Competitive Advantage for Many Hospitality Organisations - Essay Example

Industry overview Over view of Hospitality Industry: Companies in the hospitality industry face a highly competitive environment in which differentiation and providing an innovative customer experience are key elements building brand awareness and loyalty among customers. However, many companies spend the majority of time focused on improving core operations rather than the fundamental customer experience. This point of contact – where the customer and hospitality enterprise interact directly – is where the customer experience is most important. And, it’s often the difference between a repeat customer and a dissatisfied customer. However, to create time for hospitality management to focus on the customer experience, means executives must free themselves from running the less-value added parts of the core business. This is often becoming difficult to achieve because of the volume of issues hospitality companies deal with today: Poor Customer Connection Customers today are not loyal to any one brand with decisions often made on price or discounts. Guest expectations regarding services are rising, often driven by the reality that hotels and food service locations are an extension of a customers’ home. The total guest experience is often more than a particular lodging or food service organization. For instance, customers may want to find other points of interest near their current lodging or dining location. Hotel or restaurant locations are hard to find for customers using the Internet to explore. Inefficient Operations: Too many systems are not integrated. Low visibility into supply chain delivering status. For instance, lodging and food service managers have little exposure to current shipment locations and estimated times of arrival. Hotel and food service inventory received is not quickly reconciled with inventory ordered. Poor insight into how customers are finding their lodging or food service locations and how to direct customers to the nearest location. Low Business Insight Key business trends and insights are hard to manage, analyze and view. Sales and marketing campaigns are ineffective due to inability to map demographic data against key customer attributes. No differentiated customer experience due to lack of simple customer understanding and insight. Now let us closely examine the issue of brand management in Hospitality industry: Brand Management in Hospitality Industry Definition of Brand: By definition, a brand is a promise made by a company to its customers. This promise is a bundle of goods that includes the product, its related services and intangible elements such image. Essentially, the brand promise reassures the customers in the purchasing process: they know what it is they are buying and they know what they will get. Brand in the Hospitality industry: In the hotel business, this notion is very important. When traveling, a customer will seek to eliminate as many unknowns from the process as possible. In planning the trip, the choice of the hotel becomes a key decision. Knowing beforehand where you are going and what you will be experiencing once you are there, substantially reduces stress. Therefore, a well recognized and defined brand stands to gain a substantial share of the traveler market compared to a local, unknown brand. Furthermore, the known brand can sustain a competitive advantage having attracted the traveler the first time around. If the brand met the customers expectation, there is little incentive to change the next time. So the notion of the hotel brand plays an important role in attracting customers and retaining loyalty. Branding begins with principles. And the brand experience is shaped by every action of every associate. Take the lead and help determine the guiding values that inform and shape every decision which impacts those associate actions.( Rick Hendrie, 2005) The general challenges before Hospitality industry: Drive consistent, profitable growth Rapidly build brand equity Identify a strategy that maximizes consistent revenue growth while minimizing capital investment Reduce employee turnover and related costs The Solution for which the industry is seeking: By overcoming the above challenges, the industry looks ahead to achieve the below: Have the most profitable guests define the brand drivers and the specific experience they value Make serving guests fun and engaging for front-line employees Use executive coaching to give managers leadership skills that motivate employees to delight profitable guests Train employees to consistently deliver the experience profitable guests value Audit every aspect of the project to ensure brand consistency Rigorously analyze results for impact on loyalty, revenue and profit Implement an integrated Human Resources system that recruits, compensates, and communicates with employees to build brand equity, guest loyalty, and employee loyalty Problematic areas in Hospitality brand management: Though the hospitality industry maintains the brand, the analysis of the situation points to areas of weakness within the industry that are preventing hotel brands from taken their rightful place in the top 100 in the stock market. However, given the size and the importance of the hotel industry, it is astonishing that not a single hotel chain appears on the 2002 list of top brands. Consistency of brand offer The consistency of the product and service offer needs to be investigated. Hotel chains are by and large at the mercy of the local market conditions in terms of infrastructure. This results in a wide variation in the product offer in terms of architecture and lay-out. Also, hotel chains tend to only manage the facilities with the ownership belonging to a third party. The divide between ownership and operations sets-up an inherent conflict of interest. This impacts the perception of the brand. In particular, it is very difficult to drive a standard approach to brand quality when each owner has a different level of involvement and his own criteria for running the business. This not only impacts the level of service within the company but also essential marketing elements such as the name and the logo. If one cant even get establish consistency in the naming, then there is little hope in being able to build the brand. Efficiency of internal operations Company cultures and organizations play a big part in the market value of a brand. Inefficient processes and procedures impact customer perceptions. Consequently, to build a brand, a company must be just as vigilant about its internal operations as its marketing efforts. Yet, hotel chains have been slow to initiate productivity