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Benchmarking The Quality of Hotel Services: Managerial Perspectives
Benchmarking The Quality of Hotel Services: Managerial Perspectives
Introduction
Over the last decade, the Korean hotel industry has grown steadily which has
resulted in overconstruction of hotels and increased competition among hotels.
In the wake of increasing competition, a growing number of hotel managers
have begun to realize the importance of service improvements that can be
converted to a competitive advantage. In fact, a recent survey of North
American, Western European, and Japanese managers showed that 78 per cent
of the surveyed managers believe service improvements are the key to
competitive success[1]. Service improvements usually mandate the
establishment of service standards and the measurement of service quality. The
measurement of service quality, however, is not an easy task due to the
intangible and elusive nature of service quality.
There are very few precise measures of service quality mentioned in the
literature. Nevertheless, quite a few attempts have been made to assess service
quality[2-6]. One of the most well-known efforts may be the SERVQUAL
instrument introduced by Parasuraman et al.[6]. SERVQUAL is a concise
multiple-item scale which was designed to assess the quality of firms in a wide
range of service categories. SERVQUAL is intended primarily for identifying
the key dimensions of service quality and their contributions to overall
customer satisfaction as perceived by current and past customers of a service
firm. Although SERVQUAL may help identify the key determinants of service
quality, SERVQUAL alone may not help evaluate the firm’s comparative
service performance. In this era of global competitiveness, the firm should
constantly strengthen its competitive edge by surpassing the service
performance of other firms and should lure prospective customers away from
its competitors by gaining the position of “the best of breed”. This paper
proposes the use of competitive benchmarking as a means of comparing the
International Journal of Quality
service performance of Korean luxury hotels and utilizes an analytic hierarchy
& Reliability Management,
Vol. 14 No. 6, 1997, pp. 582-597,
process (AHP) and competitive gap analysis as reliable service quality
© MCB University Press, 0265-671X measures.
Competitive benchmarking as a service improvement tool Benchmarking
Benchmarking is a continuous quality improvement process by which an the quality of
organization can assess its internal strengths and weaknesses, evaluate hotel services
comparative advantages of leading competitors, identify best practices of
industry or functional leaders, and incorporate these findings into a strategic
action plan geared to gain a position of superiority. Benchmarking is applicable
to a wide array of industry including the hotel industry and has two distinctive 583
approaches: competitive and process benchmarking. Competitive
benchmarking aims to measure organizational performance against that of
competing organizations, whereas process benchmarking aims to measure
discrete process performance against organizations that lead in those
processes[7]. Within the basic frameworks suggested by Camp[8] and Balm[9],
the steps of competitive benchmarking may consist of:
Step 1: Identify and prioritize salient service attributes that influence the
overall service quality in hotels.
Step 2: Develop service quality standards as benchmarks.
Step 3: Conduct competitive gap analysis.
Step 4: Develop strategic action plans for continuous service quality
improvement.
Following the above steps, this paper focuses on competitive benchmarking of
Korean luxury hotels.
Hilton, Hyatt, and Lotte – during the past year (April 1994 through March 1995).
Of the subjects 82 per cent said they have had more than one year of experience
as employees for the surveyed hotels; 41 per cent have had more than five years
of experiences. This sample profile clearly suggests that subjects are frequent
service providers at the hotels and consequently are familiar with both actual
customer needs and the workings of the hotels based on their years of
experience. Although tracking customer perceptions is one way of measuring
service quality in hotels, it is important to see how management (hotel
employees) treated customers from their point of view because hotel employees
are generally more knowledgeable about “proper procedures” in their work than
are customers. As such, employee input and feedback are essential for bridging
the service gap between the management perception and customer expectation.
For example, Covin and Slevin[18] used only management perception in their
assessment of a firm’s service performance.
To analyse employee input and feedback, hotel employees were asked to rate
on a five-point Likert scale the relative importance of the 14 service attributes as
they relate to the evaluation of hotel service quality (Tables I and II). Herein, we
decided to adopt a five-point scale, because it is commonly used in other prior Benchmarking
studies (e.g. [5]). Attributes considered most important in forming service the quality of
quality impressions are both cleanliness of a guest room and courtesy of a hotel hotel services
staff. This finding coincides with the recent survey conducted by Consumer
Reports[19]. Both size of a guest room and hotel/tour guide information were
perceived to be somewhat important by the subjects. Most subjects also believe
that hotel/tour guide information is not significantly important for forming 587
quality impressions of their customers.
