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An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore

Kevin K.F. Wong The Hong Kong Polytechnic University, Kowloon, Hong Kong Cindy Kwan The Hong Kong Polytechnic University, Kowloon, Hong Kong


Hotels, Travel agents, Service, Competitive strategy, Hong Kong, Singapore


Hong Kong and Singapore, are among the most open and dynamic economies in the AsiaAbstract Pacific Region, and have spurred the Hotels and travel agents struggle emergence of growth corridors and growth constantly to innovate and conceive new business strategies triangles which benefit from complementarities in services development to meet the ever-changing travel needs and diversity of demands among neighbouring countries in East Asia. from the increasingly discerning According to the International Institute for traveler. Hong Kong and Management Development (1998), Singapore Singapore, as the leading tourist and Hong Kong continue to hold second and destinations, compete fiercely to serve as the tourism hub of the third place in the overall competitiveness region. The aim of this study is to rankings worldwide. The strategic location investigate the competitive business strategies used by hotels (international and regional airline hub) and the unique competitive structures of both and travel agents in Hong Kong and Singapore and examine these economies have created strong economic similarities and differences in advantages for the rapid growth of their these strategies across the two hospitality and tourism industry. A city-states. The findings indicate significant aspect of growth and development that cost competitiveness, mobilizing people and partners, in both of these two city-states has been a and building a robust service notable parallel tertiarization of the economy delivery system are the top three as output, trade and investment grew over the competitive strategies which past few decades. This parallel development senior managers employ, while leveraging information technology has profoundly influenced the pattern and and product differentiation are direction of growth of the hospitality and areas in which they showed the tourism industry in both cities. least confidence. The In Asia, many investors interested in interrelatedness of competitive strategies is exemplified by the investment in hotel property and tourism fact that a good service delivery infrastructure tend to select Hong Kong and system which can realize services consistently can only be achieved Singapore because of their strong growth in when service standards are clearly tourist arrivals. Hong Kong has been the defined and measurable. most visited city destination in Asia, attracting 10.7 million visitors in 1999 which represents a 11.5 per cent increase in arrivals over 1998 and a 154 per cent growth over the This research project was funded by a university grant past ten years. In terms of foreign exchange, Hong Kong received approximately US$6.8 from the Hong Kong Polytechnic University. billion from tourism receipts last year contributing to 4 per cent of Hong Kong's Gross Domestic Product (Tourism Commission, 2000). This healthy growth after International Journal of the onslaught of the Asian financial crisis Contemporary Hospitality
Management 13/6 [2001] 293303 # MCB University Press [ISSN 0959-6119] The current issue and full text archive of this journal is available at

has been matched by an equally competitive growth rate in tourist arrivals in Singapore of 11.2 per cent in 1999 with a total of 7.0 million visitors that year. It is estimated that the hospitality and tourism industry generates tourism receipts of about US$5 billion per year and contributes approximately 6.5 per cent to Singapore's Gross Domestic Product. Tourism ranks as the country's third most important industry in terms of foreign exchange earnings (Cockerell, 1994). The largest share of origin markets for both Hong Kong and Singapore is from within the Asian region itself. In 1993, 63 per cent of the region's tourists were intraregional travelers. It has been forecasted that this share will not change very much over the next ten years, from 37 million in 1993 to 64 million in 2000 and 81 million in 2005, resulting in a doubling of intra-regional arrivals in a period of 12 years (Hotelier, 1996). According to the World Tourism Organization (2000), in the next millennium, the best growth prospects will be recorded in the Asia-Pacific area where some countries will lead Singapore and China (Hong Kong SAR) included. There is a popular belief that Hong Kong and Singapore are in constant competition to stay as the top Asian tourist destinations and in recent time, this competition has intensified. On the other hand, there are others who argue that these two countries are seeking new partnerships to capitalize on the high growth of the Asian region (Hong Kong Standard, 1996). In many ways, Hong Kong and Singapore are very similar, both being city-states with an impressive sky-line, harbour, efficient infrastructure, high level of technology and telecommunications and a literate and skilled workforce (John, 1994). These factors have served well in attracting large tourist numbers and filling up hotel rooms in the past decade. Average hotel occupancy rates for both countries have

