Xianlong Jiang€¦ · China). These four hotels are all located in the city centre and we can...

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Transcript of Xianlong Jiang€¦ · China). These four hotels are all located in the city centre and we can...

Page 1: Xianlong Jiang€¦ · China). These four hotels are all located in the city centre and we can compare these hotels in many different ways. Firstly, we can compare them locally to
Page 2: Xianlong Jiang€¦ · China). These four hotels are all located in the city centre and we can compare these hotels in many different ways. Firstly, we can compare them locally to

Xianlong Jiang

Examining if service standards is the factor that provides hotels with the greatest competitive advantage

1. Introduction Globalisation has led to an increasing number of business travellers in modern society. The demand

of business hotels consequently has rapidly risen. However, there is no widely accepted definition of

“business hotels” at present (Lee and Back, 2010). “Business hotels” are usually named mid-range

hotels because they provide moderate standards of facilities and services for business customers,

such as food, room service and Wi-Fi (Moskowitz and Krieger, 2003; Chu and Choi, 2000). The

property may also house a speciality restaurant, coffee shop and lounge catering to visitors as well as

hotel guests (Chu and Choi, 2000). In an international context, business hotels are normally located

in the city centre or central business district (CBD). Interestingly, due to its value for money, more

leisure travellers are choosing to stay in business hotels nowadays. Given the popularity of business

hotels among travellers, I am examining if hotel service standards is the factor that provides a

business hotel with the greatest competitive advantage. This hypothesis is based on the fact that

business hotels are part of the service industry. Therefore, the main purpose of the report is to

evaluate the significance of hotel service standards in relation to customer satisfaction levels by

analysing cases in Hangzhou, China and London, England. The conclusions drawn in this report will

enable key decisions makers of business hotels to modify their strategies to enhance their

competitiveness in the industry.

2. Literature review Due to the increasing demand of business hotels worldwide, many investigations have been

conducted to determine factors affecting the sustainable development of business hotels (Gundersen,

1996; Akbaba, 2006; Berezan, 2013). My report will assess if the factors listed in those previous

investigations actually affect the competitiveness of a business hotel and how important each factor

is. I will focus on hotel services in particular.

The literature on business hotels has highlighted several components of services that may affect the

hotel’s competitiveness. For example, previous surveys demonstrate that business hotels should

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focus on housekeeping and reception services, in order to increase the customers’ satisfaction levels

(Gundersen, 1996; Akbaba,2006; Berezan, 2013). In other words, the comfort level of rooms and

services provided by the reception may be the two most important factors in improving the

customer’s satisfaction of business hotels or make them more competitive. These days, the needs of

the customers are becoming more and more personalized. When they are consuming a good or

service, they are not only consuming that good or service itself, but they also consume something

else in addition.

Meanwhile, there are studies on how the use of colour in hotels can affect the relaxation of hotel

guests (Elsosan, Pandelaki, and Murtini, 2013). As the colour scheme chosen by the hotel is a subset

of hotel decoration, in my research, I will find out how decoration affects the customers and how

important decoration is in business hotels.

In addition, attempts have been carried out to investigate the relationship between branding and hotel

performance (Chu, 2000; Dos Santos, Méxas and Meiriño, 2017; Gundersen, 1996). The results

suggest that hotels with corporate brands will gain more profits than others (Dos Santos, Méxas and

Meiriño, 2017). Moreover, along with RBT (Grounded in resource-based theory), the correlation

between brand and profits will become stronger when the value of corporate brand is greater to

customers (e.g. in the lower-quality segment), and when the corporate brand is harder to imitate (e.g.

more well-known brand) (Silva, Gerwe and Becerra, 2017), and also when it is utilized by specific

organizational governance mechanisms. To evaluate, branding will also be part of my research. I will

compare the global-chain business hotel (Holiday Inn) with the local-chain business hotel (Z hotels

and Ji hotels) to see whether branding will influence the customers’ choices or not, and how crucial

is branding.

Porters Value chain

In his influential book on ‘Competitive Advantage’ released in 1985, Michael Porters proposed a

general-purpose value chain that companies can use to examine all of their activities, and see how

they're connected. The way in which value chain activities are performed determines costs and

affects profits. This tool can be applied to help business hotels understand the sources of value and

where hotel services fit into the picture.

