Impacts Of Information Technology In Hospitality Industry - Essay Example

?Table of Contents Table of Contents Introduction 2 Methodology 3 Literature review 4 Findings 7 Information technology use in attracting and retaining customers 8 Information technology in hotel reservation and registration 9 Information technology and hotel profitability 10 Current and future applications of IT in hotel industries 11 Information technology and corporate social responsibility 13 Applications of IT in the differentiation of services 14 Discussions 15 Recommendations 17 Conclusions 18 Introduction The 21st century has witnessed a tremendous growth in the use of information technology in conducting business globally. Information technology has made it quite easy to reach clients, order for goods, and bid for contracts or even negotiate for mergers with multinationals around the world. Executives today conduct e-conferences and e-meetings from the comforts of their rooms thanks to the advances in information technology. This growth and paradigm shift in the way business is conducted has also been witnessed in hospitality industries especially in the management and running of hotels (Koutroumanis, 2011). Hospitality industries are one of the fastest growing industries globally, this has been attributed to the large number of client base that source their services. Hotels are omnipresent in almost every sphere and sector of the economy; as a result, they serve a wide variety of clients ranging from leaders on retreat, families, business meetings and travellers. The advances in technology have therefore played an integral role in the growth and developments of hotels and other related restaurant industries. The changing consumer behaviour patterns in the global market have forced business executives to device new ways of satisfying the needs of the customers. The retention and building a strong customer base is the current headache for most hotel and restaurant managers mainly due to rapid changing face of the industry. Employment of information technology in ensuring that the dynamic customer needs is catered for will promote the growth of hotel industries (Khosrow-pour, 2002). Competitive advantage in this troubled economy is the desire of all industries. Developing products that appeal to the needs of the customers can be the first steps towards building a proper business advantage. Information technology therefore presents several avenues of improving service delivery and consumer satisfaction in hotel businesses (Koutroumanis, 2011). The use of advanced and sophisticated mobile and computer technology has been adopted in various levels of hotel management. Hotels have adopted interactive interface on the internet to communicate with their clients and prospective customers. As a result, service delivery has been tremendously improved as the clients desires and needs are incorporated in various spheres of hotel management. Information technology has had a tremendous change in the management and operation of hotels in the entire globe (Smith, 2002). This paper discusses the impacts that the ever changing face of information technology has had on the operation and success of hospitality industries in the world. The instruments of information technology that are employed in the hotel industry will be discussed, analyzing the impacts that they have and continue to create in the sector. Methodology This chapter reviews the methods that were used in the collection of data and information based on the objectives of the thesis. The study seeks to establish the current applications of information technology in hotels and related industries. The areas of applications of information technology and the current new tools of IT used will also be critically evaluated. This study also seeks to establish the effects of information technology in the management of hotels and how information technology increases competitive advantage in the industry. The tools employed in the process of data collection are also described within this chapter. Based on the nature of this research, the case study design is the best option that can be employed to collect the information required. A large portion of data that will used to base further discussions shall be collected from available books and journals on the topic. Peer reviewed academic articles and journals together with various academic books available on the topic will be used to provide the basis for further arguments on the topic. Information technology tools used in various hotel departments will be critically analysed giving emphasis to their significance to service deliver and client satisfaction. Literature review A number of changes have occurred in the business sectors that have changed the way business is conducted and concluded around the world. These changes have affected the operations of various departments in different business environments. The recruitment of new staff, placing a job advert, advertising your services and interacting with clients have all witnessed the revolution. The emerging changes in business operations in various business sectors of the world have made it difficult for businesses to retain their traditional ways of doing business. Hotels and restaurants serve as one of the most dynamic customers and clients; therefore, the technological advancement that have occurred are important to be ignored by hotel businesses. According to Koutroumanis (2011), hotels and restaurants are exposed to high competitions for employees, business location and most recently information about the customers. Information technology has provided a better opportunity for hotels and restaurants to advance and grow their customer base. The development of the internet has led to widespread sharing of information between different individuals; therefore, the internet serves as a better and free source of information on customers, business facts and best hotel business location. The need for organisations to restructure their thinking to suit the way customers thinks