Indian Hospitality Industry 16

During my professional life in India, that spans over 48 years, I was distressed only on two occasions with regards to the future of the ‘Hospitality Industry’, first time it was in 80s’ when the industry was passing through major industrial disputes that had erupted across the country, the staff was revolting against the HR policies, low wages and babu culture. I remember getting an opportunity to attend a seminar organized by Professor Majumdar, during her lecture she pointed out how to circumvent the man management crises, Prof Majumdar said that there was an urgent need to understand the meaning of ‘Worker Evaluation System vis-à-vis Productivity and Employee value. She also warned that any delay in understanding this mechanism will cost dearly - and it did.

Established chains like TAJ and ITC started hiring staff for their city hotels from other cities to avoid a sticky Union situation and in the process, they landed up paying through their nose. While Oberoi Hotels were smarter, they started paying highest salary in market along with extensive training (over hundred days in a year), they also started working on the policy of inducting over 10 to 15% of new staff every year and finding ways and means through motivation-competition- promotion getting old staff to leave for better. The staff didn’t mind, because they were well trained and got lots of opportunity in other hotels. International brands were even smarter; they started providing staff the facilities like never before and who remained got absorbed by the booming hospitality Industry.

Today as the COVID pandemic settles down, the industry is, once again,  experiencing a major problem relating to man management and the  situation is bad,  it is so bad that it is not only effecting the quality of operations at present, but it might also have a long term impact on the future of hospitality industry. Everyone was fully aware of the fact that once COVID was contained, the industry will start booming, like never before, well if so, how come we were caught off guard? How come all of a sudden the most glamorous and promising industry has lost its sheen and is no more a star attraction to the young and not so young - Why?

In this blog, I have tried to address some of these issues giving my reasons, supported with zest of my the discussions with large number of HR Directors and GMs who are actually staring at the crisis and facing the music;

·         Before COVID became a pandemic our Industry was doing quite well. Most of the Hotels were making good money. But when pandemic was declared the ownership and stakeholders got worried about their own fate and interest, and all they could focus on, was their primary money earner i.e. The Staff and their salary bills. They grossly misjudged the situation and saw COVID as an opportunity to ease out the majority of staff and those who remained were paid pittance for over two years. Whatever the owners might say today, most of operating Hotels/ Restaurants were hardly able to break-even or earn very little money, because of the scare and compulsory quarantine laws resulting in compulsory quarantine and food take-away. Although the money was less but wheels of  hotel  industry kept rolling - thanks to COVID rules.

·         Over hundreds of thousands of Hospitality staff was sent home without any compensation across India. This was indeed the darkest period for the staff and their families. Just imagine the plight of all those poor people who had earned crores and crores of money for their bosses, were all of a sudden abandoned to fend for themselves and face a dark future. This by any standard was grossly unethical.

·       All those who earned millions in tax for the Government, got no backing or any kind of relief or support from the Labor or Tourism ministry. The way they were treated by one all, left a very sad view of this Industry.

·         I also need to mention that there were few Hotel management companies, who did take care of their employees during this difficult period. But these were very few as compared to the humongous industry manpower.

·        What happened to those people, totally changed their lives forever. It was a question of survival as such they started looking for any kind of job, it could be from Zomato delivery boy, to just any job in any other industry, to opening their own small business - fortunately in most cases it worked. Surprisingly enough most of them ended up earning much more than their previous Jobs. They also realized that industry and promoters were short changing them – by making them work for 10-12 hours every day at comparatively low salary.

·       And when things became normal, all the hotels wanted their staff back, but it was too late and to their surprise, most of the competent staffers were well settled and declined the offer to join back, simply because most of them were earning much more than they were, in their last job, regardless of the position and the ones who had established their business were earning way above and beyond their last salary drawn.

Today, the situation is pretty grim, as most of the Hotels are suffering in terms of the quality of service due to shortage of trained staff and the floating manpower that is available is below the industry standards as they are not trained. On other hand, the one’s who have returned, are busy in playing musical chairs with Hotels. Although present situation has not started affecting the owners yet, because the business boom continues to spiral, but the hospitality industry pundits’ are justifiably worried and are busy looking for long term solutions to resolve the situation.