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Kevin K.F. Wong and Cindy Kwan An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore International Journal of Contemporary Hospitality Management 13/6 [2001] 293303

ranged between 70-80 per cent in the past five years (Hong Kong Tourist Association, 1999; Department of Statistics Singapore, 2000). There has been some evidence of this collaborative Asian partnership. In 1999, Hong Kong and Singapore joined forces for the second year running on a larger ``Together in Asia'' stand which promoted the region as a convenient one-stop shop for agents and operators interested in the region. The campaign has been expanded to embrace a tour operator support program as well. These efforts represented a special partnership in Asia, demonstrating the importance of first attracting people to the Far East as a region since choosing one region rather than another is the really crucial decision holidaymakers have to make. Kevin Welch, European Director of the Hong Kong Tourist Association, commented that: ``Singapore, Hong Kong (and Thailand) complement each other very well. They offer a wealth of diverse and contrasting attractions which together can create a fascinating and memorable multi-centre trip to the Far-East''. Hong Kong views itself as Asia's preeminent international city with a unique and distinctive blend of eastern and western heritage and culture. Both cities aspire to serve as the tourism hub of the region. Like Singapore, Hong Kong reaps a distinct competitive advantage as a preferred gateway to the Asia-Pacific region in general, and to the Chinese mainland, in particular (Hong Kong Tourist Association, 1999). In comparison, Singapore is also strategically located at the tip of the Malaysian Peninsula which makes it easily accessible to most areas in the countries of Asia Pacific and in particular, a gateway to Southeast Asian countries. It also serves as a ``platform for the testing of tourism ideas and businesses before they are exported to the region'' (Singapore Tourism Promotion Board, 1995). Both city-states have an enviable record of tourism growth and macroeconomic stability in the past but are cognizant of the fact that they are vulnerable to both external shocks and a long-run loss of competitiveness in this services industry due to the high volatility demand in the industry. Given the fact that the hospitality and tourism industry has reached its mature stage in both countries, hoteliers, tour operators, travel agents and owners of tourist attractions of Hong Kong and Singapore compete fiercely to attract the growing number of international and, intraAsian travelers to not only visit but stay longer and spend more on their hospitality

and tourism products and services. However, each hospitality firm is inclined to view competition differently. Some firms consider competitiveness as the ability to persuade customers to choose their offerings over alternatives while others view it as the ability to improve continuously process capabilities (Feurer and Chaharbaghi, 1994). Competition is a process of responding to new forces and is essentially a method of reaching a new equilibrium. Regardless of the firm size, each organization constantly struggles to formulate corporate and business strategies to determine the way in which they can move from their current competitive position to a new and stronger one. The diversity and complexity of the demand and supply relationships within the hospitality and tourism industry makes the crafting of a winning strategy a very elusive one. Past studies show that high-performing regional firms often attribute their success to the sale of specialty products and services as they are able to offer a customized product or service tailored to regional tastes as an alternative to the fare served at national chains. However, while these high performers (e.g. hotels, tour operators) respond ingeniously to specific markets and market segments, they do not view themselves as strictly regional operations serving limited markets. Rather, they consider themselves as businesses situated in an evolutionary phase, seeking to expand as market opportunity and corporate structure permit (West and Olsen, 1989). In contrast, some authors have pointed out that the competition for clients based on product differentiation has become increasingly difficult in the hospitality industry, particularly for hotels. This has been attributed to the greater degree of segmentation, diverse and overlapping options and the greater intensity of competition itself (Reid and Sandler, 1992). Competitive pricing, notably one of the most widely used tactics in the hospitality industry, is, arguably, the least desirable type of competitive strategy for the industry. This is because it is of real benefit only to the lowest cost producer and can be easily copied, resulting only in short-term gains. Research on competitive methods used in the food-service industry concludes that the net effect of price competition is likely to be a reduction in profitability as margins are sacrificed to increase customer numbers (West and Olsen, 1989). It is the ability of firms to meet customers' expectations for

