How Information Technology Applications May Lead to Competitive Advantage in Hotel Industry - Research Paper Example

How Information Technology May Lead to Competitive Advantage in Hotel Industry The paper aimed to demonstrate a conceptual framework that shows how applications of Information Technology may result to an advantage that is competitive in the Hotel industry. The article was written basing on the previous literature synthesis in the area. Many areas have to be in implementing and developing the projects of Information technology so that they can contribute to an advantage that is competitive in the hotel industry. There exist four areas that are to evaluating the decisions of Information technology in hotels. They entail the co-relationship between the decisions of Information technology and the strategy of the business, application types of information technology, positive anticipated outcomes of the IT decisions and the style of decision-making. Skills of management, complicated technology and the linkage of resources are the primary issues in an effort to implement decisions of Information technology. Investing in applications of Information technology in the hotel industry may result in better capabilities and competencies of IT. They can lead to minimized costs, innovation, nimbleness, value that is for consumers, and greater services for customers. Though not all investments of IT can lead to positive results or their superiority may not last for a long time. More so there is the possibility of the existence of a time lag between setting up of the decisions of investment and realizing their anticipated results there are numerous areas that require consideration in setting up and implementing the decisions of IT investments if they are to result in the competitive advantage of the industry. The hotels in the industry need to be discriminating in their investment decisions of Information technology and investigate every investment of the IT from a management perspective that is strategic. Thus, the paper was to help academic researchers and hotel managers in analyzing projects of Information Technology in the hotel industry. Keywords: Competitive advantage, Information Technology, Hotel industry, Investments, Applications. Introduction Investments in Information technology have a role that is crucial in the management of hotels industry. Deployment of timely and practical new applications of information technology can provide opportunities for services of guests that are so as to attain the rising expectations of the customer. Also the cost controls that is, more strategies of marketing that are efficient and opportunities that are expanded for hotels. In reality investments in information technology will improve the productivity of hotels, minimize their operation costs and also add value to the products and services that they provide to their consumers. Thus, applications of information technology investments in the hotel industry have improved over the previous years. In addition, there is the need for more research to look into how applications of information technology may result in establishing a competitive advantage that is long lasting for the hotel industry. The study focuses on discussing how the applications of Information Technology can lead to an advantage that is competitive in the hotel industry (Law & Jogaratnam, 2005). Theory or Background The findings of the paper were presented in three categories, and the first one was using four areas that are related to evaluating the decisions of Information technology in hotels. It entails the co-relationship between the decisions of Information technology and the strategy of business, application types of information technology, the financial standing of the firm’s financial position. It also includes the financial resources that are available, positive anticipated outcomes of the IT decisions and the style of decision-making. The second category was using five major areas in the implementation of the projects of the information technology. The areas include; complicated technology, skills management, linkage of the resources and integration of the projects of information technology with other systems. The third category is developing with capabilities of Information Technology and the competencies of IT to come up with an advantage that is competitive (Burca, Fynes & Marshall, 2005). Investments in Information technology can result in attaining the below outcomes; -Minimized costs -Value addition -Speed -Agility -Innovation -Service to customers (Burca, Fynes & Marshall, 2005). The minimized costs refer to the giving of services or products at a very low cost. It can assist a firm to provide services a lower ratio of cost. Value addition refers to giving services and products that are in a high manner and have features that are distinct. The innovative and creative utilization of technology that facilitate the value of services offered is the means by which hotels differentiate themselves from rivals. Speed refers to the processes and systems that provide excellent products and services. The solutions of Back-office Internet technology give many ways to improve the departments. Agility is the capability to handle change faster than the competitors. Agility that is driven by IT could be through support systems of decision in hotels. Innovation is the flow that is continuous for new services and products that are preferred by the consumer. Managers seek to link changes of IT as a way of achieving an advantage that is competitive