By Lamia Kamal-Chaoui
PARIS - Tourism is facing a labour shortage crisis.
The sector was one of the hardest hit by the COVID-19 pandemic. International tourism fell by 73% in 2020 with over 1 billion fewer international trips.
Now, after years of postponing plans, many holiday makers are setting off in the Northern Hemisphere. In the first week of July, air travel in Europe was back to 87% of 2019 levels.
But tourism faces an uphill struggle – issues in one area can cause knock-on effects, especially regarding labour. The sector is a network of overlaying parts including: transportation; accommodation; food and beverage; recreation and entertainment; and travel services.
The trouble with travel
COVID-19 reduced world passenger traffic by 60%. Revenue per kilometer (RPKs) declined by 90% between 2019-20. Many airports sought to drastically reduce staff numbers with an estimated 2.3 million jobs lost. For those that remained, many were asked to take pay cuts directly or through associated job retention schemes.
The low-cost airline business model has helped many fly more frequently and further away but it has also driven less advantageous employment terms and contracts.
Now, as growth outpaces remaining labour capacity, we are seeing widespread chaos at airports around the world; endless queues and thousands of delayed and cancelled flights. The strain on remaining staff is worsening working conditions and leading to increasingly dissatisfied workers. There have been calls for strikes in the US, Belgium and Spain. A similar story can be told with rail strike action already affecting the UK and France.
Some airlines are trying to up their game but negative publicity on working conditions makes replacing the lost labour challenging. Even when hired, staff require time to train and operate efficiently. With the summer boom, time is a commodity the industry lacks.
Hotel hiccups and dining difficulties
The World Travel and Tourism Council economic models estimate a loss of 62 million jobs, equivalent to nearly 1 in 5 workers. The challenges extend beyond travel though. In Greece, the hotel industry is now looking to fill 55,000 vacancies to meet demand this summer.
While the pandemic exacerbated the problem, staff shortages are not new and reflect structural issues that have long plagued the sector. Despite the existence of some high paying jobs, tourism workers are often among the lowest paid. Earnings in hotels and restaurants can be 60% lower than for the economy as a whole, in some countries.
As tourism lags other sectors in the adoption of advanced new technologies, it also lacks the high skilled jobs associated with them.
In addition, small and medium-sized enterprises (SMEs), who were amongst the worst affected in the pandemic, are disproportionately represented in the travel sector. Some 85% of tourism businesses are MSMEs. In some countries like Canada, this number increases to 99%.
Recovery packages from governments have not been equitable across regions and industries. The interconnected nature of the tourism ecosystem makes it tricky. This means that a restaurant may have kept its doors open, but if neighbouring hotels did not survive and there are less customers, difficulties arise in keeping staff.
Sight beyond summer
Currently, some firms are making headway despite tight labour market conditions. By April 2022, the number of staff employed by US airlines was nearly back to pre-pandemic levels – see below. But the sustainability of such progress is questionable. The industry is highly seasonal and given all the factors, survival in 2023 is not guaranteed, particularly if the hiring methods do not take into account the continued expected fluctuations in demand.
Even though we are seeing a solid rebound – even to the extent that the Airbus A380 is making a comeback – there are notable regional inequalities. Significant travel restrictions are still in place, particularly in the Asia-Pacific region. This means that regions with preferred destinations of travel from those countries may still see limited demand.
The likelihood of further waves of the virus and related restrictions are unknown, leading to further regional variations in the tourism recovery. In a similar vein, international traffic between Russia and the rest of the world has been cancelled or rerouted. In 2021, international air traffic to and from Russia accounted for 5.7% of total European traffic. Cyprus, Turkey, Poland and Bulgaria have the highest share of total passenger numbers ranging from 5% to 12%.
Consumers have remained determined to pack their bags and get travelling again. Yet the rising cost of food and energy, exacerbated by Russia’s large-scale aggression against Ukraine, is putting pressure on household travel budgets and this cost of living crisis is likely to impact future demand.
While travelling abroad seems to be a current trend, many are becoming more conscious of supporting their local industries. This follows the pandemic trend where many took the opportunity to holiday in their own country.
In addition, there is a rise in awareness of the environmental consequences of tourism and efforts are being made by travellers to engage in more sustainable tourism including reducing their air miles. Tourism’s contribution to global greenhouse gas emissions ranges between 5% and 8%. Pressures also arise from the use and degradation of natural resources, landscapes and biodiversity.
More and more tourists are looking at options that are more respectful towards the planet, even if that implies paying higher prices. According to the European Investment Bank, 37% of Chinese people, 22% of Europeans, and 22% of Americans say they will avoid flying because of climate change concerns. The destination and type of tourism demanded will have consequences on the labour required to deliver these services.
Tourism taking action – all aboard!
Tourism business action means making the travel and tourism sector more attractive to workers. There are some encouraging examples. Accor has recognised the need for change and introduced “work your way” and “same-day hire” programmes in the Pacific region, to increase flexibility for workers and fast track recruitment processes. Meanwhile, the Accor Academy offers career development opportunities for staff.
Governments also have a role to play in working with the sector’s businesses to address structural issues. Ensuring government assistance packages take a whole-of-sector approach will be critical. Some are already looking to do so. Canada’s Sectoral Initiatives Program funds efforts in the tourism and hospitality sector to attract and retain skilled workers, build capacity through training and remove barriers for under-represented groups. In Portugal, the Tourism innovation Centre emphasises the importance of raising standards across the tourism sector through intra-sectoral training.
A shared commitment to regenerative and off-season tourism can support local economies to become environmentally and economically sustainable. By thinking beyond simply filling vacancies today, businesses can embrace the green and digital transitions to attract workers into higher quality and more stable jobs. Doing so will pay dividends for businesses in meeting the immediate needs of customers, but also help them to save our holidays for many years to come.