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Baihaki - Exploring Current Benchmarking
Baihaki - Exploring Current Benchmarking
www.emeraldinsight.com/1463-5771.htm
BIJ
19,6 Exploring current benchmarking
practices in the Egyptian
hotel sector
730
Mohamed Nassar
College of Business Administration,
Gulf University for Science and Technology, West Mishref, Kuwait
Abstract
Purpose – The purpose of this paper is to investigate the current state, understanding and opinions
of benchmarking in the Egyptian hotel sector in order to establish its perceived benefits, obstacles, and
possible improvements.
Design/methodology/approach – By way of a three part structured self-administrated
questionnaire, a representative sample of 128 two, three, four and five star hotels (giving a response
rate of 29 percent) in Sharm El-Sheikh, Cairo, Alexandria and Luxor were examined. Descriptive
statistics were drawn from general hotel data, in addition to data pertaining to the understanding of
benchmarking and the impressions or experiences of its barriers and future use.
Findings – A generally positive attitude towards benchmarking predominated, with the majority of
participants understanding benchmarking to be a quality enhancement tool that can bring about
better service. Most perceived it to be a useful and inexpensive strategy to connect to other businesses.
Furthermore, senior management staff were seen to play a crucial role in quality improvement.
However, barriers to its wider or continuing use exist, with 25 percent of participants unwilling or
unsure to consider its usage in the future. Limitations of benchmarking included too much data
collection and the unwillingness of potential benchmarking partners in sharing data.
Research limitations/implications – Identifying specific obstacles to effective benchmarking
must be undertaken so that they may be practically overcome. In addition conducting multiple case
studies to compare benchmarking practices around the Arab world, or in conjunction with the US and
UK, would be of great value to the industry.
Originality/value – There is an absence of empirical research into benchmarking applications in the
hospitality industry, especially in North Africa and the Middle East. The present study addresses the
lack of data regarding benchmarking within the context of the Egyptian hotel sector.
Keywords Benchmarking, Hotels, Egypt, Quality improvement, Tourism
Paper type Research paper
Introduction
Benchmarking is the exercise of establishing the highest standards of excellence for
products, services, or processes and identifies the improvements necessary to reach
those standards, commonly termed “best practices” (Camp, 1989a, b; Elmuti and
Kathawala, 1997; Zailani et al., 2008). Specifically, “benchmarking is a continuous
systematic process for evaluating the products, services and work of organizations that
Benchmarking: An International are recognized as representing best practices for the purpose of organizational
Journal improvement” (Spendolini, 1992, p. 9). This method has recently been developed as a
Vol. 19 No. 6, 2012
pp. 730-742 management tool and has drawn wide attention from various disciplines including
q Emerald Group Publishing Limited
1463-5771
engineering, education, business and hospitality. It was originally initiated by Xerox in
DOI 10.1108/14635771211284297 the 1970s as Japanese competition in the copier market prompted the company to
increase its productivity and decrease costs. The ultimate objective of benchmarking is Current
to improve processes to meet customer expectations (Omachonu and Ross, 1994). benchmarking
Benchmarking essentially promotes learning and quality improvement through
management. By allowing companies to become aware of new and innovative practices
approaches to solving issues facing management, it facilitates learning which in turn
provides the basis for training. A valuable aspect of the benchmarking process is the
opportunity it presents to learn from contexts outside an organization’s usual frame of 731
reference (Cox et al., 1997). Further, by helping organizations set achievable goals that
have been proven successful in other settings, benchmarking is a vehicle to improve
performance. It thus works to overcome disbelief in or resistance to alternative
approaches to achievement and overall organizational enhancement (Fuller, 1997).
Camp (1989a) and Zairi (1996) observe that benchmarking is a way to contrast
organizational practice with desired outcomes in order to produce improvement. Other
benefits include assisting firms to better meet client requirements, recognizing
organizational strengths and weaknesses, inspiring constant operational enhancement
and functioning as a cost-effective means of gathering inventive ideas (Smith et al., 1993).
Kozak (2003) presented an excellent analysis of organization benchmarking, performance
evaluation of a particular organization and its departments, and destination
benchmarking, which involves all service elements such as transport, accommodation,
leisure and sport, hospitality and local attitudes, for developing a specific benchmarking
methodology that is relevant in the context of international tourism destinations.
