The article explores processes of restructuring firms in the Norwegian hotel industry in the light of constant negotiations between neoliberalisation and countermeasures in the social-democratic welfare state, and the effects of this restructuring on labour. Inspired by scholarship on neoliberal restructuring, the article examines how competitive strategies in the hotel industry are shaped by intensified competition, by the interface of industry regulations, labour market regulations, and social security, and by the labour movement. Socialdemocratic welfare states are not insulated from neoliberal currents in either accumulation or regulation, and the concept of socially managed flexibility proves helpful in examining regulatory resistance to neoliberalisation. As in other advanced economies, the Norwegian hotel industry faces increased competition through intensification of labour efforts and strategies to increase flexibility, especially numerical flexibility aimed at cutting costs. Norwegian labour market regulations to some extent curb numerical flexibility for cost-cutting purposes, and the centralised labour movement plays an important role in this regard. Nonetheless, the hotel industry has found room to manoeuvre. The article reveals the state's difficulties in managing flexibility in a way that permits numerical flexibility, yet prevents costcutting that leads to intensified labour efforts at the lower end of the service sector.