The aim of this report is to provide a theoretical framework for international hotel industry that will be used to assess what determines the international success of the hotel company. By analytical reviews of article issues about affiliation choices and strategies choices, managers and people, brand and customers and designing organization structure to illustrate what kind of factors the successful hotel have in international market.
The second part will present the recommendation and measurement of the Rezidor hotel company, considering the theoretical framework and analytical review previously built.
Analytical reviews of Affiliation choices and strategies
This article discusses the issues and questions raised in the factors that influence the choice between franchise agreements and management contracts in the development of international hotel companies. This study attempts to fill the gap which lacks of research in this field by viewing the points of transaction cost economic and agency theory. Through comparing with these two choices, the international hotel may know the differentiations of risks and cost according to the specific circumstances. Other factors such as location risk, political risk and geographic dispersion are interrelating with management contract which is a good point for an international hotel to consider based on decision making on expansion. It is relate to the topic which I want to find the affiliation choice for a successful hotel that can choose in this area. The authors examine that management contract can be taken to a hotel with specialised knowledge and control ability. To be able to maintain an appropriate control, a hotel firm would be concerned about the variety of chances between expected and perceived quality, which may lead to the importance of this difference to customer by giving free riding control from higher quality brand. However, in this article, it has not provided an adequate explanation in franchise agreements which are relatively different from management contract in hospitality industry. (Read on 14th May 2011)
With regards to franchise and management contract, one of the main functions of affiliation and merge is to assist an international hotel to export their products and service beyond national boundaries. As a successful hotel company, it is necessary to consider the degree of different asset acquisition strategy by the parent company, such as costs of expansion, result of profit gained and so forth (Knowles. T, 1996: 227). It is a common knowledge that franchising may have more power and control than management contract. Franchising is driven by market systems trying to meet the demands of shareholders and also to protect the core competence to meet the expectation of international customers (Altinay. L, 2007)
Hoffman and Preble (2004) identify the impact of franchising represents an important mode of foreign market entry for service market. However, cultural different could be a crucial issue for franchisors to consider in the global market (Altinay and Roper (2005)). Hotel companies have to face some of obstacles which including culture distance and geographical conditions by exploiting their limited local culture understanding and doing their business in different way. Moreover, when designing control systems in franchise agreement, international master franchisors should consider how much efforts need to be put in operational control processes. Good relationship and well communication between franchisors and franchisees will impact on strategic approach. They should also reflect on the degree to which perceptions of similarities and differences in franchisor and franchisee organisations, and analysis the how markets influence on the specific processes they own. (Brookes and Roper, 200?)
By contrast, management contracts have become a fixture in the hotel industry for most full service, upscale, luxury, resort. (Roos, 2010) Many researches show that management contract explosion from 2000 to 2009 by the branded operators under the estate bubble effect. Management contract was perceived as sound way for best brand hotel to gain in different countries. It was a quite safety way for the operator earns profits without investing in the property. Knowles (1996) imply that more competitive strengths will require the management contracting hotel firm to develop more complex global pricing and marketing efforts. Furthermore, disagreement between the owner and operators should be negotiated in several ways of management contract based on the detail. Such as operating fee, operator guarantees, term, renewal, termination right (Bader and Lababedi, 2007)
In my point of view, it is a new approach to grow franchising in a country where local market is familiar with. But, international hotel is at the risk of entering a different country market by franchising that might create organizational tension. Management contract could be developed in some of country is unstable situation and different culture. As a successful hotel, one needs to modify own company norms and values to the different target country.