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3. Research methods

In the report, I will combine secondary data reviews and interviews to answer my research question:

‘is the hotel service the most significant factor affecting a business hotel’s competitiveness?’

3.1 Research strategies and procedures

To begin, I am going to choose factors affecting customer satisfaction and hotel occupancy rate as

the method to measure competitiveness (Table 1). For data reviews, I am going to make use of

reviews from 2 different websites which are the Ctrip and booking.com for the past six months from

1 January 2017 to 30 June 2017. These two booking websites are used by many travellers in China

and UK respectively, and six months will be a reasonable and reliable time-frame to perform an

evaluation. I have collected data on five major sections which are location, services, facilities, price

and internal environment. Under each section, I will break them down into further sections so that

the data is more specific. For example, under the services section, I have listed three further sections

which are staff, food and extra services. By doing this I can obtain a more detailed and

comprehensive review of the data. These data will help me to make sense of the criteria customers

value most when it comes to satisfaction levels.

3.2 Multiple case studies

I will conduct four case studies, two in Hangzhou and two in London. In London, I will choose Z

Table 1 The list of factors of data reviews

Services Includes: Staff/ food/ extra services

Location Includes: Leisure/ Business

Facilities & Decoration Includes: Room/ Bed/ Internal facilities/ electric appliance. And also Internal facilities.

Price Includes: value for money

Internal environments Including: Cleaning/quietness

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Hotel Soho (a small business hotel chain only operated in Britain) and Holiday Inn Mayfair (a giant

international business hotel chain). In Hangzhou, my choices will be Holiday Inn Huanglong (giant

international business hotel chain) and Atour Huanglong (small business hotel chain only operated in

China). These four hotels are all located in the city centre and we can compare these hotels in many

different ways. Firstly, we can compare them locally to see the differences between small-chain

business hotels and big international branded business hotel chain. Secondly, we can compare the

differences between business hotels in China and the UK.

For interviews, I will be interviewing the staff representative or the hotel general director of each

hotel using the email contacts I have obtained. (Firstly, I checked the hotels’ websites to obtain the

customer services email, and communicated with them through email to arrange this meeting). The

staff representatives or general directors of the hotels have a more comprehensive view of the hotel,

unlike department managers who have a narrow view of the hotel, for instance, only the department

they are in charge of.

I will develop the interview questions based on previous customers’ reviews and literature reviews,

and separate the interview questions into three main parts which are 1) the competitive advantages of

a hotel, 2) the hotel policy, and 3) the hotel’s future development opportunities. By asking these

questions, I can prove whether the works of literature work in reality; secondly, I can understand

what these professionals think about the ways to make the hotel more competitive, and compare

these findings with the data review to see whether it works or not. Four main themes are services,

location, colour and decoration, and brand in the report.

3.3 Ethical issues

In order to protect the interviewees’ personal information, all the interviewees’ details will be

anonymous, and all data collected from these interviewees will be stored in an encrypted memory

stick which means only I can gain access to it. Besides, all interviewees have agreed to partcipate in

the research voluntarily.

3.4 Limitations

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However, there are some limitations in my research. First of all, due to privacy issues, it will be very

hard to get the primary data of customers’ satisfaction levels (questionnaire customers). I will only

have online reviews to rely on. In order to get around the problem, I will be asking those corporate

representatives what they think about the customer reviews, so I can get a better understanding of the

customer reviews. The other limitation in my research is that the cases in the UK and China have

slight differences. To explain further, Holiday Inn Hangzhou is located in the new CBD, and Atour

hotel is located in the old CBD; but the two cases in London are both located in the old city center,

not the new CBD. This is because there is no Holiday Inn located in London’s CBD.

4. Business hotels in China

4.1 Introduction

This chapter will include semi-structured interviews of corporate representatives of business hotels

and data reviews drawn from the Ctrip from 1/1/2017-30/6/2017 for Holiday Inn Qianjiang and

Atour Huanglong. From these data, we can get an idea of which elements will make the business

hotels more competitive.

