Introducing New Computers Related Subjects within the Study Programme Design and Textile Materials

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F&B AND OPERATIONS MANAGEMENT

Full Papers

FAST FOOD AND CULTURAL IMPACT: THE PERCEPTION OF CHINESE AND p. 13 SWISS CONSUMERS Reza Etemad-Sajadi & Daniela Rizzuto, Ecole hôtelière de Lausanne THE INFLUENCE OF ECOCENTRIC AND ANTHROPOCENTRIC ATTITUDES p. 23 AND INTRINSIC PRODUCT ATTRIBUTES ON ORGANIC WINE PREFERENCES Imran Rahman, Tyler Stumpf & Dennis Reynolds, Washington State University, Pullman RESTAURANT ENTREPRENEURS’ CHARACTERISTICS AND STRATEGIC ACTIONS p. 37 AND CONSIDERATIONS Christine Demen-Meier, Ecole hôtelière de Lausanne & François Pageau, Institut de tourisme et d’hôtellerie du Québec EXPLORING SERVICE SABOTAGE BEHAVIORS IN THE FOOD AND BEVERAGE p. 38 INDUSTRY Lou-Hon Sun, National Kaohsiung University of Hospitality and Tourism ETHNIC MINORITY PERCEPTIONS OF SELF-SERVICE TECHNOLOGY IN LIMITED p. 39 SERVICE RESTAURANTS Clark S. Kincaid & Seyhmus Baloglu, University of Nevada, Las Vegas (UNLV) CHALLENGES FOR PROCUREMENT IN THE UK CATERING INDUSTRY p. 47 Jane Eastham, Sheffield Hallam University FROM CRADLE-TO-CRADLE: FOOD SOURCING AND ATTITUDES OF RESTAURANTS p. 57 TO SUSTAINABLE DEVELOPMENTS. THE CASES OF THE CARIBBEAN, USA, SWITZERLAND AND WALES Ian Jenkins, Robert Bristow & Ralph Cervera, STAR (Swiss Tourism Applied Research), LRG-University of Applied Sciences Switzerland & Westfield State University, Massachusetts THE RELATIONSHIP BETWEEN THE USE OF TECHNOLOGY & SERVICE OPERATIONS p. 67 MANAGEMENT TOOLS AND HOTEL PROFITABILITY & CUSTOMER SATISFACTION Karolin Kokaz Pucciani, Ecole hôtelière de Lausanne & Jean Hurpé, Swissôtel Nankai Osaka THE RELATIONSHIP BETWEEN INDIVIDUALISM/COLLECTIVISM AND FOOD p. 81 HANDLER'S PRACTICES Ma'moun A. Habiballah, Al-Hussein Bin Talal University & Elizabeth M. Ineson, Manchester Metropolitan University

Short Papers GENERATION Y AND ORGANIC WINE: IS IT LOVE AT FIRST SIGHT? p. 82 Elena Cavagnaro, Stenden University of Applied Sciences, Academy of International Hospitality Research INFLUENCE OF FESTIVAL ATTRIBUTE QUALITIES ON SLOW FOOD TOURISTS’ p. 87 EXPERIENCE, SATISFACTION AND INTENTION TO RE-VISIT Timothy Jung, Manchester Metropolitan University, Mincheol Kim, Jeju National University & Elizabeth M. Ineson, Manchester Metropolitan University CLEANER GUESTROOMS FOR A BETTER LODGING INDUSTRY - A HACCP-BASED p. 92 MODEL FOR HOTEL HOUSEKEEPING Sheryl Kline, University of South Carolina, Jack Neal, University of Houston, Barbara Almanza, Purdue University & Olivia V. Stroia, University of South Carolina

Posters

OSTRICH MEAT AS A NEW PRODUCT IN THE HOSPITALITY OFFER IN REPUBLIC OF p. 93 MACEDONIA Gordana Petrovska-Rechkoska, Risto Rechkoski & Elena Petrovska, University “Sv.Kliment Ohridski”-Bitola, Faculty of tourism and hospitality-Ohrid, Republic of Macedonia ICT AND E-BUSINESS IN THE HOSPITALITY INDUSTRY IN THE REPUBLIC OF p. 95 MACEDONIA Mirjana Sekulovska, University St. Kliment Ohridski-Bitola, Faculty of Tourism and Hospitality-Ohrid & Emilijan Sekulovski, Politecnico di Milano O B/HRM

FINANCE

Full Papers

SPECIFICITY, FINANCIAL CONTRACT, AND LIQUIDITY OF COMMERCIAL REAL p. 96 ESTATE: A CONCEPTUAL MODEL FOR LODGING PROPERTIES Inès Blal, Ecole Hôtelière de Lausanne & Nicolas Graf, ESSEC Business School A STUDY OF THE EVOLUTION OF HIGH-END WINES IN SWITZERLAND p. 105 Philippe Masset, Jean-Philippe Weisskopf & Vincent Deboccard, Ecole hôtelière de Lausanne ACQUISITION PREMIUMS AND PERFORMANCE IMPROVEMENTS FOR ACQUIRERS p. 106 AND TARGETS IN THE LODGING INDUSTRY Jin-young Kim, Kyunghee University & Linda Canina, Cornell University THE CONDITIONAL CAPM IN THE TRAVEL AND LEISURE INDUSTRY p. 107 Alexis Beck & Philippe Masset, Ecole hôtelière de Lausanne RESTAURANT RISK: IDENTIFYING THE GAP BETWEEN RESEARCH AND INDUSTRY p. 117 PRACTICES Meng-Mei Chen & Raphael Zanoni, Ecole hôtelière de Lausanne

Posters PERFORMANCE MEASUREMENT IN THE CROATIAN HOSPITALITY INDUSRY – A p. 126 COMPARATIVE STUDY Milena Peršić , Sandra Janković & Katarina Poldrugovac, Faculty of Hospitality and Tourism Management , University of Rijeka

INNOVATION

Full Papers MANAGERIAL CAPABILITY FOR INNOVATION IN IRISH TOURISM MICRO FIRMS p. 128 Arthur Kearney & Denis Harrington, Waterford Institute of Technology

Short Papers SOCIAL ENTREPRENEURSHIP IN THE HOSPITALITY AND TOURISM INDUSTRIES p. 137 AS A BUSINESS MODEL FOR BRINGING ABOUT SOCIAL IMPROVEMENT IN DEVELOPING ECONOMIES Philip Sloan, Claudia Simons-Kaufmann & Willy Legrand, International University of Applied Sciences Bad Honnef

HOSPITABLY SOCIAL OR SOCIALLY SUSTAINABLE? AN EXAMINATION OF SOCIAL p. 142 ENTREPRENEURSHIP WITHIN THE HOSPITALITY INDUSTRY Colin Johnson, Mehmet Ergul & Geoffrey Desa, San Francisco State University

Posters A CONCEPTUAL MODEL FOR MANAGING THE HOSPITALITY INNOVATION PROCESS p. 149 Robert Harrington, University of Arkansas & Michael Ottenbacher, Heilbronn University

MARKETING

Full Papers ONLINE MARKETING PRACTICES OF DIFFERENT HOTEL SEGMENTS: CONTENT p. 150 ANALYSIS Maryam Khan, Howard University Washington CSR: ARE VISITORS WILLING TO PAY FOR RESPONSIBILITY? p. 158 Henri Kuokkanen & Michael Macdonald, Glion Institute of Higher Education CAPTURING THE GUEST EXPERIENCE IN HOTELS. PHASE TWO: EXPLORATORY p. 169 STUDY ON THE SENSORY CHARACTERISTICS OF A COMFORTABLE AND INVITING AMBIENCE Ruth Pijls & Brenda Groen, Saxion University of Applied Sciences EFFECT ON PRICES OF THE ATTRIBUTES OF THE SAILING BOATS: A HEDONIC p. 179 PRICES APPROACH Neven Sipic, Zagreb School of Business AN EXPLORATION OF THE RELEVANCE AND RECALL OF SOCIAL MEDIA IN HOTEL p. 188 ROOM PURCHASE Hilary Catherine Murphy & Meng-Mei Chen, Ecole hôtelière de Lausanne EXPLORING THE MOTIVES OF HOTEL GUESTS IN THEIR CHOICES ABOUT p. 189 SUSTAINABILITY WITH REGARD TO HOTEL STAY Arjan van Rheede & Rob J. Blomme, Hotelschool The Hague THE PRESENCE OF A VIRTUAL AGENT ON THE RESTAURANT’S WEBSITE: THE p. 195 IMPACT ON WEB-USERS’ PERCEPTION Reza Etemad-Sajadi, Ecole hôtelière de Lausanne CUSTOMERS’ LIGHTING NEEDS AND WANTS AT THE RESTAURANT p. 204 Caroline Jacquier & Agnès Giboreau, Food and Hospitality Research Center – Institut Paul Bocuse FREQUENCY AND MAGNITUDE OF EMOTIONAL DESCRIPTORS OF HOSPITALITY p. 212 CUSTOMER REVIEWS: AN INDEX VALIDATION Samad Laaroussi & Lohyd Terrier, Ecole hôtelière de Lausanne EXAMINE THE ANTECEDENTS AND OUTCOMES OF RELATIONSHIP QUALITY p. 226 Christina Geng-qing Chi, Washington State University & Wen Biyan, Jinan University HOTEL SEARCH AND SELECTION ATTRIBUTES FOR LEISURE TRAVELERS – THE p. 235 CASE OF SWISS OFFICIAL STAR RATING Horatiu Tudori & Francine Federer, Ecole hôtelière de Lausanne

STATUS-SEEKING CONSUMER BEHAVIOUR AND ITS IMPACT ON THE HOSPITALITY p. 236 CONSUMPTION OF YOUNG PROFESSIONAL FEMALES Kimberley Anne Kirk-Macaulay & Susan Horner, Bournemouth University

Short Papers USING HOTEL STORIES TO ADD NEW VALUE TO THE HOTEL EXPERIENCE p. 237 Bastienne Bernasco, Saxion University of Applied Research EXPLORING SERVICE ENCOUNTER QUALITY WITH TOURISM STUDENTS p. 242 Sanna-Mari Renfors & Vappu Salo, Satakunta University of Applied Sciences A MODIFIED ORGANIZATIONAL BUYING BEHAVIOR MODEL OF THE MEETING p. 247 PROFESSIONAL'S SITE SELECTION PROCESS Carole Sox, Sheryl Kline, Sandy Strick & Xiang Robert Li, University of South Carolina ASSESSING ATTENDEES' ATTITUDES TOWARDS A SPECIAL EVENT: APPLYING p. 248 HEDONIC DIMENSIONS Deborah Breiter, Diehdra Potter & Duncan Dickson, Rosen College of Hospitality Management University of Central Florida GUEST JOURNEY EXPERIENCE MAPPING p. 249 Jan Huizing, Karoline W. Wiegerink & Danilo Huss, Hotelschool The Hague THE SENIOR TRAVELER: PERCEPTIONS OF CHINESE SENIORS TOWARDS FUTURE p. 250 TRAVEL Howard Adler & Tong Ji, Purdue University YOUTH TRAVEL AND THEIR DESTINATION CHOICE p. 254 Ali Sukru Cetinkaya, Selcuk University, Yuliya Skorobogatova, Università della Svizzera Italiana & Muzaffer Uysal, Virginia Tech EXPLORING THE INFLUENCE OF FOUR REALMS OF EXPERIENTIAL MARKETING p. 258 ON IMPULSE BUYING IN CHINESE NEW YEAR FESTIVAL Austin Rong-Da Liang, National Kaohsiung University of Hospitality and Tourism & Jun-Shu Zhang, Shanghai Normal University IS GENERATION Y READY TO GO GREEN? p. 264 Marketa Kubickova, H. G. Parsa & K. Nusair, Rosen College of Hospitality Management University of Central Florida

Posters ONLINE HOTEL BRAND IMAGE: HOTEL MARKETING MANAGERS' PERSPECTIVES p. 265 Duangthida Nunthapirat & Hesham Al-Sabbahy, School of Hospitality and Tourism Management, University of Surrey WHICH FACTORS ARE IMPORTANT FOR CUSTOMERS CONCERNING HOTEL p. 267 LOYALTY PROGRAM DESIGN? Mareike Haas, Heilbronn University, Michael Ottenbacher Heilbronn University & Robert J. Harrington University of Arkansas GETTING TO KNOW THE CONTENT OF THE ‘WOW’ p. 269 Lysbeth Vink, Annette Kappert-White & Daphne Dekker, Hotelschool The Hague

