The three different worlds of hospitality

An examination of some of the key differences between the Government, corporate and small business sectors of the hospitality industry, for those who might be thinking of moving from one to another.

Over the years I have come to realise that there are three distinctly different worlds within the hospitality industry. These three worlds are inhabited by different people, with different values, different systems management, different problems and quite different career paths.

The Government sector

The first world I will call the Government sector. They are the hospitality businesses like canteens and dining rooms that are conducted within hospitals, tertiary institutions, and other Government departments. The one characteristic of this world which renders it different from the others in the hospitality industry is that this sector’s revenue comes either directly or indirectly from Government funding. This tends to insulate the business from normal economic forces.

The Government sector has three subsections: federal, state and local.

You’d think that Government funding would make life easy, but in reality it’s a double edged sword with a very difficult downside. Any manager working in this sector will tell you that although they don’t have to worry so much about sales or revenue, they do have some very difficult problems dealing with slow moving bureaucracies; large teams of long serving, intransigent and often militant staff; and constant pressure to sell everything at unrealistically cheap prices.

The size of this sector is decreasing steadily as budget cuts and ‘user pays’ policies force change that is quite difficult to initiate and accommodate. Senior managers within the Government often seem to believe that it is easier to handball the problem of creating efficiency to private operators than attempt reform internally (in reality it is often beyond the ability of private operators to create efficiency in a workplace that has stagnated, without sacking everybody and starting again). Many managers in this sector find themselves between a rock and a hard place — under continual threat of privatisation, but unable to do what is needed to be done because of impediments from both above and below.

The corporate sector

Managers in the corporate sector have a raft of support specialists.

The next world is the ‘corporate’ hospitality sector. These are the larger hospitality companies that have multiple locations spread nationally or internationally. Managers within this sector are usually focused on the dual goals of financial performance and growth, and have well developed systems and structures to deliver these goals. The perception from outside is often that their senior managers are paid unconscionable salaries for attending meetings; the reality is that the salaries they are paid are rarely adequate compensation for the destruction of lifestyle.

In theory, these large companies should have operating efficiencies in bulk purchasing, regional marketing, human resource management, administration, repairs and maintenance etc. — but in practice these are often negated by the cost of top heavy management structures, inconsistent operating standards, intense competition and changing public perceptions of value. The loss of market share in the upper levels of the hotel sector to the rapidly growing number of serviced apartments and small boutique hotels are examples of this.

Managers working within this sector often have a plethora of support from specialist departments and only have to concentrate on operating their department, which may seem to the uninitiated to ease the burden of management no end. Alas, those support departments (sales, marketing, HR, maintenance, etc.) may, in reality, be more of a hindrance than a help as they empire build, squander resources and place bureaucratic barriers in the way of those trying to deliver the products and services.

Corporate managers often have to work under political constraints that usually only allow steady-as-she-goes, incremental change — but we’re in a rapidly changing business environment that sometimes requires radical solutions in order to survive. As a consequence job security in the corporate sector can be quite tenuous as individual fortunes wax and wane in response to group performance and political patronage. 

The small business sector

The third hospitality world is the small business sector, which makes up the majority of employment in the hospitality industry. In my opinion this sector is the most difficult of the three to manage. At present, there are too many businesses with not enough customers and standards are being forced continually upward in response to the laws of supply and demand.

Managers in this sector are often the owners of the business and generally face long working hours, continual cash flow difficulties, fractured family lives and the constant stress of having to be the ‘jack of all trades’ — marketing guru, financial controller, HR specialist, maintenance expert and motivational leader of the team.

Managers in this sector have to be jack of all trades and have little support.

Crossing from one sector to another has a high failure rate

The differences between these three worlds become most apparent when managers try to cross from one to the other. Believe me, it’s far from easy! I’d have to say that the small business sector is the most difficult of the three to prosper in, and my evidence for this is the very high failure rate of successful managers from the Government and corporate sectors who go it alone, and subsequently go broke.

It’s nearly as difficult to swap from the Government to the corporate sector, or vice versa. The management of each requires different skills, and the cultural differences require different attitudes. We constantly field job enquiries from managers who think the grass is greener in another sector and come to us for assistance to make the move.

So think carefully before you try to jump from one world to one of the others — you just may be leaping from the frying pan into the fire. They’re all tough at the moment.

To learn more about the topics discussed in this article please consider the following courses,

For documentation to support the management systems discussed in this article, please visit our resources website.

If you are not sure where to start, contact us now to speak with a consultant.

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