Danish Hospitality Industry (SWOT)

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Strengths

Living by the principle that all citizens should have equal rights to the social securities, Denmark has established a solid welfare system with strong social guarantees. By paying high taxes, education and health is free of charge (Denmark.dk, 2017). This means that, if a person would like to get an education within the hospitality field, tuition fees are covered by the government. Similarly, if a person requires medical help, most of the medical assistance is for free. Thus, there is a strong safety net for people living in Denmark. Likewise, this applies to European Union citizens.

Furthermore, everyone who is a member of an unemployment insurance fund, is entitled to the financial benefits while being out of a job (A-kasser.dk, 2017). This ensures that there is no need to worry about personal finances while looking for a job and thus the focus can be put on finding a suitable job rather than taking any kind of job because of the financial pressure.

As of the salary levels, there is no legal minimum wage that is required by the law. Minimum salary levels are agreed upon between the trade unions that are representing the employees and the employers, and a collective agreement has been created (3f, 2017). Thus, there is a minimum amount per hour that must be paid out to the employee within the specific industry. This way the employee knows what to expect and has a sense of financial safety net. Likewise, the general salary levels in Denmark are quite high compared to other countries. Moreover, there is a steady yearly increase in the average salary per month (Trading Economics, 2017).

As mentioned earlier the trade unions have a strong influence on the employees’ working conditions, that are not only limited to the salary levels. Trade unions may step in situations of conflict and protect the employees’ rights. This again provides a feeling of having a safety net behind.

Flexible working hours may seem to be more attractive to part time employees, especially when having a job on the side of the studies. This appears to be convenient for the part time employees.

Denmark ranks quite low on power distance and thus high on employee autonomy according to Hofstede’s national culture dimensions. This mostly results in a flat organizational hierarchy especially when compared to other countries. Thus, it is also more noticeable to the employees who come from other European countries. The role of management is perceived as to facilitate and empower employees. The atmosphere at the workplaces is informal and respect must be earned by

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showing the competency in real life situations. Danes believe that everyone should enjoy equal rights regardless their position at work, as well as it is important to employees to be consulted (Hofstede Insights, 2017). When having such a flat hierarchy, it shapes the culture at work.

Moreover, the flat hierarchy is expected and, perhaps, in situations when there is a higher level of hierarchy, some small conflicts and misunderstandings may occur. Thus, it might be crucial for a hospitality business to possess a flat organizational hierarchy to attract qualified employees as it is expected.

Weaknesses

General salary levels have been described earlier in the section, where the strengths have been identified. However, even though there is a controlled minimum wage, the hospitality industry has lower average salaries compared to the other industries, which means that they hospitality industry might not be as attractive as the other industries when it comes to salary levels (Sturman, 2001).

Higher salary can meet employees’ expectations and encourage them to perform more efficiently, likewise it can attract talent (Yen & Huang, 2012). Getting a relatively lower salary may affect the decision of taking a job, as well as whether to stay in the industry at all.

One of the biggest challenges hospitality industry is facing worldwide is the high employee turnover.

Bonn & Forbringer (1992) 25 years ago brought up the issues of changing demographics and the fact that it would affect hospitality industry in a sense of not having enough workforce to support the demand. There is not only a lack of qualified workforce, but they even mention that due to the lack of workforce in general, the companies are willing to hire almost anyone, who would be interested to fill the positions. This, naturally is leading to a high employee turnover as not everyone is fit to a job within the hospitality industry. When it comes to voluntary employee turnover, external personal events, both positive and negative, as well as positive external professional events highly influence the employee turnover. This indicates that critical life events affect the employee turnover (Tews, et al., 2014). High employee turnover in general influences the perception of hospitality industry.

Seasonality is a characteristic of the industry and thus hospitality industry in Denmark has high and low peaks throughout the year. The summer season is considered as the high season as the weather is more pleasant, whereas the winter time generally brings in fewer tourists. Seasonality affects the

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staffing decisions, meaning that more staff members are needed for the high season and fewer staff members are necessary for the low season. As the summer season is the peak season for tourism, more staff members are necessary, which leads to attracting people that are available for a short period of time. As students usually have a break from school during the summer time, most of the hiring is among the available students, who are looking for some extra income and/or experience during their break from the school. In many cases experience is not needed to obtain a job within the hospitality industry for a short period of time.

