Main issues for managers in the hospitality industry

Published: 2019/12/05 Number of words: 3934

In this essay, I will analyse some of the main themes that owners and managers of the hospitality industry have to face every day within their working environments, such as hotels, restaurants, spa, tourists establishments, etc. However, since there are several typologies of issues, and it is not possible to examine all of them in detail, I will mainly focus on those related to human resources and their cohabitation within the same working environment. Therefore, I will report information related to some international chains such as Marriott, Hilton and Yum and human resources strategies theories based on how to improve approaches and relationships between employees and customers, such as Baum (1995), Hofstede (2001) and Avci et al. (2011).

The hospitality sector is one of the most vital and important modern industries in the entire globe (Shepherd, 2013). As stated by Enz (2010), this industry has grown during the past two decades, despite the recession of the last few years, a relevant importance for the national economies of several countries, particularly of the developing ones which don’t have other revenues and incomes other than those generated by tourism. Also, massive investments have been made by several firms present in the market to make competitive advantages over the main and direct competitors. In fact, as stated by Tanke (2001), only those companies which were able to manage and develop internal and external resources can generate competitive advantages and succeed in the market. Also, according to Sommerville (2007), hospitality managers don’t have the duty exclusively to manage those internal resources provided by their organisations, but also to develop and adapt them according to the changes of the market.

In a modern environment, managers have to face several issues since they have a critical role in a new firm that operates in a field where there is a massive presence of human resources. On the one hand, they have employees, who with their skills, knowledge and behaviour profoundly influence the overall performance of the business. On the other hand, there are customers, who are considered in a modern hospitality vision as the most important asset for an organisation (Baum, 1995; Avci et al., 2011). During the past decade, globalisation has intensified the interaction between people and organisations located across the globe, leading hospitality managers to face more problems and issues than in the past, such as different cultures, religions, habits, etc. As stated by Ottenbacher & Gnoth (2005), there is a vast number of issues in the modern hospitality industry such as recession, adaptation to new technologies, several rules and regulations and particular HRM (human resource management) and all the problems related to this latter. Ottenbacher & Gnoth (2005) agreed that globalisation has enhanced those issues: in the particular case of human resources and its management, the globalisation phenomenon has generated the presence of a high degree of diversity within hospitality firms. According to these two scholars, the main reason is an open global labour market and the increased ability to move from one place to another and visit new places (due to faster and cheaper transportation means). This high number of workers and tourists who travel abroad from different countries profoundly contributed to changes in the hospitality and tourism industry. Consequently, there is an increased number of issues for managers, who nowadays have to eliminate or reduce their negative impact and effect to succeed in their operations and offer the opportunity to survive in the market (Chang, 2011). As stated by Tanke (2001) and Liu et al. (2007), hospitality managers that want to decrease the adverse effects of the issues present in the modern market should focus on positive brand image and adequate human resources. These tools can generate overall satisfaction in employees and customers. In fact, the first group can create a high-quality standard service and therefore a positive word-of-mouth and brand image, which in turn will attract new customers and retain the old ones, who will become more loyal and ensure constant revenues for a particular organisation in the medium and long-term period. However, as mentioned above, even if this occurs there are still several issues that a hospitality manager can face during internal and external operations. In this paper, the author will mainly focus on those related to the management and development of human resources, such as employee turnover and the entire recruitment process (selection, training, development). According to Johansson (2007), human resource management can generate considerable competitive advantage for every organisation operating within the hospitality industry over its primary and direct competitors. Nankervis & Compton (2006) argued that there are several challenges that managers need to face during the daily operations, mainly related to employee issues. One of these problems is the employee turnover, which also involves several costs related to recruitment and the training process to take on new employees to replace those who left an organisation. As stated by Hinkin & Tracey (2000), employee turnover has become one of the most challenging factors that can affect the overall business of a hospitality firm during the past few years, again due to the globalisation phenomenon.. In fact, because employees can move and change jobs with ease, the hospitality industry has several problems caused by an increasing level of staff turnover, which involves, as mentioned above, tangible (cost and expenses) and intangible (service quality, brand image, word-of-mouth) consequences. As stated by Riegel (2002), the main reasons for a high level of staff turnover are employee dissatisfaction, unsafe and inadequate working environment and conditions, low wages, inefficient management and lack of involvement and commitments. All these factors can affect the staff attitude during the development of their duties. In fact, as stated by Iverson & Deery (1997) in their studies related to staff turnover and needs of the workers within the hospitality industry, high level of turnover is considered the most dangerous and least manageable issue in human resource management as it can generate several adverse consequences for business. Also, these scholars argue that this risk is more related to large and international chains than individual businesses, most probably due to the several differences regarding nationalities, languages, cultures and behaviour present within a global business compared to a small one. Also, as mentioned before, staff turnover involves a cost due to the entire process of recruitment for new employees and because several international large chains of hotels and restaurants hire more people than they need to avoid a potential lack of staff and poor service. As stated by Hoque (1999), employees potentially can be the main issue for an organisation since they play the most important role when they interact with the customers. Therefore, a lack of standards, attitude, skills and knowledge can generate a poor service which has several adverse consequences on the entire business, mainly due to loss of loyalty and negative word-of-mouth of customers with their family, friends and through social media. Vice versa, if modern organisations are able, through induction, training and eventually economic and career benefits to improve their employees’ skills and motivate them, there is the opportunity to generate competitive advantage over the main and direct competitors. Specifically, these competitive advantages can be directly caused by employees, who are in the modern vision of the hospitality industry the most valuable resource for a firm or organisation. In fact, as stated by Guest and Hoque (1994), several businesses have training academies for all their employees, with the primary purpose of providing skilled and knowledgeable staff with unique and personalised service methodologies that can create diversification in the market and therefore a competitive advantage. Hinkin & Tracey (2000) and Hudson & Hudson (2012) argued that among the several issues that hotel or restaurant management can face these are among the most significant and harmful but at the same time can generate powerful competitive advantages in the modern market (Page & Connell, 2009). The first one is all the economic and financial features of an organisation and how the latter can reduce costs and generate profits to survive in the market. The second issue is staff and the service provided by them. According to these two scholars, customer service is not a new problem for hotels and restaurants management. In fact, due to its delicate nature and the fact that it involves human beings with different behaviours and attitude, there is the need to consider it as a crucial element of every organisation operating in the hospitality industry which has to deal on a daily basis with the eventual benefits or potential adverse consequences. Also, Hinkin & Tracey (2000) stated that when an organisation, due to several internal or external reasons, has to face a quick staff turnover, there is the risk that customers are served by employees who don’t have a high level of commitment, skills and attitude. Therefore, as stated by Huang (2001), every modern hospitality business should implement and develop methodologies and approaches with their staff to ensure a high level of service quality. This statement emerges from the fact that human resource strategies in hotels and restaurants have to focus on the approaches and relationships between staff and customers and how to improve the overall skills of the first since they can generate satisfaction in the latter and make profits and competitive advantages for the organisation. Also, employees need to know how to act and react with different types of customers, according to their culture, religion, language, etc. which needs, of course, specific training on these several variables (Bianey et al., 2004).

