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SERVICE OPTIMISATION IN THE HOTEL SECTOR – ADDING “VALUE” WITH TECHNOLOGY & OPERATIONS MANAGEMENT TOOLS

ABSTRACT

Karolin Kokaz Ecole hôtelière de Lausanne Lausanne, Switzerland Email: karolin.kokaz@ehl.ch and Hilary Catherine Murphy Ecole hôtelière de Lausanne Lausanne, Switzerland Email: hilary.murphy@ehl.ch

This paper focuses on a review of critical business processes which are identified along with the key determinants, critical technology and environmental factors of service optimisation, particularly in the context of small &medium enterprise (SME) hotels. The goal is to discover whether hotels track / map / measure/ optimise their service processes and to further identify opportunities to be compliant and proactive in their approach to adopting new processes (and appropriate technologies) in service operations management. Methods used are; a literature review and case study approach (to determine the existing processes) and in-depth interviews (to refine the variables and determinants for the research framework). These preliminary results show that few hotels consistently map and/or optimise processes and this reflects a lack of resource allocation and prioritisation.

Key words: service optimisation, SME hotels, technology

INTRODUCTION

The hospitality industry is process driven, to a large extent. These processes involve people, equipment and services. There are certain critical processes that can be easily identified and defined e.g. the reservation process, the booking process, the housekeeping process, customer relationship management etc. These processes have remained largely static in their form and function over time with technology being introduced, mostly on an ad-hoc basis, to enhance and improve these processes. The question as to whether they add “value” and “save costs” remains unanswered to a large extent (HTNG, 2002). Nonetheless, hospitality firms are continuously fighting for improvements in productivity, service quality and profitability (Jones, 2002). One of the defining drivers of the hospitality industry which makes process re-engineering more challenging is the considerable difficulty in accurately tracking / mapping / measuring and assessing these processes in order to optimize their execution and delivery. This is further exacerbated by fluctuations in demand which typically occur at the daily or weekly level or may be due to yearly seasonality (Guerrier and Lockwood, 1988). Hospitality firms need to be able to respond quickly to changing customer demand and services requested and therefore accurate mapping of goods, services and personnel within the sector should have a positive impact on productivity, service quality and, ultimately, on profitability. This research will help to identify opportunities to be compliant and proactive in their approach to adopting new processes (and technologies) in service operations management, particularly in terms of customer facing processes and CRM.

Therefore, the main aim of this paper focuses on a review of hotels’ critical business processes which are identified along with some of the key determinants, critical technologies and environmental factors. A initial literature review enables the determination of tools & technologies available and ,at this exploratory stage, the goal is to discover the extent to which 3-5 star hotels track / map / measure/ optimize their service process. It further

identifies opportunities to be compliant and proactive in their approach to adopting new processes (and appropriate technologies) in service operations management.

LITERATURE REVIEW

Mapping and documenting processes has traditionally been done manually and may be a complex process that results in standard operating procedures (SOPs) for certain tasks. Service maps are developed in order to better understand the service system, help identify failure points to then develop procedures to avoid them, and for work simplification in order to improve the efficiency of processes. Service mapping could become a very time consuming activity, if not done properly, due to the need of observing the system to gather the necessary accurate data through time and motion studies, which are the parameters of the process to be mapped and the goal of the exercise (Harvard Business School, 1992). There is little evidence that hotels, and the small and medium sized (SME) hotels in particular, pay any regard to formalizing their processes in terms of service mapping or blueprinting. The challenge is then to optimize the processes (and therefore save costs, improve processes, enhance customer satisfaction), when no real documentation exists and/or reengineer the process in the light of customer/ strategic partner/ internal/ external requirements.

What customers want, where they go and how they want their services & products delivered is directly related to business process optimization. The key to optimizing business processes is to have detailed, accurate and complete service maps for all processes that are regularly updated with continuous data inflow. This will help identify critical activities, develop quality standards, and rigorous constant monitoring for process control, so that on the spot interventions can be achieved when needed and customer loyalty is ensured. With clear standards, appropriate tools, and process controls, quality can be increased. According to Deming, productivity is a by-product of quality and as quality improves so will productivity (Harvard Business School, 1990).

In a survey carried out by Witt & Witt (1989) among 43 hotels, only 11% of them used operations management techniques frequently. Moreover, bigger hotels (in this case estimated by the number of employees hotels had) used operations management techniques more frequently compared to the smaller size hotels: 23.1% for hotels with more than 500 employees and 8.1% for hotels with less than 50 employees. Furthermore, Okoroh et al. (2002), in the conclusion from a master thesis study, states that hotels manage their assets and services in an unstructured and/or inefficient way and those facilities management techniques could help increase productivity. Additionally, research completed in business projects that are managed by Ecole hôtelière de Lausanne Institute of Technology and Entrepreneurship (EHLITE) reveal that using operations management tools can potentially increase profitability, productivity and quality (Kokaz, 2007). This disparity between larger, corporate hotel companies and smaller entities is confirmed in research by Kilic and Okumus (2005) that shows that branded management companies had higher productivities.

Many studies in the literature have suggested that productivity growth in the service sector, and especially in the hotels, has been historically very low (Witt and Witt, 1989; Lovelock and Young, 1979). This is believed to be mostly due to the lack of management skills and not having incorporated operations management techniques that have been widely used with great success in other industries. Most of these methods require system observations, data collection, and continuous monitoring which are timely and resource consuming activities but has very high potential rewards. Technology can help obtain the necessary data for some of these operations management tools. Employee tracking, using location based devices, biometrics etc, could provide exact information on which type of activities consumes how many labour hours (or euros) and this information could be used to calculate accurate labour productivity measures and help identify the value-added activities. Similar data could help determine where the busy work periods are in order to move staff members around to help out during peak times where possible. A

few examples of how customer tracking could also help improve business operations are: for housekeeping - when to know room is free to clean it, or for F&B services - to stop preparing breakfast food if most of the customers are

already out of the hotel, etc

can be linked to inventory management tools that are part of operations management techniques.

Finally, tracking of supplies can help optimize inventory systems furthermore which

Most processes within the hospitality sector can be categorized as “customer- centric” or “hotel- centric”. The current business literature acknowledges that technologies which are currently in more widespread consumer use are related to specific processes e.g. airline check in, airport transfer, employee recognition, payment (Heracleous and Wirtz, 2006). Zimmerman et al (2004) highlight the convenience of biometrics in the “check out

process” in the retail sector and Jones et al (2007) investigate transaction speeds at points of sale (POS) that reduce queuing in the airline sector and airports. Therefore it is useful to examine those processes within the hotel experience that are customer centric, i.e. booking , reservation, check-in, payment, customer specific information requests, activation of secure devices etc. Heracleous and Wirtz (2006) agree that efficiency in process transactions through “significant process re-configuration” (p.18) along with improved customer service and convenience will be perceived as a driver by both, the customer and the industry.