OB/HRM

Full Papers THE EFFECTS OF HOPE AND WORK ENGAGEMENT ON FRONTLINE EMPLOYEES’ p. 272 PERFORMANCE OUTCOMES Osman M. Karatepe, Faculty of Tourism Eastern Mediterranean University WHEN EMPLOYEES WALK THE COMPANY TALK: THE BENEFITS OF INVOLVEMENT p. 281 IN CORPORATE PHILANTHROPY FOR EMPLOYEE COMMITMENT AND GOODWILL Steffen P. Raub, Ecole Hôtelière Lausanne THE IDEAL BOSS IN HOSPITALITY INDUSTRY - THE SEARCH GOES ON p. 282 Kari Nurminen, HAAGA-HELIA University of Applied Sciences THE USE OF THE PSYCHOLOGICAL CONTRACT TO EXPLAIN SELF-PERCEIVED p. 283 EMPLOYABILITY Jenny Sok, Hotelschool The Hague, Rob Blomme, Nyenrode Business University & Debbie Tromp, Hotelschool The Hague ACCEPTANCE OF LOW PAY: A STUDY OF PEOPLE IN LOW PAID JOBS p. 294 Sumeetra Ramakrishnan, Middlesex University INTERCULTURAL COMPETENCE AS AN ANTECEDENT OF FRONTLINE EMPLOYEES' p. 295 JOB ATTITUDES AND BEHAVIORS IN THE HOTEL SECTOR Ankie Hoefnagels, Maastricht Hotel Management School, Armand Odekerken, Maastricht Hotel Management School & Josee Bloemer, Radboud University EXPATRIATE MANAGERS IN THE HOSPITALITY INDUSTRY AND NEGOTIATION p. 310 SUCCESS: AN EMPIRICAL ANALYSIS OF SPANISH HOTEL CHAINS IN LATIN AMERICA Agustín Alonso, Ana Arencibia, Desiderio J. García-Almeida & Ancor Suárez, University of Las Palmas de Gran Canaria PSYCHOLOGICAL EMPOWERMENT IN THE JORDANIAN HOSPITALITY INDUSTRY: p. 311 DOES THE CONTEXT MATTER? Andrew Lockwood, University of Surrey, Hesham Al-Sabbahy, University of Surrey, Khaled Odeh, Al-Hussein bin Talal University & Samer Al-Sabi, Al-Hussein bin Talal University HUBS AND SPOKES: CHARACTERISTICS OF CAREER NETWORKS OF p. 323 MICHELIN-STARRED CHEFS Florian Aubke, Marc Stierand & Stefanie Krätz, MODUL University Vienna & NHTV Breda University of Applied Sciences TO WHAT EXTENT DOES A STAR RETAIN TALENT? p. 324 Stéphanie Pougnet, Ecole Hôtelière de Lausanne ROLE AMBIGUITY AND ROLE CONFLICT IN OUTSOURCED AND p. 325 PROPRIETARY-MANAGED SPAS Veronica Waldthausen & Demian Hodari, Ecole hôtelière de Lausanne THE INFLUENCE OF COMMUNICATION QUALITY BETWEEN SUPERIORS AND p. 327 SUBORDINATES ON THE TRANSFER OF KNOWLEDGE IN THE HOTEL INDUSTRY José Luis Ballesteros Rodríguez, Desiderio J. García Almeida, Crisanto Román Montoya & Carmen Domínguez-Falcón, Universidad de Las Palmas de Gran Canaria & Lopesan REVISITING HOSPITALITY COMPETENCIES: THE CASE OF CYPRUS p. 328 Stelios Marneros, European University of Cyprus & Anastasios Zopiatis, Cyprus University of Technology

MANAGING HUMAN RESOURCES IN HOSPITALITY. THE IMPORTANCE OF HAVING p. 337 COMMITTED EMPLOYEES. Ana Machado Sampaio, ISMAI - Instituto Superior da Maia & Angeles Cabarcos , Universidade de Santiago de Compostela “DON'T THINK THERE AREN'T CROCODILES BECAUSE THE WATER IS CALM”: A p. 347 STUDY OF WORKPLACE CONFLICT NARRATIVES FROM THE MALAYSIAN HOTEL INDUSTRY Jing Jing Lee and Lyn Glanz, Glion Institution of Higher Education Les Roches-Gruyère University of Applied Sciences EMPLOYING MIGRANT WORKERS IN THE HOSPITALITY SECTOR - A STRATEGY p. 357 FOR GAINING COMPETITIVE ADVANTAGE? Hania Janta, University of Surrey, Peter Lugosi, Oxford Brookes University, Lorraine Brown, Bournemouth University & Adele Ladkin, Bournemouth University

Short Papers HOSPITALITY AND LANGUAGE p. 358 Leanne Schreurs, Saxion Hospitality Business School ASSESSING EFFECTS OF ACCULTURATION ON SERVICE FAILURE RESPONSES: p. 363 INSIGHTS FROM AUSTRALIAN-CHINESE CONSUMERS Karin Weber, Hong Kong Polytechnic University, Beverley Sparks, Griffith Business School & Cathy Hsu, Hong Kong Polytechnic University A BETTER HOSPITALITY INDUSTRY IN THE UNITED ARAB EMIRATES: p. 364 NATIONALISATION IN ROTANA HOTELS Olga Kampaxi, Cesar Ritz Colleges A STUDY OF EMOTIONAL LABOUR OF FAST FOOD EMPLOYEES p. 365 Hazrina Ghazali, Nurhasmilaalisa Abdul Halim & Yap Sing Yee, University PUTRA Malaysia HOSPITALITY EMPLOYEE WELL-BEING: INSIGHT FROM A LUXURY HOTEL IN p. 370 THAILAND Ewa M. Mottier & Robert A. Lewis, Les Roches-Gruyère University of Applied Sciences/Les Roches International School of Hotel Management THE LOW LEVEL OF ORGANISATIONAL SOCIAL CAPITAL IN HOTELS – A NEW p. 375 ZEALAND CASE STUDY Anthony Brien, Lincoln University, Nicholas Thomas, DePaul University & Ananda Hussein, Lincoln University HOSPITALITY BUSINESS: EXPLORING A NEW RESEARCH AGENDA p. 380 Brenda Groen, Saxion University of Applied Sciences, Xander Lub, Saxion University of Applied Sciences, Ruth Pijls, Saxion University of Applied Sciences & Rene Rijnders, Dutch Board of Hotel & Catering Industry

Posters A CASE STUDY OF MANAGEMENT NEGLIGENCE RESULTING IN WORKPLACE p. 381 VIOLENCE Stuart Feigenbaum, Hotelschool Den Haag & Suzanne Murrmann, Virginia Polytechnic Institute and State University STUDY OF PROFESSIONAL EDUCATION IN THE FIELD OF TOURISM IN LATVIA p. 383 Margarita Platace & Agita Donina, Faculty of International Tourism, School of Business Administration Turiba

PEDAGOGY

Full Papers EDUCATING THE NEW GENERATION OF GLOBAL MANAGERS: TESTING CULTURAL p. 384 INTELLIGENCE FOR BUSINESS STUDY ABROAD PARTICIPANTS A.J. Singh, Chunyan Peng & Linn Van Dyne, Eli Broad College of Business Michigan State University HOSPITALITY STUDENTS’ PERCEPTIONS OF DIGITAL TOOLS FOR LEARNING AND p. 395 SUSTAINABLE DEVELOPMENT Alisha Ali, Sheffield Hallam University, Hilary Catherine Murphy, Ecole hôtelière de Lausanne & Sanjay Nadkarni, Emirates Academy HOSPITALITY EDUCATION: CREATING SUSTAINABLE EMPOWERMENT p. 396 OPPORTUNITIES FOR WOMEN IN NIGERIA Belinda Nwosu, Wavecrest College of Hospitality STUDENT DETERMINANTS OF ACADEMIC ACHIEVEMENT AND PROGRAM p. 405 COMPLETION INTENTION Brian Soule, Pennsylvania State University, James A. Busser, University of Nevada & Cynthia Carruthers, University of Nevada DEVELOPMENT AND EVALUATION OF AN ELEARNING COURSE PRESENTING A p. 406 REGIONAL DESTINATION. THE CASE OF “TICINO SWITZERLAND TRAVEL SPECIALIST” Nadzeya Kalbaska, Olena Sorokolit & Lorenzo Cantoni, Università della Svizzera italiana

Short Papers EXPECTATIONS CREATED: A REVIEW OF GRADUATE MANAGEMENT TRAINING p. 415 PROGRAMMES FROM INTERNATIONAL HOTELS’ CORPORATE WEBSITES Fang Wang & Maureen Brookes, Oxford Brookes University PERCEPTIONS OF THE IMPORTANCE OF NUMERACY AS AN EMPLOYABILITY SKILL p. 420 BY HOSPITALITY STUDENTS AND EMPLOYERS: A COMPARISON OF UNITED KINGDOM AND HONG KONG Anne Conneally & David Egan, Sheffield Hallam University EXPLORING THE IMPACT OF EXECUTIVE FUNCTIONS ON THE STUDY PROGRESS OF p. 427 HOSPITALITY STUDENTS Nije Bijvank M., Saxion University of Applied Sciences, Woelders L., VU University, Verweij C. F., Saxion University of Applied Sciences & Tonnaer G. H., Saxion University of Applied Sciences REASONS FOR DROPPING OUT OF TOURISM STUDIES p. 432 Heli Müristaja, Tiina Viin & Rita Viik, Pärnu College, University of Tartu ASSESSING THE COMPETENCIES NEEDED BY HOSPITALITY MANAGEMENT p. 437 GRADUATES IN INDIA Li-Ting (Grace )Yang, University of South Carolina, Charles G. Partlow, University of South Carolina, Jaisree Anand, Auro University & Vimal Shukla, Auro University HOSPITALITY MANAGEMENT MBA PROGRAMMES – MEETING THE EMPLOYABILITY p. 442 NEEDS OF STUDENTS AND EMPLOYERS Seth Lewis, Ealing Hammersmith West London College

EXPERIENTIAL LEARNING THEORY (ELT) PERSPECTIVE: THE CASE OF GAP YEAR p. 447 TRAVEL RESEARCH Novie Johan, University of Surrey THE IMPACT OF SUMMER STUDY ABROAD ON STUDENTS' VENTURESOMENESS: p. 448 AN EXAMINATION USING PLOG'S PSYCHOGRAPHIC PERSONALITY TYPES Makarand Mody, Susan Gordon, Howard Adler & Xinran Lehto, Purdue University PROFILING HOSPITALITY MANAGEMENT STUDENTS p. 453 Wendy Smeets, Hotelschool The Hague THE IMPORTANCE OF HOSPITALITY CONCEPT WITHIN THE TEACHING METHODS p. 459 OF VOCATIONAL COLLEGE FOR CATERING AND TOURISM MARIBOR Nataša Artič & Helena Cvikl, Vocational College for Catering and Tourism Maribor A SCHOLARSHIP OF TEACHING AND LEARNING PROJECT IN HOSPITALITY AND p. 465 TOURISM: PERCEPTIONS OF PLACE THROUGH THE PHOTO VOICES OF STUDENTS Cynthia S. Deale, East Carolina University

Poster ASSESSING INTERCULTURAL SENSITIVITY OF STUDENTS AND ACADEMIC p. 466 PROGRAMS IN HOSPITALITY Larisa Buhin Loncar & Lucija Marinov, American College of Management and Technology COMPARING ORANGES WITH APPLES? LOOKING FOR ACADEMIC AND p. 467 PRACTITIONERS INTERESTS ON SUSTAINABILITY IN HOSPITALITY Elena Cavagnaro & Ernst Jonker, Stenden UAS STUDENTS GET INVOLVED IN HOTEL RECYCLING EFFORTS p. 470 Betsy Stringam, New Mexico State University

REVENUE MANAGEMENT

Full Paper GAME-THEORETIC OPTIMIZATION IN CONJOINT PRICING p. 471 Bjorn Arenoe & Jean-Pierre van der Rest, Hotelschool The Hague

Short Paper

TOURISM, CULTURAL HERITAGE AND REVENUE MANAGEMENT p. 479 Kate Varini, Oxford Brookes University & Rafael Matos-Wasem, Institute for Tourism, HES-SO Valais

Posters HUMAN-COMPUTER INTERACTION BETWEEN THE FORECASTING SUPPORT p. 484 SYSTEM AND THE REVENUE MANAGER Larissa Koupriouchina, Hotelschool The Hague, Jean-Pierre Van Der Rest, Hotelschool The Hague & Mark Dechesne, Leiden University

STRATEGY

Full Papers WHO'S IN CHARGE NOW? THE DECISION AUTONOMY OF HOTEL GENERAL p. 486 MANAGERS Demian Hodari & Willl Hobden, Ecole hôtelière de Lausanne AN EXAMINATION OF FRANCHISEE BUSINESS START UP THROUGH AN p. 487 ENTREPRENEURIAL LENS Maureen Brookes, Oxford Brookes University, Levent Altinay, Oxford Brookes University & Ruth Yeung, Institute for Tourism Studies, Macau HOSPITALITY FOR A BETTER WORLD: IS THE HOSPITABILITY INDUSTRY p. 488 MITIGATING ITS ENVIRONMENT IMPACTS? AN EMPIRICAL STUDY ON THE HOTELIERS’ PERCEPTIONS OF ONLINE SELF-AUDIT TOOLS AND THE BARRIERS AND MOTIVATORS TO INVEST IN GREEN AND ENERGY EFFICIENT TECHNOLOGIES. Willy Legrand, Cornelius Kirsche, Philip Sloan & Claudia Simons-Kaufmann, International University of Applied Sciences Bad Honnef CARBON FOOTPRINT MITIGATION THROUGH ENERGY SMART HOTEL p. 498 BENCHMARKING: A COMPARATIVE ANALYSIS OF SELF-ADMINISTERED ENERGY AUDIT ONLINE TOOLS FOR HOTELS Willy Legrand, Sabine Allhoff, Philip Sloan & Claudia Simons-Kaufmann, International University of Applied Sciences Bad Honnef “HOSPITALITY TOMORROW”: A CASE FOR DESIGN DRIVEN INNOVATION IN p. 509 HOSPITALITY RESEARCH Xander D. Lub, Saxion University of Applied Sciences, Laura Niño Caceres,Thought Refinery & René Rijnders, Dutch Board of Hotel & Catering Industry NEW VENTURE ENTRY MODE AND COMPETITIVE DYNAMICS: AN INVESTIGATION OF p. 519 LONG-TERM HOTEL PERFORMANCE Cathy A. Enz & Linda Canina, Cornell University DEVELOPMENT OF DYNAMIC CAPABILITIES: NEW ROLE OF HOTEL MANAGEMENT p. 527 COMPANIES Mozgovaya Evelina, HEC Geneva, Haemmerli Mike, Kempinski Hotels & Ferrary Michel, HEC Geneva THE HOTEL AS THE HOLIDAY / STAY DESTINATION: TRENDS AND INNOVATIONS p. 537 Detta M. Melia & Gereva Hackett, Dublin Institute of Technology

