Strategic Hotel Managemtn PUBLIshed

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Evaluate what determines the international success of hotel companies and recommend,

with justification, which hotel company is (or is likely to be) most successful in managing

internationally.

Analytical Review

Piccolo et al (2002) says that one of the most important things that affect the performance and

social status of a hotel is the customer relationship that it is has maintains. It has been argued

in the paper that since the services that the hotel services provide directly affect the emotions

and the feelings of the customers and because the dealing with the product itself and the

customers is existent, the management of customer relationship needs to be focused upon the

most while strategically planning to manage a hotel. The paper studies the small amount of

literature that is present on the topic and argues regarding the American lodging industry. It

finds out through research that even though customer relationship management is extremely

important, the entire lodging industry is divided in through ownership parts and therefore the

management of relationship is not as efficient as it should be.

Baum (1989) studies the competencies required for hotel management and considers the fact

that the employers of the hotel sector expect a lot from the graduate employees that come

from the job. The research is based on an original study done is the United States of America

which has actually been replicated in methodology in the United Kingdom. The results found for

the two papers were similar to each other. The basic method for this paper was to find the

expectations of the managers on with the graduate workers. The idea of the research is to

study key competencies and the priority that they are given in the ranking by the employer and

how this ranking has implications in the overall authority and the performance of the

organization. The conclusion drawn from the study in the United Kingdom was actually

compared to the results that were achieved in the United States and the performance of the

two hotel industries were correlated with each other on the basis of that data.

Pine and Go (1995) shed light on the globalization strategies in the hotel industry. It should be

noted that 1995 were years of boom after the 1980s recession and now that the markets and

businesses were growing and blossoming people had funds and time to work towards achieving



greater goals and obviously one of the greatest goals of the organization is to achieve a global

brand name. As will be studied in the paper below, in the hotel management industry,

globalization then, is particularly famous and important. The publication under question looks

at the development of international strategies by the worlds biggest hotels. The study was

based on Marriott, Forte, Ramada and Shangri Li. The idea is to study how the ownership and

management has dealt with the competitive environment and has managed the areas such as

human resource, organization change, new and different technology, and local cooperation

during the process of internationalization.

Li (2008) finally studies the trans culture management of international hotel and this study is

done by keeping China as a case study into account. It has been argued in the paper that given

the process of integration of this world, which has resulted in the formation of a global

economy, the culture conflicts that have started sprouting up needs more attention. In regards

to China, Li (2008) studies that these cultural conflicts have been a major trouble and they have

kept many international groups from becoming comfortable in regards to hospitality in China.

In the hospitability industry then, hotels form an major part and this means that if the

international groups are not satisfied, then there is a probability of the management of hotel in

China, lacking somewhere. These cultural beliefs, Li (2008) argues seriously affect the overall

hotel management in the area as well and therefore, internationalization in the hotel process

needs to be studied from the perspective of cultural conflicts as well .

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Lockyer (2007) claims that hotels are a part of what is referred to as the service industry and

that the service industries are frequently described as intangible as their output is viewed as an

activity rather than a tangible object and therefore unlike a physical product, the service

components in a hotel cannot be tasted, hear or smelled before they are purchased. This

results in the customer not properly knowing the tools for the evaluation or a sample for the

evaluation of what the hotel industry has to offer before he or she actually makes the purchase.

Given this, the managers of the hotel industry are left in a very difficult situation because they

cannot give a sample of their services to people for free checking like a marketer of a tea or a

coffee brand might do. For this reason, hotel managers have to really put in all the effort and

creativity to make the stay of their customers an experience worth a lifetime of memory so that

apart from ensuring that the current customer would return to the same hotel but also making

sure that new customer will be attracted.

With the advent of technology then, the hotel business has become even more competitive and

the position of the customers has been made even worse off considering the fact that the

customers can never be sure as to what the hotel is showing in the pictures online is actually

present in reality or not. Moreover, the as far as the hotel themselves are concerned, the

customers now have the access of finding out more and improved hotels. For finding a good



hotel now, the customers of the services industry do not have to suffer the wrath of travel costs

and effort hardships. All they have to do is to sit online and search for a good hotel with the

required levels of services, in the budget and in the locality. Thus, to make sure that the fixed

costs of a hotel are not crossing their revenue, a hotel organization needs to put in a lot of

effort, creativity and management skills.

Another twist to the story of the hotel business management is the fact that the world today is

turning into nothing less than a global village. Everything is interlinked and every expansion

means that a step towards going global is being taken. Thus, whereas for a stagnant and

satisfied hotel business manager, the current levels of revenues and customers might be

enough, for a hotel business which wants to grow, expanding internationally is an indispensible

criterion.

However, going global and moving towards international hotel business means that the task of

hotel managers becomes even more complex because they have to ensure that the same level

of qualities and that too an amazing and high standard one are being provided to where the

franchise of the hotel is situated in the world. With that, the hotels have to let the customers

have a flavor of the culture and the norms of their local areas so that the tourists do not miss

out on the part of the local experience of each franchise. This synchronization of standards,

while keeping personal identity is a difficult tasks and it becomes more difficult as the business

keeps expanding. This however is only the scary part of international hotel management. On

the brighter side, nothing can match the revenue generation for a hotel chain like going

international can do. The flow of inflows and the diversification of various types of risks can be

attended to in an awesome manner.