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Kevin K.F. Wong and Cindy Kwan An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore International Journal of Contemporary Hospitality Management 13/6 [2001] 293303

their segment that makes for success, not the firms that merely offer the lowest price. Past studies on competing through services (Vandermerwe et al., 1994) relied on a set of criteria to investigate the different aspects of a firm's competitive strategy. Several different aspects were designed to investigate the strategic use of firms' resources to meet changing customer (tourists) expectations, differentiation of market offerings, building of efficient service delivery systems, mobilization of people and partners, leveraging information technology to deliver value, defining service standards and performance, minimizing costs, reliance on local vs expatriate staff and delivering services across countries. These criteria would capture the essential characteristics of the competitive strategies adopted and reveal the unique aspects of the value-added services of the hospitality company, showing how their contemporary strategies may differ from traditional approaches. For example, a case study of the Scandinavian Airlines System (SAS) by Vandermerwe et al. (1994) revealed that, in competing through services to meet changing customer expectations, the airline's management made a dramatic move away from ``flying planes'' to ``flying people''. This represented a strategic shift from a product focus to a customer focus which worked well for the company in the midst of rapid deregulation and heightened competition. In terms of competing through mobilizing people and partners for effective service delivery, SAS had to deal with two new major challenges without incurring additional costs. These challenges revolved around having to cater to global customers by building strong partnerships and focusing on treating customers as individuals, providing high quality services while simultaneously keeping costs down. Some related issues which had to be addressed included how to maintain the momentum and drive amongst SAS employees and how to find the ``right kinds of partners to deliver the services which make up the travel experience package throughout Europe and globally''.

pursued by key members of the industry. This study represents an attempt to fill this gap by examining the competitive business strategies employed by hotels and travel agencies in Hong Kong and Singapore and comparing and contrasting these strategies across the two city-states. Some aspects of the company's corporate structure and the relationship between different competitive strategies are also examined.

As the factors affecting the competitiveness of hospitality firms are of a conflicting nature and interact acutely, competitiveness cannot be defined by a single measure. In this study, a set of criteria based on an approach used by Vandermerwe et al. (1994) is used to study the different aspects of the firms' competitive strategies. Nine different areas were designed to investigate the strategic use of firms' resources to meet changing customer (tourists) expectations, differentiation of market offerings, building of efficient service delivery systems, mobilization of people and partners, leveraging information technology to deliver value, defining service standards and performance, minimizing costs, reliance on local vs expatriate staff and delivering services across countries. The crucial aspects of competitive strategies were investigated through the conduct of an independent field survey with a group of international and local hotels and travel agents in Hong Kong and Singapore. A non-random, convenient sample of 104 key hospitality companies (hotels and travel agents) were selected from the membership list provided by the Hong Kong Hotels Association, Hong Kong Association of Travel Agents, Singapore Tourism Board and Singapore Hotel Association. Of the total 104 companies interviewed, 20 hotels and 33 travel agents were located in Hong Kong and 21 hotels and 30 travel agents were in Singapore. Resource and time constraints limited the study to two major component sectors of the hospitality industry. Personal face-to-face interviews were held with general managers, senior managers and directors of sales and marketing in these companies (both Hong Kong and Singapore) based on a structured questionnaire. The use of personal interviews was necessary to ensure a high degree of accuracy in answers provided and to minimize non-response as the questionnaire contained in-depth questions on the various aspects of competitive strategies used by the firm. A

Objectives of the study

Whilst past studies have been able to identify broad macroeconomic and general factors (Mathews, 2000) which impact on business strategies of hospitality and travel firms in general, little is known about the similarities and/or differences in competitive strategies

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Kevin K.F. Wong and Cindy Kwan An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore International Journal of Contemporary Hospitality Management 13/6 [2001] 293303

pilot survey was conducted with 12 senior managers from hotels in order to obtain feedback on the validity and appropriateness of the questions asked. Based on their comments, the questionnaire was further refined. The first section of the questionnaire focused on questions related to the company's business structure and diversification strategies. The (second) main section of the questionnaire investigated the nine competitive aspects. Respondents were asked to rate the competitive strategies on a fivepoint Likert scale varying from 1 (strongly disagree) to 5 (strongly agree). Due to the sensitive nature of the questions asked on the firm's specific competitive strengths and weaknesses, some difficulties were encountered in obtaining personal interviews with senior managers of hotels and travel agents. As a result, the sample size for travel agents is relatively small. However, the findings presented offer valuable insights into the competitive status and strategies of hotels and travel agents in a very competitive part of the Asia-Pacific region where the hospitality industry continues to grow rapidly. The results should be interpreted with caution and serve as a springboard for further research and analysis into this vital area which relates strongly to the survival of the firm.

in Hong Kong employed ten or less full-time employees (Table I). It appears that Hong Kong firms, particularly hotels, employ a larger labor force. This is further corroborated by the pattern of part-time employment which shows a relatively higher level of involvement by part-time staff in Hong Kong. In terms of being diversified, the results show a somewhat similar percentage of hotels and travel agencies are diversified in Singapore (17.6 per cent) and Hong Kong (15.1 per cent). In addition to being involved with domestic diversification, these firms indicated some attempts at global diversification, that is diversify by acquiring a foreign firm, but the primary market remains domestic.

