Hotel Online For Hospitality Operators example essay topic

Analysis of Hotel-Online Internet News Service I. Introduction The need to balance a company's strategy and structure with changes in the external environment is obvious in any industry. However, in fast changing industries such as the Hospitality Industry, this need is even more important. Hospitality operators have to keep track of changes in the mentality of customers, changes in the attitude of government agencies and legislators towards the industry, changes in economic and technological issues, and strategic changes of competitors and other firms connected to the industry. This responsibility has been previously discussed by West: "The strategic manager [must] scan sectors of the environment which are appropriate to the intended strategies of the firm, identify trends and changes within each sector, ascertain which require immediate response, interpret the potential effects of environmental occurrences on firm performance, and initiate appropriate firm response. ' Unfortunately, the fast-paced nature of this industry prevents most operators from spending adequate amounts of time monitoring the external environment; day to day operations always take precedent. For this reason, Internet news services such as Hotel Online may be the perfect tool for environmental scanning efforts in the hospitality industry.

Hotel Online is a convenient service providing daily information on hospitality related news and events. It counts with nearly 3000 registered users from different hospitality related companies and institutions, although the total number of users is certainly larger (see Table 1). Registration to the service's mailing list is optional, and the web page can be accessed freely by any person with a web browser Table 1: Hotel Online Subscription Statistics (based on a random sample of 500 users) Type of Subscriber Count % of Sample Hospitality Companies 18937.80% Domestic Use 400.80% Related Companies 16733.40% Educational Institutions 13927.80% Regulatory Agencies, Government 100.20 Totals 500 100.00% The content of this paper represents a discussions of trends in the hospitality industry as determined by an analysis of the internet postings in Hotel Online. The project had a double purpose: to obtain environmental information of the hospitality industry and to determine the usefulness of the internet service provided by Hotel Online. II.

Research Methodology The outcome of this project is the result of a content analysis of Hotel Online. The research involved analyzing the daily news postings in the server over a period of 30 days, between November 1 and December 1st, 2000. The analysis consisted of reading the title, first paragraph and the first sentence of other paragraphs of each article posted. Then, each article was qualified and placed in one of the following categories: a. General environment categories: 1. Socio-cultural environment 2.

Political environment 3. Economic environment 4. Technological environment a. Specific environment categories: 1. Finance 2. Marketing 3.

Research and Development 4. Operations 5. Administration 6. Human Resources This classification scheme was taken form the work of Chon and Olsen (1987).

As it is further described in Appendix I, these categories were divided into sub categories to increase the specificity of the research. In addition, each article was assigned a specific weight according to its length, in order to make a more accurate assessment of each article's importance. However, it is difficult to find an appropriate measure of article space in a web page. Most articles in Hotel Online have very similar lengths and number of paragraphs. The most convenient measure found by the author was the number of "Page Downs' that it took to reach the end of the article (using a 14" monitor with a display of 600 by 800 pixels).

The weights were assigned as follows: Table 2: Weight Assignment Number of Page Downs Weight 1 to 21 32 43 5 plus 4 The total number of postings analyzed was 747 articles. This number is so substantial due to the daily nature of this online service. After these articles were analyzed, categorized and weighted, statistics were obtained to determine the major themes dominating the internet space of Hotel Online (see Appendix II for detailed statistics obtained in the research process).. Findings and Discussion The first major finding of the research process was the fact that the majority of the news posted in Hotel Online relates to the U.S. national industry environment. The actual distribution of national vs. international topics is described in Table 3. Table 3: Distribution of National vs. International Environment Environment% of Hotel Online Space National 88.75% International 11.25% Another major finding of the study was the predominance of topics related to the specific environment over the general environment (see Table 4).

These two characteristics of Hotel Online slightly limit its usefulness as a complete environmental scanning tool. Table 4: Distribution of General vs. Specific Environment Environment% of Hotel Online Space General 26.41% Specific 73.59% General Environment With respect to the general environment, it has to be acknowledged that Hotel Online provides just a small amount of information. As it was just mentioned, the service is dominated by articles referring to the specific environment. In addition, the postings classified under general environment categories usually referred to industry-specific information (see Figure 1 for major trends in the general environment).

