The hotel sector, currently grappling with a critical labor shortage, is considering delaying its expansion strategies. Builders were optimistically looking towards the expansion policies, but the current postponement adversely impacts them as well.
Labor shortages are severely affecting the hotel industry.
Issues of low wages and extended working hours discourage workers from remaining in the hotel industry. Both hotel firms and governmental bodies have struggled to devise an effective solution to this labor crisis, and their initiatives seem to yield minimal results. Mr. Lalit K. Panwar, Vice Chairman & MD of Indian Tourism Development Corporation Limited (ITDCL), remarked that the situation is indeed dire.
Mr. Panwar emphasized that there is a pressing need for approximately 150,000 trained workers in the hotel industry each year. Notably, out of the students graduating from various universities, only 50,000 trained professionals are currently available. This translates to a staggering shortage of 100,000 skilled workers annually, a gap that is likely to widen with the influx of foreign hotel firms entering the market.
The hotel industry is facing significant challenges due to the labor shortage.
Numerous international hotel chains are planning to establish operations in India over the next five years. Encouraged by this trend, builders have begun constructing hotel malls across the nation. However, if these hotel firms cannot secure the necessary workforce, their expansion efforts will be jeopardized. While many hotel companies harbor ambitious plans for growth, concerns about labor shortages loom large.
Parvadhavardhini Gopalakrishnan, Principal of the Welcome Group Graduate School of Hotel Administration in Manipal, noted that the labor deficit constitutes a major challenge for the hospitality industry. She stated that hotel companies are aiming to expand their capacity by an additional 10,000 rooms, contingent upon resolving the labor shortage. Despite the pressing need for manpower, several hotel firms are proceeding with their expansion plans.
The growth of the hotel sector offers a glimmer of hope for builders, as it enables advancement in certain real estate developments. Additionally, the hotel industry’s expansion may provide a boost for several other sectors as well; nevertheless, its success greatly relies on effectively addressing the labor shortage.
According to Akshay Kulkarni, regional director of hospitality for South and Southeast Asia at real estate broker Cushman & Wakefield, the sector is expected to generate around 240,000 jobs. Furthermore, an additional 3.6 million jobs are forecasted to emerge in the following five years, as per a report from the Tourism Ministry dating back to 2010.
Parvadhavardhini also pointed out that the ongoing labor crisis will impact the hotel industry in two significant ways: firstly, an increase in wages will likely be necessary, and secondly, hotel firms will need to enhance their training facilities.
Mr. Panwar highlighted that under The Hunar Se Rozghar Scheme, 1,500 individuals were trained in 2011, followed by 4,000 in 2012.
Builders closely monitor these initiatives, as they can only proceed with their hotel mall construction plans if the industry finds a resolution to the labor shortage.