Individuals from Generation Y are entering into the hospitality job market, but little is known about their intention to remain in the hospitality business. The purpose of this study was to examine what factors affect a Generation Y employee’s intention to remain with a hospitality company with respect to internal marketing tactics. Qualtrics, an online survey service company, was used to distribute and collect a self-administered questionnaire survey. A theoretically proposed model was tested using structural equation modeling. The results of this study indicated that “work environment” significantly influence Generation Y employees’ job satisfaction, followed by “empowerment,” “pay,” and “relationships with managers,” which in turn, influences “employee commitment” and “intention to remain in hospitality business.” The implications of the study are discussed.

Introduction

Job turnover rates in the hospitality industry are alarmingly high and have an impact on both a hospitality company’s financial performance and its employee morale. Turnover increases a company’s spending because it is costly to replace departing employees (Brown et al., 2015; Hinkin and Tracey, 2000). A study of restaurant employee turnover proved that the cost of losing and replacing one hourly employee can be as high as $5864; and if a restaurant maintains a 73% annual employee turnover rate, the restaurant potentially loses $428,072 or more annually as a result (Tracey and Hinkin, 2006). Hospitality companies desire to minimize their operating costs, which is why it is important to attempt to determine the causes of job turnover and to increase employee retention (Lu and Gursoy, 2016). The higher a company’s job turnover rate, the more money will have to be spent on recruiting, hiring, and training new employees. High job turnover rates also cause resentment among seasoned employees who have to pick up the slack for slower and less experienced colleagues (Dermody et al., 2004). One of the possible reasons for high job turnover in the hospitality industry is that hospitality businesses rely heavily on young employees. According to most recent restaurant industry data, more than two million teenagers get their first job in the restaurant industry and a number of students begin their careers in the catering industry, resulting in a high staff proportion of jobs being staffed by students (“National Restaurant Association,” 2018). Additionally, student employees’ work schedules are often affected by their academic and holiday commitments, which frequently create scheduling challenges and contributes to a perception of less than total commitment to the employer and the job. Such perception, in turn, fosters an environment of high employee turnover.