Tourism Management Productivity
The purpose of this chapter is to present some theories existing in literature concerning productivity related to tourism. In this section there are going to be five issues that will need further analysis. These issues are the following:
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Tourism management and productivity, in which there is going to be presented the relation between productivity and effectiveness in tourism management.
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Productivity defined by Prokopenko, in which there will be a definition of productivity and how it becomes effective.
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Productivity defined by Dobni, in which there are going to be presented some concepts that explain the difficulty of operationalising productivity.
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Productivity defined by Lee-Ross and Ingold, in which productivity will be presented as far as hotel owners are concerned.
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Other definitions, in which there will be stated briefly the theories of Gronroos and Ojasalo, Karl Marx and McLaughlin and Coffey.
At the end of the chapter there is going to be a short summary concerning the issues discussed.
Before starting the presentation of the relation between productivity and tourism management it seems that there should be an explanation of what productivity management is about. Thus, productivity management is the process that aims in the improvement of the productivity of the business not only as far as business is concerned but also as far as the employee himself is concerned. In short, it is the reassurance that employees are doing the right things whenever they should be done. Companies can increase productivity in a variety of ways. The most obvious methods involve automation and computerization which minimize the tasks that must be performed by employees. Recently, less obvious techniques are being employed that involve ergonomic design and worker comfort. A comfortable employee, the theory maintains, can produce more than a counterpart who struggles through the day.
In economics productivity is the amount of output created (in terms of goods produced or services rendered) per unit input used. For instance, labour productivity is typically measured as output per worker or output per labour-hour. With respect to land, the "yield" is equivalent to "land productivity". In fact, some studies claim that measures such as raising workplace temperature can have an enormous effect on office productivity. Increases in productivity can also influence society more broadly, by improving living standards, and creating income. They are central to the process generating economic growth and capital accumulation. As it has also been suggested increasing production reduces prices, and therefore goods become more widely available.
Although the definition of productivity appears straightforward, productivity can be difficult to deal with for three reasons:
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First, the outputs are usually expressed in different forms to the inputs.
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Second, the ratio by itself tells us little about performance.
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Third, many different ratios can be used
In operations we tend to understand reasonably well the relationships between operational inputs and outputs but understand less well the relationships between time, effort and cost expended by a customer and their impact on the customers experience, outcome and perceived value, i.e. customer productivity and customer satisfaction. Indeed it is possible that by carefully applying small increases of customer inputs by small amounts (time, effort and maybe even the price paid by a customer) that both operational and customer productivity and even customer satisfaction can be increased. In essence in service operations the customer can be used a key lever to increase their own productivity and that of the operation at the same time as increasing their satisfaction. Customers may be willing to expend some time and effort themselves to achieve better service which in turn improves the operational productivity.
Tourism is different from most other industries in that free resources are a vital part of the product. Whilst tourist attractions and facilities are increasingly more competitive, many are also experiencing increasing visitor pressures. A growing response to both on the part of their operators is to pay more attention to the quality of the tourist experience and to seek approaches and techniques to enhance formerly neglected aspects of the tourist product. To affront this situation there should be high levels of productivity in tourism business.
Moreover, Butler (1980, p.5-12) demonstrated that tourist areas not only change over time but change for the worse. This is shown mainly by the passing through life stages of tourist businesses that progress from birth to death following the stages below:
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Involement
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Exploration
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Development
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Consolidation
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Stagnation
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Decline or Rejuvenation
Therefore, in order to increase productivity there should be a distinction between these stages so as to follow the right strategy according to conditions. What has to be taken under serious consideration according to Butler (1980, p.5-12) is that tourist attractions are not infinite and timeless but should be viewed and treated as finite and possibly non-renewable resources. They could then be more carefully protected and preserved. The development of the tourist area could be kept within predetermined capacity limits, and its potential competitiveness maintained over a longer period.
All in all, it is obvious that travel and tourism strategy represents a key challenge to managers because of the nature of the products being sold and of the complexities of the environment in which the industry exists. In particular, as Moutinho (2000, p.25-27) suggested strategy is informed by the fact that most travel and tourism products are services rather than goods.
According to Prokopenko (1987 cited Kilic et al. 2005) productivity is a complex concept, which could mean different things to different people and so different or even conflicting definitions and perceptions of productivity exist, even though some people perceive it as a simple equation of inputs and outputs.
There appears to be a degree of confusion over the concept and definition of service productivity. For instance productivity has been approached as an umbrella concept including utilisation, efficiency, effectiveness, quality, predictability and other performance dimensions, as well as a narrower concept reflecting only production efficiency. In order to develop a model of service productivity it is important to provide some clarity and distinction between these terms.