Benchmarking is increasing in popularity, particularly as a tool for continuous
improvement and cost cutting (Rigby, 2011). Organizations using benchmarking
strategies have been found to achieve savings of as much as 30-40 percent of their
operating costs (Elmuti and Kathawala, 1997; Camp, 2006; Zailani et al., 2008). Because
it establishes methods of measuring each area within an organization in terms of units
of output as well as cost, the process generates data that can support more effective
budgeting, strategic planning, and capital planning.
Benchmarking is therefore “a positive, practical process to change operations in a
structured fashion to achieve superior performance” (Camp, 1998, p. 10). Elmuti and
Kathawala (1997) assure that benchmarking enables companies to learn recent
innovative approaches and provides a basis for learning; therefore it can cause a desirable
change in a company’s culture involving searching inside the company for improvement
and growth. Benchmarking, especially when used in association with a well-structured
total quality management program and a continuous quality improvement program,
plays an absolute role in today’s business organization. All of these benefits are
considered important motivations for hotel businesses to learn and acquire suitable
benchmarking approaches, which will in turn have a positive effect on the performance
and overall level of service quality.
Types of benchmarking
The type of benchmark method depends on the nature of the operations used to
quantify an attribute. Two types may be distinguished depending on the nature of the
operations used to quantify:
(1) qualitative; and
(2) quantitative.
BIJ Benchmarking involves a wide range of instruments and can be linked to other
improvement instruments and strategies. Depending on approaches adopted,
19,6 benchmarking can be classified into two main categories (Hegalson, 1997). The first
category of benchmarking, called the top down approach, is imposed externally,
usually by a central department or central management agency. Such externally
imposed benchmarking is often used to set target for an agency. The second category
732 of benchmarking is called the bottom-up approach, where individual organizations
develop their own internal benchmarking projects and try to find relevant
benchmarking partners (Southard and Parente, 2007). Central departments can
support such initiatives by developing methods and helping organizations to achieve
relevant expertise and find benchmarking partners. It is also possible, especially for
larger organizations, to initiate an internal benchmarking. Internal benchmarking is
often seen as a useful first step in benchmarking. Organizations with many divisions
working on similar issues may get substantial benefits from benchmarking the
divisions internally. In the public sector this approach is particularly important for
organizations with many regional offices. Benchmarking can be used in resource
allocation decisions, for example to give an incentive to improve performance or to
introduce internal competition. It is not simple to design incentives that have no
dysfunctional effects. The measures used to assess performance have to be carefully
selected to avoid that the competitive elements introduced have undesired effects.
Externally imposed benchmarking has a number of benefits compared to internally
generated benchmarking. First, it secures participation and that experiences from many
organizations are studied and shared, particularly when large number of organizations
provide relatively homogeneous services. Second, it ensures a better overview on the
effects of different processes on performance and also on the effects of external factors on
performance. Third, it ensures standardization of method, and finally it ensures links
to the budget process and other relevant decision making. This is particularly important
if benchmarking is to be used in relation to internal competition in the sector.
Benchmarking methods
Generally benchmarking methods can be classified into three groups depending on:
(1) what is benchmarked;
(2) against what is an organization benchmarked; and
(3) how is benchmarking used (Hegalson, 1997).
Research gap
There is an absence of empirical research into benchmarking applications in the
hospitality industry, especially in areas like North Africa and the Middle East. The present
study addresses the lack of data regarding benchmarking within the context of the
Egyptian hotel sector.
Dorsch and Yasin (1998) argue that the academic community is lacking in terms
of providing and advancing models and frameworks that integrate the many facets
of organizational benchmarking. The authors also state that most of the benchmarking
knowledge available is the result of the efforts of practitioners, rather than of
researchers.
