LABOUR PRODUCTIVITY, WORK FLEXIBILITY, AND INTERNATIONAL MIGRATION IN HOTELS

Lead Research Organisation: University of Surrey
Department Name: Tourism

Abstract

There has been a longstanding concern to understand the UK productivity gap, that is, why its economic performance lags behind that of many leading international competitors. Initially, an undue focus on manufacturing at the expense of the service sector limited the ability of researchers to address this question. Although this has been partly rectified by recent research on services, some sectors continue to be neglected including hotels, even though they account for significant shares of UK jobs and output.

This project focuses specifically on labour productivity, and aims to analyse the extent to which this is determined by flexible work practices within hotels, and the employment of migrant workers, both of which are important and contentious areas of policy and business practice in the UK. We also examine the extent to which there is a relationship between work flexibility and the employment of migrants, and how the interaction between these influences firm performance.

Much of the existing research on productivity has been constrained by the limitations of secondary data. This has been problematic given that researchers increasingly emphasise that the key to the productivity gap is to be found not in sectoral averages, but in 'heterogeneity' or the variance between establishments. While recent research on hotels has focused more on individual establishments, their findings have still been limited by data constraints: a lack of data at the departmental level within hotels; reliance on annual or, at best, monthly data that fail to capture seasonality, weekday/weekend and other temporal variations; and reliance on perceptions of performance rather than actual measurements of inputs and outputs. Even where more objective data are available, these often tend to be for financial measures of outputs, rather than physical outcomes (rooms let and serviced, meals served etc) which is a critical weakness in an industry characterised by strong, and potentially distorting, pricing practices.

This project benefits from privileged access to a unique data base for three large companies, with some 80 hotels, which provide data not just at the hotel level, or even at departmental level, but at individual employee level. Data is recorded on an hourly basis for different types of labour inputs (part time, contracted, seasonal etc) over a continuous five year period. Outputs are measured in both physical and financial terms, while the availability of data for 2007-12 also allows analysis of how firms have responded to a changing operating environment through the current economic crisis.

In addition to its academic contribution, the project will contribute to policies and practices seeking to enhance hotel performance, by identifying key intervention points in relation to work flexibility and migrant employment, in a sector with a poor and uneven productivity record. This will be maximized by working closely with the companies included in the data set, while also engaging with industry-wide bodies throughout the research.

The research is timely because of the insights it will provide into some of the key determinants of productivity in an important sector at a time when prolonged economic crisis has highlighted issues relating to UK economic competitiveness. It is also timely because it will be able to provide exceptionally detailed analyses of migrant employment and flexibility, and the relationships between these at a highly disaggregated scale, and to model how these are related to labour productivity. These issues have been prominent in a range of policy discourses covering migration, supply side policies, and industrial relations in the UK.

Planned Impact

This project will impact on a number of practice, policy and academic domains related to productivity, work flexibility, and migrant employment. The potential of previous research to understanding the relationships between these three research domains has been constrained because they have tended to be fragmented in terms of focus, methodologies and data sources. There has also been an unhelpful divide, at times, between hospitality and broader social science research agendas. The main impacts will be the following:

i. Research partners interface. We aim to involve eProductive and the three hotel companies at an early stage as co-producers of the research in terms of identifying key questions and issues to be investigated in our analyses. We have already obtained commitments from all the industry partners not only to allow access to the data held by eProductive but also to commit to shaping detailed research questions, and the interpretation of the findings. We also plan eight interviews with each company (repeat interviews with HQ and three hotels) which will provide further opportunities to engage staff from across the company, and not only at the central executive level. Presenting the findings of the research at a workshop for the three companies will provide opportunities to think through the broader practice and policy implications of the research in terms of different types of work flexibility, and the variability of productivity across different organizational and time scales.

ii Hotel industry interface. The main research findings will be disseminated in two ways. First, through virtual and paper circulation of briefing notes to the leading sector associations for hotels: Master Innholders, Institute of Hospitality, British Hospitality Association, and HOSPA. Secondly, via a workshop to disseminate the findings to representatives of these associations and to draw out policy and practice implications for wider circulation. Lockwood, who is currently Chair of the Executive Council and Board of Trustees of the Institute of Hospitality, will take on the role of Communications Director for the project. The main benefits for the industry lie in learning about, and contributing to understanding of, the influence of different forms of work flexibility and migrant employment on firm performance.

iii. Academic-policy maker interface. The main contact points for impacting on policy are DBIS and DCMS. Williams had contact with representatives from DBIS through his involvement with two AIM programmes on productivity and innovation. Surrey has contacts with DCMS related to its leading role in UK research on tourism and hospitality. The research will make an input into high profile and pressing debates about a) flexibility and performance, b) the contribution of international migration to the UK economy, and c) the economic consequences of the UK's non-EU migration policies for productivity.

iii. Academic community interface. This will be pursued at two main levels. First through a rigorous programme of academic publishing and conference papers aimed at a variety of groups (e.g. BAM, I-CHRIE, AIEST). We plan to publish a minimum of 4 key papers in high impact journals, in both hospitality and broader social science journals, in order to engage academics across a range of disciplines and research areas. Secondly, through an end-of-project symposium which will bring together academics, policy makers and the hotel sector. We aim to contribute to linking the debates around flexibility, migrant employment and performance by grounding these in a systematic and detailed empirical analysis. The project has its core in management studies and labour studies, but also connects to research on industrial relations, migration, and economic sociology.

