Operators who want to improve retention must treat employee feedback not as background data, but as the information at the center of their challenge.
Ask yourself: Is your business seasonable? Do employees seem overwhelmed during shifts? How do wages compare with competitors? What industries in your area successfully hire employees in the same demographics, and how are they doing it?
How do you plan on responding to what your workforce is telling you?
Understaffing leads to immediate challenges, like reduced operating hours, but it drives less visible costs, too. Labor shortages ripple through hospitality operations, affecting everything from employee well-being to guest satisfaction.
The chart below shows how different hospitality industries may experience the effects of understaffing, highlighting the importance of adequate staffing for both daily functions and long-term reputation and sustainability.
| Burnout/Turnover | Reduced Service Level/Offerings | Inadequate Equipment Maintenance | Longer Wait Times | Increased Error Rates | |
| Restaurants (source) | ✔ | ✔ | ✔ | ✔ | ✔ |
| Cruises (source) | ✔ | ✔ | ✔ | ✔ | ✔ |
| Hotels (source) | ✔ | ✔ | ✔ | ✔ | ✔ |
| Travel Agencies (source) | ✔ | ✔ | N/A | ✔ | ✔ |
| Event Spaces (source) | ✔ | ✔ | ✔ | ✔ | ✔ |
In addition to directly impacting operating capacity and service capabilities, understaffing can harm customer perception, leading to negative reviews and further financial implications.
While many operators in the hospitality sector are continuing to face hiring challenges, some have found successful strategies to attract and retain top talent. In a 2024 survey, the Society for Human Resource Management (SHRM) highlights key strategies used by operators who are experiencing little-to-no difficulty in hiring.
From competitive compensation and strong benefits packages to flexible scheduling, these are some of the reasons successful operators say they didn’t have trouble hiring—which offers valuable insight for hospitality businesses looking to improve recruitment strategies.
| Positive workplace culture | Competitive benefits package | Competitive pay | Flexible work arrangements | Strong employer reputation |
| 59% | 59% | 54% | 53% | 48% |
(source)
What steps is your business taking to address issues like competitive pay? If you can’t offer higher salaries, could you offer bonuses for referrals, high customer satisfaction ratings, or something else?
In 2024, employers deployed a range of recruitment strategies to stay competitive–let’s take a closer look. While compensation and workforce culture were some of the most popular strategies, many companies are experimenting with other strategies, like hiring efficiencies and education-based incentives.
The chart below highlights some of the most widely adopted strategies, reflecting the complex and varied approach needed to compete in the competitive hospitality labor market.
| Using social media | 60% |
| Improved compensation | 51% |
| Promoting positive culture | 49% |
| Including pay range in job posts | 45% |
| More advertising | 43% |
| Focusing on retention | 42% |
| Streamlining application process | 37% |
| Offering education perks | 37% |
| Improving employee referral programs | 37% |
| Cross-training existing employees | 35% |
(source)
Here’s a closer look at how a few of these strategies are shifting recruitment efforts in the restaurant industry:
Around half of current and near-future hospitality applicants are Gen Z (those born between 1995 and 2012), and they’re not just shaping why candidates apply, they’re shaping how they apply. In fact, more than half of applicants are submitting job applications outside of standard business hours, and the majority are using mobile devices to do so.
| Applying outside of work hours: | Using mobile devices to apply: |
| 54% | 86% |
(source)
Furthermore, with the expansion of mobile applications, hospitality industries are increasingly competing to reach talent quickly. As Matt Heston of The Saxton Group notes, “The faster you’re able to connect with [applicants], the more likely you are to hire them” (source).
Tools like applicant tracking systems (ATS), automated scheduling, QR code integrations, text-to-apply, and video call interviews can make hiring faster and more cost-effective. It can also make applying more accessible for talent, a key strategy to compete for quality candidates.
However, despite growing operator interest in hiring technology, adoption and effectiveness are not currently aligned. While 80% of operators believe technology provides a competitive advantage, far fewer are reporting measurable benefits–with just 15% saying technology has made it easier to recruit and retain staff.
The chart below highlights the disconnect between optimism about hiring technology and actual success of implementation.
| Do you have enough staff to support demand? | Does tech offer a competitive hiring advantage? | Do you plan to adopt hiring automation? | Are you planning to adopt AI-driven ATS? | Have tech investments made it easier for you to recruit and retain employees? |
| No – 32% | Yes – 80% | Yes – 37% | Yes – 28% | Yes -15% |
(source)
Again, while most restaurant operators believe tech can provide a competitive advantage, only 15% believe it has improved their recruitment and retention thus far. This indicates that many operators have not realized the full capabilities of screening, analytics, integration, alerts, and more.
