To engage in the hotel business, especially luxury hotels, involves high initial monetary capital. Owners turn to financial institutions (supporting industry — Figure 7.1) to capi- talise their project. Financial institution will then assess the feasibility of the project. It is well known to the industry, as expressed by interviewees, that an important criterion that financial institution considers is the operating management group and brand as an indica- tion for future success. Not surprisingly, international management hotels with a strong brand and management score highly in this evaluation process. This would seem to be a lack of recognition from financial institution, a clear indication of the lack of confidence in local management skills in the hotel industry.
Even though there are pressures from the OECD (1992) and also initiatives from MNHCs themselves to move towards polycentrism, its implementation is ineffective.
Human resource capital in Malaysia has reduced in real term. Human resource capital is arguably a lower standard than the 1980s and early 1990s. The number of local managers Tourism Industrial Development and Multinational Corporations 105
MNHC International Managers Owner
Local Employees
Forward &
Backward Linkages Local
Hotels
Government &
Non-government Organisation
Local Human Resources International
Hotel
Host Hotel Industrial Structure
Supporting Industry International Organisation Forward &
Backward Linkages (International)
Figure 7.1: Host hotel industrial structure.
in the industry may have increased over time but it does not necessarily indicate higher capability of local managers. As indicated by the President of Malaysian Hotel Association, over-promoting is an issue that the industry has to acknowledge and rectify. This issue is largely due to significant numbers of jobs at managerial and supervisory level, which were available during early to mid-1990s, when many new hotels had been built. Since the skills ready to run a hotel is by rank-and-file and is developed through time, it is difficult for MNHC to find suitable local managers in a pool of ‘over-promoting’ managers for key positions.
An issue such as English language proficiency among the Malaysian workforce is something that needs addressing. What used to be an advantage is increasingly a disad- vantage in Malaysian hospitality industry. As noted by Gladwin and Walker (1980), the American MNC have been more successful in engaging locals in higher positions due to ease of finding locals who are fluent in English. The workforce in Malaysia, especially in the 1980s, was known for their English proficiency. However, the medium of education has been changed from English to Malaysian language (National language) in the mid-1980s.
The resulting decline of English proficiency has led to many problems in training and development of local human resources.
Another concern, as expressed by interviewees, is the willingness of international mana- gers to train local managers. This is particularly the case when local managers are per- ceived as a threat to their organisational position. This is consistent with Go and Pine’s 1995) view that where local managers excelled and demonstrated potential, MNCs will retain these local managers by offering promotion opportunities, which are often positions in larger operations of the MNCs in other host countries.
What is surprising is that despite the lower level of English proficiency, the local work- force prefers to be trained by foreign managers. The skills delivered by international mana- gers are perceived to be international. However, according to an interviewee of an MNHC, there is no doubt that language is the biggest barrier when it comes to the issue of training and development. In addition, work ethic has changed immensely. The young workforce is less service oriented than before. The friendly and hospitable culture is missing in the younger generation. The Malaysian hotel industry’s previous success was mainly due to its service-oriented culture. Today, however, the workforce is less keen to work at operational levels, while attention increasingly focused is on promotion opportunities from within or amongst other hotels, which are abundant.
A final issue to consider is that while government is known for its role in imposing pressure to have more local managers in key positions, which indirectly contribute to the issue of ‘over-promoting’, government is also responsible for the pronounced use of inter- national managers in hotels. An example would be the policy to promote local culture and arts in hotels. Hotels are encouraged to employ local artists to perform in their premises.
As there was resistance from hotels in the implementation process who, argued that the choice of performance should be customer driven, local authorities approached individual hotels. Local hotels or local managers were the initial point of approach in the process.
Perhaps, they are local and, therefore, should have the initiative and responsibility to pro- mote local culture and arts. This is one example of pressure to local managers, which cause more hotels to use international managers in the process.
106 Kong-Yew Wong and Tom Baum
Conclusions
The findings in this paper exhibit the learning process and maturity of the Malaysian hotel industry, particularly human capital. There were evidences to suggest various forms of obstacles facing the industry in promoting higher degree of productivity spillovers.
However, indication for potentially positive productivity spillovers in the industry is rela- tively strong. Thus, this paper draws attention for a more integrated tourism planning approach to ensure sustainable tourism industrial development.
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