The main reason why hospitality is no more an attractive career option is basically due to poor remunerations. From one of the most sought after professions it has become an industry of lowest paid salaries. It is not surprising that nearly 60% of Hospitality graduates end up joining other professions - with fixed timings, better wages and ample time for family life. On other hand after studying for four year in catering college, only few of the youngsters get into management program, the remaining start their career on waiter’s salary with average working 10 to 14 hours, no holidays for Diwali, Holli, Eid or Christmas – who would  like their sons / daughters to invest their time in this thankless career?

As hospitality consultant I wanted to know where we stand in comparison to other industries in India and the finding are rather demoralizing. Some facts are placed below;

The Industries are divided into three broad categories and are termed as High, Moderate and Low:

HIGH:

Finance/Sales& Marketing/Business Development/Architecture and soft ware

MODERATE:

Info Tech/Health Care/ Insurance/Customer Care/Human Resources

LOW:

Construction, Transport and finally The Hospitality

 In the recent past, just a few years back, the hoteliers were compared only with the glamorous world of film stars.  Unfortunately today they have come down to all time low on the financial ladder - which is just not acceptable. Today it is a tough going for a hospitality worker. The performance and value of ‘Hospitality Staffer’ peaks when he is in his twenties, for a supervisor it is late thirties, for a manager the maximum age remains is forties and for GM it is fifties- but only if one is very lucky. After this the down slide begins, and the knowledge and the experience doesn’t help - then we worry about why young people are not joining the hospitality Industry?

Another website gave following list of top ten and forgetting us totally;

1.      Medical Industry

2.      Data Scientist

3.      Machine Learning Expert

4.      Software

5.      Product management

6.      Management

7.      Invest Management/ Banking

8.      Finance

9.      Sales & Marketing

10.   Legal

As you will notice that the hospitality professionals figure nowhere in the list, I did some research and finally found  it is the truth, that one of the lowest paid Jobs in our country today are in the hospitality sector. It is demoralizing for a guy like me, who kept comparing this industry to any other equally glamorous Industry, but today all that pride and warmth stands shattered. Like the film industry we have short span of professional life, ageing gracefully works fine as we grow steadily in the profession but  as we touch fifty, which is when the down slide begins, which translates into older you are with -lesser is your value & pay.

Dozens of highly talented Hoteliers once over 55 – 60 years old I have seen looking for jobs on half the salary they were earning and still not getting hired. Not surprisingly on the other hand young and fresh entering hospitality sector job market is realizing that their salaries have shrunk to about 60 to 70% of what their market worth in other professions’. What was 15 years back a good decision; has become a worthless option - unless there is enough financial backing to start a standalone business venture of the sorts.

When some body comments that nearly 40 to 50% seats in catering collages are lying vacant, I am not surprised, as far as manpower is concerned, worst is yet to come.

On other side the Industry is experiencing a biggest boom ever, and the best yet to come. Profitability is very high because of high rates, and surge in business, high occupancy and redoubled banquet business, but acute shortage of staff remains a handicap. Recently, I had the opportunity to talk to a large number of Staff & Managers and found that all of them were demotivated and disappointed with leadership and owners, they were even envious of colleagues who were brave enough to leave industry and settle for greener pastures.

The Questions that need to be urgently addressed are:

-          Why Senior Managers, Owners and Stakeholders are overlooking these issues? Can they visualize the long term repercussions of this trend? In majority of cases; No.

-          What effort these organizations have made to motivate and retain the manpower they have? No and they don’t care.

-           If this trend continues, do they realize what could happen to the business? Not Yet.

It is true that majority of hotels have become complacent toward the condition of the most critical tool of the Hospitality Industry i.e. The Work Force. What scares me the most is the fact that, with so many new hotels coming in next few years, and they will need to be staffed. How do the stalwarts and the industry pundits plan to get good trained staff? Most certainly there is a need to create awareness about the impending Industry crisis and take precautions before it is too late or else be prepared to bear the brunt of it all.

