Problems of Hospitality Industry Report

Abstract

Hospitality is among one of the most influential sectors of the service industry which if not always updated according to the recent trends, suffers. Therefore in this essay, we have identified the factors of HI (Hospitality Industry) being studied by the SHRM to present solutions to the existing problems faced by the hotel industry. Many workers engage directly with customers, while others whose work is still geared towards providing good customer service have a more indirect customer relationship, necessitating us to acknowledge that the employment relationship is triadic. Part-time and atypical employment is common and may be increasing amid countries’ desire to create more flexible labor markets. The labor force is highly mobile, often with a short-term orientation, generating high labor turnover and leaver rates. Recruitment and retention are particularly problematic, particularly for managers where a lack of professionalism may impede business success in developing and transitional economies.

Hence the essay is all about exploring various problems faced by the HI and it is not surprising to find regulation of the employment relationship is of global concern in areas such as minimum wages, equal pay, and working time. However, wide recognition is given to lower minimum rates for young workers, and unequal pay persists, reinforcing the importance of women and young people as cheap labor.

Global changes have contributed to economic uncertainty and a more turbulent market, creating new sets of challenges for managers. Management style is influenced by constraints and choices related to product and labor markets, organizational status and structure, size of the workplace, and culture. While managers’ frame of reference influences choice, HI managers are most likely to place a high priority on seeking to control labor costs and have little incentive to take the ‘high road’ to employment.

Introduction

Employment skills in HI present an overview of the employment relations in Britain, highlighting how these developments may influence employment relations in the HI where a triadic employer-worker-customer relationship is identified. Therefore HR is discussed in the context of tourism and hospitality along with the frames of reference on employment relations, rules of employment, and power relationships to HI, workers, and customers. The wider national and international contexts of hospitality in the dimension of HR of employment relations are reviewed.

Although we have been able to use data from different countries, a limitation is that most research is western-centric and drawn from ‘Anglo’ countries. This provides a clearer, if only partial, view of key employment relations issues in the UK, Australia, and New Zealand. We have some information about the positive and negative influence of HI on employment practices in hotels, restaurants, fast food, and contract catering in host countries, while hotels in the transitional Slovakian economy offer a corollary as they are still immune from international influence.

Aims and Objectives

The objective of the research conducted into the broad spectrum of the service industry is targeted at discovering the challenges faced by the ‘Hospitality and Tourism’ Industry. In this context, I consider and would research the tourist aspect of hospitality development to the recent update, therefore I would research based on the following challenging aspects of the hospitality industry (HI) and would initiate with employment issues and relations within the industry, how employment relations are intended to go through the HI, what role communication plays in HI and what are the barriers that are caused by communication, what is the current scenario of promoting HI and what should it be, what performance measures are involved in analyzing HI and how the community development affects the HI.

Methodology

To analyze various challenges confronted by the Hospitality and Tourism Industry, we would first discuss a glimpse of the current situation as seen by the hospitality service area. The current situation includes the issues of gender, employment opportunities, financial risks, funds, promotion, performance measures, and community development revolve around the hospitality industry.

The analysis would be done by examining the industry based on internal and external environmental analysis. This would highlight along with various trends of hospitality, the weaknesses, and strengths the industry is confronted with today. The recent trends would then be judged by putting a real live example of the Caribbean to support our judgment and decisions.

HRM Structure in HI

Hospitality is essentially a small and medium-sized enterprise (SME) industry depending upon the country’s economic infrastructure. In Europe, 94 percent of the 2.7 million SMEs are micro-enterprises employing fewer than ten people (ILO, 2001:48). We consider ‘hospitality’ as the service sector to be analyzed in the light of SHRM. Worldwide employment in hospitality/tourism, stands at 192.2 million, and by 2010 is expected to have grown to 256.1 million jobs, accounting for one in 11 jobs in the formal economy (World Travel and Tourism Council (WTTC), 2000). The importance of HR in tourism employment varies among countries, with some showing rapid employment growth, e.g. in Spain tourism employment increased by 24 percent in the 1990s (Incomes Data Services (IDS), 1998) while in some developing countries international tourism is high status and provides secure employment, while in others it may be low status and exploitative (Baum et al., 1997). In small island economies such as Cyprus and Malta hospitality employment which consists of posts ranging from chefs to receptionists is between 10 and 30 percent. In European countries like the UK, tourism employment is of greater importance to southern countries such as Spain (8.3 percent) and Italy (5.9 percent) while in other ‘westernized’ economies the figure is nearer 5 percent (Australia, US, UK). On the other hand in ’emerging’ tourism economies such as Bulgaria and Slovakia, it represents 2 percent of employment.

