How Migration Provides Opportunity to the Hospitality Industry in Australia - Assignment Example

How Migration Provides Opportunity to the Hospitality Industry in Australia to Grow and What Are Those Opportunities Name of the Student: Name of the Instructor: Name of the course: Code of the course: Submission date: Executive Summary The Australian hospitality industry is an important sector in the county’s economy. In addition to contributing to the country’s gross domestic product, it also employs a large number of people. However, the industry is faced with labour and skill shortages which have been continuously solved by overseas labour. In spite of this, these problems have not been solved fully owing to the tough immigration rules put in place by the government. However, the government has come into terms with the reality of the problems and has established several policies for instance the 457 visa program which aim at supplying the hospitality industry with the much needed labour and skills. This report will analyse the benefits which the Australian hospitality industry is set to reap from migration. The report will discuss skills, labour, education, marketing population, economy and education with respect to migration and the Australian hospitality industry. At the end, the report will give a recommendation while the conclusion will give a short summary of what the report has talked about. Table of Contents Executive Summary 2 Table of Contents 2 Table of Figures 3 How Migration Provides Opportunity to the Hospitality Industry in Australia to Grow and What Are Those Opportunities 4 1.0 Introduction 4 2.0 Background Information 5 2.1 The Australian Hospitality Industry 6 2.2 Immigration in Australia 8 2.3 Hospitality and Migration 10 3.0 Analysis 11 3.1 Labour 11 3.2 Skills 12 3.3 Population 15 3.4 Education 16 3.5 Economics 17 3.7 Marketing 17 4.0 Recommendations 18 5.0 Conclusion 18 References 20 Table of Figures Figure 1 Tourism growth in Australia (Australian Government 2010, p.2) 7 Figure 2 Australia’s growth rate (Markus 2012, 4) 8 Figure 3 Components of the Australia’s population growth (Markus 2012, 4) 9 Figure 4 Visitors to Australia (Tourism Research Australia 2012, VII) 9 Figure 5 Skills from the overseas market (Service Skills Australia 2012, p.23) 14 How Migration Provides Opportunity to the Hospitality Industry in Australia to Grow and What Are Those Opportunities 1.0 Introduction Australia is renowned for its mining industry which is the backbone of the country’s economy. However, there has been the development of other industries which have strengthened the country’s economy. One of these industries which is equally important to the country’s economy and which has been experiencing a high rate of growth is the hospitality industry. Under the hospitality industry lies the tourism sector which provides about $35 billion every year to the country’s economy, the hotel and catering industry among other recreation and hospitality service providers in the country (Workpermit.com 2012(a), p.1). For this reason, the Australia hospitality industry is important to the country’s economy. However, the industry is faced by several problems. Some of them include the lack of human resources (labour), the lack of skills in the industry, the lack of a good marketing plan, and lack of investments in the sector among other problems. However, immigration of people to and out of Australia has the potential to solve some of the problems facing this industry. According to the 2011 census, 26% of Australian population is comprised of immigrants. In addition to this, 20 % of the total Australian population has at least one parent who is an immigrant (Workpermit.com 2012(b), p.1). Looking at these figures, it can be acknowledged that immigrants have a special place in the Australian society, contributing substantially to the growth of the country. The following report will analyse several opportunities which migration provides to the Australian hospitality industry. 2.0 Background Information In order to understand the opportunities which immigration can have on the Australian hospitality industry, it is important to get acquitted with some background information on the hospitality industry in Australia, immigration patterns in Australia and the relationship between the two. This chapter will give an insight into the three aspects identified above. 2.1 The Australian Hospitality Industry The Australian hospitality industry is one of the major industries in the country. The industry is diversified. However, the two main elements of this industry are tourism and hotel & catering. Other elements of this industry include events, for instance the Sydney Olympics, and gaming events for instance tennis and golf. Looking at the statistics from the industry, it can be noted that it has substantial contribution to the Australian economy. In the year 2011, the tourism industry contributed $34,000,000,000 to the county’s gross domestic product (Australian Government 2010, p.1 ). As at now, tourism is the largest service export by Australia. The tourism sector provides direct employment to about 500,000 people (Australian Government 2010, p.2). This shows that the industry is a major employer. On the other hand, the hotel industry is equally important in the hospitality industry. In fact, tourism cannot thrive without the existence of a good hotel industry. The Australian hotel industry provides employment to about 250,000 in addition to its contribution to the country’s gross domestic product. With the current trend in the hospitality industry which is characterized by a high growth rate, it is expected that the industry will have to counter the various problems which are experienced today since they will be scaled up in the future in addition to enacting measures aimed at ensuring that the possible problems in the future are encountered as well. The following figure represents the growth rate in the tourism sector in Australia. The figure also shows the trend in the sector since 1999. Figure 