The Strategic Management of Hotel Economy in China - Research Proposal Example

? The Strategic Management of Economy Hotel in China Table of Contents 3 Introduction 4 Research Background and Motivation 4 Preliminary Literature Review 5 Research Aims and Objectives 7 Research Methodology 7 1. Research philosophy 7 2. Research strategy 7 2.1 Defining 7 2.2 Types of research 8 3. Data collection method 8 4. Data analysis method 8 Research Plan 8 Conclusion 9 References 10 Abstract The performance of businesses in each industrial sector cannot be appropriately evaluated without studying the management practices used across the particular sector. In the hotel industry a similar approach should be used. This study focuses on a specific part of the hotel industry: the low budget hotels. The strategic management framework of the sector’s hotels is explored by referring to the case of a specific country: China. The above country has been chosen because of the following two reasons: a) because of its position as a major competitor in the global economy and b) because of its significant achievements in regard to the development of the hotel industry. This study aims to show that the strategic management practices used in the sector’s hotels in China have a key role in the industry’s development; the improvement of certain of these practices, as suggested in the study, could secure the sector’s growth, a fact that would highly benefit the country’s economy. Introduction Economy hotels, as businesses, have been highly expanded worldwide. The strong financial pressures developed in the international market especially from 2007 onwards had a key role in this phenomenon. In addition, the development of technology has led to the radical decrease of distance between regions; travelling for covering various needs, including business, education or health, has become highly popular at the level that the time involved can be quite short. The establishment of hotels of low budget has been considered as a necessity so that the housing needs of an area’s visitors are covered at low cost; such perspective has been proved to increase the area’s popularity, as a tourist destination but also as a business center. Under these terms, the growth of economy hotels sector can be considered as expected. Countries that aim to secure their economic growth have emphasized on the development of the particular sector; China is an example of this trend. As in other countries, in China also, the sector’s rate of growth is not standardized; for example, during the recent global recession the profits for the hospitality/ tourist industry in China were reduced (Chon et al. 2013). This study aims to help to identify these problems so that solutions are retrieved based on the low cost philosophy that characterizes the sector’s businesses. Research Background and Motivation China is considered as one of the most powerful economies worldwide. The flexibility of the Chinese economy seems to be its major advantage. Indeed, the growth of China is not based on strict and standardized economic rules; rather, emphasis is given on innovation and the continuous monitoring of market trends (Freed 2011). Economy hotels have become quite popular in markets worldwide. The growth of the sector is indicated in the figures/ data included in the table of Figure 1 below. Figure 1 – Growth of economy hotel sector in China, up to 2012 (Shen 2013, p.1) The willingness to identify the strategic management needs of the economy hotel industry in China has been the key motivation for the development of this study. According to a recent report the economy hotels sector represents just 30% of China’s hotel industry, a percentage though that it is expected to be significantly increased in the future (PR Newswire 2013). At the same time, the competition in the sectors seems to be limited, as about 47% of the sector’s hotels are owned by three brands: ‘Home Inns Group, Hanting Inns and Hotels and 7 Days Group Holdings’ (PR Newswire 2013). The strategic management characteristics of the sector should be identified and analyzed so that competition is enhanced, a fact that could also help the sector to achieve a long term growth. Preliminary Literature Review The hotel industry incorporates a wide range of activities, addressing not only the housing needs of customers but also their entertainment or health needs (Morritt 2007). For this reason, market segmentation is necessary when trying to evaluate the industry’s performance (Morritt 2007). In general, in the context of the hotel industry the distribution of roles is quite important for the successful performance of a business in regard to its daily activities (Bardi 2011). On the other hand, the strategic management of hotels can be depended on the successful completion of tasks which are unique, in terms that they are not incorporated in the strategic management plans of other organizations; reference can be made, as an example, to capacity management (Moutinho 2011). Of course, the strategic management techniques that are commonly used in businesses in most sectors can be also valuable in the hospitality industry; for example, ‘the principle of enactment’ (Enz 2009, p.8) which