Hospitality in Thailand

At a very interesting session hosted by the British Chamber of Commerce of Thailand last night, we heard about the challenges of talent management in the hospitality sector. The growth of this sector really took off starting in the late 1980s, and the Tourism Authority of Thailand now estimates that tourism accounts for nearly 7% of annual GDP (about 16 billion USD). One speaker noted that there are 78 4- and 5-star properties in the development pipeline now, comprising about 31,000 rooms; while the ratio of employees-per-room has dropped over the years, you can still expect, at a minimum, a 2:1 or 3:1 ratio…and that is a lot of people. The continuing growth of this sector depends upon people, and the desires of business planners are starting to bump up against the realities of the talent market.

Much of the discussion last night, from industry leaders and academics, centered on recruiting and, to a lesser extent, retention. The speakers looked at commonly-assumed Millennial traits and expectations, the state of hospitality schools across Thailand, the needs of the industry, the attractiveness of the field compared to other rising industries, compensation and benefits preferences, and more. They discussed some good steps to reframe the employment value proposition of the hospitality industry, improve the education and training, and ultimately increase the recruiting and retention of talented people in the sector.

But do those people even exist?

Recent economic data suggests the unemployment rate in Thailand is at 0.83% (the lowest in the world), leaving 322,000 members of the labor force jobless. Can the 4- and 5-star hotels find the 60-90,000 people (at a minimum) they need to staff these properties? Remember, too, that they are also competing for talent with other, smaller hotels and resorts, not to mention other industries like IT, telecommunications, finance, energy, manufacturing, transportation & logistics, and anyone else who is also trying to grow. Similar challenges can be found in other markets throughout Asia: Singapore’s low birth rate has left it with a shrinking local population even as companies are trying to grow, resulting in an unemployment rate of 1.9%, and regional neighbors like Vietnam (1.8%) and Hong Kong (3.3%) face a similar shortage of talent waiting in the wings. The growth of the industry throughout Asia, not just in Thailand, will be affected by people challenges. Hospitality leaders talk about increasing the pipeline, perhaps with government support, and while that can certainly be a useful step, it may be the case that the people who could fill that pipeline have simply never been born.

The shortage of people cannot be easily solved simply by importing talent. Industry leaders made the point that one reason tourists come to Thailand is for the Thai style of hospitality that is so welcoming. Visiting a hotel in Europe, they agreed, and having it staffed by people from a variety of European countries, is acceptable and even expected, but traveling to Thailand and finding a hotel staffed largely by non-Thais is not. If the overall “Thai-ness” of the experience is diluted, tourists will be less likely to make the journey here.

So if you cannot get more people, how do you do more with the people you have?

Part of the solution may come through workforce restructuring, and re-evaluating who should be doing what. Many organizations in different industries look at “flattening,” and removing layers of management, but that can lead to some new problems if you are not careful about how you do it (plus, you could end up simply increasing the workload of remaining employees to the point where they are no longer as effective). Another emerging trend is “clustering,” in which a manager at one property oversees the same function at another property; one HR director from a large property mentioned afterwards that she also oversees HR at another property in another part of town, and splits her time between the two. It is also becoming more common to outsource not only functions such as housekeeping, but also restaurants, which used to be run by the hotel but which now may be run by an outside company or celebrity chef. The limited effectiveness of outsourcing, though, is obvious: someone still needs to do those jobs, and if you do not change the way work is done, that means you still need as many people as before, they just get a paycheck signed by someone different.

Changing the way work gets done may be the key to expanding within a limited talent market. Hospitality leaders need to consider how they can make the best use of their employees’ abilities and maximize the business value they bring. Younger employees, in particular, often say their abilities are being wasted — well, let’s see if that is true. Perhaps the leaders at individual properties and across hospitality chains can look for ways to:

– Make it easier for employees to develop and implement new ways of providing current services
– Facilitate the innovation of new products and services at relatively low cost
– Encourage collaboration across functions, and across properties, to share best practices
– Enable communication from the bottom up, to increase the pace of change to meet market needs
– Explore existing technologies that can make current services more efficient

Those last two points are related. Look at today’s Millennials (and the upcoming Net Generation or Gen Z or Gen 2020, whatever you want to call them). They do not even think about their connection to technology because it is such a natural part of who they are. Can we tap into that knowledge, and more importantly, can we get senior leaders to listen to them?

The hospitality industry in Thailand absolutely, positively needs to look at how, and who, they recruit, so they can bring as many talented people as possible into the field. That, however, will not be enough. The realities of the modern talent market mean they will need to think very carefully not just about how many people are working, but also about how they are working.

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