4.2 Holiday Inn Qianjiang

Holiday Inn Qianjiang was established in 2010 and is located in Hangzhou CBD. There are 210

rooms (74 smoke-free rooms) and 96 suites in the Hotel. At the same time, all rooms are equipped

with a 32-inch flat-screen HDTV, free broadband access and comfortable bath facilities and other

personalized services. Besides, the hotel has six conference rooms, which can accommodate up to 70

people. In addition, the hotel has an indoor fitness centre, indoor constant temperature swimming

room, sauna room and cafeteria (The website of InterContinental Hotels Group).

4.2.1 Reviews

In the six-month period, 101 people in total commented on the hotel through the Ctrip app. In

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general, most people complained about the furniture and internal environment which were too old

and needed redecoration. Besides, the other main problem is that the hotel only provides western

food. The food options were insufficient in the hotel. On the other hand, the main advantages of the

hotels are good services, and brand-name. Foreign business travellers preferred the hotel and

provided better comments. According to the figures, in the theme of services, the reviews of the staff

are very interesting. 25% of customers commented the staff was “excellent”, but also 7% of people

said the staff was “extremely bad”, and there are no “bad” comments about the staff. Besides, it is

very interesting that the comments of “excellent” were mostly about business location (29%), as well

as the leisure location (21%) which received the third highest number of “excellent” comments.

However, several people complained about the leisure and business locations which were 7% and

5% respectively. Among all the data, there are three factors which did not receive any “bad”

comments (either “bad” or “extremely bad”). They are extra services, bed and quietness. In addition,

the one thing in common is that within services itself, there were not many “excellent” comments,

but there were many “good” comments. Across all data, food received the most “bad” comments and

the fourth highest “extremely bad” comments, so overall people complained a lot about food in the

Holiday Inn Qianjiang. Moreover, internal facilities received the highest “extremely bad” comments

(14%), showing that internal facilities received numerous complaints from people. Surprisingly, 19%

of people felt internal facilities were “excellent”.

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4.2.2 Interview

According to the interview of corporate representatives of Holiday Inn Qianjiang, 70% of the hotel’s

customers were business travellers (under company’s contract), 15% were conference team members

and 15% were tourists. Therefore, they are busier during weekdays rather than the weekend.

He suggests that the most important factor for business hotels is the location as the location defines

the customer group, and the second most important factor should be the price and services, with

decoration being the third most important factor. He also highlights that they obtain more contracts

depending on their location. Meanwhile, if hotels are in the same region, better services and price

will make them more competitive. As for decoration, the corporate representative does agree that

colours will influence the customers’ mood or attract more customers, but colourful decorations are

not practical. Although these colours are very beautiful, they are also easily dirtied or damaged, and

will cost a lot to clean. Therefore, when decorating the hotel, the management is most concerned

about whether these colours or furniture are easy to clean or not, and also if the decoration is

sustainable. For instance, some hotels appear as though they are 20 years old just after ten years, but

some hotels’ decoration still remain very new after ten years. Whether the decoration is sustainable

or not is important, because in reality, hotels need to make profits.

About branding, the corporate representative agreed that brand-name will make business hotels more

competitive in the market as this will attract more non-local customers and company’s contracts. For

example, Holiday Inn receives more foreign customers as they are a global brand. When these � 7

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foreigners come to China they do not know about local Chinese business hotels. If they only know

about the Holiday Inn, they will choose Holiday Inn during the period of G20 summit. Besides, as

Holiday Inn is a global chain hotel and belongs to IHG group, they can get more contracts from

major companies. Therefore, Holiday Inn can attract more customers than local or national chain

hotels.

4.3 Atour Huanglong

Hangzhou Huanglong Atour hotel was established in 2014, located in the central zone of Huanglong

CBD business circle. The hotel has 112 rooms with complete facilities. Besides, the hotel has an

exclusive courtyard, library and Chinese restaurant and western restaurant. At the same time, the

hotel covers a hundred megabytes of high-speed wireless, and the rooms are equipped with five-star

standard bedclothes and bath products.

4.3.1 Reviews

In the half year period, 110 people in total commented about the hotel through the Ctrip app. In

general, customers highlight the theme or the style of the hotel which made them feel like home.

Although it is a small hotel, the hotel is well equipped, clean, quiet and services are very good.