has made organisation develop client friendly products. Developing a customer centred focus will enables hospitality industries to meet the demands and needs of their clients. Most clients of these industries are foreigners who have little information about a certain country. Availing information on the products and services a hotel has on the internet enables a large number of clients and potential consumers to access this information. Based on this, such clients can see the basics of seeking the services of the hotel; moreover, hotel booking has also progressed from the manual front desk booking to the internet. Hotels that allow online booking by customers have the ability to attract more clients as opposed to those who do not. Adopting the use of internet in room reservation enables clients to avoid the hustles and bustles of booking once they reach the hotel. According to Zhou (2004), the success of any player in the hotel industry depends on the availability of information on it. The access to this information by clients who are distributed all over the world can only be enhanced through the use of information technology. With consumers constantly seeking new information on hotels, their rates and location before purchasing the tickets, online booking has grown significantly. The travel industry association in 2002 produced a report that indicated that over 64 million Americans used the online ticket booking to get room and make reservations in hotels. The number of online bookings has tremendously increased since then as more and more citizens access the internet. The growth in information technology has also provided a new front for marketing. E-advertising has grown tremendously within a short period of time due to the significant impact that it has created especially to business that employs it. Hotel industry has most of its customers being technologically conscious individuals. As a result, most people source for best hotels to stay in when on vacation in a foreign country from the internet. The growth of social media and interactive website hosting has also made it possible for hotels to answer the questions of their customers’ real time. This has enabled the industry to grow and spread its presence into areas that were previously ignored (Connor, 2004). According to Muller (2011), the development of social media has further made it easier and cheaper for hotels and restaurants to market their services and extend their customer base. Most hotels today employ social media hosts to interact with their customers within these sites as they tackle any issues raised by the clients. This improves the awareness and enables a hotel to strengthen its presence within the sector. Hotels like the balsam grand resort in New Hampshire have developed a website that enables clients to log into their rooms independent of the front desk office. The customers can also pay for the reservations through their credit cards online, with this kind of system; customers are capable of making reservations at the comforts of their trip. Such an interface makes it easier for hotel businesses to reach a wide range of clients without worrying about the pressure of manual booking. The log in accounts of clients has also been used by hotels for marketing purposes. The system requires clients to provide their personal information and contacts. Preferences and any complaints are also logged into the system; such information enables the hotel to package their services to meet the desires of the clients. Most hotel clients are business people who are either on training, company meetings or outings. Such individuals require access to the internet to enable them conduct their businesses from the comfort of their hotel rooms. Information technology has enabled hotels to fit their hotel rooms and premises with wireless internet access according to Dixit and Dhunna (2012). This, the author acknowledges has revolutionised the hotel industry from being just meeting centres into offices away from the main office. Hotel clients are there capable of conducting business transactions from the comfort of their hotel rooms (O’Fallon and Denney, 2011). Conner (2004) acknowledged the development in information technology to the development of e-pricing in hotels. The benefits of pricing the hotel services online have made it possible for travellers the world over to adopt this method. It saves so much time and money when hotel clients make payment online. Online purchases also provide a number of discount incentives to customers; this lures travellers into using this mode of payment and increase the customer base to most hotels. A survey done to a survey done by Brewer (2008) on the impacts of IT on the Hilton hotels, the management and coordination of large chain of hotels like the Hilton and the Serena chain of hotels has been made much effective due to information technology. The prices and value of services in all these chains are synchronised and the information made available in the internet. As a result, it is possible for a traveller to book any of the chains due to similar information and services (Handler and Maizlish, 2006). Findings The hotel industry has a number of departments whose operations are dependent on one another. The departments range from marketing, catering, finance, administration, and housekeeping departments. The employment of information technology in all these departments has registered tremendous impacts in the hotel and restaurant sectors. Information technology has revolutionised the operation in major international hotels and restaurants. Hotels are today making millions of shillings thanks to the contributions of information technology. Zhou (2004) places the competitive advantage of most hotels to the technologically advanced operation modes that they have adopted (Ketler and willems, 1999). A number of researches have also attributed the adoption of state of the art operational software of the hotel sector to the success of many hotels. As hotel managements interact one on one with their