Background and motivation:
The concept of service quality has been gaining importance since the 1970s; the basic concept behind premium service quality is delivering and meeting more than the expected from the customer. “Service quality is son intangible that objective
Azerbaijan, as a country situated in the Caucasus has a very advantageous location for tourism, but tourism is not a leading sector in Azerbaijan. The most important industry here is oil sector as Azerbaijan has very rich oil reserves and economy depends and develops on the oil industry. Over 90% of annual income comes from our oil industry and the difference between oil industry and the others is huge. So that’s why Azerbaijani government wants to cover this difference and the best way is to improve tourism sector because we have the potential. Even in the world tourism is the second biggest industry after the oil sector.
Most of the tourists coming to Azerbaijan are business travellers and the reason is oil industry again. That is why the hotels are mostly specialized in business tourism. There are some hotels that I would like to mention: The Landmark Hotel, Hyatt, Ramada Baku, Radisson SAS and Park Inn. As a best practice in sustainable hospitality experience I would like talk about Hyatt. In comparison with above mentioned hotels, Hyatt Hotels Baku has a real professional background and prosperous experience in hospitality industry.
Contribution to the Body of Knowledge
Actually there have been done no studies and researches on sustainability of the hotels in the market in Azerbaijan that made it a challenge to discuss the topic with extremely lack of information given. Therefore, this thesis can be accepted as one of the first researches on the sustainability of the hotels in the market, but not in respect to the environment and nature.
While working on this topic I am going to find answers to the following questions:
What is the current situation in hospitality industry?
What are the barriers for sustainability of hotels?
Which are the ways of breaking the barriers of hotel’s sustainability?
What are the recommendations and suggestions for sustainability?
This thesis will be done by hermeneutical kind of research as I am going to search existing literature, statistical reports, articles, etc. While reviewing these materials I will analyze and gather all necessary information and give a final report on sustainability of hotels.
In order to get intended information about the hotel I have contacted the sales & marketing manager of Hyatt Baku Mrs. Bahar Dadashova. So far we had only one conference call to inform her about my intention, however in the run of the thesis we will keep in touch.
This chapter gives an overview of the different definitions of sustainable tourism. On the other hand, some studies done concerning kinds of sustainable tourism itself. So far, these definitions give an idea about sustainable tourism and its main factors.
Sustainable tourism development is defined by the Word Tourism Organisation (WTO), as a development that “meets the needs of present tourists and host regions while protecting and enhancing opportunity for the future. It is envisaged as leading to management of all resources in such a way that economic, social, and aesthetic needs can be fulfilled while maintaining cultural integrity, essential ecological processes, and biological diversity, and life support systems” (World Tourism Organisation (WTO), 2003). Based on the Rio de Janeiro Declaration on Environment and Development, 12 guiding principles of sustainable tourism are set in the Agenda 21 for the travel and tourism industry (United Nations Environment Program (UNEP), 2002). In the tourism context, sustainable tourism is often associated with nature orientated tourism or eco-tourism (Eagles et al., 2002) and has become central in the debate on environmentally integrated tourism development (Gössling et al., 2002).
Tourism in Azerbaijan
Sustainability of the hotels in Azerbaijan is very young as the tourism industry itself. The Republic of Azerbaijan was established in the early 1990s. Since the establishment economy of the country was depending on oil industry. 95% of the budget was contributed by the country’s oil industry.
The best alternative to cut down this dependency on oil in the budget is to develop tourism industry. Azerbaijan has very good potential for tourism; high mountains, beautiful forests, ancient history, different historical sites and monuments, lots of artists, poets etc.
The Ministry of Tourism and Culture of the Republic of Azerbaijan was established in 2005. One year later Azerbaijan Tourism Institute (ATI) under the Ministry of Tourism and Culture of Azerbaijan was opened. ATI is established in order to cover the lack of qualified staff in tourism sector which is a global issue in world tourism industry as well.