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Also, Huang (2001) argues that hospitality businesses, in the implementation of this service quality standard management, have to consider not exclusively an achievement of higher commitment to customer care in their lower level employees but also in the more senior management, since there is the latter that can motivate and guide the first. Other relevant issues regarding human resources (and also correlated to the previous one) are training and development, and selection and recruitment, which are all part of the higher level entire hiring process. Training and development, as stated by Porter & Tansky (1999), is a sequence of steps developed and personalised by several hospitality industry chains to generate service quality and therefore avoid poor service and loss of customers. Vice versa, high training can develop the overall skills of employees and improve their attitude and motivation, because large international chains of hotels and restaurants tend to promote internally those employees who offer the best performances regarding commitment and service quality (Porter & Tansky, 1999). Also, Huang (2001) stated that human resources strategies aimed to improve staff quality and reduce turnover (in environments where there is service delivery through the use of people) have a fundamental role in safe and efficient service delivery with the integration of service culture and human resources training plans.

Many scholars, such as Porter & Tansky (1999) and Alleyne et al. (2006), stated that there is not only the need to develop and improve skills and knowledge related to the service, but also training and development also have the purpose of generating behaviour and a customer care culture. For instance, according to Porter & Tansky (1999), if education and development can create this culture, hospitality businesses can improve their overall service quality, generate higher revenues, avoid potential negative issues with customers, reduce costs due to a low turnover and achieve success in the market. The second process which is intended to decrease problems in the hospitality industry is that one linked with staff recruitment and selection. According to Alleyne et al. (2006), the biggest challenges in the hospitality industry are due to the nature itself of this industry. In fact, there are some reasons, such as multicultural, legislative and economic issues, that the labour demand in a particular business located in a given country cannot always be easily predicted by managers, who have to face negative consequences, from the economic and qualitative point of view. Therefore, the main result is that hospitality firms can be affected by economic and organisational issues, and the employees can have in turn a lack of motivation to work in a given organisation, mainly because due to a lack of financial resources there will be few opportunities to be promoted or receive bonuses or other incentives. Also, other several factors, such as demographics, can decrease the number of potentially valid future employees and generate a shortage of staff within an organisation. Therefore, resourcing new employees can represent an issue if adequate management is not implemented with the consequence that there is an imbalance between labour demand and supply which can generate staff shortage and poor service (Tanke, 2001).