Short Papers A SET OF TOOLS FOR THE RISK ASSESSMENT OF BUSINESS ETHICS IN AN p. 547 ORGANISATION Benjamin Wirz, University of Surrey INTERNATIONAL HOTEL EXPANSION IN INDIA: OPPORTUNITIES AND CHALLENGES p. 553 Maryam Khan, Howard University DOES CUSTOMER LOYALTY TRANSLATE INTO LONG TERM PROFITABILITY WITHIN p. 558 THE HOTEL INDUSTRY? INVESTIGATING THE IMPACT OF NET PROMOTERS ON FIRM PERFORMANCE Betsy Stringam, New Mexico State University, John Gerdes, University of South Carolina & Basak Denizci Guillet, Hong Kong Polytechnic University

AN EXPLORATION OF THE RELATIONSHIPS BETWEEN SERVICE QUALITY, p. 564 SUSTAINABLE COMPETITIVE ADVANTAGE AND FIRM PERFORMANCE. Stuart Feigenbaum, Hotelschool The Hague

Posters CORPORATE SOCIAL RESPONSIBILITY AND IMPACT ON HOTEL INDUSTRIES p. 569 Babak Khazaeli, Université de Rennes1 KEY BENCHMARKS ANALYSIS IN THE EVALUATION OF ECONOMIC PERFORMANCE p. 570 OF SPA HOTELS IN THE CZECH REPUBLIC Alexey Kondrashov, Department of Tourism, University of Economics in Prague

TOURISM

Full Papers

SHANGHAI RESIDENTS’ PERCEIVED SOCIAL AND ECONOMIC IMPACTS OF THE p. 573 WORLD EXPO 2010: INSIGHTS FROM A LONGITUDINAL STUDY Xiang Robert Li, University of South Carolina, Cathy H.C. Hsu, The Hong Kong Polytechnic University & Laura Lawton, Griffith University DESTINATION MANAGEMENT ORGANIZATIONS - QUEST FOR PRESENT AND p. 574 FUTURE SUSTAINABLE DEVELOPMENT, A CROSS-COUNTRY ANALYSIS Katarzyna Klimek, University of Applied Sciences, Institute of Tourism HOW ORGANIZATION OF HOTEL INDUSTRY AFFECTS THE TOURIST DESTINATION p. 587 POSITIONING – AN EXAMPLE OF ISTRIA TOURIST DESTINATION Nadia Pavia, Faculty of Tourism and Hospitality Management Opatija & Tamara Floricic, Juraj Dobrila University of Pula CRUISE TOURISM IN JUNEAU, ALASKA: AN INCONVENIENT TRUTH? p. 599 Barbara Hoffmann & Alice Yau, Cesar Ritz Colleges REGIONAL DEVELOPMENT IN THE TRANSITION AND POST-TRANSITION ERA: p. 600 CASE ESTONIAN TOURISM REGIONS 1991-2011 Ain Hinsberg & Tiit Kask, Estonian School of Hotel & Tourism Management EHTE SUSTAINABILITY VALUES AND TOURISTS’ DESTINATION CHOICES p. 610 E. Sirakaya-Turk, University of South Carolina & Seyhmus Baloglu, UNLV TRANSFORMATIONAL HOSPITALITY AND TOURISM: THE HEALTH AND WELLNESS p. 611 SECTORS Melanie Smith, Budapest Business School EXPLORING THE POTENTIAL OF DEVELOPING DOMESTIC TOURISM IN ROMANIA p. 621 Colin Seeley & Gelu Pui, César Ritz Colleges IS THERE A FUTURE / CAREER FOR TOURIST GUIDES? p. 631 Detta M. Melia, & Josephine Rice, Dublin Institute of Technology AN ANALYSIS OF THE CONCEPT OF “ADVENTURE” IN ADVENTURE TOURISM. p. 643 CASE STUDY: GUIDED SKI MOUNTAINEERING IN THE EUROPEAN ALPS Christine Barnes, Swiss Hotel Management School

Short Papers

MEDICAL TOURISM AS A MEANS OF COMPETITIVE ADVANTAGE: THE CASE OF p. 653 TURKEY Mehmet Ergul, San Francisco State University, Colin Johnson, San Francisco State University, Ali Sukru Cetinkaya, Selcuk University & David S. Martin, Auburn University SUSTAINABLE TOURISM DEVELOPMENT – FACTORS FOR LOCAL RESIDENTS’ p. 654 ATTITUDE TOWARDS TOURISM AND TOURISTS (THE CASE OF BULGARIA) Maria Vodenska, Tourism Department, Sofia University REDEFINING COMMUNITY-BASED TOURISM p. 659 Emmanuel Barreto, Eurofin Hospitality MAKING SPACE HOSPITABLE: UNDERSTANDING THE COMPLEXITIES OF REUSING p. 664 THE HISTORIC BUILT ENVIRONMENT FOR HOSPITALITY Ian Elsmore, Sheffield Hallam University & Tanya Rountree, Nottingham Trent University THE CITY HOSPITALITY EXPERIENCE MODEL – SHAPING A HOSPITABLE CITY p. 665 Monique van Prooijen-Lander & Karoline W. Wiegerink, Hotelschool The Hague

Posters CULTURAL ROUTES IN TURKEY; EVLIYA ÇELEBI WAY p. 670 Canan Baştemur, Kastamonu University IMPORTANCE OF SPECIAL ACTIVITIES TOURISM DEVELOPMENT AS PERSPECTIVE p. 674 SYNERGY OF INCENTIVE TRAVEL AND EXPERIENCE ECONOMY IN LITHUANIA Nida Kaladyte & Skirmante Vaitkute, Vilnius kolegija/ University of Applied Sciences Vilnius State University

FAST FOOD AND CULTURAL IMPACT: THE PERCEPTION OF CHINESE AND SWISS CONSUMERS

Reza Etemad-Sajadi*

Ecole hôtelière de Lausanne Lausanne, Switzerland

[email protected]

and

Daniela Rizzuto Ecole hôtelière de Lausanne

Lausanne, Switzerland [email protected]

ABSTRACT

The purpose of this research is to investigate the degree of satisfaction and loyalty of Chinese and Swiss fast-food consumers. The aim is to compare Chinese/Swiss consumers’ perception of meal quality, service quality, price and their influence on their satisfaction and loyalty. The image of fast-food restaurants in the two countries is also compared.

Key Words: Service quality, Fast-food restaurants, Customer satisfaction, Customer loyalty, Culture

INTRODUCTION

Competition in the fast food market is growing and success depends more and more on customer retention. Therefore, service improvements are the key to competitive success. To succeed in different countries, fast-food providers must adapt themselves to local preferences (Qin et al., 2010). Indeed, despite a more and more globalized world, customers have differing needs and perceptions. Although, causes of satisfaction and dissatisfaction can sometimes be generalized, there are some variations according to cultural background. Therefore, it is important to identify the specific characteristics of culturally diverse markets (Brady et al., 2001). Indeed, most studies report an effect of culture (Hofstede, 1991) on perceptions and this implies that service offerings need to be adapted to the environment (Donthu and Yoo, 1998; Furrer et al., 2000; Hoare and Butcher, 2008; Laroche et al., 2004). It is crucial to understand how customers evaluate services so firms can adapt their offerings accordingly. By adapting to the local needs and preferences a step towards superior service quality is undertaken.

The way that service quality and meal quality are perceived by local consumers will influence customers’ satisfaction and consequently their loyalty in the future. Indeed, consumer loyalty is a pre-requisite for a successful and profitable business. Several authors also argued that satisfaction is an antecedent of loyalty (Woodside et al., 1989; Cronin and Taylor, 1992; Kandampully and Suhartanto, 2000; Lovelock and Wright, 2002; Hong and Goo, 2004; Ekinci et al., 2008; Faullant et al., 2008). Service quality has a direct impact on customer satisfaction and an indirect impact on customer loyalty. However, there are several more factors that must be taken into account such as the impact of firm’s image or even the perception of price fairness. A complete picture is essential in order to truly deliver what customers desire based on their national culture.

For this research, McDonald’s was chosen as it is the world’s market leader in fast food, the local leader in Switzerland and well represented in China. McDonald’s is an example of combination between its process of globalization, standardization and adaptation to local communities (Vignali, 2001). Switzerland and China were selected to represent two different cultures. Moreover, while McDonald’s is seen as a usual fast-food restaurant in some countries, it represents a symbol in others. Our goal is to investigate the antecedents of satisfaction and loyalty of Chinese and Swiss fast-food consumers.

LITERATURE REVIEW

The relationship between service quality, satisfaction, and loyalty

Several models exist to measure the quality of service perceived by the consumers. One of the most famous is SERVQUAL. Parasuraman et al. (1988) developed SERVQUAL instrument which measures customers’ perception of the received service and relate it to their expectations and the gap measures client’s satisfaction. Indeed, consumer perception of service quality is critical for the success of a firm as it is linked with customer satisfaction and loyalty (Parasuraman et al., 1985; Cronin and Taylor, 1992; Baker and Crompton, 2000; Lee et al., 2000; Caruana, 2002; Hong and Goo, 2004; Ladhari, 2009). Customer satisfaction acts as a mediator between service quality and loyalty and has an overall stronger effect on loyalty than service quality. However, satisfaction alone may not be enough to actually achieve loyalty (Woodside et al., 1989; Cronin and Taylor, 1992; Kandampully and Suhartanto, 2000; Lovelock and Wright, 2002; Hong and Goo, 2004; Ekinci et al., 2008; Faullant et al., 2008). It was found that the majority of customers who assert to be brand loyal did switch brand recently even if they were generally satisfied with their regular brand. Therefore, in order to become loyal and profitable for the company, a customer must be highly satisfied. Any drop from total satisfaction results in a major drop in loyalty (Jones and Sasser, 1995). Moreover, less money needs to be invested in attracting new customers as highly satisfied customers spread positive word of mouth and recommend the service to others (Lovelock and Wright, 2002). As far as restaurant experience is concerned, Stevens et al. (1995) adapted SERVQUAL to the restaurant industry and called it DINESERV. Several authors argued that food, physical environment, and employee services are major components and have an impact on customer satisfaction (Ryu et al., 2012; Chow et al., 2007; Jang and Namkung, 2009). In the fast food industry, several authors studied the impact of perceived service quality on customer satisfaction and loyalty (Stevens et al., 1995; Brady et al., 2001; Qin and Prybutok, 2009; Gilbert et al., 2004; Qin et al., 2010; Johns and Howard, 1998; Law et al, 2004). The factors such as the taste of food, the outlet cleanliness, the fast service, and the friendliness of staff seem to play a major role. Moreover, two values that are gaining importance are price and nutritional values (Kara et al., 1995; Oyewole, 1999; Min, 2011). Convenient operating hours are a further significant point for consumers (Oyewole, 1999).

Challenges when dealing with customers in different countries/cultures

One of the most important research studying cultural differences between countries was done by Hofstede in 1991. He stated that differences in thinking needed to be taken into consideration if one wants to define effective solutions in a cross-cultural context. People acquire patterns of thinking, feelings and potential acting during their childhood which are formed afterwards by their social environment. Picking up on the theory of Hofstede, Laroche et al. (2004) defined culture as the sum of learned beliefs, values, and customs that create behavioural norms for a given society. Culture is one of the key constraints to complete marketing standardization. In fact, it has been noted that the inability of firms and their managers to make adjustments to the demands of the international business environment, principally due to the inability or unwillingness of managers to appreciate cultural challenges, has been cited as the principal cause of international business failures. For business success in new geographic areas, it is vital to develop strategies that adapt to the cultural environment of the country. Depending on the characteristics of the culture, the service provider needs to work harder to delight its customers. As standardization is necessary in order to control cost, managers need to ensure that they offer the same services to similar customers. However, in parallel smart firms are customizing their offerings and services to local markets (Ueletschy et al., 2008). With the trend of globalization, growth of transnational corporations, and the emergence of culture related issues, cultural differences have become significant when explaining the behaviour of consumers and designing efficient marketing strategies and tools (Weiermair and Fuchs, 2000).

Hofstede (1991) identified five dimensions of culture which are i) power distance (the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally), ii) individualism versus collectivism (the degree of interdependence a society maintains among its members), iii) masculinity versus femininity (the fundamental issue here is what motivates people, wanting to be the best or liking what you do), iv) uncertainty avoidance (the extent to which the members of a

culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these), and v) long-term versus short-term orientation (the extent to which a society shows a pragmatic future-oriented perspective rather than a conventional historical short-term point of view). These cultural dimensions have been widely used in explaining customers’ perception of service quality in different cultures (Donthu and Yoo, 1998; Furrer et al., 2000; Hoare and Butcher, 2008). Donthu and Yoo (1998) analysed the effect of Hofstede’s dimensions on customers’ service quality expectations. They found that the level of expectation is higher for customers with a culture identified to be individualistic, low on power distance, short-term oriented and high on uncertainty avoidance. Laroche et al. (2004) and Ueletschy et al. (2008) found that some measures of service quality and satisfaction were constant across cultures. This suggests that some marketing measures can be standardized but that total standardization will not lead to satisfaction. Whereas consumers from collectivist and/or high uncertainty avoiding cultures tend to voice praise when they receive superior service, they are also less apt to switch service providers and to voice criticism when they receive inferior customer service. In direct contrast, consumers from individualistic and/or low uncertainty avoiding cultures are less likely to praise superior service but are more apt to switch and to voice criticism.

