Food Services Hungry for More While Accommodation Takes a NapSeptember 9, 2016 Leisure and hospitality is often thought of as the tourism industry. This industry experiences seasonal swings in employment and wages due to shifting levels of demand which are largely brought about by travel and tourism. In times of economic instability, such as a recession, leisure and hospitality usually takes a hit in employment and wages. This is due to decreased spending on luxury items like travel and dining out. Likewise, in times of increasing economic activity, leisure and hospitality usually sees growth in employment and wages.
Eastern Oregon's leisure and hospitality employment and wages accounted for 3.1 percent and 2.4 percent, respectively, of the state's total leisure and hospitality industry in 2015. Employment in this industry totaled 5,913 in Eastern Oregon and total wages for the industry were greater than $88.3 million. This represented 11.2 percent of all private employment and 4.8 percent of all private wages for the region.
Leisure and hospitality is an industry super-sector comprised of two smaller industries (sectors): arts, entertainment, and recreation; and accommodation and food services. Roughly 15.0 percent of employment and wages in Oregon's leisure and hospitality industry came from arts, entertainment, and recreation in 2015. In Eastern Oregon (Baker, Grant, Harney, Malheur, Morrow, Umatilla, Union, Wallowa) that share was roughly 6.0 percent.
The majority of employment and wages for leisure and hospitality in Eastern Oregon is seen in accommodation and food services. Accommodation and food services supplied 93.9 percent (5,549) of employment and 94.6 percent ($83.5 million) of wages for leisure and hospitality. The accommodation and food services sector can also be broken into two smaller industry components (sub-sectors): accommodation, which represented 18.3 percent of this employment and 20.6 percent of wages; and food services and drinking places, which represented 75.6 percent of this employment and 74.0 percent of wages.
Employment Over Time
Between 2001 and 2005, employment in leisure and hospitality was on the downswing in Eastern Oregon. Accommodation dropped 177 workers and food services and drinking places added only 94. Industry growth over the next two years, however, drove employment up by 495 and total employment for the industry peaked at 5,882 in 2007. Most of this growth came in food services and drinking places which added 363 workers. During this same time accommodation added back 118 workers lost in prior years.
When the Great Recession hit, growth in the industry stalled. By 2011 accommodation employment fell by 189 (16%) and food service employment was stagnant, falling by 66 (1.5%). In 2015, employment for the industry finally pushed past the 2007 peak. Employment in food services and drinking places climbed to 4,468 in 2015, up 4.7 percent from 2007 and 17.2 percent from 2001. Accommodation employment slipped to 1,081, down 8.9 percent from 2007 and 13.2 percent from 2001.
In 2015, employment in accommodation remained below 2001 levels in all Eastern Oregon counties except for Grant and Harney. However, all Eastern Oregon counties except for Morrow, have seen slow upward trends in accommodation employment over the past two or three years.
Employment in food services and drinking places is a bit more convoluted for individual counties. Umatilla has experienced continual growth in food services and drinking places since 2001. Baker and Malheur rose above pre-recession peaks with a recent upward trend. Grant, Harney, and Wallowa show an upward trend, yet still remain below their pre-recession peaks. Union is above its pre-recession peak with a recent upward trend, but still sits 71 workers below its 2010 peak. And Morrow shows continual decline since 2003 having shed 40.0 percent of food services workers over the period.
Wages Over Time
An industry's nominal wages (not inflation adjusted) should grow over time as long as employment levels don't completely crash. Nominal wages for leisure and hospitality grew from $55.4 million in 2001 to $88.3 million in 2015 (59.3%); accommodation wages grew from $14.1 to $18.1 million (28.2%); and food services wages grew from $36.7 to $65.4 million (78.0%). Since inflation can be a large factor in nominal wage growth, wages should be adjusted for inflation when analyzing growth of wages over time.