gains that will assist their brand perception. In particular, they have failed to benchmark themselves against other industries that have made significant productivity improvements. It is rare to hear hotel chains talk of "Six Sigma" or "lean manufacturing". Yet the fundamentals of these methodologies are directly applicable to the hospitality industry. Hotel chains have used the argument that they are in a different industry with different needs then the rest. This excuse is clearly not being bought by the stock exchanges as the hotel chains continue to seriously under perform all key market indicators. To build the brand value, it is essential that hotel chains actively pursue innovation in processes and procedures that will result in efficiency gains. Breaking down the principles into ‘doable’ things: In prioritizing the needs to develop a strong brand, the hotel chains should emphasize sorting out internal operations first. The industry must be seen as innovative, offering new solutions to the market. In addition to improving the bottom line performance and customer satisfaction, these initiatives will provide more credibility to the industry. This improved visibility and interest should allow companies to build consistent brand offers. This in turn should assist in developing differentiated products and services. Operations moves to the fore by defining those principles in an operational context. Here a principle of “Commitment to Excellence” as an example, might be re-defined in a variety of ways as it affects guest service, food quality, retail amenities or décor and atmospherics – not as specific actions, but as contextual touchstones. Companies like Zingermans or Ritz Carlton do a superb job of breaking essential principles into ‘doable contexts’. Need for HR strategies in the Hospitality Brand management: Paradigm shift in Hospitality Industry: According to Ruud J. Reuland, one of the fundamental changes in the business environment of the hospitality industry is the growing complexity of relationships and transactions between people. This complexity requires new competencies of managers in our business. The hospitality manager of the past The typical hospitality manager worked 18 hours a day with only one goal: to satisfy the needs of the guests. He had a team of hospitality driven people, who worked in a strict hierarchy with a clear division of jobs and tasks. He had no shareholders who were watching his financial performance day by day. These traditional hospitality managers knew all aspects of the operation and had excellent guest oriented skills and competencies; but had no clue on how to really manage their business. Hotel management education programs were similar to that: very operational, based on accumulated experience with basic management knowledge on marketing, finance and human resources, very much oriented on technical and communication skills with the client. Change Change and uncertainty in the business environment are key words nowadays. Apart from tremendous growth in our industry, we deal with other types of guests who have different demands that change rapidly. Moreover, the communication channels with our guests and consequently the distribution opportunities have changed dramatically. The relation with the work force is also different and is becoming more complex. The employees are more diverse than ever in age, cultural background, educational level and motivation. The human resources of today are more independent in mind and spirit. They embrace concepts such as life long learning, greater match of career and personal values and the desire for personal development as well as fun in their work environment. The labour force, which used to be the traditional segment is shrinking, resulting in the need to improve the competitiveness of the industry labour market wise. The hospitality industry needs to be competitive in the global capital market as well. Unlike in the past, capital providers have less emotional and more rational reasons to invest and therefore require maximum return on investment. The conclusion is that most important stakeholders (guests, employees and capital providers) have changed: higher expectations, and probably more conflicting interests. And the challenge for managers is to delight all these stakeholders. New competencies To deal with these challenges in terms of change and uncertainty; hospitality managers will need other competencies in the following ways: From a manager who bases his decisions on past experiences to a manager who anticipates on future developments; From a problem solving manager to a problem finding manager; From a caretaker to a change agent; From a mono-disciplinary manager to a multi-disciplinary entrepreneur; From a hospitality manager to a manager who adds value to his company. From teaching to learning These changes in required competencies must result in another type of education for hospitality managers. In simple words: hospitality schools should make a shift from" teaching" to "learning". This is not an overnight process. It requires a shift in the mindset of all actors in the learning process. It also requires the input and understanding of the industry. And to achieve the above said shift, the managers must acquire new competencies in line with the new paradigm. Benefits of effective HR strategies in general: Set and achieve organizational goals Boost team performance Make their department more efficient Motivate their staff to excel Manage and develop team members Control workloads and rosters Successfully handle day-to-day problems, and Manage a diverse workforce and customer needs. Support of HR strategies in Brand maintaining for Hospitality Industry: Howard Schulz, CEO of starbucks recognized early on that appropriate HR policies and practices were critical for sustainable delivery of the brand mantra. They would make a big difference to Starbucks ability to attract and retain good people to deliver that critical brand experience. Schulz wanted his employee policies to signal that the thousands of part-time employees were critical to the business success and were valued accordingly. He also wanted them to make the connection between employee behavior and the success of the brand. That is why Starbucks was the first company in the USA to offer medical, dental and vision benefits to part time employees. It was also the first to offer them stock options, called bean stock. From an HR perspective, the toughest task is making sure that, having made a public commitment to the brand values, the companys deeds match its words. That means delivering on aligned recruitment and performance metrics, not just paying lip service. It also means reviewing compensation and benefits programs to ensure that they dont encourage off-brand behavior.  