The importance of HI lies in the human resource employment and the main characteristics of the labor force and employment that flows across the world. High levels of recruitment activity can be attributed to specific conflicting pressures. On the one hand, the HI worldwide reports skill shortages and fail to fill current vacancies, inferring a quality problem, while on the other there are countries that possess HI workers in access, skilled or semi-skilled which is another concern.

Employers may not be targeting appropriate groups of people or national training frameworks may be inadequately geared to the industry’s needs as considering only locals as a source of labor may be outdated in a global economy (Choi et al., 2000). Technological advances facilitate the finding of required labor by targeting recruitment in developing countries, where there are high rates of unemployment among skilled workers, e.g. in Bangladesh 40 percent of people with a Master’s degree are unemployed or under-employed. The increasing presence of the hotel industry in HI, in countries such as India, may not necessarily be met by an adequate supply of skilled workers (Singh, 1997), it all depends upon adequate and effective training and skill.

On the other hand, the consequences of employment flows, which management may seek to perpetuate, and cost-minimization policies encourage recruitment systems that are highly responsive, flexible, and ad hoc. In the past twelve months before HI workplaces were most likely to have vacancies for unskilled and sales staff. HI workplaces were significantly more likely to have vacancies for personal service, sales staff, and routine unskilled manual workers, and significantly less likely to have vacancies for professional, technical and scientific, clerical and secretarial, and operative and assembly workers. Half the workplaces in the HI had no difficulty filling vacancies, while the skilled and unskilled job was most problematic in a small minority of HI workplaces and this is since HR is bound to hire employees globally, irrespective of acknowledging that they fit into the industry or not.

The ‘employment decision’, in the premises of the hotel industry particularly in the situation when the vacancy is filled by an appropriate candidate, is a mutual and voluntary decision, based on employers’ and candidates’ freedom to withdraw from the process at any time. The process involves chance and risk over which managers have considerable discretion but are never in complete control (Torrington et al., 2002, p. 189). SHRM’s own ways of maximizing cost-effectiveness have different meanings within hotels’ employment standards and different labor market conditions.

Internal Environment

The term ‘total reward system’ has traditionally been used to describe remuneration in the HI. Employees in hotels and restaurants, but not necessarily in other sub-sectors, are assumed to receive all or most of the following variable reward system:

Basic pay + subsidised lodging + subsidised food + tips or service charge + ‘fiddles’ and ‘Knock-offs’

The wider application of this package may well have been overstated in an attempt by employers to justify that employees are not low-paid. The stark reality is that the SHRM concerns about low pay, regardless of how pay is measured. Most of the elements of the total reward system can be applied to workers in other sectors, who may benefit from other more favorable monetary and non-monetary benefits.

The unpredictable and variable nature of the total reward system says a great deal about the nature of the employment relationship in the HI. Despite the legal and institutional framework, managers can exert strong control through individual contract making, and unilateral management determination of pay (Gilman et al., 2002). Informal practices are not the preserve of any particular type of workplace or activity. In fast food stores, practices involve the distribution of rewards and favors according to informal systems of individual bargaining, including access to days off and favorable rosters (Allan et al., 2000). An informal deal may bind a worker to a tacit understanding that may later be used as a sanction against her/him. The lack of transparency about reward systems reduces workers’ bargaining power by isolating individuals (Rubery, 1995). It is not surprising that the HI sustains high quit rates in these circumstances, however, the reward is not seen as a part of culture change.

