Evaluating the Impact of Change Within a Hotel Operation

Title Page: Evaluating the impact of change within a hotel operation: A case study of the Churchill Hotel in London Abstract: The dissertation will examine 2 areas of International Business often use when dealing with Strategic and Operations Management: •Service Quality for Businesses and Suharaman’s theory of SERVQUAL •The Effect of organizational change on staff Using the Churchill Hotel in London was a good example of an organization that had to rely heavily on the key strategies of organizational change and service quality after the Hotel changed management from Inter-continental Hotels to Hyatt International in January 2004.

The Dissertation would examine how the Hotel has coped with the change in the 2 years after being under the Inter-continental for 20 years. As a back up comparison for the evaluation, another Hyatt hotel outside of Europe will also be evaluated. The Grand Hyatt Cairo was up until recently a Meridien Hotel (changing over in 2004 also). As I will be working with the Churchill hotel as a Corporate Trainee from mid November 2005 onwards, I thought it would be a great opportunity to research the project

There are a number of social and commercial issues involved in the change over and re-branding of the hotel as outlined above and it would be interesting to learn and experience these issues first hand. The Dissertation will also attempt to look at several other aspects: •Why do hotel owners very often not run their own hotels? As is the case with the Churchill whose owners have relied on international hotels chains to run the management of its London hotel. Would they be in fact be better off if they ran it by themselves using the personal knowledge of the area? Why pay vast sums of money to hotel chains to operate a hotel and not hire the best talent available to do the job? The Dissertation will also be an attempt to examine the profitability of business owners investing in external management for there own staff and labour parts instead of a more organic growth of staff •Why is Branding important for Hotel operators? In today’s Hotel Service Industry the brand of a hotel is vital for its marketing and retaining and attracting customers.

The dissertation will attempt to look at how much extent this is vital to a hotel as a competitive advantage •How to build a brand? By going through research of the Hyatt’s history as well as it’s closest competitors and marketing business models there will also be an attempt at seeing how brand is created and sustained over time • How does a company go beyond branding and build a culture of a company which is even more important for its employees? Part of the Hyatt business models is instilling a multi-national culture amongst its employees that is reflected in the brand.

By interviews with staff who have stayed over from the transition and if they have felt any difficulty since the change •Successful hotel operators are in the five star markets. Why are they not so successful in the budget brands? By examining at smaller hotels the dissertation will see if the theory of Brand building can work in smaller markets for Hotel service •Successful hotel operators are charging ever higher room rates. Does this contribute to inflation and social disruption by increasing real estate prices in city centers?

The Economical aspect of whether or not International chains are actually helping or hurting the cities in which they operate will also be investigated with research from journals form the service industry •What happens to employees of a particular hotel when a new chain takes over the hotel? Are the employees retrained, motivated and have the potential to earn more money or do they lose their jobs to higher skilled outside employees? As well the interviews, an investigation into the HR departments training will also be looked and if any theories of HR apply. How did the changed service standards impact the guests and the employees of the hotel? By examining sales figures and feedback forms as well as interviews with the head managers of each department, the dissertation will attempt to bring perspective on the initial stages of the changeover Literature Review: The material required for will be presented in two sections. One part will be examining theories applying to Business services in general and the second part will closely examine the Hotel Industry and the Churchill.

In the case of general theory Business Services, several theorists will be examined on various aspects: Critical Success Factors: It has been established that CSFs are varied and depend on the type of business which the organisation is operating in. With Hotels, service quality and customer satisfaction are important factors that hotels are best to focus on, as they are the main factors, which assist the hotel to attract new customers and maintain existing ones. The review will look at what the basic definition would (i. e.

Johnson and Scholes’ belief that they are elements of strategies that companies need to outperform there rivals) To further examine this element we can also defied through Kay (1993) theory of: “Five key determinants including in critical success factors which are architecture, innovation, brand, corporate reputation and strategic assets”. One theorist and Journal was KW Leung’s 2002 paper which defined the 5 determinants as so: •Architecture can be defined as the structure of relationships within an organization and between organization and its suppliers, investors and customers. Innovation is a capability and a culture, which encourages support and innovation •Brand can be a strategic capability, which develop, maintain and exploit brands. Brand identity is the key source to sustain long term competitive advantage to the organisation. •Corporate reputation can be defied as the strategic capability to expand and maintain. Exploiting corporate reputation is the main source of maintaining long term competitive advantages to the organisation •Strategic assets, resulting from the possession by the organisation of a specific market position or strategic feature that is unavailable or inaccessible to competitors.