Nevertheless, several major trends in the general environment were identified. a. Socio-cultural environment: In general, the trends identified in the Sociocultural environment of the industry can be summarized as increasing importance of the elderly in travel due to the aging of the general population, increasing willingness to travel, increasing acceptance of casino and gaming operations and increasing concern for safety in travel and lodging. The aging of the American population is not news to anyone. It is a process that started with the appearance of the "baby-bust' generation, a period in which birth rates decreased considerably.

Improvements in life expectancy also contributed to this trend. The major trend identified in this project is the increasing response of the hospitality industry to this shift in customer needs. Some companies and destinations are specializing in catering to the elderly traveler. As an example, Oregon coastal towns are taking advantage of their country-style, relaxing atmosphere to attract senior citizens.

Lodging establishments in the area have adapted to serve the special needs of this group and are experiencing economic benefits in the process. It is important that all operators in the industry realize the increasing importance of this particular segment of the market. A recent study concluded that mature travelers consider assurance, reliability, tangibility, responsiveness and empathy to be the most important customer service factors in a hotel. Operators must make sure that the service provided emphasizes these characteristics when dealing with older guests.

The implications on human resource management are obvious. Employees must be trained to provide a level of service that meets the expectations of this segment of the population. Coupled with the good state of the economy in the U.S. and many other countries, there is an identifiable increase in the appeal of travel and tourism for the general population. Travel continues to increase, and records seem to be broken every day. A very specific trend is the increase in the number of young people (ages 18 to 24) traveling in small groups on vacation.

Hospitality operators must take notice of the importance of this cost-conscious, practical group of travelers. Another identifiable trend is the craving for educational experiences in travel. Travelers want to increase their appreciation of nature and culture by traveling to specific destinations where the potential for knowledge acquisition is greater. Destinations such as Virginia and some European cities are taking advantage of this situation.

With the opening of doors for gambling operations in many states of the country, there is an increasing social acceptance of this controversial form of entertainment. Many people are recognizing the economic benefits that such operations can bring to local economies, and more people are giving in to the temptation of attending casinos and try their luck. A perfect example of this trend is the increasing number of Native American tribes that are developing casino operations to support their families and preserve their way of life. Hospitality companies in general may take advantage of this shift in social perception to increase income through gaming operations in their establishments. A final Sociocultural trend that has been present in the industry for quite a while is a concern for safe travel. A 1995 study on choice criteria of leisure travelers concluded that security is a primary decision factor in choosing airlines, hotels and other travel related companies.

Travelers discriminate among different service providers according to their safety records, a factor worth of special attention in the industry. b. Political environment: The major themes under both the legislative and lobbying aspects of the political environment concerned regulations on hospitality operations and the application of new taxes to hospitality companies. Table 5: Distribution of Major Political Environment Aspects Aspect% of Environment Space Legislative 68.42% Lobbying 31.58% A specific trend concerning regulations on hospitality operations is the close monitoring of casino operations by different state and local government agencies. Many steps have to be followed to obtain permission to open, operate and maintain a gaming operation. Although several restrictions have been removed, it is still very important for gaming companies to be aware of existing regulations to avoid legal complications. Another relevant issue is the application of new taxes on hospitality and travel companies as part of a new tax plan of the federal government.

The U.S. Congress is considering a new airline tax that will severely increase the average price of a ticket and considerably affect the tourism industry of the country. The new tax is part of an income tax reduction plan for individual contributors. The government hopes that this hidden tax will not be noticed by the general public, but the effect it could have on the travel and tourism industry must be acknowledged. This practice is nothing new. The Tax Reform Act of 1986 also shifted tax contributions from individuals to corporations, including hospitality and travel companies. It is clear that this industry is already heavily taxed, and further burdens should be avoided.