Apart from keeping pay low, there are other circumstances and conditions under which SHRM control may be intensified. For example, control on wage costs and employee performance is achieved through high reliance on tips, particularly in pubs and bars. Work intensity is maximized by the provision of live-in facilities, enabling staff to be summoned to work at short notice.

The introduction of the NMW (National Minimum Wage) in the UK has caused a pay spike at the minimum rate, showing that workers benefited from its introduction (LPC, 2000). The arrival of the NMW has not been a discrete event in a stable world. Individual Hospitality firms do have scope for discretion, and to take random, opportunistic decisions (Lucas and Langlois, 2003). However, there has been a tendency for hospitality firms to take a ‘low road’ approach. Hotels have tended to adopt a cost-minimization strategy rather than pursue a quality enhancement route (Brown and Crossman, 2000).

The NMW has been introduced successfully, with employers given plenty of warning about forthcoming increases, therefore the HI has been disproportionately affected because it has the highest proportion of low-paid jobs, particularly among females, and employs large proportions of young people, the group most likely to suffer unemployment effects. Twenty-three percent of hospitality jobs, 300,000 in total, benefited from a major hike in the NMW of 40p in 2001. Waiting and bar staff is among the occupational groups most affected. The impact on the wage bill of 0.7 percent is less than at the time the NMW was introduced.

In the UK three aspects of the NMW have particular resonance within the HI: tips and gratuities, an accommodation offset, and the differential treatment of young workers? Employers may use tips or a service charge collected through the payroll to ‘top up’ hourly pay to the NMW, whereas cash tips paid to and kept by workers do not count. As there was a limited call to the LPC’s suggestion that the rules for the treatment of tips and gratuities be reconsidered, this remains unchanged (LPC, 2003).

An accommodation offset of £24.40 per week (£26.25 from October 2004) can be deducted from the NMW to pay for accommodation. Where accommodation is for less than a full week, the offset must be a corresponding reduction, which replaces specified hourly and daily rates (LPC, 2003). Employers can charge more provided the deduction does not bring the hourly rate below the NMW. The BHA estimates that the average cost of accommodation is £42 per week and that employers typically charge between £40 and £50 (IDS, 2001). Other sources suggest wider weekly variations of between £20 and £95 (IDS, 2002) and £35 and £65 (LPC, 2003).

Employers perceive a positive relationship between age and employee attributes, rating under 18s’ attributes consistently lower than the rest of the workforce. Some attributes such as solving problems, making decisions, and interpersonal skills are developed through experience, hence lower pay. In most cases, work also involves fewer tasks and responsibilities. The exception is fast food, where workers of all ages receive the same starter rate, as they are subject to the same tasks, responsibilities, and working conditions.

Workers aged 18-21 are to an extent disadvantaged on lower pay because they appear to be performing the same tasks as older workers. Employers appear to place more emphasis on the possession of higher personal attributes by older workers.

External Environment

Men earn more than women because every labor market in the EU is gender-segregated (Almond and Rubery, 1998). Full-timers earn more than part-timers, although the differential is smaller among women than among men. Strong collective bargaining and minimum wage regimes reduce the percentage of low-paid workers, but the benefits of regulation do not extend to women, especially part-timers, as much as to men (Robson et al., 1999). There is also a strong sectoral effect on whether or not national arrangements are in place.

The most dilemmatic condition in the HI is the differences in systems of wage determination between countries and changes to wage structures would not have consequences for the relative pay of women and men (Almond and Rubery, 1998:675). Hence in the US, Canada and the UK where pay determination systems are decentralized and fragmented, between 19 and 25 percent of the full-time female labor force is low-paid compared to 6 percent in Scandinavia where solidaristic bargaining prevails. That said, women executives in the US have lower starting salaries than their male counterparts, and pay inequality persists where directors are believed to be able to ‘get more for less’ (Coffey and Anderson, 1998).

