Low pay in the hotel and accommodation sector
Hotels have failed to share the profits of their booming businesses with their workforce. Despite the industry’s rapid recovery after the recession, median earnings barely rose in real terms between 2008 and 2017. Pay in the industry is so low that over half of employees in the industry earn below the real Living Wage, with the number of employees not earning a living wage higher among:
- Younger age groups
- Part-time employees
- Women
- Workers in some regions
Low pay, long hours and abuses of power such as sexual harassment are rife in the industry. In the words of one worker, ‘they treat us like machines’.
This report is the first of two reports looking at the hotel sector. This report will focus on pay. The second, to be published in early 2019, will look at how workers are treated while at work.
The UK’s hotel industry has made an impressive recovery since the 2008 recession. This recovery would have been impossible without the hundreds of thousands of workers that keep the accommodation industry in business.. Whether it’s through making beds, cleaning rooms, or cooking food for guests, their dedication and hard work means that both British and international visitors are able to enjoy the time they spend in hotels.
Despite the contribution they make to the success of the accommodation industry, hotel workers are often badly rewarded for their efforts. Low pay, long hours and abuses of power such as sexual harassment are rife in the industry. In the words of one worker, ‘they treat us like machines’.
This report is the first of two reports looking at the hotel sector. This report will focus on pay. The second, to be published in early 2019, will look at how workers are treated while at work. This will include issues such as long hours, health and safety and abuses of power.
What’s the issue with pay?
The hotel industry is enjoying an impressive recovery. For example:
- The country’s largest hotel chain, Premier Inn, saw its underlying operating profit increase from £457 million in 2016/17 to £498 million in 2017/18, a rise of 6.5 per cent. Its total sales grew by 5.2 per cent, while the chain opened 4,385 new rooms
- Intercontinental Hotels Group (IHG), owner of chains including the Holiday Inn and the Crowne Plaza, report that group operating profit rose by 12.5 per cent
- In its most recent publicly-available annual report, Travelodge had increased its total revenue by 6.6 per cent
These profits are not being shared evenly. For the average employee, the accommodation industry is one of the most badly paid in the economy. The average employee receives £8.15 per hour, which is over £4 per hour less than the average employee in the economy as a whole.
Over half of the employees in the accommodation sector are paid below the real Living Wage, with the percentage of employees not paid the real Living Wage rising among certain groups. For example:
- In some regions, between 60 and 70 per cent of employees are not paid the real Living Wage. In three regions (Wales, Yorkshire and the Humber, and the East Midlands), it’s between 70 and 75 per cent of employees
- Younger workers in the accommodation sector are much less likely than the average accommodation employee to be paid the real Living Wage
- Women in the sector are less likely than male employees to be paid the real Living Wage
The accommodation sector does not offer its employees much scope for pay progression. An employee in the accommodation sector barely earns more in their thirties and forties than they do in their twenties. This goes against the trend in the rest of the economy. The highest earning age group in the accommodation sector, those in their forties, earns £54 per week less than the average employee across the whole economy between the ages of 22 to 29.
Excessive executive pay coexists with poor wages across the industry. While the average hotel sector employee is paid £8.15 per hour, Travelodge paid its board of directors a combined total of £5.4 million in 2017. Its best-paid director saw their remuneration package double, from £1.2 million to £2.5 million. Whitbread paid its board and CEO a combined total of over £4.7 million in the 2017/18 financial year.
What we want to see change
The TUC believes that every worker deserves to have a great job. An essential part of this is fair pay.
We want the government to increase the national minimum wage to £10 as quickly as possible, and for this to include 21- to 25-year-olds. Due to the prevalence of low pay in the accommodation sector, with median pay for all employees being £8.15 per hour, this would improve the pay of the vast majority of employees in the sector.
Employees in the hotel sector also need a voice at work. As part of the Great Jobs Agenda, we want employers to:
- Recognise a trade union for collective bargaining on pay and conditions
- Set out how they’ll consult the whole workplace on important decisions
- Have elected workers on company boards.
Each of these would help to improve the pay of workers in the hotel sector, as well as lead to fairer distribution of the profits currently being enjoyed by the CEOs and boards of directors of hotel chains.
You can read more about the Great Jobs Agenda .
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