1 Tourism growth in Australia (Australian Government 2010, p.2) With such kind of growth in the tourism sector, it is expected that the accommodation and hotel industry in the country will grow proportionately in order to cater for the accommodation and dining demands of the huge population. Currently, the hospitality industry in Australia experiences several problems. The magnitude of these problems is expected to rise as the industry continues to grow. One of the biggest problems to the industry is the lack of adequate labour. Many Australian prefer to work in the highly paying mining industry as compared to the hospitality industry. This has led to a shortage in labour force in the hospitality sector. Another major problem to the sector is the lack of skills. It is one thing to lack labour and another one to lack skills. Ideally, skills are a major element which determines the competitiveness of an industry. As at now, there is a shortage in the chefs, hotel managers and other professionals in the industry. Another problem facing the industry is the lack of proper marketing which renders brand Australia uncompetitive in the market. However, the government has tried to counter some of this problem via its immigration department whereby it gives immigrants chances to work and live in Australia. This report will discuss this phenomenon later. 2.2 Immigration in Australia The Australian population has been growing steadily over time. As per the last census, the population stood at about 23 million. The following figure illustrates the population growth rate in the country. Figure 2 Australia’s growth rate (Markus 2012, 4) As identified earlier, 26% of the total population is composed of immigrants. The immigration in the country is in such a manner that it contributes to population growth since the numbers of people who migrate into Australia are more than those who migrate out of the country (Markus 2012, 4). The following figure illustrates the immigration patterns in the country. Figure 3 Components of the Australia’s population growth (Markus 2012, 4) Immigration might either be permanent or temporary. The Australian government has various visa provisions for different immigration status. The main cause of permanent immigration into Australia is employment. The following table illustrates some of the other reasons why people come to the country. The table represents statistics from the year ending on March 2012. In that year, Australia received a whopping 5, 499, 026 visitors. Figure 4 Visitors to Australia (Tourism Research Australia 2012, VII) 2.3 Hospitality and Migration Hospitality is subject to reap a lot of benefits from migration. As identified earlier, the lack of adequate labour is a major problem in the hospitality industry. The employment of immigrants in the country is a very good solution to this problem. Ideally, many immigrants are not choosy about the kind of employment which they get. For this reasons, as native Australians try their best in the highly paying Mining sector, the immigrants are eager to get job security, which they get in the hospitality industry (Baum 2012, VI). In addition to this, immigrants are due to provide the much needed skills in the Australian hospitality industry. Generally, the industry is experiencing a shortage of skilled manpower, for instance chefs, bakers and hospitality specialists. For this reason, attracting skilled immigrants into Australia provides an amicable solution to this problem (Barron 2008, p.731). This explains the reason as to why the immigration department in the country via Skills Select is trying to lure manpower skilled in hospitality. Another way in which the Australian hospitality industry is due to benefit from migration is via education. Ideally, the lack of skills in a country is directly proportional to the education and training in the specific country. Looking at Australia’s shortage in hospitality skills, one can conclude that there is no adequate education of Australians in the required skills hence translating to their shortage (Scott 2010, 2). However, if immigrants who are knowledgeable in teaching those skills are attracted into the country, it will lead to an increase in the productivity and performance of the Australian hospitality industry. The hospitality industry would also benefit from the migration with respect to the increase in population. Generally, the profitability and sustainability of the hospitality industry is aligned to the number of guests/ visitors which it is able to attract. For this reason, migration is important to the performance of the industry since it supplies it with the demographics. Migration is also set to favour the economics of the hospitality industry. In addition to the fact that the immigrants provide an additional market to the industry, they are also due to invest in the industry, hence leading to its growth. On this point, it is important to note that lack of capital to exploit all the opportunities provided by the hospitality industry is a major problem to the industry. However, the investment of immigrants into the industry provides a partial solution to this problem. Lastly, the industry is due to benefit from immigration via marketing. Looking at the immigration statistics, it can be seen that a substantial number of visitors to the country are return visitors. This means that migration is a form of marketing. With the chances of every immigrant attracting several people into visiting Australia, the hospitality industry is certain to benefit from it. This report will discuss the above benefits of migration to the Australian hospitality industry. 3.0 Analysis As identified above, this section will discuss about the benefits of migration to the Australian hospitality industry. 