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One of our industry’s most publicised aims is to create 300,000 new jobs by 2020. That’s some 43,000 new jobs every year for the next seven years. How feasible is this?
Even in the heady period of economic growth between 2000 and 2008 the UK accommodation and food service workforce only increased by an average of 22,200 per year. Could this period of expansion be repeated and even doubled in the next seven years? It seems unlikely.
In the last few years of high unemployment (disproportionately amongst the young), it is easy to understand the reasons behind stating such goals. But would such growth even be desirable? Labour is the greatest cost item in every hotel business and it is again on the rise, particularly in light of new auto-enrolment pension obligations. No employer is going to create a new job simply for the sake of it.
Successful businesses are therefore continually striving to achieve higher levels of productivity. It is the golden thread that separates success from failure. Statistics, however, show that productivity varies massively in our industry. Research highlighted in Hospitality Digest 2014, a new publication by the Institute of Hospitality, shows that in the UK hotel sector, sales revenue varies between £2.14 and £18.44 for every £1 spent on labour.
So what is it that the more successful and highly productive businesses do and, more importantly, what can other employers learn from them? In his article, David Battersby FIH says that there are five drivers that power productivity and, ultimately, profitability.
- Increasing customer spend
- Building customer volume
- Controlling material costs
- Improving the way work is organised
- Reducing labour costs
Best Practice Forum studies concluded that more than a third (about 37%) of working time is wasted. This is mainly a result of:
- Doing too much
- Waiting around
- Transporting
- Unnecessary actions
- Dealing with faults
Of course, the hospitality industry is in an expansionary mode and new outlets are opening every day. The danger lies in creating new jobs when existing workers are insufficiently well-trained to fulfil the jobs they already have.
If the existing workforce is working at only 80% capacity or less, as estimated by People 1st, recruiting more and more workers will not make the industry more efficient, which must be the ultimate aim if profitability is to be maintained.
By Peter Ducker, CEO of the Institute of Hospitality
