Yield Management within the Hospitality and Services Industry

Introduction

Customers in the hospitality and other service industries are looking for the most desirable attributes of the services being offered for them. Seldom, the customers are also shifting their choices with the idea that all the offers should be cost-friendly. Because of the recognizable trend in customer behavior, the organization under the service industry are attempting to discover the most efficient way that will adds value to their brand name, while maintaining the number of the customers.

Background and Problem Statement

The idea of enhancing the areas involved in services became the center of the business leaders in managing the profitability. By then, the term Yield Management is introduced as the strategy in handling the service activities to make more profit even if there are limited areas involved in their services. Many businesses under the service industry are aware on the growing interests of the customers to get the best offer, and because of this truth, the yield management is emphasized (Selmi, 2008). The aim of the service-oriented companies to gain more customers and keep the relationship on the existing clients gives the ideal strategies to extend their offers, research for the effective intervention on services, and many more. In return, what is the impact of yield management among the hospitality and other service-oriented companies that implemented the type of strategy?

Research Aim and Objectives

The main aim of the study is to investigate the impact, as well as the importance of the yield management in strengthening the service industry. And in order to provide the necessary information regarding the yield management, there are three objectives that should be satisfy. First is to describe the nature of the business and how they implement the yield management. Second is to recognize the contribution of the employees in strengthening the service oriented organization. And third is to describe the influence of the technologies, business models, and other theories in formulating the unique yield management of the organizations.

Literature Review

One of the most common businesses under the service industry is the airlines. Through the implemented yield management, the airlines can use the discounted tickets to attract the customers with a limited period of time. This is effective in utilizing all the seats in the aircrafts. However, the related management reflected on the handling techniques of the airlines regarding the capacity of the aircraft in accordance to the prices and even in the services that included as a package, which in return adds to the total income. Because of the sophisticated from of managing both of the supply and demand, yield management is proposed to be the best service available to the customers which deliver what is only the best (Selmi, 2008). Therefore, there is a variety of concepts, analytical tools, and techniques applied in the service industry to solve their problems, which are commonly revolves in the allocating the limited resources but still providing the best service for the clients. Through directly targeting the issues involved in the services of the companies, the yield management can be generated. Again, the airline industry will be taken as an example. The yield management involved in the airline industry includes the overbooking, dynamic pricing, and innovative services. However, it is important for the business to provide the basic concepts and create the details in the application of the yield management in their service (Netessine & Shumsky, 2002). Because of the increasing numbers of the travelers who became price-insensitive, the airlines sophisticatedly applied price-discrimination strategies to evenly manage the various types of clients. Apparently, the yield management is identified to work well in the industries that require high initial investment and have perishable products. The airline seats might not decay in a manner but the time involved and the value will perish without producing the expected value if not utilized, therefore, the investment is wasted (Kaul, 2009).

Methodology

The suggested method in the study is the use of secondary information that will focus on the modern operations and management of the service-oriented companies. The materials that can be used as references can be the annual report of the organization, the case studies, and customer-based studies, and web-publications. The information that needs to obtain are the managerial focus of the organization in emphasizing the yield management. Therefore, it is important that the organization involved has the existing yield management in their system. In this manner, the study can organize the important information according to its aim.

References:

Kaul, S., (2009) Yield Management: Getting More Out of What You Already Have, Creativity Theme [Online] Available at: http://www.ericsson.com/ericsson/corpinfo/publications/ericsson_business_review/pdf/209/209_THEME_yield_management.pdf [Accessed 29 July 2010].

Netessine, S., & Shumsky, R., (2002) Yield Management [Online] Available at: http://mba.tuck.dartmouth.edu/pages/faculty/robert.shumsky/Yield_management_note.PDF [Accessed 29 July 2010]

Selmi, N., (2008) Yield Management: Impacts on Hotels and Customers [Online] Available at: http://turpade.org/docs/articulos/2008_OCT_Yield_Management.pdf [Accessed 29 July 2010].

Role of Strategic Management to the Management Practices of Hospitality Managers

Introduction

Tourism and hospitality has indeed become a very large industry over the years as several companies around the world take advantage of the festering curiosity concerning the social life and the environment of other areas and the desire to experience it fully. Globalisation has also contributed widely to the opportunity for several casual travellers to experience a lifestyle so removed from their own. While tourism is primarily set for the enjoyment and service of the visitors to the area, there are also several other uses for tourism itself: to promote peace and ethnic coexistence of groups (Moli, 2003), indulgence on first-hand experience concerning a different ethnic group (Leader-Elliott, 2002), and for the sheer enjoyment of being removed from one’s usual habitat (Chang, Huang & Savage, 2004), among others. Indeed, the popularity of tourism has encouraged thousands of corporations to take part in such interest, such as the hospitality industry hotels and inns, travelling corporations such as buses and trains, not to mention travel agencies themselves partnered with governments and departments to ensure the enjoyment of the tourists. It is not a very big surprise that many people are opting to take a vacation in other areas in an effort to satisfy their curiosity as well as fulfil their chance to relax and be able to enjoy the offers of other countries.