especially with the services to the customers that are improved and enhanced productivity of the employees. Service to customers is the great response to the needs of the customers (Buhalis & Law, 2008). The below table provides the structure for the presentation of the findings Evaluation of decisions of Information Technology in the Hotel industry Implementation of the projects of Information Technology Developing of capabilities of Information Technology and the competencies of IT to come up with an advantage that is competitive. The co-relationship between the decisions of Information Technology and the strategy of business Linkage of the projects of Information Technology with other systems Internet infrastructure that is flexible The style of decision-making Complicated Technology Business to firms Application types of Information Technology Skills of Management Self-service to consumer Positive anticipated outcomes of the IT decisions Linkage of the resources Value added IT to products The financial standing of the firm’s financial position and the financial resources that is available. Value added IT to services Innovation of IT According to research, it is to be a strong relationship between the strategy of a business and the strategies that are functional of hotels in the industry. The managers are supposed to demonstrate and justify how their investments in information Technology can support the strategy of the business of the hotels or the strategies of competition in the industry. If they do not do that the projects of Information technology will not be supported entirely by the owners and the management team of the hotels in the industry. Hotels can also invest in the applications of Information Technology in either back of the house in front of the house or both. Some of the applications of IT can be used by the senior management while the consumers could use others. Recently the hotel industry is forced to utilize IT so as to maximize the value of customers and reinvent their activities. The consumers may also have different expectations and needs of Information Technology. The travelers of business may want hotels to provide internet services while the travelers of leisure may need the amenities of entertainment (Daniells, 1993). The other significant area is discovering the cost of the project of IT and its anticipated results. The primary factors that drive implementations of technology in hotels are improved volumes of transaction through consolidations, reporting requirement that is complex and communication requirements that are international. Investments in Information technology can help the companies in the hotel industry to commence new services and products in a proficient manner. The benefits include; operational efficiency that is, minimization of cost, support decision in the areas of business strategies and planning, enhancement of quality of product, loyalty of customers and image of the brand. The other area is the industry’s financial position and the resources available for the projects of IT. For instance, the exploitation of a project of IT may be highly required, and most managers will accept it. However, if the financial position of the companies in the industry is not high and the companies lack the financial resources due to external or internal reasons, the project might not be successful. The financial position of the hotel industry is important in determining the type of the decisions of Information Technology (Papatheodorou, 2006). In the implementation of the applications of Information technology, the integration of complicated Information technology and performance of the hotel industry has gotten absolute attention in the literature over previous years. Having the skills of management is another important area in the development and implementation of Information technology decisions. The capabilities of management have an influence in the manner that technology is exploited, developed and utilized in the hotel industry The skills of management include; The capability of the managers of Information Technology appreciates and understands the needs of business of other functional suppliers, customers, and managers. The capacity to work with the technical providers, clients, and managers so as to come up with applications of IT that are appropriate. The capacity to link the activities of IT in a manner that supports other functional suppliers, customers, and managers. The capacity to expect the forthcoming needs of IT of technical providers, clients, and managers (Pour, 2000). If the skills of management are lacking, the overall potential of a company cannot be seen. The skills of managerial IT needs a very long time to be developed. Also the skills are inborn, and they cannot be taught (Pour, 2000). The other thing is linking to resources. The beginning of resource linkage demonstrates the maximization of an advantage that is competitive in an industry through using and combining resources that are valuable. Companies are seen as trying to find the support boundary that is optimal by which their value of resources is realized better than through other combination of resources. The linkage of information systems is a crucial issue for hotels because the industry is driven by data. Basing on the importance of sharing information of customers from across properties and departments, linked systems of Information Technology are needed to help employees share and exchange information. In addition effectiveness and efficiency are the end-results of integration of Information