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A study of hotel information technology applications

Article  in  International Journal of Contemporary Hospitality Management · March 2005

DOI: 10.1108/09596110510582369

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IJCHM
17,2 A study of hotel information
technology applications
Rob Law
170 School of Hotel and Tourism Management, The Hong Kong Polytechnic
University, Hong Kong, People’s Republic of China, and
Giri Jogaratnam
Hotel and Restaurant Management, Eastern Michigan University, Ypsilanti,
Michigan, USA

Abstract
Purpose – Information technology (IT) applications in the hotel industry have largely been devoted
to the handling of the routine operational problems that crop up while running a hotel. Previously, the
hotel industry has been criticised as reluctant to make full use of IT. This paper reports and analyses
the findings of a recent survey on IT applications in Hong Kong hotels.
Design/methodology/approach – Through personal interviews with 21 managers of hotel
electronic data processing/management information systems (EDP/MIS) in 2003, different technical
and behavioural aspects of IT were examined.
Findings – Compared with a similar study performed in 1997, the empirical findings in 2003 showed
that IT was used not merely to replace the existing paper system but also to improve customer
services and to enhance operational effectiveness. Unfortunately, the empirical findings also indicated
that hotel decision makers did not seem to realise the importance of IT for the purpose of developing
business strategies and, therefore, IT was generally not used in hotels for high-level business
decision-making.
Research limitations/implications – A limitation of this study was the fairly low participation
rate of hotel managers.
Practical implications – The study does offer useful insights for hoteliers to realistically analyse
the potential benefits of IT applications to their business.
Originality/value – This paper will contribute to help raise the awareness of IT involvement at all
levels of hotel business processes, and facilitate hoteliers to proactively incorporate IT into their efforts
to remain competitive in the industry.
Keywords Hotels, Information, Technology led strategy, Hong Kong
Paper type General review

