What is destination human capital? It’s the people!

Peter Semone would advise any incom­ing tour­ism min­is­ter to focus on their des­tin­a­tion’s people as a priority. 

In this “GT” Insight, Mr Semone sum­mar­ises the chal­lenges and oppor­tun­it­ies for des­tin­a­tion human cap­it­al devel­op­ment and its poten­tial con­tri­bu­tion to the sus­tain­able devel­op­ment goals (SDGs) and to tour­ism industry per­form­ance more generally.

In 2016, I con­cluded my eight-year rela­tion­ship with Lao tour­ism and proudly left behind the school that I helped to devel­op, the Lao Nation­al Insti­tute of Tour­ism and Hos­pit­al­ity (LANITH), know­ing that my team was ready to man­age it on their own. 

It is dur­ing those eight years in ASEAN’s only land­locked coun­try that I real­ised the most import­ant ele­ment of a destination’s sup­ply side: its people. People are the ambas­sad­ors that inter­act daily with inter­na­tion­al vis­it­ors. People define a country’s tour­ism char­ac­ter and soul. In fact I am so con­vinced that a renewed focus on “Des­tin­a­tion Human Cap­it­al” is the next big thing for tour­ism that I star­ted a com­pany that goes by the acronym DHC.

Human cap­it­al devel­op­ment (HCD) is macro-eco­nom­ic and can be defined as improv­ing the whole sys­tem of human inter­ac­tion in the tour­ism exper­i­ence with the object­ive of elev­at­ing the qual­ity of tour­ism-related ser­vices res­ult­ing in enhanced bene­fits and profits for all tour­ism eco­nomy stake­hold­ers. A destination’s HCD should not be con­fused with enter­prise-level (micro-eco­nom­ic) human resource man­age­ment (HRM) or human resource devel­op­ment (HRD), which is primar­ily con­cerned with recruit­ment, remu­ner­a­tion, assess­ment, and the ongo­ing in-ser­vice train­ing of com­pany employees.

To most people engaged in the tour­ism sec­tor, “cap­it­al” means cor­por­ate cash reserves or phys­ic­al assets such as a vehicle, res­taur­ant, aero­plane or hotel. These are all forms of cap­it­al in the sense that they are assets that yield income and oth­er use­ful out­puts over vary­ing peri­ods of time. But these tan­gible forms of cap­it­al are not the only ones. Labour and land make up the oth­er two factors of pro­duc­tion in clas­sic­al eco­nom­ics. Just as land has become recog­nised as ‘nat­ur­al cap­it­al’ and an asset in itself, human factors of pro­duc­tion have become known as ‘human cap­it­al’, which has become a crit­ic­al index of com­pet­i­tion in the world of busi­ness and a top pri­or­ity in design­ing the stra­tegic plans of busi­ness organ­isa­tions and vis­it­or industries.

In tour­ism, the eco­nom­ics of human cap­it­al are asso­ci­ated with the value that people bring to a destination’s qual­ity of ser­vice. Argu­ably, com­pet­ent, friendly and help­ful people have a far great­er impact on guest sat­is­fac­tion at a des­tin­a­tion than does extra­vag­ant infra­struc­ture. There­fore, both tour­ism com­pan­ies and des­tin­a­tions need to approach the devel­op­ment of their people with the same fer­vour they do the con­struc­tion of hotels and attractions.

While major invest­ment con­tin­ues to flow into tour­ism infra­struc­ture devel­op­ment in the form of hotels, air­ports and attrac­tions, there is little atten­tion being paid to pro­du­cing the people that will define the per­son­al­ity of des­tin­a­tions and hos­pit­al­ity and tour­ism ser­vices in the future. Tack­ling human cap­it­al issues is widely recog­nised as crit­ic­al to the suc­cess of inter­na­tion­al tour­ism but this, in prac­tice, is fre­quently served more by rhet­or­ic than action.

