SESSION 1: ECONOMIC SECTOR AND DEMOGRAPHIC OVERVIEW Patrick Leung, Executive Partner, Accenture

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SESSION 1 ECONOMIC SECTOR AND DEMOGRAPHIC
OVERVIEW Patrick Leung, Executive Partner,
Accenture
WTTC International Conference, Human Resources
for Chinas Travel Tourism Industry16 January
2008 at JW Marriott Hotel Shanghai
2
Travel and tourism is a surprisingly important
industry
Industries share at global GDP in
4
4
3
Automotive
Agriculture
TT
TT industries share at countries GDP in
4
4
2
China
France
USA
Estimates. Source WTTC 2007.
3
China will play a key role in the global travel
and tourism industry soon...
Source WTTC 2007.
4
... with rapidly growing revenues and a huge
demand of employees.
Travel and tourism industry forecast for 2007-2017
High need for TT employees in absolute terms
Exceptional growth of revenues in relative terms
257
Revenuesbn
1.582
000 employees
48
1.880
2007
62
2007
2017
2017
USA
UK
DE
FR
EU
CHN
DE
USA
FR
UK
EU
CHN
Source WTTC 2007.
5
As the Chinese economy develops, the demand for
skilled service people will increase
31
Employees by economic sectors (2006)
Agriculture
Industries
Services
China
Germany
France
Source Eurostat 2007, China Statistical Yearbook
2006
6
Will there be sufficient skills to support the
productivity growth?
Chinese TT employees per 1000 USD GDP
435
247
72
2001
2006
2016
Chinese TT students per 1000 TT employees
?
22
7
2016
2006
2001
Source WTTC 2007, CNTA 2007.
7
Above average attrition rates impact the skill
development
Average attrition rate of employees
20
5-10
Other industries
TT
Source ChinaINFOBANK 2007
8
Highly skilled people find the hospitality
industry less attractive

• Average yearly wage levels in China by industry
  (2006)

IT
Financial services
Manufacturing
Hospitality services
000 Rmb
Comprises accommodation and catering services.
Source CBC
9
Even if the current employees partially see TT
industry attractive...
Source Best Employers in China Award (Hewitt
Associates 2007)
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... this doesnt necessarily match the viewpoint
of potential top managers
Most admired companies in China 2007
Largest companies in China 2007
Sources Forbes Global 2000 (2007) , Fortunes
Most Admired Companies (2007)
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Companies are setting up training programs to
address the need for higher skills

• Westin Shanghai Hotel (Starwood)
• High potential Talent development Program
• Minimum 6 hours compulsory training
• China International Travel Services
• Comprehensive training to help campus recruitment
  graduates be on board
• Overseas training and education for future
  leaders candidates
• Establishment of corporate university

Source ChinaINFOBANK 2007
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Summary

• Chinas TT industry will be number two in 10
  years in terms of foreign visitors and total
  demand
• Over 1,5 million additional employees are needed
  for this growth
• Higher skill level is already supporting the
  productivity growth in TT industry
• Companies are already responding to the
  insufficient official system

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Attachment
14
(Storyline)
Increasing deficit for TT talent in China
Chinas TT industry
War for talent
Growing demand for TT talent in China
Insufficient supply for TT talent in China
Increasing importance of TT for China
Increasing demand for talent in TT in China
Missing industry attractivity
Insufficient educational capacity
Size
Size
Growth
Size
Size
Growth
Growth

• Growth of travel graduate number
• and size of university grants for TT

• TT workforce market

• of GDP by industry
• of foreign and domestic visitors

• Forecasted of GDP
• Forecasted of foreign visitors
• TT revenue CAGR

• Wage levels
• Employer rankings
• Company sizes
• General image

• of TT universities
• of curricula
• of travel graduates

• TT workforce CAGR
• Share of service in economy

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Chinese TT market is characterized by an
above-average growth in TT revenues and employees
Travel and Tourism employees and revenue CAGR,
(2007-17) in
Employees
Revenues
Rev growth
Rev growth
CHN
CHN
USA
UK
UK
EU
EU
USA
FR
FR
GER
GER
0.0
-0.5
0.5
1.5
1.0
2.0
-0.5
0.0
0.5
1.5
1.0
2.0
Employee growth
Employee growth
16
Chinese tourists are increasingly venturing
outside of China
Growth of outbound and domestic Chinese tourists
Total outbound domestic residents
Total domestic tourists
Source ChinaBusinessReview
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Foreign tourists by Country and Region in China
2003
3
Africa
Latin America
Oceanic and Pacific Islands
North America
9
23
India
Indonesia
Europe
Thailand
UK
Japan
Asia
31
11
Germany
27
9
South Korea
6
France
53
Italy
Russia
Malaysia
The Netherlands
Singapore
Mongolia
Portugal
The Philippines
Switzerland
Sweden
Source China Business Review
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Travel and tourism market is still dominated by
the domestic travel
100
Inbound Tourism Receipts breakdown (2005)
USD 29,3 bn
Long distance transport
28
Shopping
Accommodation
Others
22
Food Beverage
13
Entertainment
Sightseeing
11
Local transportation
9
6
Communication
4
3
4
Source CNTO 2005
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Closing the perception gap in Chinas service
quality is a key challenge to the future of the
tourism industry
7
Perceived Service Quality in Chinas Hotel
Industry, Illustrative
Survey shows that tourists perceptions of
service quality provided in the hotel industry in
China were consistently lower than their
expectations and that managers overestimated the
service delivery, compared to tourists
perceptions of actual service quality, in the
hotel industry in China.
Tourist
Perception Gap
Hotel Manager
Source International Journal of Contemporary
Hospitality Management, 2000 Vol.12
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Chinas tourism skill shortage roots in
educational problems

• Tourism education in China plays an important
  role of supporting tourism development and
  ensuring the continuous supply of quality human
  resources to meet the overwhelming industry
  requirements.
• A big gap exists between supply and demand for
  quality personnel, as the tourism industry is
  growing rapidly in China.
• A key dilemma of tourism education in China is
  poor curriculum design.
• Graduates from tourism education institutes and
  vocational training schools cannot fulfil
  industry needs and demands in terms of quality
  and quantity.

• Supply demand gap is increasing due to rapid
  growth
• Poor curriculum design at tourism education in
  China
• To few graduates with too low quality skills in
  tourism

Source International Journal of Contemporary
Hospitality Management, 2000 Vol.12