Sustainable Tourism in Azerbaijan
As it was mentioned above tourism sector in Azerbaijan is young compared to the other industries. Talking about sustainability of the hotels in Azerbaijan we can only mention very few hotels e.g., Hyatt Hotels Baku, Radisson SAS Baku.
The names mentioned above are one of the first hotels in Azerbaijan. They are still operating successfully and still very strong in the market.
To go back to the Soviet Union period then we can talk about the Hotel Azerbaijan and Absheron Hotel. Those hotels had a big market share as well and were very popular at that time. They had been operating for a long time. The sustainability factors were;
Contribution by the government
Best service for that time
Since 2005 these both of the hotels were destroyed one after another and now there are 2 big constructions going on; Hilton and JW Marriott.
The JW Marriott is replacing Baku’s famous Absheron Hotel, which has been demolished, and will be part of a mixed use development designed by ReardonSmith to include 16 floors of private residences, serviced apartments, retail and offices as well as the 20-storey hotel. The architects had a number of key considerations to balance in their concept: location, the high water table, local conventions and successful hotel operations and of course, the client’s aspirations for this important building. The result is a unique design that makes a virtue out of addressing these potentially competing dictums.
The Hotel “Hilton Baku”, which is being built in Baku on Azadlig Avenue (instead the hotel “Azerbaijan”), will be commissioned in August 2011. The total area of five-star hotel “Hilton Baku” is 42,160 square meters. The hotel will consist of 25 floors and 308 rooms. There will be elevators with panoramic views, different restaurants, concert and exhibition halls, recreation centre at the 670 square meters, sports and fitness centres and swimming pools in the hotel. A bar, which rotates 360 degrees and covers the entire panorama of Baku, will be located on the top floor of the hotel.
I guess this is the only hotel that actually stopped growth of the company related to its policy: Global Hyatt has concentrated on high-end segment, but nevertheless it is among the ten largest. In 2007, the chain launched an innovative hotel brand Hyatt Place, where everything is created based on the results of surveys carried out among the discerning tourists. The hotel is not only providing exclusive services but also tries to make emphasize on its buildings and design.
Hyatt Hotels Corporations well-established reputation as an industry innovator provides a wealth of inspiration as the company looks forward to its next era of creative hospitality. Known around the world for its brands – Hyatt Regency , Grand Hyatt , Park Hyatt , Hyatt Place , Hyatt Summerfield Suites and Andaz – the entire collection of Hyatt hotels and resorts weaves together authentic service with leading technology to offer its guests unique restaurants, luxury accommodations and distinctive spas. With its new initiatives and design elements continuing to evolve, the next half-century of Hyatt innovation will continue to provide its guests a world of uncommon travel experiences. Hyatt Hotels & Resorts opened its first property, a small motor hotel at the Los Angeles International Airport, in 1957 and its portfolio quickly grew to include several other modest hotels along the West Coast and in Chicago over the next ten years. In 1967, Hyatt opened its first major John Portman designed hotel, Hyatt Regency Atlanta, in Georgia, which featured a space-age design with a dramatic, 21-story atrium lobby. The revolutionary architecture spawned scores of atrium lobbies around the world, effectively changing the course of the lodging industry and reshaping the Hyatt brand as an innovative and significant global hospitality leader.
Hyatt successfully distinguishes itself within the competitive hospitality marketplace with six different brands, each designed to deliver experiences attuned to the lifestyles, attitudes, values, and aspirations of the guests for whom it is designed. The 2007-launched Andaz brand is sophistication made simple delivered with a genuine warmth; Hyatt Regency enables productivity and revitalization within a responsive, convenient and contemporary environment; Park Hyatt , a discreet and refined collection located in fashionable cities around the world, epitomizes modern luxury; Grand Hyatt properties are some of the most architecturally dramatic hotels in the world, offering stunning design and a myriad of innovative food and beverage concepts; Hyatt Place is designed for the 24/7 lifestyle of today’s multi-tasking business traveller, and Hyatt Summerfield Suites , a reinvention of the all-suites, extended-stay hotel, features timely amenities and inviting, residential design.