The failure of minimum wage systems to deliver gender equity in the EU arises from strong political pressure not to increase minimum wages as a symbol of wage restraint and to promote a more flexible labor market. Unusually, a stated objective of the UK’s NMW was to promote gender equality; over 70 percent of beneficiaries were women, and around two-thirds of jobs below minimum wage levels were part-time (LPC, 2003). The gap between male and female hourly pay has narrowed, particularly among part-timers, but remains at 82 percent for full-timers and 89 percent for part-timers.

In Western Europe, collective agreements reached multi-employer (sectoral and economy-wide) have coverage that is greater than union density. This is because even firms with few union members participate in sectoral bargaining and statutory procedures extend the terms of the agreement to all employers in the sector (Robson et al., 1999).

After the Second World War, private services remained the ‘Cinderella’ of British industrial relations. Even though the growth of private services such as retailing and hospitality opened up more employment opportunities for women, whose main work opportunities had been in domestic service in the earlier part of the century, unregulated, female service work was deemed not to be part of industrial relations. Even so, the lack of collective bargaining arrangements prompted the Labour government to extend the scope of minimum wage legislation to embrace these sectors.

Growing standardization and routinization of hospitality work has led to deskilling in the HI. One problem is that one’s definition of skill, therefore, influences perceptions about the extent to which hospitality work has become deskilled, and its attendant consequences, notably in fast food. Both Levitt (1972) and Braverman (1974) foresaw that technology would give rise to work organization entailing practices and experiences more in keeping with factory work than service work. The introduction of automatic dishwashing machines caused a substantial drop in the proportion of kitchen hands from 21 percent to 4.2 percent between 1951 and 1971 (Bagguley, 1987).

Marchington and Parker (1990) suggest that stable product markets will encourage the development of ‘high road’ practices based on partnership, job security, systematic recruitment, selection, training and development, two-way communications, and formal procedures. Turbulent market conditions, which affect large parts of the HI, militate against long-term policies, even in larger companies (Guerrier and Lockwood, 1989). They will drive ‘low road’ practices based on hire and fire, ad hoc recruitment, selection, training and development, low pay, one-way communication, if any, from management, and lack of procedures, reinforcing a culture of macho management.

A consortium of 12 hotels and the four largest union locals found a collective solution to skill development and career progression. The collective agreement included joint problem-solving groups and a state-subsidized training program. All workers were offered 100 hours of training in team building, technical skills, and English as a foreign language. This released the potential capability of room attendants with degrees to advance to higher positions. Cross-training enabled them to gain experience as food servers during periods of holiday cover.

Training and development supported by performance appraisal is a primary tool of culture change and communication strategy. People-focused organizations like BA, Singapore Airlines, Marriott, and Ritz Carlton do engage in systematic training and development programs.

Limitations to managerial training and development feature widely in the HI where the bringing together of all hotel managers at the company’s training center in pairs is lauded as enabling international managers to network and thereby develop a better understanding of global aspects and company philosophy. Perceptions of limited promotion opportunities are not justified in major airlines, international hotel groups, and theme parks (Baum et al., 1997).

Female functionally flexible workers in four- and five-star hotels are more core than male workers, and usually better qualified with greater opportunities. Flexibility is geared to employers rather than to employees and family needs with adverse gender consequences. Hence flexibility is a function of cost control in conditions of fluctuating demand, and not about retaining key workers such a women returners.

Brand touchpoints with all the different ways that a brand interacts with, and makes an impression on, customers, employees, and other stakeholders (Davis and Dunn 2002:58) – also include purchase touchpoints in which visitors are exposed to the destination, revel in the delights of experiences or bask in the warmth of hospitality. All of these, including adjustment to a different place and pace of life, have to be managed if the customer-value proposition is to be maximized. Because management of many of these touchpoints falls under operational processes, and tourism and product development, one might assume that the interdependency and interplay among all these processes and activities are far from seamless. Marketing, operations, and development occupy organizational silos. Breaking through the bureaucracy in some businesses in the Caribbean can be quite a challenge.