Basically, the tourism industry is one of the important sub-groups present in the society, and this organisation function differently, in relation to business, health, political, economic, and societal conditions. Actually, all organisations not only the tourism industry have several missions, tasks, responsibilities, market, and services provided in society, and the difference in their tasks and responsibilities makes them a unique sub-group. Organisations are comprised of teams with various functions, which contribute to the productivity of their organisation. With this, it is important for teams to work efficiently and effectively, to enhance and improve the whole organisation. The saying, “the sum of its parts is greater than the whole” applies to every organisation, for if one part or team of the whole organisation collapses, then the rest of the organisation is affected. That is why it is important to assess the teamwork and organisational structure of a company or business organisation.

In this regard, the core objective in every hospitality organisation is the achievement of competitive advantage or the edge that the business firm has over its competitors in the industry. To achieve competitive advantage, the hospitality business should identify relevant strategies and incorporate these into its strategic plan to direct its operations towards the creation of value for customers and for the organisation. However, before an organisation can start to implement its strategic plan and manage its progress, it is imperative that the organisation is able to differentiate strategy from strategic plan in order to distinguish their respective roles in its capability optimisation and resource maximisation targets.

The success of most hospitality businesses and tourism companies and organisations today acknowledges the contribution of managers. Actually, managers are supposed to intermingle with the employees and staff members. In this case, the manager should carefully explain to his/her employees that success is not only for struggling people but also to high-achieving employees to enhance their capacities. Careful explanation should be done in a way that a manager will not be degraded or questioning the capabilities of the employees. As a manager, he / she may direct the employees to develop quality programs that enhance capabilities but it is also very vital for the manager to give good suggestions in this problem.

Strategic management goes beyond encouraging and guiding other people to seek solutions to problems. Managers must be able to contribute to the substantive thinking necessary to move a business beyond problems and into opportunities. There are many aspects of substantive thinking. The imagination draws on acuities about people's needs and how to satisfy them with a product or service. This imagination is probably the most important in successful strategic management because it is hardly possible to be right about many aspects of a business if the marketing side is wrong. Many managers who have strategic management imagination still lack a sense of products and markets. If, in addition, their strategic management imagination leads them to the point where they fail to acknowledge realities, they sooner or later cause trouble. They mistake the possibility of synthesising a deal for the economic soundness in back of the deal.

Discussions

The Need for Strategic Management

Tourism businesses undergo strategic management process to arrive at certain strategic actions that they use to obtain their desired results. These businesses are able to match the conditions of the ever-changing market with their continually evolving (often scarce) corporate structure and strategy. The vitality of strategic management is that it carefully integrates strategy formulation and strategic implementation resulting to strategic actions that targets strategic outcomes.

Strategic management process is intended to arrive at well-developed approach to help the hospitality business handle the challenges of the modern marketplace wherein globalisation connects the external environment of different countries, existence of hyper-competition and evolution of more sophisticated customers. In the planning stage, strategic inputs should be well-gathered to serve as a good foundation for strategic actions. In the implementation stage, strategists should provide the platform for organisational members and external stakeholders for feedback for improvement or adjustments required to the implemented strategy. Since strategists are commonly positioned in the top-level hierarchy of a hospitality business, open communication can be used to gather necessary feedback (when it comes to employees) while research can be applied to analyse the external stakeholders (Hitt et al 2003).

The Comparison of Managers

Managers without knowledge of strategic management have more individualistic tendencies than their counterparts building a manager’s state towards conformity with his work with less emotional attachment to the company. In contrast, hospitality managers that implement strategic management are more risk averse to uncertainty than their equivalents which is compatible to their relative formal lifestyle as high uncertainty avoidance put great emphasis to tried-and-tested methods. Further, it is found that managers that implement strategic management are more likely to be concerned on automatic respect for authority and hierarchy than managers without knowledge of strategic management. As a result, the former would tend to act according to expectations while the other exhibits inherent regard to seniority and/ or being a male from young members which are considered learners. However, this authority has consequent responsibility to guide the learners and giving license to the latter for more mistakes (Jackson & Tomioka, 2003).

In addition, managers that implement strategic management take a long-term time orientation whereas managers without knowledge of strategic management settle for interim phases which were invigorated by the trust put by the former to their nearest factor to control, human resources, which has known commitment and flexibility. This then would offset the uncertainty factor illustrated earlier. Next, managers that implement strategic management have high-context communication than managers without knowledge of strategic management which means that implicit information and silence are more tolerable. In high-context environments, the information is already in the person. As a result, social cohesion is observed among managers that implement strategic management in corporate linkages as the high-context communication requires face-to-face interaction to better know the personality of the communicators. On other hand, managers without knowledge of strategic management are irritated in the lack of clear information due to their reliance to individualistic capabilities. In effect, communication difference alone suggests a number of implications to the varying approach between these managers (Jackson & Tomioka, 2003).

