July 20, 2015
What does it mean to you to be the new Chair of Tourism Accommodation Australia? Are you pleased to be working back in the sector?
Tourism has obviously been a major part of my recent past, and I was fortunate that my time as Australian Tourism Minister saw a growing recognition from government of the importance of the industry, and the continued confidence is evidenced in the current hotel building boom. There is enormous potential for the industry in Australia and it has been rightfully identified as one of the five primary growth industries for the country’s economic future.
What’s your initial agenda in your new role?
The hotel industry is enjoying buoyant times, but complacency would be very dangerous. Overall, there is greater understanding of the importance of the tourism and hospitality sector to the Australian economy, and we have seen that reflected in budgets of just about every State Government in recent years, all vying for the events and tourism market. Tourism, like mining, has the potential for volatility, and so it is essential that we keep pressure on Government to continue investment in demand-drivers such as major events, tourism promotion and infrastructure to support tourism growth.
We need to also create the right environment for investors in the tourism and hotel sector. The hotel industry’s profile might have changed, but the operating conditions don’t reflect that we live in a different era to 40 years ago, when international hotels first arrived in Australia.
The industry is a service industry and will always be reliant on high staffing levels, but the industrial relations environment hasn’t adapted to the demands of the new economy. Addressing that issue will be a key priority for TAA over the next year.
Access to skilled labour will be another key issue over the next few years as the industry opens all the new hotels planned and under construction. The industry is a global industry facing significant skills shortages and it is important that these genuine shortages can be filled in part by reducing the barriers to skilled migration. We welcome the improved accessibility of the seasonal worker program for Northern Australia and would be keen to see this extended.
And what are the main things you’re hoping to achieve in the coming months in your new role?
There will be some very significant hearings in the Fair Work Commission over the rest of the year that will review the award structure that the hotel industry operates under. We now operate in a 24/7 service industry, where as the original awards were created over 50 years ago when hotels closed at 6pm, virtually everything was shut on the weekend, and there wasn’t a vast pool of labour who see weekend work as “just another day”. We will be asking the Fair Work Commission to review the awards structure to take into account the changes to working conditions. We are definitely not opposed to penalty rates, but when rates are as high as 275% and businesses can’t afford to open, then no one wins – neither the workers who want to work nor the businesses who would like to open.
Another priority will be to ensure a level playing field in the accommodation sector. There has been a vast amount of talk about the ‘sharing’ economy, with people letting out rooms and apartments for short-term rent, but it is important that it doesn’t become a ‘taking’ economy, where unregulated operators run commercial-size businesses to make money without meeting any of the obligations imposed on legitimate operators. These accommodation providers often don’t comply with safety standards, don’t pay taxes and don’t meet basic building and consent requirements. They don’t create employment and could well provide a disincentive for investment in the legitimate hotel sector,
What do you believe are the benefits of Australia’s hotel industry to the economy?
The fact that Australia’s governments and businesses are increasingly aware that tourism and hospitality can be as important an industry as financial services or agriculture highlights the value it can bring to a country’s economy. Victoria understood this before most States, when they started promoting the State as the events centre of Australia, and it transformed the economy. Significantly, the tourism success then prompted infrastructure development in the form of convention centres, hotels and attractions, and that in turn encouraged investors to build more hotels. Melbourne has been an exemplary city in balancing hotel demand and supply. By hosting major events such as the Grand Prix, Melbourne Cup and Australian Open they created a dynamic tourism economy which has continued to attract hotel investors.
How will the expansion of the industry over the next few years benefit the economy further?
Australia is undergoing the largest-ever hotel expansion in its history. There are varying estimates, but industry analysts suggest there could be anywhere from 80 hotels to over 100 constructed in the next five years. As a contrast, the CBD of Sydney saw only one new-build hotel developed between 2000 and 2010. If you look around the various State capitals and in major regional centres, where you see a crane, it is likely there is a hotel under it. That is creating vast amounts of employment, attracting considerable foreign and local investment, and creating a new level of quality in our accommodation sector that is vital if we are to compete with sophisticated foreign markets.
There are stresses in the economy currently when it comes to employment, especially in regional and remote areas that are currently experiencing downturns in mining. The hotel boom will provide a vast range of opportunities for a new generation of hospitality workers, including Indigenous Australians, and it will be essential that we provide the highest level of training for them to ensure that these jobs are sustainable.
In the immediate future, major events, conferences and exhibitions will deliver significant benefits to the economy, with the ‘multiplier effect’ meaning that such events provide benefits across the whole economy.
To maximise the potential of such events, a key priority must be access for visitors to our major gateway city, Sydney. While it is commendable that a decision on a second airport has been made, it will be a considerable time before we see the first plane land. In the meantime, Sydney Airport’s capacity and operating conditions need to be reviewed to cater for and drive additional demand.
You were responsible for the Tourism 2020 plan. How is that rolling out over Australia and positioning the industry for growth?
The 2020 targets were ambitious but crucial to galvanise the industry and make it reach for ambitious, but attainable, targets. It was designed to create momentum, for every state and local tourism organisation to look at what they were doing and what they could do to accelerate and improve their tourism product and services. I think we are seeing the results now, not just with the massive growth in the Chinese and Indian markets, but also the revival of the European and American markets, and a major new emphasis on domestic travel. We still have a long way to go, and one of the key ingredients will be to ensure that new hotel stock comes onto the market and existing hotels are continually upgraded to meet demands. It is essential for the industry to be able to offer the highest quality accommodation as it contributes to the attractiveness of a destination and its ability to market itself both locally and overseas.
How will TAA be supporting its members over the next 12 months?
I’ve been speaking to many of the TAA’s members in recent weeks and their optimism is tempered by the fact that operating costs continue to grow, while competition from a wide range of areas – such as Online Travel Agents and non-compliant accommodation operators – grows at an even faster rate. The situation is particularly worrying in regional areas which haven’t enjoyed the same levels of demand growth experienced in some of the cities. We need to review workplace conditions, and especially punitive penalty rates, so that tourism businesses and their workers can both benefit. The Fair Work Commission has shown recently that they are prepared to reduce penalty rates when it can be shown that it would be of great assistance to employment and industry, and we believe that further reforms in the hospitality industry are both possible and desirable. TAA and the Australian Hotels Association will be making a number of submissions on the issue over the rest of the year and I am hoping that we can achieve dialogue between the industry and unions so that we can create future employment opportunities and address the real needs of those who want to pursue a career in the industry.