Competitive strategies

Findings and discussion

Company profile
Of the 104 hospitality firms surveyed, 53 of them were based in Hong Kong whilst 51 were located in Singapore as shown in Table I. These hospitality firms were mainly from the hotel sector (39.4 per cent) and travel agency (60.6 per cent), which represents a major part of the hospitality industry. The business structure of hospitality firms in Hong Kong ranged from partnership (24.5 per cent) to public and private limited company (58.5 per cent), while most of the Singapore hospitality firms were private limited companies (74.5 per cent). The number of years of operation reflects a company's experience in the industry. In terms of history of operation among hotels and travel agencies surveyed, about half of them in Singapore (47.1 per cent) have been in business for more than ten years whilst a larger proportion was found in Hong Kong (58.5 per cent) (Table I). Over 40 per cent of the companies surveyed in Singapore and nearly 30 per cent of them

Among the nine different areas in which firms could achieve competitiveness, cost competitiveness (mean = 4.42) was the aspect which received the highest level of agreement among hotel and travel agency managers in Hong Kong and Singapore (Table II). In recent years, both Hong Kong and Singapore have been perceived as expensive cities for doing business (John, 1994; Brevetti, 1995). Coupled with the recent tourism downturn caused by the Asian currency crisis, the businesses of Hong Kong and Singapore hospitality firms suffered further business losses, as other Asian currencies devalued or depreciated making travel to these destinations relatively much more expensive than before. Increasing regional and global competition forces these companies to create and sustain a competitive advantage, through adjusting to a buyers' market by reducing costs while maintaining service quality (Go and Pine, 1995). While Singapore firms indicated a keener awareness of the cost factor (higher mean of 4.5), hotels and travel agencies in both cities appear to have extended equally strong efforts to monitor and evaluate competitive strategies to ensure cost-effectiveness (mean = 4.49). In addition, they actively seek out underperforming areas in order to cut cost (mean = 4.26) with a view to achieving long-run competitiveness. Past evidence shows that many Hong Kong and Singapore hospitality firms have indeed reduced manpower resources by laying off employees to minimize cost, a strategy widely practiced during the downturn in 1997. In instances when marketing budgets were cut, these companies adopted alternative strategies and tactics to lower cost, such as, forming

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Kevin K.F. Wong and Cindy Kwan An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore International Journal of Contemporary Hospitality Management 13/6 [2001] 293303

Table I Company profile Item

0 13 12 19 9 53 0 0 8 14 8 9 14 53 15 7 3 8 4 12 4 53 24 16 6 4 2 1 53

Hong Kong

2 0 8 38 3 51 1 5 7 14 3 6 15 51 21 10 2 8 8 1 1 51 30 11 6 4 0 0 51


2 13 20 57 12 104 1 5 15 28 11 15 29 104 36 17 5 16 12 13 5 104 54 27 12 8 2 1 104


% 1.92 12.50 19.23 54.81 11.54 100.00 0.96 4.81 14.42 26.92 10.58 14.42 27.88 100.00 34.62 16.35 4.81 15.38 11.54 12.50 4.81 100.00 51.92 25.96 11.54 7.69 1.92 0.96 100.00

Business structure Sole trader Partnership Public limited company Private limited company Others Total Number of years in business <1 1-2 3-4 5-10 11-15 16-20 >20 Total Number of full-time employees 1-10 11-50 51-100 101-300 301-500 over 500 over 1000 Total Number of part-time employees 0 1-10 11-50 51-100 101-300 Missing Total

0.00 24.53 22.64 35.85 16.98 100.00 0.00 0.00 15.09 26.42 15.09 16.98 26.42 100.00 28.30 13.21 5.66 15.09 7.55 22.64 7.55 100.00 45.28 30.19 11.32 7.55 3.77 1.89 100.00