clients, repackaging or services to suit the customers need has made it possible for hotels to rebrand and suit the customers’ needs. Customer satisfaction and confidence has as a result developed leading to retention clients (Law and Leung, 2013). The advancement and incorporation of information technology has created a vibrant and more customers based front desk office. Proper management of the front desk office enables a hotel to attract and retain customers. The traditional front desk practises involved the use of cards and other booking instruments. This was manual and required the presence of the client; however, information technology has led to the emergence of a virtual, front desk office. Clients can today make bookings while still miles away and be assured of a room and luxurious services in a hotel of their choice (Augusto, 2009). The management and finance departments within the industry have also benefitted from the growth in information technology. The pricing of services are done from an e-based interactive interface, which allow clients to book rooms, services, and hotels that best suit their descriptions and budgets. Clients are also capable of making payment through online payment channels like PayPal, MasterCard and visa card. Other services within most hotels are also paid using the card (Law and Leung, 2009). This reduces the risks that guest, revellers and hotel customers are faced with when doing cash transactions. Accounting within the hotel industry has also integrated their book keeping systems to include the use of modern accounting packages. Such packages have the ability to reflect online payments on the sport thus increasing accountability and efficiency within the hotels (Pease and Rowe, 2007). Information technology use in attracting and retaining customers The advancement in the growth of information technology has led a revolution in the way businesses reach out to their potential customers. The development of the internet has made it easier for hotel industries to interact with their clients and potential customers; as a result, hotels promote and even sell their products and services online. Online marketing and product promotion has a number of benefits both to the seller and the buyer, in this case the hotel and their potential guests. Online marketing is buyer friendly as it is convenient and easy to operate. Hotel guest can therefore order for services from the comfort of their rooms. It also reduces the chances of the buyers interrupting their busy schedules to meet sales people before deciding on the hotels to book. The use of information technology in marketing also enables consumers to access a variety of options and information on the products they need. This is highly beneficial to hotel users as it enable them to have a variety of options before making the final choice (Aziz, 2012). E marketing and buying is also more interactive and immediate; therefore, the information reaches the target group in time and their response can be received immediately. This is essential in the hotels where promptness is required in order to access the best services especially during peak seasons. The success of marketing depends on the lasting impression that the sales person makes on the potential client. Information technology has provided a virtual platform, which enables the immediate interaction of both the seller and the customer. This results into building of a great rapport, which is essential in customer attraction and retention in the hotel industries. The cost of doing business also reduces significantly with the use of information technology in marketing (Pease and Rowe, 2007). Information technology in hotel reservation and registration The growth of information technology has resulted into tremendous change in the registration and booking systems of hotels around the world. From on-spot registration where clients had to be at the hotels front desk office, travellers today make reservations while a million miles away, this has greatly improved hotel reservation systems and efficiency. The Hilton hotel according to Brewer (2008) has an online customer registration system that allows clients to log into their hotel rooms and access their services; moreover, the online reservation system enables guest to see the available hotels and their rates. Online room reservation and registration has replaced the rigours of calling up hotels in the last minutes to book hotel rooms and make reservations. Today, last minute arrangements are possible from the click of a button. Online booking and reservations are also cheaper as compared to the traditional mode of hotel bookings and entry. Air travel agencies and companies have also entered into partnerships with international hotels and their agents. This has made it much easier for clients to book hotel rooms online while buying their air ticket (Khan, 2012). The development of the portal system has also demonstrated the level to which information technology has revolutionised hotels and restaurants. Loyal and daily clients have specialized personal sites through which they make prior payments for hotel services. Clients can therefore make real time log in and custom make their request and orders. These will be reflected immediately to the system administrator who will pass the information to the relevant department for execution. Koutroumanis (2011) attributes the development of point of sale equipments in hotels to increased room bookings and the tremendous growth of the industry. Orders are no longer written by hand and manually delivered to the kitchen for execution. Clients today make their orders by dialling a button from their rooms. Such orders are reflected in the kitchen real time with the hotel room and the nature of order the client has requested. The use of information technology in room reservations and registration has also made easy the process of floor and room management. Hotel managers and patrons are able to track the level of occupancy and make decisions without having to conduct a head