In strategic management, tourism organisations emphasise three critical issues; namely, internal labour market, concern to employee needs, and cooperation and teamwork under unique hospitality business environment. In effect, these issues are translated into extensive training, participative decision-making, adaptive organisation, competitive appraisal system and continuous consultation. In this arrangement, the hospitality business seeks to employ and retain applicants that can accept and blend in the values and culture of the organisation. Fairness is also a vital factor since white- and blue-collar employees has relatively small disparity in terms of benefits (Pucik & Hatvany, 1983).

Essential Strategic Management Qualities of Hospitality Managers

Planning. Planning is commonly known as the process of formulating in advance as organised behaviour action. While it is true that people do not always plan their actions, it is inherent for any tourism organisation especially the managers to plan. However, whether dealing with the context by which planning is occurring or whether on the individual or organisational level, the process takes shape according to the prevailing attitudes, beliefs and goals that are involved. The hospitality business's objectives should reflect standards of success in competitive performance, as well as acceptable levels of risk and rates of long-term growth (Roney, 2004). The manager’s role in planning for the management function is to define goals for future performance of the tourism organisation. He/she also decides on the task and the resources to be utilised in achieving the predetermined goals. In meeting such goals, he/she applies significant materials or resources related to strategic management.

It is a fact that lack of formal planning (Baird et al., 1993) or poor planning process alone can decrease organisational as well as individual performance or the worst, defunct the tourism organisation. The role of the manager is to ensure the best people, materials, procedures, and applications in implementing plans while the role of the executive assistant is to aid the manager in dealing with such matters. The presence of strategic planning in management minimises the potential pitfalls of the said process such as uncertainty (Matthews & Scott, 1995; Roney, 2004). The success of several organisational endeavours that is engage in hospitality businesses lies on the effectiveness of every individual to plan, evaluate and materialise arrangement in connection to the achievement of the tourism organisation’s goal.

Organising. Thematically, organising is the act of putting similar elements following one or more rules (Morgenstern, 1998). In an organisational perspective, it is the management function that usually follows after the planning process. Generally, the organising duty of the manager includes the specification and distribution of tasks to appropriate departments. It also involves the assignment of authority and allocation of resources. The said ways are the immediate responsibilities of the manager together with the executive assistant.

Process and decision models are useful to the manager in organising the work and intellectual contributions to be drawn from all levels of the management tourism organisation (Roney, 2004). Some models that could be used in situations like the aforementioned one are Plan-Do-Check-Act Cycle and Value Analysis. Organising is crucial in developing inputs to planning, making planning decisions, and implementing strategy. To be effective, however, comprehensive management function in the business must be a continuous process. However, the organisation process that is conducted within the company is dependent on the plans that must be implemented.

In connection to the diagrams and model applicable in this encounter, the plan-do-check-act cycle will help the manager to observe, learn, apply, and develop the characteristics that will help him / her achieve given goals. Further, value analysis helps the manager to study the operations and the real flow of the process of executive assisting.

Directing/Leading. The role of the manager in directing/leading a management function is reliant to the development and implementation of designs or plans made. It is important that he/she must consider cost effective and time efficient ways in leading. His/her day-to-day responsibility of running the daily business and leading the group in developing the plans for the long term future of the tourism organisation is accounted to his/her leadership abilities and managerial prowess. Furthermore, the manager is encouraged to adapt participative approaches to directing/leading in order to elicit useful characteristics and elements that are functional for the hospitality business’s success. The leadership styles the executive assistant chooses to utilise is also a vital determinant of effective directing process. Thus, it is still fundamental to study the feasible applications to be implemented in accordance to the achievement of tourism organisation’s prime motives. Chemers, MM 1997, identified four main behaviours that managers should adopt in terms of leadership:

• Concern for task. Here leaders emphasise the achievement of concrete objectives. They look for high levels of productivity, and ways to organise people and activities in order to meet those objectives.
• Concern for people. With this behavioural characteristic, leaders tend to look upon their followers as people - their needs, interests, problems, and focus on the personal development of their followers. Followers are not simply seen as units of production or means to an end.

• Directive leadership. This behaviour is characterised by leaders taking decisions for others - and expecting followers or subordinates to follow instructions.
• Participative leadership. This is a behavioural characteristic where leaders try to share decision-making with others both followers and peers.

Most of the early proponents of the behavioural model focused on participative and people-centred leadership, making the case that leaders who concentrated on these behavioural aspects in their leadership would bring about greater satisfaction amongst followers.

