Posts Tagged ‘Hospitality and Travel’

Technology and Unemployment

Wednesday, August 24th, 2011

Speaking at a town hall meeting last week in Illinois, President Obama said that one of the challenges of creating jobs in our economy is that businesses have used technology to become incredibly efficient, thus reducing their need for employees.

“When was the last time somebody went to a bank teller instead of using the ATM, or used a travel agent instead of just going online?” the president asked. “A lot of jobs that used to be out there requiring people now have become automated.”

“Have they really?” asks Smeal’s John Jordan in the latest edition of his e-newsletter and blog, Early Indications:

The impact on the unemployment rate of information technology and its concomitant automation is not at all clear. The effect is highly variable across different countries, for example. Looking domestically, travel agents were never a major job category: Even if such jobs were automated away as the number of agencies dropped by about two-thirds in the decade-plus after 1998, such numbers pale alongside construction, manufacturing, and, I would wager, computer programmers whose positions were offshored.

The unfortunate thing in the entire discussion, apart from people without jobs obviously, is the lack of political and popular understanding of both the sources of the unemployment and the necessary solutions. Merely saying “education” or “job retraining” defers rather than settles the debate about what actually is to be done in the face of the structural transformation we are living through. On that aspect, the president is assuredly correct: He has the terminology correct, but structural changes need to be addressed with fundamental rethinking of rules and behaviors rather than with sound bites and band-aids.

Jordan offers more detailed commentary and analysis in the August edition of Early Indications.

Tags: Economic Crisis, Economy, Hospitality and Travel, Jordan, Technology, Unemployment
Posted in News | 24 Comments

Open the Skies

Monday, March 29th, 2010

“The European Union and the United States agreed Thursday to expand a three-year-old accord that allows airlines to operate more freely across the Atlantic,” The New York Times reports. “The move will increase access to each other’s markets and narrow differences over environmental regulations, but industry executives were disappointed that no agreement was reached to remove the remaining barriers to foreign ownership and control of airlines.”

In a 2008 op-ed in The Atlanta Journal-Constitution, Smeal’s Terrence Guay argued in favor of allowing foreign ownership of U.S. airlines, calling the ban archaic and hypocritical.

From Guay:

Relaxing the restrictions on foreign ownership would allow British Airways and other foreign carriers to serve U.S. locations that are underserved now. It also would avoid the reduction in routes and elimination of cities served when two U.S. carriers merge. And for anyone dreaming of decent meals and better service—even in economy class—foreign airlines have a lot to offer, as almost anyone who has flown abroad can attest.

So why isn’t this already happening? One reason is that the Federal Aviation Act of 1958 requires that, for airline corporations, 75 percent of the voting interest must be held by U.S. citizens, and two-thirds of its board of directors must be U.S. citizens. Such restrictions seem absurdly arcane 50 years on, in a far more interdependent global economy than was the case during the Eisenhower administration.

… Perhaps most important is the message of hypocrisy that protectionism over the U.S. airline industry sends to the rest of the world. At a time when our own trade representatives are demanding that other countries open their financial, retail, and other service industries to competition from U.S. companies, we refuse to open our airline market to others. Yet this is the best strategy to improve the financial health of U.S. airlines, while allaying the concerns of travelers in smaller cities and their elected representatives who justifiably fear that a merger between any two major U.S. airlines will adversely affect choice and cost. This kind of foreign aid would be a win for the airline industry, air travelers, and U.S. trade policy.

Tags: Globalization, Guay, Hospitality and Travel, International Relations
Posted in News | 1 Comment

A Service Tip

Friday, March 26th, 2010

“The Elysian hotel in Chicago, which opened in December, has adopted a no-tipping policy, a move that breaks with standard practices across the high-end- and luxury-hotel market,” according to The Wall Street Journal.

“I just don’t think it’s luxurious to always have to be thinking about having to tip people for doing the jobs they do every day,” The Journal quotes Elysian’s CEO, David Pisor, as saying. “We try to eliminate your need to have to have extra cash on you to get someone to do something.”

However, according Smeal’s Bill Ross, who recently co-authored a study on tipping and service levels, “Customers may be more comfortable with the idea of no-tipping at first, [but] they may feel otherwise if the service suffers because of it.”

In a recent paper, Ross and his co-authors, Robert Kwortnik, Jr. and W. Michael Lynn of Cornell University, look at the concept of “buyer monitoring,” which is using tipping as a means for customers, instead of managers, to reward and monitor service as a way to motivate and incentivize service workers to deliver better service.

They examine the effectiveness of voluntary tipping by observing two industries: leisure cruises and restaurant dining. Their results show that cruise ships with voluntary tipping policies received higher service ratings that those with a no-tipping policy. And they find similar evidence in a restaurant setting.

In addition, the researchers note that servers’ expectations and motivations may lead them to perceive the relationship between service and tip size as stronger than it actually is. They observe that the stronger this perception is, the more likely servers are to engage in service-enhancing behavior, which proves that tipping provides an incentive for the delivery of good service.

“Managers in service industries should think twice before abandoning voluntary tipping policies,” the researchers conclude.

Adds Ross: “Managers need to ask themselves how to use tipping to get their service employees to perform better. Smart restaurants and cruise lines structure the tipping decisions far less to do with cost and far more to do with how they want the experience to work for their customer.”

Tags: Hospitality and Travel, Ross
Posted in News | 41 Comments

Business Travel Good for the Economy

Wednesday, March 25th, 2009

As public outrage grows over bailed-out banks hosting what many perceive to be lavish retreats and business meetings, politicians from the president on down have been condemning such events. In fact, the Senate recently  passed a bill limiting spending on luxury travel for firms receiving bailout money.

“There is no arguing with the premise that accountability regarding the use of bailout funds is essential to restoring public confidence,” says Smeal’s Fred Hurvitz. But, he says, the criticism seems to be causing a ripple effect through the entire meeting and event-planning industry. According to Hurvitz, a lot of healthy companies that haven’t received any bailout funds are cutting back on travel out of a fear of being labeled as lavish spenders.

More from Hurvitz:

The business travel industry supports nearly 2.5 million jobs in the United States. It is estimated that approximately 1 million of these jobs are tied directly to meetings and events. The travel industry is already suffering due to the current economic situation. The added focus on, and criticism of, business travel by our politicians is causing additional strain on this economically important industry.

What our politicians fail to realize is that when they make their very public assertions condemning “lavish” business travel, they are also stifling some of the economic spending needed to help re-energize this economy. It has been estimated that business travel accounts for approximately $240 billion in sales revenue, and meetings-related travel generates approximately $16 billion in state and local tax revenue. So, while it may be politically fashionable at moment, condemning business travel as an example of corporate extravagance is not in the best interest of our economy.

Perhaps the most disturbing part of all of this is that the people who our elected officials are harming the most are the service workers—including housekeepers, maintenance workers, reservation agents, wait staff, and other hourly employees—who depend on this form of travel for their modest livelihood. These are the very people who politicians purport to be looking out for when they run for election.

The recovery that we are all hoping to see depends on restoring confidence and stimulating customer spending. Politicians who are adopting populist rhetoric to garner support from an enraged public are working in direct contrast to these goals, and they need to be careful what they wish for. Condemning the travel industry, which accounts for about one out of every eight jobs in the United States, is not a good way to stem our rising unemployment levels. And fueling public anger against an entire industry—one that is a vital element to our nation’s overall economic recovery—can have unintended consequences.

Tags: Economic Crisis, Economy, Hospitality and Travel, Hurvitz, Politics
Posted in News | 28 Comments