SME Hotels Though the larger hotels have recognized and exploited the importance of standard operating procedures (SOP), service mapping and optimization (using technology), SME hotels (usually independently owned) struggle to achieve this level of formalized approach to service optimization and implementing technology. Many generic SMEs share particular problems i.e. lack of training, financial restrictions, little formalized training, multi-tasking staff etc. Moreover, the SME hotel has distinct forces acting upon it regarding technology e.g. the cost and lack of IT expertise and the dominant technology role of their key supply chain partners e.g. third party distributers . SME hotels depend to a material degree on family members and provide “jobs” for non-family members rather than “careers”. Additionally, their level of management expertise and the lifestyle/ occupational characteristics of the small hotel operator/ manager contribute to reduced technology infrastructure and overall exploitation of e- commerce (Murphy, 2004). Hill (2001) also infers that SMEs lack “decision making policies” and reaffirms their reliance on “intuition” as a key determinant in management success. Certainly most authors in the wider context of SMEs comment on the strategic (in)competencies of SMEs in that their planning, essential to strategy and long term viability, is “both under utilized and misunderstood” (Hill, 2001, p217), furthermore, “corrective action” is not taken in the event of service errors.

As other sectors adapt to new processes (usually utilizing new technology), SME hotels lag behind and remain reactive to innovation. It appears desirable to reorient efforts towards proactive involvement in new processes and new technologies for this sector, (Murphy, 2004). Managerial deficiencies and lack of personnel training combined with a scarcity of funds that make it more difficult for these enterprises to take advantage of the potential benefits emerging from technology and impedes successful adoption of optimizing techniques in general. Additionally, current approaches for improving (hospitality business) processes - in theory and in practice - are insufficient or potentially outdated.

Customer & CRM Hotels use customer relationship management (CRM) extensively. CRM is used to align business processes and customer strategies (Noone at al, 2003) by customizing products and services for specific customer preferences. Thus the hotel must provide consistent, timely “recognition”, even rewards, during and after the customer visit. Data collection and mining is therefore critical to deliver effective CRM, particularly CRM “in the moment” (Haley and Watson, 2002).Most hotel processes are continually collecting data to enhance the customer experience, monitor their return on investment and to better develop products and services .These data are collected by a variety of systems in the hotel sector, primarily via the PMS (property management system), POS (point of sale) and CRM systems. In addition, over the last 5 years, CRM and online behavioural data is accumulated by visits, reservation, traffic etc. to the hotel (and intermediary) websites. These applications mostly track transactions, e.g. what do customers book, reserve, consume, spend. These systems fail to reveal what customers “do & where they go” what their engagement is with the hospitality processes that they encounter. The added value (and spend) that is generated by guests during their visit exceeds the calculation of simply the price paid for the room and provides additional income to the hotel itself but also the “value” they perceive at points of contact i.e. “customer touch-points” and effective CRM should lead to increased customer loyalty, optimized “customer lifetime value” and therefore overall revenue optimization (Noone at al, 2003). Reengineering processes that face the customer can improve CRM not only through customer tracking, and thus more detailed profiling, but also through inventory control. A customer focus, and hence increasing service quality, has been shown to have major impacts on service performance (Antony et. al. 2004) and positive correlation with REVPAR (Lewis, 2007).

Although the existing literature and current business utilization of these technologies provide concepts and measures of adoption, for the hospitality sector this involves analyzing existing business processes within the key areas of CRM and service operations, identifying additional models and synthesizing their results. It also involves exploratory research with hospitality firms to identify current best practice in managing reengineering through technology (if it exists).

THE FRAMEWORK The aim of the wider research project (funded by HES-SO) is to provide a thorough review of both current research and actual practice of the key business processes within the hospitality firm, and propose an approach for hotels that will enable them to increase their service performance by taking actions to do one or more of the following: improve financial figures (increase revenues and/or reduce costs), increase productivity, and increase customer satisfaction (anticipate and meet customer needs & expectations, offer high quality service with desired availability). To achieve this, an initial research framework is proposed (Figure 1) where hotel processes will be analyzed to understand the current tools & technologies used and the reasons for those choices. Hotel customers will also be solicited through interviews to identify their satisfaction levels with the different services offered and the significance of their visit: “will they be return customers” and “will they provide good reference for the hotel for other potential customers”. Only when there is a match between services offered and customer needs, there will be improvements in service performance for the hotels.

Figure 1: Theoretical Framework – Hotel Operations and Customer Needs & Expectations

HOTELS CUSTOMERS - Documentation & Mapping organizational charts, service blueprints, standard operationg
HOTELS
CUSTOMERS
-
Documentation & Mapping
organizational charts, service
blueprints, standard operationg
procedures (SOP)
Match between the TWO
-
Reasons for choice
price, quality, location, …
-
-
Performance metrics measured?
what about productivity?
Satisfaction
with different departments &
services
-
Customer feedback collected
how to act on them?
systems/procedures?
-
Likes, dislikes, & suggestions
-
Operations Management Tools
what is used? Why?
-
Will they return?
-
Technologies used?
-
Will they recommend?
RESULTS
customer satisfaction
revenues (occupancy)
productivity --- costs

The framework in Figure 2 shows some of the dimensions that are critical for operating a hotel from a service performance management perspective. Customer demand is what impacts the choices and design of the business and facilities, technologies and human resources support this business. Decisions regarding the hotel demographics and departments should follow from this reasoning. Each department can be evaluated for its management function, administrative function, operational aspect and its employees. It should not be forgotten that when building the business, the service design, the service marketing and the service delivery are interlinked (Ghosh et. al. 2004) and they should be planned with the process and customer focus in mind (O’Neill and Sohal, 1999; Heymann 1992). The performance and “value-added” of these services should be evaluated at the three following levels: financial (revenues & costs), operational (process efficiencies, # of errors), and customer satisfaction (quality of services, # of complaints).

