£1.43bn additional revenue in hospitality with 1% improved productivity, says new report

16th July 2015 (Last Updated July 16th, 2015 18:30)

Improving productivity by 1% would drive an additional £1.43bn of revenue in the UK hospitality industry, says a new report from workforce development charity People 1st.

productivity

Improving productivity by 1% would drive an additional £1.43bn of revenue in the UK hospitality industry, says a new report from workforce development charity People 1st.

The report titled ‘The Skills and Productivity Problem’ urges the need to address low productivity levels in the hospitality and tourism industry that poses a potential threat to the sector.

High levels of employee turnover are making the sector less effective, with the industry being 58% less productive on a per-employee basis when compared to manufacturing.

To corroborate this, the report cites facts such as per-employee contribution, which in the hospitality and tourism workforce, stands at £21,600 to the industry against £46,000 in retail, £35,000 in construction and £52,000 in manufacturing.

The People 1st study attributed the fall to skill gaps, which is being created because of the staff ‘revolving door’ where more than two-thirds of restaurants and hotels (68%) do not have a full complement of staff.

"We want to tackle this challenge in collaboration with the industry, and are keen to share the best practice of those who know the industry best."

Approximately 993,000 new staff is needed in the industry by 2022, out of which 870,000 is needed to replace existing employees.

As a result, the sector’s annual contribution to UK productivity is significantly less than comparable sectors at £46.5bn.

People 1st managing director Simon Tarr said: "The causes of low productivity are complex and diverse. It is clear that parts of our industry are trapped in a revolving door of high turnover, increased skills gaps, and reliance on resorting to further transitional, non-permanent staff, to plug those gaps.

"We believe diversifying recruitment to include older workers and maternity returners, as well as putting in place strategies to reduce turnover with a greater focus on career progression, will have a positive impact on productivity."

In response to the Treasury’s productivity plan released last week, People 1st launched a new campaign to tackle low productivity and invites collaborative suggestions from the industry.

Mr Tarr said: "However, we want to tackle this challenge in collaboration with the industry, and are keen to share the best practice of those who know the industry best.

"That’s why we are launching a consultation today to gather the views of employers to reveal how to tackle this together, head on.

"The good news is that even incremental improvements can lead to substantial benefits to business and indeed the nation in terms of increased productivity."

The report is urging employers to offer more development opportunities for staff to retain them with a clearer view of their career progression and promotion prospects.

The report also recommends employing apprentices and recruiting more maternity returners and older workers into the sector, as opposed to relying too heavily on seasonally available employees.


Image: An additional £1.43bn in revenue in the hospitality sector is achievable with 1% improved productivity, says new report. Photo courtsey of Nicola Quinion at Bluerubicon.