OFallon and Rutherford (2011) say that the developer of the hotel business is the

entrepreneur, the risk taker who originates the idea for the hotel and then depending on the

business structure selected, the developer of the hotel business, the developer often puts his or

her personal wealth at risk when engaging in a hotel project. The developer, along with a small

staff of people networks with commercial real estate agents on the lookout for a suitable hotel

site.



For the initiation of the hotel project then, the things important are as follows:

i) The site for the construction of the hotel. This includes the proper zoning, traffic

patterns and counts, accessibility from streets, freeways, airports, train stations etc,

the proximity to where potential guest lives, travel or work, the barriers that

discourage competition, the utilization of adjacent property and impact fees charged

by the respective city have to be taken into account.

ii) The next is the feasibility study which is commissioned to obtain an analysis of the

site by an objective third party so that a detailed data is gathered to see if in the

opinion of the expert company, the hotel construction and operation makes

economic sense or not. The two broad areas considered in the feasibility report are

number one the economy of areas and number two the hotel market. The economy

of areas portion of the report focuses on the major employers and government

agencies of the area, the business trends for each employer, the demand for a hotel,

the leisure travel inflow into the city, the nearby tourist attractions and the annual

conventions, functions and events etc. one the other hand, the hotel market survey

includes the nature of the competition, both planned and existing, the historical

occupancy of the hotels in the area.

iii) Third step of the hotel management and initiation project concerns the financing of

the project. This step includes various types of costs that the developer of the

project has to incur. The first and the foremost is the cost of the land, and then the

cost of design and construction, next, is the furniture and equipment costs and later

the labor and the marketing costs. Moreover, the developer or the strategic

manager of the hotel needs to have the hedging cash at hand to cater to the initial

risk of little business of the hotel.

iv) The fourth step concerns with the method of raising the financing. Obviously, the

developer or the manager of the project cannot finance the entire cost of capital

and operations by his or her own money and therefore investments are needed. For

this purpose, the manager can turn to several people: individual investors, the

private asset managers, opportunity fund managers and venture capital managers.



Every type of financing of course has it pros and cons but the idea is to manage the

businesses as well as possible and to take the steps as strategically as possible in

order to assure that the steps that are to follow will be taken efficiently and for the

betterment of the entire business as well.

Singh (2000) says that for the strategic management of a hotel business, two things that are

seriously required are departmentalization and clarifying the authority. Singh (2000) says that

as organization grow in size, the manager of the organization are faced with the need to group

certain jobs together in order to ensure efficient coordination and control of activities. For this

purpose, even most restaurants have chosen to departmentalize with food preparation as a

separate functional departments. Departmentalization is a logical and practical solution to the

problems of lack of efficiency in a service business because it idea leads to specialization of

labor and specialization in turn leads to efficiency in performance of both the employees and

also that of the overall business.

On the other hand, as far as authority is concerned, every manager is faced with the question of

how much decision making authority to grant to individual workers, managers or departments.

Singh (2000) says that organization is never totally centralized or decentralized with regard to

decision making rather they tend toward one direction or the other without ever perfectly

achieving any one. The factor here is that authority identification is a key issue in assuring that

the employees will perform up to the mark and that even without the presence of the manager

on their head all the time, they would relate to his or her authority and will guard the standards

and the reputation of the hotel.

Spans of control relate to the number of subordinates reporting to a supervisor and it has been

previously argues that an ideal span of control of exactly seven subordinates does the

management trick for the hotel business. However, the view was too simplistic to be held true

in the complex world and therefore, Singh (2000) argues that the ideal span of control actually

depends on:

i) The task similarity: the more similar the tasks of the subordinates, the wider the

span of control can be.



ii) Training and professionalism: the more trained and skilled a subordinate, the less

supervision required and thus the greater the span of control will be.

iii) Task certainty: the more the routing and predictable the work task, he greater the

span of control can be.

iv) Frequency of interaction: the relationships require frequent interaction; the span of

control must by narrow.

v) Task integration: the more a supervisor must integrate and coordinate the taks of

subordinates, the narrower the span of control must be.

vi) Physical dispersion: the more widely dispersed the subordinates are, the fewer a

manager can properly supervise and therefore, the lesser the span of control.

Sheela (2005) argues that managerial economics is very closely connected with the hotel

industry and that even though the hotel industry is considered a service sector, providing

service in the form of food and accommodation to its guests is considered as an industry

whose main aim is also to make profits, though this may change at times. The incorporation

of economics then, helps the sector in various ways right from the time of initiation which

leads to its establishment, and growth.