With this definition of what Critical Success Factors definition is, the next area would be to look at what Critical Success Factors (“things that must be done if the company is to become successful” Freud 1988) and how these will understandably vary from various projects and businesses however the emphasis is on having the right people for the right job. The next part would be to examine Critical Success Factors specifically for the Hotel Industry and attempt to compare what theorist would defy as appropriate to the Churchill’s current state under the Hyatt. The primary emphasis would be to look at Service Quality and Customer satisfaction.

Marketing of Services: This area would look at specifically whether or not the marketing of the hotel and how specifically it is marketed is The main area to evaluate would be Journals such as Alder’s 2001 establish belief that marketing should be integrated with overall operations and reflect a wider definition of marketing and not the traditional four part marketing mix. Service Quality: When looking at Service Quality the best journals and books to view would be on A. Parasuraman’s thesis on SERVQUAL- the title given to the ten main factors needed from a customer’s viewpoint to measure a quality service divided into two parts.

The first five points being quality outcome of the service experience and the second set being the quality inputs which included •Access •Reliability •Credibility •Security •Customer understanding •Responsiveness •Courtesy •Competence •Communication •Tangibles These set of factors were also countered with barriers which Parasuraman defied as: •Misconceptions •Inadequate resources •Inadequate delivery •Exaggerated Promises By looking at these barriers and entries to service quality, the dissertation will attempt to apply the Churchill’s current service and see if there are any barriers or if in fact they have all the correct entries.

The further show the validity of Paraguayan’s findings, the evaluation will also compare his beliefs in service quality with case studies by Gronroos (1978) (Services are less marketing orientated), Shostack (1984) and Levitt (1981) (both applying the theory of intangibility and how there is a significant difference in products and services) as well as Zeithami (1996) (intangible products present new challenges for service managers) There is also theory that quality has the ability to create customer loyalty and performance is vital which Parasuraman (along with Zeithmal and Barry) explain.

Customer Satisfaction: An important aspect to look at when evaluating any service is its level of customer satisfaction. This of course is especially true of hotels and they are general theories and definitions that each can be applied to the Churchill case: •Smiths (“Customer Satisfaction is the heart of retaining loyalty and it’s everyone responsibility”) •Sarah Cook (“Vital if organization wishes to attract new customers and retain old ones”) •N. Hill and J. Alexander (“ a measurement of organizations total product”) •D. Rinani, W. Mo, C. Chan, “number of customers is key”) As well as these theories there is also an emphasis that demands of the customers must be met by satisfaction (Hill and Alexander) and this too can be evaluated by examining the Churchill’s customer relations. Perceived Quality: A look at what is perceived to be quality generally and how the Churchill and the Hyatt brand have tried to link this to the customers’ belief. Alder and Grongross both had thesis on this area which will be used as the Churchill’s evaluation Connection of Service Quality and Customer Satisfaction:

The tailoring of services to attempt to link both service quality with customer satisfaction and several journals have there perspectives on this. MJ Baker (“By understanding what they need and want in order to attract new customers and maintain existing ones”) Crosby 1979, Gavin 1983 (“Good quality is different to service quality as goods quality can be measured objectively”) There are also aspects to consider again that because service is intangible, it may be more difficult to perceive quality as stated again by Gronroos.

But they have been some defining theories such as Oliver (1981) The Gap Model: Parasuraman and Zeithmal both cited the Gap Model as a way to describe any customer dissatisfaction of service quality and 5 series gaps were identified (Promotional, Understanding, Procedural, Behavioural and Perception) The Model has been evaluated by different theorist (Hill and Alexander) and its use can be applied to the Churchill. Competition: There are several journals and articles written explaining what an organization needs to deal with competitors (Hao Ma 1999 and Vivek Suneja).

By evaluating these articles we can develop a benchmark to see if the Hyatt’s service is adequate to help the Churchill in its market. Competitive Advantage: Following an examination of service quality theory, the next step is to look at general aspects of organizational change and why much like service quality they benefit any company. This will require an in-depth look at the importance of competitive advantage, why it’s needed as well as the various definitions of it.