The subjects further indicated that promptness of check-in/check-out,
swift/smooth handling of complaints, and convenience of reservation were very
important attributes in evaluating front-office services during their customers’
hotel stay. The subjects also believe that their customers will appreciate swift
handling of customer complaints because such handling may reflect the
reliability of hotel services.
To test the existence of any perceptual differences between hotel employees
and their customers (guests), we additionally surveyed a selected group of 180
hotel guests. From this group, we received 113 valid responses. The
comparative results for the 14 service attributes are presented in Tables I and II.
Although a series of paired t-tests indicate some disparities in the absolute
importance of the service attributes, cleanliness and employee courtesy still top
the list for both hotel employees and their guests. Overall, the Wilcoxon-Mann-
Whitney test shows that the views of hotel employees and guests do not differ
significantly as to which attributes are most important in evaluating hotel
service performance. That is to say, no significant difference was observed with
respect to the priority rank of hotel service attributes at α = 0.05.
Criteria
Attributes Attributes
Figure 1.
Hierarchy of Inter- Chosun Shilla Hilton Hyatt Lotte
benchmarking Korean continental
luxury hotels
Note: Numbers in parentheses represent given weights
general criteria are placed which are usually considered important in evaluating Benchmarking
the hotel service performance. These criteria are room values and front desk the quality of
services. At the third level, these criteria are decomposed into 14 service hotel services
attributes that may affect the overall service quality in hotels. These attributes
are connected to the bottom level of a hierarchy represented by six major
Korean luxury hotels under evaluation.
589
Service performance evaluation of Korean luxury hotels
For illustrative purposes, the baseline scenario involves evaluating service
performances of six Korean luxury hotels chosen for this study because of their
similar characteristics. Under this scenario, we estimated relative weights
(priorities) of each criterion, attribute, and hotel under each node of the
hierarchy through a series of pairwise comparisons. These weights represent
hotel employees’ judgements of the relative importance or preference of the
elements in the hierarchy. As discussed earlier, these weights were determined
primarily based on the survey of hotel employees. Since these employees’
perceptions of service can be somewhat subjective and inconsistent, the AHP
may allow some degree of inconsistency in the employees’ judgements. To
address this issue, we employed a consistency ratio (CR) which is defined
as[20,23,24]:
CR = consistency index (CI)/random index (RI) where
CI = (λmax )/(n –1),
λmax = maximum eigenvalue of the matrix of pairwise comparisons,
n = number of criteria or attributes in the consideration,
RI = mean CI of a randomly generated reciprocal matrix from a ratio scale
of 1 to 9.
Owing to the complex and time-consuming calculations, determination of
relative weights and CR values calls for the assistance of AHP software such as
Expert Choice [25]. Expert Choice is an interactive menu-driven AHP software
which runs under both DOS and Microsoft Window operating systems. Owing
to its simplicity, any user who is familiar with the personal computer (PC)
environment and understands the basic theory of AHP can use Expert Choice
without documentation[26]. Applying Expert Choice to service performance
evaluation of hotels, we obtained relative weights of criteria and attributes
along with the corresponding CR values. According to a rule of thumb
suggested by Saaty[20], a CR value of 0.10 (10 per cent) or less is considered
acceptable. In general, smaller CR values are desirable. A small CR value means
that computed weights resulting from pairwise comparisons reflect the
employees’ coherent judgements with a high degree of accuracy.
Initially, we derived local weights for the 14 attributes in terms of their
relative importance to service quality in hotels (Figure 1). Each hotel’s local
priority score and its corresponding rank in terms of each weighted attribute
are summarized in Table III.