Technology (Ber, 2002). The exploitations of applications of IT will assist a firm to establish capabilities of IT and competencies of IT. Capability of IT primarily focuses on efficiency that is internal and cost minimization which may lead to the transformation of primary processes of business and practices into capabilities of Information Technology. The capabilities of IT link and streamline the value chain. In addition, the competencies of IT have a focus that is external and stand for the learning of an IT firm that is collective. The primary skills of information technology include; Internet infrastructure that is flexible, business to consumer, business to companies. It also includes; self-service to consumer, Value added IT to products, value-added IT to services, innovation of IT (Orfila-Sintes & Mattsson, 2009). The theory chosen is justified by the evaluation of decisions of Information Technology in the hotel industry and Implementation of the projects of information technology. They assist in demonstrating how applications in information technology may result in an advantage that is competitive in the hotel industry (Orfila-Sintes & Mattsson, 2009). Methodology The paper has been written basing on a previous literature synthesis in the area. The strategy also entails the meaning of the center of the study, collection of data and analysis of the data. The research paper includes the below research questions; How do the applications of Information Technology lead to an advantage that is competitive in the hotel industry? What are the many areas that need to be analyzed when investigating how the applications of Information technology may lead to an advantage that is competitive in the hotel industry? The focus of the study can be manifested when it is put in the circumstance of an existing research. The figure below shows that the focus of the study is how the applications of Information Technology may result to Competitive advantage in the Hotel industry (Pannell, Kerr & Forster, 1981). Figure 1: An illustration of how the applications of Information Technology may contribute to competitive advantage in the hotel Industry (Rushmore, ONeill & Rushmore, 2012). The data utilized in the research was retrieved from many sources that are secondary. The documents entail journals, academic textbooks and trade magazines. The procedures for the collection of data from every document were scrutinized and studied. Before the results were presented, there was a discussion on the credibility and validity of the presented data. Since one study is not able to attain validity, numerous efforts were put into practice so as to facilitate validity and credibility of the collected data. Because the data was retrieved from sources that are secondary their credibility was reviewed. The collected data was strictly analyzed according to accounting principles that are accepted that are the proven methods of analyzing the performance of a business (National Productivity Council, 1966). The research design makes use of the dependent and the independent variables. There are three independent variables namely; the decisions of Information Technology in the hotel industry, Implementation of the projects of Information technology and the capabilities and competencies of IT. In addition, there is only one dependent variable that is the focus of the study. It is how the applications of Information Technology have led to Competitive advantage in the hotel industry (National Productivity Council, 1966). Data analysis The information that was retrieved from secondary sources was analyzed using the variables. In addition measures of accounting such as assets return, investment return, and sales return were used. The measures of accounting were retrieved from the financial statements of the hotel companies named in the paper, and their results were used to compare the variables for the entire industry. The analysis was done using mean and percentages so that it can be clearly understood. The analysis was also conducted using the independent variables separately; 1. Decisions of Information Technology in the hotel industry Variables Percentage of exploitation in the hotel industry The co-relationship between the decisions of Information Technology and the strategy of business 20% The style of decision-making 10% Application types of Information Technology 20% Positive anticipated outcomes of the IT decisions 20% The financial standing of the firm’s financial position and the financial resources that is available. 10% Mean 0.8 (Sigala, 2003). 2. Implementation of the projects of information technology Variables Percentage of exploitation in the hotel industry Linkage of the projects of Information Technology with other systems 20% Complicated Technology 8% Skills of Management 12% Linkage of the resources 30% Mean 0.5 (Sigala, 2003). 