Introduction and literature review

International Journal of
Contemporary Hospitality
Management
Vol. 17 No. 2, 2005
pp. 170-180
q Emerald Group Publishing Limited
0959-6119
DOI 10.1108/09596110510582369
The traditional hotel industry has placed great emphasis on the provision of quality
service to guests. With the increasing demand for intensive information from
customers and hotel practitioners, hotels have adopted computer-based IT facilities to
improve operational efficiency, reduce costs, and enhance service quality (Camison,
2000; Cobanoglu et al., 2001; Siguaw and Enz, 1999; van Hoof et al., 1996). With the use
of IT in their businesses, hotel managers expect that their profit margins and financial
returns will increase. According to Watkins (1995), IT starts and ends with customers
This project was supported by a research grant funded by the Hong Kong Polytechnic
University under contract number G-T568.
in a hotel. The investment in IT thus benefits the hotel if it enables customers to have a Hotel information
better experience and the hotel staff to work more efficiently to better assist customers. technology
Likewise, Olsen and Connolly (2000) argued that the use of IT can place knowledge and
information at the core of a hospitality organisation’s competitive profile. applications
In general, the hotel industry can be regarded as information intensive. Davis and
Davidson (1991) claim that with IT reshaping the basic structure of the industry and
society, in addition to consumers’ need for more accurate and timely information, the 171
pace of technology diffusion in hotels will increase at an unprecedented rate. Similarly,
Cho and Olsen (1998) stressed that IT can transform the nature of products, processes,
companies, industries and competitions in the hospitality industry. Frew (2000a, b)
further emphasised that technology will bring about a major revolution in the
hospitality industry.
The rapid growth of the tourism industry in Hong Kong in the 1990s and early
2000s stimulated the rapid development of the local hotel industry. In the period
from 1992 to 2001, Hong Kong had been able to attain an average hotel occupancy
rate of over 80 per cent; whereas the corresponding figure for worldwide hotels
was less than 70 per cent (HKTB, 2002). To efficiently manage the several
hundred rooms in each hotel at an international standard of service, hotel
managers need updated management know-how and the latest IT systems.
Prior studies have indicated that hotels do not always intend to take the lead in
implementing a new kind of technology (Cho and Olsen, 1998; Sheldon, 1997).
Such a slow response, according to Gamble (1988), causes the hospitality industry
to lag behind other industries in IT applications. This, in turn, may cause a
hotel to have a low degree of accrued benefits in terms of changes in the hotel’s
competitive position. Furthermore, most hotel decision makers did not receive
training in IT; for this reason, their technical knowledge is fairly limited (Borsenik,
1993). The low IT knowledge of these hotel managers inevitably causes them to be
reluctant or even resistant to accept new technologies because they fear that these
technologies might affect their role of providing personalised services to hotel
guests. Connolly et al. (1998) stated that, due to their low IT competence, many
hotel managers are skeptical about the value of investing in IT. Additionally, Law
and Lau (2000) commented that the low technical competence of hotel managers
and the large scale of IT-assisted hotel operations mean that the hotel industry
will remain at a high risk of having IT problems.
In 1997, a survey of hotel IT applications was performed in Hong Kong (Law and
Au, 1998). In that survey, 48 hotel EDP managers of the 83 members of the Hong Kong
Hotels Association voluntarily participated in the study and were interviewed about
general IT use in their hotels. Research findings in 1997 showed that hotels in Hong
Kong generally used IT to assist in daily operations. The study, however, also revealed
that hotel IT applications were non-innovative and lagged behind in terms of
technological applications compared to other business fields. In particular, hotel
managers generally talked about service quality, marketing strategy and cost control.
By contrast, computer networks, operating systems and programming environments
appeared in the conversations of technical IT professionals. In other words, there had
been very little mutually understandable communication between non-technical hotel
managers and technical IT professionals, making hotels unable to fully utilise their
IT facilities.
IJCHM Since IT developments have changed rapidly in recent years, it is beneficial to
17,2 reinvestigate the latest IT applications to the hotel industry. As a longitudinal
examination of hotel IT applications, this paper uses a descriptive approach to report
on a study overviewing the latest IT uses in Hong Kong hotels. This paper is expected
to benefit hospitality practitioners in several ways. First, it makes an attempt to raise
the awareness of IT to hotel managers at large. This is achieved by sharing
172 information on primary data collected from the hotel industry in Hong Kong, a
cosmopolitan city with many world-class hotels. Next, this paper provides a more
realistic analysis of the potential benefits of IT applications to the hotel industry.
Hoteliers can then plan their business strategies on IT development in their hotels.
Lastly, the paper advocates the importance of IT in the hotel industry and stresses the
need for hotel managers to be IT competent in order to take full advantage of
technology. The paper should, therefore, be of value to hotel managers and students
of hotel management.

Methodology
This research used an in-depth interview approach. Hotel managers in EDP/MIS
departments were interviewed to seek their views on two dimensions of IT applications
in their hotel properties. These dimensions included technical and behavioural aspects.
The questions used in the interviews largely followed a study that was performed in
1997 to investigate hotel IT applications in Hong Kong (Law and Au, 1998). These
questions basically cover the essential areas of IT facilities and related issues in
hospitality business applications (Shelly et al., 2002; Kasavana and Cahill, 1997).
In this study, the population consisted of all of the members of the Hong Kong Hotels
Association. All EDP/MIS managers of the member hotels listed in the most recent edition
of the Hong Kong Hotels Directory (HKHA, 2003) were contacted for personal interviews.
A total of 21 hotels participated in the study, representing a 27 per cent response rate. This
response rate is lower than the matching figure of the study performed in 1997, during
which 48 EDP managers out of the 83 hotels agreed to participate. In view of the heavy
workload of EDP/MIS managers and the time involvement in the personal interview, the
response rate in 2003 can still be considered as reasonable. The personal interviews and
data collection were completed in March 2003.

