The Routledge Handbook of Hotel Chain Management

Maya Ivanova, Stanislav Ivanov, Vincent P. Magnini, Maya Ivanova, Stanislav Ivanov, Vincent P. Magnini

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9780367660109
• eBook ISBN: 9781317618430
• Topic: Business
• Subtopic: Hospitality, Travel & Tourism Industry
• Index: Business

Understanding the global hotel business is not possible without paying specific attention to hotel chain management and dynamics. Chains are big business, approximately 80 percent of hotels currently being constructed around the world are chain affiliated and, in 2014, the five largest brands held over a one million rooms. The high economic importance of the hotel chains and their global presence justifies the academic research in the field however, despite this, there is no uniform coverage in the current body of literature.

This Handbook aids in filling the gap by exploring and critically evaluates the debates, issues and controversies of all aspects of hotel chains from their nature, fundamentals of existence and operation, expansion, strategic and operational aspects of their activities and geographical presence. It brings together leading specialists from range of disciplinary backgrounds and regions to provide state-of-the-art theoretical reflection and empirical research on current issues and future debates. Each of the five inter-related section explores and evaluates issues that are of extreme importance to hotel chain management, focusing on theoretical issues, the expansion of hotel chains, strategic and operational issues, the view point of the individual affiliated hotel and finally the current and future debates in the theory and practice of hotel chain management arising from globalisation, demographic trends, sustainability, and new technology development. It provides an invaluable resource for all those with an interest in hotel management, hospitality, tourism and business encouraging dialogue across disciplinary boundaries and areas of study.

This is essential reading for students, researchers and academics of Hospitality as well as those of Tourism, Marketing, Business and Events Management.

Section III
Strategic and operational management of hotel chains

Section III consists of 14 chapters dealing with strategic and operational management issues of hotel chains. In Chapter 18 Yumi Lim discusses the brand management of hotel chains. The author acknowledges that branding has been a major marketing tool in hotel chain management. Hotel chains have benefited from branding in their product, price, communication and channel-related marketing activities. As growth platforms of brands, brand extensions have been influential areas in marketing. An explosion of brand extensions in hotel chain management occurred in the 1990s. Hotel chains have adapted vertical brand extension strategies by extending their product line to various price and quality level brands. In addition, brand trust and brand loyalty have been important constructs in the marketing literature. The author finds that brand trust has an impact on brand loyalty. In addition, brand loyalty is positively related to brand extensions in hotel chain management.

In Chapter 19 Sjoerd Gehrels analyses the case of a successful well-known international European hotel corporation, starting with the history and development of the company. Next, ongoing changes in brand promise and the further developing of the brand are explored. The internal employer brand is compared with the external brand and improvements are discussed to facilitate a better alignment. Progression into an employment brand is explained as well as the connected diversity strategy for the company. Finally, considerations about how a diversity strategy implementation will impact the viability and business success of the company are shared.

In Chapter 20 Melissa Baker focuses on customer experience management in hotel chains. Managing customer experiences in hotel chains is critical as it relies not only on the individual hotel property, but incorporates all of the experience components at all the hotel properties within the chain. This chapter provides a literature review, current hotel chain examples, and managerial suggestions for managing customer experiences. First, the chapter discusses why it is critical to consider all of the touch points in the stages of experience: pre-arrival, arrival, occupancy, departure, and post-departure. Second, given the high amount of interaction between hotel personnel and customers this chapter discusses the importance of communicating the brand message through interpersonal and non-verbal communication. Third, as service recovery is important in managing customer experiences the chapter discusses service failure, recovery, and managing customer justice perceptions. Lastly, given the increase in online experiences with hotel customers, this chapter discusses how to manage online experiences more effectively.

Distribution channel management is the focal point of Chapter 21 by Peter O’Connor. With electronic distribution becoming an essential part of successfully running a hotel, facilitating this increasingly complex portfolio of routes to the marketplace has become one of the key value-adding activities of a hotel chain with owners and franchisees alike increasingly examining the proportion of business delivered through controlled routes as one of their critical hotel chain selection and evaluation criteria. This chapter traces the growing importance of electronic distribution in the hotel chain–owner relationship, examining many of the challenges currently being faced by chains in managing this increasingly complex environment. In particular the issues of access to world class technology, availability of expertise on distribution issues, superior negotiating power and ability to more fully leverage customer data advantage of working with a hotel chain are debated, with how participation in a chain allows hotels to more effectively play the distribution game highlighted.

Chapter 22 by Aurelio Mauri deals with pricing and revenue management, which are nowadays two crucial subjects for hotel chains. In the current business environment, characterised by increasing digitalisation, globalisation and tougher competition, price has augmented its central role. While traditional approaches are commonly based on costs, in recent years academics and practitioners have highlighted the relevance of value perceptions by customers (value-based pricing). As a result, differential pricing, also known as price discrimination, has been more and more utilised, as it is an effective means that permits sellers to improve corporate profits and to reduce consumer surplus. Revenue management is presented as a collection of coordinated techniques and practices, strictly connected to pricing, utilised for increasing profitability, centrally in service activities. It is analysed as an articulated business process composed by a set of decisions and activities like demand modelling, segmentation, customer profiling, demand forecasting, capacity allocation, and pricing optimisation. Specific revenue management challenges faced by hotel chains are also elaborated.

