IMPROVING PRODUCTIVITY IN HOTELS

Abstract

The recession in the United States economy has and is still affecting the Singapore economy, a predominantly export oriented economy because of its heavy dependence on the United States economy for its performance. The effect of imported recession is especially felt in the latter half of 1985 and is still being felt in the economy. Prior to 1984-1985 when the effects of recession have not crept into the economy, investors and property developers were very heavily involved in construction projects and property development projects. This is especially so in the hotel sector. Based on double-digit tourist growth in the boom years in the early 80s, construction for hotel projects were carried forward or accelerated. Most of these projects are now completed while some are being held back because of the recession. The hotel industry now faces problems relating to the oversupply situation of hotel rooms and declining tourists' arrivals. These in turn result in declining room rates, declining occupancy and lower hotel tariffs. The viability of the hotel enterprise is also threatened. These are structural problems which are caused by the effects of recession, the policies of other tourist generating countries and that of Singapore's urban policies which are erasing the oriental mystique image of Singapore. The unfavourable situation calls for urgent action to redress the problems faced by the hotel industry. Although hoteliers have reacted to these problems through reducing room rates to capture a dwindling share of the market, retrenching staff to cut costs and other drastic measures, these measures cannot provide a long-term solution for the next 4-5 years. There is a scope for improving productivity in hotels, a predorminantly labour-intensive industry where wages are not tied to productivity. Redundancy of labour is present and the skill of the labour force is lacking. Perhaps in recession times, hoteliers should look to ways of improving productivity overall through ways of increasing the efficiency of its operations and the quality of the labour force to prepare themselves for the better times ahead. This, in essence is the long-term solution to the problems faced in the hotel industry.