Culture in Switzerland versus China

Table 1 shows a comparison of culture between Switzerland and China. According to Hofstede (1991) Switzerland is an individualistic and masculine culture with a small power distance and a relative high tolerance for uncertain situations. Chinese culture is characterized by a large power distance, collectivism and a long-term orientation.

Table 1: Cultural distance between Switzerland and China (Hofstede, 1991)

Note: PDI = Power distance, IDV = Individualism, MAS = Masculinity/Feminity, UAI = Uncertainty avoidance, LTO = Long term orientation China’s fast food market

In 2006, fast food industry revenues reached 35 billion dollars in China (Datamonitor, 2007). In 2009, its revenues reached 64 billion dollars while fast food industry revenues in the world reached 486 billion dollars (Euromonitor, 2010). With the fast-growing middle class in China, their lifestyle is changing and less people are cooking at home (Cullen et al., 2008). However, fast food in the Chinese market share accounts for only 9.8% of Chinese sales for outside meals versus 84.5% in America (Datamonitor, 2007). This implies an important potential of growth in China (Qin et al., 2010). By 2014, it is predicted that fast food will account for 26% of the consumer foodservice market (Euromonitor, 2010). International fast-food chains are rushing into China due to the huge market potential. Asian fast-food restaurants represent by far the largest sub-sector in the fast food industry. This implies that Chinese customers are obviously accustomed to their local cuisine. Additionally, Asian fast-food restaurants also have lower selling prices than Western fast-food outlets. Indeed, prices in McDonald’s and Kentucky Fried Chicken are often too high for people living in underdeveloped cities and rural areas. McDonald’s who is present in China since 1990, is number two with 15.8% market share compared to

40.2% of KFC (Euromonitor, 2010). As local products are favoured by Chinese customers, Western fast-foods such as McDonald’s must adapt their offers to the local market.

Switzerland’s fast food market

Sales of fast food remained strong in 2009, indicating that they have not suffered from or were not greatly impacted by the recent credit crunch. Indeed, they even benefited as customers downgraded from more expensive restaurants. In 2009, sales reached 1.5 billion dollars (Euromonitor, 2007). Further, the popularity of fast-food outlets among youngsters contributed to the growth. An estimated 20% of young people in Switzerland aged between 15 and 24 eat fast food more than twice a week (Euromonitor, 2010). The fast food industry is predicted to grow further, supported by time-pressed and busy customers looking for time-saving solutions (Euromonitor, 2010). Fast-food providers are challenged by the increasing health focus and campaigns sponsored by the Federal Office of Public Health and major consumer protection associations that prompt Swiss consumers to limit their fast food consumption. As a reaction to this trend, fast-food restaurants have adjusted their menu offerings. In order to cater to the health conscious clientele, they make ingredient and nutritional information available on their menus (Euromonitor, 2010). Burger fast food dominates the market with almost 50% of the total fast food value in 2009. McDonald’s is a major contributor to the fast food brand with 42% market share (Euromonitor, 2010) and its first restaurant opened in 1976.

RESEARCH FRAMEWORK

Figure 1 represents the research model. The goal of this research is not to test the complete model, but to observe the impact of nationality on the other variables. As we already have an idea of the five dimensions of national culture described by Hofstede for the two countries, we focused on the consumers’ nationality instead of asking them questions related to Hofstede’s dimensions. We also aim to determine whether nationality has a moderating role on the other relationships between the different latent variables. As SERVQUAL instrument has been used in several different cultural contexts, we opted for this instrument and we adapted the items of the five dimensions of SERVQUAL, which are reliability, responsiveness, assurance, tangibles, and empathy, to the fast food industry. We only focused on consumer perception of performance and not on their expectation. In this sense, we were more similar to SERVPERF.

Figure 1: Initial research model

Notes: Links between IVs (independent variables) and DVs (dependent variables) based on literature Our specific 6 hypotheses

METHODOLOGY

Sampling and data collection procedures

Switzerland and China were selected to represent Western and Asian cultures. We selected McDonald’s as it is globally a standardized and well-known fast-food chain. Students were chosen for our two samples. They were identified to be the current customers of fast-food restaurants and consequently possess an intuitive understanding of fast-food outlets. Further, they do not have a lot of discretionary income to spend on eating out and are therefore likely to choose cheap options such as McDonald’s. A student sample was also chosen to enhance sampling equivalence. This approach is often used for cross-cultural studies as they minimize demographic and socioeconomic variances (Clarke, 2001). Indeed, students share similar characteristics which facilitate a comparison of the variables in question. Research was facilitated through the easy access to universities and therefore to the target population. The sampling frame consists of Swiss students at Ecole hôtelière de Lausanne and University of St. Gallen, and Chinese students from the Beijing Hospitality Institute.

The questionnaire was sent to 683 Swiss students and to 572 students in China which results in a total number of 1255. A total of 118 responses were collected, 66 from Swiss students and 52 from Chinese students. This results in an overall response rate of 9.4% (9.7% for the Swiss sample, 9.1% for the Chinese sample). The relatively low response rate of the present study can be explained by the length of the questionnaire. Indeed, as we wanted to increase the reliability of respondents, we had several items for the majority of our latent variables.

Data analysis method

Data analysis was performed using ANOVA. Structural equation modeling (SEM) was also adopted to test the hypotheses because the model contains latent variables. We chose partial least square (PLS), because it does not require a large sample (Fornell and Lacker, 1981). SmartPLS 2.0 was used for the analysis. We employed a bootstrapping method (200 sub-samples) to test the significant level of regression path coefficients.

RESULTS

Reliability and validity of measures

All latent variables have a cronbach’s α higher than 0.6, which confirms that the scale reliabilities have adequate and stable measurement properties. Validity is assessed based on three main criteria, namely unidimensionality, convergent, and discriminant validity. An exploratory factor analysis can verify unidimensionalty. In our case, validity is confirmed and sufficient to support the model.

Results and discussion

Table2 shows the comparison of means between the perception of Chinese and Swiss fast-food consumers. The first major difference comes from the perception of product quality. Chinese consumers perceive a higher quality of product in McDonald’s (mean = 3.28) compared to Swiss consumers (mean = 2.25). This difference seems to be very important. On Figure 2, we see that the nationality explains 25.7% of variance of product quality perceived. Hence H2 is supported. Vignali (2001) argued that the perception of the quality of McDonald’s products varies based on the country. This point can also explain the fact that there is no significant difference of perception about price. Indeed, the perception about the fairness of the price is very similar in the two samples. Consumers in China appear to be willing to pay a higher price relative to their earnings due to the fact that they perceive a higher quality in McDonald’s products. Hence H3 is supported.

Another significant difference is the image of the company. We notice that Chinese consumers have a better image of McDonald’s (mean = 3.68) compared to Swiss consumers (mean = 3.36). Hence, H4 is supported. On can conclude that compared to China, McDonald’s managers in Switzerland should work harder

in order to improve their image. Healthy meals are gaining importance and compared to Chinese consumers, Swiss consumers seem to not be convinced enough by the efforts done by McDonald’s or other fast-food restaurants.

As far as the degree of general satisfaction is concerned, there is no significant difference between the two samples. However, Chinese consumers seem to have a higher degree of loyalty towards McDonald’s (mean = 3.07) compared to Swiss consumers (mean = 2.71), even if they are not more satisfied about McDonald’s. Hence H5 is rejected and H6 is supported.

As far as the quality of service is concerned, we observe a significant difference for these two sub-dimensions: reliability and tangibles. Chinese consumers perceive these two sub-dimensions more positively compared to Swiss consumers. Hence one can claim that H1 is partially supported.

Table2: Comparison between the perception of Chinese and Swiss fast-food consumers: ANOVA results

Mean Total Mean

Min Max ANOVA (F)

p-value Constructs Swiss China 1. Reliability 3.264 3.599 3.412 1 5 7.965 .006* 2. Tangibles 3.401 3.691 3.529 1 5 5.984 .016* 3. Responsiveness 3.104 3.196 3.145 1 5 .691 .407 4. Assurance 3.159 3.299 3.221 1 5 1.145 .287 5. Empathy 3.294 3.361 3.324 1 5 .335 .564 6. Product quality 2.257 3.288 2.711 1 5 40.153 .000** 7. Price 2.969 3.076 3.016 1 5 .304 .582 8. Image 3.369 3.680 3.506 1 5 7.247 .008** 9. Satisfaction 3.216 3.406 3.300 1 5 2.385 .125 10. Loyalty 2.716 3.071 2.872 1 5 5.290 .023*

Notes: * Significant at the 0.05 level. ** Significant at the 0.01 level.

Figure 2 presents the results of the PLS analysis. We observe the values of different path coefficients. As mentioned below the variable nationality is not ordinal. However, as we only have two groups (codification: Swiss consumers = 1 and Chinese consumers = 2), we normalized the data in order to measure the impact of this variable on the others. As mentioned above, the profile of respondents (China versus Swiss consumers) influences significantly i) the product quality perceived (γ = 0.507), ii) the image perceived of McDonald’s (γ = 0.203), and iii) the degree of loyalty (γ = 0.139).

As a moderator variable, we can observe that nationality influences the impact of image on the degree of loyalty. This means that for Swiss consumers, the image (negative or positive) perceived about the company has a more important impact on their loyalty compared to Chinese consumers (γ = -0.163). The negative value is due to our codification. We also observe that nationality influences the impact of service quality on the image of McDonald’s. It means that for Chinese consumers, the quality of service perceived has less influence on the image of the company compared to Swiss consumers (γ = -0.356).

On the Figure 2, we also observe other relations between our latent variables, which confirm the literature and where there is no difference between our two samples (e.g. the impact of satisfaction on loyalty). We also observe that the firm’s image and service quality influence customer satisfaction the most (respectively γ = 0.379 and γ = 0.327). 45.2% of variance in customer’s satisfaction is explained by the independent variables. Product quality and price fairness seem to not have an impact on customer satisfaction in a fast-food context. One can also claim that customer satisfaction is the variable that has the strongest influence on customer loyalty (γ = 0.468). The image of the company perceived by the customer also has an impact on loyalty (γ = 0.183). The overall variance explained in customer loyalty is 50.6%, indicating that the proposed model in this study could well predict and explain customer loyalty in our context.

Fast-food managers must adapt themselves to the preferences of local consumers. However, this study also showed that not all variables are perceived differently by Swiss and Chinese consumers. This implies that some measures can be standardized in order to save costs.

Figure 2: Results of the PLS analysis

Notes: * Significant at 0.05 level. ** Significant at 0.01 level. a The variable nationality is not ordinal. However as we have 2 groups (codification: Swiss consumers = 1 and

Chinese consumers = 2), we normalized the data in order to measure the impact of this variable on the others. b The 5 dimensions of SERVQUAL which are reliability, empathy, responsiveness, tangibles, and assurance define

the latent variable service quality. We decide to not put them in the Figure 2 in order to keep it more readable.

LIMITATIONS AND FUTURE WORK

This study is subject to some limitations. First, we must be careful in the generalization of our findings to all fast-food restaurants, due to the fact that it concerns McDonald’s. Second, the size of our two samples is small and is limited to students. Thus, the two samples do not represent the entire consumer population. Nevertheless, the use of a student sample is not rare as students are a legitimate proportion of the customer base of many fast-food restaurants (Min, 2011). Third, as we selected students from cities, we again must be careful in the generalization of our findings. For example, one can suppose that Mcdonald’s prices perceived by people living in Chinese cities are different compared to people living in underdeveloped cities and rural areas. Fourth, measurement of product quality perceived was carried out using a single-item scale.

A possible area for future research is to explore other fast-food providers and compare results with McDonald’s. It would also be interesting to study other types of restaurants and to observe the similarities and differences between the two cultures. Another possible area for future research is the comparison with other countries and cultures such as the US, India, Japan, etc. Finally, it may be useful to make the same research in ten years and observe the evolution of behaviours and perceptions over time.

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The Influence of Ecocentric and Anthropocentric Attitudes and Intrinsic Product Attributes on Organic Wine Preferences

Imran Rahman

Tyler Stumpf Prof. Dennis Reynolds ([email protected])

Washington State University Pullman, Washington, USA

Stand-up Presentation at the 2012 EuroCHRIE Conference

Lausanne, Switzerland

ABSTRACT

This experimental study, employing sensory evaluation in conjunction with a survey eliciting participants’ attitudes towards environmental issues, investigated whether ecocentric and anthropocentric values or attitudes influence consumer preference for organic wines. The means-end approach, evaluative conditioning, and consumer involvement provided the underlying theoretical foundation for the study. Despite strong theoretical underpinnings, the results indicate that taste alone among intrinsic wine attributes influenced participant preference for wines, whether organic or non-organic. Ecocentric and anthropocentric values or attitudes were found not to significantly influence participants’ preference for organic wine.