IJQRM Criteria Attributes Hotels Priority scores Ranks
14,6
Room values Cleanliness Intercontinental 0.015 1
Chosun 0.014 2 (tie)
Hilton 0.014 2 (tie)
Shilla 0.013 4
590 Hyatt 0.012 5
Lotte 0.011 6
Comfort of a Chosun 0.014 1 (tie)
bed/pillows Intercontinental 0.014 1 (tie)
Hilton 0.012 3 (tie)
Shilla 0.012 3 (tie)
Lotte 0.012 3 (tie)
Hyatt 0.011 6
Atmosphere Intercontinental 0.013 1 (tie)
Chosun 0.013 1 (tie)
Hyatt 0.012 3 (tie)
Shilla 0.012 3 (tie)
Hilton 0.011 5
Lotte 0.010 6
Quality of fixtures Chosun 0.013 1 (tie)
Intercontinental 0.013 1 (tie)
Hilton 0.013 1 (tie)
Shilla 0.012 4 (tie)
Hyatt 0.012 4 (tie)
Lotte 0.010 6
Size of a room Intercontinental 0.014 1 (tie)
Chosun 0.014 1 (tie)
Hilton 0.011 3 (tie)
Shilla 0.011 3 (tie)
Hyatt 0.009 5
Lotte 0.008 6
Price Intercontinental 0.014 1
Chosun 0.013 2
Hyatt 0.012 3
Hilton 0.011 4 (tie)
Shilla 0.011 4 (tie)
Lotte 0.011 4 (tie)
Complimentary Chosun 0.013 1
items Shilla 0.012 2
Intercontinental 0.011 3 (tie)
Hyatt 0.011 3 (tie)
Hilton 0.010 5
Table III. Lotte 0.008 6
Local priority scores of
luxury hotels (Continued )
Criteria Attributes Hotels Priority scores Ranks
Benchmarking
the quality of
Front-office Employee courtesy Chosun 0.015 1 (tie) hotel services
services Intercontinental 0.014 2
Hyatt 0.013 3 (tie)
Hilton 0.013 3 (tie)
591
Shilla 0.013 3 (tie)
Lotte 0.009 6
Promptness of Shilla 0.014 1 (tie)
check-in/check-out Chosun 0.014 1 (tie)
Intercontinental 0.013 3
Hyatt 0.012 4 (tie)
Hilton 0.012 4 (tie)
Lotte 0.009 6
Convenience of Intercontinental 0.014 1
reservation Chosun 0.013 2 (tie)
Shilla 0.013 2 (tie)
Hyatt 0.012 4
Hilton 0.011 5
Lotte 0.009 6
Handling of Chosun 0.013 1 (tie)
complaints Intercontinental 0.013 1 (tie)
Hilton 0.012 3 (tie)
Shilla 0.012 3 (tie)
Hyatt 0.012 3 (tie)
Lotte 0.009 6
Efficiency of a Intercontinental 0.014 1
business centre Hilton 0.013 2 (tie)
Hyatt 0.013 2 (tie)
Shilla 0.012 4 (tie)
Chosun 0.012 4 (tie)
Lotte 0.007 6
Quality/sufficiency Chosun 0.012 1 (tie)
of sports/ Intercontinental 0.012 1 (tie)
recreational Hyatt 0.012 1 (tie)
facilities Shilla 0.012 1 (tie)
Hilton 0.011 5
Lotte 0.008 6
Hotel/tour guide Intercontinental 0.013 1
Hilton 0.012 2 (tie)
Shilla 0.012 2 (tie)
Chosun 0.011 4 (tie)
Hyatt 0.011 4 (tie)
Lotte 0.008 6 Table III.
IJQRM Determination of the overall service leader necessitates the specification of the
14,6 set of overall (global) priorities. Subsequently, synthesis of the judgements was
made in pairwise comparisons to arrive at a single numerical value indicating
the overall priority for each hotel. Such a synthesis can be found in Table IV.
From this Table, we can identify Intercontinental as the overall service leader,
with an overall priority score of 0.187 and an overall CR of 0.00. Therefore, we
592 conclude that the Intercontinental hotel is the benchmark among the six hotels
considered in this study. This conclusion is consistent with the hotel guests’
perspectives (Table IV). In fact, the Wilcoxon signed rank test suggests that
both hotel employees and guests agree on their overall priorities of the hotels at
α = 0.05.
Sensitivity analyses
After identifying the service leader with the given weights of service attributes,
we carried out sensitivity analyses to explore the response of the overall
priority to changes in the relative importance (weight) of each attribute. The
sensitivity analyses are necessary because changing the importance of
attributes may alter the service leader. As summarized in Table V, when the
importance of price and availability of complimentary items change, a ranking
of the service leader may change due to relatively high sensitivity to such a
change. On the other hand, the service performance seems to be mildly sensitive
to changes in the importance of cleanliness, comfort, and atmosphere, while it
is somewhat insensitive to the importance of quality/sufficiency of room
fixtures and size of a guest room.