As a unified portfolio, Hyatt’s properties share core values across the Hyatt brand: exceptional guest service, upscale amenities, popular food and beverage programs, and innovative interior designs that incorporate local art and style. Currently offering travellers a choice of more than 365 hotels and resorts in over 45 countries, Hyatt Hotels Corporation continues to build on its commitment to clients, staff, partners and the environment as it grows its dynamic vision for the future of hospitality.
Hyatt Corporation is one of the leading hotel companies in North America. Owned by the Pritzker family of Chicago, Hyatt manages or licenses the management of 87 hotels and 16 resorts (with a total of 55,000 rooms) in 83 cities in the United States, Canada, and the Caribbean. In addition to its resorts, Hyatt has also developed other special hotel concepts–the Grand Hyatt, the Park Hyatt, and Classic Residence by Hyatt. Grand Hyatts are large-scale, higher priced hotels located in culturally rich cities, with three in the United States (New York, San Francisco, and Washington, D.C.). Park Hyatts are modelled after small European hotels and are located in Chicago, Los Angeles, San Francisco, and Washington, D.C. The Classic Residence by Hyatt properties offers luxury retirement apartments for rental. Starting in the mid-1990s, the company has also sought growth opportunities in franchising, time-share properties, free-standing golf courses, and casinos.
Hyatt Hotels Baku
Hyatt Hotels Baku consists of 2 hotels -Hyatt Regency Baku and Park Hyatt Baku Hyatt Regency Baku was reconstructed and opened in 1995; second renovation was implemented in 2005; Park Hyatt Baku was open in 1999 and most of the rooms were refurbished with new facilities in 2008
Best Sustainable Hotel Chains
InterContinental Hotel Group
Since 2004, this hotel’s chain became the largest in the world. To date, it owns more than 600 thousand hotel rooms, scattered across the globe. Each year their number is being increased by 5,9%, mainly due to the expansion of Holiday Inn Express, but also because of the increasing number of hotels Crowne Plaza and the emergence in Europe, Staybridge Suites and Indigo boutique hotel.
The company claims that every year, growing by 4,7% and in the near future has plans to build 800 hotel and add to the existing 500 thousand rooms 125 thousand more. The Group also promises to invest a lot in pre-existing ones, including the Marriott floor, numerous brands, covering all niches of the hotel business from budget options for poor tourists to luxury hotels for the discerning VIP-persons.
Ranking as the fourth largest chain, this brand is popular not only with luxury hotels, but also because of the scandalous Paris Hilton’s escapades, the former heir to the empire hotel room. The company is known propensity for innovations: the first one of its owners have introduced a system of “star” ratings, equipped hotel with Wi-Fi. However, the chain began to suffer losses, and in 2007 the former owners were forced to sell the hotel business group Blackstone. In 2008 net increased with 300 new sites, and the growth of the company was mainly due to expanses of the United States. But the emergence of the company’s portfolio of brands Doubletree, Homewood Suites, and especially the Hilton Garden Inn and Hampton Inn, as well as the construction of Hilton Hotel in provincial Russia say the desire to start taking over the world.
ANALYZING THE general statement
Hyatt Hotels in Azerbaijan
Hyatt Hotels Group is focused on enhancing the brand preference by continuously improving the performance of their existing hotels and successfully expanding the presence of their brands in select markets worldwide. Smart growth and development is fundamental to achieving these aims. As a company, they add hotels in locations throughout the world where their loyal guests and customers want them to be. Hyatt team works closely with the development partners to ensure their success through innovative and efficient design, operational excellence and effective sales and marketing strategies. Hyatt Hotels are focused on the role of development within the organization and have formed a dedicated and experienced global development team. Hyatt Hotels Baku is committed to establishing a reputation as the leading hotel complex in Azerbaijan and the Caucasus region. Their service is known to anticipate, meet and exceed the guest expectations.