Human Recourses Managers need to point out to their Senior Managers and promoters about what can happen in years to come. Ownership which has been treating manpower as something of use and throw commodity- as and when required, has to change. Another important thing I would like to highlight is that our Industry staff are most disciplined, second only to the armed forces. The staff is trained to be polite and courteous under any and all conditions and that makes the job even tougher.  Fortunately for hospitality staff, now future is changing for the better and in their favor.

As things are, I foresee that next one year will be very tough for Hospitality Industry in terms of staff recruitment and the numbers will become a major source of worry. Even today in the hotels, on average, for every 10 new staff recruited, we are losing approximately 9-12 already working staff members. New joining is on higher salary and at times even higher than two-to three-year-old staff salary, as for new and qualified entrants they are very few and that number will keep on reducing unless some drastic action is taken.

Question is what is the solution? After lot of discussions with concerned senior managers, I have few suggestions which I urge the industry to seriously consider, if required modify and implement. I hope you will, as hotelier, will forward your valuable advice to right channel, as we need all the help to bring back our industry to right track if we want our industry to do well in future.

1.      Hospitality Industry’s main assets /component are the people who work there. During COVID we as senior mangers and promoters physically, mentally not only degraded them, without any concern for their future nearly 80 % were sacked. Remaining 20% were paid less then 50% of their salary. Today we need to be more understanding toward their issues, try to make efforts to win back their trust and restore faith in our system. Work on pension/ insurance schemes for their financial security and most all give them the salary which they deserve.

2.      In seventies and eighties, when Unionization was at its peak, we introduced a system to try and free the staff from the clutches of Unions; we converted large number of work post into officers. Today nearly thirty percent officer level staff has very poor productivity and there salary is equivalent to three to four staff. Why not go back to the old system, follow South East Asia see how they are doing very well. South East Asian Hospitality is considered best in the world. Reduce number of officers, and recruit more staff to improve Hotel functioning, productivity and the money. This will help in increasing the  wages across the ranks and it will attract higher productivity and service standards

3.       What kind of salary are we paying to our staff? My study shows Hotels are paying nearly 15-21% of turnover as wages. With an average of Rs.30-37000 per employ. But if we remove salary of HODs including GM then the wages are below Rs.24500. GM and his Executives salary itself is nearly35- 45% of the wages.  I think all this is self-explanatory. Time has come to have lean, mean and competent team but a very well paid team.

4.    To attract more people joining the industry, we need to improve the take home salary by; [A.] Enhancing income through motivation- change in attitude and  good financial, [B.] Income and productivity linked incentives in all departments and [C.] work on floating organizational structure.

5.      Food and Beverage income(22-25% GOP) when compared to rooms income has one third of GOP compare to Room  income(65-75% GOP) that is when you are doing well. We also know that the major staffing is in this very department. The truth remains that on an average out of ten hotels or restaurants only one can be called truly successful in F&B Sales. But all these Hotels have at least four F&B outlets (one ‘All Day Dining’, and 24hr room service, a Bar, and at least one or two specialty restaurants). In most of the Hotels these Restaurants are subsidized by ‘All Day Dinning’ and Banquets. There is a need to reorganize these, if the restaurants are not giving expected returns? The solution is to either close or lease it. Some of the International Management Hotel Chains, strong in F&B operation has already done that.

There are many more ideas to create staff attraction, rebuild faith in the Hospitality industry. Let Federal Associations, Labor Ministry, Hotel & Restaurant Industry sit together and find solutions. We need to fill up our Hospitality institutions, motivate people to join our industry and that can only happen if there are attractive remunerations, sense of belonging as time goes by, and slowly the  future potential to be genuinely visible.

Finally! Remember that if we need to develop India as premier tourism destination we need to take care of the most important tool that drives India’s hospitality Industry – The Manpower.

Written By Anil Chak & Virat Varma