Findings
Profiles of the respondents and their hotels
In this study, data were collected on the qualifications of the interviewees and
background of their hotels. Table I summarises the demographic profiles of the
interviewees and their hotels. This section mainly discusses the findings in 2003, but
the corresponding figures for the 1997 study are also listed for reference.
EDP/MIS managers were fairly well educated. Forty-five per cent of the
respondents held university degrees and more than half of the respondents
(52 per cent) had received a formal education in technical computer science or in
engineering disciplines. This indicates that the academic qualifications of EDP/MIS
managers were relevant to their jobs. Compared to the figures in 1997, EDP/MIS
managers nowadays are better educated and receive more related academic training.
Besides, EDP/MIS managers have all had many years of industrial work experience,
with 50 per cent having worked in the industry for at least ten years.
 1997 (n ¼ 48) 2003 (n ¼ 21)
Hotel information
Percentage of total Percentage of total technology
Respondents’ educational background
applications
Highest academic qualification
Secondary school or below 39 35
Diploma 29 20 173
Degree 32 45
Major
Computer science/Engineering 38 52
Management/Business
Administration/Accounting 33 14
Others 29 33
Respondents’ years of experience in an IT/IS department
, 1 year 3 0
1-3 years 25 0
4-6 years 18 20
7-9 years 15 30
$ 10 years 40 50
Number of hotel staff
Full-time staff
# 100 2 16
101-200 22 0
201-400 22 42
401-600 22 26
601-800 20 16
$ 801 13 0
Part-time staff
# 100 100 83
101-200 0 17
Number of EDP/MIS staff
Full-time staff
0 7 5
1 39 14
2 41 76
3 13 5
Part-time staff
0 97 80
1 3 20
Average annual budget for an EDP/MIS department
#$10,000 3 0
$ 10,001-300,000 53 15
$ 300,001-600,000 0 77
$ 600,001-900,000 7 0
$ 900,001-1,200,000 20 8
$$ 1,200,001 17 0
Estimated costs of maintenance for hotel systems
#$10,000 3 0
$10,001-300,000 63 50
$300,001-600,000 29 44 Table I.
$ 600,001-900,000 0 6 Hotels’, and respondents’
$900,001-1,200,000 5 0 profile
IJCHM Hong Kong hotels are generally large in scale, with more than 100 rooms in each
17,2 property and, for this reason, these hotels require hundreds of employees to provide a
high standard of service to their guests. In this study, 84 per cent of the hotels had more
than 200 full-time employees. However, it is somewhat interesting to note that,
probably due to the cost saving factor, hotels tended to hire more part-time employees.
In 2003, 17 per cent of the participating hotels had more than 100 part-time staff
174 members. Additionally, most hotels (76 per cent) had two full-time employees who
were responsible for IT development and implementation. However, a majority of the
hotels (80 per cent) did not have any part-time EDP/MIS staff. Each year, most
EDP/MIS departments (77 per cent) were usually allocated HK$300,001-HK$600,000
(US$1 ¼ HK$7.8) by the hotels. Moreover, 50 and 44 per cent of the hotels had set aside
a further HK$10,001-HK$300,000 and HK$300,001-HK$600,000, respectively, to
maintain their computer systems.

