Hospitality industry in the United Kingdom is continuously growing in the 21st century. This industry encompasses hotels and other accommodations, restaurants, fast food retail, bars, and catering. It has been characterized in recent decades by the development of an increasing range of highly segmented products and services. Overlapping tourism and leisure services, with a growing business services component, it is a highly competitive global industry (Rowley et al, 2003, 9).
Hospitality is a major force in the UK economy, creating growth and jobs. It employs 1.8 million people in nearly 300,000 establishments and has a total turnover exceeding £64 billion (BHA, 2002). Hospitality and tourism has become one of the world’s most fiercely competitive businesses. The hotel industry is the linchpin of the UK’s leisure-related service sector: a big business with enormous growth potential. It also contributes to the country’s attractiveness as an international business destination (Lovegrove et al, 1994).
However, a report shows that the future of the UK leisure industry is not as bright as it seems to be. In order to consider the demand and supply equation within the UK hospitality industry, the report commissioned by the Greater London Authority (2002) reviewed the drivers of demand and then provided forecast the likely tourism trends over the next 15 years.
The report had taken an econometric model similar to one used to forecast hotel performance for the British Hospitality Association in 1998.
In its discussions with industry experts, the Greater London Authority (2002) noted some pessimism about future prospects for London as a visitor attraction. The pessimism reflected the view that London was expensive relative to other centers, and that there were new and more exciting tourist venues coming on to the market all the time, including very cheap and attractive new venues in Eastern Europe such as Prague.
This pessimism is borne out for the period 1980 to 1999, which shows London generally losing share of the market for world tourism. The UK’s share of world arrivals has also fallen over this period. However, since that market has itself been growing extremely strongly for the past 20 years and more, the consensus view is that the demand for London visitor nights is also set to go on growing, notwithstanding the loss of market share.
A further influence on hotel demand is the impact of war. There were sharp dips in international travel associated with the bombing of Libya in 1986 and with the Gulf War in 1990. Even though it is impossible to forecast future events of this sort, it is important to take account of them in the estimation process because there is otherwise a risk that variations in international travel for these reasons are wrongly attributed to variations in income or price. This can lead to misleading estimates of the coefficients on these key drivers, and to erroneous forecasts. The broad relationship between movements in the number of overseas visitors to London and changes in foreign incomes (measured by world GDP) reveals a clear long-run correlation. It also shows that the relatively mild slowdown in the growth of the world economy in the early 1990s led to a much sharper slowdown in foreign visits to London.
In 1989 demand apparently fell sharply. The Greater London Authority (2002) examined the possibility that the decline arose in part due to a change in the survey method employed by the British Tourist Authority in 1989. However the alternative theory that the fall was a real one was supported by the measures of bed-space occupancy. The fall between 1989 and 1990 is less surprising, since by then the UK economy was moving sharply into recession. UK visitors to London remained at low levels throughout the recession of the early 1990s, right up to 1993. Since then London hotels have benefited, as they did not in the late 1980s, from the buoyancy of the UK economy and especially of the service sector.
The pattern of annual changes in demand is reassuringly similar even though there is a large difference between the absolute number of visitor nights and the number of nights spent in hotels. This difference primarily reflects nights spent outside the hotel sector.
A factor that result to the low demand for hotel service purchase is that the UK hotel industry is not effectively coping up with the changes posed by the need to enhance the skills of workers. The hotel industry remains a low skill area of employment where skills are increasingly required to adapt to changes in technology, product range and the social, legal and commercial environment (Rowley et al, 2003, 9). Moreover, the sector has a record of suffering from a chronic shortage of recruits with food preparation skills, wastage from the sector of those with vocational skills and qualifications. Likewise there is a widespread evidence of vacancies which are hard to fill. Britain receives some 25 million overseas visitors a year, spending nearly £13 billion, but these numbers have been broadly static for several years, revealing problems of competitiveness which government and the industry need to address (BHA, 2002).