Publications

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Park S (2016) Demand fluctuations, labour flexibility and productivity in Annals of Tourism Research

 
Description The research focuses on the productivity gap in hotels, a sector which has a relatively low level of productivity compared to the total economy, and faces particular challenges in terms of strong regular and irregular demand fluctuations - how can firms effectively manage their staff in the face of seasonal, weekly, daily and erratic variations in customer numbers and expenditure? The study produced three main findings based on an analysis of daily and hourly data for some 80 hotels over a number of years. First, productivity levels have been static or have fallen in most of the hotels since the 2008 economic crisis. Secondly, demand conditions are the main driver of the levels of productivity in hotels, and therefore demand management (outside the scope of this study) is essential to their operations. However, labour management practices (especially flexible working) can respond to the challenges related to maintaining minimum staffing levels in response to demand fluctuations over time - and this can make a significant contribution to their overall performance. Thirdly the detailed analysis of the contribution of migration to productivity at the level of individual hotels or departments is complex, but provides some evidence to suggest that employing migrant workers is associated with higher levels of productivity.
Exploitation Route Key areas for future research include: a) identification of threshold levels which trigger sharp changes in productivity levels; b) analysis of the impact of employing different groups of migrant workers on productivity; c) assessing the relationship between levels of training and productivity.
Sectors Leisure Activities, including Sports, Recreation and Tourism,Culture, Heritage, Museums and Collections

 
Description The research findings feed directly into one of the ESRC's three main research concerns, namely: 'fostering global economic performance, and specifically the economic competitiveness of the UK'. It focuses on the productivity gap in hotels, a sector which has a relatively low level of productivity compared to the total economy, and faces particular challenges in terms of strong regular and irregular demand fluctuations. There are three main strands to the research, being: a) the productivity paradox or the failure of productivity levels to recover to pre 2008+ crisis levels, b) the extent to which labour management practices (especially flexible working) can respond to the challenges related to maintaining minimum staffing levels, and to responding to seasonal demand fluctuations, and c) assessing the contribution of migrant workers to both flexible working practices and to productivity levels. To date, we have published papers on the first two of these themes and our broader impact is mostly related to these. Our analysis of international migration is continuing, and to date has had limited wider social exposure. We have sought to make our research impactful in two main ways. First by engaging directly with the senior management of the three hotel chains that we have researched. This has taken the form of two meetings with their senior management at which we discussed our findings, and the implications for their management of labour, and of productivity levels. Secondly by talking to wider audiences through engaging in a virtual workshop with members of the Institute of Hospitality (senior managers in the sector), and via a workshop where we presented our findings in a series of sessions, alongside parallel presentations by industry representatives: People First, British Hospitality Association, and Institute of Hospitality. This engagement was facilitated by working alongside Eproductive, a data management company which was our partner in the research, and provided access to their unique longitudinal data set. To date our research has had two main impacts. It has identified the wide variation in productivity levels between individual hotels, and also between departments within these. If there is a productivity gap, then it is strongly driven by a long tail of poorly performing establishments. Our research has allowed the hotel chains to identify both the strong and the weak performing establishments within their groups, leading to greater managerial focus on raising productivity in the latter. Given the nature of our research, the managerial focus has mainly been on the effectiveness of different labour flexibility practices, and on the variations in these across hotels and departments. The CEO of one of the three companies has already written to confirm the importance of our research to their understanding of productivity levels, and labour management practices.
First Year Of Impact 2015
Sector Leisure Activities, including Sports, Recreation and Tourism,Culture, Heritage, Museums and Collections
Impact Types Economic

 
Description ESRC DTC studentships
Amount £150,000 (GBP)
Organisation University of Oxford 
Department ESRC Doctoral Training Centre
Sector Academic/University
Country United Kingdom
Start 10/2017 
End 09/2020
 
Title Analysis of labour flexibility measures 
Description Have directly calculated the extent of numerical and functional flexibility in the labour force, using weekly data for up to 8 years. This has been incorporated in fixed and random effects regression models which analyse the relationships between employment practices and productivity. 
Type Of Material Model of mechanisms or symptoms - human 
Year Produced 2015 
Provided To Others? Yes  
Impact The analytical methods have been reported in a paper accepted for publication in 2015, in the International Journal of Hospitality Management. It is too early to know whether and how it has impacted on research. 
 
Title Hotel productivity data 
Description Panel data provided by Eproductive on 80+ hotels belonging to 3 companies operating in the Netherlands and the UK. The data is available on a weekly basis since 2005/2008 depending on the company. It incorporates physical and financial measures of outputs, as well as a range of work flexibility, and migrant data. 
Type Of Material Database/Collection of data 
Provided To Others? No  
Impact Unique data on actually implemented labour processes allows exceptionally detailed analysis of changes in the measures, and determinants, of labour productivity. 
 
Description Eproductive collaboration 
Organisation Eproductive
Country United Kingdom 
Sector Private 
PI Contribution We identify the main determinants of labour productivity and discuss these with the senior personnel at Eproductive, as well as with company representatives from the three main hotel groups who provide data to them. The chief executive of Eproductive, Chris Cowell, has been appointed a visiting professor at the University of Surrey in order to further strengthen our collaboration.
Collaborator Contribution Eproductive are a data management company who are providing uniquely detailed data sets on labour inputs and outputs for some 80+ hotels that belong to 3 companies in the UK and the Netherlands. Our regular meetings involve the exchange of information, and discussion of the findings, with Eproductive. Eproductive also faciliated interviews with the target companies, and feedback sessions at the end of the project.
Impact Yaduma, N., Williams, A. M., Park, S. and Lockwood, A. (2015 in press), Performance, Labour Flexibility and Migrant Workers in Hotels: An Establishment and Departmental Level Analysis, International Journal of Hospitality Management
Start Year 2013