Coordinating. Coordination is the regulation of all the various aspects of the tourism organisation into integrated and harmonious operations. It is the integrating and establishing of linkages to diverse sections of the tourism organisation in order to accomplish a communal set of objectives. For instance, in coordinating information to all members of the tourism organisation, the manager’s role is to see to it that there is unity on all aspects given by his/her superior. Managing information that the company uses in its daily operations is crucial in any business tourism organisation especially to the manager. Information is the blood stream of every company on which every staff, employee, and manager work on in order to meet the demands of the clients and customers of the business. This is the reason why there should be proper management flow within the organisation’s manager and the rest of the manpower. Direct link between the managers, supervisors, and the subordinate employees should be efficient enough to answer to the daily work loads of the members of the tourism organisation. Communication between and among the members of the tourism organisation is prioritised in order to provide a well-functioning business operation within and outside the working tourism organisation. However, there are some significant elements that are barriers to coordination. Among these are intervening factors such as personal indifferences, cultural pluralism, and behavioural diversity among members of the group (Trebing, 1996).

Controlling. Acting as a manager, it is his/her sole responsibility to implement plans but at the same time limiting the possible negative consequences in favour of the higher authority. It has been demonstrated that the emphasis in successful management lies on the man/woman, not on the work; that efficiency is best secured by placing the emphasis on the man/woman, and modifying the equipment, materials and methods to make the most of the man/woman. It has, further, been recognised that the man's mind is a controlling factor in his/her efficiency, and has; by teaching, enabled the man/woman to make the most of his/her powers (Gilbreth, 1914).

CONCLUSION

One of the keys for a successful organisation is a good manager. Can you imagine a tourism organisation, an airline company, a hotel organisation, a tourism business succeeds without good governance? According to Kousez and Posner (2002), credibility is the foundation of a good manager. A manager should be credible for him to lead. In addition to this characteristic, a manager should possess honesty, competence, aspiration, and a forward-looking approach. Come to think of this, would you believe in managers who do not practice what they preach, do not walk the talk, do not do what they say they will do, and do not keep their promises? The statistics show that majority do not.

Strategic management is the secret to success in life; it is not just some individual’s business but it is everyone’s business. Strategic management is also about building personal relationships. It is unquestionable to say that to have strategic management skills is a challenge and most people are having hard time achieving this. In the business point of view, strategic management proves to be quite beneficial. Strategic management aids in effectively meeting job-related demands, in creating higher-performing teams, in fostering renewed loyalty and commitment, in increasing motivational level and in reducing absenteeism and turnover of employees.

Unfortunately, this so-called effective strategic management is not that easy to attain; effective strategic management is not as easy as writing down notes. Strategic management entails a lot of hard work, dedication, and many other factors. However, strategic management should not be a burden to us; we should embrace it as a challenge.

The above scenario will be evident in the nature of the job of a manager. Similarly, the above solutions are generally applicable in every situation that caters to the management function and even ordinary tasks in the corporate environment. The models utilised are still vital to learn and develop more skills that will eventually result to better and excellent performance in the competitive workplace surrounding the manager.

The traditional values in strategic management culture are individual recognition for effort and collective recognition for a job well done, advancement/ promotion bias on males and seniors, harmony in relations with line-managers and immediate supervisors, cooperation within groups, and employment security. However, there are emerging challenges and issues against this traditional view. In a recent case study, promising strategic manager’s features are generally described as to likely resort to additional earnings for those who become dissatisfied to the current regimes and to finance quality of life (with family) that is willing to forgo employment opportunities. Thus, security of employment is faced with an alternative in employment areas that have greater challenges and achievement for individual recognition and satisfaction for a job well done. With strategic managers realising the need of self-esteem and personal achievement, risk-averse tendencies and reliance to job security and automatic promotion are becoming lesser significant (Jackson & Tomioka, 2003).

References:

Baird, I.S., Kuratko, D.F., Lules, M.A. & Orris, B.B. 1993. Formalised Planning in Small Business: Increasing Strategic Choices. Journal of Small Business Management, 31 (2), 38+.

Chang, T. C., Huang, S. & Savage, V. R. 2004. “The Singapore River Thematic Zone: Sustainable Tourism in an Urban Context.” The Geographical Journal, 170 (3), 212.

Chemers, M. M. 1997. An Integrative Theory of Leadership. London: Lawrence Erlbaum Associates.

Gilbreth, L. 1914. The Psychology of Management. New York: Sturgis & Walton. In Witzel, M. (2003). Fifty Key Figures in Management. Routledge: New York.

Hitt, M, Hoskisson, R & Ireland 2003, Strategic Management: Competitiveness and Globalisation, 5^th Edition, South Western; Thomson Learning, Singapore.

Jackson, K. & Tomioka, M. 2003. The Changing Face of Japanese Management. New York: Routledge.

Kouzes, J.M. and Posner B.S. 1987, The Leader Challenge, Second Edition. San Francisco, California: Jossey Bass Wiley.

Leader-Elliott, L. 2002. “Indigenous Cultural Tourism as Part of the Birdsville/Strzelecki Experience.” Australian Aboriginal Studies, (2), 35.