Figure 2: Service Performance Dimensions

DEMAND IMPACTS CHOICES & DESIGN FOR THE BUSINESS

DEMAND IMPACTS CHOICES & DESIGN FOR THE BUSINESS HUMAN RESOURCES, FACILITIES & TECHNOLOGY SUPPORTS THE

HUMAN RESOURCES, FACILITIES & TECHNOLOGY SUPPORTS THE BUSINESS

RESOURCES, FACILITIES & TECHNOLOGY SUPPORTS THE BUSINESS Operational Hotel Information Departments - Process
Operational Hotel Information Departments - Process efficiencies (activity times) - # of errors - Star
Operational
Hotel Information
Departments
- Process efficiencies (activity times)
- # of errors
- Star (1,2,3,4,5)
- Location (city, urban, rural)
- Clientele (business, liesure)
- Size (# of rooms)
Front desk, housekeeping, F&B, HR, marketing, etc…
# of employees
Costs and Revenues
Links between departments
Financial
Service
-
Revenues & costs
Performance
- Management style (family, chain,…)
Customer
-
# of employees
Management
Administrative
Operational
Individual
Satisfaction
- Role
- Procedures
- Process
- Education
- Education
- Technology
efficiency
- Training
Quality (customer expectations
vs. perceptions)
-
- Strategy &
- Technology
- Multiskilling
-
# of complaints
objectives set
- Improving
- Motivation
clearly?
facilities
- Salary,
-
Objectives
bonuses, &
alligned?
rewarding
Process &
Service
Service
Customer
Design
Delivery
Focus
Service
Marketing

METHODS

The larger research project (funded by HES-SO) involves 4 major research steps (see Figure 3). A thorough literature review will enable the determination of tools & technologies available. This will be followed by a data collection stage to identify the utilization of these tools & techniques and best practices in the hotel sector. An analysis and synthesis of the data collected will lead to the (in)validation of hypotheses generated and propose recommendations.

Figure 3: Project Steps Literature Primary Final Synthesis Outcomes Review Data Collection - Identify tools
Figure 3: Project Steps
Literature
Primary
Final
Synthesis
Outcomes
Review
Data Collection
- Identify tools
- Questionnaires
- Identify technologies
- Interviews
- Define methodology
WITH
- Data analysis
- Gaps
- Segmentation
- Optimal choices
- Hotels
- Scientific report
- Academic report
- Teaching
- Publications
- Conferences

- Customers

Hypotheses to be tested:

1 - Independent hotels use less IT and operations management tools then chain hotels

2 - Location does not influence the use of IT and operations management tools

3 - Hotel manager profile influences adoption of IT and operations management tools Older managers tend to use less IT and operations management tools Male managers tend to use more IT and operations management tools Managers with higher education level (academic qualifications) tend to use more IT and operations management tools

4 - Hotels with bigger number of rooms use more IT and operations management tools

5 - Hotels that use more IT and operations management tools have higher customer satisfaction

6 - Hotels that use more IT and operations management tools are more productive

7 - Hotels that use more IT and operations management tools are more profitable

There is some literature that provides further support for the above hypotheses. In the article by Main (1995), a survey of 243 independent hotels in South Wales, shows evidence for more IT use in bigger hotels, with young and male managers, and with managers having higher education levels. Additionally, Chathoth (2007) presents a framework supporting the conclusions for improved productivity, service quality, and operating profits through the effective use of IT. Moreover, Ingram (1997) states that customer service, labour productivity and revenues can be improved through the effective use of IT.

However, this paper focuses on a review of hotels’ critical business processes which are identified along with the key determinants, critical technology and environmental factors. The data collected at this stage is exploratory and more qualitative, with in-depth interviews (4 in total) being utilized at this pilot stage of the project to help in determining the most appropriate research approach, particularly, in the case of SME hotels, where technology and service optimization utilisation is suspected to be low and optimization terminology unfamiliar. The research framework will be further developed, and empirically tested at a later stage through a Delphi study, to extract meaningful data to support and test the hypotheses and further modify the research framework, followed by a questionnaire sent out to a larger sample of hotels.

RESULTS

Though there is limited data in these in-depth interviews, an examination of the responses reveals certain useful information, which will also help guide and develop the research framework and the Delphi Study for the next stage. The questionnaire was validated by one hotel (4-5 star upscale hotel in rural lakeside location with 140 rooms) before going out to get the answers of the other three hotels. The results described below follow the informational categories explored throughout the questionnaire used in the three hotel interviews.

Hotel Demographics: All three hotels are 4 star hotels; 2 at city center and 1 in rural (mountain or lakeside) location. They have above 100 rooms (107 to 150). Two hotels mostly serve business clientele and one hotel serves leisure clientele. All hotels have a restaurant, bar, room service and a business center and only one has a pool and spa. The hotels have an average daily rate between 150CHF to 250CHF. The general managers answering the questionnaires were all male, 53 to 63 years of age, and had a “hotel school” education.

Documentation & Mapping: Two of the hotels claim to have an organizational chart, but none of the hotels have a blueprint of their services. Two of them train new employees for 5 and 8 hours respectively before starting work and all three hotels claim to offer continuous training. These hotels identified between 4 to 8 different departments in their organizations but only one hotel claims to have process maps for the different services in these departments. All hotels say that they have standard operating procedures (SOP) in each department.

All hotels use some sort of technological tools in their reservations, check-in & check out, payment processes and restaurant management. No technological tools are used in their supply chains and recruitment processes and the technological tools which are most used are: internet, smart cards, and specific software such as PMS. None of them use RFID, biometrics or other tracking devices. Also, none of the hotels use an enterprise resource planning (ERP) software to link the processes in different departments.

Figure 4: The Type of Technological Tools used by different service processes by Hotels in Sample

Technology Used in Service Processes 6 5 4 3 2 1 0 service processes Smart
Technology Used in Service Processes
6
5
4
3
2
1
0
service processes
Smart Cards
Hand Held Devices
RFID, Biometrics, other tracking devices
Internet
Specific software (e.g. PMS)
# of hotels
Reservation
Check in- &
Check out
Payment
processes
Restaurant
Management
Housekeeping
Customer
Relationship
Management
(CRM)

There are only two of the operations management tools listed (out of 16) that are used by all hotels: quality control charts and forecasting. Tools like critical path analysis, Pareto charts, economic order quantity, queuing theory, and bottleneck analysis are not used by any hotel. The reason listed for using the aforementioned operations management tools was mainly standard operating procedure.

Figure 5: The Use of different Operations Management Tools by Hotels in Sample

Operations Management Tools Used

Critical Path Analysis Pareto Charts Economic Order Quantity Queuing Theory BottleneckAnalysis Decision Making Tools
Critical Path Analysis
Pareto Charts
Economic Order Quantity
Queuing Theory
BottleneckAnalysis
Decision Making Tools
Linear Programming
Histograms
Activity Sampling
Quality Circles
Revenue Management Systems
Descriptive Statistics
Quantitative Analysis Tools
Process Maps
Forecasting
Quality control charts
0
1
2
3
Hotel 1
Hotel 2
Hotel 3
# of hotels

All hotels measure profitability and customer satisfaction in the context of performance measurement, whereas only one hotel measures employee satisfaction. All hotels measure the following productivity metrics:

revenue/cost, profits/cost, revenues/# of rooms, sales/labor cost. None of them calculate the non-financial (operational/physical) single factor productivity measure of occupied rooms/reception employee, which is the measure at a specific process level rather than at the whole organization level.

