The Swiss Institute Advantage
The hotel and tourism industry in Sri Lanka has received a serious wakeup call: Despite rising tourist numbers the formal sector is not always selling more rooms. Something is not right in the industry. What is actually going on?
We have invited several partners from the hospitality industry to share with us what their vision is for their businesses in Sri Lanka, the challenges they face, and what they expect from the Swiss Institute.
The Swiss Institute is a training institution and much more. It is a knowledgeable industry partner that identifies trends in the hotel business so well that training is moulded to address industry challenges of today and tomorrow. So, training becomes a profit driver, not a cost factor.
Swiss Institute sees itself as the doctor of the industry: that is what our logo stands for. It symbolizes the shark tail fin – studies in recent years have shown that where there are no sharks the seas are unhealthy and fish populations decline. Sharks keep the oceans healthy and abundant, they are the guardians of the sea. We see our role similarly for the service industry. We have solutions to the current and future challenges the industry faces.
We are introducing practical, tested and world-renowned Swiss training for the hospitality industry in Sri Lanka. Our students learn in 8 weeks what others take a year to learn. Fast forward in the industry. When they leave our school they don´t need to be trainees. They will be relevant performers for the industry. GMs can see the outcomes from our pilot class: Gitangeli Chakravarthy a GM from Uga Resorts feels that Swiss Institute is by far the school with the closest understanding of industry needs and how they can be met. She looks forward to the first batches graduating from Swiss Institute. Likewise the CEO of MJF´s Resplendent Ceylon has, at supervisory level, more than seen his expectations met by Swiss Institute training for his staff. Several hotel organizations are getting Swiss Institute in to undertake mystery shopping and product audits at their properties to get a sound and neutral judgment of their capabilities and their product. And also what their training should focus on. Training is linked to the needs of the business. Today’s and tomorrow’s
Swiss Institute brings a focus on setting higher standards for hospitality players and raising the bar for the product besides providing training aligned to industry requirements. This is the Swiss model as practiced in Switzerland and something the industry has been eagerly awaiting in this country.
It means that our graduates are job-ready from their first day of work, which means they are guaranteed employment. They have a portable qualification from Switzerland – which opens up global job opportunities– once they have initially worked in Sri Lanka.
It also means that, for the industry, we can assist in improving the business and fulfilling the brand promise. We can also provide insights into real customer needs and trends of the future as generated by the main players in the global arena: So hotels are fully aware of what the face and understand strengths and weaknesses of the product they have and how to reshape them for better results.
We see four major challenges for the industry in the future:
Retaining and integrating new talent Deficiencies in product quality in Sri Lanka / in the formal sector Industry changes on a massive scale led by new customer behav- ior and the coming of age of the informal sector The brain drain to be expected from growth in the global tourism industry On item 1: It is not enough to just develop staff for the industry. Why? Not everyone stays. Or better said, in Sri Lanka most don’t. What we see is that up to 90% (!) of a batch of trainees from any hotel school drop out – within a year from entering the industry. That is a staggering number and has to do with the fact that hotels have not learnt to absorb new entrants adequately. And the schools are not aware of how to prepare candidates and build their confidence to weather the industry workplace. That is your first challenge. So it is not just about training more people. But how to train them in such a way that they stay with the industry and want to build a career in it. This is what we are here to address as a first issue. We match graduate and hotel and accompany the graduate throughout their career in the industry – with this model 90% stay in the industry. So, there is a solution.
Then, as a second challenge, hotels in Sri Lanka – in the formal star category sector – do not provide a quality product when it comes to rooms. This is a threat for the future. A Colombo hotel can no longer rely on income from banquets and weddings to offset the lower income from rooms with the advent of more and higher grade properties in the country. Visitors from abroad have more and more choices. This year Cuba has come on as a top destination for Western travelers, and the Philippines, Thailand, Indonesia and Malaysia are far cheaper destinations for people to travel to from China or India than Sri Lanka. The modern traveler is not the group package tourist we used to know. We can’t fill a bus and cart people around from place to place. We have tested several hotels for service quality for the new breed of traveler and hygiene standards and found – regardless of whether they are star grade properties or not – most hotels in Sri Lanka fail the basic standards. It doesn´t matter if a property is in the formal or informal sector. Many properties in Sri Lanka don´t make a cut. That is alarming because of developments that are just happening.
