Last year, Hotel Analyst’s Andrew Sangster took part in the Big Tent Ideas Festival which was held close to Cambridge. Below is an edited version of his speech which was printed in the latest issue of Hotel Analyst. To download a copy of Hotel Analyst please click here.
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I want to talk to you about how the hotel industry will save the world.
If you have thought about this at all, you probably think I’m going to tell you about how the hotel industry enables people to travel which brings cultures together. It’s the sort of picture that might be conjured up by a Coca Cola advert.
But my talk is not that saccharine sweet. While it is true that travel does indeed bring cultures together, it is also true that everybody hates a tourist.
What people do like is the money tourists bring.
And the jobs.
And the tax generated.
And the leisure facilities, cinemas, theatres, restaurants, museums and other cultural attractions that are all supported with the help of tourist spending.
The problem – and I think it is a big problem – is the negative image tourism and tourism jobs have. While miners and car assembly workers are lauded as heroes, all too often tourism jobs are derided and the workers treated as zeroes.
Yet nobody dies working in a hotel and the range and diversity of hospitality employment is significantly beyond that available as a mundane minion on a production line.
A couple of years ago I was at a function in New Delhi and a senior official from the British embassy attended. Talking to him during evening drinks, he was unable to grasp the point of training people to work in hotels.
He said: “What good does it do? That surely doesn’t take long, does it?” He believed that the locals should be trained in what he considered were “proper” careers.
I had to point out that hotels were offering employment to people who were often illiterate and sometimes didn’t even know how to wash themselves properly. Taking them from this state to a position where they could provide service took time and effort by their employers.
While becoming a doctor or lawyer could only be an ambition for the children of these slum dwellers, well paid, good jobs in hospitality were in reach of all of them.
I think the word “service” is part of the problem. The British (and many other nationalities) seem unable to grasp that providing service does not mean being servile. It seems fine to provide service as a banker or a lawyer but somehow serving people as part of the hospitality industry is seen as a low trade.
We’re simply being too snobby about hospitality.
But hospitality, at least in the broader definition of travel and tourism, accounts for 1 in 10 jobs in the UK economy.
And perhaps more importantly, it accounts for 1 in 3 new jobs. More on that later.
The overall economic contribution is equally as impressive. The sector is worth – if you include indirect efforts- more than £200bn a year. This is more than 10% of the UK economy.
It’s a massive export industry too. Tourism generates £30bn of exports, just under 5% of the total for the UK. And its share is growing.
Yet policy makers, governments and civil servants treat hospitality as a dirty word. During the foot and mouth outbreak in 2001, government acted to save the agricultural industry. But agriculture provides half the number of jobs in rural areas compared to tourism.
The policy of closing off areas of the countryside devasted tourism businesses to save a no-growth, low employment industry. The high growth industry of tourism was sacrificed to sate the agricultural lobbyists.
Even today, the ignorance of our government is breath taking. We make people wait at immigration for four hours or more; they have to fill in reams of forms to get a visa; and we tax them higher than for almost any other country when they fly to the UK.
Despite the best efforts of government to damage tourism, it continues to grow faster than the economy as a whole even if this growth lags a long way behind the best in the world.
I hope I have convinced you that tourism does matter as an industry and deserves attention. But how will it save the world?
Apart from the US, the UK is a world leader in the experience economy. And yet we obsess about the metal bashing of the Germans. “We need a mittelstand” is shouted by numerous economic policy think tanks.
No we don’t. We are trying to develop what worked in the previous period of economic development and our economy has moved well beyond this. It is the Germans that need to worry.
Manufacturing ceased to be a meaningful provider of jobs decades ago. Unless you want to compete with the Chinese, who are now themselves too expensive relative to say the Vietnamese, you will never again have mass manufacturing employment.
And the arrival of artificial intelligence is going to strip away middle-class jobs too: lawyers, accountants, GPs and more are going to be replaced by robots. It is already happening.
Unless you have a PhD, getting a job in manufacturing is unlikely. Unless you are at the very top of your profession, keeping your legal or accountancy job is going to be tough.
The new jobs are going to come in the experience economy. They are going to be provided by people who know and care what they are doing.
Do you want your coffee served by someone who is waiting for a better gig, or do you want it from someone who has a passion about how the beans are roasted and can explain the flavours form the different types of bean? Somebody, in other words, who is committed to what they are doing.
Sure, a machine will dispense you a coffee, but a hipster barista will deliver an experience. They can only do this through proper training and being paid properly. The businesses that do this will be able to maintain margins and profits.
In an age of plenty, people will pay twice the price of a standard coffee for something special if they think it delivers value. And the measure of value is increasingly about the experience that is delivered.
The same goes for haircuts, bar tenders, waiting staff and so on. Passion is what is needed to deliver the experience, an experience that no machine will give you.
As machines take jobs, productivity increases and global wealth goes up. We have the time and money to spend on experiences.
Those economies that are ready to exploit this new experience economy will be the giants of the future. Forget the Germans and their metal bashing.
The UK is at the forefront of this new age. This is despite, not because of, our policy makers.
The cornerstone of this experience economy is hospitality and the hotel industry is the largest component of this thanks to the value of its real estate.
The hotel industry is therefore vital for the future success of the experience economy and vital for global prosperity. It is the hotel industry that is going to lead the way in providing future jobs, future taxes and future wealth.
The hotel industry is going to save the world.
· The Big Tent Ideas Festival, dubbed the “Tory Glastonbury”, was held at the Babraham Research Campus, Cambridge, on September 8th. www.bigtent.org.uk