In terms of quality measurement, all these hotels claim to collect customer feedback through mystery guests, complaints, and cards, and two hotels also through e-feedback. They respond to customer feedback in different ways: within 24 hours, or using the website, or based on their SOPs on a case by case method.

CONCLUSIONS

Even though there is limited data, at this stage, to form robust conclusions, some conclusions are offered and a further modification and extension of the research framework is proposed as a result of this stage (Figure 6). The data gathered from this pilot study provides support for the hypotheses put forward in the “methods” section, which will be proved more rigorously in the next stage of the project.

Figure 6: Research Framework: Critical Variables, Tools & Technologies, and Performance Metrics

Variables

Hotel Demographic

Performance Metrics

   

No Of rooms Management Style ( Owner- Managed?) Average Daily rate (ADR) No of full time employee equivalents (FTEE) Location (city, urban, rural) Clientele (business, leisure) Other Services (restaurant, bar, room service, spa, business center, fitness center, pool) Competition Stars

What is measured? What are their values?

Branded management seems to show higher productivity…

occupancy, revenues & costs by department revenue/cost, profits/cost sales/labour cost # of customers/cost, # of customers/labour hrs

 

room nights or guest nights / FTEE, occupied rooms per reception employees revenues/# of rooms, # of guests/employee hours, # of guests/staff, # of tables or seats /employees

Documentation - Mapping

Tools
Tools
KPIs
KPIs

OPTIMIZATION?

Written documentation-operational staff Service Blueprints Process Mapping

Benchmarking process flow diagrams flowcharts bottleneck analysis

 

traning time and cost, activity times

 

capacity maximization (# of customers served per time unit)

Quality Standards?

Tools
Tools
KPIs
KPIs

SOPs

documentation & control SPC (statistical process control) mystery guests, complaints, cards, e-feedback Follow up?

% of time standards not met # of points outside control limits # of customer complaints per total # of customer handlings # of errors, reworks

Quality Control

Customer Feedback

Customer Facing Processes

Technologies Used

 
KPIs
KPIs

Reservation Check in - Check-out Room service House Keeping Restaurant / Bar

time measures, customer satisfaction measures, costs (employees needed)

There is little documentation and mapping of services in hotels in terms of organizational charts, blueprints and process maps, which are invaluable tools for everyday decision making. Rather, these hotels seem to operate solely based on SOPs. Few operations management tools are used which may result in missed out opportunities for service optimization. The tools used are a result of implementing SOPs.

Technology is used in some but not all service processes. Newer technologies, such as RFID, biometrics, or other tracking devices particularly designed to save costs and improve operational performance, are not used at all. They do not use ERP systems to link all departmental operations, which may lead to redundancy in operations and time loss when requesting information from different departments.

All hotels measure profitability and customer satisfaction. Hotels collect and act on customer feedback in multiple ways. How they measure and use this information to improve customer-facing processes is not evident. Only one hotel measures employee satisfaction. A combination of all linked performance metrics should be incorporated for an effective overall evaluation of the hotel performance and planning of future growth of the business.

A number of productivity metrics are measured by the hotels; however, how these measurements are used in the daily decision making process is the focus of the next stage of the project. Also, for better and more accurate optimization of services, a more departmental or function/process specific measurement approach should be considered.

The focus on processes and customers is not fully incorporated in the design, marketing and delivery of the services offered by these hotels. Furthermore, hotels fail to understand the role that technology plays in the service process and understand its link to customer satisfaction, productivity and profitability. “Service performance” should be evaluated in financial as well as operational and customer satisfaction aspects. Some of these results may be explained by the inherent nature of the SME hotel i.e. that they rely on intuitive judgment rather than formalized business procedures. The operational level managers also tend to be highly involved in the day-to-day operational aspects of the business, leaving little time for strategic planning and service optimization. There are also aspects of labour turnover in this sector, which impedes successful transfer of knowledge and procedures, which is essential in the context of accurately tracking / mapping / measuring / optimising and assessing these processes. Also the educational level of the operational staff that would be expected to undertake these service optimization tasks tends to be low and therefore an understanding and consequent strategic implication for company and customer, about these management techniques may be hindered.

The next stage of the project is to focus on examining the underlying determinants and factors that impact on the (seemingly low) usage of technology and service optimization techniques. Given the challenge of completing questions on service optimization, mapping and blueprinting at this stage of the project, a Delphi approach will be adopted next with operational managers of SME hotels to explore the “value-added” contribution (for operational, financial and customer contexts) of service optimization. This will be followed by a questionnaire sent to a larger sample of hotels to support the hypotheses and populate the research framework with both quantitative and qualitative data for further analysis.

REFERENCES

Anthony, R. & Heskett, J. (1992). Note on Service Mapping. Harvard Business School. Antony, J., Antony, F. J., and Ghosh, S. (2004). Evaluating service quality in a UK hotel chain: a case study, International Journal of Contemporary Hospitality Management, Vol. 16, No. 6: pp. 380-384. Chathoth, P. (2006). The impact of information technology on hotel operations, service management and transaction costs: A conceptual framework for full-service hotel firms, International Journal of Hospitality Management, Vol. 26, Issue 2: pp. 395-408. Ghosh, S., Surjadjaja, H., and Antony, J. (2004). Optimisation of the determinants of e-service operations, Business Process Management Journal, V ol. 10, No. 6: pp. 616-635. Guerrier, Y. & Lockwood, A. (1988). Work flexibility in hotels. In: Johnson, R., The management of service operations, Springer Verlag Haley, M. & Watson, B. (2002). The ABCs of CRM: Part one of Two, Hospitality Upgrade, Summer, 36, 38, 40 Harvard Business School. (1984). Work Simplification. HBS Case Services.