Hospitality operators must keep track of further developments on this matter to adjust their operations accordingly. c. Economic environment: The major trends identified in the economic environment of the hospitality industry include an overall increase in tourism-related economic activity, an increase in the cost of traveling and an acknowledgment of the potential of tourism as a generator of economic growth and employment. The analysis undertaken reveals that most tourism destinations are experiencing increased economic activity and increased revenues as a result of tourist visits. It is obvious that the main reason for this trend is the excellent condition of the American economy in general. Many studies have discussed the close relationship between hotel room occupancy and trends in business cycles. Currently, his trend is also coupled with the increasing popularity of travel among the general population.

Although a few destinations have experienced some problems due to a variety of external circumstances, the general economic picture in the industry is favorable. A clear sign of this situation is the constant development of tourism facilities (hotels, parks, shopping centers, etc.) nationally and internationally. The rush towards construction of new facilities has also resulted on an increasing need for financing and capital investments. Another situation that has surfaced in this environment is the palpable increase in the cost of traveling. According to, for instance, the cost of lodging in the U.S. has increased by 3% in 1997 compared to the previous year. A result of this economic reality is the increased popularity of motels and other low cost establishments.

There is a nationwide boom of motel construction that is mentioned constantly in hospitality publications. Finally, it has been found that there is an increasing appreciation of the value of the hospitality industry as a creator of jobs and a generator of economic growth. This was the most popular subject in this category. It is no secret that the hospitality industry is the second in importance globally, and it appears that it will not lose that position in the foreseeable future. An example found in the research process is the situation of Cuba and its reliance on tourism as a way out from its economic difficulties. The tourism sector of Cuba's economy is closing in on sugar production as the major industry of the country, and it has been a provider of international investment since 1990.

With respect to the jobs created by the industry, the adoption of a plan by the eight most industrialized nations of the world (the G 7, plus 1) to rely on the industry to provide labor opportunities in each country underpins the favorable outlook of economies where tourism plays an important role. Table 6: Distribution of Major Economic Environment Aspects Aspects% of Environment Space GNP Trends 3.01% Fiscal 8.27% Monetary 0.00% Labor 4.51% Trade 84.21% d. Technological environment: The technological trends identified through this research are very specific to the hospitality industry, but are closely related to technological improvements experienced globally. The major tendencies in technology call for an increased use of the internet, a constant development of new technologies to improve hospitality operations and the creation of new technologies to improve food handling, processing and sanitation. One of the most popular topics today is the wonder of the internet. It appears that every industry has at least experimented with this new technology, and the travel and hospitality industry is not an exception.

The major uses of this technological marvel include the development of internet-based reservations systems, the creation of web pages as marketing tools, and the use of the internet as an outlet for increasing research and education in the field of hospitality. A curious development is the incursion of some companies into the business of gaming through the internet. Virtual casinos seem to be popping up everywhere. Hospitality operators must maintain themselves updated with the new ways this technology can be used to improve their operations and increase sales. A recurrent topic throughout this environment is the continuous development of new systems, machinery and software to aid the hospitality operator. Major developments include new PMS systems, new reservations systems, new safety and security systems and some new facility designs that enhance customer appeal and ease of operation.

An example is the emphasis on the development of new entertainment options for travel and lodging customers. The trend towards offering video-on-demand features in hotel TV systems, in-room video games and electric outlets in airplanes is widespread, and it will probably continue in the near future. The hospitality operator must keep informed of these technological improvements in order to remain competitive in a market where the customer is increasingly demanding cutting-edge services. A minor theme covered in the analysis was the development of new products and technologies geared specifically for food operations. Food sanitation is a big concern, and some companies are coming out with products that help increase the safe handling on perishable goods.

An example is the invention of a bacteria-fighting towel to be used by kitchen personnel to avoid food contamination. Due to the potentially damaging effects of a food poisoning situation, F&B and restaurant managers must take advantage of these technologies to avoid such complications. Table 7: Distribution of Major Technological Developments Aspects% of Environment Space Computer, Electronic 63.16% Equipment, Facilities 30.53% Food Handling 6.32% Specific Environment As mentioned before, the news provided by Hotel Online is quite industry specific. As a result, most of the postings were related to management practices of several hospitality related companies. This characteristic allowed the researcher to determine major trends experienced by the hospitality industry in the six main functional areas of management. After the analysis of these trends was completed, it was clear that most of them were outcomes or effects of the general environment trends identified earlier.