Analytical reviews of managers and people
This article examines the culture differences between French and British managers in an international hotel organisation. Through giving an example of ANO hotel’s appraisal system, which was chosen as a phenomenon to reflect these cultural characteristics in hospitality industry. In the case, by analysis a parent French hotel group operating a hotel in the UK. It reflects French and British managers might be different in cultural dimension, such as power distance and uncertain avoidances. The result shows people may influence on various cultural elements including their own national cultural background. It also shows the interdependencies and interrelationships between the variety of forms and levels of in culture. From the perspectives of international hotel, unexpected and unforeseen cultural elements that influence management team should be considering under the times of globalisation, company mergers and diversification. It was a fact that ANO company growing fast and huge development in the early year. Employee empowerment and entrepreneurship would be the strong influence in franchising or transferring control to general manger within different cultural characteristics. In this article, it is suggests that as a HR specialists in a homogeneity-oriented organisation, one need to be aware of cultural characteristics and demographic changes under the rapid expansion. (Read on 15th May 2011)
Successful company, according to Wood (1994: 149) viewed that people are most important assets of business. The study of Gannon, et al (2010) indicated that Hotel Company need to develop new ways of managing their human resource from their business partners by operating wider global expansion. What is more, as stated in the analytical review, cultural elements need to understand and practice more when hotel firm want to be success. As a general manager in a successful hotel, no matter in a owner hotel or operate hotel, she or he was expected to monitor his or her market environment, have a wide understanding of what direct task to do and build a strong relationship with the intermediaries. (Gilbert. D, and Tsao. J, 2000) on the strength of another personality of manager, other research add that effective cross-cultural leadership promotes the good performance of organization and will success in global market environment. (Shafer. E. L, et al, 2005)
Moreover, it is obviously that affiliation choices and strategies choose will impact on the international management approach. There are four management approaches to international management: Polycentric which id host country oriented, Regio-centric is based on regional oriented, Ethnocentric which is based on home country, and Geocentric focus on worldwide. Some researches add that it could be the characteristics of senior decision makers, who operates ethnocentric orientation approach will lead to lack of risk tolerance and open-mindedness towards global market. (Altinay. L, and Roper. A, 2005)
In my opinion, the key factor for a successful hotel to make decisions is from diverse national backgrounds; in other words, from the geocentric approach. Hotel firm could develop geocentric approach into a different cultural country. All people in a hotel should be developed through a range of overseas cross-cultural training assignments. Besides, regionally oriented approach reminds intended regional country of their existing needs, and creates fresh need. By these two approaches, international management could be contributes to expansion development.
Analytical reviews of brand and customers
The purpose of this article is to provide hotel measures to evaluate brand equity as an element of brand strategies can be affect the customer satisfaction, and also by using service-branding model as a conceptual framework to find out service experience is the most influential in determining brand meaning. In customer perspective, the authors imply that lack of hotel brand differentiation may make customers confusion to tell service experiences which is familiar with the owner’s hotel brand. In this article, it suggests that for experienced hotel, service experience plays a crucial role in building hotel brand equity. Furthermore, brand awareness of the hotel is important in ensuring the presence of the brand in the minds of customers. The results of this study indicate that brand awareness is not a significant predictor of hotel brand equity. Experienced customers, other internally oriented brand activities are more important than the traditionally, externally focused brand activities. Therefore, for a hotel firms focus on external brand management and also need to be balanced with an internal factor given that hotels have existing, as well as new, customers that are important for future brand success. (Read on 12th May 2011)
The ability of the hotel company to attract and retain their customers is vital to its success.( Ransley. J, and Ingram. H, 2004) Hotel brands are easily identified and are considered to be the best value for the price. From the customers’ perspectives, brand loyalty requires a strong desire by the customer for a service, he or she will choose attractive service or product based on his or her preferences. (Dick and Basu, 1994) It was to classify hotel service quality attributes in terms of their hotel brand towards guests’ intention to stay again.
From business perspective, Brand loyalty is regard as effectively intangible asset. Those types of asset contains a competitive advantage of hotel firm performance and key market value. (Oak. S, and Dalbor. M. C, 2010) In terms of hospitality brand development the hotel product and the service have attained the greater growth within the sector, service growth rate may benefit in marginal way. Additionally, with the presence of expansion, guarantee standards of brand may created in order to meet customer expectations and secure price premium. And also according to O’Neill and Xiao (2006) indicate that a hotel brand has a significant impact on the market value of a hotel property.