Technical aspects
MS Windows was still the most popular operating system used in hotels. This was
largely due to the superb operating capability and portability of Windows on personal
computers. Also, since local area networks (LAN) were commonly used in business
environments, the network operating system Novell Netware was used by 62 per cent
of hotels. Other frequently used operating systems include UNIX (48 per cent), AS/400
(29 per cent) and RS/6000 (14 per cent) for property management systems. Table II lists
the findings of the survey on technical IT applications in hotels.
As revealed in Table II, MS Office (76 per cent) was the most popular application
software system used in hotels. A natural outcome of the wide adoption of MS Office as
the integrated generic software was the driving out of non-integrated generic software
such as WordPerfect and Lotus in 2003. FIDELIO, which ranked third in 1997, became
the second most commonly used application software in 2003 (38 per cent). HIS, once a
very popular hotel property management system, was third on the list, with only
one-third of hotels using it in 2003. The shift in the use of property management
systems from HIS to FIDELIO was likely due to the latter’s flexibility and relatively
low maintenance costs. Naturally, such a shift in application software caused a
decrease in the use of mini computers such as AS/400 and S/36. In addition, all of the
surveyed hotels used various generations of Pentium personal computers (PCs), with a
majority of them using P3. This contradicts the findings in 1997, during which
non-Pentium PCs were still widely used, even though Pentium PCs were available.
This finding shows that hotels in Hong Kong, while not the most high-tech oriented,
were not lagging far behind in terms of the adoption of computer hardware. Since the
recent generation of Pentium PCs can accommodate advanced graphical software,
Apple Macintosh computers, which 31 per cent of hotels were still using in 1997, were
simply discarded in 2003.
In terms of IT equipment and services that were available to guests, hotels in 2003
were generally able to provide a full range of facilities that had been only partially
available in 1997. Examples of the facilities that were available in all hotels include
computers, e-mail, fax, internet access and printers. It should also be noted that all
hotels had set-up home pages on the internet in 2003, while the corresponding figure in
1997 was only 50 per cent. Lastly, 71 per cent hotels had a connection to the central
reservation systems (CRS) in 2003.
 1997 (n ¼ 48) 2003 (n ¼ 21)
Hotel information
Percentage of total Percentage of total technology
Operating systems used in hotels
applications
Windows 83 100
Novell Netware 40 62
UNIX 23 48 175
AS/400 0 29
DOS 79 24
RS/6000 0 14
Mac 15 10
LINUX 0 10
OS/OS2 4 0

Application software/systems used in hotels a

Microsoft Office 71 76
FIDELIO 21 38
HIS 48 33
ACCOM 21 5
DELPHI 2 5
MAXIAL 4 5
PRISM 2 5
WordPerfect 44 0
Lotus 42 0
MICROSS 21 0

Hardware platforms
Mini
AS/400 40 29
S/36 25 0
RS/6000 2 10
PCs
P4 43
P3 67
P2 33
P1 5
586 77
486 85
386 56
286 29
Mac 31 0

IT equipment and services provided for guests

Business centre 85 95
Computers 83 100
Email 42 100
Fax 79 100
Internet 48 100
Printers 73 100
Voice mail 33 86
Teleconferencing 17 29
Centralised control system 2 57 Table II.
Technical information
(continued) on hotels
IJCHM 1997 (n¼48) 2003 (n ¼ 21)
17,2 Percentage of total Percentage of total

Hotels have a homepage on the internet 50 100

Cost of initial set up
176 #$20,000 60 25
$20,001-50,000 30 50
$$50,001 10 25
Homepage set-up by
Group/Chain 57 45
Outsourcing 36 30
Hotel’s IT/IS department 7 25
Hotels have a connection to the central reservation
system (CRS) 66 71
Table II. Note: aApplication software/systems that were used in only one hotel are not included in this table

Behavioural aspects
Hotel employees generally picked up their IT skills through on-the-job training (95 per
cent). About half of the hotels (57 per cent) also provided course-based IT training to
their staff. The constraints or difficulties in organising training sessions, as revealed
by the interviewees, were mainly resources, budget constraints (33 per cent) and time
constraints (14 per cent). Hotel managers also revealed that formal IT training to staff
has been insufficient. They, however, blamed the high turnover rate in hotels, where
most training happens on the job. As a result, skills were passed over from one
employee to another in an unstructured manner, which easily led to inconsistent
standards of IT utilisation. In particular, the interviewees commented that managerial
staff needed to be trained to appreciate the strategic and tactical value of IT.
Table III lists the findings of the survey on behavioural IT aspects in hotels.
Moreover, in 2003, only 43 per cent of hotels indicated that their guests were
positive about the provision of technologies, whereas the equivalent figure in 1997 was
70 per cent. Guests in most hotels (90 per cent) expressed the view that the provision of
technologies was sufficient or very sufficient. For particular technologies that can be
used to improve service quality, other than internet connections which 29 per cent of
the hotels had agreed were useful, there did not appear to be a specific technology
which most hotels found useful. In other words, with the probable exception of the
internet, hotel managers did not believe that using a specific technology can help
improve service quality. Lastly, 38 per cent of the hotel managers suggested that their
hotels need to upgrade their IT equipment, and 29 per cent recommended that the PCs
in their hotels should be linked. Compared to the findings in 1997, hotels in 2003 leaned
towards connecting their PCs instead of simply asking for an equipment upgrade.
Such a change is probably due to the growing popularity of PC networking, and thus
the optimisation of resource sharing.