As it is described in Figure 2, the most important topics appearing in Hotel Online related to finance, marketing and operations, as opposed to research and development, administration and human resources. a. Finance: According to Figure 2, discussion of financial situations covered the 24.41% of the space dedicated to the specific environment – the second in importance after operations. The major subjects mentioned in Hotel Online postings are the continuing epidemic of mergers and acquisitions among hospitality companies, the increasing level of complexity of financing activities in the industry and the reporting of good financial performance by most hospitality companies in the period analyzed. The trend of mergers and acquisitions has taken front stage in the hospitality industry since the last decade. The original factors that gave birth to this trend where "the scarcity of land sites suitable for hotel development, high cost of building, and the need for strategic market locations. ' Even though the latter is probably the only factor still present in the industry, the trend has survived and will probably continue for several years.

Small firms continue to merge with larger ones in order to survive and improve their financial status. Large companies are always willing to acquire more hotels, more restaurants and more management companies in order to expand their operations and diversify their portfolios (geographically or by product category). The merger-mania appears top be more severe among gaming companies and airlines. This rapidly changing industry forces operators to keep track of the merger and acquisition game. One never knows when the person in charge of operating the company is going to change. The vast majority of space dedicated to this area of management involved the description of financial transactions and strategies of hospitality companies.

Comments on credit ratings, dividend announcements, public stock offerings, stock splits, credit line increases and loan petitions abounded. Although these issues can be seen more as facts of life in management than as trends, they do highlight the increasing complexity of financing a hospitality operation and the wide variety of financing resources available to every operation. Hospitality managers must keep track of the financial activities of the industry in order to use the appropriate financing tools when the times demand it. The final group of postings was composed of press releases of companies reporting their operating results, primarily from the first quarter of 1997. An analysis of these articles resulted in the identification of two main trends. First, hospitality companies overall are performing quite acceptably.

Secondly, big hospitality corporations tend to perform a lot better than independent, small companies. The excellent performances of Circus Circus Enterprises, Marriott International, and Choice Hotels International contrasts with the somewhat poor results of small hotel and gaming companies such as Sands Regent and U.S. Franchise Systems. The performance of several casinos in particular seemed not to keep pace with the overall good results in the industry. It must be noted that due to the short period analyzed, seasonal considerations may have played an important role in the performance of these companies. Nevertheless, scanning the financial performance of competitors can help the hospitality manager assess the value and merit of the results obtained in a particular operation. b. Marketing: According to Figure 2, topics in the area of marketing covered almost 20% of Hotel Online space dedicated to the specific environment.

The major issues surfacing in this management area include an increase in the use of the internet for marketing purposes, a proliferation of special promotions and advertising from hospitality companies, and an increase in the importance of state tourism organizations and tourism promotion associations in marketing destinations as a package. Many hospitality companies are realizing the marketing potential provided by the internet. From on-line reservation systems geared to the end consumer, to the development of web pages describing the services and facilities offered, hospitality marketers are jumping into the information superhighway to increase sales and product awareness. Web-developing companies are taking advantage of this trend to offer their services to hospitality companies, which can place adds at different web pages or collect reservations online. In addition, companies such as Radisson Hotels are offering special features on their home pages to attract more customers, such as online games and other interactive activities. The potential use of the internet in marketing hospitality products is amazing, and it can be guaranteed that more and more companies will employ it in the future.

The abundance of special promotions and heavy advertising is still a trend in the hospitality industry. The larger amount of postings described original promotions offered by different companies with the purpose of attracting more customers. The most popular promotions always appear to involve frequent flyer miles or frequent guest points. Also, most of this promotions involve joint efforts between different companies (i.e. a car rental company offering more miles to customers flying in a specific airline).