3.1 Labour As identified earlier, there is an acute shortage of labour force in the Australian hospitality industry. The current growth rate in the industry is set to increase the labour shortages in the country by a greater margin. As a result of this, the industry has turned to migrants to for labour. Generally, the industry has benefited from immigrants for a long period of time (Toh & Quinlan 2009, p.454) . In fact, it is certain that the industry cannot thrive without the input of the immigrants. In the effect of this, the Australian government has established various immigration policies and legislations which encourage people to immigrate into the country, hence providing the much needed labour in the hospitality industry. Some of these policies will be looked at later. Looking at the hospitality industry, one cannot fail to acknowledge the fact that the industry is labour intensive (Yam & Raybould 2011, p.1). In the effect that many Australian nationals are not willing to work in the industry due to its low wages as compared to other industries, there is a creation of a labour shortage. However, immigrants are due to provide a cheap and stable source of labour to the industry. This lies on the basic principle that immigrants look forward to making a living in new countries. Owing to the fact that most of them lack the education and skills which are required by other Australian industries, they tend to opt for the hospitality industry which already has ready jobs for them. For this reason the government is targeting to attract 56,000 immigrants to work in Australia’s hospitality industry (Workpermit.com 2012(a), p.1). In addition to this, there is a current labour shortage of about 36,000 people. Looking at those statistics, it can be acknowledged that the hospitality industry stands to benefit a lot from the immigration into Australia. 3.2 Skills Another major problem facing the Australian hospitality industry is the lack of skills. There is a very close relationship between labour and skill. Labour is the manpower needed to work in an industry while skills are the technical knowhow to do specific types of tasks in the industry. On this point, it is important to note that there might be a good supply of labour but a bad supply of skills in an industry. However, there is a shortage of both in the Australian hospitality industry. Moreover, it is important to note that the lack of skills in an industry reduces the competitive of that specific industry. Therefore, the shortage of skills in the Australian hospitality industry is a major factor which reduces the competitiveness of the industry. Among the 36,000 labour shortages in the Australian hospitality sector are skill shortages. Even though the majorities of employees in the hospitality industry are not skilled or have low skills, there is a high demand for skilled manpower. One of the most sought after skill in the Australian hospitality industry is cookery (Robinson, Arcodia, Tian & Charlton 2010, p.483). In order to counter this problem, players in the hospitality industry have resorted to rigorous recruitment and selection exercise which is aimed at ensuring that they get the required skills from the global labour force (Ryan 2012, p.1). The Australian visa 457 program allows for employers to sponsor the immigration requirements of potential employees. This has translated to a lot of immigration into the country. In addition to the point above, the government via various policies and legislations sought to attract immigrants into the country so as to provide labour to the hospitality industry. It has already been identified earlier that the government aims at attracting 56,000 hopilatity workers by the year 2015 (Australian Hotel Association 2012, p.3). One of the ways in which the government is able to ensure that the required skills are attracted into the country is via the skill select program whereby individuals with specific skills which are scarce in the Australia labour are given priority in visa processing (Service Skills Australia 2012, p.2). The overseas worker policy is a major boost to Australia’s quest for skills from the international labour market. The following figure illustrates the various skills which the Australian hospitality industry has been able to get from the immigrants. Figure 5 Skills from the overseas market (Service Skills Australia 2012, p.23) From the above, it can be seen that the Australian hospitality industry is due to benefit a lot from immigration. For this reason, it should enact good legislative measures aimed at ensuring that the industry is able to get the much required skills from the global market. 3.3 Population As pointed out earlier, the profitability of the hospitality industry is determined by a great extent by its ability to attack a larger number of guests/ customers. The industry gets its customers from the domestic or global market. Owing to the fact that the domestic market is not as profitable as the global market, there is a need for the industry to attract many foreigners (Hing 1997, p.245). On this point it can be acknowledged that migration provides the Australian hospitality industry with a larger market. Taking a focus on the domestic market, it is important to acknowledge that it is one of the strong points of any hospitality industry. Generally, a hospitality industry which is faring well domestically is certain to do so in the global market. Looking at the Australian tourism sector, one cannot ignore that the fact that domestic tourism is growing slowly. According to Tourism Australia, there is a 10.4% increase in domestic tourism spending (Tourism Australia 2012, p.1). On this point, it is important to recognize the ‘There is nothing like Australia’ campaign which is organized by the ministry of tourism, aimed at ensuring that domestic tourism grows. Linking this with migration, it can be seen that permanent immigrants who form 26% of the Australia’s total population provide an additional domestic market to the hospitality industry. Therefore, it can be acknowledged from the above that the Australian hospitality industry is set to benefit from the large population which results from migration. 