count. Such information is then posted on their online booking sites to guide other potential customers. Whenever the room bookings have reached the maximum, the system post such a result online thus preventing any more reservations or guest making inquiry. Room reservation and registration has therefore grown significantly with the adoption of information technology in hotel management and administration (Law and Leung, 2013). Information technology and hotel profitability Efficiency in business management translates into more value for less money. Information technology has changed the efficiency in service delivery in hotels the world over. More and more guest are today booked into hotels with ease resulting into customer satisfaction and comfort. Information technology has today changed how marketing and hotel bookings are conducted. The use of a more interacting website and social media sites to market the service provided by hotels has reduced the need for more cash to use in traditional marketing (Ingram, 1980). Agents of hotels who previously outsourced for clients at a commission have felt the brunt of advanced technology as virtual agents have replaced their roles. At a cost much less compared to real person marketing, hoteliers can comfortably advertise the presence of their products and services using web 2.0. This method is also more efficient as compared to traditional advertising due the high number of clients it reaches. This method of advertising has led to cost cutting and reduction to operational costs by many hotels (Tewari, 2010). The adoption of a different hotel registration and reservation method has also led to the reduction of hotel staffs. Previously, hotel agents were spread all over international travel points including airports and point of entry of most tourists and visitors. However, agents have changed from human agents to virtual agents, which are hosted by the hotel management, this has tremendously reduced the number of hotel employees. The operational costs of these have therefore dropped tremendously; therefore, patrons who patrol hotel rooms to pick orders and guest requests are no more. Clients make their orders through point of sale system (Tewari, 2010). Hotels have grown since the adoption of information technology in their ways of operation. This has been attributed to the increased profitability that the new system of operation has created. A recent report by a hotel and travel watchdog attributes the increased number of hotel chains to the high profits available in the industry. These are all attributed to the effects of information technology (Cobanoglu and Collins, 2010). Current and future applications of IT in hotel industries The current trends in the development of hotel industries and the incorporation of information technology into its management have shown what to expect in the future. Information technology has been used in several avenues in the hotel industry; this has been credited for the growth and development in this sector of the economy. The current trends in the application of information technology in the hotel industry give us a clear picture of its application in the near future (Smith, 2002). The current applications of information technology in the industry ranges from marketing and creation of product awareness to service delivery within the hotel set up. E marketing has made it easier for hotel managers to reach more clients within the shortest time possible. It has also made it possible for hotels to repackage their products to meet the client’s expectations and personal needs. This is possible due to the interactive nature of this nature of advertising, client bookings and registration is another current application of information technology in the hotel industry, this has also made it possible to improve service delivery and customer satisfaction (Tewari, 2010). Information technology has also made it possible to change hotel rooms from resting places to business rooms. The installation of wireless internet services has enabled travellers and guests to undertake office duties from the comfort of their rooms. Hotel boardrooms are also used for e-conferencing and meetings for business executives, this has completely changed the traditional role of hotels and the industry altogether. Information technology has also been used by hotels to retain and attract more customers (Marina, 2012). A number of emerging trends in the application of information technology has shown the route that hotel industries will take in their future employment of information technology. Mobility in offering services has been tremendously incorporated into business. This has been made possible due to the growth and advancement of computer devices. Today, portable devices like the smartphones, tablets and tablets have led to mobile services. Hotels would soon manage their staffs and clients through tablets and Smartphone’s. The manual registration desk will also be replaced by the online hotel management services on ipads and tablets. This will result into low reduced capital expenditure and operation costs for the hotels (Khan, 2012). Though used, social media has not been extensively employed by the hotel industries. However, the future holds a great potential for hotels who would adopt the social media to reach their clients and customers. The internet has been used by many industries to create and improve their reputations before their customers (Morrit, 2009). Social media provides a better tool that can enable the hotel players to improve their public image and create an impact on their potential and present clients. The creation of more hotel chains and units requires a global presence. This can only be possible if hotels capitalize on the opportunity that the internet provides. Globalisation will be the next trend in the hotel industry as it will result into the creation of international presence. Hotel clients are mostly international visitors who feel comfortable being in a hotel they can easily recognise with. Globalisation will