3.92 0.00 15.69 74.51 5.88 100.00 1.96 9.80 13.73 27.45 5.88 11.76 29.41 100.00 41.18 19.61 3.92 15.69 15.69 1.96 1.96 100.00 58.82 21.57 11.76 7.84 0.00 0.00 100.00

joint promotions with banks, publication companies or telecommunication companies to gain free exposure. A significant factor which is needed to sustain competitiveness in the hospitality industry is the availability of strong management of human resource for effective delivery which is related to the ability of the company to mobilize its employees and partners. In order to do this effectively, a company needs a well-formulated mission statement and a clear set of strategic objectives. Without these, existing staff at all levels may be poorly motivated, misguided and lack commitment. This could result in a company's short-term actions being counterproductive to its long-term interests. There appears to be strong agreement among senior management staff (general managers) of Singapore hospitality firms (mean = 4.32) that a mission statement and an

expressed company philosophy is already in place compared to the situation in Hong Kong (mean = 4.17). In comparison, while Hong Kong managers also showed keen awareness of the significance of a clear company direction which would enhance competitiveness, there appears to be a lack of effort towards developing one. Whilst it is true that staff at all levels may be motivated when clear strategic goals are set, a well-developed mission statement is useless if it is not properly or appropriately conveyed to all staff members in the company. Compared to Hong Kong, middle management staff (senior managers and managers) and junior management staff (assistant managers and supervisors) in Singapore tend to be less aware of their hospitality firms' strategic goals and may, therefore, be less ardent or conscientious in achieving and contributing to the profitability of the company. This implies a communication gap between senior

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Kevin K.F. Wong and Cindy Kwan An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore International Journal of Contemporary Hospitality Management 13/6 [2001] 293303

Table II Competitive strategies Hong Kong vs Singapore Levene's test for equality of variances F Sig.



Meana Hong Kong Singapore

t-test for equality of means t-value p 1.23 0.22

1.95 0.06 0.00 1.00 0.31 0.76 1.29 0.20 0.05 0.96 0.61 0.54 0.90 0.37 0.97 0.34 0.31 0.76 1.34 0.18 0.10 0.92 0.95 0.34 1.26 0.21 0.33 0.74 0.71 0.48 2.36 0.02** 1.74 0.08 3.50 0.00** 0.47 0.64 0.39 0.70 -0.74 0.46 0.22 0.82 0.85 0.40 0.40 0.69 (continued)

Cost competitiveness Our company has the need to increase cost competitiveness Our competitive strategies are constantly evaluated to ensure cost- effectiveness Our company identifies underperforming areas in order to cut costs Our company minimizes cost to achieve long-run competitiveness Mobilizing people and partner Senior management staff have formulated a mission statement Middle management staff are aware of the company's strategic goals Junior management staff are conscientious in contributing to company's success Professionalism of front-line staff is imperative in maintaining competitiveness Our company has invested increasing resources to train staff Building service delivery systems Our company has the required skills and equipment to offer quality services Our company is enhancing employees' skill levels to offer service improvements Employees are familiar with the implementation procedures of services Our company has the need to modify service methods to adapt customer demands Differentiating market offerings Our company make conscious efforts to differentiate services and products from competitors Our company targets different market segments in the hospitality industry Our customers are satisfied with our range of products and services New marketing strategies have been established to meet customers' changing needs Delivering services across countries Our company serves a significant international clientele Our services meet international competitive quality standard Our overseas services enhance customer awareness

4.52 4.49 4.26 4.42 4.37 4.24 4.37 4.26 4.76 4.23 4.32 4.31 4.29 4.31 4.37 4.21 4.27 4.22 4.22 4.14 4.21 4.28 4.16 4.17

4.36 4.49 4.23 4.30 4.37 4.17 4.45 4.34 4.77 4.09 4.31 4.40 4.13 4.28 4.43 4.07 4.09 3.81 4.19 4.19 4.26 4.31 4.07 4.12

4.69 4.49 4.29 4.55 4.37 4.32 4.29 4.18 4.75 4.37 4.32 4.22 4.45 4.33 4.29 4.36 4.45 4.65 4.25 4.10 4.15 4.26 4.26 4.21

14.89 0.60 3.47 9.40 0.70 1.09 1.24 0.29 0.78 8.31 0.03 0.03 1.68 0.05 0.12 3.04 3.25 57.30 4.57 0.21 0.12 0.08 0.40 1.40

0.00* 0.44 0.07 0.00* 0.40 0.30 0.27 0.59 0.38 0.00* 0.85 0.86 0.20 0.82 0.73 0.08 0.07 0.00* 0.03* 0.65 0.73 0.78 0.53 0.24

