Labour turnover costs added more than 19% to the payroll costs in the accommodation industry, in Australia.

The results are according to an industry report launched today by Minister Kevin Andrews, Minister for Employment and Workplace Relations.

The Report "Labour Turnover & Costs in the Australian Accommodation Industry" is based on research undertaken by Griffith University in conjunction with TTF Australia and the Sustainable Tourism CRC.

TTF Managing Director, Christopher Brown said the 64 surveyed hotels are paying a total of $49 M on replacing staff. Extended across the industry this cost is most considerable and could run to hundreds of millions of dollars.

"Results show that last year 48.64% of the workforce of surveyed four and five star hotels had to be replaced as thousands of workers changed their jobs or left the industry.

"The study shows the vast majority of labour turnover is brought about by voluntary resignation as workers look for increased pay, more traditional working hours and career opportunities elsewhere. This is a significant challenge to the industry and one that is increasing given the tight employment market as a result of skills and labour shortages.

"The survey shows that 78.3% of hotels were encountering labour shortages.

"This level of turnover is unsustainable for any industry, but particularly for the accommodation sector given its labour intensiveness and global competition from other destinations and hotels.

"The survey shows that on average hotels were forced to replace 39.19% of managerial employees in addition to replacing a massive 50.74% of operational employees in 2005.

"Of concern is that while overall staff turnover is 32.66% in urban areas, it is 68.32% in regional and remote areas.

"The annual cost of replacing managerial employees was $109,909 per hotel while the annual cost of replacing operational employees was $9,591 per employee.

TTF Australia is a national, member-funded CEO forum, advocating the public policy interests of the 200 most prestigious corporations and institutions in the Australian transport, property, tourism & infrastructure markets.

"This cutting edge research is the first of its kind in Australia and significantly highlights the real and significant costs Australia's major accommodation employers are facing.

"Other costs of high turnover are lost productivity, lost corporate knowledge, higher overtime costs and increased stress as staff deal with the loss of colleagues and heavier workloads.

"The study reveals the need to examine turnover costs in the context of overall business costs and profitability.

"The tourism industry, and the accommodation sector in particular, is very reliant upon labour, it is a ‘people business'.

Anything which can be done to reduce business costs will ensure the industry continues as a robust employer of large numbers of people.

"Consumption of over 48% of an industry's workforce in a year certainly indicates that something is amiss and something needs to change. Are current HR practices appropriate, or is it that this sector can't compete with other industries in a tight labour market?

"The Commonwealth Government has a critical role to play in relieving skills shortages through education and training; however industry must also examine practices that may exacerbate the issue and find solutions.

"TTF Australia has undertaken this research as a service to the accommodation industry. It solidly identifies an area where effort may be placed to reduce costs and improve profitability. TTF will form a taskforce to look at ways that industry and Government can work together to address these issues.

"This research included surveying the labour turnover experience of 64 (4-5 star) hotels and resorts across a range of locations.

"TTF Australia thanks Griffith University for their research for this report and the Sustainable Tourism CRC and Amora Sydney Jamison Hotel for their support," Mr Brown said.

A full copy of the report is available online at www.ttf.org.au .

Media contact: Caroline Wilkie 02 9240 2016 or 0419 777 338

TTF Australia is the peak national industry group representing tourism, transport and infrastructure. It comprises the chief executives of the 200 most prestigious investors, operators, regulators and developers across Australia.