In order to retain the established position as the market leader in Baku, they focus on the quality of the operation, the physical aspects of both of the hotels, safety and security as well as creating exciting, innovative and trend setting products throughout.
Widely recognized and industry leading brands of Hyatt Hotels have consistently received top rankings, awards and accolades for service and guest experience from independent publications and surveys, including Travel and Leisure, Mobil and AAA. The mission of Hyatt is to provide authentic hospitality by making a difference in the lives of the people. They focus on this mission in pursuit of the goal of becoming the most preferred brand in each segment that they serve for the associates, guests, and owners. Hyatt Hotels support their mission and goal by adhering to a set of core values that characterizes their culture. Globally, they manage, franchise, own and develop Hyatt branded hotels, resorts and residential and vacation ownership properties around the world. As of March 31, 2010, the company’s worldwide portfolio consisted of 434 properties.
Sales & marketing department of Hyatt Hotels Baku
Sales and Marketing department in Hyatt Hotels Baku consists of 8 employees which are-Director of Sales, Catering Manager, 2 Banquet Sales Managers, 2 Rooms Sales Managers, Sales Executive and Revenue Analyst. Besides, there can be Sales Admin Assistant, Sales Coordinator, Regional Director of Marketing, Marketing Communications Manager. Hyatt’s worldwide Sales and Marketing teams strive to build brand preference and drive revenue to our hotels. Our sales and marketing strategies are rooted in a comprehensive understanding of our customer segments, the current dynamics of the marketplace and the most effective use of new technology and media platforms. Hyatt’s marketing strategy is designed to secure and build brand value and awareness while meeting the specific business needs of hotel operations. Building and differentiating the brand position of Hyatt and our sub-brands is fundamental to increasing Hyatt’s brand preference and demand, rate premium and related business imperatives. Hyatt is focused on targeting the distinct customer segments that each of our brands serves and supporting the needs of the hotels by thorough analysis and application of data and analytics. There is a coordinated and integrated communication strategy for the Hyatt master brand and each of the sub-brands across every distribution channel.
Promotion of Hyatt Hotels Baku in the World
Hyatt’s Central Reservation System is an important contributor to the performance of the hotels system wide. The system booked 11.8 million room-nights in 2008, representing approximately $2.3 billion in rooms department revenue. Reservation centres are located in the United States, Australia, India, UAE, Germany, Japan and China to provide 24/7 access to prospective guests. Hyatt Hotels work closely with the distribution partners to ensure that they maximize market share across all channels. These include traditional travel agencies (e.g., American Express, Carlson Wagonlit), online travel agencies (e.g., Expedia, Travelocity and multiple regional agencies, etc.), opaque agencies (e.g., Priceline, Hotwire) and multiple user-generated sites that link back to Hyatt.com (e.g., Trip Advisor). Hyatt also has extensive marketing partnerships with all global and regional airlines.
Hyatt Baku Hotels offers unmatched variety of facilities and services within one complex, including business and communication technology, vast fitness and relaxation facilities, an array of dining and entertainment opportunities, shops and offices. The USP of Hyatt Hotels Baku is: favourable location and convenient access to select business centres and government offices; the only complete lifestyle complex in the city, featuring 2 hotels, office and residential facilities, wide variety of F&B Outlets, multifunctional meeting and conference facilities and state-of-the-art Health and Fitness Centre; largest global distribution / reservation system; largest inventory of suites present in the city suitable for large VIP government groups.
Contribution from the Hyatt Hotels International
Hyatt’s properties and preopening sales offices are supported by a network of salespeople in key markets around the world. Sales professionals represent all Hyatt destinations and focus on all relevant market segments e.g., corporate accounts, M.I.C.E. accounts, key wholesalers, travel agencies and luxury travel specialists. Additional support is provided to hotels with dedicated resources managing programs such as Virtuoso American Express Fine Hotels & Resorts. The network includes offices in New York, Chicago, Los Angeles, San Francisco, Washington D.C., Mexico City, London, Mainz, Sydney, Melbourne, Riyadh, Tokyo, Hong Kong, Singapore, Beijing, Shanghai, Bangalore, New Delhi and Mumbai, as well as additional coverage throughout Continental Europe. Each office is responsible for ongoing support of the Hyatt portfolio. Additionally, each office coordinates the presentation of Hyatt and Hyatt’s sub-brands at important industry events and shows such as ITB, World Travel Market and Asia Luxury Travel Market. Hotels also have the opportunity to participate in annual Hyatt fairs and sales calls coordinated by each worldwide sales office. These events provide the hotels with face-to-face access to Hyatt’s best existing and potential clients.
