The hospitality industry in South Africa is dominated by small businesses, to the extent that an audit commissioned by the Department of Environmental Affairs and Tourism in 2007 found that 97% of hospitality establishments in South Africa are Small and Medium Enterprises (SMME’s). Typically these do not belong to a chain, and many are owner managed (Theta, 2007).
There are severe skill shortages at all levels within the hospitality industry. At ownership level, this is ascribed to the low barriers to entry in the industry. According to a study commissioned by Theta (2007), there are no formal registration requirements and start-up capital requirements are low. Existing assets can be sold to raise the necessary capital. Some investors enter the industry because they are attracted to a specific geographic location. Most hospitality decision makers have not had formal IT training (Borsenik cited by Law & Jogaratnam, 2005). The collective impact of these factors is that most hospitality decision makers are poorly positioned to make quality IT decisions.
Skill shortages are also experienced at worker level, and formal qualifications of Hospitality workers are significantly lower than those of workers in the related industries of Travel and Tourism, Gaming and Lotteries, Sport, Recreation and Fitness and also Conservation and Tourist Guiding (Theta, 2007) and a very high percentage (54%) of workers are unskilled, i.e. lack basic numeracy and literacy skills (Theta, 2007).
These findings accord with those of Maumbe & Van Wyk (2008). In a study amongst 84 employees in 11 participating establishments, they found that the average worker at a South African hospitality establishment is poorly skilled and poorly compensated. This results in part from South Africa’s global isolation during the Apartheid years and the suppression of its tourism industry during this time (Visser & Rogerson, 2004), and in part from the trend that is prevalent in developing countries to firstly concentrate on the “bricks and mortar” tourism infrastructure and only thereafter pay attention to the development of human capital (Echtner, 1995).
The combination of long working hours and poor compensation in the hospitality industry has translated into a high staff turnover rate. This is in turn problematic for long-term staff development, which is a costly investment in itself (Spenceley & Seif, 2003).
The lack of knowledge at all organisational levels in the hospitality industry has an adverse impact upon the rate and speed of technology diffusion.
Another characteristic of the hospitality industry is that innovations are generally introduced and driven by suppliers rather than the hospitality industry itself (Hjalager, 2002). The technology supplier not only has expert knowledge regarding the technology itself, but is also experienced in the contextual factors that influence the success of its implementation. Thus the technology supplier is ideally positioned to fill the knowledge gap of the hospitality decision maker as well as the worker, thereby cushioning the negative impacts of the lack of hospitality and IT knowledge prevalent in the firm.
The technology supplier also determines the price, pricing structure and payment terms related to an innovation. These aspects of an innovation are important to small independent hospitality establishments, since they traditionally experience severe resource constraints.
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