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CRITICAL SUCCESS FACTORS IN

TAIWAN INTERNATIONAL TOURIST HOTELS

Robert T. Y. Wu
Jinwen University of Science and Technology/
College of Hospitality and Tourism/
Department of Hotel Management
Hsien-Tien City, Taipei County, Taiwan
e-mail: robertwu@just.edu.tw

ABSTRACT

The purpose of this study is to explore a feasible and comprehensive critical success factor (CSF)
construct for Taiwan international tourist hotels to improve their competitive advantage. The earliest application
of the critical success factors began in the Information Systems (IT) field (Daniel, 1961), and later extended into
management (Grunert &Ellegaard, 1993; Brotherton, Miller, Heinhuis, & Medema, 2003). In hospitality, Geller
(1985) began to use the CSF approach in designing hotel information systems. Since then, many hospitality
based CSF studies were conducted, with diverse objectives, foci, context and results (Brotherton, 2004).

CSFs are the factors that must be achieved if the company’s overall goals are to be attained (Brotherton
& Shaw, 1996). Since international tourist hotels in Taiwan are facing severe competition both nationally and
internationally, the application of the CSF approach can provide feasible and comprehensive guidelines for
successful management.

This study employed document analysis as the main research method. A review of the related literature
was conducted for analyzing the contents of CSFs in Taiwan international tourist hotels. The results showed that
a comprehensive CSF construct should include both internal and external CSFs. The internal CSFs comprise
departmental/functional critical factors related to hotel operations while external CSFs include factors related to
human resource management, marketing and sales, organization, customer and finance.

Key Words: international tourist hotels, critical success factors

INTRODUCTION

Critical success factors (CSFs) in the hospitality industry was first applied in Geller’s (1985) study in
which he designed his hotel information systems. Brotherton and Shaw (1996) described CFSs as a combination
of activities and processes designed to facilitate the achievement of objectives and goals specified by a company.
As hospitality and tourism have become significant economic revenue for many European countries such as
France and Spain, critical success factors can substantially improve the hospitality industry’s capabilities in
coping with future changes by identifying core competencies that are critical for their competitive advantage
( Berry, Seider and Gresham, 1997). Since the hotel industry plays a multi-functional role in accommodating
tourists’ needs when travelling, the CSFs can help create better service capability and quality.

In 2008, there are 60 international tourist hotels in Taiwan, with a total capacity of 17,733 rooms
available for tourists (Taiwan Tourist Bureau, 2008). Since these hotels are constantly facing severe competition
both nationally and internationally, consulting with a set of critical success factors can help the hotel managers
compete with other competitors in the field, and identify the “focused specialization” aspect of hotel operation,
namely the concentration of resources and effort factors which provide the greatest competitive leverage for a
business. Brotherton (2004) further distinguished internal CSFs from external CSFs. Internal CSFs feature a
particular company’s internal environment such as its products, processes, people, and possible structures;
external CSFs refer to factors determined by the nature of the external environment a company faces. By
extending Brotherton’s (2004) notion of internal external CSFs, this paper attempts to explore a feasible and
comprehensive critical success factor construct for Taiwan international tourist hotels in order to aid their
competitive capabilities.

LITERATURE REVIEW

First, the importance of CSFs in the tourism and hospitality industry is addressed by reviewing and
analyzing CSF literature relating to hospitality. Next, CSFs for international tourist hotels are constructed from
which hotel managers can benefit by following a set of reliable and comprehensive operating guidelines for
improving the core competencies of the hotels.

Critical Success Factors in the Hospitality and Hotel Arena

The critical success factor approach has existed for some considerable time in the literature. Its
application began in Information System (IS), and later extended into management, particularly within Strategic
and Operational Planning and Management ( Brotherton, Miller, Heinhuis, &Medema, 2003; Gruert &
Ellegaard, 1993). Brotherton and Shaw (1996) reviewed CSF studies, and found that focused specialization is
the essence of CSF approach to management. They defined focused specialization as the concentration of
resources and effort factors capable of providing the greatest competitive leverage. Thus, basically CSFs are the
factors that support a company’s overall goals. Therefore, from a management perspective, the CSF approach is
a way to focus a company’s resources and efforts on factors that are critical to its success and has become an
effective strategy for businesses, including hotels.

Previous literature revealed relatively few CSF research in hospitality. Geller (1985) was the first
researcher who studied the US hotel industry and focused on applying the CSF approach to hotel information
system. In Europe, other notable hospitality-related studies were conducted by Griffin (1995), Brotherton and
Shaw (1996), Leong (1998), Hinkin and Tracy (1998), Collie and Sparks (1999), Brotherton, Miller, Heinhuis,
and Medema (2003), Ottenbacher, Shaw and Lockwood (2005), Kim and Okamoto (2006), and DiPietro,
Murphy, Rivera, and Muller (2007).