Matthews, C.H. & Scott, S.G. 1995. Uncertainty and Planning in Small and Entrepreneurial Firms: An Empirical Assessment. Journal of Small Business Management, 33(4), 34+.

Moli, G. P. 2003. “Promotion of Peace and Sustainability by Community Based Heritage Eco-Cultural Tourism in India.” International Journal of Humanities and Peace, 19 (1), 40.

Pucik, V. & Hatvany N. 1983. Management practices in Japan and their impact on business strategy. In Lamb (Ed).

Roney, C.W. 2004. Strategic Management Methodology: Generally Accepted Principles for Practitioners. Westport, CT: Praeger.

Trebing, H.M. 1996. Achieving Coordination in Public Utility Industries: A Critique of Troublesome Options. Journal of Economic Issues, 30 (2), 561+.

International Hospitality Management

Also known as the value of receiving people wholeheartedly and treating them importantly, hospitality has been recognized as a desirable attitude in dealing with others, be it within the community or among neighbouring countries. At present, the practice of being hospitable is not only applicable in entertaining others. In most businesses and corporations, particularly in tourism, hospitality management has been a valuable means of maximizing the return on investment. Such trend is perhaps attributable to the common conception that the value of attracting potential clients is equal in keeping existing ones.

While some major businesses have not yet familiarize themselves or applied hospitality management, various industries, other than those related to tourism, have already made use of hospitality as a means of motivating and retaining clients or employees meaningfully. One of the main reasons is the marked difference of providing hospitable services rather than merely distributing manufactured products. The specific points of difference as well as how these have been beneficial to various industries will be the core topic of this essay.

Hospitality Industry

Hospitality industry is among the fastest growing economic sectors worldwide. In fact, the hospitality industry by itself is recognized as multi-billion dollar and still progressing industry (Flora, 1998). While this industry enables the provision of vast services for the clients, work opportunities are also diverse. Indeed, the provisions of the industry for the customers are as unlimited as its opportunities for employees. People are able to work is different areas of interest while still be in a job within the industry. At present, more workers are employed in service provision than in manufacturing, indicating the continuous growth of the hospitality industry. In fact, about eight out of ten workers in the United States are in various sectors of the service industry including education, entertainment, retail, transportation and health care. In the United States, seventy percent of the country’s gross national product is covered by service industries. By 2012, it is expected that this percentage will increase to ninety percent (Microsoft Encarta Online, 2004). Likewise, hospitality industry is among the major economic forces in the UK as its enables growth and creation of job opportunities. According to the British Hospitality Association (2002), the business has employed over 1.8 million workers who were distributed within 300,000 hospitality establishments, totalling to revenue generation of more than £64 billion. From these records, hospitality has indeed become one of the most competitive businesses in the world.

Historically speaking, the hospitality business is considered as one of the oldest industries there is. This is because, long before the use of the term hospitality management, people are already travelling for leisure or work purposes; they are already going out to eat or shop. However, as the world continues to change, the hospitality industry had started to grow and become more diversified. Considering the accessibility and improvement hospitality services had undergone, the industry indeed has opened itself to newer business areas and innovations (Flora, 1998).

In general, hospitality management is a process that involved planning, organizing directing and regulating human and material resources. These activities are performed within the restaurant, travel and tourism, lodging, recreational management, institutional management as well as in meeting and convention planning businesses. Though separated, these sectors are actually related to hospitality industry as they all aim to provide generous and kind services to the customers (Flora, 1998). The hospitality industry basically involves hotels and other forms of accommodations, fast food outlets, bars, retail stores, restaurants. These diverse segments of the hospitality industry made the business grow and eventually into a highly competitive global business (Rowley et al, 2003, p. 9)

Several business and industries have adopted the trend of hospitality management primarily because corporate entertaining and hospitality is capable of effectively establishing networking opportunities. This trend also enables businesses to create and strengthen business relationships. While, these advantages are valuable and essential to businesses, an owner may find himself in the midst of disaster as corporate hospitality is capable of causing major damages as well, particularly on corporate reputation.

Hospitality management has been a highly significant priority as it involves all the elements needed in a company’s marketing mix. It also offers an essential component that corporate marketers are after, and that is to attain the opportunity to get quality time with their clients and prospects. A good corporate hospitality program is beneficial as it strengthens the relationship shared between the sponsor and its chief constituencies. Hospitality management enables companies to spend time with them away from the stress and pressure of the business, creating an environment that is conducive for business transaction (Rocky Mountain News, 2004).

The importance of practicing hospitality in businesses has been increasing due to the equally increasing cost of customer acquisition. More specifically, the cost of acquiring new client cost about four to five times as much as it does to keep acquired clients. Within the business, face to face or personal hospitality and entertainment has played an essential role in developing and acquiring client and employee relationships.