Chapter 23 by Vladimir Zhechev encompasses the most essential concepts related to integrated marketing communications of hotel chains and delivers contemporary examples of their manifestations. It provides an original conceptual model exhibiting not only the design of integrated marketing communications for hotel chains, but also putting the various communication tools into critical discussion. The chapter also highlights vital metrics for assessing the efficiency and effectiveness of hotel chains’ online presence as it is critically important for any promotional undertaking. It also presents the steps for effective marketing communications and addresses fundamental issues related to positioning/repositioning and levels of integrated marketing communications design for hotel chains.

Chapter 24 by Haywantee Ramkissoon and Felix Mavondo is dedicated to customer relationship management in hotel chains. This empirical study bridges the gap in literature by examining the differences between managers’ and customers’ perceived value across different categories of chain hotels. Findings suggest that managers of different classes of hotels significantly differ in the level of value they perceive they deliver to their customers. Further, a comparison between managers and customers at the same hotels shows that managers across all classes of hotels think they are offering superior customer value but their customers receive much lower value. Findings have implications for alignment, investment and profitability of the organisations. The theoretical and practical relevance are discussed.

Chapter 25 by Vincent Magnini and Carol Simon discusses how hotel chains foster service quality through a focus on employee development and performance. This chapter provides a review of how hotel chains go about fostering cultures in hotels in which high levels of service quality are consistently provided at the frontline. In doing so, this chapter compartmentalises strategies in the following three stages: 1) The pre-training stage entails recruiting and selecting frontline associates who are capable of performing at high levels. 2) The training stage involves arming the frontline associates with the knowledge and skills to deliver top-rate service. 3) The post-training stage encompasses engendering a culture on an ongoing basis in which associates have both the ability and the motivation to deliver high quality experiences for guests.

The purpose of Chapter 26 by Cherylynn Becker and Wei Wang is to introduce the core concepts associated with developing and maintaining a culturally aware workforce in today’s global environment. The chapter is organised to address the following concerns: (1) the identification and descriptors associated with the values specific to the major and dominant cultural perspectives: individualism/collectivism, power/distance, uncertainty avoidance, masculinity/femininity, and long-term/short-term orientation; (2) the identification of employment classifications associated with a multi-cultural workforce; (3) the human resource interventions or activities specifically oriented towards effective management of a culturally diverse workforce.

Chapter 27 by Fernando José Garrigós Simón, Yeamduan Narangajavana and Roberto Llorente analyses the management of information systems in hotel chains. In order to do this, the chapter addresses five elements. First, it concentrates on the applications which are useful for the different functions in the organisation. Second, it looks for the connections between the different parts of the organisation, mainly through Enterprise Resource Planning (ERP) systems, focusing on the interchange of data between the functions and the central databases. Third, the chapter emphasises the relevance of the supply chain management and the connections with suppliers. Next, the chapter analyses diverse mechanisms of connections with customers and other stakeholders, through the use of customer relationship management systems or other more evolved systems related to Web 3.0 and the techniques of crowdsourcing. Finally, the chapter highlights the future implementation of new technologies which are being developed at present and may be adopted by hotel chains.

Chapter 28 by Liliya Terzieva elaborates the financial management issues in hotel chains. To survive and thrive in such fast-changing times, hotel chains recognise the necessity to transform their way of thinking and acting, where finance is not an exception. The modern hotel financial management is in the core of hotel management, closely related to all departments, and each link involves capital flow, from purchasing to processing, selling, financial collection, and then back to purchasing.

Chapter 29 by Vivien Ulu and Dirisa Mulindwa provides an analysis of legal issues in chain hotels’ relationships with focus on the grievances that arise from hotel management contracts. In the wake of growing legal disputes concerning hotel management contracts, particularly from the USA, and given the global nature of the hotel industry, it is imperative to investigate the legal relationship between hotel chain operators and hotel owners. The chapter examines the nature of terms of hotel management contracts, drawing on the experiences of hospitality legal practitioners and decided cases to provide a needed reality check on the legal issues and to identify the challenges ahead. Rights and liabilities arising from hotel management agreements are explored, in particular from the law of agency and fiduciary duties. The chapter offers an analysis of the current legal position of hotel management agreements based on decided cases and considers the future of hotel management agreements as a viable business model given fears within the industry that recent court decisions will undermine the viability of the model.

Chapter 30 by Carlos Pestana Barros and Luiz Pinto Machado evaluates the productivity in the ENATUR hotel chain (the National Tourism Company in Portugal) from 2000 to 2013 with a DEA-Data Envelopment Analysis model. A comparative analysis is made and policy implications are derived.

