REPORT FROM INDIA—The development of hotel real estate in India is quickly outpacing the development of the skilled workforce in the region necessary to run it. And despite some efforts from government and hotel companies alike, there remains little relief on the horizon.
“The situation is stark,” said Lalit K. Panwar, vice chairman and managing director of Indian Tourism Development Corporation Limited.
“The industry requirement is 150,000 trained persons per annum while the availability is only 50,000 per annum,” he said, referring to the number of students passing through public and private learning institutions. “Thus, there is an existing shortage of 100,000 persons per month.”
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Lalit K. Panwar Indian Tourism Development Corporation Limited |
“It is difficult to give a number on shortage of manpower, but if we are to believe that about 120,000 keys will hit the market over the next few years, it will create a minimum of 240,000 jobs,” said Akshay Kulkarni, regional director of hospitality for South and Southeast Asia at real estate broker Cushman & Wakefield.
The hospitality sector alone will create an additional 3.6 million jobs during the next five years at a projected growth rate of 12%, Kulkarni said, highlighting a 2010 report from the Ministry of Tourism.
Parvadhavardhini Gopalakrishnan, principal of Welcomgroup Graduate School of Hotel Administration, Manipal (a joint venture between ITC Hotels and the T.M.A. Pai Foundation) said, “The shortage of skilled manpower looms as a large threat to plans by large hotel companies that are planning to add a total of some 10,000 rooms within the next five years. Similarly, international companies are planning to open more than 50 hotels in the same period.”
A Cushman & Wakefield report titled “Survival to Supremacy, Indian Hospitality Story, 2012 & Beyond” underscores the situation further:
“One of the main causes of concern for India is the lack of adequate manpower given that hospitality is one of the most labour intensive service sectors and depends completely on the experiential and repeat value of the business. The current supply of skilled/professionally trained manpower is estimated to be a very dismal 8.92% to the total requirement as per a study commissioned by the Ministry of Tourism. The study anticipates a rapidly widening gap towards 2016 (to 2017), taking into account attrition rate and retirement and supply from both Government and Private programs.”
Bracing for impact
If the shortage persists, the hotel industry will face two key challenges, Parvadhavardhini said.
The first, she said, is the rising cost of skilled labor.*
“And second, hotel companies will have to enhance the capacity of their in-house training programs.”
Both outcomes would create extra costs and squeeze margins, Parvadhavardhini said.
“Employee costs have risen for hotel companies by about 10% to 15% in the last two years, according to industry estimates. In the next few years, this could rise by as much as 20%,” she said.*
The dearth of talent is being felt most severely in the departments of food and beverage, housekeeping and the front office, Panwar said.
There is a critical shortage of good skilled blue-collar workers, especially in good drivers, room service, waiters and cooks, he said.
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Akshay Kulkarni Cushman & Wakefield |
Kulkarni shared a similar sentiment. “Most of the shortage would exist in the areas that are labor intensive and where high skills training is required—thus housekeeping and kitchen are places where one would face maximum shortage, in my opinion.”
Taking action
The government has stepped up its initiative in making manpower training and development as a primary focus.
As per the Cushman & Wakefield report, “with a growing number of foreign tourist arrivals and domestic tourists, a shortage of trained manpower could be a major cause for concern. The Government, having identified this gap, has factored in the initiatives in the 11th and 12th Five Year Plans, while the 11th Five Year Plan (2007- 2011) looked at establishing hotel management and other related institutes to educate and train the managerial level workforce for the hospitality sector, the 12th Five Year Plan (2012 - 2017) looks at creating Food Craft Institutes, with short term programs to train the non-managerial workforce.”
Panwar said the government training scheme The Hunar Se Rozghar training will address the shortage of blue-collar workers. ITDC, under the guidance of the Ministry of Tourism, has trained 4,000 people in 2012and 1,500 in 2011.
Despite these efforts, the shortage of skilled labor persists—much in part due to the hotel sector’s relatively low pay in addition to other disadvantages.
“Initially (employees) do not get good scale of pay,” Panwar said.
“The 2011 to 2012 recruitment of students at the undergraduate level was abysmally low—some of the reasons being poor compensations, long work hours and improper work-life balance,” Parvadhavardhini said candidly. “The existing capacity of hotel schools, if filled to capacity, will be able to manage the predicted demand at least for the next three years.”
The situation is aptly summed up by Kulkarni: “Apart from supporting the hospitality training and education sector, it is critical for the government and the (hotel) industry to take steps to reposition this industry and help achieve social acceptance for the professionals. The perception of hospitality professionals is still not as desired.”
Correction, 9 January 2012: An earlier version of this article used the incorrect gender when referring to Parvadhavardhini Gopalakrishnan in attribution.