But it does not mean that the industry is doing nothing. According to the British Hospitality Association (2002), with the support from the government, it is discussing the skills shortage problem through a number of routes, including the annual Careers Festival and special schemes under New Deal. It is a prime contributor to social inclusion and widening participation. Moreover, it urges hotels to concentrate on funding mechanisms. The funding of vocational education in hospitality, especially in further education colleges, must be increased to reflect the fact that the industry is producing jobs of the future; the simplification of the qualifications structure for hospitality must be addresses; and the knowledge of food and practical cooking skills should be a requirement of all stages of the National Curriculum (BHA, 2002)
Furthermore, the BHA sets skills requirement to employees. The vocational skills requires expertise in food production and preparation, stock management, and cost control; the generic skills cover the managerial skills, particularly small business management, communication, problem-solving, selling skills, literacy and foreign language competence; and the competence deriving from attitude to work such as enthusiasm, commitment, and the will to learn.
UK hotels are employing Total Quality Management (TQM) on their operational systems. TQM is concerned with quality and its continuous improvement; the external customer, or person affected by outputs is the ultimate source of quality judgements; the system or subsystem leading to productive outputs, and considering resource inputs, is the focus of attention; the organization is studied and portrayed as systems; besides ultimate clientele or consumers of outputs, all persons in the stream of production are considered to be customers; groups of employees and managers work on problem solving; every person is to be a process manager; employees are trained in problem solving techniques, including process analysis and statistical quality control (Siegle, 1996).
The underlying philosophical principle is that quality and its continuous improvement are important objectives. As high quality is achieved, improvement will be seen in other performance measures such as productivity. Emphasis is on improvement of processes and measurement of quality (Siegle, 1996). Quality is defined variously, such as impact of outputs, attitudes of consumers, and the skills of employees. Of course, without a strong leadership commitment it is difficult to implement the objectives of TQM.
According to (Seidler, 1996), TQM is a total philosophy for running an organization. It has as its main objective the meeting of both internal and external customer’s expectations through continuously improving all processes and products. It uses basic statistical tools to measure and refine work processes. Since quality is a top-level management responsibility, they must provide the work environment and organizational conditions to allow this to occur. The refinement, measurement and improvement come from the workers closest to the daily processes (Seidler, 1996).
A flattening or reduction in organizational levels is one approach to the empowerment of employees and supervisors at the system processing level (Sullivan, 1988). Schonberger (1992) adds that the role of the supervisor changes from a monitor to a coordinator and facilitator who is responsible for clearing obstacles and smoothing the path of implementation
Training and employee development is a significant part of the TQM (Siegle, 1996). Highly effective group processes are needed to ensure maximum participation and contributions from all team members; thus, team building is an important aspect of self-directed work groups, as is training in the organization’s culture of quality (Siegle, 1996).
The industry which is exploiting the TQM is the service industry for obvious reason: to satisfy the customer. In today’s business world, the value and importance of customers is not something that should be set aside by companies. Marketing plans and strategies would be incomplete without paying much consideration to the customers. Customers will and should always be a part of the agenda in any marketing plan of any company. Because of the implications for profitability and growth, customer retention is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today’s ever increasing competitive environment (Lindenmann, 1999).
Hotels are turning to the Internet to increase sales, thus a raise in the demand. As such, the tourism industry is one of the industries that exploit the convenience benefits of the Internet (Domke-Damonte & Levsen, 2002). Moreover, according to Jupiter Communications Market Research (1999), Fiona Stadtler Swerdlow, an industry analyst, concluded that travel is one of the fastest growing sectors on the Internet, accounting for 50% of all www transactions in 1996. With the evolution of tourism industry, comes the commercialization of tourism (Urry, 1990).
Bacchus and Molina (2001) state that the increasing demands of customers in availing hotel or airline reservations are being addressed by the tourism industry through the online Internet reservation system. This reservation system enables travelers to find schedules and fares, seat and room availability, car hire tariffs and make reservations directly (Bacchus & Molina, 2001). Today travelers can book a room from almost anywhere in the world as many hotel websites allow online booking with a confirmation being given instantly (Kasavana & Brooks, 2001).