To rem­edy this dire situ­ation people will need to be at the core of ensur­ing that the tour­ism industry of a des­tin­a­tion remains com­pet­it­ive and sus­tain­able. Indeed the best advice I could offer an incom­ing tour­ism min­is­ter is to focus on people and work toward inspir­ing an esprit de corps among pub­lic, private and civil soci­ety act­ors in sup­port of inclus­ive and sus­tain­able tourism.

Human capital development & the sustainable development goals

The issue of human cap­it­al in tour­ism is also crit­ic­al to the achieve­ment of the newly adop­ted Sus­tain­able Devel­op­ment Goals (SDGs). Dur­ing the 70th Ses­sion of the United Nations (UN) Gen­er­al Assembly 154 heads of state or gov­ern­ment adop­ted the bold and ambi­tious 2030 Agenda for Sus­tain­able Devel­op­ment, along with the 17 Sus­tain­able Devel­op­ment Goals that aim to, inter alia, end poverty, pro­tect the plan­et, and ensure prosper­ity for all.

Based on this uni­ver­sal, integ­rated and trans­form­at­ive vis­ion, the UN World Tour­ism Organ­iz­a­tion (UNWTO) is pla­cing its efforts and tire­less work on con­trib­ut­ing its tech­nic­al assist­ance and capa­city-build­ing to the achieve­ment of these glob­al goals. UNWTO is work­ing with gov­ern­ments, pub­lic and private part­ners, devel­op­ment banks, inter­na­tion­al and region­al fin­ance insti­tu­tions, the UN agen­cies and inter­na­tion­al organ­isa­tions to help achieve the SDGs, pla­cing an emphas­is on Goals 8,12 and 14 in which tour­ism is featured.

Not­ably, the UN Gen­er­al Assembly has approved the adop­tion of 2017 as the Inter­na­tion­al Year of Sus­tain­able Tour­ism for Devel­op­ment. The res­ol­u­tion, adop­ted on Decem­ber 4, 2015, recog­nises “the import­ance of inter­na­tion­al tour­ism in fos­ter­ing bet­ter under­stand­ing among peoples every­where, in lead­ing to a great­er aware­ness of the rich her­it­age of vari­ous civil­iz­a­tions and in bring­ing about a bet­ter appre­ci­ation of the inher­ent val­ues of dif­fer­ent cul­tures, thereby con­trib­ut­ing to the strength­en­ing of peace in the world”.

Challenges & opportunities for human capital development

The founder of Four Sea­sons Hotels & Resorts, Isad­ore Sharp, is oft-quoted: “The reas­on for our suc­cess is no secret. It comes down to one single prin­ciple that tran­scends time and geo­graphy, reli­gion and cul­ture. It’s the Golden Rule — the simple idea that if you treat people well, the way you would like to be treated, they will do the same.”

Mr Sharp is cor­rect. People are crit­ic­al to the suc­cess of all tour­ism com­pan­ies, par­tic­u­larly con­sid­er­ing the increas­ing chal­lenges of high­er expect­a­tions and ser­vice stand­ards, advance­ments in tech­no­logy, region­al­isa­tion, dereg­u­la­tion, and glob­al­isa­tion. The rel­at­ive import­ance of per­son­al ser­vices in the tour­ism sec­tor makes people the num­ber one factor of pro­duc­tion for most travel and tour­ism enter­prises. Due to the fact that the trav­el­ling cus­tom­er is dir­ectly in con­tact with line staff, and the qual­ity of a product is largely reflec­ted in employ­ees’ abil­ity to meet cus­tom­er expect­a­tions, there is little mar­gin for error when it comes to devel­op­ing human capital.

Unfor­tu­nately, macro-level human cap­it­al devel­op­ment is fre­quently neg­lected or releg­ated to a foot­note with­in tour­ism devel­op­ment strategies. This com­prom­ises the abil­ity of people work­ing with­in tourism’s private and pub­lic sec­tors to be able to sup­port the deliv­ery of qual­ity exper­i­ences for all vis­it­ors to a des­tin­a­tion. This, in turn, poten­tially leads to low levels of cus­tom­er satisfaction.