Adjusting for inflation in Eastern Oregon trims growth significantly, but marked gains still remain for food services and also for the industry as a whole. After adjusting to 2015 dollars, real wages (inflation adjusted) for leisure and hospitality grew by 19.0 percent and wages for food services grew by 33.0 percent. Accommodation wages on the other hand received a blow, falling by 4.2 percent.
The average annual wage for leisure and hospitality workers was $14,946 in 2015; growth of 11.2 percent from 2001 in inflation-adjusted dollars. The average wage for food services workers was $14,639; growth of 13.4 percent in inflation-adjusted dollars. The average annual wage for accommodation workers was $16,811 in 2015; growth of 10.3 percent from 2001.
This may seem odd given that total real wages for accommodation workers decreased slightly from 2001 to 2015. The growth in average annual wage for accommodation is due to how this wage is calculated. Average annual wage is calculated by dividing total wages for an industry by total employment for that industry. So, total wages decreased in accommodation, but total employment decreased at a faster rate, which boosted the average annual wage for accommodation workers.
Where's the Work?
From 2001 to 2007, the total number of businesses in Eastern Oregon engaged primarily in some form of leisure and hospitality increased. Leisure and hospitality business units reached 563 in 2007 (+8.3% from 2001); accommodation grew to 122 units (+34.0%); food services and drinking places grew to 364 units (+5.5%). Since 2007 the total number of leisure and hospitality businesses has decreased, falling to 542 in 2015. This is primarily due to the loss of 20 accommodation units throughout the region. Accommodation dropped to 102 units while food services added 11 units to reach 375 in 2015. Union County has seen the largest loss in accommodation, dropping 8 units between 2008 and 2015.
Leisure and hospitality workers in Eastern Oregon were primarily employed in two sub-sectors in 2015. Eastern Oregon accommodation workers found employment in 76 hotels or motels, 18 RV parks and campgrounds, six recreational and vacation camps, four bed-and-breakfast inns, and four other travel accommodations businesses. Workers in food services and drinking places found employment in 176 full service restaurants, 114 limited service restaurants, 37 snack and non-alcoholic beverage bars, 31 drinking places, 11 food service contractors, six caterers, three cafeterias, grill buffets, or buffets, and two mobile food services.
Full service and limited service restaurants employ roughly 80.0 percent of food services and drinking places workers in Eastern Oregon. Full service restaurants provide food services to patrons who order and are served while seated and pay after eating. Generally, these are restaurants with waiters and waitresses such as the local steakhouse or breakfast diner. Only 2.8 percent of full service restaurants in Eastern Oregon appear to be franchise/chain establishments.
Limited service restaurants provide food services to patrons who order or select items and pay before eating. Generally, customers at these restaurants order at the counter and seating areas are provided. Roughly 47.0 percent of limited service restaurants in Eastern Oregon are franchise/chain establishments.
Snack and non-alcoholic beverage bars are primarily engaged in sales of specialty snacks or beverages. These establishments may sell certain restaurant style items such as sandwiches or soup, but generally promote and sell a unique snack or non-alcoholic beverage. They include the local coffee house, juice hut, or frozen treat shop. Roughly 51.0 percent of snack and non-alcoholic beverage bars in Eastern Oregon are franchise/chain establishments.
Eastern Oregon's leisure and hospitality industry is sending mixed signals. Employment and wages in the overall industry are up for the region as a whole. Accommodation wages have slipped and employment lags behind previous peaks. Individual counties also display this trend which suggests lower demand for overnight lodgings. This may be tied to decreased tourist activities, but the region's decreased construction activities also play a part. Growth in construction often raises demand for overnight lodgings due to worker migration. Construction activity likely helped drive the upswing in accommodation employment between 2005 and 2007.
Employment and wages in food services and drinking places have risen above previous peaks and continue their upward trend. This is mixed across counties in the region, but the upward trend shows increased demand. This may be tied to travelers passing through, but along with other economic indicators for the region such as historically low unemployment rates the trend suggests that residents are increasing their demand for luxury items.