INTRODUCTION Since the advent of the “New Environmental Paradigm” (Catton & Dunlap, 1978) in the late 1970s, researchers interested in consumer behavior have paid increasing attention to the interface between society and the natural environment, including the importance of environmental consciousness as a factor that can influence human behavior (Dunlap and Catton, 1979). Now more than ever it is important to understand how consciousness of environmental issues affects consumer preferences and purchase decisions. The corresponding trend towards sustainable consumption has generated growing demand for products that incorporate social and environmental considerations into their design and delivery (Seyfang, 2007). This growing consumer demand warrants a deeper understanding of consumer purchase motivations and attitudes toward organic products (Yiridoe, 2005). The burgeoning segment of “ethical” consumers focuses on a range of issues associated with corporate responsibility, foremost among which is its concern with the environmental or ecological impact of purchase decisions (Tallontire, Rentsendorj, & Blowfield, 2001). As a result of the growing paradigm shift towards ‘eco-friendly’ lifestyles, consumers are “basing their purchasing decisions on how well products satisfy individual needs, while minimizing the negative impact on the natural environment” (Barber, Taylor, & Deale, 2010, p. 65). We observe evidence of this trend towards eco-friendly products in increasing demand for organically produced foods and beverages. Organic farming and production methods utilize natural, organic inputs and sustainable technologies to bring products in several segments—food, beverages, cosmetics, clothing, etc.—to the marketplace. Consumers concerned with sustainable consumption appreciate eco-friendly packaging practices and organic products, which they perceive as fitting their sense of identity, attitudes, and personal values (Vermeir & Verbeke, 2006). In short, today’s consumers “tend to view consumption acts both as an experience and as a slice of life” that reflects underlying values (Mora & Moscarola, 2010, p. 675). Prior studies have examined how environmental attitudes can impact purchase decisions (Balderjahn, 1988; Barber, 2010; Mainieri, Barnett, Valdero, Unipan, & Oskamp, 1997), the impact of product labeling on consumer preferences (Celhay & Passebois, 2011; Grankvist, Dahlstrand, & Biel, 2004), and factors that impact preferences for organic products (Chryssohoidis & Krystallis, 2005; Demeritt, 2002; Lodorfos & Dennis, 2008; Padel & Foster, 2005), but few, if any, studies have investigated these issues as we have, by combining three underlying theoretical approaches—means-end, evaluative conditioning, and consumer involvement. In this paper we deploy these approaches to examine factors that play into consumer purchase decisions regarding organic wines by combining a survey to elicit environmental attitudes with sensory evaluation, namely wine tasting. To our knowledge ours is the

only study of consumer preferences for organic wines that includes wine tasting and sensory evaluation in its methodology in an experimental setting. In particular, to contribute our unique approach to the literature, we conducted an empirical investigation that examines how consumer attitudes regarding environmental issues and values affect preferences for organic wines. To this end, we utilized an experimental research design to investigate the interplay between organic and non-organic wine cues, environmental attitudes, and wine preferences. The overarching purpose of this research is to extend our understanding of both the ways in which environmental attitudes affect consumer behavior and the role of product labeling in the formation of consumer perceptions, including preferences based on taste and other sensory modalities. Our methodology enabled us to examine the role of both extrinsic attributes, such as consumer values, and the intrinsic attributes of wine (taste, bouquet, and appearance) in the process through which consumers include labeling information when evaluating organic wines.

LITERATURE REVIEW

Sustainable Consumption Over the past decade, consumers have increasingly linked their consumption behaviors with social issues of personal relevance (Vermeir & Verbeke, 2006). Today’s consumer may integrate corporate ethics and social responsibility, fair trade, worker exploitation, animal rights, local economic development, nationalism, and support for diversity in addition to or instead of environmental awareness into their perceptions of and preferences for particular brands and products. As Solomon (1983, p. 319) aptly asserts, “Consumption does not occur in a vacuum; products are integral threads in the fabric of social life.” Environmental considerations are now given conspicuous prominence in the minds of contemporary consumers when making purchase decisions and lifestyle choices (Barber, Taylor, & Strick 2009). With the rise of ‘green consumerism,’ consumer identities, values, and attitudes play a pivotal role in connecting consumption activities and preferences with lifestyles and ideologies (Haanpaa, 2007). Thus, consumers may rely on the implicit social information that accompanies products in aligning purchase behaviors with desired social roles (Solomon, 1983). For example, in an effort to combine the satisfaction of personal needs with the broader societal obligations of environmental stewardship, consumers have increasingly assigned credence to the value of products made using organic processes. Organic Products Organic agricultural production omits the use of manufactured or ‘artificial’ chemical fertilizers and pesticides in order to reduce pollution and improve the quality of soil and the produce it yields (Reed, 2001; Seyfang, 2007). Proper labeling of organic agriculture products has been recognized as one of the first and most successful forms of labeling that signifies eco-friendly product attributes (Allen & Kovach, 2000). According to the United States Department of Agriculture (UDSA), the term organic is used in product labeling to indicate that the product has been certifiably produced via approved methods that “integrate cultural, biological, and mechanical practices that foster cycling of resources, promote ecological balance, and conserve biodiversity” (USDA, 2012). In addition to improving and sustaining soil health, organic production reduces surface and groundwater pollution, promotes habitat and genetic diversity protection for wildlife, and preserves significant elements of the cultural landscape such as small farms (Biao, Xiaorong, Zhuhong, & Yaping, 2003). Due to consumer emphasis on health (which we note in greater detail below) and sustainability, organic agricultural products have been growing rapidly in popularity. Organic food and beverage sales in the United States grew from $1 billion to $26.7 billion between 1990 and 2010, with total global sales reaching nearly $55 billion in 2009 (Willer & Kilcher, 2011). In addition, over 130 countries worldwide now house certified organic commercial agriculture operations (Lotter, 2003). Accordingly, researchers have become increasingly interested in organic food and beverage products. Examples from the extant literature include studies on the factors that impact organic product purchase decisions (Chryssohoidis & Krystallis, 2005; Demeritt, 2002; Lodorfos & Dennis, 2008; Padel & Foster, 2005), consumer perceptions of the quality attributes of organic foods (Hay, 1989), differences in organic food purchases based on

ethnicity (Quah & Tan, 2009) and country (Thøgersen, 2010), and consumer price considerations when making organic purchase decisions (Canavari, Nocella, & Scarpa, 2005; Doorn & Verhoef, 2011; Kalogeras, Valchovska, Baourakis, & Kalaitzis, 2009). Other studies have focused on the interface between organic products and environmental issues. In their study on organic food buyers in the Netherlands, Schifferstein and Oude-Ophuis (1998) found that these consumers are keenly interested in issues relating to nature and the environment. Grunert and Juhl (1995) reported results from Denmark that found environmental attitudes and organic food purchases were positively correlated, while Davies, Titterington, and Cochrane (1995) found that environmental concern was the primary motivation for purchasing organic food products. Finally, the association between organic products and the environment dovetails with a related interest in health. Recent trends in consumption habits exhibit a greater concern for both health and the environment on the part of consumers (Molla-Bauza, Martinez, Poveda, & Perez, 2005; Smith & Marsden, 2004). Numerous studies have shown that consumers perceive organic products as healthier and of higher quality as well as being safer for the environment (Magnusson, Arvola, Hursti, Aberg, & Sjoden, 2003; Saba & Messina, 2003; Schifferestein & Oude Ophius, 1998; Williams & Hammit, 2001). Environmental concern has been found to be a major determinant of organic food purchase decisions (Grunert, 1993; Van Dam, 1991), as has concern for health and overall animal welfare (Schifferstein & Oude-Ophuis, 1998; Soil Association, 2000; Tregear, Dent, & McGregor, 1994). As such, it seems reasonable to expect that consumers with a high level of concern for health and the environment will prefer organic wines to their non-organic counterparts. Wine and Involvement Compared with scholarly interest in aspects of consumer behavior relating to organic food purchasing decisions, relatively little attention has focused on organic beverages, including organic wines, the subject of the present study. Much as both eco-consciousness and organic food consumption (Schifferstein & Oude-Ophuis, 1998) have been characterized as benchmarks of a way of life, wine has been classified as a lifestyle beverage in its own right (Bruwer, Saliba, & Miller, 2011). Many people drink wine, that is, for more than the tactile sensations it provides. Wine helps to define a person’s identity as an expression of a desire to be associated with a particular lifestyle, social class, community, or culture. Wines can embody specific sociocultural characteristics and symbolic representativeness as well as contribute to the construction of one’s personal narrative (Mora & Moscarola, 2010). In view of these considerations, researchers use the concept of consumer involvement to help them elucidate how complex emotions and attitudes towards wine products can influence consumer choices (Barber et al., 2009; Barber, Taylor & Deale, 2010; Barber Taylor & Strick, 2010; Mora & Moscarola, 2010). Consumers are considered to be ‘involved’ with a product when the product is perceived as addressing or corresponding to something of considerable value or central importance in their lives (Vermeir & Verbeke, 2006). Zaichkowsky (1985) classifies involvement into three categories: the personal (inherent interests, values, or needs that motivate one towards an object), the physical (characteristics of an object that cause differentiation and increase interest), and the situational (something that temporarily increases the relevance of or interest in an object). Involvement and aspects of personality such as attitude are regarded as accurate predictors of environmental concern or consciousness (Antil, 1984). A handful of studies have investigated the interface between wine consumerism and environmental issues from a consumer involvement perspective. For example, Barber et al. (2009) examined how product and environmental involvement, along with knowledge and attitudes, affect purchase decisions, finding that consumer knowledge regarding environmental issues that pertain to wine is related to personal involvement with broader environmental issues, and that “involvement with wine as a product will positively impact a consumer’s belief in what they know about environmental wine issues.” The same study also suggests that consumer attitudes towards environmental issues are positively related to knowledge of environmental wine issues, and that strong attitudes regarding the environment are positively associated with willingness to purchase environmentally friendly wine. Barber, Taylor, and Deale (2010) focused on wine tourism to examine the relationship between environmental involvement, environmental attitude, behavior, and purchase intentions, finding significant relationships between strong environmental attitudes and willingness to purchase environmentally friendly wines. Barber (2010)

investigated profiles of consumers who are willing to pay a premium for green wine packaging (i.e., packaging that involves minimal environmental consequences) finding that consumers with more environmentally friendly attitudes are willing to pay a premium for such products. While these studies have yielded interesting insights into the wine consumption experience, the existing body of research does little to address consumer perceptions of either the extrinsic or intrinsic attributes of organic wines. Wine Labeling Scholars are becoming increasingly interested in the impact of wine labeling and packaging on consumer wine product evaluations. Labeling can significantly influence consumer purchase behavior and perceptions of quality, particularly among those interested in specific growing practices (Dimara & Skuras, 2005). Packaging styles can supplement labeling information to communicate distinct traits that also impact consumer perceptions and purchase behavior (Jarvis, Mueller, & Chiong, 2010). Mueller and Szolnoki (2010) used the expectancy disconfirmation approach, placing subjects in the blind condition to examine the effects of brand, grape variety, origin, and packaging, finding strong support for the impact of brand name and packaging on consumer preferences, while also reporting significant consumer demographic heterogeneity and varying responses to intrinsic and extrinsic product cues. We have mentioned the distinction between intrinsic and extrinsic product attributes, a distinction that is especially relevant for wine. After all, the culture of wine drinking focuses on intrinsic attributes such as aroma or bouquet, taste, color, or texture (Jarvis et al., 2010; Richardson et al., 1994). Yet research has shown that extrinsic attributes such as price, brand name, label imagery, and package design may also influence wine consumption and purchase behaviors (Richardson, Dick, & Jain, 1994). Boudreaux and Palmer (2007) investigated the effects of wine label imagery, label, and color on consumer perceptions of brand personality, finding significant evidence that these components of the wine label, and in particular label illustrations, do indeed affect perceptions of brand personality, which in turn impacts purchase intent. Jarvis et al. (2010) examined the impact of several wine label symbols, finding that distinct consumer segments reacted differentially to various metaphorical and non-metaphorical symbolic elements. Other studies have investigated which aspects of the wine label consumers seek out in purchase situations (Dimara & Skuras, 2005) and the relative impact of various labeling cues such as region of origin (Skuras & Vakrou, 2002; Tustin & Lockshin, 2001). While these and other studies in the wine literature have provided interesting insights into the impact of the extrinsic attributes of wine products, very little research has investigated how a wine’s extrinsic attributes influence consumer perceptions of its intrinsic attributes. One exception is Priilaid (2006), a study that involved sighted and blind tasting to illustrate how perceptions of wines’ intrinsic qualities are affected by extrinsic cues such as price, origin, and grape cultivar. The present study is a related but distinct variation of Priiliad’s, insofar as we use organic/non-organic labeling as an extrinsic cue posited to attempt to influence perceptions of intrinsic quality and overall wine preferences, which are in turn moderated by consumers’ environmental attitudes.