Southern Rock Restaurants owns 160 franchised stores across the U.S. Through the implementation of Applicant Tracking System (ATS) automation and automatic interview scheduling, they were able to reduce time from application to hire from 14 days to under 24 hours, a reduction of 93%.
| Before | After |
| 14 Days to Hire | <24 Hours to Hire |
| Manual Screening & Scheduling | Automated Screening & Scheduling |
While most operators believe in the power of hiring technology, only a fraction report real results. Why?
It appears that successful implementation makes the difference. As the Southern Rock Restaurants case study shows, the right tools—used the right way—can have a big impact.
More than 80 percent of restaurant operators say that technology gives them a competitive advantage, and we’re seeing that in hiring. By integrating automation and AI-powered tools, restaurants are reducing hiring times, enhancing employee engagement, and fostering a workplace culture that supports long-term retention.
(Source)
In a competitive labor market, providing meaningful opportunities for career growth can set businesses apart, both in terms of attracting new talent and retaining existing teams.
Employees treat educational support not as a perk, but as a deciding factor in their career choices. However, despite 65% of prospective employees citing that career development opportunities are important when looking for a new job, just 47% of employers currently offer educational perks, like tuition assistance, scholarships, or student loan assistance. This highlights an opportunity for employers to differentiate themselves to prospective employees.
The chart below explores some of the ways education perks benefit employees and influence workplace perceptions and job decisions.
| The perks employers offer impact the decision to take a job (source): | Used education perks to learn new skills: | Education perks helped to be a more effective employee: | More likely to stay with an employer offering education perks: | Education perks were a major factor in deciding to accept a job offer: | Would leave current employer for a job offering education perks: |
| 93% | 67% | 82% | 76% | 84% | 45% |
(source)
With education costs expected to continue rising and student loans becoming more expensive for some, many applicants are valuing education perks above other benefits. In addition to increasing access to education, it may reduce turnover rates by about 20-40%–which is especially valuable to hospitality operators, who experience an average annual turnover rate of about 70-80%.
Successful operators are echoing this shift in employee preferences, responding to workforce preferences by delivering on education and training benefits.
What Gets Measured Gets Managed: Regularly survey your staff and conduct exit interviews to uncover which benefits and policies truly matter to your workforce—and which ones aren’t quite landing.
Build Advancement Pathways: Create mentorship programs, offer education perks, and host skill-building workshops to show employees they have a future with your business.
Communicate with Intention: Establish monthly one-on-one meetings between employees and managers to build trust, surface issues early, and strengthen retention.
Did you know: Employees are 3.6 times more likely to be strongly motivated to do an outstanding job at work when they receive regular feedback from managers.
It’s not as much about money as before. Instead, there’s a greater emphasis on what else employers are bringing to the table.
(Source)
Roughly 30% of restaurant operators plan to increase their investment in workforce development and benefits in 2025. In fact, cross-training was the second-most popular strategy for preserving profitability in 2024–right after raising menu prices. Nearly half of restaurant operators (48%) say they increased cross-training efforts in the past year.
In industries facing rising labor costs and potential global trade pressures, upskilling can help reduce turnover, increase efficiency, and build a positive workplace reputation.
Roughly 27% of food and beverage employees are enrolled in school while working, compared to just 10% in the overall U.S. workforce. Juggling both full-time school and employment can lead to overworked, burnt out employees, especially in high-stress environments like kitchens and hotels. That’s why it’s important to offer education benefits that are designed for working professionals.
Through Auguste Escoffier Global Solutions, employers can access a suite of culinary and hospitality development solutions. With tools that can help make hiring and training easier and more effective, Escoffier Global aims to link great employers with hard-working employees to support the overall health of the hospitality industry. Programs include:
As the hospitality industry continues facing staffing and retention challenges in 2025, operators must think strategically about how to stand out to job seekers. Hiring accessibility, workplace culture, and professional development opportunities are becoming some of the top differentiators that successful hiring managers are using to secure top talent.
While competitive pay is no-doubt important, employers can also stand out by thinking more strategically about what job candidates want, including flexible, career-building opportunities. Escoffier Global provides a suite of hospitality and culinary development solutions, like Work & Learn and ESource, which can make it easier to attract, hire, and retain talent looking for a career, not just a job.
Get in touch with the Auguste Escoffier Global Solutions team to explore custom training solutions, connect with externs, or explore Work & Learn degree and diploma programs.
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