Discussion
Shelly et al. (2002) stated that because strategy is put together based upon the
fundamental building blocks of information, a successful business framework
should consist of IT as an essential component in the strategic planning process.
 1997 (n ¼ 48) 2003 (n ¼ 21)
Hotel information
Percentage of total Percentage of total technology
IT training provided for staff
applications
On-the-job training 79 95
Course-based 33 57
Train by group 8 0 177
Practical issues/difficulties in organising training sessions
Resources and budget constraints 10 33
Time constraints 13 14
Inconsistency of user’s computer knowledge 0 5
Human/Managerial factors 21 0
Guests’ view on provision of technologies
Attitude
Positive 70 43
Neutral 30 52
Negative 0 5
Sufficiency
Very sufficient 10 10
Sufficient 80 80
Not sufficient 10 10
Particular technologies that can improve service quality
Internet connection 33 29
Speed of computer 0 14
Teleconferencing 15 10
PC/network upgrade 4 0
Notebook rental 0 10
Suggestions for overall technical improvement
Upgrade hardware, software and computerised office 63 38
PC network link-up 4 29
Internet 2 10
Provide training to users 2 5 Table III.
Support PC conductivity 2 0 Behavioural aspects

This approach is highly emphasised in the areas of engineering and science. In these
areas, managers understand that, without information, business activities can easily
become guesswork. In the context of hospitality management, Peacock (1995) made a
similar claim that a strategy will become fruitless speculation if there is no information.
Kasavana and Cahill (1997) thus strongly advocated the use of computers to achieve
the goal of incorporating information into the hospitality strategic planning process.
However, computers tend to merely be used to duplicate the existing paper system.
A computer can become part of the strategic planning process of a hospitality
organization only when hotel managers make full use of it.
In the context of the technology used in Hong Kong hotels, there have been some
significant changes since the previous survey in 1997, especially in the use of new
versions or models. However, a paradigm shift does not seem to have occurred on the
level of IT utilisation. On the basis of the interview findings, hotels in Hong Kong were
able to adopt IT to improve business operations, and the IT penetration rate has
generally increased. Nevertheless, hotel managers also revealed that IT is mainly used
for clerical or operational functions. In other words, IT applications predominantly fall
in the lower level of the clerical-operational-tactical-strategic hospitality management
IJCHM hierarchy as defined by Gamble (1988). That is, hotel decision makers do not seem to
17,2 realise the importance of IT for the purpose of developing business strategies.
Therefore, in most cases, IT is not treated as part of the strategic planning process. The
small size of EDP/MIS departments in hotels and their role in the hotel management
structure truly reflects this unfortunate situation. On the whole, EDP/MIS managers
are largely disconnected from senior management positions. They therefore have no
178 direct involvement in important decision-making of the hotel. IT budgeting and
accounting are handled on an annual basis subject to the approval of the financial
controller, who is usually the immediate supervisor of an EDP/MIS manager.
Hotels in Hong Kong, and very likely in other regions, are not fully utilising IT
facilities to their fullest capability. Such an underutilisation occurred in processing
speed, storage space and hardware connectivity. Previous studies have stated that
hotels in the UK were not making full use of IT capacity (Main, 2002) and that the level
of IT commitment was insignificant in hotels in Singapore (Leong, 2001). In addition,
they found that hotels rarely used state-of-the-art hardware or software technology.
The fact that hotels lagged behind in technology applications, compared to other
service industries such as business and financial management, was largely due to the
nature of customer services (Sheldon, 1997).
Hotel managers are now generally under pressure to increase profitability with the
same or fewer resources. An approach to ease such pressure is to integrate IT
extensively into the business environment to reduce costs and improve efficiency. It is
well known that effective IT applications require the knowledge and professionalism of
both the managers and the operating staff (Go et al., 1994). A challenge now faced by
most, if not all, hotels is the existence of a large gap in the management hierarchy,
especially between the senior hotel directors and junior hotel staff in relation to IT
utilisation. The existence of such a gap is likely due to a lack of enthusiasm on the part
of senior hotel decision makers in utilising IT, while the junior hotel managers or
operators are in favour of utilisation.