3.4 Education The sole solution to a shortage in skills is education and training (Poulston 2008, p.412). In order for an industry to ensure that it has a steady supply of skills, it must ensure that it empowers its employee through retraining and education. In so doing, an industry will have a higher chance of retaining the skilled employees in addition to attracting new employees. In basic human resource management, an organization is supposed to ensure that it retains the best skill manpower to work for it, hence ensuring sustainability. In addition to this, the industry should focus on the training of new employees, hence ensuring the growth in an industry is matched by an equal supply of skills. However, this is not the case with the Australian hospitality industry. Ideally, the hospitality graduates and trainees in colleges have a high demand in the market and since they are not many in number, in addition to their unwillingness to work in the hospitality industry, there is a constant skill gap, which can be filled by immigrants (Ross 1994,p.33). Generally, the industry can attract people who have the required education to work and to train others or possibly attract people who are willing to be trained to become employees in the hospitality industry, there is a high chance of filling the education gap in the industry. All in all, it should be acknowledged that foreigners who have the necessary education or who are pursuing education related to hospitality in Australia can be readily absorbed in the job market (Yao & Bai 2008, p.250). For this reason, hospitality is certain to gain from migration. 3.5 Economics One underlying factor which should be taken into account always in an industry is economics. Migration is set to benefit the Australian hospitality industry in two ways. The first way is in providing a larger market to the industry. This point has been discussed extensively in the population subheading. Another way in which migration is set to influence the economics of the hospitality industry positively is via foreign investment (Wilkinson 2012, p.1). It should be acknowledged that the lack of capital is a major factor which slows down the growth of any industry in addition to providing a hindrance to the full exploitation of opportunities in an industry. However, the inflow of immigrants into Australia can provide a partial solution to this problem. Foreign investments in the hospitality industry are certain to occur with the increasing the migration in and out of Australia. The presence of foreign organization operating the hospitality industry for instance the Hilton group of hotels is an indicator of the potential benefits that the Australian hospitality industry is set to reap as a result of migration. As at now, there are several hospitality organizations in Australia that are owned by immigrants. 3.7 Marketing Marketing is one of the most important aspects of any organization. It ensures that there is economic development (Kinsey 1982, p. 63).Generally; an organization should strive to attain as much market share as possible. However in such a situation as that one marketing hospitality in a country, it is the responsibility of the government and the industry’s players to ensure that they market the country and the industry as whole. An example of this is the ‘There Is No Better Thing That Australia’ campaign which is meant to market domestic tourism. Looking into the migration and hospitality thing via network thinker perception, it can be acknowledged the immigration is a major marketing tool whose potential is yet to be realized. Generally, when an Australian visits another country and talks great of his country, he is marketing Australia. When a foreigner comes to Australia and goes back with photographs of Kiwi, the Sydney Bridge among other souvenir from the country, he is marketing Australia. Looking at the situation from a statistical point of view, it can be seen that among the number of visitors who come to Australia, a large proportion of them are return visitors. This is the unseen power of migration as a marketing tool. From this, it can be acknowledged that the hospitality industry is set to reap marketing benefits from migration. 4.0 Recommendations From this report, it has been seen that the Australian hospitality industry is highly dependent on the overseas labour market to sustain itself. For this reason, there is a need for strategic immigration policy and legislation which ensures that the industry is able to have access to these employees. The 457 visa template is a major boost to the industry. However, the strict immigration policies which are enforced by the government stand in the way of the industry exploiting the global labour market to its advantage (Deloitte 2012, p.9). In the effect of this, there is a possibility of sinking the industry into more problems. 5.0 Conclusion In conclusion, this report has been able to illustrate several benefits which the Australian hospitality industry is set to reap from migration. A point which has been stressed all along in the paper is that the hospitality industry is very important to the country’s economy. For this reason, it has been seen that it is important for the effective countering of the various problems which are associated with the industry. The report has discussed the following benefits which the hospitality industry is set to reap from migration: availability of skills, availability of labour, education in hospitability related courses, increase in population which provides a larger market, economic benefits and marketing. With a shortage of 56,000 employees in the industry, there is a need of exploiting the international market for labour. On this point, it has been seen that the government has made several efforts towards enabling the industry get this labour force. One of the most effective policies as at now is the 457 visa program, which allows employers to support the immigration of employees. In addition to this, the skills select program in the country enables the industry to get employees who are highly skilled, hence solving the skill shortage problem. 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