There are sev­er­al key chal­lenges and oppor­tun­it­ies for human cap­it­al devel­op­ment in tour­ism. These three, in par­tic­u­lar, are sig­ni­fic­ant in light of the SDGs:

1. There is a chal­lenge and oppor­tun­ity to invest in women, espe­cially in devel­op­ing des­tin­a­tions where tour­ism can be a lead­ing pro­mul­gat­or of gender equality.
2. There is a chal­lenge and oppor­tun­ity to provide oppor­tun­it­ies for young people who can con­trib­ute sig­ni­fic­antly to an industry facing severe tal­ent defi­cits in most destinations.
3. More gen­er­ally there is a chal­lenge and oppor­tun­ity to bet­ter match sup­ply and demand in the tour­ism labour mar­ket by bridging the gap between gov­ern­ment, industry, and edu­ca­tion providers.

Human capital development in education & training

In many coun­tries, the edu­ca­tion provided in pub­lic and private schools is per­ceived to be inad­equate for the needs of tour­ism busi­nesses, and the num­ber of extern­al tour­ism train­ing insti­tu­tions is insuf­fi­cient to meet the needs of an expand­ing industry. Moreover, the num­ber of in-house train­ing pro­grams is insuf­fi­cient and their qual­ity is often mediocre.

Form­al­ised tour­ism edu­ca­tion and train­ing dates back some 120 years to Switzer­land and spe­cific­ally École Hôtelière de Lausanne. Sub­sequently it has developed in a wide vari­ety of formats, insti­tu­tion­al con­texts and levels so that tour­ism edu­ca­tion in some form is now offered in vir­tu­ally every coun­try. There is recog­ni­tion that tour­ism edu­ca­tion, both with­in the form­at­ive school, col­lege, or uni­ver­sity con­text and with­in the work­place through industry-based devel­op­ment pro­grams, forms an essen­tial build­ing block in the search for a highly skilled work­force. This, in turn, can con­trib­ute dir­ectly to increased busi­ness suc­cess and improved des­tin­a­tion performance.

Giv­en this diverse land­scape in tour­ism edu­ca­tion and train­ing, it is hardly sur­pris­ing that the status and recog­ni­tion accor­ded to pro­grams var­ies greatly from coun­try to coun­try. While there are clear excep­tions in the form of inter­na­tion­ally-recog­nised col­leges and uni­ver­sit­ies offer­ing tour­ism edu­ca­tion and train­ing — such as Cor­nell and the Culin­ary Insti­tute of Amer­ica in the USA; Hong Kong Poly­tech­nic Uni­ver­sity in Hong Kong SAR, China; Uni­ver­sity of Queens­land in Aus­tralia; Uni­ver­sity of Strath­clyde in the UK; a num­ber of spe­cial­ist hotel schools in Switzer­land — it is fair to say that much that is going on in the area of tour­ism edu­ca­tion and train­ing world­wide is rel­at­ively unre­cog­nised, espe­cially at lower aca­dem­ic levels.

There are oth­er prob­lems inher­ent in weak approaches to HCD in tour­ism. The lack of loc­al edu­ca­tion and train­ing res­ults in lost oppor­tun­it­ies to gen­er­ate qual­ity, authen­t­ic loc­al products and ser­vices that can be con­sumed in the vis­it­or eco­nomy. Where the homo­gen­isa­tion of tour­ism products con­tin­ues to increase, loc­al edu­ca­tion and train­ing can help enhance the vital­ity of the industry, provide unique tour­ist exper­i­ences, gen­er­ate oppor­tun­ity for loc­als to enrich their lives on a glob­al level, and min­im­ise eco­nom­ic leakages.