This glimpse into one process, visitor management, reveals that tourism in the Caribbean is built on essential, though nuanced, blocks of resources and assets (private and public, tangible and intangible, naturally or humanly inspired), as well as a set of activities used to create visitor experiences and measurement systems that record success. It is now possible to see how assets relate to processes, how processes connect to outcomes, how measurements relate to market results, and how relationships are critical determinants of the creation of value. This is, essentially, the DNA of tourism, but every destination adds its flavor and tempo that are difficult to capture on paper and hard to fathom if you are an outsider. (Duval, 2004, p. 129) For example, expatriate managers, new to the islands, may arrive equipped to understand and appreciate the requirements of guests, but may lack appreciation of typical Caribbean customs and may have difficulty in fostering local relationships that might serve to untangle supplier relationships or motivate employees. Earning trust and confidence takes considerable time and lots of effort.

As an industry that generates volumes of visitors that descend on, and utilize, large portions of the landmass and surrounding waters of small, fragile tropical isles, the industry struggles intending to be or become good corporate citizens and neighbors. Industry associations are leading the charge. Some of their visions for tourism include: “To be the safest, healthiest and happiest of comparable destinations in the world”; “The Caribbean cares”; “Caribbean development through quality tourism” etc. (Duval, 2004, p. 67) The Caribbean, in particular, depends on the pristine conditions of its coastal zones – fabulous beaches, clear water, and healthy marine life. Islands are fragile, closed ecosystems with limited resources.

Conclusion

Hospitality and tourism employment is important to very many countries across the globe. Although the influence of large hotel industries is spreading, most employment is in small, independent enterprises. Much work is unpaid or low-paid. There is heavy reliance on females and young labor and, in some countries, on migrants. Most work is regarded as semi-skilled or unskilled, and there has been some deskilling. Training is often basic, with firms tending to buy in skills from the labor market.

SWOT Analysis of J (Case Study)

J’s Strength

Located at the heart of Thailand, J is famous for providing quality services and attracts tourists from various ethnic minorities all over the world since 1980.

Good Food

The provision of good food is the asset of hospitality, which overcomes all other deficiencies and loopholes of the HI. In this context, the production of ‘Halal’ food is likely a blessing in the Middle East and Muslim HI, where there is always an offer of food versatility. Muslims are supposed to make an effort to obtain halal food of good quality. It is their religious obligation to consume only halal food. For non-Muslim consumers, halal foods often are perceived as specially selected and processed to achieve the highest standards of quality.

The food service in J is successful in responding to the needs and desires of the customer, who belong to various cultures, races, and religions and come from all parts of the world. Though they come from various diversions still the most common thing they enjoy is the consciousness about foods, health, and nutrition. They are interested in eating healthy and hygienic foods that are low in calories, cholesterol, fat, and sodium. Many people are interested in foods that are organically produced without the use of synthetic pesticides and other non-natural chemicals. The ethnic and religious HI in America and Europe has encouraged the food industry to prepare products that are suitable to different groups such as the Chinese, Japanese, Italian, Indian, Mexican, Seventh Day Adventist, vegetarian, Jewish, and Muslim. (Chaudhary & Riaz, 2004, p. 24)

Following Hygienic Standards

Since most tourists are from Muslim countries, therefore J follows hygiene and kitchen standards to the utmost. Dishes and utensils used for preparing and serving vegetarian products are separated from non-vegetarian dishes or at a minimum must be thoroughly washed. Mostly cross-contamination from non-vegetarian food is avoided in J.

J’s focus is on maintaining hygienic conditions and emphasis on various aspects of clothing, equipment, and the premises used for processing, manufacturing, or packaging of food. The objective is to ascertain that the food is produced under hygienic conditions and is not hazardous to human health. The following conditions are fulfilled:

1. J distinguishes all halal products by storing, displaying, selling, or serving them separately thereby categorizing and labeling them as ‘halal’ at every stage to prevent them from being mixed or contaminated with things that are not halal.
2. All the products prepared in J are properly prepared, packed, processed, stored, and transported, thereby separating from ‘non-halal’ food.
3. The products are processed and packed under J’s observation which meets strict hygienic conditions in premises licensed under good manufacturing practices.