3 Capabilities of Information technology and the competencies of IT to come up with an advantage that is competitive. Variables Percentage of exploitation in the hotel industry Internet infrastructure that is flexible 10% Business to firms 9% Self-service to consumer 11% Value added IT to products 20% Value added IT to services 15% Innovation of IT 10% Mean 0.75 (Sigala, 2003). The analyzed data shows that the companies in the hotel industry need to use applications of Information Technology so as to achieve an advantage that is competitive (Sigala, 2003). Findings From the research conducted the hotels are focusing on the initiatives of a set of technology that are joined to a strategy that is specific. Within lodging segments, that are little value added, for example, midscale, economy and budget, the hotels in the industry are probably to undertake Information technologies that enhance efficiency in operations. On the other hand the lodging segments that have a high-value addition such as luxury and upscale, hotels are probably to undertake enhances in technology that improve service delivery quality to the consumers. The important aspect is to find the meaning of the strategy of business and investments in information technology. In addition, the business paradigm that is uneven requires the hotels to be more consumers oriented, collaborative, innovative, quick, flexible and responsive. From the research in the year 2008, Sheraton Resorts and hotels came up with a new hotel customer experience with Microsoft surface that was a pioneer commercial computer cover for Microsoft. The surface units are positioned in the lobbies of the Sheraton hotels so as to provide an environment that would provide the way for interaction, a setting that is social to the lobby and connectivity. The experience offers the customers with a new way to discover and facilitate their stay in the hotel (Siguaw, Enz & Namasivayam, 2000). From the research, the perception of hotel customers shows that the essential technologies to the consumers are; hotspots of Wi-Fi, systems of in-room entertainment . The primary essential in-room technologies for male customers are the access to the internet that has a high speed and the electrical outlets that are readily available. On the other hand, the electrical outlets that are readily available, the panel of consumer control and the internet access that has a high speed are essential in-room technologies for the female customers. The techniques have resulted in a competitive advantage in the industry. Using measures of accounting such as assets return, investment return, and sales return have shown mixed outcomes to correlations that are positive with investment in Information Technology. Also, many firms in the hotel industry do spend inefficiently on information technology. The companies are vulnerable to under-invest in some sections, especially in the financial periods that are weak. Thus losing opportunities to enhance productivity, minimize costs, provide better services to consumers or attain an advantage that is competitive. In addition, the companies spend more in periods that are financially stable, mostly purchasing into the hype that promised investment returns that were huge in trendy solutions of software/hardware. They sometimes copy their competitors thus leading to disillusionment and disappointment (Siguaw, Enz & Namasivayam, 2000). It is not the Information technology that can lead to an advantage that is competitive but how the project of information technology is chosen, implemented and utilized. Also, what it offers to the industry and what it can offer in the future that will demonstrate a difference in competitive advantage. Complicated Information technology restrains the relationship of service performance-service practice. Also in the having of the skills of management, it was found that the understanding of the projects of IT by the Directorate and their possible contribution to the performance of the firm was essential to the ability of the American Airlines to come up with the SABRE system (Siguaw, Enz & Namasivayam, 2000). It was also found from a hundred winner of the CIO magazine revealed that competencies of information technology and capabilities of IT do have an effect on the competitive advantage of the hotel industry. In addition, the Vintage Inns set up a system of enterprise that would enable the hotel sell benefits to consumers. Also in the combining the histories of customers from their properties into the central database so as to enhance efficiency in booking. The system of enterprise enabled the hotel to manage the assets efficiently in a fundamental manner and staff reservation, and the capability to book rooms for any property of the hotels. The system has improved the efficiency of staff by 15% and enhances the accuracy of data by almost fifty percent with the removal of re-entering customer information between the systems. The system also reduced the time of training of the employees in the company, and it has also enabled the company to gain competitive advantage (Bagdan, 2013). Another research conducted is the Morrissey Hospitability where it established the system of yield management in two of its properties that are luxurious. After two months of developing the system, RevPAR improved, and their occupancy took advantage of their competitors by 30%. Research also indicates the reservation system of Marriot handles the booking of a figure higher than 355,000 rooms of hotels around the world. The system gives Marriott an opportunity to collect information concerning the habits, preferences and characteristics of their customers. In fact, the profiles for consumers that are about twelve million that is stored in the usual ledger program of Marriott sets up the largest database in the entire hotel industry. The information collected enables the firm to cross-check the profiles of consumers that are personal with the preferences of products. By having done that the firm was able to gain a competitive advantage due to the distinctive services they offer to customers. In addition Trump, SoHo established solutions of Cisco for the network of the hotel, access to persuasive wireless and communications that are unified so as to provide customer