Hong Kong Travel

1. Hong Kong Travel NosiphoHlabangana Krysta Howard Meagan Parks

2. HK Travel History • The Hong Kong Tourism Board (HKTB) is a government-subvented body tasked to market and promote Hong Kong as a travel destination worldwide • HKTB was founded on 1 April 2001 under the HKTB Ordinance. • It was reconstituted from the Hong Kong Tourist Association (HKTA), which was established by Government Ordinance in 1957 • Tourism is the fastest growing of the Four Pillar Industries in Hong Kong. The industry is relatively labor intensive and thus is an important driver for generating jobs. • Between 2000 and 2009, tourism grew by an average annual rate of 5.7%, compared to a 2.2% growth of the overall economy.

3. HK Travel History • Between 2000 and 2009, 28.4% of the new jobs created were in the tourism sector • Tourist arrivals registered a strong rebound in 2010, surging 21.8% to a record of 36 million. • In 2011, it contributed to 4.5 per cent of Hong Kong’s GDP. It employs around 233 500 persons, accounting for 6.5 per cent of total employment. • In 2012, visitor arrivals registered an increase of 16 per cent over 2011 to a record-high of 48.6 million. • In the first seven months of 2013, visitor arrivals increased by 13.1 per cent over the same period of 2012.

4. The Case • Commission-based tour guide caught on camera berating group of tourists • Threatened to lock them out of hotel rooms • Tried forcing them to spend money • Spending money was “part of the tour” • Compared group to another group who spent almost 9x more money • Video went viral • Gave Hong Kong reputation • People no longer wanted to visit • Travel Industry council Chairman wanted to take action • Tour guide became defensive • Says she didn’t force them to buy anything • “everyone has to earn a living” • Threatened reporter not to write about her

5. The Case Cont. • Travel industry council given three months to address problem • Hong Kong’s tourist industry reputation was diminishing • Set up task force to look into issue • Problem with outsourcing • Firm had less control • Quality of performance was not up to par • Difference in cultural norms

6. Failures • Failed at Maintaining Uniform Corporate Image & Standards • Unsuccessful Organizational Structure • Lack of communication between Travel Industry Council and Hong Kong tour guides • Outsourcing Can Create Challenges • The Hong Kong Travel Industry lost control by utilizing independent contractors to provide services • The tour guide lost focus of the firm and tourists’ welfare

7. Divisonal Org. Structure Executive Office The Chairman Board of Directors Committees Appeal Board Shopping Related Committee Consumer Relations Committee Membership Committee Tourist Guide Committee Compliance Committee Tour Guides

8. Boundaryless Organizational Design • Corporate-Level Strategy • Related Diversification • High Need for Interdependence • Behavioral Reward and Evaluation System

9. Risks of Outsourcing • Loss of Critical Skills • Tour Guide lacked the skills needed to ensure tourists guides were successful • Loss of Cross-Functional Skills • Lack of Communication between Tour Guide and Management Team • Loss of Control • Tour Guide assumed too much power

10. Solutions • Obtain common culture and shared values • Understanding the cultures of different tourists • Incorporate Horizontal Organizational Structures • Consistency in training between tour guides • Improve Communications • Establish Human Resource Practices • Develop appropriate skills and techniques

11. Questions • Should HK Travel continue to utilize outsourcing in the future after creating an appropriate organizational structure? • What are some suggestions HK Travel could use to create better control over the firm?