Only a few studies in the hospitality sector (Breiter and Kline, 1995; Yasin and
Zimmerer, 1995; Monkhouse, 1995; Min and Min, 1996, 1997; Phillips and Moutinho,
1998a, b, 1999; Dubé et al., 1999; Ogden, 1998; Parkan, 1996; Sadgrove, 2005) have
considered the role of benchmarking in hotel quality and have proposed various
approaches and models to improve hotel quality via benchmarking. For example,
Monkhouse (1995) examined the penetration of benchmarking in the small and medium
sized enterprise (SME) sector and confirmed that benchmarking practices in SMEs are
still embryonic. Monkhouse also argues that a range of techniques and tools capable of
accepting the idiosyncrasies of the sector need to be developed. Min and Min (1996)
conducted a competitive benchmarking study of service quality in six luxury Korean
hotels. Phillips and Moutinho (1998a, b, 1999) proposed a managerial tool to measure
the effectiveness of strategic planning that could enable the process of benchmarking
in a selected sample of hotels in the UK. Dubé et al. (1999) conducted a comprehensive
study of the US lodging industry’s best practices with the aim to “foster innovations in
current management thinking” (Dubé et al., 1999, p. 14). Studying the attitudes towards
benchmarking and current practice within the Egyptian hotel sector is a necessarily
step toward developing and improving its effectiveness.
The Egyptian hotel sector Current
The Egyptian hotel market has shown strong growth over the past few years. Many of benchmarking
the older hotel properties are currently undergoing renovation while new supply has
been created in the upper end of the market. Visitors to the country are now able to practices
choose products across a wide range of geographical destinations rather than in a
distinct center (Cairo, Luxor, Aswan, etc.) and across better-defined market segments
such as luxury or niche brands. As a result hotels are more able to protect their yield, 735
whereas previously all hotels were competing within the same market. Many
established international hotel chains such as Sheraton, Hyatt, Hilton, Meridian, Forte
and Intercontinental currently dominate the management of first-class hotels in Egypt,
with more than 90 percent of the total rooms available in the region being owned and
managed by these well established brands. This domination of hotel chains may
encourage small and medium-sized hotels to seek service quality improvement through
the application of benchmarking to the best practices of these larger hotel chains
(Cityscapeintelligence, 2010).
The Egyptian hotel market follows the star rating system determined by the
Egyptian Hotel Association (EHA) and the Ministry of Tourism. Each registered hotel
is inspected at regular intervals by hotel registration officers from the Ministry of
Tourism. The purpose of this inspection is to assess the extent to which the hotel
complies with both a list of basic requirements and a graduated list of specifications
essential to each grade. The latter specifications are in the form of scale points
allocated in varying proportions to six factors: structural features; furnishings and
fittings; services and facilities; food; cleanliness; and amenities. In the grading of the
hotels, tests attempt to adhere to objective criteria and to avoid, as far as possible,
intangible, subjective considerations.
Methodology
This study used a descriptive approach to investigate and report on current
benchmarking practices in the Egyptian hotel sector. The main aim of the descriptive
approach is the exploration and clarification of some phenomena where accurate
information is lacking (Gay and Airasian, 2000). Such approach is intended to provide
thorough descriptions, with a view to providing material and generating assumptions
and targets for subsequent research. The descriptive approach is the most widely used
research method in behavioural science. It also serves as the “reconnaissance” phase of
an investigation in a new area in which the purpose is to identify factors, which are
most promising for experimental investigation (Gay and Airasian, 2000; McMillan
and Schumacher, 2001). The descriptive research method has proven useful for
investigating a variety of business and management problems (Gay and Diehl, 1992).
The sampling frame included hotels in four major cities in Egypt, namely Cairo
(metropolitan area), Alexandria, Aswan and Sharm el-Sheikh. The list of hotels was
drawn from the Egyptian hotel directory[1].
Data was collected using a structured self-administrated questionnaire in order to
facilitate ease of response, not least because the study population was geographically
so dispersed. The questionnaire included three sections. The first section asked
respondents to provide general data about themselves and about their hotels,
which were then statistically tested for associations with their experience of
benchmarking (where benchmarking experience is indicative of current or previous
BIJ use of benchmarking tools). Section two explored the respondents’ general
understanding of benchmarking and their attitudes towards the process. This
19,6 section also included questions about hotel managers’ perceptions of the advantages of
and barriers to benchmarking. The final section of the questionnaire explored the
hoteliers’ current and possible future intentions to utilize the process of benchmarking
with respect to other quality improvement measures.