Besides, the library inside the hotel has boosted its rating. According to the figures, there are lots of

“excellent” reviews across all parts of the hotel especially staff, business location, room, internal

facilities and cleanness which received 26%, 25%, 21%, 27%, 18% “excellent” reviews respectively.

Besides, the percentage of “good” are all above 20% across all sections of the hotel, which is a

reasonably high figure. In addition, the negative reviews of “bad” and “extremely bad” were at most

3% for each section and through all sections of the hotel. Moreover, for food, business location and

furniture, there were no any negative comments (either “bad” or “extremely bad”). The element that

customers complained the most about was the room, with 3% of customers commenting “extremely

bad” and the same number commenting “bad”.

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4.3.2 Interview

According to the interview with corporate representatives of the Atour Hotel Huanglong, 50% of the

hotel’s customers were business travellers (under company’s contract), 20% were business customers

who book through third-party agents or online, and 30% were tourists. Therefore, they were busier

during weekdays rather than the weekend.

He suggested that the most important factor for business hotels should be the services as the services

will attract more return customers and it is the most important factors that can improve customer

satisfaction, and the second most important factor should be the location; then lastly, decoration. The

corporate representative said that industries like hotels and restaurants are basically part of the

service industry, and services should be the most important elements to attract more customers.

However, he also mentioned that after the CBD was relocated to Hangzhou Qianjiang new city, the

Atour received lower occupancy rate than it was used be. Concerning decoration, although it is very

important, it is not as crucial as other factors. For example, old hotels in the Europe still receive lots � 9

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of customers. In addition, he agreed colours will influence customers’ mood or attract more

customers, but he didn’t comment a lot about decorating. He mainly suggested that decoration

should be relevant to the theme of the hotel. For instance, the style of Atour hotels is humanity, so all

Atour hotels were decorated with a light brown colour. The corporate representative felt that this

colour will make people feel peaceful.

About branding, the corporate representative agreed that brands will make business hotels more

competitive in the market as this will attract more customers who are not familiar with the local area

and company’s contracts. For example, during the period of the G20 summit, Atour received few

contracts only with travellers who were familiar with the place. Recently, as they gradually become a

household name in China and also a national hotel chain, they have received more non-local

customers. As more and more people know them, more big companies will sign contracts with them,

as these big companies know it is a good brand and can match their standards. As a result, they do

get more customers than they are used to.

4.4 Comparisons and Summary

By comparing the Holiday Inn Qianjiang and Atour Huanlong, I obtained variable information.

Firstly, according to online reviews, it is very easy to see that Atour received much better reviews

than Holiday Inn. However, one thing should be pointed out: according to the interviews, there was

an increase in the number of guests at Holiday Inn Qianjiang during the period of the G20 summit. In

the report, it is difficult to define whether the “hotel service” is the most important factor in enabling

business hotels to be more competitive in Hangzhou China. However, I think that “location” might

be the most important factor due to two main reasons. One, is that the number of customers who

were living in Holiday Inn is higher than Atour Huanglong. Although critics argue might argue that it

might be related to the hotel brand, location remains a key factor as the hotel manager said they used

location to obtain more contracts. Secondly, although Atour received better reviews on service than

Holiday Inn, after the CBD in Hangzhou was relocated to Hangzhou Qianjiang new city, the Atour

experienced a drop in occupancy rates.

5. Business hotels in England

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5.1 Introduction

This chapter will include semi-structured interviews of corporate representatives of business hotels

and data reviews drawn from Booking.com from 1/1/2017-30/6/2017 for Holiday Inn Mayfair and Z

Hotel Soho. From these data, we can get the idea of which elements will make business hotels more

competitive in England.

5.2 Holiday Inn Mayfair

5.2.1 Reviews

Between 01/01/2017 and 30/06/2017, there were 119 people in total who commented on Holiday Inn

Mayfair. The most significant result is that the location section for both “business” and “leisure”

received the most “excellent” comments. Besides, it is also worth mentioning that within the

“services” section, the staff section received the second highest “excellent” comments among all

sections. In addition to this, all these three sub-sections did not have even one “extremely bad” or

“bad” comment. This shows the reviews for the sub-sections under “services” were very positive.