Most experts agree that the gov­ern­ment and oth­er pub­lic insti­tu­tions, such as nation­al tour­ism organ­isa­tions (NTOs), have a key role to play in the pro­vi­sion of train­ing and in the improve­ment of human cap­it­al in the vis­it­or eco­nomy. This is espe­cially import­ant for coun­tries where a developed and edu­ca­tion-con­scious private sec­tor is absent. The same energy and dili­gence with which NTOs have addressed the mar­ket­ing and pro­mo­tion of their coun­tries must now also be focused on policies and strategies that will improve the qual­ity of their des­tin­a­tions’ human capital.

Human capital development is a team effort

As I noted earli­er, the best advice I could offer an incom­ing tour­ism min­is­ter is to focus on people. And, as noted by Esi­chaikul and Baum (1998), strong gov­ern­ment sup­port and guid­ance in human cap­it­al devel­op­ment is essen­tial, espe­cially in devel­op­ing coun­tries whose tour­ism sec­tor is pre­dom­in­ated by small- and medi­um-sized enter­prises that lack the neces­sary resources and motiv­a­tion to be involved in nation­al-level HCD issues and whose edu­ca­tion pro­viders are often woe­fully defi­cient in qual­ity instruct­ors, ped­ago­gic­al train­ing facil­it­ies, and materials.

How­ever, a country’s pub­lic sec­tor can­not imple­ment HCD on its own and must work with rel­ev­ant stake­hold­ers to:

• Engage in dia­logue and part­ner­ship with the private sector;
• Bet­ter under­stand the tour­ism labour mar­ket through research;
• Identi­fy tour­ism career paths and employ­ment conditions;
• Provide qual­ity edu­ca­tion and train­ing cur­ricula and programmes;
• Devel­op core com­pet­ency accred­it­a­tion and cer­ti­fic­a­tion schema;
• Devel­op ser­vice qual­ity stand­ards; and
• Roll out pub­lic aware­ness cam­paigns about the bene­fits of a career in tourism.

In my opin­ion even incre­ment­al improve­ments in the human resource land­scape through a renewed focus on a destination’s human cap­it­al — its people — can improve the eco­nom­ic and social bene­fits derived from tourism.

Fea­tured image: Cap­it­al. By Nick Young­son (CC BY-SA 3.0) via The Blue Dia­mond Gal­lery.

Reference

Esi­chaikul, R. and Baum, T. (1998), “The case for gov­ern­ment involve­ment in human resource devel­op­ment: A study of the Thai hotel industry”, Tour­ism Man­age­ment, 19/4. 359 – 370.

About the author

Peter Semone is man­aging part­ner of the stra­tegic advis­ory organ­isa­tion Des­tin­a­tion Human Cap­it­al and founder of the inter­na­tion­ally acclaimed Lan­ith – Lao Nation­al Insti­tute of Tour­ism and Hos­pit­al­ity voca­tion­al school in Laos. He has acted as Chief Tech­nic­al Adviser and Team Lead­er for European donor and Asi­an Devel­op­ment Bank pro­jects. He also con­sults for United Nations agen­cies includ­ing the World Tour­ism Organ­isa­tion and Inter­na­tion­al Labour Organisation.

Cur­rently serving as Chair of the Pacific Asia Travel Asso­ci­ation (PATA) Found­a­tion, Chair of the PATA Industry Coun­cil, and a mem­ber of PATA’s Exec­ut­ive Board, Peter has been an Asso­ci­ation stal­wart for more than 20 years. From 2002 – 2006, he worked for PATA as its Vice President.

Peter is widely pub­lished in peer-reviewed journ­als on top­ics related to tour­ism devel­op­ment and des­tin­a­tion human cap­it­al. He enjoys lec­tur­ing and is in con­tinu­al pur­suit of a PhD in inter­na­tion­al tour­ism devel­op­ment stud­ies. Peter spends his free time with his fam­ily in Bali.