Products vs. Services

Hospitality as a marketing service stands out due to its difference from both manufactured products and services. Products are basically the items that industries create, design, produce and distribute to the consumers. These products may be based from current trends or from more objective marketing researches. In product development, several factors are to be considered. These include the nature, content, material, processes, packaging and distribution means that will be used for its efficient marketing. Products come in various forms like food, drink, appliance and accommodation. Thus, products are generally regarded as tangible items. In the past, the marketing efforts of most companies are concentrated mainly on the selling of these manufactured items (Microsoft Encarta Online, 2004).

However, at present, businesses and industries have learned to prioritize various economic goods other than those produced by the manufacturing sector. This is also known as services. Unlike products, services are generally intangible. Service involves performance, action, or effort that a customer cannot obtain physically. While both products and services are different in terms of tangibility aspects, these business terms also have similarities. For instance, both require effective marketing.

The only difference between the application of marketing to both products and service is that in service marketing, physical handling is not involved. Services must also be planned and created with care so as to meet consumers’ needs and demands. The degree of marketing needs for products and services can be stressed through an example. Within temporary personnel field for instance, studies are conducted in order to identify the types of skills employees must have or possess. This is because appropriate skills must fit in to various fields and geographical locations of the business. This makes services difficult to sell in comparison to manufactured products. Thus, promotional campaigns to sell services should be more aggressive than when promoting physical goods (Microsoft Encarta Online, 2004).

Hospitality industry on the other hand, is a combination of both product and service provision. Knowing the difference between both business terminologies, the hospitality industry can then be defined as a spectrum of both tangible and intangible goods. The hospitality industry is considered a spectrum as it does not cater to product or service alone; rather it is a combination of both. This is one of the major differences of hospitality management from manufactured products and services. While most of the characteristics of service industries are incorporated in hospitality management, the addition of the production element further makes this industry a bit more complex.

Specific Points of Difference

Hospitality management is entirely different from products and services alone as it is a combination of both. In addition, there are several other factors that make hospitality management difference from manufacturing or service industries.

· Pricing

The hospitality industry calls for the need to provide a suitable environment in order to deliver hospitable services efficiently. Hence, this means that most hospitality industries must allocate considerable investments in plant and premises. This in turn creates a low variable cost and high fixed cost structure. Taking the hotel in the luxury market as an example, the variable costs for providing room services is minimal, whereas the hotel itself has a high fixed cost. Generally, hospitality businesses have a quite high financial break-even point. Exceeding this break-even level will naturally result to high revenue. Lower volumes on the other hand will result to considerable business losses. This type of cost structure hospitality businesses apply has implications for pricing decisions. In addition to the cost structure, pricing in hospitality management is also challenging as demands tend to fluctuate over time. This is in terms of the type of customer as well as the departmental functions. Hence, aside from bringing difficulties in pricing, this tendency makes forecasting difficult as well, making the business’ subsequent staff and stock scheduling a challenge.

· Balance in Supply and Demand

In order to obtain a satisfactory balance between the supply and demand patterns within the industry, hospitality managers must practice operational capacity and resource scheduling. These tasks are generally difficult to accomplish. This is because the management of customer demands in relation to maximum volume of optimal value is a challenging task. When customers are too few, the cost structure of the business operation will definitely suffer. Alternatively, the inability to supply the required resources and skills to serve numerous customers will only leave to quality deterioration and dissatisfied customers. In balancing the supply of resources, scheduling becomes an important strategy. The absence of this valuable technique will only bring disadvantages to the operation. For instance, if too many personnel are placed on duty to attend to an expected demand, profitability will be affected. If demands are not met due to the inadequate number of staff, morale of the employees will decrease. Thus, forecasting in the hospitality industry is an important tool for success. While product and service industries are also encountering similar problems, hospitality industry would have to encounter all sorts of problems experienced by both business sectors, making the achievement of balance a difficult accomplishment.

· Intensive Skills and Education

In addition to pricing difficulties, hospitality management is different from manufactured products as it requires intensive preparation in terms of enhancing competency in delivering hospitality services. While efficient marketers and products developers must undergo intensive studies and training to produce a good product, hospitality management must possess competency for the provision of both products and services. Thus, the degree of effort and preparation needed is slightly different.

The significance of education in hospitality management has long been recognized worldwide. Through proper hospitality management education and formal education, skilled human resources are generated. In most countries, various systems and programs are being applied and integrated so as to enhance hospitality management education. Preparing competent human resources for hospitality management is necessary and is considered a responsibility of the education systems of each country (Christou, 1999).

In order to achieve the goal of generating competent and skilled human resource, the role of formal education must be stressed as significant. Hence, the value of hospitality management education in most countries is of crucial significance so as to create proper human resources (Christou, 1999). The pressure of this need adds to the fact that the satisfaction of customers from hospitality services is reliant on the skills of the human resource (Baum, 1995). Mariger and Miller (1999) noted that within the contemporary global business environment, sufficient and proper education is among the major requirement in the tourism business. Furthermore, Partlow and Gregorie (1994) argued that the complexity involved in the tourism business brought about by the consistent tourism management needs, industry executive must constantly develop and enhance their knowledge skills. The success of the hospitality industry is then hugely dependent on the development of skills with value-adding factors among its human resource (Baum, 1995).