After this explanation of some theories and models of some main issues related to the human resources in the hospitality industry, I will now report concrete cases of how some international chains are organised to avoid possible poor service and an overall loss of business. For instance, the Yum! brand is one of the largest global fast-food firms and major restaurants businesses with more than 750,000 associates in 30,000 outlets operating in over 100 countries (Reference for Business, 2015). This company has to focus a lot on customer service training since a poor service can have, as analysed previously in this paper, catastrophic consequences for the entire organisation. Therefore, due to these reasons, Yum has implemented a “Customer Mania” programme to induct and train staff in customer service called CHAMPS (Cleanliness, Hospitality, Accuracy, Maintenance, Product Quality and Speed), as stated in the corporate responsibility report “Serving the World” (Yum, 2008). In this programme, Yum’s managers have to implement several standards which lead entry level employees to gain knowledge and skills related to how to listen to guests and deal with them, recovery service and how to meet and satisfy guests’ needs. Also, since employees receive rewards when they have higher performances, Yum has also implemented the CHAMPS excellence review, which consists of reports made by some of the best managers of the firm when they visit the various outlets to investigate and ascertain that they follow rules and standards according to the customer service CHAMPS. To implement this innovative training program in all the several shops, Yum has invested almost US$20 million. The primary purpose is to generate competitive advantages over its main and direct competitors and create a qualitative system control to avoid poor service and loss of business in the future to ensure the survival in the market (Yum, 2008).

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Regarding the issues mentioned above for hospitality managers related to the presence of different cultures within the hospitality industry due to the globalisation phenomenon, several international hotel chains understood that they have to face this issue not only in the global market but also in the national one. Nowadays, since most of the entire hotel and restaurant businesses are under the control of a few international corporations (Lim & Noriega, 2007), globalisation is a phenomenon that has to be carefully analysed and evaluated. For instance, during the last few years, organisations like Hilton and Marriott have focused a lot of investment in the Asia-pacific area to build several new infrastructures to satisfy the increased request of tourists who travel for business or other purposes (Stanley, 2008). Therefore, because these two firms have to operate in a multicultural environment, with both employees and customers from Asian countries, they implemented specific training programs to develop people who can become the best managers in the hospitality market and who will be able to operate in a global and multicultural workplace. All these elements are considered relevant and vital for those firms that work within the international hospitality industry to achieve an efficient and effective multiculturalism and help employees and guests to overcome the differences existing between cultures and languages (Doherty et al., 2007). However, as stated by Bianey et al.(2004) and Hofstede (2001), international hotel and restaurant chains have to focus on training and induction mainly based on multicultural approaches and aim to build a relationship between employees (both managers and entry-level staff) and customers.


Therefore, what emerges from this paper is that several issues that managers have to face during their daily duties are related to human resources. However, there is the need to outline the fact that, as stated by several types of research and studies analysed through this paper, most of the issues due to lack of motivation and poor attitude by entry level employees are the direct consequence of an inefficient business organisation and incompetent management. These factors represent the main reason why global organisations like Yum, Hilton and Marriott focus on SERVQUAL (RATER), a quality management framework, to highlight, develop and maintain logical components of high-quality service (Kandampully et al., 2001). Also, due to the several changes that have happened during the past decade with globalisation and other related effects, hospitality business managers have to face nowadays much more potential issues than in the past (Brooks et al., 2011). In fact, as mentioned above, international hotel chains like Hilton and Marriot invested a lot in Asian countries to expand their market and generate further revenues due to the increased request of places where to stay for business or tourism purpose. However, this internationalisation has caused the presence of several different culture and habits, from both employees and guests’ side, in the same place with the consequence to increase the potential number of misunderstandings and mistakes which can negatively affect the overall business. Consequently, these international chains, to avoid poor service and offer a consistently outstanding quality, implemented several pieces of training not only for entry level employees but also for higher management since they have to deal at the same time with workers and guests. In fact, as stated by Paskin (2008), in the hospitality field, when there is an effective achievement of the target forecasted by these training and programs, it is possible to reduce staff turnover and the costs correlated. Also, there is the opportunity to generate a sense of belonging to the organisation which in turn can enhance the overall service quality, brand loyalty and revenues. To summarise, according to Hoque (1999), staff turnover is a phenomenon that is widely accepted by all managers and organisations operating within the hospitality industry, due to several reasons, such as age, income, family, etc. However, there is the opportunity to reduce it through better and more efficient management of the human resources. Therefore, since one of the most important factors for the success of business in this industry and its overall performances comes from employees, there is the need to implement effective model and methods to improve their overall working conditions (Milkovich, 1997). In fact, people are the most importance resource (employees) and asset (customers) for hospitality firms, since without them no business can be developed and human resource management is a vital and crucial part of every modern organisation. In fact, without adequate training and development, there will be at the same time high turnover and poor service, which means that if some material resources or input can be easily bought or rented, employees need to be trained. Also, in particular in the hospitality industry, where there is direct contact with customers, they can generate satisfaction within customers. The latter, on the other hand, as reported in a study developed by Gupta & Lehmann (2003) are of the brand the most valuable intangible asset, since through their loyalty they can generate several profits for many years ensuring the survival in the market.



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