For example, Griffin (1995) identified and categorized the CSFs for hotel yield management systems.
Brotherton and Shaw (1996) conducted the first UK based CSFs in hotels and identified the six most critical
CSFs for each of the 10 department/functional areas of hotel operations. The results of this study also revealed
the technical and human dichotomy of hotel CSFs. Choosing city clubs as the research subject, Leong (1998)
explored five city clubs in Singapore to delineate their key success factors. Collie and Sparks (1999) suggested
five broad success/difficulty factors including product, staffing, financial, environmental, and customer issues.
Brotherton, Miller, Heinhuis, and Medema (2003) conducted a study to compare the CSFs in UK and Dutch,
and found that 33 out of the original 59 CSFs were statistically significant by both Dutch and English
respondents. Brotherton (2004) further studied UK corporate hotels and found that most of the original CSFs
designed in his 1996 study proved to be valid in other studies. In his study, he categorized the CSFs according
to the following areas of hotel operation: front office, food and beverage (service), food and beverage
(production), conference and banqueting, leisure operations, marketing/sales, human resource management,
accounting and control, and guest accommondation. Each category is further composed of various CSF items.

In another study, Ottenbacher, Shaw, and Lockwood (2005) investigated the CFSs affecting
innovation performance in chain and independent hotels. The results of the study indicated that market
attractiveness, process management, market responsiveness and empowerment predicted the successfulness of
new service development in chain hotels while employee training, behavioral evaluation, effective marketing
communication, marketing synergy and employee commitment were the CSFs for independent hotel
innovations. Kim and Okamoto (2006) studied hotels in Japan, and found that location, annex facilities and
development system were important components of Japanese hotels. DiPietro, Murphy, Rivera, and Muller
(2007) explored the CSFs of current multi-unit managers in a large casual dining restaurant. They found that
the CFSs of these managers were single operations, standard operating procedures, multi-unit strategic
planning, interpersonal and social responsibilities, travel and visiting units, human relations, effective
leadership, and unit level finances.

In summary, most of the above literature focused on the examination of CSFs and hotel operations.
Although the findings of these studies varied according to the themes, nationality and cultural background, the
identified CSFs can be divided into the categories of either technical (e.g. the efficiency and economy of the
hotel operations) or human (e.g. marketing and service delivery) category similar to Brotherton and Shaw’s
(1996)Technical-Human dichotomy.

A Critical Success Factor Construct in International Tourist Hotels

Brotherton and Shaw (1996) categorized CSFs into internal and external factors. Internal CSFs are
derived from a company’s internal environment, and reflect its core capabilities and competencies critical for
competition with other competitors. On the other hand, external CSFs are based on the nature of the company’s
external environment. International tourist hotels need to consider both internal and external CSFs in their
strategic planning processes to gain competitive advantage.
International tourist hotels in Taiwan are basically four or five-star hotels. According to American
Automobile Association (AAA) standard of evaluation, these hotels should be either upscale in all areas such as
stylish rooms, quality physical attributes, extensive array of amenities, hospitality and service, or ultimate
luxury and sophistication in every service area. Since these hotels serve to respond to customers’ various needs
such as events, banquets, food services and conventions, they must address the importance of both internal and
external CSFs related to hotel management and operations in order to exist and survive.

The internal CSFs comprise factors related to product, processes, people and structure, which reflect a
company’s core capabilities and competencies. For example, in his study of UK hotels, Brotherton (2004) found
41 department/functional critical factors with highest current and future priority in nine areas of hotel operations,
namely front office, food and beverage (service), leisure operations, market share, food and beverage
(production), back of house operations, and accounting and control (see Table 1). These CSFs are good
examples of internal CSFs in international tourist hotels.

Table 1
Internal CSFs with Highest Current and Future Priority

Front Office Leisure Operations


Staff attitude Cleanliness & hygiene
Accurate and efficient reservations system Attractiveness of facilities
Enquiry handling Customer safety
Staff appearance Quality of staff
Pricing, yield and profit Range of facilities
Conference and banqueting Marketing & sales
Attention to detail Hold/Increase Market Share
Enquiry handling Quality of sales team
Diary/reservation management Competitor intelligence
Flexibility of facilities Client database
Quality of facilities Effective advertising
Human Resource Management Food and Beverage (Production)
Staff development Minimizing food wastage
Morale & loyalty Using efficient production methods
Guest accommodation Use of standards & procedures
Consistent quality Maintaining high hygiene standards
Staff training Staff skills & training
Food & beverage (service) Back of House Operations
Staff attitude & appearance Planned maintenance programme
Quality of food & drink Effective cleaning regimes
High level of service Guest safety
Improved sales Laundry quality & efficiency
Accounting and Control
Prompt payment of all monies
Accurate financial reports
Note. From “Critical Success Factors in UK Corporate Hotels,” by B. Brotherton, 2004, The Service
Industries Journal, 24(3), pp. 33-34.