Across all sections, the ‘facilities’ section received the worst reviews in every module, especially

“electric appliance”, “internal faculties” and “furniture”. These sub-sections received the lowest

percentage of “excellent” comments but the highest percentage of “extremely bad” comments. It can

be observed that customers complained about these categories the most. At the same time, there were

some controversial modules which are “room”, “food” and “bed”. Especially for the bed, the amount

of “excellent” and “extremely bad” comments are about the same. It is also very interesting that the

“cleanness” module doesn’t have any negative comments, but its “excellent” and “good” comments

are relatively few.

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5.2.2 Interview

According to the interview with corporate representatives of the Holiday Inn Mayfair, the hotel’s

customers are 48% business travellers (under company’s contract), 42% tourists, and other types of

customers take up to 10%. Therefore, they will be busy all week.

He suggested that the most important factor for business hotels is the location as the location defines

the customer group. For instance, as their location is good for both business and leisure, they get all

types of customers and have high occupancy rates throughout the week, unlike other business hotels

which are only busy during weekdays. The second most important factor is the price and service. If

hotels are located in the same region, better services and price will make them more competitive; and

decoration, although important, is not as crucial as other factors. For instance, Holiday Inn Mayfair

has old decoration which customers complain often about, but they still have very high occupancy

rates and reasonably high ratings.

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About branding, the corporate representative agreed that brands will make business hotels more

competitive in the market as this will attract more customers who are not familiar with the area and

companies’ contracts. However, for them, it does not help a lot to some extent. To explain further,

there are many famous business hotel chains in the market, such as Novotel and Hilton, so the

competition will be very strong. Besides, there are also some traditional British business hotels in the

area, so many British people will choose to stay in those hotels. Therefore, there is much competition

in the market, both locally and internationally.

For decoration of colours, the corporate representative does agree that colours will influence the

customers’ moods or attract more customers, but he thinks these special decorations are not practical

for mid-range hotels, which may not be able to afford these decorations. Besides, given the

peculiarities of London, firstly, it is very hard to renovate the decoration as it will cost a lot; and

secondly, it may not fit the style of the building or the area.

5.3 Z Hotel Soho

5.3.1 Reviews

In the half year period, there were 132 comments in total about the Z Hotel Soho and generally,

reviews were positive. To begin with, the section which customers praise the most is the location for

either leisure or business, and from the data, leisure location has an even better performance than the

business one. This section on “location” did not receive any negative reviews. The “services” section

had comparatively highly positive comments in general, with “services”, “food” and “extra services”

modules receiving a reasonably high amount of “excellent” comments which just fell behind the

“location” section, and only a few negative comments. It is worth mentioning that customers

complain the most about the room. 39% of customers gave the room an “extremely bad” comment

which is the highest across all sections. Besides, the percentage of “extremely bad” comments for the

room was much higher than that for “electric appliance”, the sub-section with the second highest

(10%) of “extremely bad” comments. It is also interesting that the comments about electric appliance

were very controversial. The number of negative comments was roughly equal to the number of

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positive comments. The “cleanness” sub-section is also very interesting in that although it did not

receive many “excellent” comments, it has no negative comments. Overall, except the “room” and

“electric appliance”, Z Hotel Soho received reasonably positive reviews.

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5.3.2 Interview

According to the interview of corporate representatives of the Z Hotel Soho, the hotel’s customers

are 18% business travellers (with company’s contract), 26% are business customers who book

through the third-party agents or online and 56% are tourists. Therefore, they are busy all week.

The corporate representative suggested that the most important factor for business hotels should be

“the location” as the location defines the customer group. Since their location is convenient for

business and leisure travellers, they get all types of customers and have high occupancy rates all

week, unlike other business hotels which are only busy during weekdays. The second most important

factor would be the “services and price” because if the hotels are in the same region, better services � 14

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and price will make them more competitive. The services and special services have to boost their

customer’s satisfaction rates. The corporate representative believed that although decoration was

important, it is not as crucial as the other factors. As long as the decoration is of a comparable

standard to other business hotels in that region, it will be fine.