Competitiveness of Hyatt Hotels
Currently eight five-star international hotels are under construction in Baku. This is not just about attracting well-heeled tourists, as Baku still has a relatively small demand for luxury hotels. It is about making Baku competitive as a mega-event Mecca. Baku will be promoted as a site for “conference tourism,” Gurbatov, the tourism official, said. “Each year, Baku hosts more government-sponsored conferences and other events. But the creation of the appropriate infrastructure — luxury hotels, large expo-centres, convention centres, conference halls and stadiums — will allow the government to bid on hosting large-scale international events.” One 33,800-square-meter exposition centre opened in Baku in May; the government has also begun construction of a 60,000-seat soccer stadium. The sprawling 90,071-square-meter Heydar Aliyev Cultural Centre, designed to look like rippling waves, will open in 2013. Attracting sporting events and conferences to these venues “is a matter of both the country’s prestige and commercial profit from foreign visitors,” Gurbatov added. For now, expectations run high that the owners of the new hotel under construction will benefit from their investments – assuming that the government succeeds with its “conference tourism” strategy. Commented Kenan Aslanly, an analyst at Baku’s Public Finance Monitoring Centre: “If this strategy is successfully implemented, the country will win both economically and politically.”
Jumeirah will be the first new hotel to open in 2011. Jumeirah will have reasonably strong brand awareness in Baku, since a) Dubai is a very familiar weekend / holiday retreat for Azerbaijanis and b) Middle-Eastern and Persian business is growing in Baku due to the development in the city with Dubai as an “ideal”. Jumeirah is located close to the President’s Dacha, approx 15 minutes outside the airport (45 minutes from city centre).
The President will use this hotel to host visiting diplomatic delegations and Ministry conferences due to the close proximity to the airport, Buta Palace conference centre and to his summer residence / Dacha, where he resides between April – October every year. This will affect Park Hyatt, as we currently get the majority of this business. It will also affect Hyatt Regency when it comes to groups and associations (e.g. sport groups) which look for a secluded place with spaces for outdoor activities (pools, golf course, tennis etc), and groups looking for a location outside the city centre to avoid late party nights.
The Marriott (80 room inventory) is located close to Jumeirah. Due to a small inventory and inconvenient location, it will not impact Hyatt much, despite being a well known, international brand with an aggressive opening-strategy to drive occupancy. JW Marriott (228 room inventory)will open Q1 2012.Located at Baku’s Freedom Square – a national symbol and location of military parades – as well as the seafront boulevard with the Caspian Sea beyond. This hotel will also have to compete in the corporate market to achieve occupancy. Hilton will open in June 2011 and is located right next to Park Inn, sea side in the centre of the city. The two hotels have the same owner, something which is of great concern for Park Inn. Park Inn opened in 2005, but is still worried about getting a new, international brand as competitor- and has great concerns about losing corporate agreements for companies located around the hotel and group business. Landmark is also very concerned about this new entry on the hotel scene. We think the Hilton will also affect Hyatt Regency, – both for groups and transient business. Fairmont is the largest of the new hotels; the hotel will also have to compete in the corporate market to achieve occupancy. They will be able to offer moderate corporate rates due to the size of the property, and due to the location we can expect companies and individuals visiting for meetings with ministries etc to perhaps choose this location. Hyatt used to be a good location as we are only a 5-10 minutes drive from the parliament and several ministries. Four Seasons hotel is scheduled to open late 2011. Park Hyatt is currently the only official protocol hotel in Baku, but it will mainly lose this status once Four Seasons is opening. The hotel will be more or less purpose built to host high-ranking government officials, diplomatic visits, VIPs etc., with a 3-bedroom Presidential suite and several 3-bedroom and 2-bedroom suites and a room type called “Deluxe deluxe” with two king beds in the same room (suited for the American- and Asian market). Four Seasons will also have a 330 m2 ballroom. Sheraton is still a project to rebrand the Airport hotel (ex Holiday Inn)