In my opinion, successful hotels should provide sufficient evidence to ensure that customers perceive good value for money in using their services by their valued brand. It provides adequate customer service to ensure and improve customer satisfaction by good room quality. (Ramanathan. U, and Ramanathan. R, 2011) Moreover, a successful hotel requires the effective customer service into a foreign market with a high level of managerial, customer satisfaction, human resource, and financial resources. It is also important for a hotel company to consider the degree of control over its operations to guard against the local partner’s shirking its responsibilities in customer service.
Analytical reviews of Designing Organization structure
The study investigates increasing understanding of factors relating to the variety of governance structures in the hotel industry. There are two agencies which hold different opinions of governance form. Agency theory maintains the ideas that it is necessary to control service quality, financial risk, and the market environment which can be important in the choice of governance form. Hoever prior agency research emphasizes governance structures can be selected in the field of principals employ, local market conditions, and risk preferences. It also analyzes the choice compare independent ownership and affiliation with a voluntary chain with the choice between integration and franchising. This study found hotel facilities and environmental factors could affect agency that offer insight into governance. Besides, the principal agency perspective provides only a partial explanation of contract decisions. In a agency perspective, it was become complex network when hotel firms trying to establish new operates in worldwide expansion of hospitality industries. Such as new establishments in franchised system, ownership rights and so forth. From this article, it is more situations for a successful hotel to assess in organization structure in variety of way in hospitality industry. (Read on 15th May 2011)
A hotel firm seeking to expand globally tends to rely on organization model for a number of reasons: 1) became global by greater market coverage. 2) Create a new approach to another national or regional market when needed. 3) To fill a well defined niche in the market place (Ransley. J, and Ingram. H, 2004) Thus, the structure of the industry within which the hospitality unit competes is key factor in influencing the firm’s overall success and survival.
In my point of view, to begin any analysis of industry it is important to define what existing competitors is, new threat of entry of new competitors, variety of governance form. Sainaghi, R. (2010) adds in his research that current hotel performance is time test of any strategy and performance improvement is at the heart of strategic management. It is necessary for a successful hotel to consider organization structure based on its strategic approach.
A Successful hotel Recommendation
The case of Rezidor Hotel company
The Rezidor Hotel Group is committed to growth either by building a new hotel, making a comprehensive conversion or a smaller adjustment such as turning an office building to a hotel. They have professional tem to find a good deal to meet their partner need. In 2010, the Rezidor hotel company growth is achieved approximately 50% by new hotels building and other rebrand through managed and franchised contracts. Most of overseas hotels are operated by management contract in their companies. (see the chart)
In order to get success from their truly brand that can meet the customer expectation, the Rezidor hotel company manage five brand focus on different market segmentation. Such as Carlson, Radisson Blu, Park Inn, Hotel Missoni, and Radisson. Considering the fierce competition in the international hospitality business, the Rezidor hotel operates their band in geographically diverse location approach. They reach ranges from Spitsbergen to Cape Town and from Cork to Beijing. (Rezidor (2011). Their company slogan is “whichever brand or location you choose, we guarantee 100 % satisfaction”. By this way, the brand of Rezidor hotel provides a level of recognition through consistent service and product standards that provide guests with a level of familiarity in unknown markets to the regular customers and new traveller.
In their management team, “Yes I Can!” is the core service philosophy of the Rezidor hotel group. They offer trainings for all levels in the Rezidor hotels group. The different career development programme is provided to self identity in job position and develops high potential talents to become general managers of the Rezidor hotel group. This programme will help manager or staff to grow at their own speed in the best environment which linked to company’s culture of promotion and meet the succession planning in their growing company
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