About branding, the corporate representative agreed that brands will make business hotels more

competitive in the market, as this will attract more customers who are not familiar with the area and

attract more companies’ contracts. For example, because Z Hotel is not a global hotel chain like

Holiday Inn, they do not have many contracted business customers as many big companies will not

sign a contract with them. Besides, many foreign customers may not choose Z Hotel Soho because

the hotel is unknown to them. However, while Z Hotel Soho is not a household brand, they still

receive high occupancy rates. Therefore, the corporate representative suggested that if the location is

good enough and with positive online reviews, many travellers will still choose the hotel, given that

the location is a big consideration when choosing which hotel to stay in.

For decoration of colours, the corporate representative agreed that colours will influence the

customers’ mood or attract more customers, but he thinks these special decorations are not practical

enough. He believes that the colour of the decoration is not the most important factor. Ensuring the

furniture and decoration are functional, and making sure the arrangement of rooms is functional are

more crucial than the colour scheme used. In other words, how to use the space more efficiently will

be very important, because in central London space is very limited. A smart design or arrangement

will make the hotel more profitable and let customers feel more comfortable.

5.4 Comparisons and Summary

By comparing Holiday Inn Mayfair and Z Hotel Soho, location is the most important factor for

business hotels. Both hotels have a great location for either leisure or business customers, so they

receive very high occupancy rates all week. In addition to this, from the data, they all have

reasonably good services but not the perfect or the best ones. However, they still have very high

occupancy rates and customer satisfaction levels, which proves that services may not be the key

factor for business hotels, but location.

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6. Conclusions

By comparing the findings on business hotels in Hangzhou and London, location is the most

important factor for boosting a business hotel’s competitiveness in both Hangzhou, China and

London, UK. This could be because a business hotel in a good location will provide much

convenience to business travellers especially if the hotel is near where the business meetings are

held. Although service is an important factor, it is not as important as location when it comes to

increasing competitiveness and maintaining high occupancy rates. For instance, Atour Hotel in

Hangzhou received better reviews for service standards as compared to Holiday Inn Hangzhou.

However, when the CBD was relocated to Qianjiang new city, the occupancy rates of Atour Hotel

fell. Hence, location is a significant element when business hotels are seeking to secure potential

contracts with companies.

According to the findings obtained from interviews and secondary data reviews, hotel service

appears to be the second most important factor when boosting the hotel’s competitiveness, after

location.

While decoration and the colour scheme used by the hotel can enhance customer satisfaction levels

and their moods, the decoration should be practical and cost efficient.

Furthermore, brand is a key factor for foreigners when choosing a hotel to stay in. The Holiday Inn

belongs to IHG group which is a global hotel chain. Due to a lack of awareness of domestic hotel

chains, foreign travellers are less likely to choose domestic hotel chains such as Atour or Z Hotel

over brand name hotels such as Holiday Inn. Political environments may be crucial in facilitating the

development of business hotels and playing a mediated part in the relationship between hotel brand

and scaling out.

In conclusion, the report has found that the role of hotel services is less important than that of the

location towards the success of a business hotel in the modern society, although it is also vital for the

business hotel managers to improve their services in order to appeal to travellers. Therefore, in the

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future, entrepreneurs in the business hotel industry should pay more attention to the selection of their

hotel location and use it to attract more companies and individual customers. Meanwhile, hotel

branding is a great strategy in enabling business hotels to scale out, especially in this modern society

where there are better transportation networks and an increasing number of both business and leisure

travellers.

7. References and bibliographies

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Berezan, O., Raab, C., Yoo, M. and Love, C., 2013. Sustainable hotel practices and nationality: The

impact on guest satisfaction and guest intention to return. International Journal of Hospitality

Management, 34, pp.227-233.

Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.

Chu, R.K. and Choi, T., 2000. An importance-performance analysis of hotel selection factors in the

Hong Kong hotel industry: a comparison of business and leisure travellers. Tourism

management, 21(4), pp.363-377.

Dolnicar, S., 2002. Business travellers’ hotel expectations and disappointments: a different

perspective to hotel attribute importance investigation. Asia Pacific Journal of Tourism

Research, 7(1), pp.29-35.

Dos Santos, R.A., Méxas, M.P. and Meiriño, M.J., 2017. Sustainability and hotel business: criteria

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