Harvard Business School. (1990). A Note on Quality: The Views of Deming, Juran, and Crosby. HBS Case Services. Heracleous, L. & Wirtz, J. ( 2006). Biometrics: the next frontier in service excellence, productivity and security in the service sector, Managing Service Quality, Vol.16, No 1, 12-22 Heymann, K. (1992). Quality Management: A Ten-Point Model, Cornell Hotel and Restaurant Administration Quarterly, Vol. 33, N0. 5: pp. 50-60 Hill, J. (2001). A multidimensional study of the key determinants of effective SME marketing activity: part 2, International Journal of Entrepreneurial Behaviour & Research, Vol. 7, No 6, pp 211-235 HTNG (2002). A Path to Achieving Next-Generation Technology for the Hotel Industry, [retrieved 22 nd February from www.htng.org] Ingram, H. (1997). Performance Management: processes, quality and teamworking, International Journal of Contemporary Hospitality Management, Vol 9, No7 pp. 295-303. Jones, P,Williams, P., Hillier, D., Comfort, D. (2007) Biometric retailing, International Journal of Retail & Distribution Management, Vol 35, Issue 3,pp217-222 Jones, P. (2002). Researching profit through productivity. Hospitality Review, January, pp. 37-41 Kilic, H. and Okumus, F. (2005), Factor influencing productivity in small island hotels: Evidence from Northern Cyprus, International Journal of Contemporary Hospitality Management, Vol. 17, No. 4: pp. 315-331. Kokaz, K. (2007). The Use of Operations Management Tools in Service Industries to Increase Productivity, Ecole hôtelière de Lausanne Institute of Technology and Entrepreneurship (EHLITE), Issue 18. Lewis, K. (2007). Franchise Quality Standards: The Importance of Making the Grade, Hotel Business Review, HotelExecutive.com. Lovelock C. H. & Young R. F. (May-June 1979). Look to Customers to Increase Productivity. Harvard Business Review. pp. 168-178. Main, H. (1995). Information technology and the independent hotel – failing to make the connection?, International Journal of Contemporary Hospitality Management, Vol. 7, No. 6: pp. 30-32. Main, H. ( 2002). The Expansion of Technology in Small and Medium Hospitality Enterprises with a Focus on Net Technology , Information Technology and Tourism, Vol. 4 no3/4, pp167-175 McCarthy, T. (2001). SOPs: A great communication tool, Lodging Hospitality, Vol. 57, No. 10:, p. 12. Murphy H. ( 2004). The Diversity of Diffusion of Information and Communication Technologies in the Hospitality Sector- building a Contemporaneous Model. in A.Frew, M. Hitz, P. O’Connnor (eds) Proceedings of ENTER- International Conference on Information and Communications Technologies in Tourism,Cairo,

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SERVICE OPTIMISATION IN THE HOTEL SECTOR – ADDING “VALUE” WITH TECHNOLOGY & OPERATIONS MANAGEMENT TOOLS

ABSTRACT

Karolin Kokaz Ecole hôtelière de Lausanne Lausanne, Switzerland Email: karolin.kokaz@ehl.ch and Hilary Catherine Murphy Ecole hôtelière de Lausanne Lausanne, Switzerland Email: hilary.murphy@ehl.ch

This paper focuses on a review of critical business processes which are identified along with the key determinants, critical technology and environmental factors of service optimisation, particularly in the context of small &medium enterprise (SME) hotels. The goal is to discover whether hotels track / map / measure/ optimise their service processes and to further identify opportunities to be compliant and proactive in their approach to adopting new processes (and appropriate technologies) in service operations management. Methods used are; a literature review and case study approach (to determine the existing processes) and in-depth interviews (to refine the variables and determinants for the research framework). These preliminary results show that few hotels consistently map and/or optimise processes and this reflects a lack of resource allocation and prioritisation.

Key words: service optimisation, SME hotels, technology

INTRODUCTION

The hospitality industry is process driven, to a large extent. These processes involve people, equipment and services. There are certain critical processes that can be easily identified and defined e.g. the reservation process, the booking process, the housekeeping process, customer relationship management etc. These processes have remained largely static in their form and function over time with technology being introduced, mostly on an ad-hoc basis, to enhance and improve these processes. The question as to whether they add “value” and “save costs” remains unanswered to a large extent (HTNG, 2002). Nonetheless, hospitality firms are continuously fighting for improvements in productivity, service quality and profitability (Jones, 2002). One of the defining drivers of the hospitality industry which makes process re-engineering more challenging is the considerable difficulty in accurately tracking / mapping / measuring and assessing these processes in order to optimize their execution and delivery. This is further exacerbated by fluctuations in demand which typically occur at the daily or weekly level or may be due to yearly seasonality (Guerrier and Lockwood, 1988). Hospitality firms need to be able to respond quickly to changing customer demand and services requested and therefore accurate mapping of goods, services and personnel within the sector should have a positive impact on productivity, service quality and, ultimately, on profitability. This research will help to identify opportunities to be compliant and proactive in their approach to adopting new processes (and technologies) in service operations management, particularly in terms of customer facing processes and CRM.

Therefore, the main aim of this paper focuses on a review of hotels’ critical business processes which are identified along with some of the key determinants, critical technologies and environmental factors. A initial literature review enables the determination of tools & technologies available and ,at this exploratory stage, the goal is to discover the extent to which 3-5 star hotels track / map / measure/ optimize their service process. It further

identifies opportunities to be compliant and proactive in their approach to adopting new processes (and appropriate technologies) in service operations management.

LITERATURE REVIEW

Mapping and documenting processes has traditionally been done manually and may be a complex process that results in standard operating procedures (SOPs) for certain tasks. Service maps are developed in order to better understand the service system, help identify failure points to then develop procedures to avoid them, and for work simplification in order to improve the efficiency of processes. Service mapping could become a very time consuming activity, if not done properly, due to the need of observing the system to gather the necessary accurate data through time and motion studies, which are the parameters of the process to be mapped and the goal of the exercise (Harvard Business School, 1992). There is little evidence that hotels, and the small and medium sized (SME) hotels in particular, pay any regard to formalizing their processes in terms of service mapping or blueprinting. The challenge is then to optimize the processes (and therefore save costs, improve processes, enhance customer satisfaction), when no real documentation exists and/or reengineer the process in the light of customer/ strategic partner/ internal/ external requirements.

What customers want, where they go and how they want their services & products delivered is directly related to business process optimization. The key to optimizing business processes is to have detailed, accurate and complete service maps for all processes that are regularly updated with continuous data inflow. This will help identify critical activities, develop quality standards, and rigorous constant monitoring for process control, so that on the spot interventions can be achieved when needed and customer loyalty is ensured. With clear standards, appropriate tools, and process controls, quality can be increased. According to Deming, productivity is a by-product of quality and as quality improves so will productivity (Harvard Business School, 1990).

In a survey carried out by Witt & Witt (1989) among 43 hotels, only 11% of them used operations management techniques frequently. Moreover, bigger hotels (in this case estimated by the number of employees hotels had) used operations management techniques more frequently compared to the smaller size hotels: 23.1% for hotels with more than 500 employees and 8.1% for hotels with less than 50 employees. Furthermore, Okoroh et al. (2002), in the conclusion from a master thesis study, states that hotels manage their assets and services in an unstructured and/or inefficient way and those facilities management techniques could help increase productivity. Additionally, research completed in business projects that are managed by Ecole hôtelière de Lausanne Institute of Technology and Entrepreneurship (EHLITE) reveal that using operations management tools can potentially increase profitability, productivity and quality (Kokaz, 2007). This disparity between larger, corporate hotel companies and smaller entities is confirmed in research by Kilic and Okumus (2005) that shows that branded management companies had higher productivities.