therefore improve business tremendously for hotel industries and restaurants due to the high number of visitors it reaches (Jones and Lockwood, 2004). Information technology and corporate social responsibility Tewari (2010) defines corporate social responsibility as the on-going assurance by corporate to act morally and contribute to the economic growth while refining the value of life of the workers and their relatives as well as the public. The need to monitor compliance to the CSR policy of the hotel industry has led to increased use of information technology in the implementation of corporate social responsibility. To gauge their extent of compliance, hotel industries require gauging the view of their clients and guest. Information technology has enabled hotels to install systems within their rooms which collect the views of their clients. From this, the hotels gain a better picture of the attitudes that the general public has on their services and dedication to service of the community. Information management in the hotel sector has been improved by rise in information technology. Necessary information required for compliance with the organisations CSR can be easily disseminated through emails and other electronic channels (Jones and Lockwood, 2004). Hotels also have a mandatory role of preserving private information of their clients. It is unethical to share the information of the clients without seeking their consents. Information technology has therefore made it possible to store client’s confidential information under passwords lock. Such access is only restricted to few personal and the customers who are made aware of their CSR responsibilities in advance. However, it has proved tricky to preserve client’s private information especially if there are a number of staffs who are allowed access into the information. This has legal implications to the hotel as legal claims can be made against it. Most hotels and hotel chains are owned by shareholders and other organisations; as a result, accountability is highly essential. The development and the incorporation of information technology in the operation of hotels have made it possible to ensure that there is high accountability. This is especially possible to the high number of auditing applications that are available for accountants. Public incorporated hotel chains are therefore capable of making their financial statements available at any time through the internet thus achieving their CRS mandate (Brewer, 2008). Applications of IT in the differentiation of services The differentiation of services in all sectors of a business enables improved services delivery. All employees are assigned specific roles and areas of administration within the hotel industry to improve efficiency and service delivery. The advancement in information technology has led to improved and easier differentiation of services. Product differentiation is a strategy that has been used by many industries, hotels included. It enables hotels to gain competitive advantage over other hotels in the sector. Hotels have distributed their services by allowing agents to offer some of their services (Shin, 2003). Information technology has lead to the rise of online travel agencies who provide booking services on behalf of the hotels. This has enabled the hotels to focus on service delivery at the hotels while the OTAs source for clients on their behalf. Information technology has also enabled differentiation in the hotel industry by ensuring their presence in the distribution channels of the markets (Morrit, 2009). Hotels are also showcasing their products and services online through their customized websites. This creates a good perception of the hotel to potential clients. Differentiation also allows for the differentiation of services and rates in the hotels. Information technology has created a room for value differentiation in the hotels. Rates vary depending on the nature of services offered and the spaces available; this has been enabled by information technology as all the differences are posted in the hotels websites and social media. Information technology has also changed the mode entertainment for guests in hotels. Most hotels are today fitted with cable television to provide the clients with up to date entertainment and news. From the comfort of a client’s room, one is able to be informed of the current happenings around the world. Such information is of importance to business executives who participate in stock trading (Kamel, 2003). The provision of video linked conference system has also increased a number of hotels and resorts. This targets business individuals who are interested in connecting with their colleagues in other parts of the globe. Children on vacation have also continued to enjoy the services offered by hotels thanks to information technology. It is therefore possible for families on vacation to enjoy their stay within these hotels (Frew, 1999). Discussions The increased application of information application in the hotel industry has led to a number of impacts which are attributed to the growth of the sector. Growth of any sector in the economy is attributed to efficiency in administration and management. Koutroumanis (2011) attributes managerial implications of information technology to the success of hotels. Customer’s satisfaction and service delivery has developed extremely because of information technology; therefore, the quality of service to the guest determines the success of a hotel. A system that allows clients and customers to enjoy the services of the hotel freely improve the attitude of the customers to the hotel; therefore, service delivery and quality has developed tremendously because of information technology applications. Competitive advantage is a feature businesses fight to gain in order to remain relevant in the sectors they operate in. In the hotel industries, competitive advantage is only gained through the satisfaction of clients and the guest. Information technology has improved the ease with which clients enjoy