True cost of hospitality in the Gulf: A call to action for business & investors

Samentha Goethals, Senior Researcher on Labour Rights & Mariam Bhacker, Project Manager, Migrant workers in the Gulf construction industry, Business & Human Rights Resource Centre

Putting migrant worker protections on the Gulf hospitality management and investment agenda

This week the Middle East’s tourism and hospitality elite gathered at the Arabian Hotel Investment Conference in Dubai. Intended to spur investment, the event agenda neglected any discussion of risks to investors and companies that choose to do business in the region, despite the existence of pressing financial, environmental and social concerns.

A major risk to investors in the Gulf is the threat of exploitation and mistreatment of migrant workers, who account for over 80% of the population in countries like Qatar and the UAE. 

A 2015 Swedwatch investigation into the working conditions of migrant hotel workers in Dubai documented labour violations that included twelve-hour working days with no overtime pay, the withholding of workers’ passports and payment of costly recruitment fees by workers. The ensuing report pinpointed the kafala system as the root of these violations, explaining that “The basic principle of kafala is that every migrant worker needs a local sponsor who takes responsibility for the worker during the stay. For workers with no education it is impossible to change sponsors – regardless of working conditions.” 

Growing global scrutiny on the Gulf’s hospitality sector

As the World Expo 2020 in Dubai and 2022 Qatar World Cup draw closer and attract an influx of tourists, scrutiny of business activities and brand accountability is unlikely to relent.

In 2016, Hilton Hotels & Resorts was linked to a lethal labour camp fire in Qatar via media reports alleging that workers killed in the incident had been working on a large development where a Hilton hotel was being constructed. Similarly, eight years of reports and campaigning by human rights groups and mainstream media have earned the Guggenheim and Louvre museums on Abu Dhabi’s Saadiyat Island international notoriety for allegations of worker exploitation. As the World Expo 2020 in Dubai and 2022 Qatar World Cup draw closer and attract an influx of tourists, this type of scrutiny of business activities and brand accountability is unlikely to relent.

Elsewhere, government scrutiny of corporate supply chains is on the rise, with a tide of legislation mandating corporate transparency and/or due diligence on forced labour and modern slavery. Varying on specifics, legislation like the California Transparency in Supply Chain Act, the UK Modern Slavery Act and France’s corporate duty of vigilance law, place expectations on companies to avoid, mitigate and report on human rights risks, and create new avenues for stakeholders to hold companies to account for inaction or abuse.

A significant aspect of the UK Modern Slavery Act and similar legislation is their global reach. By requiring companies to report on their global supply chains, companies’ international operations are gradually being subject to increased scrutiny. Given the documented risks facing migrant workers in the Gulf, we set out to survey companies on the steps they are taking to prevent harmful impacts to migrant workers in their global operations.

How are companies addressing risks of migrant worker abuse?

Between December 2016 and March 2017, we invited 10 hotel groups with operations in Dubai and/or Qatar to participate in a pilot survey on their labour policies and practices with regards to migrant workers. The selected hotel respondents are members of the International Tourism Partnership (ITP), an industry association that produces sector guidance on human rights and convenes a Human Rights Working Group.

The company responses and publicly available human rights disclosure are summarised in the charts below: 

   

The prevalence of human rights policy commitments and guidelines for ethical business conduct are evidence of the important steps these companies have taken to integrate human rights due diligence into their operations, spurred by the concerns of investors, customers and civil society.

However, the survey responses also revealed a concerning level of ambiguity when it came to providing concrete policies and processes for protecting employees from the types of abuse common to migrant workers in Qatar and the UAE.

Weak worker protections: blame in the business model?

This ambiguity stems in part from the dominant ownership structure in these countries. The companies that responded to the survey operate in Qatar and the UAE through “managed” operations, whereby the hotel property is privately owned by a third party and the hotel group lends its brand and manages the day-to-day operations.

Under this structure, and as described in the company responses, hotel brands are involved in the recruitment and management of workers, but staff are employed by the hotel owner. It is not clear from the company responses how contracts for out-sourced services and agency labour are negotiated within this business model.

Regardless of organisational structures, preventing and addressing pervasive harms to migrant workers is the responsibility of all companies in a value chain, and hotel brands are no exception. 

The disjointed organisational structure makes it difficult to pinpoint corporate responsibility and accountability for migrant rights in hotel supply chains and to determine the parameters of companies’ influence to uphold labour standards. Not only does this negatively impact the ability of brands to safeguard workers throughout their supply chain, it also obstructs the ability of investors and external observers to push for improvements for workers. Regardless of organisational structures, preventing and addressing pervasive harms to migrant workers is the responsibility of all companies in a value chain, and hotel brands are no exception. 

An opportunity to drive improvement

Having publicly committed to human rights, companies must work to operationalise these commitments in high-risk contexts like Qatar and the UAE; recognising the inadequacy of national labour laws and regulatory enforcement, and the risks inherent to the kafala system. Companies should also seek ways to increase their leverage in relationships with hotel owners, in order to institute stronger and consistent protections.

Corporate transparency will also help investors identify the extent to which companies understand and mitigate human rights risks, enabling them to make better, more informed investment decisions.

Transparency is key to moving forward. Increased traceability of business structures and supply chains coupled with robust corporate due diligence and disclosure will help companies, investors and civil society to understand the gaps and challenges in current protections and to propose solutions. Corporate transparency will also help investors identify the extent to which companies understand and mitigate human rights risks, enabling them to make better, more informed investment decisions.

Over the next year, Business & Human Rights Resource Centre will work alongside companies, industry associations and civil society to shift the conversation on hospitality management and investment in the region, and ensure that migrant rights have a firm place on the agenda.