promotes the idea of developing a business by focusing on strategic alliances (Enz 2009). One of the key characteristics of the strategic management practices used in businesses across China is their potential alteration under the influence of the strategies used by foreign firms operating locally (Alon 2003). Still, in China, as also in other countries that have a strong cultural framework, the ‘materialistic management of the West’ (Schlevogt 2002, p.237) is not appreciated. The economy hotel industry in China has been highly developed under the influence of the success of the sector in Western countries (Tuunanen, Windsperger and Cliquet 2011). However, through the years the growth of the sector has been achieved emphasizing on local culture and ethics (Chon et al. 2013). Today, the economy hotel sector in China represents one of the country’s most dynamic business sectors (Bobik 2010). The understanding of the sector’s growth requires primary the study of its strategic management framework, as developed under the influence of local culture but also of the strategic choices of the foreign enterprises established in China (Chon, Guangrui, Lew, Ap and Yu 2013). In practice, if the strategic choices of the Chinese and the foreign businesses operating in the economy hotel industry of China are compared a series of similarities will be identified (Okoroafo et al. 2010). Figure 2 – Performance of Hotels in China according to type of management (Okoroafo et al. 2010, p.8) At the same time, the study of Qin, Adler and Cai (2012) shows that the managers of hotels in China are highly influenced by certain strategic practices of their counterparts in the West: for example, ‘the low cost strategy and the rapid expansion strategy’ (Qin, Adler and Cai 2012, p.44-45). In addition, the strategic managers in economy hotels in China seem to face problems in understanding the customer value, an issue that should be addressed in order to secure the sector’s growth (Zhang 2008). In the hotel industry, customer satisfaction is of vital important for business performance, a fact that the industry’s managers in China should realize (Dominici and Guzzo 2010). Research Aims and Objectives This study’s aims and objectives could be described as follows: AIMS: a) to show the level at which economy hotels contribute in the development of Chinese economy, b) to make clear that the challenges faced by strategic managers in the economy hotels of China are many and c) to contribute in the improvement of existing strategies used in economy hotels across China. The above AIMS will be achieved through the following OBJECTIVES: a) the performance of economy hotels in China will be presented using relevant literature and data published in empirical studies and industry’s reports, and b) the common strategies of managers in economy hotels in China will be identified and explained, based on existing literature and on empirical research. Research Methodology 1. Research philosophy Most commonly, the research philosophy reflects the view of the researcher on the issues addressed through a research project. In this study the research philosophy can be characterized as interpretive and could be described as follows: the information gathered in regard to this study’s subject can be interpreted using a series of criteria, leading to different assumptions (Khan 2011). Because of the lack of standardization as of the meaning of facts and data it is suggested that the findings of the empirical study are compared to those of the literature review so that their interpretation to be accurate, as possible. 2. Research strategy 2.1 Defining Research strategy is a term used for reflecting ‘a generalized plan for a problem which includes structure, desired solution and an outline of planned devices for implementing the strategy’ (Singh 2010, p.188). The parts of the research strategy are not standardized but they can be highly differentiated across research projects depending on the resources and the time available but also on the aims and objectives involved. 2.2 Types of research Both qualitative and quantitative research will be employed in this study. The qualitative research will have the form of the literature review. The second part of the research will have the form of survey based on a questionnaire. Survey has been chosen because of its following advantages: a) it offers to the participants the freedom to arrange their time in completing the questionnaire; participants can think of the issues set with no rush, a fact that increases the value of the answers, b) it offers the advantage of anonymity, compared to other types of research and c) it can be completed within a short period of time, especially when it is developed through the Internet (Khan 2011). 3. Data collection method A survey will be conducted among the employees of economy hotels in China. The survey will be based on a questionnaire that will be sent to potential participants through e-mail. The employees of China’s two most popular economy hotels chains, Home Inns & Hotels Management Inc and China Lodging Group Ltd, will be reached and will be asked to state their view as of the study’s issues. In total, the questionnaire will be sent to 400 employees at various positions in hotels belonging to the above two Groups. A minimum of 150 questionnaires should be returned completed. 