Utilisation is the ratio of actual output of a process or operation to its design capacity. However it is rare for processes or operations to operate at design capacity due to planned losses such as maintenance and planned shut downs, and avoidable losses such as breakdowns. Utilisation is therefore both unplanned and to a degree uncontrollable in services. Efficiency is the ratio of actual output to effective capacity.
Productivity is the ratio of what is produced by an operation of process to what is required to produce it, or put simply the ratio of actual output to input over a period of time. Inputs might include transforming and transformed resources and the outputs are goods and services.
This conventional approach to utilisation, efficiency and productivity derives largely from manufacturing. Services present a number of challenges that require a slightly different approach. First, operations may be underutilised due not solely to planned loss, but also because there is insufficient demand. Second, the customer is personally involved in the process of delivery and hence efficiency derives not solely from the service provider's actions. Third, the characteristics of services, in particular intangibility and heterogeneity, place a high degree of importance on the psychological "outcomes" of the service experience, as much as they do the actual output.
It has been suggested that the relationship between operational productivity and customer productivity (and satisfaction) is not always positively or negatively related. In some circumstances increases in operational productivity can reduce customer productivity and satisfaction and in other circumstances it can increase customer productivity and satisfaction.
In a study conducted by Dobni (2004) it is argued that productivity can be defined as inputs and outputs in the manufacturing sense but also supported that service productivity is a difficult concept to operationalise because of its unique characteristics (Intangibility, Inseparability, Perishability and variability). Before referring to the aspects of productivity according to Dobni there seems to be a necessity to further analyze the above-mentioned characteristics of productivity.
Services cannot normally be seen, touched, smelt, tasted, tried on for size or stored on a shelf prior to purchase. Their intangibility makes them harder to buy but easier to distribute. The fact that tourism is not a physical object but an amalgam of invisible services creates certain problems for organizations operating in this sector. To overcome this intangibility, tour operators sometimes attempt to create some form of tangible offering that potential customers can relate to. With the growth in the home ownership of video-recorders and computers for instance tour operators are now able to record the features of their holidays for home viewing by customers. This takes away some uncertainty existing from the part of the customer. Similarly, travel brochures help to overcome the problem of intangibility.
The production and consumption of services are inseparable. The implication of this is that the consumers have direct experience of the production of the service. This, in turn, has profound implications for the staff in service industries. In the case of a "tourist product" customers are very concerned about the way in which the product is delivered. For example, in a reception desk, the customer will notice if the receptionist is rude or unwelcoming. In the tourist industry everything has to be right first time, all the time and any mistake can prove very costly in terms of lost future custom. Therefore, how service personnel conduct themselves in the customer's presence can determine whether the customer buys from the business again.
Since production and consumption are simultaneous, services are instantly perishable if they have not been sold at the time of production. Unlike manufacturers of goods, service providers cannot just keep on producing services and store them for future sales and striking the correct balance between capacity and sales is extremely difficult. The problems of perishability can be made even more acute by fluctuating demand but fixed supply. Demand can vary during the day, during the week or from season to season of the year. Many resort hotels for instance are only ful a few months of the year. Supply, on the other hand, is much more difficult to alter at least in the short term. For this reason a tour operator enters a contractual obligation -often months in advance of the date of travel- with the providers of accommodation to fill a certain specified number of rooms. The management challenge, therefore, is to make sure that the company is operating at full capacity for as much of the time as possible. To be successful, the company will need carefully designed strategies to stimulate demand, lengthen seasons or to offer appropriate pricing levels to manage and smooth out occupancy levels.
The last characteristic is variability. This term seems to present that tourism services unlike mass-produced manufactured goods are never identical. The human element mostly ensures that services will vary. Tourism products are people oriented and the human factor plays a key role. The enjoyment gained from a holiday cannot be separated from the personalities who go to make up that holiday (airline crew, hotel staff etc.). Human behaviour, however, is highly variable and it is difficult for a company to ensure that its employees display good customer relation skills all of the time. Similarly, the company has no influence over the behaviour of the customer when on holiday. The customer' s behaviour will also contribute to the pleasure gained from the holiday. This means that there is an uncontrollable element inherent in the production of the travel or tourism product which can lead to the holidaymaker being satisfied or disappointed with the holiday. In many cases in travel and tourism, the tourism, the customer is actually attracted by the variability. Tourists would become bored if every tourist destination was identical, and hotel chains try hard to maintain a consistent brand image whilst at the same time trying to differentiate each hotel through varying design features. This variability is understandable, but it makes it very difficult for potential purchasers to evaluate services and for managers to deliver products of a consistent quality.