This emphasis on promotions seems to be an attempt to differentiate the services provided by very similar companies. It is getting harder to offer a completely original product to the potential guest, and these promotions may allow companies to be more appealing to certain customers. However, a big problem with promotions is that they are easily imitated by competitors. An example is a recent promotion started by American Airlines, offering half-price rates for babies two and under if the parents owned approved safety seats. On the same day, every other U.S. airline except US Air had matched the promotion.

Hospitality operators must assess the potential for success of every promotion before implementation. With respect to advertising, there appears to be an increasing tendency to use specialized advertising agencies to support corporate marketing efforts and deliver a more effective message. Due to their larger resources, big hospitality trademarks such as Caesar's Hotels, Planet Hollywood and KFC have taken advantage of this situation to deliver better ads and build brand loyalty. A final marketing aspect worth mentioning is the active role that state tourism organizations and other associations are taking to promote destinations. Joint efforts by hospitality and tourism firms in specific destinations are proving to be successful in increasing the size of the pie for everyone to share. In the case of some cities and states, the efforts of these organizations are essential for the good performance of the tourism industry.

Hospitality and travel managers will probably continue to cooperate with this joint marketing endeavors to improve sales and financial performance at the firm specific level. c. Research and Development: As it can be seen in Figure 2, R&D continues to be the most neglected area in the hospitality industry. However, there appears to be a greater appreciation of the need to conduct market and customer research, and test new services and products before launching them into the market. The role of tourism organizations appears to be basic in this area of management, representing close to 50% of the research efforts found in Hotel Online. The major efforts in this area have been directed to the determination of customer preferences and attitudes through surveys, the evaluation of economic impact of tourism activities on specific destinations and the test of new products and services by hospitality companies. From this efforts, companies have discovered changes in attitudes from their repeat customers, many cities have discovered the great economic effects of tourism for their communities, and companies such as McDonald's have tested the implementation of new technologies to improve their service.

The importance of R&D in this industry resides in the fact that it can be the means for a company to obtain a competitive advantage and differentiate its product in the marketplace. d. Operations: This was the functional area of management covered more extensively by this online news service. The major trends that were determined under this category are the expansion of operations of several hospitality and travel companies, and the streamlining of operations by the use of new computerized systems and the improvement of facilities, menus and services. The vast majority of articles related to this category addressed the issue of companies expanding their operations in a variety of ways. Airlines, for instance, appear to be constantly extending their operations to serve new destinations and diversify their geographical position. Management companies continue to acquire contracts with a variety of properties, franchises continue to expand, and international chains continue to open new properties in a variety of geographical locations.

An important factor in this trend is the increasing efforts to expand internationally. Around 20% of new operations by local chains described in Hotel Online were located outside the U.S. An example is the incursion of Ritz-Carlton in China, positioning itself as one of the first international luxury chains to enter this market. The scanning of these expansion activities in the industry allows the hospitality operator to keep track of competitive threats and opportunities for expansion in untapped markets. The use of new technologies continues to be a major trend in the operation of hospitality and travel related companies.

Many companies keep their property management systems up-to-date with the latest technologies, realizing the improvements on efficiency that this products bring. The introduction of high-tech services and features for guests and customers is also a noticeable tendency. An example is the adoption of video-on-demand options in in-room TV systems by some lodging companies on an experimental basis. A final consideration regarding operations is the fact that results from in-house surveys are being considered more frequently to improve operations. Most menu improvements come from direct customer research, and result in economic benefits to food service providers.

Operators must continue to pay close attention to the preferences of their repeat customers in order to increase loyalty or improve the quality of the service provided. e. Administration: Administrative topics occupied about 16% of the specific environment space of Hotel Online. The major trends identified in the analysis of this category are the increase in the number of strategic alliances and joint ventures among companies, a continuing involvement of hospitality and travel firms in legal cases and a more open discussion of internal management practices as a good public relations tool. The popularity of strategic alliances and joint ventures among travel and tourism companies is easy to identify. One study found that the main driving factors behind such alliances are the increasing globalization of the industry, heavy competition and the low profitability of some operations.