Online Reservation System

J’s Hotel Industry is strong in the sense that it has its electronic appearance in the form of the sophisticated website being run by a team of 10 members working in various shifts following the principle of 24/7. This is not the end, J’s HI is fully equipped with the latest tools and techniques required to impress customers, like an ‘online reservation system’. 50% of the customers are those that book their rooms online so that J’s transport would be able to welcome their customers on time.

J’s Weakness

Poor Communication Skills

The most visible dilemma in HI is the lack of communication skills and that even in English which is widely spoken and understood throughout the world and is considered an international symbol of communication throughout different cultures. Since J is run by a group of Chinese men, therefore most of the workers are Chinese who though understand English, but still are not able to conduct communication in English. This situation creates many complexities for tourists, and on the other hand, provides an opportunity for J’s competitor to capture the tourists as J is competent in skilled labor who are English men.

A number of the larger hotel companies have adopted training initiatives to improve retention in a tight UK labor market. Some examples are the Thistle Tower Hotel that introduced Modern Apprenticeships in-house, while employees at Harrington Hall were given the chance to study National Vocational Qualifications (NVQs) (IDS, 2001). The London Heathrow Marriott offers a wide range of courses including Modern Apprenticeships, graduate training schemes, NVQ programs, and English lessons for non-English speaking staff.

Costly “Quality” Service

Customers are also unpredictable and their unsatisfactory behavior may impact managers and workers. Where customers are drawn into managerial control strategies, e.g. high reliance on tips, employees will suffer stress if tips are non-existent or derisory or they have to draw upon behaviors that do not come naturally. Customer/guest information used to guide hiring, performance assessment for pay, or other purposes, including training needs, promotion, discipline, and dismissal, may be unreliable, including unwillingness by customers to testify in formal proceedings, e.g. employment tribunals.

Gender Equal Workplaces

While there is evidence that HI employees are more likely to work in more gender-equal workplaces, some management practices are not gender-neutral. Women’s work may be defined as unskilled to keep costs low. The use of proxy measures in the appraisal, e.g. ‘being there’, may penalize women working part-time. There is also some evidence that trade unions have not always served women’s interests well. Assumptions of women’s lower commitment may shape the core-periphery and determine which jobs are full-time or part-time, with the latter receiving less favorable terms and conditions. Cost-cutting underpins job segregation, the same assumptions can also be applied to young workers, affecting men and women alike. Labour markets perpetuate gender segregation where collective bargaining is more likely to benefit men, decentralized pay increases the probability of low pay and minimum wage systems treat young workers less favorably. It remains to be seen how far new legislation will enable these gaps to be closed. More studies are needed that take a perspective that embeds customers, gender, and youth within the analysis of employment relations in the HI.

By analyzing the nature and extent of employee involvement through individual effort and team working in hotels, including the methods used and the levels of responsibility and autonomy afforded to teams, two approaches were used. Task-based teams were created to make workers functionally flexible, e.g. within food and beverage operations across the bar, restaurant, and room service. Problem-solving teams met to discuss improving customer service when management signaled a problem. Actual levels of discretion and responsibility were low because managers deployed various mechanisms to limit empowerment. Although the employees reported a strong sense of teamwork, they felt it should allow them to have more input into problem-solving and decision-making. Rees (2003) defines constrained responsible autonomy as ‘reorganized control’, as the increased level of employee involvement is within increasingly defined and measured limits. (Lucas, 2003, p. 114).

In assessing the management evidence, we must remind ourselves that three-quarters of HI workplaces are multi-site, and include some very large employers. Strong strategic integration is suggested. HI workplaces are much more cost-conscious and work on a lower wage cost: sales ratio. While a strong proprietorial and family effect is also evident, in most cases this is about control of a large organization, not a stereotypical single site family business. Most of the very small workplaces employing 10 to 24 employees included for the first time in HI are chain pubs. HI is most likely to convey a big organization picture of employment relations and is less helpful in providing particular insights into the practices of small, independent operators. This form of employment relations is most likely to be discernible in small workplaces employing between 25 and 49 employees. (Lucas, 2003, p. 227) So, there is a need to understand the employee motives and intentions to decide for training them, in the long run, might be beneficial.

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