By the same token, we performed a series of sensitivity analyses for seven
other attributes related to front-office services. Table V shows that a ranking of
the hotels is also sensitive to changes in the importance of handling of
complaints, promptness of check-in and check-out, and efficiency of a business
centre. In contrast, the service performance is insensitive to changes in the
importance of convenience of reservation and hotel/tour guide information,
while it is still somewhat sensitive to changes in the importance of both
employee courtesy and variety/quality of sports/recreational facilities. These
results imply that the hotel may increase its competitive advantages over others
by substantially improving the service performance with respect to price,
Notes: aThe benchmark index represents the average score of a five-point scale defined below:
Scale for the degree of expected customer satisfaction:
5 = very satisfied
4 = somewhat satisfied
3 = neither satisfied nor dissatisfied
2 = somewhat dissatisfied
Table VI. 1 = very dissatisfied
Competitive gap Notes: bThe negative gap occurs when the service performance of a given hotel is worse than
analyses of Korean that of its benchmark (Intercontinental Hotel)
luxury hotels Notes: cGaps with asterisk marks are statistically significant at α = 0.05
atmosphere, price, convenience of reservation, efficiency of a business centre, Benchmarking
and availability of hotel/tour guide information. The Chosun hotel, however, the quality of
appears to be a service leader with respect to room fixtures, size of a guest hotel services
room, complimentary items, employee courtesy, handling of complaints, and
quality/sufficiency of sports and recreational facilities. As such, Chosun seems
to be the most competitive hotel against Intercontinental, because Chosun is the
only one that has more than six positive gaps against Intercontinental. Three of 595
these positive gaps are statistically significant at α = 0.05 (see Table VI).
In light of the above, if Chosun offers more competitive prices to its
customers, diversifies its sports and recreational facilities, upgrades its
business centre, and improves hotel/tour guide information, it may take a
position of superiority over Intercontinental. As such, Chosun’s future action
plan should include improvement in the above service categories. Its success,
however, may depend on the Chosun’s current financial capability in improving
services, the accurate assessment of return-on-investment (ROI) in terms of the
plan’s potential impact on customer service level, and the vulnerability of
Intercontinental to Chosun’s new service improvement strategy.
Concluding remarks
Recognizing that the hotel’s survival greatly depends on its ability to provide
superior service, this paper extended an application of competitive
benchmarking to hotel service quality. To sum up, this paper attempted to
combine analytical work with empirical work in developing objective measures
of actual service quality and the hotel’s relative service performance from the
management’s point of view. Our attempts have four areas of practical
significance for hotel managers. First, the methodologies such as AHP and
competitive gap analysis described in this study provide a useful framework for
operationalizing the level of competition in the hotel industry. In particular,
these methodologies may help the hotel manager determine where the hotel
stands on service performance relative to its competitors and consequently
identify specific areas of comparative advantages and disadvantages; thus, the
hotel manager can formulate viable service improvement strategies using the
proposed methodology.
Second, the hotel employees generally believe that service attributes that
contributed the most to their customers’ impressions of service quality are
cleanliness of a guest room and courtesy of employees. In this regard, the hotel
guests generally agree with the responses of hotel employees. It is not
surprising to find that the effect of “atmospheric” impressions such as
cleanliness, comfort, and decoration on the hotel guest’s perceived service
quality is significant, because those attributes may set the standard for
hospitality of the hotel. Employee courtesy also stood out in our survey as the
service attribute of the utmost importance, because the hotel service requires
frequent interaction with the contact personnel such as the hotel staff. In fact,
this finding coincides with the result of the recent survey conducted by
Consumer Reports[19]. Furthermore, since quality of prior service has a great
IJQRM impact on the repeat customers’ hotel patronage behaviour, the hotel should not
14,6 only keep the occurrence of service failure at a minimum, but also effectively
monitor customer complaints if service failure occurs.
Third, the proposed methodology can be used to measure tradeoffs among
different attributes of hotel service quality. Thus, the methodology may allow
the hotel manager to evaluate “what-if” scenarios associated with changes in
596 importance of hotel service attributes (e.g. from cleanliness to size of a guest
room). In addition, the methodology has applicability beyond hotel services to
various service settings such as hospitals, banks, and restaurants which often
need to identify inter-organizational differences in service quality.
Fourth, this study incorporates the customers’ perception of service quality
into the hotel benchmarking process rather than merely relying on the inputs of
hotel employees. Although hotel employees may see a larger picture than their
customers in evaluating hotel service performance, we cannot still ignore the
notion that the service performance may be largely affected by the interactions
between hotel employees and guests. Congruent with such a notion, we found
no marked difference between hotel employees and guests in prioritizing the
importance of hotel service attributes. Also, there is greater consistency
between hotel employees and guests as to how they rated the overall service
performance of the respective hotel.
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