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Kevin K.F. Wong and Cindy Kwan An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore International Journal of Contemporary Hospitality Management 13/6 [2001] 293303

Table II Levene's test for equality of variances F Sig. 0.10 2.12 1.14 0.75 0.15 0.29

Item Our company will implement a wider network of delivery Our company is more competitive than companies offering similar services Our company provides sufficient facilities to support the quality of services Defining service standards and performance Our company defines a set of service standards Our company is satisfied with the existing service standard Our staff are able to achieve the company's service standard Our service standard is continually monitored to meet customers' needs Reliance on local vs expatriate staff Our company has an adequate number of skilled staff Our company has employed an optimal ratio of local and expatriate staff Our local staff are efficient Our expatriate staff are efficient Our local staff need to be motivated to increase competitiveness Our expatriate staff need to be motivated to increase competitiveness Leveraging information technology to deliver value Our company use information technology as a competitive advantage over competitors Our company has a strong belief in advanced information technology Our company is aware of the need to upgrade information technology to service our clients Our company will use new technology to accommodate customers' needs Meeting customer expectations Our company is facing strong competition Our company is meeting current needs of customers Our company is meeting changing customers' expectations Our company has an existing programme to evaluate customers' needs Our company has organized marketing campaigns to improve clients' loyalty Overall competitiveness

Overall 4.17 4.01 4.11

Meana Hong Kong Singapore 4.31 4.24 4.26 4.02 3.76 3.95

t-test for equality of means t-value p

1.15 0.25 2.04 0.04** 1.51 0.14

4.33 3.63 4.13 4.56 4.12 4.3 4.13 4.21 4.12 4.25 3.97

4.32 3.34 4.17 4.65 4.07 4.32 4.21 4.34 4.10 4.09 3.79

4.33 3.94 4.10 4.47 4.19 4.27 4.04 4.08 4.14 4.41 4.17

2.08 2.55 0.34 4.84 2.84 0.12 0.06 0.46 0.75 4.54 11.78

0.15 0.11 0.56 0.03* 0.10 0.73 0.80 0.50 0.39 0.04* 0.00*

0.50 0.62
0.06 0.95 0.97 0.33 -0.45 0.65 1.24 0.22 0.80 0.43 0.27 0.79 0.67 0.50 1.64 0.10 0.24 0.81 1.58 0.12 1.22 0.23

3.77 3.98 4.43 4.25 4.04 4.66 4.36 4.53 3.15 3.49 4.21

3.74 3.72 4.28 4.11 3.99 4.64 4.30 4.55 3.09 3.36 4.17

3.80 4.25 4.59 4.39 4.09 4.69 4.41 4.51 3.22 3.63 4.26

1.63 8.88 4.33 2.85 4.06 1.92 0.34 0.00 3.80 7.13

0.20 0.00* 0.04* 0.09 0.047* 0.17 0.56 1.00 0.05 0.01*

1.68 0.10
0.26 0.79 2.09 0.04** 1.62 0.11 1.37 0.17 0.69 0.49 0.38 0.71 0.79 0.43 -0.24 0.81 0.38 0.70 0.82 0.42

Notes: *Equal variance not assumed; **significant level at 0.05; a1 = strongly agree; 2 = moderately agree; 3 = neutral; 4 = moderately disagree; 5 = strongly disagree [ 299 ]

Kevin K.F. Wong and Cindy Kwan An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore International Journal of Contemporary Hospitality Management 13/6 [2001] 293303

and lower level management and operational staff in hotels and travel agencies which needs to be narrowed for more effective teamwork and stronger group competitive spirit. In terms of staff mix, both Singapore and Hong Kong hotels, in particular, continue to employ a fair number of expatriate staff at the management and operational level. Managers in both cities are reasonably confident that their companies have employed an optimal ratio of local to expatriate staff and they are reasonably confident that their companies have employed an optimal ratio of local to expatriate staff and they are reasonably satisfied with their efficiency. However, in the area of staff motivation, Singapore firms expressed a greater need compared to Hong Kong firms, for both their local as well as expatriate staff to be motivated to win the competitive edge in the industry. The results in Table II show that professionalism of front-line staff was rated as a top individual item with the highest level of agreement among managers in achieving and maintaining competitiveness in both countries (mean = 4.76). As the nature of the hospitality industry is to provide service through people, front-line staff, who have direct contact with customers, play an essential role in delivering quality service. Indeed, there is also a significant correlation (0.542) between mobilizing people and partners and building service delivery system (Table III). Building a robust service delivery system, which can realize services consistently, is another crucial aspect in sustaining competitiveness (Normann, 1991). A relatively large number of Hong Kong hotels and travel agency managers agreed that they have the required skills and equipment to offer quality services (mean = 4.40) while managers in Singapore are more confident in enhancing employees' skills level and use of improved technology (mean = 4.45) as well as developing employee familiarity with the implementation service procedures (mean = 4.33). Despite of the high level of confidence on the service delivery system in both cities, over 80 per cent of the firms' managers strongly feel a need to modify their service delivery to adapt to the demand of customers, especially in the case of Hong Kong. In order to improve a company's service delivery system and raise the value of its services, there is a need to have a set of welldefined service standards and performance criteria. Managers in both countries indicate reasonably strong agreement on the existence of a set of service standards within

