Oh, the optimism we had in April of 2021 when we sent out our last newsletter on the Travel, Hospitality and Leisure sector (THL). At that time, believe it or not, it looked like Covid was behind us. That was before Delta brought everything to a screeching halt with many localities experiencing their longest lockdowns of the pandemic. Melbourne shed its most liveable city status and swapped it with the notoriety of having been widely considered the most locked-down city in the world, overtaking Buenos Aires after spending over 280 days in lockdown orders of one degree or another.
Now, even as we have collectively stopped looking at daily Covid numbers (mostly) and put our trust in some of the best vaccination rates going in the developed world, Omicron has seen flights suspended and quarantine orders put back in place for inbound internationals seemingly out of nowhere. Holiday plans that felt secure just days ago are in limbo. Yet, Queensland has brought forward opening their border, and the NSW and VIC premiers are united that an Omicron Zero strategy is not the way forward. And no one on social media can fail to have noticed that Fiji started welcoming international guests again. Bula!! I’ll see you there in January.
Yet, all of this continued uncertainty from April straight up to today has played merry hell with the THL sector across Australia and New Zealand. One survey from this past October had more than one-third of Australia’s tourism businesses express concerns they might be forced to close within three months. A caveat, exact numbers differ by survey, but the Australian Bureau of Statistics had Australia at 611,700 tourism jobs at the end of June 2020 – 18 per cent below 2019 levels. Uncertainty is bad for business.
With the press always eager for an alarming headline and governments still showing signs of hair-trigger responses as we saw from last week’s global response to Omicron, uncertainty may be with us well into 2022.
Yet, there is strong confidence amongst senior leaders in the sector that the market is on an upwards trajectory. According to one survey, domestic overnight trips are forecast to grow to 113 million by the end of 2021, just under 2019 levels, and to 134 million trips by 2023, a 14 per cent increase from 2019. In 2020, travel restrictions led to hotel occupancy plunging to a low of 45 per cent, a decline of almost 30 points from 2019. Nevertheless, 5,000 new hotel rooms were added in 2020 with forecasts that 32,000 new rooms in adjusted terms will be added to the national room stock over the coming years, with approximately 40% of those rooms set to be available by the end of 2022.
Yes, Delta pushed back the timeframes, and many businesses that were considering their next moves held back from making them over the course of this year. Consequently, the executive market, now has nearly two years of kinetic energy built into it. We have all read about the “great resignation,” and its many derivative permutations. At first, we were sceptical, but buckle up. In just the last month alone, CEOs and General Managers are witnessing staff and colleagues who have been firmly entrenched in their positions start to resign as December bonuses are paid out and the adventurous look to fresh starts in 2022. The great resignation appears to be happening.
Speaking to individuals across the THL sectors, two themes are clear. One, staff recruitment and retention across the THL sector is a major issue across the Antipodes. We see articles about dishwashers bringing in 90 dollars an hour. While the nature of many of the jobs cannot be changed, working conditions and pay are very much in the spotlight. Industry leaders will eventually have to come together to find new ways to attract and keep people in the sector.
Secondly, amongst senior executives, resiliency, and the ability to make the best out of the situation at hand are key personality traits that organisations are looking to along with technical proficiency and hard-won domain expertise. We have seen some moves in 2021. Crown Resorts, as an example, has seen a number of appointments including Simon McGrath who has been appointed as Chief Executive Officer of Crown Sydney and Group Head of Hospitality effective 1st February 2022, subject to regulatory approvals. Ziggy Switkowski was appointed as Chairman and Steve McCann was appointed as Chief Executive Officer and Managing Director.
The other common theme is technology. From keeping up with privacy regulations to maximising customer data to improve on customer experience, few in the THL sector believe they are at the cutting edge of what today and tomorrow’s technology have to offer.
At Blenheim, we have invested heavily in our Technology Practice as demands for next-generation capabilities in this sector soar. Below, I’m delighted to share a video link to my colleague Barry Lerner’s thoughts on technology and its implications for executive capability. Barry comes from a long career of senior positions including ten years as CIO, CTO and Director of Business Strategy and Planning at Huawei Asia Pacific. As a futurist, Barry brings a forward-looking perspective to search that is unique to our industry.