Sustainability of Hyatt Baku Hotels
Hyatt Hotels Baku has started operating in Azerbaijan since 1995. First, Hyatt Regency was opened in 1995 after the â€žContract of Century” (Baku-Tbilisi-Ceyhan oil pipeline). Then in 1999 due to the high demand Park Hyatt was opened next to the Hyatt Regency. Till 2004 both of the hotels were very strong and almost alone in the market. The only competitor was Radisson SAS. In 2004 another brand Park Inn penetrated into the market. Since then the market share of Hyatt Hotels in Baku is decreased slightly. Because still the demand is high and accommodation facilities are not enough to meet the need. Currently, Baku features only a few luxury hotels run by international chains — the Hyatt Regency, Park Hyatt and Radisson SAS, Park Inn and Airport Hotel. If Azerbaijan’s Eurovision contestant, Safura, had triumphed at the annual pop extravaganza this year, Baku would not have had the facilities to host the event in 2011, noted Faig Gurbatov, national coordinator of the government’s Tourism Development Project, an initiative run jointly with the United Nations Development Programme.
Since the 1995 to nowadays both of the Hyatt Hotels in Baku were operating very successfully. This is a main factor showing its sustainability.
Demand for Hyatt Regency and Hyatt Park (Baku) is quite high. The average occupancy rate (annually) is around 69%. In high seasons this figure increases up to 90-95%.
One of the components needed to apply hotel revenue management is market segmentation. It allows you to target and market to a variety of consumer groups with different behaviour with an offer that matches their needs and budget level.
Your hotel market segmentation shall help to identify the purpose of the trip: either business or leisure. The price does not decide of the market segmentation. Clear distinction must also be achieved between individual and group business .The market segmentation shall help you identify the trends of your business:
Length of Stay
Day of Weeks stays
Total Revenue per room, Total Revenue per client
No Show ratio
Due to the last trends in Azerbaijan 3 industries are increasing rapidly e.g., oil business, pharmaceutical industry and information & telecommunications sector. Guests from the above mentioned industries are coming to stay at Hyatt very often. Also, the number of governmental officials and walk-in tourists is high enough.
Maritz guest satisfaction survey (Benchmarking)
Since the competitor hotels give wrong information, Hyatt International has decided to change their strategy. Now, Hyatt Hotels are not doing benchmarking. Hyatt Hotels Baku uses the services of Maritz.
Maritz is a guest satisfaction survey. Maritz protects the data about the companies by the world-class policies and procedures. Maritz has developed a security program which includes:
Physical Security and Controls
Network Architecture and Security
System and Remote Access Controls
Call Centre Security
Data Back-up and Retention
Business Continuity and Disaster Recovery
Guest Satisfaction Surveys
As many hotel chains Hyatt hotels International check the guest satisfaction level. In order to obtain the information about the service quality and better to understand the needs and wants of the guests.
Hyatt Hotels Baku is also conducting such kind of surveys in order to get the needed information. Mostly the comment cards are used in hospitality sector. Either the cards are put on the table in the rooms or reception provides with comment cards at the check – out.
As I have mentioned already, I had a meeting with the sales & marketing manager of Hyatt Hotels Baku. She showed me a guest comment card.
How would you rate the quality of the food?
How would you rate the service quality?
Please rate the cleanliness of the facilities.
Please rate the friendliness of the staff.
Please rate your overall experience.
How likely are you to refer us to a friend?