Sheela (2005) argues this on the basis that the hotel industry is also affected by the four

core concepts of economics namely, competition, productivity, cost of production and

profits and therefore, a manager seeking to lead his or her hotel towards strategic and

sustainable success needs to focus on all these four concepts and look at the factors not

only in terms of the management light but also in terms of the economic light.

Yu (1999) says that hotel management requires specialized expertise and skills. Many

inexperienced hotel owners such as the real estate developers and financial institution

often find it very difficult to operate a profitable hotel. Even today, not all the firms in the

world are managing all their hotels. In 1998, according to the special report on Hotels,

Marriott International only 675 out of 1477 hotels, were managed. As the competition and

the markets of the world evolved, more and more markets, more managers realized the

need to manage the business more and more strategically and thus, as of 2011, the number



of hotels being managed has increased by several folds as compared to the number of

hotels managed back in 1998.

Lochyer (2007) says that the services offered in the hotel industry is subject to high levels of

variability and that the quality of the services provided has a lot to do with who, where and

when the services are being provided. The fluctuating demand in hotels makes it difficult on

many occasions such as peaks periods to control the quality of the service that would be

expected at other times. Staff training and exercises then, tend to reduce this high level of

variability as far as possible however, sometimes, variability in the hotel business is caused

by factors that are not controllable by within the system forces and for them, and the

managers need to create a hedge for the risks that the external factors might offer.

Through the study that has been done above, it can be deduced that there are several

factors that assure the success of the international hotel companies. For starters, the

training of the employees internationally is a very important factor in assuring that the level

of quality of services is not compromised. Secondly, it has not be kept in mind by the

manager that the standard of quality should be consistent throughout the branches of the

hotel because this is an essential element especially in the business clients and also in

maintain existing customers internationally. Next, the accountability of the finances and the

feasibility of any new project need to be checked over and over again to assure that the

business has been hedged against the foreign forces. Finally, the international hotel needs

to cater to the local business threats as well as the international wells and this should be

done by gaining as much competitive advantage as possible through better services and

competitive costs.

The international hotel company that the paper recommends is Hyatt hotels. The reason is

that this organization is still in the phase of growth and having come into the market

recently only helps the hotel in understanding the nature of the competition better. Since

they fell right in the high level competition, they got the experience from that of the other

organization as to how to avoid mistakes and how to best utilize the forces and tools of

efficient marketing. According to Min, Min and Chung (2002), Hyatt hotels have achieved



dynamic sustainability through their management practices and even though they are not

leading the services market internationally, the pace at which the hotels are growing is

marvellous. Teare (1993) studies that back then, Hyatt hotels were designing a

contemporary hotel service sector and predicted that over the years, Hyatt hotels would

grow to be a big name in the international hospitality industry. Maxwell (2005) noted the

President of the Hyatt Hotels saying the ninety nine percent of his employees do a good job

and that how they perform is the reflection of the one for whom they are working in order

to create the maximum level of relationship with the client. Because of this behaviour of the

employees which obviously does not come without training, Hyatt Hotel is able to keep the

existing clients to come back for the same level of satisfaction and love that they found at

Hyatt. Madnick and Siegel (2001) note that Hyatt hotel has been efficient at taking the

benefits out of the web aggregation and that technology and the level of progress in the

communication that is now taking place forms a very important part of the macro

environment of the Hyatt hotel. Haywood (1993) pointed out that one of the things that

have attracted the customers over the years towards Hyatt hotels is the lavish architecture

of the hotels. The idea then is that Hyatt hotels have been able to keep an overall identity

by keeping a standard design however they have not compromised on the importance of

locality and the fact that people want to be welcomed and want to experience differentcultures in different places.

References

Baum, T. (1993). Competencies for Hotel management. Available at

http://www.emeraldinsight.com/journals.htm?articleid=866986&show=abstract

Li, C. (2008). A Study on the Trans-Culture Management of International Hotel in China.

Available at http://journal.ccsenet.org/index.php/ijbm/article/view/1414

Lockyer, T. (2007). The international hotel industry. USA: Haworth Hospitality and Tourism

Press.



Madnick, S. and Siegel, M. (2001). Seizing the Opportunity. Available at

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=303827

Maxwell, J. (1993). Developing the leader within you. Canada: Nashville.

Hokey Min, Hyesung Min, Kyooyup Chung, (2002) "Dynamic benchmarking of hotel service

quality", Journal of Services Marketing, Vol. 16 Iss: 4, pp.302 321

Piccolo et al. (2005). Customer relationship management. Cornell: School of Hotel

Administration.

Pine, R and Go, F. (1995). Globalization strategy in the hotel industry. Available at

http://www.cabdirect.org/abstracts/19961803239.html;jsessionid=C6AE197A68DF566CAD255

9DA8B243FB2

Teare, R. (1993). Designing a contemporary Hotel Service Culture. Available at

http://www.emeraldinsight.com/journals.htm?articleid=851533&show=abstract

Singh, R. (2000). Hotel and hospitality management. 1st

Ed. India: Kalpaz Publications.

Sheela, M. (2002). Economics of hotel management. 1st

Ed. India: New Age International.

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