Equally, Starbucks recruitment philosophy for its baristas is to focus on outgoing personality and social skills. The recruiting posters in its outlets talk only about delivering satisfaction - a subtle way of reinforcing the brand promise to customers at no cost. The training programs reflect the same emphasis - working in the people business serving coffee, not the coffee business, serving people, to paraphrase. Starbucks is in the retail hospitality/entertainment industry so it is easy to understand how brand helps and why employees are so critical for brand delivery. However, the same rules apply just as strongly in the management consulting business. Providing substantiated assessment of each employees competencies is a huge exercise. But it is an invaluable contribution from HR to the brand team as it provides backbone for the brand, making explicit how the values should be reflected in behavior. Alignment of competencies is important whether your company is in hospitality or manufacturing, as consistent performance standards are always vital for quality assurance.  Six sigma initiatives transform critical processes and employee capabilities for many manufacturers. Implicitly or explicitly, these disciplines help in brand building as they improve consistency and uniqueness, two essential elements of strong brands. Training and Knowledge Management are the logical next steps for brand building. At PriceWaterhouse, the company amended all the methods training courses so that management actively encouraged on-brand behavior. Similarly, disciplined employee brands like BMW or FedEx have compulsory brand induction programs for all new employees, from EVPs (Executive Vice Presidents) or other operations staff, to emphasize the brands promise, values and target behaviors. The main offer of HR strategies to the Industry: From an HR perspective, the toughest task is making sure that, having made a public commitment to the brand values, the companys deeds match its words. That means delivering on aligned recruitment and performance metrics, not just paying lip service. It also means reviewing compensation and benefits programs to ensure that they dont encourage off-brand behavior. So the contribution of HR is as follows: 1. Supporting learning in the workplace Ultimately, the only learning of value to any tourism enterprise is learning that directly contributes to superior business performance and superior business results. Increasingly, learning must be connected into the needs of the workplace. This is often best achieved when learning takes place on-site in the workplace, and particularly where learning takes place across a team of work colleagues. Isolated learning – where one individual goes on a course at a remote location detached from the realities of the workplace is not always an effective means of boosting business performance. Many tourism businesses need to “raise their game” and this is often best achieved where a team or work-group collectively develop their skills. 2. Supporting skills development (HRD) Another major theme to Brand sustaining is “ skills development”, and the need to heighten awareness at the level of the individual enterprise that building the right skills-set is a continuing process. It is also a deliberate process that will certainly not just happen by accident, and it is best done in the context of a clear skills inventory and training plan. Mary L.Tankey, in her book ‘Human Resource Management for Hospitality Industry’ illustrates that the hospitality industry is such one where managers can move from property to property and operation to operation, and concept to concept and still working for the same company. Constant movement, high turnover, mergers, and acquisitions are just some of the reasons why many hospitality organizations have revamped and formalized their management development systems. They recognize that the ongoing development of their managers is an important investment that can pay large rewards for employees, guests and company alike. In her book she explains the ‘Marriott Lodgings’ management development system also called the Career Bundling system. (CBS), which is an integrated system that seeks to support the company business goals(p-201). The two key components are career brands and key competencies. Career bands place all Marriott lodging jobs into groups of management positions that have similar roles and responsibilities. Key competencies are the knowledge, skills, and abilities that manager must demonstrate to be successful within the job position. As you can see, this ties back into the information, it is gathered from the job analysis and put back into job description and job specifications. The total model consists of the inclusion of the below: - Career management - Training and development - Staffing - Performance management - Total Compensation 3. Strengthening workplace practices A further insight from the HRD Strategy is that well designed work practices can be more important than specialist HR expertise. Many small enterprises in particular will claim that they cannot improve the people management aspects of their business because they cannot afford a full-time HR Manager. The HRD Strategy challenges this piece of “received wisdom”, and suggests instead that smaller businesses just need to get smarter at how they manage, motivate, develop and deploy their staff. 4. Strengthening information for policy The another key theme for the importance of the HRD Strategy is that of improving the nature and quality of information that is used to inform the education, training and development of tourism workers. HR strategies will pull the information together into a more coherent format, Enhancing the communications aid to brand development. Conclusion: The brand offers the prestigious position to the organizations especially in the Hospitality industry. And thus to make and develop the brand the Hr practices has to be culminated into the system to recruit, to transform right human resources in to the system, who make the right brand. The HR strategies offering efficiency in making the brand not only to the individual hospitality entity, but it also offers, integrated effort to the whole system to strengthen policies and develop and strengthen work place practices. References: Ruud J. Reuland, New competencies for hospitality managers: a paradigm shift in learning. By General Director, Ecole hôtelière de Lausanne, available from http://www.ehlite.ch/jan03/16e.asp accessed on 22 September 2005. 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