One of the important skills workers of the hospitality industry must possess is the human relation skill. This principle has been supported by several authors. According to Doyle (1992), in selecting competent workers for hospitality services, recruiters mainly look for interpersonal competency, teamwork and elective communication. In a report done by Williams and Hunter (1991), the need for additional professional development in terms of human resource skills among the supervisory personnel has been described. One study revealed that students often feel less competent when it comes to human relation skills, particularly on guest interaction and employee management (Knutson and Patton, 1992).

Within the food and beverage industry, study showed that the hospitality educators, students and practitioners claimed that managerial and human relations skills are considered vital for students taking up hospitality management programs (Okeiyi, Finley and Postel, 1994). Baum and Nickson (1998) stated that student of hospitality management needs an actual and in-depth comprehension, both theoretical and conceptual, of the hospitality industry and the various human relation issues involved in it. This should be taken into account before students are given the prescriptive and operational models of how to operate the business itself (p. 79). In other words, learning hospitality management should start from the basic down to the specific areas. Furthermore, the authors suggested that the hospitality management curriculum must have a stronger educational basis for the students’ learning experience (Baum and Nickson, 1998, p. 79). More specifically, the learning experience of the hospitality management students must be founded on six content areas. These include service marketing, human resource management, interpersonal skills, total quality management, financial analysis and leadership (Umbreit, 1993).

· Employee Action

As mentioned in the discussion on intensive skill and education requirement, the success of the hospitality industry is dependent on the customer satisfaction. This is determined through the interaction between the customer and the employees. Aside from providing customer satisfaction, the good relations between the service provider and the customer give the operation the opportunity to sell its services, resulting to additional revenue generation. In order to effectively deliver the products and services of the business, the majority of the effort must come from the service providers. Hospitality management requires the coordinated efforts of various teams of staff, including the operational and support personnel. Attending the needs of an individual customer is difficult enough. Responding to numerous customers is a different challenge altogether. With different requirements and needs, multiple customers results to multiple complexities as well. Hence, team effort among employees of the hospitality industry is vital to success.

How exactly employee actions can help achieve customer satisfaction can be illustrated through an actual business example. Take for instance, Wal-Mart, a retail giant. Certain protocols such as the “Satisfaction Guaranteed” policy are one way how Wal-Mart delivers great services. This policy means that every associate will do everything that they can possibly can to satisfy the needs of the customers. Moreover, products that need to be repaired, exchanged or refunded are entertained by the store with a smile and a thank you (Newsome, 2000). This policy gives importance to Wal-Mart clients that make them come back again and again. This particular behaviour is naturally derived from the common observation where people that are given respect and importance are more appreciative, cooperative and loyal.

Walton, as Wal-Mart’s founder, was able to integrate valuable work practices among the company’s employees, which later became part of what the business has became known for. Eventually, these policies and practices were followed and applied by other stores as well. One example of this notable work practices is called the “people greeter” where a Wal-Mart associate welcomes its shoppers as they come in the store. Aside from providing personal service, the presence of these greeters helps reduce store pilferage. Walton encouraged store associates to practice the so-called 10-Foot Attitude where customers 10 feet away from them must be looked in the eye, greeted and offered assistance. Customers who need help in looking for a certain item will be guided to where the item can be seen. This is contrary to the common practice where store employees would just point to where these needed items are. When the associate knows the client’s names, they use them when speaking to them. In addition, Wal-Mart associates thank the shoppers as they leave the store (Newsome, 2000). The success Wal-Mart is currently enjoying is a major proof that the integration of hospitality in business can make a huge difference.

· Customer Satisfaction

One of the most important elements for the hospitality industry is the presence of the customers. Without the clients, efficient services of the business cannot be delivered. Moreover, the hospitality industry needs the response of the customers as this will determine the demand pattern of the business. The customer then serves as the final judge of satisfaction in relation to the quality of the products and services provided. This pattern shifts the focus on total quality management and quality assurance.

In order to achieve customer satisfaction, the business should consider individual customer demands and needs. As every customer need is different from another, customization is very important. In applying customization, two factors must be taken into account. First, one must consider whether customization is possible based on the services’ characteristics and delivery systems. Second, one must identify the amount of judgement that can be exercised by the customer contact personnel in defining the nature of service individual customers receive. This is necessary as some service concepts are standardized while others are able to provide various alternatives and options (Spillane, 2001).

