CHAPTER 1

The Hospitality Service Strategy

HOSPITALITY INDUSTRY
• Food, drink, and lodging services
– Theme parks
– Airlines
– Gaming
– Cruise ships
– Trade shows
– Meeting planning
– Conventions

Guestology
• Guests versus customers
• Treat customers like guests
• Guests are studied
– Behaviors observed
– Wants, needs, and expectations discovered
– Service product tailored to meet demands

Customer Expectations
• Drive customers’ evaluation of quality and value of experience
• Guestologist

THE SERVICE INDUSTRY

– Intangible part of transaction relationship between provider organization and its customer, client, or
guest
• Service package
– Tangible
– Intangible

Nature of Services
• Partly or wholly intangible
• Consumed at the moment or during period of production or delivery
• Interaction between service provider and customer, client, or guest

Interaction Relationships between Customer and Service Provider

Service Industry
• Industrial - Service - Experience
Economy Economy Economy
• From acceptable goods to memorable experiences

Guest Experience
service product + service setting + service delivery system
• Unique experiences
• Servicescape
• Service delivery system

Service Encounters
• The heart of service
• Moment of truth
• Critical incident
• Organizational use in the future

QUALITY, VALUE, AND COST

Quality - Difference between quality guest wants and quality guest gets
Qe = Qed – Qee
• Affected by changes in guest expectations or organizational performance
• High Qe - exceptional service experience
• Independent of cost or value

Value
• Quality of guest experience divided by all costs incurred by guest to obtain experience
Ve = Qe / all costs
• Low quality and low cost
• High quality and high cost
• Adding value

Cost
• Price
• Opportunity Costs
• Time
• Risks
• Tangible and Intangible
• Financial and Non-financial

Who Defines Quality and Value?

• Intangibility Service and variability of guest expectations
• No objective determination of quality level
• Only guest can define quality and value in hospitality field.

Importance of Guestology
• Service industries like hotels, restaurants, travel agencies that customers return to are the ones that
take the time to figure out what customers seek in the guest experience, offer it and then make clear in
all they say and do, that it was a pleasure that customers sought it out from them.
• If this organization understands the customer and gave them what they seek in that experience,
customers will like them, ascribe high value to that guest experience provided, return when they need
that service and tell their friends and neighbors what a terrific place that organization is.

CHAPTER 2
Meeting Guest Expectations through Planning
Generic Strategies
• Low-price provider
• Differentiate
• Market niche

A Lower Price
• The low-price provider tries to design andprovide pretty much the same service that the competition
sells, but at a lower price.
• Ex. Airlines; Supermarkets; Appliance Centers
• Management focus on maximizing operational or production efficiencies to minimize organization’s
cost.

A Differentiated Product
• Hospitality organizations all want to be perceived as offering a service product that is different in
ways their customers find favorable.
• H2O Hotel;

Brands
BRAND –unique design, sign, symbol, words, or a combination of these, employed in creating an image
that identifies a product and differentiates it from its competitors.
• Brand image – quality, credibility, satisfaction in the consumer’s mind
• Brand name – identifies or represents a firm. A high-quality brand image enables a company to gain
acceptance or anything new it brings to the marketplace. Ex. Walt Disney; H&M; SM; Gucci; etc..

A Special Niche
• When an organization try to find and fill aNparticular market gap or niche.
• Focus on the specific part of the totalmarket by offering a *special appeal to attract customers in that
market segment.
• *quality, value, location or exceptional
Example: Senior Citizen- Cruise; Holy Land Vegan

HOSPITALITY PLANNING CYCLE

The Hospitality Planning Process

Looking Around
• Environmental assessment
• Strategic premises
• Determine key drivers!
• Look around for opportunities and threats, w/c defines strategic premises.
• What forces will impact their business in the future?
• What customers will want in that future environment?