736 Responses were collected from a total of 128 two, three, four and five star hotels,
giving aggregate response rate of 29 percent. The respondents (hotel managers/senior
management executives) comprised a representative sample of hotels of different
grades in each of the four major cities studied. Sharm El-Shiekh posted the highest
number of respondents (43 percent), followed by Cairo (24 percent), Alexandria
(19.3 percent) and Luxor (14 percent). More than half (53 percent) of the total hotels
have 50-100 rooms available for guests. There were approximately equal numbers of
responses from three, four and five star hotels, which collectively made up the majority
of participants (90 percent).
Data analysis was performed using SPSS 17 statistical software. The data under
study is classified as categorical. Therefore, two-tailed Pearson’s x 2 statistics
technique was used in order to identify whether there was any significant association
between two components or questions. This technique is fairly robust. Higher the
x 2 statistic, stronger is the relationship.
90 90
80 80
70 70
60 60
50 50
Figure 1. 40 40
Hotel size by number of 30 30
rooms (left), hotel location 20 20
(right) and benchmarking
10 10
experience, where
p ¼ 0.659 and 0.886, 0 0
respectively Less than 50 Between Over 100 Sharm El Cairo Alexandria Luxor
50 and 100 Sheikh
100
n = 36 Current
Benchmarking experience (%)
90 benchmarking
80
70 n = 21 n = 31 practices
60 n=5
50
40 737
30
20
10
0
2* 3* 4* 5*
Hotel grade Figure 2.
Notes: Numbers above bars indicate frequency; three hotels (not shown) were not Significant association
graded but were categorized as “under classification”; these were not included in the between benchmarking
and hotel grade
calculation of the x2 statistic; p = 0.047
and benchmarking. However, that most hotels in the locations selected – and hence in
the sample under investigation – are owned or managed by international chains is a
feature of the sample data that cannot be ignored. The absence of statistically
significant associations of hotel size and location with benchmarking experience may
be a result of many international hotel chains using benchmarking tools as a well
established and mandatory part of their protocol.
Attitudes towards benchmarking. The majority of hotels surveyed have introduced
benchmarking to their business in an attempt to achieve the highest standard of
excellence in their services for their customers (69 percent). Among those who have
experience in benchmarking, almost two-thirds (65 percent) reported its effectiveness
in their hotel operation.
A large and significant proportion of participants perceived benchmarking as
a useful practice to assess performance (Table I) and it was commonly found to be a
useful way to establish connections with other hotel businesses. Most did not view
benchmarking as a tool suitable exclusively for large hotel chains which supports the
finding that small, medium and large hotels did not significantly differ in their
experience of benchmarking. As the majority of participants agreed that benchmarking
is both a competitive strategy and a way of improving quality, it belies the general
understanding of the benchmarking process as intended in essence to be a learning
process as well as a means of increasing competitiveness and quality. These findings
60
n = 65
50
40 739
30 n = 34
20
10
0 Figure 3.
TQM Monitoring and Quality Benchmarking Other The different quality
Evaluation Assurance improvement tools
Notes: Numbers above bars indicate frequencies; a number of hotels use a currently adopted by
hotels
combination of tools
Reason to adopt %
The survey asked respondents to identify what factors would encourage them to adopt
or to continue to adopt benchmarking in their business (Table III). Respondents
indicated that they would be encouraged to adopt benchmarking if its effectiveness
could be proven in their operation (27 percent) and if it could help them provide quality
service to their customers (24 percent). When respondents were asked about their
intention in using benchmarking, hotel businesses expressed that they will adopt
benchmarking or will still use benchmarking in their hotel operation (67 percent).
Determining organizational readiness is therefore a worthwhile exercise. This finding
supports Paddock (1997), who argued that more businesses will use benchmarking if
they recognized that it could enhance an organization’s understanding of its own
operations, support the strategic planning process and encourage the development of
accurate measures of productivity.
About 75 percent of participants stated that they are planning to use or will
continue to use benchmarking in the future. Although this is not an overwhelming
majority (approximately 16 percent were unsure and 9 percent stated they would not
adopt the practice), this positive attitude does reinforce the usefulness of benchmarking
as a successful venture.
Note
1. Egyptian hotel directory, www.eha.org.eg
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12 January, available at: www.foodproductiondaily.com/news/ng.asp?id¼73317-prologis-
benchmarking-logistics (accessed 10 June 2011).