Various empirical studies (Griffin, 1995; Collie and Sparks, 1999; Brotherton, 2004) indicated that
most identified CSFs were internal CSFs while only a few external CSFs were considered. Therefore, it is
crucial to complement the internal CSFs with external CSFs for both hotel strategic and tactic planning
purposes.

Some empirical studies explored the external CSFs for hotels. Collie and Sparks (1999) identified five
CSFs relating to product, staffing, financial, environmental and customer issues. Pavia and Rubelj (2006)
suggested that organizational success in the hospitality industry is determined by four CSFs, including volume,
clear roles, specialization and control. In addition, Kim and Okamoto (2006) examined important factors of
hotel components from a manager’s perspective and found three CSFs, namely location, annex facilities and
deployment system.
Because of the trend of global tourism and the increasing number of international tourists,
international guests are more and more concerned about the services provided by international tourist
hotels. Tourists in Taiwan’s international tourist hotels are of no exception. These hotels are expected to
provide upscale service as well as high standards of comfort and design. The CSFs identified for the hotels
in other counties can equally serve as a reliable reference for determining factors which are critical to their
successful operation in Taiwan.

METHODOLOGY

The purpose of this study was to explore the critical success construct for international tourist hotels
in Taiwan. This study employed document analysis as the main research method. An analysis of the related
research reports, government documents, articles, journals and the relevant computer base was conducted for
designing the critical success factor construct. According to the results of the studies related to the CSFs for
hotels, it is necessary to include both internal and external CSFs in order to effectively improve the performance
of international tourist hotels. Especially, when we consider Taiwan as an important part of the global tourism,
the CSFs for international tourist hotels in Taiwan are crucial to these hotels in providing upscale service for
their guests.

RESULTS

From the above literature, a more reasonable and comprehensive construct for the hotel CSFs can be
obtained. By incorporating internal CSFs with external CSFs, the final CSF construct is formed. According to
the previous research on the CSFs for the hotel industry, the internal CSFs should at least include accurate and
efficient reservations system, enquiry handling, pricing, yield and profit, attention to detail, diary/reservation
management, flexibility of facilities, quality of facilities, staff development, morale & royalty, guest
accommodation, consistent quality, staff training, staff attitude a& appearance, quality of food & drink, high
level of service, improved sales, cleanliness & hygiene, attractiveness of facilities, customer safety, quality of
staff, range of facilities, marketing & sales, quality of sales team, competitor intelligence, client database,
effective advertising, minimizing food wastage, using efficient production methods, use of standards &
procedures, maintaining high hygiene standards, staff skills & training, planned maintenance programme,
effective cleaning regimes, guest safety, laundry quality & efficiency, prompt payment of all monies and
accurate financial reports.

The categories for these external CSFs should include human resource management, marketing and
sales, organization, consumer, and finance. For human resource management, staffing, employee recruitment,
performance, training and development are critical. For marketing and sales, market analyses, market
attractiveness and market responsiveness are important. For organization, environmental analysis, strategic
planning and organizational structure are critical. For customers, customer relationship and satisfaction are
crucial. Lastly, for finance, the scale of economy and investment are important (see Table 2).

Table 2
External CSFs for International Tourist Hotels

Human Resource Management Organization


Staffing Environmental analyses
Employee recruitment Strategic planning
Performance Organizational structure
Training Customers
Responsiveness Customer relationship
Marketing and Sales Customer satisfaction
Marketing and Sales Finance
Market Attractiveness Scale of economy
Market responsiveness Investment

CONCLUSION

International tourist hotels in Taiwan are facing challenges both nationally and internationally. In
order to retain and improve their core capabilities and competencies for existence and survival, it is necessary to
consult CSFs related to hotel operations and management. Analysis of CSF studies pertaining to hotels showed
that both internal and external CSFs are equally critical to successful hotel operations. Therefore, a construct
combining internal and external CSFs can assist hotel owners or managers in dealing with planning and
implementation aspects of the hotel management. Thus, this paper proposed some external CSFs to complement
the existing internal CSFs.

For international tourist hotels, these CSFs can be initially applied to market and environmental
analysis, and appropriate strategies for planning and implementation can be subsequently delineated. Based on
the proposed strategies, hotel managers can then dispense hotel resources and capabilities to form their unique
core competencies for competition. The main advantage of considering both CSFs is that hotel managers can
evaluate outside environment and consumers before making any important or innovative decisions.

The results of Brotherton’s (2004) study and the external CSFs from this paper can be further
investigated to identify the CSFs for different types of hotels. Particularly, in areas such as marketing and sales,
and human resource management, the CSFs should be derived from both internal and external environments
confronted by the hotels, instead of being bias toward only one side.

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