Many studies in the literature have suggested that productivity growth in the service sector, and especially in the hotels, has been historically very low (Witt and Witt, 1989; Lovelock and Young, 1979). This is believed to be mostly due to the lack of management skills and not having incorporated operations management techniques that have been widely used with great success in other industries. Most of these methods require system observations, data collection, and continuous monitoring which are timely and resource consuming activities but has very high potential rewards. Technology can help obtain the necessary data for some of these operations management tools. Employee tracking, using location based devices, biometrics etc, could provide exact information on which type of activities consumes how many labour hours (or euros) and this information could be used to calculate accurate labour productivity measures and help identify the value-added activities. Similar data could help determine where the busy work periods are in order to move staff members around to help out during peak times where possible. A

few examples of how customer tracking could also help improve business operations are: for housekeeping - when to know room is free to clean it, or for F&B services - to stop preparing breakfast food if most of the customers are

already out of the hotel, etc

can be linked to inventory management tools that are part of operations management techniques.

Finally, tracking of supplies can help optimize inventory systems furthermore which

Most processes within the hospitality sector can be categorized as “customer- centric” or “hotel- centric”. The current business literature acknowledges that technologies which are currently in more widespread consumer use are related to specific processes e.g. airline check in, airport transfer, employee recognition, payment (Heracleous and Wirtz, 2006). Zimmerman et al (2004) highlight the convenience of biometrics in the “check out

process” in the retail sector and Jones et al (2007) investigate transaction speeds at points of sale (POS) that reduce queuing in the airline sector and airports. Therefore it is useful to examine those processes within the hotel experience that are customer centric, i.e. booking , reservation, check-in, payment, customer specific information requests, activation of secure devices etc. Heracleous and Wirtz (2006) agree that efficiency in process transactions through “significant process re-configuration” (p.18) along with improved customer service and convenience will be perceived as a driver by both, the customer and the industry.

SME Hotels Though the larger hotels have recognized and exploited the importance of standard operating procedures (SOP), service mapping and optimization (using technology), SME hotels (usually independently owned) struggle to achieve this level of formalized approach to service optimization and implementing technology. Many generic SMEs share particular problems i.e. lack of training, financial restrictions, little formalized training, multi-tasking staff etc. Moreover, the SME hotel has distinct forces acting upon it regarding technology e.g. the cost and lack of IT expertise and the dominant technology role of their key supply chain partners e.g. third party distributers . SME hotels depend to a material degree on family members and provide “jobs” for non-family members rather than “careers”. Additionally, their level of management expertise and the lifestyle/ occupational characteristics of the small hotel operator/ manager contribute to reduced technology infrastructure and overall exploitation of e- commerce (Murphy, 2004). Hill (2001) also infers that SMEs lack “decision making policies” and reaffirms their reliance on “intuition” as a key determinant in management success. Certainly most authors in the wider context of SMEs comment on the strategic (in)competencies of SMEs in that their planning, essential to strategy and long term viability, is “both under utilized and misunderstood” (Hill, 2001, p217), furthermore, “corrective action” is not taken in the event of service errors.

As other sectors adapt to new processes (usually utilizing new technology), SME hotels lag behind and remain reactive to innovation. It appears desirable to reorient efforts towards proactive involvement in new processes and new technologies for this sector, (Murphy, 2004). Managerial deficiencies and lack of personnel training combined with a scarcity of funds that make it more difficult for these enterprises to take advantage of the potential benefits emerging from technology and impedes successful adoption of optimizing techniques in general. Additionally, current approaches for improving (hospitality business) processes - in theory and in practice - are insufficient or potentially outdated.

Customer & CRM Hotels use customer relationship management (CRM) extensively. CRM is used to align business processes and customer strategies (Noone at al, 2003) by customizing products and services for specific customer preferences. Thus the hotel must provide consistent, timely “recognition”, even rewards, during and after the customer visit. Data collection and mining is therefore critical to deliver effective CRM, particularly CRM “in the moment” (Haley and Watson, 2002).Most hotel processes are continually collecting data to enhance the customer experience, monitor their return on investment and to better develop products and services .These data are collected by a variety of systems in the hotel sector, primarily via the PMS (property management system), POS (point of sale) and CRM systems. In addition, over the last 5 years, CRM and online behavioural data is accumulated by visits, reservation, traffic etc. to the hotel (and intermediary) websites. These applications mostly track transactions, e.g. what do customers book, reserve, consume, spend. These systems fail to reveal what customers “do & where they go” what their engagement is with the hospitality processes that they encounter. The added value (and spend) that is generated by guests during their visit exceeds the calculation of simply the price paid for the room and provides additional income to the hotel itself but also the “value” they perceive at points of contact i.e. “customer touch-points” and effective CRM should lead to increased customer loyalty, optimized “customer lifetime value” and therefore overall revenue optimization (Noone at al, 2003). Reengineering processes that face the customer can improve CRM not only through customer tracking, and thus more detailed profiling, but also through inventory control. A customer focus, and hence increasing service quality, has been shown to have major impacts on service performance (Antony et. al. 2004) and positive correlation with REVPAR (Lewis, 2007).

Although the existing literature and current business utilization of these technologies provide concepts and measures of adoption, for the hospitality sector this involves analyzing existing business processes within the key areas of CRM and service operations, identifying additional models and synthesizing their results. It also involves exploratory research with hospitality firms to identify current best practice in managing reengineering through technology (if it exists).

THE FRAMEWORK The aim of the wider research project (funded by HES-SO) is to provide a thorough review of both current research and actual practice of the key business processes within the hospitality firm, and propose an approach for hotels that will enable them to increase their service performance by taking actions to do one or more of the following: improve financial figures (increase revenues and/or reduce costs), increase productivity, and increase customer satisfaction (anticipate and meet customer needs & expectations, offer high quality service with desired availability). To achieve this, an initial research framework is proposed (Figure 1) where hotel processes will be analyzed to understand the current tools & technologies used and the reasons for those choices. Hotel customers will also be solicited through interviews to identify their satisfaction levels with the different services offered and the significance of their visit: “will they be return customers” and “will they provide good reference for the hotel for other potential customers”. Only when there is a match between services offered and customer needs, there will be improvements in service performance for the hotels.