Conclusions
The international hotel industry has been, and will be, facing a technology-based
revolution. High profile and “high-tech” services have become a requirement for
demanding and sophisticated hotel guests. A new challenge for hotel managers in the
21st century is how to integrate the new, complex and varied services and IT systems
into their existing business operations.
As previously stated, the emphasis in most Hong Kong hotel IT applications is
primarily on administrative and operational functions. In other words, IT is still
largely being considered as a tool or simply an image instead of as an important
constituent in the strategic planning process of a hotel. Sadly, the non-strategic
incorporation of IT into hotel management hinders full IT utilisation. This, in turn,
may result in the loss of competitive power in regional and worldwide hotel markets.
Most hotels do not seem to be in favour of adopting advanced software technologies
such as Artificial Intelligence-based systems in assisting with either their daily
business operations or long-term strategising. Such a dearth in state-of-the-art IT
facilities could be due to the transactional nature of the hotel business. Since providing
quality customer services always remains the highest priority, hotel managers simply
do not attempt to strive for high-tech applications as do engineering and military
managers. In short, a reliable IT environment rather than high-end IT facilities is Hotel information
viewed as necessary in the hotel industry. technology
Recommendations for practitioners
applications
It is important for hoteliers to proactively incorporate IT into their efforts to improve
service quality. An ongoing improvement of IT knowledge for all hotel employees can
help achieve this goal. An overall upgrade in IT proficiency can then be assured in the 179
hotel environment. In addition, hotels should remain in close contact with the IT
industry. Such close contact is necessary to keep hoteliers updated on the latest
IT developments. Hotel managers can then integrate the appropriate IT facilities into
their businesses. This, in turn, will enable hotels to remain competitive in the industry.
After all, IT capabilities are limited more by the hotel management’s attitude,
training, skill, ambition and financial situation rather than by the technical limitations
of hardware and software systems. Besides, most, if not all, professional bodies
relating to the hotel sector do not seem to be taking an active role in promoting the
strategic use of IT. This matches with the finding of a prior study performed in the UK
(Main, 1995). In view of the lack of strategic promotion of IT in the hotel industry,
EDP/MIS managers, therefore, urgently need to play a more aggressive role in
bridging the gap between the technical experts/equipment and the non-technical hotel
managers. To achieve this goal, hotel EDP/MIS departments should go beyond simply
handling data processing in an electronic environment as they have done in the past.
To ensure the smooth operation of IT facilities, hotel EDP/MIS managers should
actively participate in vendor/supplier contacts and software/hardware evaluations.
At the same time, they should provide professional advice to department managers on
IT capabilities and inform technical computing professionals about the importance of
business goals. In this approach, data processing, while still an essential part of the
hotel industry, becomes only a small portion of the information processing activities.
Hence, if opportunities emerge, EDP/MIS managers should participate more at all
levels of business decision-making. Seeing that information is crucial to the
management of all types of organisations, IT can contribute more than technical
applications and can be part of the management approach emphasising quality
services in the hotel business.

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