4. Data analysis method As noted above the research philosophy on which this study is based is interpretive. The data retrieved through the survey will be critically analyzed using relevant literature. Graphs and tables will be employed for presenting the findings of the survey but no regression analysis will be used, an approach that would be preferred in case of a positivist research philosophy. In other words, the data analysis method chosen is the qualitative data analysis offering the advantage of comparing the findings of different sources of information and of explaining clearly the study’s key issues (Singh 2010). Research Plan As explained in the previous section, the study will be based in both qualitative and quantitative research. Combining two research methods secures the credibility of findings, at the level that the findings of each part can be compared to those of the other part; still, the challenges involved in such effort can be many. Time management can be difficult, especially in regard to the survey which is a core part of the research. Using a research plan can help to control the risks involved; at the same time, this plan could help to identify early potential gaps or failures. A Gantt chart has been used for showing the order of the activities that should be incorporated in this study’s research plan. Gantt chart – Research Plan Week/ Task 1 2 3 4 5 6 7 8 Research on Material/ Plan of the study Literature Review/ send questionnaire to the target group of participants Gather & organize the completed questionnaires Setting the answers into groups Analysis of findings Completion of the study’s text Overview/ check of the study Conclusion The strategic management practices used in the economy hotel sector of China seems to be similar with those employed in the sector’s businesses established in Western countries. However, in China the influence of local culture and ethics on strategic management decisions seems to be strong, at higher level that the sector’s businesses abroad. The interaction between business and culture is a key characteristic of the economy hotel sector in China; this trend has led to the establishment of the sector’s competitive advantage towards its rivals worldwide. Still, the current performance of the sector is not as high as it should be, at least if taking into consideration the overall performance of the Chinese economy. The alterations of the strategic management techniques employed in the economy hotel industry in China would be necessary so that gaps are covered and long term growth is secured. References Alon, I., 2003. Chinese Economic Transition and International Marketing Strategy. Westport: Greenwood Publishing Group. Bardi, J., 2011. Hotel Front Office Management. Hoboken: John Wiley and Sons. Bobik, M., 2010. China's Tourism Industry: A Future Outlook: Tourismus in China: Status Quo. Norderstedt: GRIN Verlag. Chon, K., Pine, R., Lam, T. and Zhang, H., 2013. Tourism and Hotel Development in China: From Political to Economic Success. London: Routledge. Chon, K., Guangrui, Z., Lew, A., Ap, J. and Yu, L., 2013. Tourism in China. London: Routledge. Dominici, G., and Guzzo, R., 2010. Customer Satisfaction in the Hotel Industry: A Case Study from Sicily. International Journal of Marketing Studies, Vol 2, No 2, pp. 3-12 Enz, C., 2009. Hospitality Strategic Management: Concepts and Cases. Hoboken: John Wiley and Sons. Freed, J., 2011. China economy brands continue rapid growth. Hotel News Now. Available at . [Accessed at 19 October 2013] Khan, J., 2011. Research Methodology. New Delhi: APH Publishing. Morritt, R., 2007. Segmentation Strategies for Hospitality Managers: Target Marketing for Competitive Advantage. London: Routledge. Moutinho, L., 2011. Strategic Management in Tourism. Oxfordshire: CABI. Okoroafo, S., Koh, A., Liu, L. and Jin, X., 2010. Hotels in China: A Comparison of Indigenous and Subsidiaries Strategies. Journal of Management Research, Vol. 2, No. 1, pp.1-10 PR Newswire, 2013. Research and Development Forecast of China's Budget Hotel, 2013-2017. Available at < http://www.prnewswire.com/news-releases/research-and-development-forecast-of-chinas-budget-hotel-2013-2017-200067701.html>. [Accessed at 19 October 2013] Qin, Y., Adler, H. and Cai, L., 2012. Successful Growth Strategies of Three Chinese Domestic Hotel Companies. Journal of Management and Strategy, Vol. 3, No. 1, pp.40-54 Schlevogt, K., 2002. The Art of Chinese Management: Theory, Evidence and Applications: Theory, Evidence and Applications. Oxford: Oxford University Press. Shen, H., 2013. The Development of Economy Hotels in China. Journal of Hotel Business Management, Vol 2, Issue 1, pp.1-2 Singh, Y., 2010. Research Methodology. New Delhi: APH Publishing. Tuunanen, M., Windsperger, J. and Cliquet, G., 2011. New Developments in the Theory of Networks: Franchising, Alliances and Cooperatives. New York: Springer. Zhang, Y., 2008. Problems Existing in China's Hotel Service and Study on the Strategy from the Aspect of Customer Value. 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