These alliances vary in purpose, but they are usually intended to improve marketing potential through cooperation, or to maximize management capacity by joining forces with more knowledgeable operators. Recent examples are the management alliances of Sheraton with Felco r and Equity Inns with Interstate hotels. A curious marketing alliance discovered through this research project is the joint marketing efforts of Las Vegas, Phoenix and San Diego to sell packaged tours including visits to the three cities in the same trip. This alliance signals the incursion of local tourism organizations into the world of corporate cooperation. Hospitality managers at any level should be aware of the potential benefits of strategic alliances to be able to take advantage of them if the circumstances recommend it, and also monitor the moves of competitors to recognize situation in which a particular operation might be threatened. Another long-lasting trend the hospitality industry has experienced over the last years is its continuous involvement in legal and regulatory cases.

The outlook for 1997 so far does not promise any changes. Although must cases involve routine legal matters such as obtaining construction permits and gaming licenses, others involve civil suits and legal proceedings that can have a profound effect on any company. A majority of these cases involve suits and complaints placed by customers, while the rest involve legal fights between companies on the grounds of unfair competition or unfulfilled contracts. The majority of administration related postings depicted management practices, conflicts and changes experienced by some companies.

Although no trend can be identified in these articles, hospitality operators may learn form the mistakes and successes of other companies. In addition, the reporting of new administrative strategies may give companies an opportunity to create favorable publicity in the marketplace. An example is an announcement by McDonald's describing new strategies that will push decision-making down to the customer level. Since this company has been under examination lately, spreading the word about the new strategy may result in a more positive attitude towards the company. f.

Human Resources: This functional area of management was a bit neglected in the Hotel Online news service. The major trends identified were a continuing involvement of travel and hospitality firms in labor related litigation and other labor conflicts, a strong competition among firms for top-management talent and the implementation of innovative employee support programs. Labor conflict issues include suits placed by employees against companies practicing biased or unfair hiring policies and strikes undertaken by airline employees. This does not seem to be a new trend in the industry; rather, it is a constant reality that operators have to face. Fortunately, the reduced number of cases noticed by the general media indicates that most companies are making a good job of managing their employee relations. The vast majority of HR related postings were hiring and promotion announcements by different hospitality companies.

An important consideration in this area is the fact that employee exchange occurs almost always within the hospitality industry, which highlights the magnitude of competition among different companies for the skills and capabilities of top-level managers. Finally, a trend sustained primarily by large hospitality corporations is the implementation of superior employee support programs in the industry. Companies are not just aiming to comply with labor regulations. They are going further to secure the well-being of their employees and achieve employee loyalty to the company. Good examples are Marriott's Welfare-to-work and Foundation for people with disabilities programs that appeared in Hotel Online postings.

Hospitality companies must continue to provide this type of programs in order to reduce turnover and improve customer service. IV. Conclusions This study has attempted to determine major trends in the hospitality industry as described in the internet service of Hotel Online. It also has attempted to determine the usefulness of internet news services such as Hotel Online for hospitality operators undertaking environmental scanning efforts. Some limitations of this research endeavor have to be acknowledged. First, the postings analyzed were reduced to a 60 day period, which undermines the coverage of all trends and neglects the cyclical nature of this industry.

Second, the study was limited to the Hospitality News section of Hotel Online. Further research and analysis of the Ideas and Trends section of the service may give more support to the usefulness of this internet service. In conclusion, it can be determined that only some of the trends currently experienced were identified in this project. Their discussion can certainly provide the hospitality operator with a good overall picture of the industry's environment.

Moreover, a good argument in support of online means of information can be derived at after analyzing this particular project. Hotel Online appears to be an excellent provider of information for the many managers involved in travel and hospitality operations. Nevertheless, this study determined that the news provided are extremely industry specific, and users must realize that their environmental scanning efforts have to be complimented with more general publications, such as business magazines, newspapers and other journals. Since most of these publications are already available online, an excellent environmental scanning program may be implemented by simply adding bookmarks to a web browser.

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