their respective companies and feel that the standard is being continually monitored to meet customers' needs. However, they appear to be less confident about the ability of their staff to achieve the company's set standards and are somewhat neutral on how satisfied the company is with the existing service standards established. The above findings may explain why managers in Hong Kong and Singapore hospitality firms indicated a relatively lower level of confidence in meeting customer expectation. Most of the hotel and travel agencies surveyed agreed that they faced strong competition (mean = 4.66) and their companies have been able to meet customers' needs (mean = 4.36). Yet, the results show that nearly 40 per cent of these companies indicated that they do not have any existing programs to evaluate customers' changing expectations or to track emerging market trends. Without an effective evaluation system, managers of hospitality firms may misinterpret the needs of customers which may lead to inappropriate marketing strategies and loss of market share. Another strategy which can raise one's competitive edge is that of leveraging information technology to deliver value. In the ever-changing business world, information technology is an essential competitive tool to gain and retain customers. Firms can use information technology to enhance utilities for customers, to produce revenue and savings (Vandermerwe, 1993). With no exception, hotels and travel agents in Hong Kong and Singapore are very much aware of the need to upgrade their information technology to provide an efficient service (mean = 4.43). However, for some firms there appear to be reservations about the applicability and contribution of information technology to their business (mean = 3.98) or the ability to create competitive advantage (mean = 3.77). Managers may consider information technology as a kind of support in their service delivery process rather than a comparative advantage over competitors. Past studies showed that owners and senior management of hospitality firms tended to be discouraged by the large amount of investment required in information technology system. Employees may also regard information technology as a threat to their job (Vandermerwe, 1993). The results reveal a statistical significant difference between Hong Kong and Singapore hospitality companies on the point about the use of information technology (probability = 0.004). Managers of Singapore hospitality

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Kevin K.F. Wong and Cindy Kwan An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore International Journal of Contemporary Hospitality Management 13/6 [2001] 293303

firms tend to show a stronger belief (mean = 4.26) in the potential contribution of information technology to company success compared to those in Hong Kong (mean = 3.72). Thus, while both nations are very advanced in their computer and technological development, there is some difference in the level of acceptance and implementation. In addition, results of the independent t-test revealed that there is a statistical significant difference (probability = 0.02) in one factor between Hong Kong and Singapore, that is, differentiating market offerings. Singapore hotels and travel agents (mean = 4.36) are evidently more confident that their marketing plans incorporate conscious efforts to differentiate and diversify their products and services compared to Hong Kong firms (mean = 4.07). Singapore managers (mean = 4.65) indicated that they devoted a significant amount of effort towards specifically targeting different market segments to achieve growth. In contrast, Hong Kong managers are less confident that this is being done (mean = 3.81). This may be due to the

difficulties in differentiating products and services as well as segmenting markets as customers nowadays are provided with a wide range of choices in most markets (Reid and Sandler, 1992).

