The latest Victoria Tourism Industry Council (VTIC) survey of tourism operators across the State revealed a generally improved trading performance in the quarter ending November 2007, but a series of special questions has revealed that a majority of survey respondents have been affected by ongoing skills and labour shortages.

"General business conditions remained positive in the three months to November 2007, with a net balance of 27 per cent of businesses reporting an improvement. This followed a slightly weaker result in the August quarter with a net balance of 17 per cent, but was a slight decline on the net balance of 33 per cent reported for the corresponding period in 2006", says VTIC Chairman Jeremy Johnson.

"Most operators are expecting continuing strong trading conditions in the three months to February 2008.

"Overall, looking forward, tourism businesses are positive about the longer term with 52 per cent of those surveyed indicating that they anticipate their business performance will be ‘much stronger’ or ‘somewhat stronger’ over the next 12 months, a figure broadly in line with that reported in the last quarter (56 percent) and the corresponding period in 2006 (54 per cent).

"Special questions were included in the November survey to canvass business about the impact of the skills and labour shortage, and current and future solutions to address this growth impediment.

"Fifty-nine percent of respondents indicated that they were affected by the current skills and labour shortage, citing two key impacts – increased labour costs and reduced profitability or cashflow.

"When asked what could be done to help resolve the current skills and labour shortage, 37 per cent of respondents identified the need to promote careers in the tourism industry, including the creation of career paths, and recognition of qualifications or work experience.

"Twenty-five per cent of respondents identified targeted education to up-skill staff as another possible solution", says Mr Johnson.

Survey Results in Detail:

Business conditions remain strong over the November quarter 2007

On a net balance basis, 27 per cent of respondents reported an improvement in general business conditions in the three months to November 2007 (comprising 42 per cent of respondents who reported an improvement and 16 per cent who reported deterioration). This followed a weaker result in the August quarter with a net balance of 17 per cent, but was a slight decline on the net balance of 33 per cent reported for the corresponding period in 2006.

Growth in sales levels remained strong, with a net balance of 31 per cent reporting increases. Average selling prices continued to rise and profitability recovered, despite continued growth in wages with a net balance of 33 per cent of respondents reporting an increase. Although the majority of respondents reported stable employment levels, on balance there was a moderate increase of 9 per cent. Growth in business investment eased.

Looking forward, the industry is expecting continuing strong conditions in the three months to February 2008. General business conditions are expected to improve, together with sales and profitability. Employment levels are expected to increase moderately, while growth in wage costs is expected to remain steady. Growth in business investment is expected to ease considerably, with the majority of respondents expecting investment levels to remain stable.

Tourism businesses remain positive about trading prospects over the longer term, with 52 per cent of those surveyed indicating that they anticipate their business performance will be ‘much stronger’ or ‘somewhat stronger’ over the next 12 months. This is a slight decrease on the previous quarterly survey (56 per cent), and on the figure reported during the corresponding period last year (54 per cent).

Action underway to address the skills and labour shortage

Special questions included in the November survey asked respondents about the impact of the skills and labour shortage, and current and future solutions to address this growth impediment.

Forty one per cent of respondents reported that they were not being affected by the current skills and labour shortage. While responses varied, the majority of respondents reporting this had less than five employees. Of the 59 per cent who were affected, two key impacts were indentified - increasing labour costs and reducing profitability or cash flow.

Respondents indicated a variety of solutions that have been implemented to deal with the skills and labour shortage. Around one third of respondents reported the use of training to up-skill current staff. Other popular solutions include offering increased remuneration and other employee related incentives, and implementing strategies to attract and retain mature-aged workers.

Of those respondents who are affected by the skills and labour shortage, the majority believe it will be a medium-term issue, with 14 per cent anticipating it will continue to have an impact over the next two to five years, and 13 per cent expecting it will have an impact for five years or more.

Results indicate that skills and experience are highly valued across the tourism industry, and that in general, a skills shortage is a more significant issue than a labour shortage.

When asked what could be done to help resolve the current skills and labour shortage, 37 per cent of respondents identified the need to promote careers in the tourism industry, including the creation of career paths, and recognition of qualifications or work experience. Twenty-five per cent of respondents identified targeted education to up-skill staff as another possible solution.

Background - what is VTIC

The Victoria Tourism Industry Council (VTIC) is the peak policy council for the Victorian tourism industry, which represents key industry associations and operators, providing one united industry voice.