Looking Within
• Organizational hopes – Vision statement
• Organizational purpose – Mission statement

Environmental Assessment
• Overall environment
– Economy
– Society and demographics
– Ecology
– Politics
– Technology

• Industry environment
– New entrants
– Bargaining power of suppliers
– Bargaining power of buyers
– Rivalry among existing firms

• Operating environment
– Competitive position
– Customer profiles and market changes
– Supplier relationships
– Creditors
– Labor market

Environmental Assessment Factors

• Quantitative-causal models
– Econometric models
– Single and multiple regression
– Time series models
– Trend extrapolation

• Qualitative or judgmental models

– Sales force estimate
– Customer survey and market research
– Scenario development
– Brainstorming

Capacity Management
• Yield management
– Airlines
– Hotels
– Reservation process
WHAT THE FUTURE MAY HOLD
Changing Demographics
• Generations X, Y, or the Millenniums and the Next gens, Millennials
• Demographic implications
• Different way of thinking

More Changes
• Technology
• Social expectations
• Economic forces
• Competitors

• Other relevant groups:

– Resource suppliers
– Capital suppliers
– Labor supply
• Surprises

Strategic Premises
• The hospitality organization draws conclusions about the future of its industry and market from its
environmental assessment, and then uses this information to make the assumptions, called strategic
premises.

Internal Audit
• Core competencies
• Internal assets
• Vision and mission statements

Asking Customers What They Want

DEVELOPING THE SERVICE STRATEGY

Excellent Service Strategy

• Quality
• Value
• Service
• Achievement

• Supporting strategies:
Service product, Environment, Delivery system

Action Plans
• Key action-plan areas:
– Management, Staffing, Capacity utilization, Finance, Marketing

Things to Remember
• Uncertain future - Even with planning, anything can happen
• Involving employees in planning - Get employees on board with company plans and goals

CHAPTER 3
Setting the Scene for the Guest Experience

Themes
• Theming – when organizations have used the environment to create a sense of fantasy.
Theming is one approach toward achieving that goal.
• Themes create fantasy
• To theme or not to theme?
– Limitations, Consistency
– Any new elements should remain consistent with the theme
– Can add value if used effectively, creates as emotional connection with the experience
– Opportunity to add “wow” to the guest experience

• Maintaining fantasy illusion

– Control and focus
• The guest should see what the storyteller wants them to see.
• Limit where the guest can go and actually see.
– Architecture
• Structures and design
– Sights and sounds
• music

WHY IS THE ENVIRONMENT IMPORTANT?

Expectations
• Environmental influence
• First impression
• Restroom test

Guest Mood
• Environment sets and maintains mood
• Consistency
• Cleanliness
• Architecture
– E.g., Main Street U.S.A. in Disney World

Employee Satisfaction
• Environment should be supportive and compatible
• Happy employees
• Organizational commitment to guest satisfaction and service quality
• Fun work setting

Setting as a Part of Service

• Service production “factory”
• Major part of what guest is paying for and seeking from guest experience
• Quality of environmental context’s affect on the following:
– Quality of experience itself
– Guest’s opinion of hospitality organization

Functional Value of the Setting

1. Safety – Well lit and Uniformed employees
2. Ease of use – Signage and Clear self-service technology directions

A MODEL: HOW THE SERVICE ENVIRONMENT AFFECTS THE GUEST

Guest Responses to Environmental Influences

Environmental Components
• Ambient conditions
• Spatial use
• Functional congruence
• Signs, symbols, and artifacts
• Other people
– Employees
– Other guests

Servicescape
• Definition
• Unique to each guest
• Differences in perceptions
• Factors that moderate individual responses

RESPONDING TO THE SERVICESCAPE

Psychological Responses
• The senses
• Information processing
• Rich and lean environments

Cognitive Responses
• Expectations and servicescape
• Nonverbal communication

Emotional Responses
• Degree of arousal
• Degree of pleasure/displeasure
• Try to create elements of arousal and pleasure to gain guest’s emotional interest

The Bottom Line: (Come and Stay or Stay Away)

• Servicecape perceptions can encourage the guests to stay longer and come again or go away and stay
away.
• Hospitality organizations must work hard to create environment that encourage the longer stays and
repeat visits that result in increased revenues.