services within the hotels. Wireless internet and point of sale service has made it possible for guest to turn their hotel rooms into offices from where they conduct their official functions (Peacock, 1995). The globalisation of business operations has led to an increased need for more avenues of conducting business with partners who are distributed all over the world. This can only be possible if hotels adopt and implement CISCO video conferencing in their conference and meeting rooms. Hotels that have adopted such services continue to enjoy the privilege of hosting high calibre guest who use their services (Enz, 2006). Market surveys and accessing consumer desire index is an important aspect of hotel businesses. Such information can enable hoteliers to have essential information about their competitors and other market players. Information about customer needs also enables hotel players to repackage their products and services to meet the expectations of the guests; this has been made possible by use of information technology. With information technology, access to information about other competing market players and potential customers is easier. Hotels have been able to grow and meet the desires of the customers despite the increasing market competition (Brotherton, 2001). Data mining is an essential component of marketing; it enables business people to gain information about their potential clients and specific needs that may be important in product promotion. Information technology has made it very easy for hoteliers to gain information on their potential clients which may be important in product repackaging. Customised customer registration and logging in result into provision of information that may be used later by the marketing department. Information technology has therefore revolutionised the process of product promotion and awareness especially to the hotels and other industry players (Bouncken, 2002). With information technology, direct mails marketing have tremendously advanced. Clients are today contacted personally with the aim of convincing that the new product meets their specifications. Seasonal promotional campaigns have also increased due to the opportunities that information technology has provided for hotel industries (Enz, 2006). Improvement in the efficiency of hotel operation has made a number of hotels win the ‘best practises awards in the United States. This efficiency has been attributed to the benefits of information technology and integration of services. Hotel logbooks has thus been eliminated in these hotels and replaced with online log in registers. The previously used phone calls maintenance practice has been replaced with point of sale communication system. This is a direct system that enables immediate actions whenever there is need for such. Tasks are today assigned to employees automatically by use of computer systems. This system informs each employee of the new assignment immediately through the use of pages. This eliminates the time consuming haggling that initially characterised job assignment in the industry (Shin, 2003). Recommendations To remain relevant in the industry, hotels need to stay up to date with the latest advances in information technology. Integrating ICT into the operations of a hotel enables the management to make timely decisions and implementations of any resolutions. As a sector that has the challenge of serving one of the most dynamic clients, it is important for the industry to adopt and be part of the revolution. Marketing is changing from the mainstream methods that were initially used in product promotion. The development of web 2.0 and social media provides a marketing opportunities and challenges to businesses, hotels included. The ability to tap on the opportunities presented by these changes in information technology will enable a hotel to remain in business. Conclusions Information technology has changed the way the world conducts its businesses, from the times when business people will travel over a long distance to finalise deals, we are in a period when contracts are finalised by a single click of a button. The management of employees has also changed tremendously from the manual registers and log in to an advanced system where report logs for employees are maintained online. This revolution in information technology has swept through all sectors of the economy and not even the hospitality industry has been spared (Enz, 2006). Comfort and security characterise all major hotel outlets in the world. All these have been made possible due to the features of information technology. The security system in hotels is advanced today thanks to information technology. As a result, customers can today relax and enjoy the comforts of the hotel without worrying about their security and wellbeing. Hotel clients continue to enjoy instant room booking and registration from the comforts of the laptops, tablets or even Smartphone. This has saved a lot of time for business executives and other revellers (Sigala, 2010). The management of various hotel outlets have also benefited from the growth in information technology. More and more hotels have adopted an integrated information system to enable them manage and control their employees. Job assignment has changed from call based to digital system that automatically assigns duties to the hotel staffs. This saves on time and operational costs for the hotels. Marketing and promotion has also tremendously changed and advanced; therefore, today hotels can announce their presence through online channels which are cheap and far reaching. The development in information technology has resulted into development and growth of hotel industries in a magnificent manner. As a result, hotels have continued to grow and increase their profitability due to the low operational costs. Adoption of information technology in operations of hotels and related industries has therefore changed from being an option into a mandatory prerequisite for success. 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