experience that is highly personalized. By doing that the company has gained competitive advantage over its rivals. IT has significantly improved efficiency of staff by offering the ability to collaborate and communicate from any place on the property. It has also empowered the members of staff to build customer experiences that are personalized thus leading to an advantage that is competitive in the industry (Rushmore, 1992). Discussion From the literature, it is anticipated that there should be a strong relationship between the strategy of business and the strategies that are functional of hotels in the industry. The managers are supposed to demonstrate and justify how their investments in information Technology can encourage the strategy of business of the hotels or the strategies of competition in the industry. From the findings, it is clear that hotels are focusing on the initiatives of a set of technology that are joined to a strategy that is specific. In addition to lodging segments where value addition is little the hotels in the industry are most likely to make use of information technologies that facilitate efficient operations. Alternatively, in lodging segments where value addition is high, the hotels in the industry are most likely to exploit information technologies. That will facilitate the providing of services to its customers (Organization for European Economic Co-operation, 1951). Hotels can also spend some money on the application types of Information Technology in either back of the building, in front of the building or both. Some of the applications of IT can be utilized by the senior executive while others could be put into by the consumers. The literature could be substantiated by the research conducted where in the year 2008, Sheraton Resorts and hotels came up with a new hotel customer experience with Microsoft surface. That was a break new ground commercial computer surface for Microsoft. The surface units are situated in the lobbies of the Sheraton hotels so as to provide an experience that would present a conducive environment for interaction, a setting that is social to the lobby and connectivity. The experience offers the customers with a new way to discover and smoothen their stay in the hotel. It can also be substantiated by the findings where the perception of hotel customers demonstrate that the essential technologies to the consumers are; hotspots of Wi-Fi, systems of in-room entertainment. The chief essential in-room technologies for male customers are the access to the internet that has a high speed and the electrical outlets that are readily available. Alternatively, the electrical outlets that are readily available, the panel of consumer control and the internet access that has a high speed are the most needed in-room technologies for the female customers. The techniques have resulted in a competitive advantage in the hotel industry (Seal, 2013). The other important area in the literature is discovering the cost of the project of IT and its anticipated results. Looking at the findings, it is clear that many firms in the hotel industry do spend inefficiently on information technology. The companies are vulnerable to under-invest in some sections, especially in the financial periods that are weak. Thereby losing opportunities to enhance productivity, minimize costs, provide better services to consumers or attain an advantage that is competitive. More so the companies spend more in periods that are financially stable, mostly purchasing into the hype that promised investment returns that were huge in trendy solutions of software/hardware. They sometimes copy their competitors thus leading to disillusionment and disappointment and thus failing to achieve competitive advantage as compared to their rivals. In addition, the industry’s financial position and the resources available for the projects of IT is also crucial to achieving competitive advantage. From research measures of accounting were used such as assets return, investment return and sales return and they showed mixed outcomes to correlations that are positive with investment in Information Technology (Slyke, 2008). From the presented literature, in the implementation of the applications of Information technology, the integration of complicated Information technology and performance of the hotel industry has gotten absolute attention over previous years. From the findings, the statement is real complicated Information Technology has proved to restrain the relationship of service performance-service practice. The presence of the skills of management is another important area in the development and implementation of Information technology decisions. The capabilities of management have an enormous influence in the manner that technology is exploited, developed and utilized in the hotel industry. From the findings, it was found that the understanding of the projects of IT by the management and their possible contribution to the performance of the firm was essential to the capability of the American Airlines to come up with the SABRE system (Slyke, 2008). The exploitations of applications of IT and linkage of resources will assist a firm to establish capabilities of IT and competencies of IT. The meaning of the statement has been demonstrated in the findings by the use of real life situation. It was also found from a hundred winner of the CIO magazine showed that competencies of information technology and capabilities of IT do have an effect on the competitive advantage of the hotel industry. In addition, the linkage of