Each question can get minimum 1, maximum 5 points from each respondent. The points from each respondent per question are added together. Then they calculate the percentage out of the maximum e.g., 3 respondents answered the 1st question and the results were 5, 4 and 3 points.
(15) is the maximum number of points for 3 respondents
With the results of this short survey conducted among the guests of Hyatt Baku Hotels you can get to know in the chart below:
Figure 1: Guest satisfaction survey chart
Guest portfolio of Hyatt Hotels Baku by the regions
The guest of Hyatt Regency and Park Hyatt are very multi-national. All around the world guests come to stay at Hyatt. Mainly the guests of Hyatt Hotels Baku are Europeans, from GCC and North America.
Internationally recognized brand
Global reservation system with the link to all GDS distributors
Quality service and facilities
Excellent F&B choices
Known Health & Fitness facilities
Extensive room & suite inventory with two hotels
Increased sales presence
NFPA – standard life safety
Multi – lingual/ international staff
Some companies perceive Hyatt as expensive Hotel considering it only for the management
Location away from the city business district is a barrier to some companies
All hotels offer complimentary Internet facilities, unlike Hyatt, where the service is perceived too expensive by corporate travellers
Brand awareness for potential acquisition.
To be in line with modest technologies and systems
Constantly work on improvements
Active promotion on local market
Upscale fitness facilities is a very strong decision making point for hotel choice on the market
Luxury room inventory and good balance between suites and standard rooms is a strong asset to target any business opportunities in the market
Continue building necessary networking and be aware of latest market trends
Additional distribution channels
Brand restrictions do not allow to compete with lower brand rate offers
Create inconveniences in acquisition of leisure business
Internet is still very expensive, thus it affects in decision making process for most of organizations
measurement is impossible, it is largely believed that the main challenge lies mostly in managing appearances and perceptions (Harvey, 1998). Majority of the study in on service quality started during the 1970s and 19780s and the reason for this study gaining such rapid importance and becoming a matter of research and development is because of the attributes of complete intangibility associated with it. The four main attributes associated with measuring service quality and the views of a few major researchers and scholars in the related feel are as follows:
Intangibility: “Customers cannot evaluate a service prior to consumption, during consumption and cannot store the service after consumption” (Zeithaml, 1981; Shostack, 1984).
Heterogeneity: “Heterogeneity relates to the potential variability in the actual performance of services” and is supported by Booms and Bitner (1981) and Looy et al. (1998).
Perishability: The element of intangibility adds to the services being completely perishable that is the customer or consumer can neither save nor inventories it for consumption in the near future.
Inseparability: One of the key aspects associated with service is that the acts of production and consumption are simultaneous, this act is inseparable.
Service quality and business performance:
Although the performance of business is measured by more quantitative financial methods like profitability, market share, comparative growth rate, image of the business as perceived by the customers and the reoccurring business generated by consumer loyalty. These statically or financially calculated results definitely reflect a clear image of the health of the business, but factors like service quality have a deep impact on the performance of the business, as mentioned by Heskett et al. (1994) “Service quality is directly associated with customer satisfaction and customer loyalty”, and the factor that a satisfied customer would be a loyal customer and both these behaviours impact increase the profitability and growth of the business. “A satisfied customer will be loyal to the company and this loyalty is measured through customer retention which eventually is a measure for business performance”. (Jiju Antony Frenie Jiju Antony and Sid Ghosh, “Evaluating service quality in a UK hotel chain: a case study”; International Journal of Contemporary Hospitality Management Volume 16 · Number 6 · 2004; Emerald Group Publishing Limited).
Cases like the case of the Scandinavian Airlines System (SAS) are landmark examples of relationship between service quality and business performance, in this particular case the CEO of Scandinavian Airlines System (SAS) Jan Carlson in the early 1980s turned a $ 8 billion a year loss making business into a $ 71 million profit making business, he states he achieved this only by treating service quality as a key driver to achieve commercial success, this example reflects the impact delivering quality service can bring to the performance of an organisation.