HYPOTHESIS DEVELOPMENT Means-End Approach The means-end approach can be used as the theoretical basis for understanding the relationship between product attributes and consumer values. Several studies have used the means-end conceptual framework to study consumer perceptions of and purchase behaviors regarding organic food (Makatouni, 2002; Zanoli & Naspetti, 2002) and wine products (Fotopoulos, Krystallis, & Ness, 2003). The means-end approach conceptualizes a product as the means through which a consumer achieves a desirable end value state (Gutman, 1982). Understanding end value states is important to both managers and consumer researchers because they play a critical role in shaping consumer decision patterns (Gutman, 1982) and are especially important in product positioning and market segmentation for high-involvement products such as wine (Judica & Perkins, 1992). The means-end approach can be modeled as a chain that starts with a consumer’s perception of a product’s attributes, which leads to perceptions about the functional and then social and psychological consequences of the

product’s use (Fotopoulos et al., 2003). These perceived consequences are governed by the values that are personally relevant to individual consumers, who will thus prefer products with attributes that help them achieve a desired end state that corresponds with their personal values (Judica & Perkins, 1992). In simple terms, consumers rely on perceived attributes or “cues” to help them make a purchase decision (Crane & Clarke, 1988).These means-end considerations result in our first research hypothesis: Hypothesis 1: The presence of an organic cue will influence subjects’ wine preferences such that

preference ratings will be significantly higher when the cue is present. When purchasing a specific food or wine product, consumers prefer specific attributes that they perceive as quality cues (signals) that pertain to the whole product. Examples of quality cues for wine can include taste, aroma, type, vintage, price, label, country of origin, and bottle enclosures. Based on the distinction between intrinsic and extrinsic cues (Olson 1977; Olson & Jacoby, 1972), taste, appearance, and bouquet are examples of intrinsic cues for wine whereas vintage and country of origin serve as extrinsic cues. Therefore, when a label or menu informs a consumer that a wine is organic (the manipulation used in this study), it is providing an extrinsic cue. Insofar as the means-end approach links product choice (the means) with product attributes and values (the ends), we expect certain product attributes and personal environmental values to determine consumer choice regarding organic wines. Thus, keeping in mind the ecological and health benefits of organic wines, ecocentrism—valuing nature for its own sake—and anthropocentrism—valuing nature because of the material or physical benefits it can provide for humans (Thompson & Burton, 1994)—are also expected to influence the preference for organic wines. Evaluative Conditioning We find further theoretical support for our study methodology in the concept of evaluative conditioning. Evaluative conditioning explains an important aspect of consumer behavior that can be used to supplement the means-end model for explaining consumer preferences. Under evaluative conditioning, a person’s evaluation of a certain stimulus may depend on, and will often change with, the pairing of that stimulus with at least one other evaluated stimulus (De Houwer, Thomas, & Baeyens, 2001). One of the earliest studies of how conditioning influences affective states was conducted by Razran (1938), who asked subjects, some of whom were eating a free lunch and some of whom were being subjected to unpleasant odors (unconditioned stimuli—stimuli that elicit a target response naturally), to evaluate paintings, music, literary quotations, political slogans, and photographs (conditioned stimuli—stimuli whose pairing with an unconditioned stimulus cause them to elicit the same target response), finding that the conditioned stimuli were rated more positively when paired with the free lunch and more negatively when paired with the unpleasant odors. Following this seminal study, scholars have written extensively on the processes by which valence (positive or negative attraction to an object) is transmitted between stimuli (Davey 1994; Levey & Martin, 1975; Martin & Levey, 1978, 1994). A typical study in this area involves pairing a neutrally valenced conditioned stimulus (CS) with a liked/disliked unconditioned stimulus (US) to measure how ratings of the neutral CS fluctuate in congruence with ratings of the US. According to Davey (1994), even conceptually neutral stimuli can have liked or disliked characteristics, and the act of pairing a CS with a congruent US will elucidate previously inconspicuous liked or disliked characteristics that may be shared by both the CS and the US. For example, “if a CS is paired with a liked US, then the liked features that are shared by the CS and US will become more salient in the CS, resulting in the participant liking the CS more” (De Houwer et al., 2001, p. 853). We posit that a similar process can be used to predict consumer evaluations of organic and non-organic wines. In our study, we conceptualized organic and non-organic wines as the stimuli on which evaluations would be conditioned. Furthermore, we incorporated the means-end approach to predict the moderating effect of environmental attitudes on consumer evaluations of wines. As Chan (1996) has pointed out, a person’s response to a stimulus depends on the attention and relevance that the individual attributes to the stimulus, and external information such as product packaging can help activate relevant decision-making mechanisms, such as ecocentric and anthropocentric attitudes. Therefore, we posit the following hypotheses:

Hypothesis 2: High ecocentric participants will assign significantly higher preference ratings than low ecocentric participants to organic wines accompanied by organic cues.

Hypothesis 3: High anthropocentric participants will assign significantly higher preference ratings than low anthropocentric participants to organic wines accompanied by organic cues.

Intrinsic Attributes The first three hypotheses were designed to test the effects of extrinsic cues on participants as they were asked to choose from a selection that included organic and non-organic wines. To complete our study we tested the effects of the intrinsic attributes of the wines on overall wine preference. Several intrinsic attributes have been established in wine tasting as primary determinants of wine quality—appearance, bouquet, and taste. These attributes comprise the main attributes that are evaluated when tasting wine (Ashland Vineyards, 2012; Island Winery, 2012; Kenswineguide.com, 2012). The focus on these attributes is consistent with the widely prevalent notion that the organoleptic quality of the final product (the appearance, aroma, taste, and other sensory states associated with a food or beverage) is the single most important factor that is considered in winemaking (Pretorius & Bauer, 2002). According to Bilyk, Chodak, and Gorzov (1975), taste and bouquet are key factors in determining wine quality. The appearance of wine has also been regarded as a strong intrinsic cue to quality (Charters & Pettigrew, 2006). We thereby propose the following hypotheses:

Hypothesis 4: Participants’ taste ratings will significantly influence their overall rating preferences. Hypothesis 5: Participants’ bouquet ratings will significantly influence their overall rating preferences. Hypothesis 6: Participants’ appearance ratings will significantly influence their overall rating preferences.

METHODOLOGY

A total of 224 participants (108 in the treatment condition and 116 in the control condition) took part in the experiment, of whom 56.3% were female and 43.7% were male. Participant ages ranged from 21 to 67, with a mean age of 26 years. Regarding ethnicity, the majority of the participants were Caucasian (68.8%), followed by Asians (12.1%), Hispanica/Latinos (6.3%), persons of mixed race (6.3%), and African Americans (4%). Regarding educational attainment, 44.4% had earned a bachelor’s degree, 36.8% had completed high school, 11.7% had earned a master’s degree, 4.5% had completed trade school, and 2.7% had earned a doctorate. As noted, participants were divided into a control group and a treatment group. The experiment was conducted over a two-day period in a laboratory on a university campus in the northwest region of the United States. The convenience sample of students, faculty, and staff were recruited through a university-wide e-mail and stand-up posters. Two researchers along with a laboratory assistant conducted the experiment. Official identification was checked before the experiment to ensure that participants were of legal drinking age. Participants were not allowed to communicate with each other during the experiment. To begin the procedure, participants were asked to fill out a survey consisting of three parts. The first part elicited participants’ attitudes towards environmental issues. The second part was based on the wine tasting itself. The third part elicited demographic information. The survey instrument that constituted the first section was adopted from Thompson and Barton (1994) and consisted of two measures designed to elicit the degree to which participants held ecocentric or anthropocentric attitudes or values. The items in this section were measured on a seven-point Likert-style scale with anchor statements ranging from “strongly disagree” to “strongly agree.” After filling out the section eliciting participants’ environmental attitudes, they were asked to taste four wines, two whites and two reds. One of each type was organic. In the control condition, the white wines were labeled simply A and B and the red wines were labeled simply C and D, while in the treatment condition it was revealed that wines B and D were organic. The same four wines were used in both conditions. Price, packaging and any other information were controlled for in the experiment. The participants were asked to rate the wines on four nine-point Likert-style rating scales for appearance, bouquet, taste, and overall preference with anchor statements ranging from “dislike extremely” to “like extremely.” The experiment was concluded with the last section of the survey, which asked participants to indicate their age, gender, ethnicity, and level of education attained. Regarding data analysis, hypotheses 1, 2, and 3 were tested by undertaking independent samples t-tests. For hypothesis 2, a mean split was also performed, dividing participants into two groups—those with high and those with low ecocentric attitudes. Similarly, a mean split was carried out before testing hypothesis 3, dividing participants into those with high and those with low anthropocentric attitudes. Hypotheses 4, 5, and 6 were tested by multiple regression analysis.

RESULTS

Hypothesis 1 was tested by comparing the mean preference ratings for wine B and wine D by participants in the treatment and control conditions. This was done by undertaking an independent samples t-test. The results are provided in table 1. Table 1: T-test results for preference ratings of organic wines comparing treatment and control conditions Preference Ratings t DF

Treatment Control Appearance Wine B 6.66 6.50 .85 222

(1.46) (1.41) Appearance Wine D 6.47 6.19 1.29 222

(1.64) (1.71) Bouquet Wine B 5.95 6.10 -.73 218

(1.47) (1.51) Bouquet Wine C 5.96 5.88 .33 220

(1.65) (1.89)

Taste Wine B 5.78 5.65 .49 222

(2.13) (2.01)

Taste Wine D 5.24 5.10 .47 222 (2.31) (2.10)

Overall Preference Wine B 6.09 5.78 1.24 222 (1.94) (1.78)

Overall Preference Wine D 5.47 5.30 .61 222 (2.19) (1.96)

**p <= .01; * p <= .05 All preference ratings except those for the bouquet of wine B were found to be higher in the treatment setting, but none of those preference ratings were found to be significantly higher. Thus hypothesis 1 is rejected. Hypothesis 2 and 3 were tested through independent samples t-tests. Mean splits were performed for the ecocentric and anthropocentric scores. The means for ecocentric and anthropocentric attitudes were 5.71 (SD = .67) and 4.56 (SD = .77), respectively. We then divided the sample into two groups (with group 1 including participants whose scores were lower than the mean score on ecocentric attitude and group 2 including participants whose scores were higher than the mean score on ecocentric attitude). The sample was similarly divided regarding anthropocentric attitude scores. The results of t-tests regarding hypotheses 2 and 3 are summarized in table 2:

Table 2: T-test results for preference ratings based on high and low ecocentric and anthropocentric attitudes, respectively Preference Ratings Ecocentric Attitude t DF

High Low Appearance Wine B 6.75 6.58 .61 114

(1.48) (1.45) Appearance Wine D 6.61 6.33 .91 114

(1.53) (1.75) Bouquet Wine B 6.02 5.88 .52 113

(1.47) (1.48) Bouquet Wine D 6.05 5.86 .63 113

(1.69) (1.61) Taste Wine B 5.81 5.75 .15 114

(2.37) (1.89) Taste Wine D 5.46 5.03 .98 114

(2.20) (2.41)

Overall Preference Wine B 6.15 6.02 .37 114 (2.05) (1.83)

Overall Preference Wine D 5.54 5.39 .38 114 (2.24) (2.15)

Anthropocentric Attitude

Appearance Wine B 6.77 6.57 .74 114 (1.24) (1.63)

Appearance Wine D 6.79 6.21 1.94 114 (1.55) (1.68)

Bouquet Wine B 6.28 5.66 2.31* 113 (1.39) (1.48)

Bouquet Wine D 6.21 5.74 1.52 113 (1.77) (1.5)

Taste Wine B 6.26 5.38 2.26* 114 (2.19) (2.02)

Taste Wine D 5.51 5.02 1.15 114 (2.33) (2.29)

Overall Preference Wine B 6.43 5.79 1.79 114 (2.09) (1.76)

Overall Preference Wine D 5.68 5.29 .34 114

(2.20) (2.17)

**p <= .01; * p <= .05 As shown in table 2, no significant difference was found between participants with high or low ecocentric and anthropocentric attitudes, respectively, in participants’ overall preferences for the two organic wines. We also assessed whether there were any differences in participant ratings of taste, bouquet, and appearance based on the same criteria. Regarding hypothesis 2, no significant differences were found. Thus, hypothesis 2 is not supported. With reference to hypothesis 3, only taste and bouquet preferences for wine B were found to be significantly higher for participants with high anthropocentric values, lending slight support in favor of hypothesis 3. However, due to inconsistency and insufficient evidence, hypothesis 3 is rejected as well. Multiple regression analysis was employed to test hypotheses 4, 5, and 6. The results of these analyses, evident in tables 2 and 3, reveal taste as the single intrinsic determinant of overall preference for all wines in the treatment and control conditions. Hypothesis 4 is thus supported. Appearance, however, was found to be a significant determinant for only wines A and B in the treatment condition and wines A, C, and D in the control condition. Similarly, bouquet was found to be a significant determinant for only wines A and C in the treatment condition and B and D in the control condition. Thus, neither appearance nor bouquet was a strong determinant across all wine types in the two experimental conditions. Hypotheses 5 and 6 are thereby rejected. Table 3: The influence of intrinsic attributes on overall preference for the four wines in the treatment condition. Variable A B C D B SE B β B SE B β B SE B β B SE B β Constant .27 .43 .33 .46 1.18 .40 .12 .38 Taste .60 .05 .65** .68 .06 .75** .77 .05 .80** .82 .04 .87** Appearance .21 .07 .21** .18 .07 .14* -.06 .06 -.06 .09 .06 .07 Bouquet .17 .07 .15* .10 .08 .08 .16 .06 .16** .08 .06 .06 R2 .69** .77** .76** .84** **p <= .01; * p <= .05

Table 4: The influence of intrinsic on overall preference for the four wines in the control condition. Variable A B C D B SE B β B SE B β B SE B β B SE B β Constant -.03 .49 .18 .46 .34 .41 -.09 .43 Taste .65 .05 .70** .69 .05 .77** .80 .04 .86** .71 .05 .76** Appearance .24 .08 .20** .05 .08 .04 .15 .06 .12* .14 .06 .12* Bouquet .12 .07 .11 .23 .07 .20** .01 .06 .01 .16 .06 .15** R2 .70** .76** .81** .76** **p <= .01; * p <= .05

DISCUSSION

Research has shown that some consumers prefer organic over non-organic wines and that they are willing to pay a premium price for such products (Forbes, Cohen, Cullen, Wratten, & Fountain, 2009; Fotopoulos & Krystallys, 2001; Molla-Bauza et. al, 2005). However, those studies were based exclusively on surveys and did not involve tasting or sensory evaluations. Although many consumers might express an abstract preference for organic wine, in our study sensory stimulants induced participants in the control condition to emphasize intrinsic attributes such as taste, bouquet, and appearance when choosing a wine. In terms of consumer involvement, we found that the physical element associated with the wines were stronger determinants of wine choice than were the personal aspects associated with the participants. The personal aspects or values we hypothesized involved ecocentrism and anthropocentrism. Previous research has found that consumers who exhibit high environmental attitudes strongly prefer organic wines and are willing to pay more than consumers with low environmental attitudes (Barber et al., 2009). Previous studies have also found that consumers who value a healthy lifestyle express a significantly stronger preference for organic wines and are also willing to pay a premium (Mollá-Bauzá et. al., 2005). However, these studies, again, did not incorporate wine tasting in their methodologies. When we incorporated wine tasting in our study, we found that neither ecocentric nor anthropocentric values had any significant influence on organic wine preferences. Only taste was found to be a strong predictor of wine preferences, not only in the case of organic wines but for all the wines in our study. Although bouquet and appearance significantly influenced some participants’ wine preferences, this outcome was not consistent across all wine types. These findings suggest that retailers may realize little benefit in marketing wines as organic; the related marketing expense may not be justified if the marketing fails to influence preference evaluations significantly. Similarly, we can infer that consumers, having tasted a wine purchased on the basis of extrinsic organic cues, might not repurchase that wine unless they are equally attracted by the wine’s intrinsic attributes. Thus, while past research has suggested that consumers might prefer an organic wine, our evidence suggests that repurchase depends less on a wine’s extrinsic organic cues than on its intrinsic qualities. Consumers who are strongly committed to buying organic might well either sacrifice intrinsic attributes for the sake of the cause or search for alternative organic wines, but our study suggests that there are limits to the extent to which consumer attitudes override sensory responses. We have shown evidence that, as consumers face the repurchase decision, a product’s intrinsic attributes will trump ecocentric or anthropocentric values. The overarching implication for wine manufacturers is that they must focus on taste and other intrinsic attributes if they want to stimulate repeat purchase of organic wines. For researchers, this study points the way to further research on organic wine preferences and repeat purchase intentions by implementing sensory evaluation techniques. While our study was limited to only two personal factors—ecocentric and anthropocentric values—and three intrinsic product attributes—taste, bouquet, and appearance—researchers might in the future incorporate a broader range of personal factors such as environmental apathy, wine involvement, and personality types and a broader range of product attributes such as aftertaste, price, packaging, type of wine, and actual labels.