Figure 1: Theoretical Framework – Hotel Operations and Customer Needs & Expectations

HOTELS CUSTOMERS - Documentation & Mapping organizational charts, service blueprints, standard operationg
HOTELS
CUSTOMERS
-
Documentation & Mapping
organizational charts, service
blueprints, standard operationg
procedures (SOP)
Match between the TWO
-
Reasons for choice
price, quality, location, …
-
-
Performance metrics measured?
what about productivity?
Satisfaction
with different departments &
services
-
Customer feedback collected
how to act on them?
systems/procedures?
-
Likes, dislikes, & suggestions
-
Operations Management Tools
what is used? Why?
-
Will they return?
-
Technologies used?
-
Will they recommend?
RESULTS
customer satisfaction
revenues (occupancy)
productivity --- costs

The framework in Figure 2 shows some of the dimensions that are critical for operating a hotel from a service performance management perspective. Customer demand is what impacts the choices and design of the business and facilities, technologies and human resources support this business. Decisions regarding the hotel demographics and departments should follow from this reasoning. Each department can be evaluated for its management function, administrative function, operational aspect and its employees. It should not be forgotten that when building the business, the service design, the service marketing and the service delivery are interlinked (Ghosh et. al. 2004) and they should be planned with the process and customer focus in mind (O’Neill and Sohal, 1999; Heymann 1992). The performance and “value-added” of these services should be evaluated at the three following levels: financial (revenues & costs), operational (process efficiencies, # of errors), and customer satisfaction (quality of services, # of complaints).

Figure 2: Service Performance Dimensions

DEMAND IMPACTS CHOICES & DESIGN FOR THE BUSINESS

DEMAND IMPACTS CHOICES & DESIGN FOR THE BUSINESS HUMAN RESOURCES, FACILITIES & TECHNOLOGY SUPPORTS THE

HUMAN RESOURCES, FACILITIES & TECHNOLOGY SUPPORTS THE BUSINESS

RESOURCES, FACILITIES & TECHNOLOGY SUPPORTS THE BUSINESS Operational Hotel Information Departments - Process
Operational Hotel Information Departments - Process efficiencies (activity times) - # of errors - Star
Operational
Hotel Information
Departments
- Process efficiencies (activity times)
- # of errors
- Star (1,2,3,4,5)
- Location (city, urban, rural)
- Clientele (business, liesure)
- Size (# of rooms)
Front desk, housekeeping, F&B, HR, marketing, etc…
# of employees
Costs and Revenues
Links between departments
Financial
Service
-
Revenues & costs
Performance
- Management style (family, chain,…)
Customer
-
# of employees
Management
Administrative
Operational
Individual
Satisfaction
- Role
- Procedures
- Process
- Education
- Education
- Technology
efficiency
- Training
Quality (customer expectations
vs. perceptions)
-
- Strategy &
- Technology
- Multiskilling
-
# of complaints
objectives set
- Improving
- Motivation
clearly?
facilities
- Salary,
-
Objectives
bonuses, &
alligned?
rewarding
Process &
Service
Service
Customer
Design
Delivery
Focus
Service
Marketing

METHODS

The larger research project (funded by HES-SO) involves 4 major research steps (see Figure 3). A thorough literature review will enable the determination of tools & technologies available. This will be followed by a data collection stage to identify the utilization of these tools & techniques and best practices in the hotel sector. An analysis and synthesis of the data collected will lead to the (in)validation of hypotheses generated and propose recommendations.

Figure 3: Project Steps Literature Primary Final Synthesis Outcomes Review Data Collection - Identify tools
Figure 3: Project Steps
Literature
Primary
Final
Synthesis
Outcomes
Review
Data Collection
- Identify tools
- Questionnaires
- Identify technologies
- Interviews
- Define methodology
WITH
- Data analysis
- Gaps
- Segmentation
- Optimal choices
- Hotels
- Scientific report
- Academic report
- Teaching
- Publications
- Conferences

- Customers

Hypotheses to be tested:

1 - Independent hotels use less IT and operations management tools then chain hotels

2 - Location does not influence the use of IT and operations management tools

3 - Hotel manager profile influences adoption of IT and operations management tools Older managers tend to use less IT and operations management tools Male managers tend to use more IT and operations management tools Managers with higher education level (academic qualifications) tend to use more IT and operations management tools

4 - Hotels with bigger number of rooms use more IT and operations management tools

5 - Hotels that use more IT and operations management tools have higher customer satisfaction

6 - Hotels that use more IT and operations management tools are more productive

7 - Hotels that use more IT and operations management tools are more profitable

There is some literature that provides further support for the above hypotheses. In the article by Main (1995), a survey of 243 independent hotels in South Wales, shows evidence for more IT use in bigger hotels, with young and male managers, and with managers having higher education levels. Additionally, Chathoth (2007) presents a framework supporting the conclusions for improved productivity, service quality, and operating profits through the effective use of IT. Moreover, Ingram (1997) states that customer service, labour productivity and revenues can be improved through the effective use of IT.

However, this paper focuses on a review of hotels’ critical business processes which are identified along with the key determinants, critical technology and environmental factors. The data collected at this stage is exploratory and more qualitative, with in-depth interviews (4 in total) being utilized at this pilot stage of the project to help in determining the most appropriate research approach, particularly, in the case of SME hotels, where technology and service optimization utilisation is suspected to be low and optimization terminology unfamiliar. The research framework will be further developed, and empirically tested at a later stage through a Delphi study, to extract meaningful data to support and test the hypotheses and further modify the research framework, followed by a questionnaire sent out to a larger sample of hotels.

RESULTS

Though there is limited data in these in-depth interviews, an examination of the responses reveals certain useful information, which will also help guide and develop the research framework and the Delphi Study for the next stage. The questionnaire was validated by one hotel (4-5 star upscale hotel in rural lakeside location with 140 rooms) before going out to get the answers of the other three hotels. The results described below follow the informational categories explored throughout the questionnaire used in the three hotel interviews.

Hotel Demographics: All three hotels are 4 star hotels; 2 at city center and 1 in rural (mountain or lakeside) location. They have above 100 rooms (107 to 150). Two hotels mostly serve business clientele and one hotel serves leisure clientele. All hotels have a restaurant, bar, room service and a business center and only one has a pool and spa. The hotels have an average daily rate between 150CHF to 250CHF. The general managers answering the questionnaires were all male, 53 to 63 years of age, and had a “hotel school” education.

Documentation & Mapping: Two of the hotels claim to have an organizational chart, but none of the hotels have a blueprint of their services. Two of them train new employees for 5 and 8 hours respectively before starting work and all three hotels claim to offer continuous training. These hotels identified between 4 to 8 different departments in their organizations but only one hotel claims to have process maps for the different services in these departments. All hotels say that they have standard operating procedures (SOP) in each department.

