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Bumper Easter holiday season ahead, but national survey shows accommodation hoteliers will count the cost as penalty rates bite

April 11, 2014 Association No Comments Email Email

The prospect of penalty rates of up to 275% is forcing Australia’s hoteliers to curtail services over the extended Easter/Anzac Day holiday period, with 67% of hoteliers surveyed indicating that they would be closing outlets or reducing services because of crippling penalty rates.

The survey, carried out on behalf of Tourism Accommodation Australia (TAA), attracted 225 respondents from TAA’s1000 strong membership, representing some of the country’s largest hotel groups, as well as major regional companies, covering all levels of the market.

While 85% of respondents acknowledged that reductions in services could negatively impact guest perceptions, the alternative for hoteliers planning to keep open outlets was to lose money over the period.

The survey revealed that for hoteliers electing to operate outlets on Good Friday and Easter Monday (when penalty rates increase to as much as 275%) only 13% of operators expected to make a profit, 54% to make a loss and 23% to break even. 10% indicated they wouldn’t operate outlets at all on those two days.

Asked which venues or services would be most affected, 74% of respondents indicated restaurant services would be affected, Room Services/Housekeeping (57%), Bars (53%), Room Service/food (41%) and Front of House services (30%). Comments from hoteliers indicated that in some cases outlets such as day spas, restaurants, guest services (Concierge) would close altogether.

83% of respondents indicated that the cost of penalty rates was driving the decision to change operating procedures.

Commenting on the survey results, TAA Managing Director, Rodger Powell, said it was disappointing that at a time when travellers were expecting the highest level of service, the costs associated with penalty rates made it impossible for hotels to deliver the service levels they would like to.

“We can’t afford to go back to the Dark Ages” said Mr Powell. “While we know that our members will be going all out to ensure their guests enjoy an excellent holiday, the situation won’t be as comfortable for either hoteliers or their employees.

“It was significant that when asked ‘If Penalty Rates were at a level where you could make a profit and operate ‘as normal’ would you employ more people to do so?’, 81% of respondents indicated they would employ more, and only 9% said it wouldn’t affect employment levels.

“Current employees are not earning penalty rates now because the hotel venues are closed. If penalty rates were dropped or lowered to a point where hotels could service guests and still make a profit, then hotels would employ more people to cover the jobs on those days with no disadvantage to existing employees. Just as importantly, we would be meeting globally competitive customer expectations, we would be growing the economy and paying more taxes to government!

“What these excessive penalty rates do is prevent potential employees – particularly casual staff – from getting work over these holiday periods. And what people are forgetting is that there are a lot of people who would have been very keen to work over this period, because it suits their lifestyle or for other reasons. We don’t operate in a 9 to 5 environment any more. The level of penalty rates is not benefitting anybody, because hoteliers are reducing opportunities for workers simply because it isn’t economic for businesses to open their doors when labour costs are so high.”

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