This he said was critical if the tourism sector is to successfully compete against other industries into the future.
Speaking at last week's 60th PATA Anniversary & Conference, Mr Chan said it was imperative for the sector to take a bigger picture view of the situation before it was too late.
"It's no longer a question of losing talent to competitors within our sector," Mr Chan said.
"It's now become a much broader issue and we are continuing to lose talent hand over fist to other industries offering better remuneration and career path opportunity.
"If we don't do something about engaging the 'next generation' and outline to them the benefits accruable within our sector, it seems highly improbable that the viscously cyclical war for talent that has dogged us for so many years will ever be completely resolved."
Few companies with the tourism sector, he said, had found the right strategy for understanding and effectively managing the Gen Y demographic.
"There's a misalignment of expectations between Gen Y and many organisations within our sector.
"Gen Y is the most educated generation in history, most coming out with degrees or even master degrees and these are the people who are shying away from the entry level jobs and assignments that are still expected of them by so many organisations.
"That is the grim reality of what our sector faces. While there are those who have achieved success, they are too few in number.
"For many other companies, it may already be too late – so we now need to start looking at ways in which we can snare the next generation – the so-called Gen Z.
"This new emerging demographic offers our industry even more potential than its predecessors," he said.
"We now need to focus on how we are going to engage these people.
"Whether we like it or not, the traditional engagement methods used time and time again have got to go out the door and we have to start moving in 'their' times if we are to succeed."
Mr Chan cited ever-evolving social media as having a critical role in helping to engage the next generation.
"Many of our traditional methods are now redundant and sitting around conference rooms debating the issues is not going to provide answers, "he said.
"If we are to move forward now is very much the time to take the required affirmative action."