Some class of services do not only require a high level of customization but also needs customer contact personnel to deliver the services to the customers. This type of service provision is also known as prescriptive, where the focus of control is transferred from the user to the provider. Professional services of the hospitality industry as well as accounting, medicine, law and architecture are included in this category. These knowledge industries need to have sufficient education and training so as to satisfy individual customer needs. This is one of the reasons why literature on service industry pertains to the interaction between the service provider and the customer as this relation determines the degree of customer satisfaction. This in particular is applicable to the hospitality industry (Spillane, 2001).

According to Mainardi (1980), hospitality professionals are dependent on the contact and the reception they receive from the customers. Hence, hospitality personnel must have a certain degree of availability towards the customers, a substantial margin of initiative and a strong sense personal responsibility. In a tourist interaction, employees in fact serve as a mediator between the clientele and the structure of the industry. This role is very much significant in obtaining the desired results of both the customers and the business. In satisfying the wishes of the customers, the ethical and psychological factors must also be involved among hospitality professionals. There is considerable evidence that clients appreciate actual interaction with people; thus, the treatment clients should receive from service providers must be different from what they receive on daily routines.

Indeed, customer satisfaction is an important element of the hospital industry that makes it different from manufactured products. However, while interpersonal skills are learned from, hospitality and customer service programs, the effectiveness and the quality of service provided should go beyond eye contact and warm greetings (Taylor, 2000). The generation of customer satisfaction should then be produced out of effort and good rapport. Most people equate customer service with personal interaction, while few of them realize the complexity of business systems involve in it. Without these helpful systems, the smile or the warm greeting service employees provide will lead to minimal results.

Conclusion

Hospitality in business is an important aspect as this enables the establishment of interconnectedness between clients and the operation. Due to the integration of various hospitality efforts, businesses are able to generate additional value and promote customer satisfaction and loyalty. Hospitality management is indeed a growing industry as evidenced by its huge market segments and workforce coverage.

The hospitality industry is a different marketing service from manufactured products primarily because this type of business was able to integrate the provision of both products and services. The efficacy of the industry may be beneficial in pleasing and servicing various customers, However as this business caters to both products and services, mismanagement may cause numerous difficulties. Moreover, the skills needed for providing products and services must be incorporated so as to meet the needs and demands of the customers. Intensive education and training, planning, organising and directing and balancing are among the most important elements for the success of the industry.

Without the customers, the hospitality industry will not work. In this kind of business the role of the customers is valuable as they serve as the source of revenue for the continuous operation of the business. Furthermore, as the customers are directly involved in service delivery, they are responsible for providing the judgment on the quality of service they receive. This judgment is essential in assessing the capability of the business as quality service providers. In conclusion, the hospitality industry is different from manufactured products as it involves not only the mere act of providing and distributing physical item. It also involves the use of interpersonal skills that enhances customer value and experience.

References:

"Marketing". (2004). Microsoft Encarta Online Encyclopedia. Available at: http://encarta.msn.com Accessed: January 11, 2005.

Baum, T. & Nickson, D. (1998). Teaching human resource management in hospitality and tourism: a critique. International Journal of Contemporary Hospitality Management, 10(2), 75-79.

Baum, T. (1995). Managing Human Resources in the European Hospitality Industry: A strategic Approach. London: Chapman and Hall.

British Hospitality Association. (2002). British Hospitality Association’s Chief Executive Industry Review—2002. Available at: www.bha-online.org.UK Accessed: January 14, 2005.

Christou, E. (1999). Hospitality management education in Greece: an exploratory study. Tourism Management, 20(6), 683-692.

Doyle, K. (1992). Mastering motivation. Incentive, 166(3), 20-23.

Flora, G. (1998). The hospitality industry. The Black Collegian.

Knutson, B.J. & Patton, M.E. (1992). How prepared am I to succeed in the hospitality industry? What the students are telling us. Hospitality and Tourism Educator, 4(3), 38-43.

Mainardi, A. (1980). The Tourism Operative as Witness to the Gospel. People on the Move, 29, 47-61.

Mariger, H. & Miller, J. (1999). Distance education evaluation: the next step. Proceedings of the 4thannual graduate education and graduate students’ research conference in hospitality and tourism, USA, 4, 428-437.

Newsome, D. (2000). Think Small One Customer at a Time, One Associate at a Time. Business Perspectives, 12(4), 20.

Okeiyi, E., Finley, D. & Postel, R. T. (1994). Food and beverage management competencies: Educator, industry and student perspectives. Hospitality and Tourism Educator, 6(4), 37-40.

Partlow, C. & Gregorie, M. (1994). Is graduate hospitality and tourism education relevant? Ask the graduates. Hospitality and Tourism Educator, 6(3), 13-16.

Rocky Mountain News. (2004). Hospitality latest Trend in Sports. Business, (October 2).

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.

Umbreit, W. T. (1993). Essential skills: what the graduates need to succeed. Hosteur, 3(1), 10-12.

Williams, P. W. & Hunter, M. (1991) Recruitment and retention insights for the hotel industry. Hospitality Review, 9(1), 51-58.