When it comes to full time employees, the working hours might be seen more as a weakness, mostly in the cases for evening and night employees. When having unusual working hours, it limits the possibility to spend quality time with the families and friends, as they are working while most of the people have time off. Working in hospitality industry usually requires to be flexible in a sense that it does not have the regular working hours from Monday-Friday from 9-17. Many of the hospitality industry establishments, such as hotels, are open 24 hours a day and seven days a week. Thus, there is a need for employees outside the usual working hours, respectively, evenings and nights, as well as weekends and holidays. The nature of the working hours might not be attractive to the potential employees, especially, if they have families, because of the challenge to find a common time for spending some quality time together.

Opportunities

There is a general trend in more tourists coming to Denmark by each year. The trend of growth has been steady for years (World Tourism Organization, 2016). The fact that the country is attracting increased number of tourists every year may indicate that because of the growing demand there is a need for more staff to be hired to cater the needs of tourists. However, it could also be tackled differently, meaning that the existing operating processes could be optimized with the existing staff members. However, it is more likely that there still will be a need for more employees in order to provide the guests with positive experiences. Thus, there are enough positions for the industry professionals.

In 2017 Denmark took the 2^nd in the World Happiness Report. The past few years it was the happiest country in the world, whereas this year Norway surpassed Denmark and took the lead. The level of happiness is measured by 6 indicators, respectively, GDP per capita, social support, healthy life

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expectancy, freedom to make life choices, generosity and perceptions of corruption (The Sustainable Solutions Network, 2017). Denmark scores well on all the criteria and thus has been one of the leading countries within the four years of the report’s existence. This could positively affect the employee retention as the level of happiness in general is high and thus is the quality of life.

Likewise, the working environment might appear attractive to foreigners that come from countries with lower scores for happiness.

Scandinavian countries are among the leading countries, when it comes to sustainable practices.

According to Kazlauskaite et al. (2013) Nordic countries are among the top most responsible countries in Europe, when it comes to business, including CSR with regards to the employees.

Furthermore, overall company’s CSR practices have become important to potential and existing employees, especially to Generation Y as the people from this generation are very aware of the sustainability, want to change the world and work for a responsible company (Ohlrich, 2015). Thus, a company that has visible CSR practices with actual positive impact to the society are more attractive to the potential employees, especially Generation Y.

Threats

Interestingly that even though the wealth disparity in Denmark has significantly increased over the last decade (CPH POST ONLINE, 2017), in 2015 Denmark still had the lowest wealth gap among 34 OECD countries (The Local, 2015). This means that wealth gap in Denmark is low compared to the other countries despite the trend of the wealth gap growing. However, the trend is that inequality is increasing and thus is affecting different aspects of quality of life.

Furthermore, hotel industry has an overall more negative than positive industry image, because of other more attractive career options, low salary levels compared to other industries, working hours, and the high employee turnover (Brien, et al., 2017). The negative image of the industry is a threat, because of the possibility to lose potential talents to other, more competitive industries.

There is no significant big international hotel chain presence in Denmark. The five leading hotel chains in Denmark are local Scandinavian ones, respectively, Scandic, Arp-Hansen Hotel Group, Cabinn As, Small Danish Hotels and Comwell Hotels (Chains, 2017). It appears that Scandinavian chains have a very strong market position in Denmark. However, when it comes to attracting and retaining talent, having only local chains does add some career limitations in a sense of lacking

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international experience and business perspective. International hotel chains do have more international experience, as well as recognition.

Having so many local chains, the competition is high, especially when it comes to attracting and retaining talent. The hotel chains in Denmark have strong brands and thus from a perspective of a potential employee, there are several hotels to choose from as a workplace.

Technology for some time has been changing the hotel industry in different aspects to the business.

In fact, according to a report in 2014 by PWC hospitality industry is among top five industries that have been investing in sensors (Carter, 2017). Several hotels are changing the in and check-out rcheck-outines from being assisted by a person to automated services with the help of online technologies, especially the smart phones that has been identified as one of the megatrends in hotel industry, when it comes to application of the technology (Mitel Networks Corporation, 2017). It is a threat to the employment within the industry, because manpower can be partly substituted with the technology for some of the operations. However, about 60 % of the guests still prefer a human interface and being in person, while needed assistance (Carter, 2017).