Modeling tourism business after Chinese hospitality

The Vice President of the World Travel & Tourism Council (WTTC), Dr.

Modeling tourism business after Chinese hospitality

The Vice President of the World Travel & Tourism Council (WTTC), Dr. Duan Qiang, who also serves as the Vice Chairman of the China Tourism Association, and is President of the Beijing Tourism Group, presented the keynote speech at the Annual Meeting of WTTC in Dubai. His speech follows.

Distinguished guests, dear colleagues, ladies and gentlemen, good afternoon. It gives me great pleasure to meet you here in Abu Dhabi. The topic of my speech today is “Chinese Hospitality: Increasing the Value of Human Resource and Mental Capital While Promoting Employment.”

Employment serves as the cornerstone of peoples’ wellbeing, and represents the most difficult problem in today’s world. According to relevant statistics, today, over 75 million young people around the world are out of job; unemployment rate in some countries exceed 31%; the number of youth remaining underemployed is still more substantial. The world tourism industry has made tremendous efforts in solving those problems. WTTC study shows that in 2012, tourism industry has created 261,390,000 jobs globally and every direct employment result in 2.58 more indirect employment opportunities. The tourism industry contributed 3.3% directly and 8.7% indirectly to the global employment market. China has registered great progresses in promoting employment, with the unemployment rate kept under 4% for long. This is attributable to Chinese tourism industry. In 2012, Chinese tourism created over 80 million jobs. And with direct and indirect employment ratio being 1:6, the industry alone contributed 9.6% indirectly to national employment market. Large enterprises are more capable of creating jobs as well as bringing more benefits to the employees. Taking BTG as an example, we created about 50,000 job opportunities in 2012, accounting for 10% of the industry’s total in Beijing calculated with the same caliber; of the 6 billion USD operating revenue of the year, 11% was translated into the salaries and welfare of the employees; annual income of the staff in the catering and hotel sector is much higher than industrial average level.

Devotion to jobs is more demanding than employment, and is also the theme of human resource management in tourism enterprises. Having long been troubled by structural problems such as aging population, non-localization and high population mobility, western countries have been searching for resolutions and have accumulated many precious experiences. As the demographic dividend of China is disappearing, issues such as labor shortage, retention problems and difficulties to stabilize the backbone contingent are emerging. After years of exploration, we found some solutions, which are summarized as follows: while building the products, brands and images of Chinese Hospitality, we will also develop human resources scientifically to make sure that the employees convert their mental resource into Mental Capital, so as to provide unique products of mental efforts to the customers. In tourism, the development of Mental Capital is core to translating labor costs into Human Capital.

Mental Capital concept is backed up by both practices and theories. There is a well-known saying in western hotel industry: We are ladies and gentlemen serving ladies and gentlemen. The motto, which is in sharp contrast to the traditional mindset that service staff is inferior, embodies the pride and commitment of the staff, and promotes personality equality of the service worker and the customer. Encouraged by the motto, many talents dedicate themselves into tourism and hotel industry, regarding providing best service to customers their life goal. Large numbers of excellent employees with mature mentality and skills helped create excellent enterprises such as the Intercontinental and TUI, promoted the growth of prestigious academic institutions such as School of Hotel Administration of Cornell University, and further attracted renowned scholars like Theodore Schulz to come into the field of human resource research. These scholars developed Human Capital theory, namely the development and investment in human mentality constitute the well spring for profit increase. Years ago, Fred Luthans, professor in psychology and ex-president of the AMA built up the Psychological Capital Theory, which improves the Human Capital theory. Those practices and theories have enlightened us. And we have also made much achievement in innovating these practices and theories in light of Chinese domestic conditions.

We proposed the concept of “Chinese Hospitality” basing on our exploration of service economy. I have elaborated on the source and framework of the concept at the global summit of WTTC in Beijing. Here I would like to introduce to you some of our new achievements. We have realized that “Chinese Hospitality” is the combination of brands, images and systems of Chinese modern service industry; its fundamental connotation is international level, domestic characteristics and value for money. It is the employees who create products of the service economy. “Chinese Hospitality” falls in the category of service economy, thus its products rely on the employees. As an old Chinese proverb goes, “people with one mind will remove the Mt. Tai,” we require our staff to make concerted and conscientious efforts to serve our customers, so as to realize “Chinese Hospitality.”

In accordance with the above-mentioned reasons, we proposed the concept of “Mental Capital”. We think that mentality represents the integration of natural and social psychological activities of a person, and is embodied through his flexibility, conscientiousness, passion, faith, sense of honor and loyalty. While the mentality of a person stores value during education and training, and creates value for the enterprise during production, it also appreciates and converts gradually into Mental Capital. Together with Intellectual Capital and Physical Capital, Mental Capital forms the Human Capital of service economy. With the coordination and cooperation among the three, a new pattern for developing human resources has formed, with mental labor as the foundation, and physical and intellectual labor as the support. In line with the new pattern, enterprises should adopt a new management model of “control+ service support” and intensify training to increase professional skills of the employees. Enterprises should also enhance incentive mechanism, in particular non-material incentives, to encourage the employees to leverage their mental efforts in daily work, so as to make full use of the Mental Capital and enhance productivity.

Guided by the concepts of “Chinese Hospitality” and “Mental Capital,” our business gained fruitful results. Since its foundation 15 years ago, BTG has increased its productivity steadily, with its annual compound growth rate of revenue and profit standing above 20%. BTG-Jianguo Hotel Management Company, one of our holding companies, edited a set of training materials on the basis of career planning principles and in accordance with the educational thoughts of Confucius “cultivating individual moral character, managing the family, the country and the world.” The working passion of the staff was ignited and businesses such as management contract expanded rapidly. The Company is now managing over 80 luxury hotels nationwide. Our wholly-owned shopping malls and property management companies earned a massive profit of 160,000 US dollars per employee; average annual income of the employees also rose to close to 14,000 US dollars. Both two figures are equal to those of the financial industry.

Staff making achievement on their posts is the basis for sustainable development. Our front-line staff has made extraordinary contributions on their ordinary service posts. Numerous of our ordinary workers, who have worked in the enterprises for over two decades, won the title of Honorary Worker; many were granted National Model Worker and Master of Service Skills and Techniques; over 500 outstanding young employees become middle-level to senior managers of the enterprises; some employees turned to be the shareholders of the joint-stock company through state-owned enterprise reform and other channels, and gained their return on investment.

Reviewing the past, we have made some achievements in promoting employment, developing human resources, and increasing Mental and Human Capital. We are very happy to see that many member companies of WTTC have already taken the initiative to develop human resources in width and depth. We would like to join hands with these companies and other tourism enterprises with same philosophy and ambition to achieve win-win, and meet the challenge of economic wave and population restructure. We will keep our efforts in creating more products with high added value, raising service quality, efficiency and benefits, promoting full employment, developing the overall potential of human resources, adding the value of Mental and Human Capital of staff, so as to run tourism market large and strong, and to build up a more friendly image of enterprise citizen and an international brand with higher fame, recognition, reputation and loyalty. Let’s try our best to further promote the recovery of economy and stability of society, and welcome the bright future.

That’s all for my speech today. Thank you.

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