Then there is the biggest challenge of them all: Airbnb. Hotels need to refocus their attention on what their differentiating capabilities are and how they can become a first choice for travelers again. Especially in the context of Sri Lanka, where prices are markedly higher than those of competing nations across the globe. Airbnb providers not only underrun prices of the hotels in almost every location in Sri Lanka, often their customer service and their product is perceived by customers as better than the star-rated hotel properties (see Tripadvisor and Airbnb ratings). Airbnb has positioned singularity and a wide range of choices besides personalized service against the paradigm of the hotel industry. It is thus no wonder that most traditional hotels are not clocking more arrivals today despite the rise in tourist numbers than they did a year ago. The trends have shifted in traveling. Most travelers would much rather book a penthouse overlooking the Thames in London than stay at a five-star property in town with fairly unspectacular service and little to differentiate from the rest. The age of dwarfing hotel lobbies and intimidating reception desks is coming to a close. Hotels can only offer a limited choice of rooms today. Airbnb can offer anything from a villa with a luxurious pool and full staffing for guests to a very basic houseboat or camper van experience -depending on budgets and preferences. In Paris, the world´s Airbnb capital, Airbnb boasts an inventory of over 70,000 properties – that is several multiples of all the rooms Sri Lanka can offer, formally and informally. In Sri Lanka at any tourist destination Airbnb can match any hotel offering with at least 100 alternatives in a radius of 10 kilometers.
So what can we do? Pick your battlegrounds, understand where your product can be strong, profile and choose your customers carefully, deliver to their needs. Hotels need followings, they need return guests who want this and no other property to stay at during their vacation – if we speak of resorts. In the case of business hotels, there are similar dilemmas: In Singapore I have only known a single property which took pains to provide added value to their customers so they would return. But knowing your guests and understanding and delivering to their needs is the key to sustainability. And by knowing what your real competition is.
There are good examples of properties and brands which can withstand the pressures. But they are far and few apart. If the industry in Sri Lanka does not address these issues, we may be witnessing the twilight of the hospitality industry in this country.
Finally, another worrying factor no one has seriously considered is the brain drain that is to be expected over the next decade: Sri Lankans have always been considered very good hoteliers. They are hard-working and adaptable abroad. Assessing global events and developments over the next five years Swiss Institute estimates there will be a pull for around 100,000 Sri Lankans who are already working in the local hotel industry out of the country. We all speak of Sri Lankans coming home. But rest assured. More will leave. This could be a very different type of Tsunami that hits the country in the macro scheme of things.
To summarize: We have four major threats to the hospitality and tourism industry in Sri Lanka.
Firstly, we have the wrong approach to capability development. We are lecturing people academically instead of preparing them for practical jobs. Hotels are not ready to absorb graduates because their supervisors and management have not been trained to deal with newcomers systematically. Result: high dropout rates of new joiners. Schools and the industry need to collaborate closely to stem the tide.
Secondly, the product quality is flawed as delivered to date by many local players. The Tourism Development Authority needs solutions – such as professional certification models in order to counter the slide in product quality.
Thirdly, the client base for hotels is changing and the nature of competition has shifted. Can the formal sector remain competitive? The product, the positioning, the service needs to be redesigned. Swiss Institute has a major focus on positioning hotels against the informal sector.
Fourthly, there is an imminent risk of Sri Lankans being pulled out of the local industry into the global Tourism arena – due to the reputation Sri Lankan hoteliers have developed. Training for the industry needs to happen on a more massive scale than ever before – with practitioner orientation as Swiss Institute preaches. We also assist hotels in gearing up for new joiners.
These are the key threats and trends we see in the hospitality industry which Sri Lanka will have to face in the coming five years. Swiss Institute partners with the industry and trains individuals with these issues in mind. Statement issued by: Dr. Rohith Delilkhan Managing Director –
Swiss Institute 25th January 2017