Workforce challenges despite a bull run

The Gulf states have seen high GDP growth over the last four years driving investment in several sectors particularly in infrastructure, real estate and tourism. While the six-nation Gulf Cooperation Council (GCC) was specifically created as a political and economic bloc in 1981, it's only in recent years that it has been gaining acceptance as a coalition comparable to other regions with high GDP rates, economic and population growth and high income per capita.

Strong economies backed up by comfortable levels of liquidity resulting from high oil prices have contributed to GCC tourism growth in recent years, with oil money finding its way into tourism-projects. Around US $272 billion worth of GCC tourism projects are due for completion by 2018.

According to the World Tourism Organisation, tourist arrivals in the Middle East and North Africa (MENA) region grew 6% in 2006 on a year-on-year basis to reach 40.7 million and represented 4.8% of the world's total tourist arrivals.

The tourism boom was mainly due to increased international demand and a healthy intra-regional market, coupled with an inflow of tourism sector investments.

According to a recent Deloitte survey, hotels throughout the Middle East recorded a 21% growth in revenue per available room (RevPAR) in 2006.

In addition, many Gulf carriers are expanding their fleets and adding new destinations and hotels, airports, travel management companies, exhibition centres, event venues, destination management companies, theme parks, tourist attractions, sporting venues, transportation companies, and travel training schools currently have several new projects under development.

Add to that major expansion plans announced by existing businesses within the industry, and the entire industry is going through a major bull run.

People problems

Strong economic growth in Asia is making it much harder for companies in the GCC to source a skilled workforce from the Indian subcontinent and other Asian countries.

This situation will worsen as most of these economies continue their expansion.

The ascending value of the Rupee and Peso, given the economic growth in the two countries, is making it less attractive for people to move to GCC. Solutions to attract new people, retain existing resources and more importantly, find new source markets for skilled workers is now more critical than ever before.

The solutions

Around 90% of the GCC's travel industry workforce currently hails from Asian countries with a majority of them coming from India or Philippines. New markets within Asia like Vietnam, China, Indonesia, some of the North African states and South America are now becoming the new hunting grounds for several recruitment companies.

The key is to find countries, especially the developing nations, with low economic growth, a good education system, less attractive lifestyle options and unsettled political environment - all factors creating frustrations for the new breed of professionals who want to be successful.

It is evident that companies who in the past, neglected their HR strategies and rarely worked with professional recruitment organisations, are now focusing heavily on this aspect of their business.

In the past, the focus of every new business in the hospitality industry had been on lavish infrastructure, design and décor and technology, etc.

This will have to shift sharply to investing in honing talent among service staff resulting in a better end product and in turn loyal customers.

It's critical that the mindset of a large number of businesses within the region changes to look at professional head hunting fees, recruitment fees, induction programmes including cultural and language courses and ongoing skill enhancement training, as investments rather than a cost.

Another solution is to join forces with professional management schools within source markets and bring on board college educated graduates.

Invest in an apprentice programme to provide on-the-job training with a view to long-term employment and career progression based on their performance.

But while this may be possible in the hospitality industry, it is a challenge for the travel industry, which has very few accredited training faculties available providing professional degrees in that segment of the industry.

Agent wage crisis

About 30% of the travel industry workforce leaves to join other related industries that offer higher wages.

Travel agents in particular are notoriously paid poorly, especially at frontline level. Despite the high overall growth, consistent low industry margins, poor management of businesses, and ever increasing competition pile on the pressure to keep companies in the black. And as agencies cope with commission cuts, staff incentives are often put on the backburner.

With the future of the industry hinged on more technologically savvy resources being able to provide a professional service, this sector of the industry desperately needs to review wage structures and make it more attractive for the right people to join their companies. The standard of service compared to the other regions, barring a few top agents, has always been a question mark and given new business challenges, drastic measures should be taken to keep many agencies afloat.

Travel agents have to market the value addition provided by each of them to the customer, who will have to pay more for a better range of products and good service.

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