Correlation between competitive strategies

All of the nine competitiveness criteria are found to be correlated to each other at a statistically significant level (0.05) (Table III). Among all the areas of competitiveness considered, the highest correlation was found between the competitive strategies, reliance on local vs expatriate staff and delivering services across countries (correlation = 0.664) implying that firms which sell to an overseas market are likely to rely more on the services and expertise of expatriate staff. To provide an effective service to an overseas market, firms need to have a thorough understanding of the internal and external environment of that market. Expatriate staff, who tend to be local citizens of the overseas market, are more familiar with the working environment and culture of that market. The knowledge and

Table III Correlation between competitive strategies Competitive strategies EXP: Meeting customer expectations DIFF: Differentiating market offerings SERSYS: Building service delivery systems Correlation Sig. n Correlation Sig. n Correlation Sig. n Correlation Sig. n Correlation Sig. n Correlation Sig. n Correlation Sig. n Correlation Sig. n Correlation Sig. n EXP 1.000 . 104 0.444 0.000 104 0.260 0.008 104 0.394 0.000 103 0.284 0.004 104 0.235 0.017 103 0.323 0.001 104 0.305 0.019 59 0.392 0.000 79 DIFF SERSYS MOBLZ IT SERSTD COST STAFF SEREXT

MOBLZ: Mobilizing people and partner

IT: Leveraging information technology to deliver value

SERSTD: Defining service standards and performance COST: Cost competitiveness

STAFF: Reliance on local vs expatriate staff

SEREXT: Delivering services across countries

1.000 . 104 0.358 0.000 104 0.476 0.000 103 0.273 0.005 104 0.321 0.001 103 0.428 0.000 104 0.282 0.030 59 0.378 0.001 79

1.000 . 104 0.542 0.000 103 0.420 0.000 104 0.594 0.000 103 0.463 0.000 104 0.448 0.000 59 0.574 0.000 79

1.000 . 103 0.438 0.000 103 0.518 0.000 102 0.489 0.000 103 0.359 0.005 59 0.529 0.000 78

1.000 . 104 0.258 0.009 103 0.332 0.001 104 0.389 0.002 59 0.383 0.000 79

1.000 . 103 0.581 0.000 103 0.370 0.004 59 0.453 0.000 79

1.000 . 104 0.317 0.014 59 0.454 0.000 79

1.000 . 59 0.664 0.000 50

1.000 . 79

Note: Pearson correlation is significant at the 0.05 level (two-tailed) [ 301 ]

Kevin K.F. Wong and Cindy Kwan An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore International Journal of Contemporary Hospitality Management 13/6 [2001] 293303

experience of expatriate staff can help hospitality firms to compete against other competitors in the overseas market. For instance, in Hong Kong, hotel groups which venture into the mainland China market often hire local Chinese employees to deliver their services. Another pair of highly correlated competitive strategies are building service delivery system and defining service standards and performance (correlation = 0.594). This finding reveals the fact that hotels and travel agencies in Hong Kong and Singapore recognize the importance of providing a clear definition of service standards and performance as an important first step in building an effective service delivery system. Employees who are guided and driven by some measurable service standards and set by the company, are likely to be more highly motivated and provide higher quality services in a cost-effective manner. The building of an effective delivery system based on this strong principle, is particularly important where the services are provided to international clients and the company has to implement a wider network of delivery (correlation = 0.574).

of the market. Managers also highlighted the importance of relationships between different strategies. For example, a good service delivery system which can realize services consistently and with costeffectiveness can only be achieved when service standards are clearly defined and measurable. The study indicated that managers, overall, were not satisfied with existing service standards which implied a need to revise these standards to raise service performance. Further research into this area could be undertaken to investigate the functional and operational aspects of competitive strategies of hotels and travel agents in these two nations. In addition, an extended study on potential co-operative partnerships between hotel chains and travel agencies on the one hand, and competitive strategic alliances, on the other, in both city-states could provide more evidence on the success of Hong Kong or Singapore to become the coveted tourism hub in the Asia-Pacific region in the new millennium.


This paper explored the competitive strategies employed by hotels and travel agents in Hong Kong and Singapore with the aim of determining their state of play in the hospitality industry and the nature of their respective competitive strengths and weaknesses. The findings provided some revealing insights into how these firms have managed to stay ahead in maintaining a competitive edge based on price-related (cost) and non-price strategies both domestically and internationally. Some of the findings which emerged included: a general consensus among senior management in hotels and travel agencies in both city-states that cost competitiveness is a major issue with the constant need to be wary of under-performing areas to cut costs and maximize long-run competitiveness; that mobilizing human resources can be more effective with a clear and well-understood mission statement for the company; that there is a need to build a robust service delivery system to add value to the service sold; that firms could increase the leverage of information technology to accommodate new customers' needs; that changing needs of the increasingly discerning traveler can only be met by constant monitoring and evaluation

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Kevin K.F. Wong and Cindy Kwan An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore International Journal of Contemporary Hospitality Management 13/6 [2001] 293303

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