After having examined the characteristics of the tourist service there should be definitions of certain forms of productivity according to Dobni. The meaning of "service worker productivity" is implied through operational definitions in empirical investigation. In recent service studies it has been measured by tracking the combination of performance, commitment and citizenship-related behaviors exhibited by the service worker (Dobni et al., 2000).
At last as Dobni suggested good relationships at work can also translate into the practice of "citizenship behaviours". These refer to acts of cooperation, altruism and spontaneous, unrewarded help from employees that go beyond the requirements of their job descriptions. In the literature there has been an increasing recognition of the importance of citizenship-related behaviours as a primary ingredient of productivity (Dobni et al., 2000).
In a study by Lee-Ross and Ingold (1994 cited Kilic et al. 2005) it was apparent that hotel owners and managers have a very vague view of what productivity really actually means and how to measure and improve it. According to Lee-Ross and Ingold (1994) productivity is a performance measure that indicates how effectively an organization converts its resources into its desired products or services. It is a relative measure in that it is used to compare the effectiveness of a country, organization, department, workstation, or individual to itself over time for the same operation, or to other countries, organizations, departments, workstations, or individuals. From a systems perspective, productivity indicates how well an organization transforms its inputs into outputs. In manufacturing, productivity is generally stated as a ratio of output to input. Productivity may be expressed as partial measures, multifactor measures, and total measures. However, it remains open to question whether productivity measurement is actually practicable in the hospitality industry according to a study conducted by at least for small- to medium-sized hospitality businesses. So, it is obvious that productivity knowledge and techniques of the hotel managers and owners are relatively low.
Gronroos and Ojasalo (2004 cited Kilic et al. 2005) defined that the input and output model as how effectively the inputs are transformed for the service provider and customers, in there model the they proposed that the internal efficiency, external efficiency and capacity efficiency is the service productivity model. In a related study by McLaughlin and Coffey (1990 cited Dobni 2004) contradicted and stated that productivity is based on the complexity of inputs and outputs and that productivity is viewed of the function of the basic nature of the service being offered.
Productivity is related to the concept of efficiency as demonstrated by Gronroos and Ojasalo (2004 cited Kilic et al.2005). Building productive relations with customers also requires collaboration and teamwork among employees in the organization who provide different inputs to the service offering (Gronroos, 1996). Marketing must ensure that all of them are enlisted in the cause of customer satisfaction and value, whether they have direct contact with external customers or not. While productivity is the amount of output produced relative to the amount of resources (time and money) that go into the production, while efficiency is the value of output relative to the cost of inputs used. Productivity improves when the quantity of output increases relative to the quantity of input. Efficiency improves, when the cost of inputs used is reduced relative the value of output. Building productive relations with customers also requires collaboration and teamwork among employees in the organization who provide different inputs to the service offering (Gronroos, 1996). Marketing must ensure that all of them are enlisted in the cause of customer satisfaction and value, whether they have direct contact with external customers or not.
In Karl Marx's labour theory of value (Gerald A. Cohen, Karl Marx's Theory of History), the concept of capital productivity is rejected as an instance of reification, and replaced with the concepts of the organic composition of capital and the value product of labour. A sharp distinction is drawn by Marx for the productivity of labour in terms of physical outputs produced, and the value or price of those outputs. It is stated that a large value might be created by a small physical output, while a large physical output might create only a small value. In general, Marx rejected the possibility of a concept of productivity that would be completely neutral and unbiased by the interests or norms of different social classes. At best, one could say that objectively, some practices in a society were generally regarded as more or less productive, or as improving productivity - irrespective of whether this was really true. In other words, productivity was always interpreted from some definite point of view.
In a related sense, McLaughlin and Coffey (1990) present a classification scheme that describes available productivity measures for services. It is based primarily on the complexity of inputs and outputs, the degree of customization, and the level of aggregation being studied, and indicates that how productivity is viewed is a function of the basic nature of the service being offered. Depending on where a specific service falls on the classification's dimensions, the appropriate measure of productivity analysis can be selected from a menu that includes quality plus techniques (aspects of quality are integrated into productivity indices), output/input ratios, practice variation studies, stopwatch timestudies, and work sampling.
The theoritical points raised in this chapter show us how difficult it is to define productivity in tourist services not only because of their characteristics (intangible, variable, perishable and inseparable) but also because of the importance of the human factor in this business. Moreover, there has been a description of what techniques can be used to measure productivity and how productivity is seen by several theoritical analysts.
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