An advantage to Internet usage for the hospitality industry falls in the marketing realm (Watson, et al., 1996). Almost 9% of all Internet users made travel reservations through the Internet in 1998 (Domke-Damonte & Levsen, 2002). By having an interactive Web site online, hotels are offering their services to a global market at an inexpensive rate (Domke-Damonte & Levsen, 2002). Through this, they can empathize their individual services and competencies, a capability not available within a cooperative marketing plan; thus, this could increase competitive moves by offering niche services the industry does not usually provide (Domke-Damonte & Levsen, 2002).
According to Violino (1998), Synapse Group Inc., hired by Hilton Hotels Corporation to design and maintain Hilton websites, indicated that an average of two million dollars worth of room reservations a month came from Hilton hotel websites worldwide. Hilton expects this number to rise significantly as an increasing number of people become comfortable booking hotel rooms through the Internet (Violino, 1998).
As noted by Aksu and Tarcan (2002), websites have now become a popular medium for advertising and reaching a large group of people. Therefore, implementing OIRS is an effective tool for increasing demand. Higley (2003) further states that big chain hotel companies are aiming to improve their websites to increase bookings. At Marriott International hotels, 85% of the online reservations came from Marriott International’s own website (Higley, 2003). From the literature, it can be concluded that usage of OIRS is rapidly increasing and that OIRS offer great potential for increasing reservations and consequently increasing room sales.
According to Domke-Damonte and Levsen (2002), the Internet has been widely used by hotels and travel agencies to make up for the loss brought about by economic downturn. Domke-Damonte and Levsen (2002) stress that the Internet has had a major impact on society in general and on hotel industry specifically as, but add that, as a result, the implementation of online reservation system greatly increases competition within a service industry.
In response to the increased importance of services, numerous articles on issues related to the effective management of service operations have appeared in both academic and practitioner based publications (for example, Karmarker & Pitbladdo, 1995; Kellogg & Nie, 1995; Lovelock, 1992). Several of these articles present typologies of services and provide directions for improving quality, productivity and operating efficiency, however relatively little has been done to empirically test the proposed ideas.
References
Aksu, A.A., & Tarcan, E. (2002) The Internet and five-star hotels: a case study from the Antalya region in Turkey. International Journal of Contemporary Hospitality Management 14(30), MCB University Press, Source: Emerald Full text.
Bacchus, L. Molina, A. (2001) Internet-based tourism services: Business Issues and trends. Futures, Vol. 33.
British Hospitality Association (2002) British Hospitality Association’s Chief Executive Industry Revies—2002. Accessed at [www.bha-online.org.UK]. Accessed on [04/09/03].
Domke-Damonte, D. & Levsen, V. B. (2002) The effect of Internet usage on cooperation and performance in small hotels. Advanced Management Journal, Vol. 67.
Greater London Authority (2003). Demand and Capacity for Hotels and Conference Centers in London: A report commissioned by the Greater London Authority with financial support from the Government Office for London SDS Technical Report Thirteen, August.
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Lindenmann, Walter. (1998). Measuring relationships is key to successful public relations. Public Relations Quarterly, 43, (4) 18+.
Lovegrove, N. C. et al. (1998) Why is labor productivity in the United Kingdom so low? The McKinsey Quarterly, No. 4.
Lovelock, C.H. (1992). A basic toolkit for service management. In Managing services: marketing, operations, and human resources 2nd ed. Englewood Cliffs, NJ: Prentice Hall.
Rowley, G. et al. (2003) Employers skill survey: Case study-Local and central government. Employment Studies Research Unit, Bristol Business School, University of the West of England, Coldharbour Lane, Bristol.
Schonberger, Richard (1992). Total Quality Management Cuts a Wide Swath – Through Manufacturing and Beyond. Organizational Dynamics. 20(Spring): 16-28.
Seidler, E. (1996). Discipline and deselection in the TQM environment. Public Personal Management, Vol. 25, pp. 529+.
Siegel, G. B. (1996) Job analysis in the TQM environment. Public Personnel Management, Vol. 25, pp 485+.
Sullivan, L. P. (1988). The Seven Stages in Company-wide Quality Control. Total Quality Management – An IFS Executive Briefing: 11-19.
Urry J. (1990) The tourist gaze: leisure and travel in contemporary societies. Sage, London.
Violino, B., (1998) Reservations online. Information Week (679) p.84. Source: Business Source Corporate.
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