Limitations

While our convenience sample included undergraduate students, graduate students, faculty, and staff members in a university setting, the majority of participants were undergraduate students, as a result of which the mean age turned out to be only 26. The results might have differed with older participants. Similarly, our participant group was not very diverse in terms of socioeconomic background. However, student samples in experimental settings are widely used in consumer attitudinal and behavioral studies and in that respect our methodology was not without precedent. In addition, the survey questions, especially those involving ecocentric and anthropocentric measures, could have resulted in social desirability bias even though anonymity and confidentiality were assured. And, as stated earlier, the modest sample size may have further limited the generalizability of our results.

CONCLUSION

As contemporary consumption habits change, reflecting a greater concern for health and the environment, it has become increasingly important to study organic products and the underlying consumer behavior in regards to purchasing and repurchasing such products. The main purpose of this study was to test the effects of ecocentric and anthropocentric values or attitudes on consumer preference for organic wines. Although some encouraging patterns emerged, there was not much support for most of our stated hypotheses. Our use of wine tasting and sensory evaluations enabled us to draw several potentially important implications for consumer preference for and repeat purchase of organic wines. Our study suggests that winemakers committed to organic methods would do well to focus on taste and other intrinsic attributes of their wines if they want to stimulate repeat purchase decisions. Our methodology, which added sensory evaluation techniques to a survey instrument, contributes to the wine and hospitality literature a potentially fruitful direction for further research on organic wine preferences and repeat purchase intentions.

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RESTAURANT ENTREPRENEURS’ CHARACTERISTICS AND STRATEGIC ACTIONS AND CONSIDERATIONS

Submitted for consideration as a Refereed Presentation at Eurochrie 2012

BY

Christine Demen-Meier Ph.D.* Professor of Marketing and Management of SMEs

Holder of the Food & Beverage Industry Chair École hôtelière de Lausanne

Le Chalet-à-Gobet Case postale 37

1000 Lausanne 25 Switzerland

[email protected]

François Pageau M.Sc. Professor in hospitality management

Institut de tourisme et d’hôtellerie du Québec 3535 St-Denis, Montréal, Québec, H2X3P1

[email protected]

Abstract: The relations between entrepreneur profile and management style having already been demonstrated, this research on the Quebec restaurant market focuses on the correlation between the characteristics of an entrepreneur’s profile and their strategic actions or considerations. Three congruent strategies were considered and measured in terms of actions and considerations: Blue Ocean, mass customization and partnerships. A survey was distributed to independent restaurateurs trough the Association des restaurateurs du Québec (378 respondents). Results show that characteristics such as “academic background” “action logic” “intention logic” “relational skills” and “personal aptitudes” are probably more important than a determinist approach to strategy choice. A model of prediction could allow entrepreneurs to understand their strategic choices and their favorable posture for a congruent strategy.

Key words: Entrepreneur, Restaurants, Strategies, SMEs,

1

EXPLORING SERVICE SABOTAGE BEHAVIORS IN THE FOOD AND BEVERAGE INDUSTRY

Lou-Hon Sun

National Kaohsiung University of Hospitality and Tourism

Kaohsiung, Taiwan, R.O.C.

E-mail: [email protected]

ABSTRACT This research attempted to classify service sabotage behaviors by food-service employees. Focus group

interviews were conducted for collecting data. A total of fifty-six first line food service employees

were interviewed. Refusal, disregard, disturbance, foolery, mistreatment, and processes simplification

were named as six categories of service sabotage behaviors.

Keywords: Service Sabotage; Misbehavior; Food-Service

ETHNIC MINORITY PERCEPTIONS OF SELF-SERVICE TECHNOLOGY IN LIMITED SERVICE RESTAURANTS

 Clark S. Kincaid*

University of Nevada, Las Vegas 4505 Maryland Parkway

Las Vegas, Nevada 89154-6021 [email protected]

Seyhmus Baloglu

University of Nevada, Las Vegas 4505 Maryland Parkway

Las Vegas, Nevada 89154-6021 [email protected]

Key words: ethnic, discrimination, SST, foodservice, technology, self-service ABSTRACT

The introduction of self-service technology (SST) into the service sector, specifically the restaurant industry, has significant impact upon customers, employees, and management. Exploratory factor analysis was used to identify perceptual/cognitive dimensions of SST. A large international limited service restaurant (LSR) chain was selected for this study. Analysis revealed three dimensions which explained 71% of the variance; usefulness, confidence/risk, and ease of use. Exploratory factor analysis was used to identify perceptual/cognitive dimensions of SST. Analysis revealed three dimensions which explained 71% of the variance; Benefits, Risk, and Ease of Use. The MANOVA findings suggested Ease of Use and Risk perceptions did not vary by Ethnicity. However, Benefits and Attitude dimensions were significantly different at 0.001 probability level. Hispanics and Asians had more positive benefits and attitude than Caucasians. In addition, Hispanics and Asian are found to more likely use SST in LSR’s and recommend using the self-service ordering system to others.

The widening introduction of self-service technology (SST) in what was formerly considered to be the domain of “high-touch and low-tech” service encounters is creating, in many circumstances, a “low-touch and high-tech” service alternative. Customers now have the option of the type of service experience they prefer (i.e. self-service or personal service). Instances where customers have a choice between self-service and personal service may occur at a movie theater when deciding to purchase a ticket from a self-service kiosk or from another person at the ticket window; choosing to scan purchases at a retail outlet or interact with a cashier.

Findings from a study conducted on customer satisfaction with self-service technologies (SST)

(Meuter, Ostrom, Roundtree & Bitner, 2000) were consistent with general perceptions of declining customer service. In response to these challenges, foodservice operators are leveraging technology to improve customer service and operational efficiencies (Kontoghiorghes, 2005). Evidence of this trend is the introduction of SST in the limited service restaurant (LSR) segment. An LSR is defined as one in which the meal is commonly ordered at a counter and paid for before the meal is consumed. Involving the customer as a participant in the production of the guest experience is not a new concept (Ford & Heaton, 2001; Halbesleben & Buckley, 2004; Johnson & Jones, 2004; Lovelock, & Young, 1979; Schier, 2004; Slywotzky & Morrison, 2001). Customer inclusion in the service process within the foodservice industry has taken different forms such as assisting in producing the product (salad bars and self-service beverage stations), marketing (sharing stories of positive experiences), and supplying the organization with beneficial information (purchase records) (Bettencourt, 1997). Customer participation in the service experience can be substantial. Customers replace labor that the organization would otherwise have to pay to perform the same task. Additionally, customers often improve the quality of their experience (Ford & Heaton, 2001).

New technologies have been successfully introduced to assist front-line employees interacting with customers in the delivery of services (Fisher, 1998). The challenge for practitioners has been to get customers to use the new technologies. Customers must recognize the benefits they gain from participating in the self-service process. Utilization of the customer acting as an employee creates internal efficiencies for the organization such as reduction of labor costs, increase in sales, and standardization of service delivery.

In discussing the inclusion of customers in the service production process Ford, Heaton, & Brown

(2001) identify a number of organizational benefits. First, anything customers do for themselves, the organization does not have to do for them. Second, the more the customer participates in the service experience, the greater the likelihood the experience will meet the customers own expectations. Third, organizations may gain loyalty from participating customers who regard themselves as part of the organization’s “family”.

Researchers have recognized the importance of blending technology with the personal aspects of service delivery (Berry, 1999). What is not clear to researchers is what influence the introduction of technology-based interactions will have on satisfaction, perception of service quality, and intentions for the consumer to remain as a customer of the organization.

Preference for self-service transactions has been attributed to the intrinsic motivations received by doing things for one’s self (Bateson, 1983). Previous research indicates many desirable characteristics of SST use for customers. The perception that service encounters are less time consuming when utilizing SST meets the customer desire for a faster service transaction (Meuter, Ostrom, Bitner & Roundtree; 2000 ). Previous research by Kincaid and Baloglu (2006) found that ten percent of customers do not want to interact with service providers. Additionally, convenience, control, privacy, reliability and fun have been found to contribute to customer desire to utilize SST (Dabholkar, 1996; Dabholkar, Bobbitt and Lee, 2003; Kincaid & Baloglu, 2006).

Understanding the precursors to technology acceptance will lead towards increasing the chances for customers to embrace technology based service delivery. In this paper a process model will be developed to organize significant variables contributing to customer responses to technology introduction into the service experience in LSRs. The contributions of this study are both theoretical and practical. First, a new model of customer attitudes toward adoption of SST will be developed, extending existing theories of attitude-behavior relationships. Secondly, operators will benefit from understanding what factors affect customer attitudes and consequently influence customer behavior. The adoption of SST to enable customer service has the potential for both a positive or negative impact on customers, their attitudes, perceptions and behavior, and therefore, the potential for a service provider to

create a favorable or unfavorable impression. Consequently, it is important for service providers to determine how SST should be introduced to provide maximum acceptance and satisfaction so as to be mutually beneficial for customers and practitioners alike (Walker, Craig-Lees, Hecker and Francis, 2002). It has been suggested that a customer’s choice to use, or reject, SST is shaped by their individual willingness and capacity. Willingness is derived from a collection of factors including, for example, the perceived complexity and relative advantage created from utilizing SST (Daniel and Storey, 1997; Loh and Ong, 1998), and the perceived costs and risks associated with using the SST (Zeithaml, 1981). These, and possibly other, considerations are grounded in both customer-intrinsic personal characteristics and customer-extrinsic operational qualities.

While both the customer and the service provider may enjoy many benefits from the utilization of SST, some customers are reticent to embrace SST. Previous SST research has investigated the impact of various personal differences related to SST usage. Most notably individual difference traits have been classified into socioeconomic/demographic factors and personality traits (Schaninger & Sciglimpaglia, 1981). In addition to demographic factors customer personality influence SST usage (Dabholkar, 1996; Meuter, Bitner, Ostrom, & Brown; 2005).

Herbert and Benbasat (1994) combined concepts from the theory of reasoned action (Fishbein & Azjen, 1975) and diffusion of innovation (Rogers, 1995) to develop a model for the adoption of information technology and found support for a relationship between attitude and behavioral intention. The technology acceptance model (TAM) (Adams, Nelson, & Todd, 1992; Davis, 1989; Davis, Bagozzi, & Warshaw, 1989) extends the attitude behavior intention relationship established in the theory of reasoned action, to the adoption of computers in the workplace. These studies developed the idea that ease of use and perceived usefulness of the technology were critical constructs influencing attitude towards using the computer. What these studies failed to examine were the situational variables apart from the technology such as perceived risk or the need for human interaction. DISCRIMINATION

Codes 2000a and 2000a(b) of Title II of the Civil Rights Act of 1964 made it unlawful to discriminate or segregate individuals on the basis of race, color, religion, or national origin in settings of public accommodations. Specifically, the law was designed to eradicate “the unfairness, humiliation, and insult of racial discrimination in facilities which purport to serve the general public” (House of Representatives, 1964).

Unfortunately, racism has not been eliminated and some would suggest is not in decline but rather

manifests through indirectness, subtleness and covertness (Bonilla-Silva & Forman, 2000; Bonilla-Silva, 2002; Coates, 2008, Walsh 2009). Members of underrepresented groups are susceptible to such subtle forms of discrimination when engaging in routine business transactions (Feagin, 1991, 2000; Feagin & Sikes, 1994). Customer Racial Profiling (CRP) frequently occurs in places of public accommodation, such as hotels and restaurants and affects members of minority groups beyond those classified as black/African-American, such as Hispanics, Asians, Native Americans, and Arab Americans (Harris, Henderson, & Williams, 2005; Walsh & McGuire, 2007).

Discrimination manifests itself in a variety of ways. Hill and Tombs (2011) examined the impact of

accent of the service provider on the perception of the recipient of the service. Their findings revealed that accent had a significant effect upon the evaluation of the service provided often evoking a negative predisposition to certain accents and reducing the customers’ level of tolerance and increasing the perception of the service provider’s lack of understanding. Language has been identified as an fundamental dimension of ethnic identity and is often used in social categorization (Rakic et al., 2011). The interactive nature of the service encounter usually involves verbal communication and thus has the potential for triggering biased judgments.

