• Lets talk about retention rates

In 2020 the tourism and hospitality sectors of New Zealand will bring more than 75,000 new workers into the industry to meet demand. That alone is a staggering number!

Those people will leave within one year, and the same number, plus an average annual growth rate of 2-4% will need to be employed the year after. And so on and so on.

Many of those people are employed in front line roles and are the face of the tourism industry to visitors. They are also the face of your organization and your customers are judging their every interaction. With such churn rates, are you as an employer confident your customers are getting the service they are paying for every single time?

Research into retention rates

The concerning thing is, that 75,000 number may be conservative, and could actually be much higher. The number comes from Tourism Industry Aotearoa’s research in 2015 into People & Skills within the New Zealand tourism and hospitality sectors. The report stated the industry had a ‘conservative’ 30% churn rate across tourism and hospitality employees.

That means the industry is recruiting and training a third of its workforce every year. According to the New Zealand Government site business.govt.nz the cost for recruitment and training of a part-time frontline hospitality role is $5,780 per person. That means the tourism and hospitality is spending in excess of $400 million this year to recruit and train the 75,000 new employees it needs.

Now it is accepted there will be churn, but as an industry are we happy with ‘conservatively’ 30%?!

Saving $100m per annum

A reduction of 5% in churn would result in more than $100 million dollars being retained by the industry. That money can be used to enhance product, experience, staff engagement, and so on.

As tourism and hospitality grow and the retention rates remain the same, the overall costs continue to skyrocket. There are some examples of companies who have reduced churn to below 20%, and made it a KPI for senior managers. We’ll be looking to share some of those insights in future updates.