All hotels use some sort of technological tools in their reservations, check-in & check out, payment processes and restaurant management. No technological tools are used in their supply chains and recruitment processes and the technological tools which are most used are: internet, smart cards, and specific software such as PMS. None of them use RFID, biometrics or other tracking devices. Also, none of the hotels use an enterprise resource planning (ERP) software to link the processes in different departments.

Figure 4: The Type of Technological Tools used by different service processes by Hotels in Sample

Technology Used in Service Processes 6 5 4 3 2 1 0 service processes Smart
Technology Used in Service Processes
6
5
4
3
2
1
0
service processes
Smart Cards
Hand Held Devices
RFID, Biometrics, other tracking devices
Internet
Specific software (e.g. PMS)
# of hotels
Reservation
Check in- &
Check out
Payment
processes
Restaurant
Management
Housekeeping
Customer
Relationship
Management
(CRM)

There are only two of the operations management tools listed (out of 16) that are used by all hotels: quality control charts and forecasting. Tools like critical path analysis, Pareto charts, economic order quantity, queuing theory, and bottleneck analysis are not used by any hotel. The reason listed for using the aforementioned operations management tools was mainly standard operating procedure.

Figure 5: The Use of different Operations Management Tools by Hotels in Sample

Operations Management Tools Used

Critical Path Analysis Pareto Charts Economic Order Quantity Queuing Theory BottleneckAnalysis Decision Making Tools
Critical Path Analysis
Pareto Charts
Economic Order Quantity
Queuing Theory
BottleneckAnalysis
Decision Making Tools
Linear Programming
Histograms
Activity Sampling
Quality Circles
Revenue Management Systems
Descriptive Statistics
Quantitative Analysis Tools
Process Maps
Forecasting
Quality control charts
0
1
2
3
Hotel 1
Hotel 2
Hotel 3
# of hotels

All hotels measure profitability and customer satisfaction in the context of performance measurement, whereas only one hotel measures employee satisfaction. All hotels measure the following productivity metrics:

revenue/cost, profits/cost, revenues/# of rooms, sales/labor cost. None of them calculate the non-financial (operational/physical) single factor productivity measure of occupied rooms/reception employee, which is the measure at a specific process level rather than at the whole organization level.

In terms of quality measurement, all these hotels claim to collect customer feedback through mystery guests, complaints, and cards, and two hotels also through e-feedback. They respond to customer feedback in different ways: within 24 hours, or using the website, or based on their SOPs on a case by case method.

CONCLUSIONS

Even though there is limited data, at this stage, to form robust conclusions, some conclusions are offered and a further modification and extension of the research framework is proposed as a result of this stage (Figure 6). The data gathered from this pilot study provides support for the hypotheses put forward in the “methods” section, which will be proved more rigorously in the next stage of the project.

Figure 6: Research Framework: Critical Variables, Tools & Technologies, and Performance Metrics

Variables

Hotel Demographic

Performance Metrics

   

No Of rooms Management Style ( Owner- Managed?) Average Daily rate (ADR) No of full time employee equivalents (FTEE) Location (city, urban, rural) Clientele (business, leisure) Other Services (restaurant, bar, room service, spa, business center, fitness center, pool) Competition Stars

What is measured? What are their values?

Branded management seems to show higher productivity…

occupancy, revenues & costs by department revenue/cost, profits/cost sales/labour cost # of customers/cost, # of customers/labour hrs

 

room nights or guest nights / FTEE, occupied rooms per reception employees revenues/# of rooms, # of guests/employee hours, # of guests/staff, # of tables or seats /employees

Documentation - Mapping

Tools
Tools
KPIs
KPIs

OPTIMIZATION?

Written documentation-operational staff Service Blueprints Process Mapping

Benchmarking process flow diagrams flowcharts bottleneck analysis

 

traning time and cost, activity times

 

capacity maximization (# of customers served per time unit)

Quality Standards?

Tools
Tools
KPIs
KPIs

SOPs

documentation & control SPC (statistical process control) mystery guests, complaints, cards, e-feedback Follow up?

% of time standards not met # of points outside control limits # of customer complaints per total # of customer handlings # of errors, reworks

Quality Control

Customer Feedback

Customer Facing Processes

Technologies Used

 
KPIs
KPIs

Reservation Check in - Check-out Room service House Keeping Restaurant / Bar

time measures, customer satisfaction measures, costs (employees needed)

There is little documentation and mapping of services in hotels in terms of organizational charts, blueprints and process maps, which are invaluable tools for everyday decision making. Rather, these hotels seem to operate solely based on SOPs. Few operations management tools are used which may result in missed out opportunities for service optimization. The tools used are a result of implementing SOPs.

Technology is used in some but not all service processes. Newer technologies, such as RFID, biometrics, or other tracking devices particularly designed to save costs and improve operational performance, are not used at all. They do not use ERP systems to link all departmental operations, which may lead to redundancy in operations and time loss when requesting information from different departments.

All hotels measure profitability and customer satisfaction. Hotels collect and act on customer feedback in multiple ways. How they measure and use this information to improve customer-facing processes is not evident. Only one hotel measures employee satisfaction. A combination of all linked performance metrics should be incorporated for an effective overall evaluation of the hotel performance and planning of future growth of the business.

A number of productivity metrics are measured by the hotels; however, how these measurements are used in the daily decision making process is the focus of the next stage of the project. Also, for better and more accurate optimization of services, a more departmental or function/process specific measurement approach should be considered.

The focus on processes and customers is not fully incorporated in the design, marketing and delivery of the services offered by these hotels. Furthermore, hotels fail to understand the role that technology plays in the service process and understand its link to customer satisfaction, productivity and profitability. “Service performance” should be evaluated in financial as well as operational and customer satisfaction aspects. Some of these results may be explained by the inherent nature of the SME hotel i.e. that they rely on intuitive judgment rather than formalized business procedures. The operational level managers also tend to be highly involved in the day-to-day operational aspects of the business, leaving little time for strategic planning and service optimization. There are also aspects of labour turnover in this sector, which impedes successful transfer of knowledge and procedures, which is essential in the context of accurately tracking / mapping / measuring / optimising and assessing these processes. Also the educational level of the operational staff that would be expected to undertake these service optimization tasks tends to be low and therefore an understanding and consequent strategic implication for company and customer, about these management techniques may be hindered.

The next stage of the project is to focus on examining the underlying determinants and factors that impact on the (seemingly low) usage of technology and service optimization techniques. Given the challenge of completing questions on service optimization, mapping and blueprinting at this stage of the project, a Delphi approach will be adopted next with operational managers of SME hotels to explore the “value-added” contribution (for operational, financial and customer contexts) of service optimization. This will be followed by a questionnaire sent to a larger sample of hotels to support the hypotheses and populate the research framework with both quantitative and qualitative data for further analysis.

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