Hospitality and tourism is the primary and major industry contributing to Australian economy. The hospitality and tourism industry in Australia is suffering from increased operational costs and lack of skilled workers in the industry. The elevated cost of operations is due to the higher amount of taxes, which is been implemented by the government at different levels (Peg, Patterson and Gariddo 2012).
This study is going to discuss about these two major issues with the help of operational, financial, human resource, product, and market level factors.
The operational context
Within last few years, the operational cost in the tourism and hospitality industry has been increased significantly. The prime reason of the increase in the operational cost is due to the increased cost for hiring the skilled workers. Upon these, the government has increased the service and goods tax on the hospitality and tourism industry. The government also implies penalties with higher rates for issues that are minor and negligible issues and therefore the business gets affected. According to the data, 71 percent of the tourism and hospitality workers have claimed that higher level of penalty is one of the major issues that are operational problem encountered in business. The increased operational cost is working as a burden to the tourism industry as the owners are not been able to pay the penalty (von der Weppen and Cocrhane 2012).
As the world is moving towards cashless transaction and due to the increased usage of debit and credit cards by the customer, the hospitality and tourism industry has to pay the extra tax, so that the company can use the latest forms of digital technologies that can be used in businesses. Furthermore, there are laws with high amount of interference with the operational function of the hospitality and tourism industry.
The human resource context
As per the research of McPhail et al. (2015), almost 53 percent of the owners of tourism business serving for the department of hospitality and tourism of Australian government are facing the problem of hiring and retaining skilled and experienced workers. It should be mentioned that communication skill is a primal requirement in each of the domains of the hospitality and tourism industry. Moreover, it is a challenging work for the hospitality industry to hire employees with higher work experience and excellent interpersonal communication skills. This is important, as it will help them to deal with people from all around the world.
Here, it should be mentioned that due to increased amount of taxes, it is impossible for the tourism and hospitality department to provide the skilled and experienced workers with proper remuneration. One of such tax is the employer’s tax and increased amount of employer’s tax, the managers of hospitality and tourism industry are not been able to implement the useful and effective policies, as the complexity of the operational activities have been increased. Challenges are there in the recruitment procedure as well, and it is one of the major reason of the Human Resource problems encountered by the operational department. This is because; the existing recruitment policies are not been able to evaluate the interpersonal communication skills of the employees properly.
The financial context
The change in the financial department of hospitality and tourism industries are because of the increased amount of the operational costs, which is a result of reformed taxation policies. Restructuring the financial framework of businesses has become challenging, as the owners of such companies are not been able to hire experts and skilled financial accountants. As the skilled laborers has increased their costs, the extra expense has to bear by the hospitality and tourism industry. According to Baum (2015), in the year 2013, the Tourism and hospitality industry contributed in the GDP of Australia by 6 percent. However, because of the unplanned law policy implemented by the government, is quite impossible for the hospitality industry to improve the financial condition. The revenue of the hospitality organization has decreased by 24 percent in last 4 years. Consequently, the Australian tourism department has to be aware of the contribution of the tourism department in the GDP of the Australian economy, and should provide the industry with some waiver I the taxation so that the economy can be revived again (Lee, Singal and Kang 2013).
The market and product context
The level of product and market service quality of the hospitality and tourism industry has been lowered consequently. This has occurred due to the fact that, due to extra financial burden upon owners; they have compromised the quality of food and service. The quality has also been decreased as the poor interpersonal communication skills has resulted in the decreased hospitality service. The recent marketing plan, which has been implemented by the organization are not stabling the sustainability, as the stakeholders are not been able to implement the infrastructural changes needed for the digital technology. This is because the workers does not have proper experience and the owners cannot risk further changes of the industry upon them. Hence, in future crisis situations, experienced workers will be needed.
The assignment discussed the shortage of skilled and experienced workers in the tourism and hospitality industry and associated problems of failure in implementation of Operational strategies. The economic and financial state of the industry are compromising due to these issues as well.
Baum, T., 2015. Human resources in tourism: Still waiting for change?–A 2015 reprise. Tourism Management, 50, pp.204-212.
Lee, S., Singal, M. and Kang, K.H., 2013. The corporate social responsibility–financial performance link in the US restaurant industry: Do economic conditions matter?. International Journal of Hospitality Management, 32, pp.2-10.
McPhail, R., Patiar, A., Herington, C., Creed, P. and Davidson, M., 2015. Development and initial validation of a hospitality employees’ job satisfaction index: Evidence from Australia. International Journal of Contemporary Hospitality Management, 27(8), pp.1814-1838.
Pegg, S., Patterson, I. and Gariddo, P.V., 2012. The impact of seasonality on tourism and hospitality operations in the alpine region of New South Wales, Australia. International Journal of Hospitality Management, 31(3), pp.659-666.
von der Weppen, J. and Cochrane, J., 2012. Social enterprises in tourism: An exploratory study of operational models and success factors. Journal of Sustainable Tourism, 20(3), pp.497-511.