resources has been proven where the Vintage Inns set up a system of enterprise. That would enable the hotel sell benefits to consumers and combining the histories of customers from their holdings into the central database so as to enhance efficiency in booking. The system of enterprise enabled the hotel to manage the holdings effectively in a fundamental manner and employee reservation and the capability to book rooms for any property of the hotels. The other research conducted is the Morrissey Hospitability where it utilized the system of yield management in two of its properties that are luxurious. After two months of using the system, RevPAR improved, and their tenancy took advantage of their competitors by 30%. Research also indicates the reservation system of Marriot handles the booking of a figure higher than 355,000 rooms of hotels around the world. The system gives Marriott an opportunity to collect information concerning the habits, preferences and characteristics of their customers. In fact, the profiles for consumers that is about twelve million that is stored in the usual ledger program of Marriott indicated the largest database in the entire hotel industry (Slyke, 2008). Looking at the findings, it is also true that the exploitations of the applications of Information Technology and linkage of resources will help a firm in the hotel industry to establish competencies and capabilities of IT. The linkage of information systems is a critical issue for hotels because the industry is driven by data. Basing on the importance of sharing information of consumers from across properties and departments, linked systems of Information Technology are required to help employees share and exchange information. It is also evident in the findings that The Trump SoHo established solutions of Cisco for the network of the hotel, access to persuasive wireless and communications that are unified so as to present consumer experience that is greatly personalized. By doing that the company has gained competitive advantage over its rivals, and it has also established capabilities and competencies of information Technology. IT has significantly improved efficiency of staff by offering the ability to collaborate and communicate from any place on the property and empowering the members of staff to build customer experiences. The company has also been able to gain an advantage that is competitive as compared to its rivals due to the experiences received by its consumers. Therefore, the findings in the paper are the research conducted from the presented literature. They prove how applications of Information Technology have led to an advantage that is competitive in the hotel industry (Das & Teng, 2000). Conclusion Investments in Information technology have a role that is crucial in the management of hotels industry. Applications in Information Technology can lead to competitive advantage through the following ways; there should be a strong co-relationship between the decisions of Information technology and the strategy of business, a good style of decision making, and application of various types of Information technology. In addition, there should be positive anticipated outcomes of the IT decisions, a strong financial standing of the firm’s financial position and the financial resources that are available (Doyle, 2000). More so the applications can lead to an advantage that is competitive if there is the existence of linkage of the projects of information technology with other systems, complicated technology, skills of management and linkage of resources. There should also be the development of capabilities of Information Technology and the competencies of IT to come up with an advantage that is competitive. The implication of the research is that indeed Applications in Information technology can lead to an advantage that is competitive as shown by the findings in research. The other implication is that IT has to a great extent improved efficiency of staff by offering the ability to collaborate and communicate from any place on the property and empowering the members of staff to build customer experiences. The implication for practice is that the exploitations of applications of IT and linkage of resources will assist a firm to establish capabilities of IT and competencies of IT. The other implication is that if any company in the hotel industry wants to stand in a healthy financial position and gain competitive advantage then it has no choice but to apply Information technology in each and every sector of its operations. Finally, if a company in the hotel industry employs all the discussed applications of Information technology then it will be right to make a conclusion that such a business in real life practice will be able to attain competitive advantage and be miles ahead of its rivals. Therefore from the conducted research it is clear and evident beyond reasonable doubt that the applications of Information Technology can lead to an advantage that is competitive in the hotel industry (Das & Teng, 2000). References Bagdan, P. (2013). Guest service in the hospitality industry. Hoboken, New Jersey: John Wiley & Sons Inc. Ber, K. (2002). Benchmarking in tourism and hospitality industries the selection of Benchmarking partners. Oxford, U.K: CABI Pub. Buhalis, D. & Schertler, W. (1999). Information and communication technologies in tourism 1999 : proceedings of the international conference in Innsbruck, Austria, 1999. Wien New York: Springer. Buhalis, D., & Law, R. (2008). 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