In the last chapter in the section (Chapter 31), Manuel Becerra, Rosario Silva and Oksana Gerwe investigate room prices and profits in a large sample of hotels in Spain from 2004 to 2008. The results show that hotels that are part of a hotel company charge higher prices than independent hotels, which is ultimately associated with greater profits per room. Furthermore, this effect is generally greater for chain hotels, i.e., company hotels that actually share the same brand, which charge higher prices than company-managed hotels that do not use a company’s brand. The authors argue that these results are due to a combination of internal factors (e.g., economies of scale and knowledge management) as well as external factors (e.g., market power and brand equity) associated with hotel chain management.

18
Brand management of hotel chains

Yumi Lim
(SOUTHWEST MINNESOTA STATE UNIVERSITY, USA)

Introduction

Branding has been a major marketing tool in the last decade, as it has been considered one of the most valuable intangible assets a firm possesses (Keller and Lehmann, 2006). Several definitions exist for a brand. Kotler (2000) defined a brand as ‘name, term, sign, or combination of them intended to identify the goods and services of one seller or group of sellers and/or differentiate them from those of the competition’ (p. 404). Aaker’s definition (1991) of a brand has been accepted widely. He defined the function of a brand as ‘to identify the goods or services whether of one seller or a group of sellers and to differentiate those goods or services from those of competitors’ (p.7). Further, a brand for a new product is shaped by creating a new name, logo, or symbol and as a result of this it receives ‘awareness, reputation, and prominence in the marketplace’ (Keller, 2002). As hotel chains, they create their brands and consistently monitor and update their brands. In 2009, Hilton Corporation changed its name and logo from ‘Hilton Hotels’ to ‘Hilton Worldwide’ in order to symbolise Hilton’s market diversification to the East Coast from the West Coast, and its overseas growth.

Branding research has also been applied to the area of services. De Chernatony and Riley (1998) investigated the definition and principles of services branding with experts’ views. They suggested services branding shared common principles with those of products at the conceptual level. However, the method of displaying specific elements of service brands might be different from product brands at the operational level due to the unique characteristics of intangibility, inseparability of production and consumption, heterogeneity, and perishability. In services literature, a bra...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• List of figures
• List of tables
• Notes on contributors
• Introduction
• Section I Theoretical issues of hotel chains
• 1 Nature and definition of hotel chain
• 2 Economic and marketing fundamentals of hotel chains
• 3 Historical evolution of hotel chains
• 4 Geographical distribution of hotel chains
• 5 The strategic environment of hotel chains
• 6 Hotel chains' conceptual models
• 7 Economic impacts of hotel chains on host destination
• 8 Socio-cultural impacts of hotel chains
• Section II Expansion of hotel chains
• 9 The decision to internationalise
• 10 The choice of a destination to enter
• 11 Entry modes: ownership (equity modes)
• 12 Entry modes: franchise
• 13 Entry modes: management contract
• 14 Entry modes: marketing consortium
• 15 Entry modes: lease contract
• 16 The choice of an entry mode by hotel chains
• 17 Selecting a partner hotel by the chain
• Section III Strategic and operational management of hotel chains
• 18 Brand management of hotel chains
• 19 An international hotel company's employment brand
• 20 Managing customer experiences in hotel chains
• 21 Distribution channel management in hotel chains
• 22 Pricing and revenue management in hotel chains
• 23 Integrated marketing communications of hotel chains
• 24 Managing customer relationships in hotel chains: a comparison between guest and manager perceptions
• 25 Fostering service quality in hotel chains through a focus on employee development and performance
• 26 Intercultural human resource management in hotel chains
• 27 Information systems management in hotel chains
• 28 Financial management, control and reporting in hotel chains
• 29 Legal aspects of hotel chain management and operations
• 30 A productivity analysis of a chain of hotels
• 31 Competitiveness and performance of chain hotels
• Section IV The individual hotel's perspective
• 32 Independent or flagged? The decision to affiliate to a chain
• 33 The choice of type of affiliation to a chain by the individual hotel
• 34 Selecting a partner chain by the hotel
• 35 Managing the affiliation process
• 36 Hotel affiliation evaluation: remaining, leaving, or rebranding?
• Section V Contemporary and future issues in hotel chain management
• 37 Environmental awareness and practices among hotel chains
• 38 Hotel chains and higher education institutions
• 39 Hotel chains, globalisation, and politics
• 40 Generations BB, X, Y, Z, α – the changing consumer in the hospitality industry
• 41 The changing employee across hotel chains – a generational approach
• 42 The new technologies tsunami in the hotel industry
• 43 Big Data analytics for the lodging industry A case study of perceptual mapping of hotel brands using online customer reviews
• 44 Brand extension: from a restaurant chain to a hotel chain
• 45 Bleisure: business and leisure equilibrium in contemporary hotel chains
• 46 Building an integrated marketing communications mindset for hotel managers Dedicated to the memory of Michael S. LaTour (March 1954 – November 2015)
• Index