With the exponentially growing importance of service quality arose the issues of having a system that would control and measure the quality of the service rendered and the flag areas of concern and commitment. Since the 1970s organisations have been using methods simple inspection which were then replaced by quality assurance and quality control organisations since the last decade organisations are adopting and implementing the culture of Total Quality Management (TQM) (Dale, 1999). Research results over the last decades very confidently claim that TQM has affected the financial performance of the firm in a very positive manner (Shetty (1993), Hendricks and Singhal (1997), Easton and Jarrell (1998), Handsfield et al. (1998), Samson and Terziovski (1999), Reed et al. (2000), Allen and Kilmann (2001) and Tena et al. (2001).
Organisations have been using TQM as a tool to measure service quality and it has been gaining importance and both in the areas of management theory and practice, this rapid expansion of the service industry and the importance of service quality in regards to business performance has really motivated me investigate in to service quality measurement and issues, the dynamics of TQM and evidential proof that over the years it has positively affected the financial performance of an organisation has directed me towards evaluating it as a service quality management tool, taking the hotel industry as an area of concern and development.
Research Problem and central research problem:
There has a been a lot of research and plenty of literature available on the implementation and the accountability of the Total Quality Management, but that mostly concerns with the manufacturing industry, which does not has fight the forces of intangibility and the product attributes associated with it. There is a very limited resource of literature and the implications that TQM would have in a completely service oriented industry. The developing literature on quality management includes: quality planning (Papic, 2007); quality assurance (Blackmur, 2004); quality auditing (Goodwin- Stewart and Kent, 2006), quality control (Tang et al, 2007); (Hoyle, 2007), and quality improvement (Maiga and Jacobs, 2005). Keeping in view the limited research and literature available in the area of service driven industry there are many questions and concerns regarding the success of quality management systems like TQM, hence it is a growing concern to investigate the implementation, factors involved in adapting to a TQM culture and most importantly the achieving the desired output, this has formed the basis of my research problem further leading me to the following research questions:
Is having quality in service a competitive advantage? And can TQM be the ideal tool to capitalise on this advantage?
How a service based business approach and adopts TQM in there area of business?
What are the critical factors that can enable the introduction of TQM culture in hotel operations?
These questions have been a concern among many in the service industry, specially the hospitality industry.
Significance of the research:
With the help of my research I feel I would be able to address the above mentioned questions and build a base which would act as a platform for further academic and professional research. With this paper I aim to establish the importance of quality and quality management for the service industry sector with focus on the hospitality industry, to better understand the implication I have further divided my researched and restricted it to the UK hotel industry as It is generally understood that these hotels benefit from improved quality levels and more experienced management (Hayes and Ninemeier, 2007; Stutts and Wortman, 2006).My research on TQM and the principles and significance of the different factors those are necessary to establish successful functionality of TQM culture within an organisation would definitely be significant.
Aims and Objectives:
The aim of this research is to explore and evaluate Total Quality Management system as a toll to measure and support the performance of the hospitality sector, with a specific interest in the UK hotel industry, the aim definitely reflects the importance of introducing TQM in the hospitality industry. Keeping in mind the aim, the research following objectives have developed:
Evaluate and analyse previous literature pertaining to quality and quality management.
Introducing Total Quality Management system to a service industry.
Exploring hospitality and hotel industry and applying TQM to the UK hotel industry.
Evaluate the critical success factors relating to the introduction of TQM through various case studies.
I believe these objectives would like milestones in my journey towards achieving the aim of my research eventually answering my central research question.
Structure of study:
In order to successfully convey my research hypothesis and make my research a platform for academicians and students for further research and development, I have divided my study on the topic into five different chapters, where with each chapter I intend to clarify and support my research question by means of facts, historic performance and realistic forecasts. The structure can be studied with help of the illustration below:
Background, introduction, problem discussion and aim of the study
Methodology and Analysis
Conclusion and recommendation
Literature Review: Quality measurement in service industry
Introduction to TQM, theory and models, TQM in the UK hotel Industry