These include Campbell et al (1999) theory: “firm’s ability to outperform against there competitors and can be measured in terms of superior profitability, increase in market share or other similar performance measures” also Lynch (2003) “advantages that allow the organisation to add more value than it’s competitors in the same market. This allows the ability to stand out and bring in new consumers and maintain there current customer base and create customer loyalty and a survival tactic” The Review will also look at how Competitive Advantage could apply to the Churchill.

Other aspects of competitive advantage to look at and the articles to look are: Origins of Competitive Advantage: Examining its early stages using articles and theories relied over time Cockburn, Henderson and Stern (2000) Stinchcombe (2000) Sustaining Competitive Advantage: How services can retain there competitive advantage through individual and unique competences Alderson (1965) Hall (1980) Henderson (1983) Coyne (1986) Barney (1991) Campbell (1999) Peteraf (1993) Lieberman and Montgomery (1988) How Core Competences are applied to Competitive Advantage: How to identify a ervice’s core competences and how resources linked in will lead to competitive advantage Prahalad and Hamel (1994) Kay (1993) Heene and Sanchez (1997) Leavy (2003) Competitive Environment: Examining both Micro and Macro environment and Porter’s Five Forces Framework applied to the Churchill hotel Ginter and Duncan (1990) Porter (1987) Evans (2003) Rumlet (1991) Hoffman (2000) Resource-Based View/Perspective: Examining how competitive advantage can be used by utilising the resources available Powell (2001) Hunt and Morgan (1995) Ramsay (2001)

Generic-Competitive Strategy: The strategy that examines what is the best strategy for the service and examining if the Hyatt has the best fit for the Churchill Porter (1985) Powell (2001) Cronshaw (1990) Mintzberg (1991) Hotel Journals •“In search of excellence” by Tom Peters and Robert Waterman •“A passion for excellence” by Nancy Austin and Tom Peters •Branding in hotels by Patrick Goff Internet websites: •Branding in hoteljobsource. com •Articles on branding and service in the hospitality industry at Apollo4. Bournemouth. ac. uk Conclusion and Research Agenda:

With the gathering of information through the Journal review. The theories that are trying to be examined would be now established as well as new ones. We can then see whether hotel owners actually gain higher earnings from their properties when they change management companies and does the local community gain from higher quality hotel chain moving into a particular location. The review and evaluation of theorist will also help us if the effects of service quality and organizational change result in a competitive advantage and does the customer benefit from these changes?

The Interviews and Journal reviews will also help define the question whether the employees benefit or lose out because of these changes. Methodology: As previously mentioned the bulk of the background reading on the Subject and investigation will be through the journals and theory literature however there will also be series of face to face interviews with several key staff members within the organisation: •The General Manager •The Human Resources Manager •The Director of Sales and Marketing Ranked and filed employees of the hotel to gain an insight into the subject. Because the Churchill will also be compared with the Hotel in Cairo, arranged interviews through the There will also be interviews with hotel consulting firms such as •Hotel Valuation Service (HVS) •Panell Kerr and •Foster (PKF) Aside from these interviews there will also be applied use of the theories form the Literature Review and evaluating the business service quality using Parasuraman’s SERVQUAL checklist and the GAP Model.

Other models also to be used will be Porter’s Five Forces Framework and the generic strategy framework to highlight current operations in the Churchill. Action Plan: They are several steps needed to conduct prior to starting the dissertation. The initial plan is to get the General Manager of the Churchill on board. That would clear the way to my research within the hotel. The aim to start this will be by the end of October 2005. If Hyatt International can approve, the aim is also to get information on the Cairo Hotel for the comparative analysis between them and the Churchill.

The aim is to get this done before December 2005 Following this the next step is to write to PKF and HVS explaining the dissertation and request an interview to gain information on the subject. The aim is to get this done by November 2005. Finally once these primary research needs are done the plan is to complete all interviews and research work by Mid February 2006 and then have enough time to write up the final overall draft of the dissertation by end March 2006

Resource and Requirements: As I will be employed at the Churchill I will not need too many additional funds to carry out the research work at the hotel. They may be some costs involved in using the trade journals for the Hotel Industry (Prices for the trade journals has not been confirmed yet) There may also be local travel time and costs to interview PKF and HVS Senior Manager, however the belief is that it will be minimal