In a study examining the attitudes of restaurant servers in the U.S. Brewster (2012) reported the

average respondent admitted to sometimes discriminating in their service delivery. Furthermore, 68% of respondents stated class bias; 71% expressed bias against the presence of small children; 59% reported bias with regard to customers’ sex; and, 55% describe bias against customers under 21 years of age. Customers that are perceived to be less “troublesome” and provide a more pleasant interaction with the service provider receive preferred treatment over customers to perceived to be less affluent (Dirks & Rice; 2004). Black customers have been described as being comparatively more difficult to serve than white customers (Dirks & Rice, 2004; Rusche & Brewster, 2008).

In a study of black Americans (Willming, 2001) found that 46% of the respondents perceived

discrimination while dining in a LSR. The most common forms of discrimination reported in foodservice operations included being ignored or having service denied; observing others being served first; receiving rude or discourteous service; and being treated unfairly (Brewster & Rusche, (2012).

An examination of the potential consequences of perceived discrimination on the part of customers resulted in the identification of attitudes and behaviors that may make customers feel better and reduce stress (Walsh, 2009).

Avoidance/Ignore the situation Lodge a formal complaint Decrease in customer satisfaction Negative word-of-mouth Decreased trust Decreased loyalty

The literature on discrimination provides a sound basis for the further examination of how SST is

perceived by ethnic groups and the inherent advantages/disadvantages of utilizing SST in LSR environment. METHOD

A large international LSR chain with some franchisees choosing to employ SST was selected for the study. The location selected for this study is located in a major metropolitan area of the western United States. The franchisee of this location agreed to allow data collection for this study. Data collection was performed on three consecutive days, Wednesday through Friday during the hours of 11:00 AM until 2:00 PM, the busiest hours of the day for this type of food service outlet. The LSR selected for this study offered both personal service, interaction with a traditional order-taker, and SST. Customers would select which type of service they preferred and then join the queue offering the desired service. Only individuals entering the queue to use the SST were approached by the researchers and asked if they would like to participate in a university research project. Fewer than ten individuals declined to participate in the study.

The instrument used for this study was adapted from an earlier study conducted by Curran and Meuter

(2005) investigating customer’s antecedent beliefs on utilizing ATM’s, phone banking, and online banking. All antecedent belief constructs were measured using a seven-point Likert scale with endpoints of 1 (strongly agree) and 7 (strongly disagree). The three items used to measure attitudes toward the SST used a seven-point semantic differential scale with endpoints of very good/very bad, very pleasant/very unpleasant, and strongly like/strongly dislike. The two item behavioral intention measure used a seven-point Likert scale with endpoints of extremely likely/extremely unlikely.

Data analysis consisted of several stages. First, descriptive statistics, outliers and assumptions were

assessed (Tabachnick & Fidell, 2001). Second, factor analysis by using principal component analysis procedure, and varimax rotation was performed. Several criteria were used for determining the number of factors, including Cattell’s Scree Test, eigenvalues greater than one, interpretability, stability, and over-factoring (Tabachnick & Fidell, 2001). The .40 cut-off point for the factor loadings was employed in this analysis. Third, Multivariate Analysis of Variance, with post hoc Scheffe tests, was utilized to examine variations in self-service technology beliefs, attitude and behavior due to ethnicity. RESULTS

Exploratory factor analysis was used to identify perceptual/cognitive dimensions of SST. Analysis revealed three dimensions which explained 71% of the variance; Benefits, Risk, and Ease of Use. The MANOVA findings suggested Ease of Use and Risk perceptions did not vary by Ethnicity. However, Benefits and Attitude dimensions were significantly different at 0.001 probability level. Hispanics and Asians had more positive benefits and attitude than Caucasians. In addition, Hispanics and Asian are found to more likely use self-service system in LSR’s and recommend using the self-service ordering system to others.

Data analysis consisted of several stages. First, descriptive statistics, outliers and assumptions were

assessed (Tabachnick & Fidell, 2001). Second, factor analysis by using principal component analysis procedure, and varimax rotation was performed. Several criteria were used for determining the number of factors, including Cattell’s Scree Test, eigenvalues greater than one, interpretability, stability, and over-factoring (Tabachnick & Fidell, 2001). The .40 cut-off point for the factor loadings was employed in this analysis. Third, Multivariate

Analysis of Variance, with post hoc Scheffe tests, was utilized to examine variations in self-service technology beliefs, attitude and behavior due to ethnicity.

Table 1 Measures and individual items Ease of use

Learning to use the self-service ordering system was easy for me.

It was easy for me to become skillful at using the self-service ordering system.

The self-service system was useful for ordering my food.

Risk

I feel secure ordering my food using the self-service system.

I know that the self-service system will handle my order correctly.

There is little danger that anything could go wrong when I use the self-service system.

Benefits

Using the self-service system makes ordering my food easier.

Using the self-service system improves the food ordering process.

Self-service provides more convenient service.

Self-service saves time.

The self-service system is useful for ordering my food.

Attitude

How good or bad do you feel about using the self-service ordering system?

How pleasant or unpleasant is it to use the self-service ordering system?

How much would you say you like or dislike using the self-service ordering system?

Behavior

When you have a choice, how likely are you to use a self-service system?

How likely are you to recommend using the self-service ordering system to others?

Scale: The SST items were measured on a 7-point scale, 1=strongly agree and 7=strongly disagree.

The respondents were mostly males 72%. The age distribution of participants was weighted towards 20-29 year olds (60%). Most of the participants in this study had at least some college education with only 5.6% reporting a high school education or less. These results may be more reflective of the LSR industry and the location of the LSR where the data was collected; adjacent to a well-known west coast university. The ethnic composition of participants was 47% Caucasian and 53% ethnic minorities.

Table 2 Demographic Profile

Variables N Percentage

Sex (n=212)

Male 153 72.2

Female 59 27.8

Age (n=215)

Under 20 29 13.5

21-24 61 28.4

25-29 68 31.6

30-34 24 11.2

35-up 33 15.3

Ethnicity (n=214)

Caucasian 101 47.2

Hispanic 38 17.8

Asian 46 21.5

Other 29 13.6

Education (n=215)

High school or less 12 5.6

Some college 47 21.9

College graduate 73 34.0

Graduate degree 83 38.6 Table 3 Variations in SST Evaluations by Ethnicity (N=214)

SST Factor Dimensions Caucasian (n=101)

Hispanic (n=38)

Asian (n=46)

Other (n=29)

F-test p-value

Ease of Use 1.60 1.46 1.51 1.40 0.499 0.684 Risk 2.41 2.33 2.60 2.59 0.457 0.713 Benefits 2.85a 1.75b 2.03b 1.84b 9.85 0.000* Attitudes 2.26a 1.75a,b 1.71b 1.49b 6.05 0.001* Behavioral 2.75a 1.97b 1.91b 1.44b 12.66 0.000* Note: Mean scores with different letters (a, b) are significantly different at 0.001 probability level.

Exploratory factor analysis was used to identify perceptual/cognitive dimensions of the SST. Analysis revealed three dimensions which explained 71% of the variance; Benefits, Risk, and Ease of Use. The MANOVA findings suggested Ease of Use and Risk perceptions did not vary by Ethnicity. However, Benefits and Attitude dimensions were significantly different at 0.001 probability level (Table). Hispanics, Asians, and Others had more positive benefits than Caucasians. On the other hand, Asians and Others exhibited more positive attitudes than Caucasians. In addition, Hispanics, Asians and Others are found to more likely use customer controlled dining systems in LSR’s and recommend them to others.

These findings are of particular importance to both researchers and practitioners. In examining the perceived benefits for non-Caucasians all groups found the SST to both improve the food ordering process and make the ordering food easier (significant at 0.000 probability level). Another important finding from this study is that both Asians and Hispanics identified the SST as more convenient and saving more time (significant at 0.000 probability level) than Caucasians.

The above described are findings are of particular importance to food service operators when determining the strategic deployment of SST assets. Due to the perceived benefits enjoyed by non-Caucasians operators should first look at deploying SST in locations with a high non-Caucasian demographic. The potential for both customer and employee discrimination as described in the literature review supports the strategic use of SST to increase customer satisfaction and repeat patronage.

The lack of person-to-person direct interface will eliminate from the service experience the potential

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Challenges for procurement in the UK Catering industry

Jane Eastham Senior lecturer

Sheffield Hallam University Sheffield S1 1WB

[email protected]

ABSTRACT

This paper explores the impact of current procurement strategies and existing marketing channels on competitive position of food service operations. The highly fragmented catering sector and changes to the structure of the catering supply sector are seen to represent a threat to the attainment of strategic advantage from procurement for even the larger operations. This paper questions whether the industry needs to make more careful consideration of strategic versus operational effectiveness. Drawing on a power dependency model the paper suggests that buyers should consider their relative power position when selecting suppliers and the implications of choosing suppliers who hold a greater number of power attributes than themselves on the distribution of economic surplus within the exchange relationship. Key words Power dependency theory, local food, strategic advantage, procurement

INTRODUCTION

The term procurement refers to the sourcing decisions which are made with a view to attain

competitive advantage. Most often defined as the advantage gained over competitors in offering consumers greater value, either through lower prices, greater benefits and or service, an explanation that place great emphasis on buyers and rivals, this paper draws in one of the neglected five forces and focusing upon the threat of suppliers and the firm as a buyer. It is proposed that in increasing contested markets, both those of the buyer and supplier, successful firms need to extend their practical understanding of the factors that affect competitive advantage to understanding the power position of the buyer versus its suppliers, and not simply their relative value against other parties in delivering value to the consumer. The work puts forward the idea that the ability of the caterer to generate sufficient benefits from their business is at least in part contingent on their ability to proactively seek suppliers who hold a weaker position of leverage than themselves. Yet changes to supply sector for many catering operations has undermined their bargaining position vis -a- vis suppliers.

This paper draws upon portfolio analysis (Kraljic, 1983), Porter's five forces ( 1980; 1985) and

Power Dependency Theories to explore the impact of a highly concentrated supply market on the ability of a relatively fragmented catering sector to achieve competitive advantage. The findings are based on longitudinal research and are presented as a case study. Foodservice operations were traditionally supplied by an equally fragmented wholesale sector, but after the popularisation of the “meals from home market” and the consolidation of the retail sector this was to change. The link pin between the two events can be traced to a decision by key multiple retailers to bypass the wholesale sector in a search for sufficient volume and quality of fresh produce to meet their expanding market needs, an action that resulted in the loss of the traditional sources of supply to foodservice, the wholesale markets.

Whilst many wholesale businesses closed down, others emerged through acquisition and mergers,

thereby reducing the leverage position of even the larger foodservice businesses. This position has been exacerbated because of a wide spread decision by Fast popular dining brands to outsource food production and thereby improve labour productivity , customer numbers and the turnover generated by more competitive pricing and the more effective use of retail space. Catering supply companies offered prepared meals and furthermore reduced the costs of receiving goods by providing multi-temperature deliveries and the opportunity for single sourcing. The downside from a strategic perspective is that this means that branded foodservice operations particularly effectively reduced the numbers of available substitutes and thus increased the costs of switching suppliers.

However these events have a possibly longer term effect on the sector, and perhaps enable

interested parties to draw some key lessons. Firstly that procurement decision should weigh operational efficiency against the share attained by the buyer from the exchange relationship. Secondly environmental scanning should not only take account of hospitality industry, considerations need to be made also of suppliers, supply chains, and as well as parallel retail businesses and their dedicated distribution channels. These issues are considered in more detail in the context of “local food agenda” for which there are significant barriers for development which is a function of past current marketing structures. The paper discusses the problem of redeveloping structures of supply, particularly significant given the food security policy agenda, and discusses with reference to the portfolio/power dependency model the relative benefits of alternative structures.

CONTEXT OF THIS RESEARCH The catering sector remains a relatively fragmented sector in comparison to both the retail sector, and their

suppliers market. This is evident when it is considered that whilst there are over 4000 catering brands with 5 or more outlets, (Technomic, 2010), 25% of the supply to catering businesses comes from the two largest catering supply companies, with a further 20% supplied to caterers by the 6 key retailers both discount and mainstream who collectively supply around 60% of the total food consumed in the UK( Oxford Economics report, 2010; IGD, 2009).1 Indeed one of the key factors that have brought about the changes to the catering supply market is the consolidation of the multiple retailer sector, and the consolidation of the catering supply chain can be considered to have had a critical impact on the balance of power between caterers and their suppliers. The other is the outsourcing of food production systems as a means of increasing operational efficiency.

Recent decades have seen the both the democratisation of food service and the emergence of key brands,

with the burger bar Wimpy bars in 1950's, which was to be followed by MacDonald’s, and Burger King) and a steady development of branded pubs with the establishment brewers fare, Beefeater, and Roast in, and the emergence of pizzeria with brands such as Pizza hut in the 1980’s (Ryan, 1980,; Kotas and Davis, 1981). By the late 1990's the turnover for the burgers sector alone amounted to over 1.4 billion per annum. The sector saw also a significant growth in the Pub meal, stimulated in part by an increasingly stringent drink driving regulations. By 1995, revenue generated from meals partaken in pubs had reached a value of £3.1billion amounting to circa 1 in 6 of all meals eaten out of the home, often from branded establishments such as Brewers Fayre, Wetherspoons and Beefeater (Eastham et al, 2001). In parallel the sector noticed the growth in other key popular dining venues, with the emergence of , amongst others, Café Rouge in 1989, Nandos in 1992, Wagamma in 1993, and Frankie and Benny's in 1995. These "hard" brands, i.e. brands which were offered a product standardised in production and service styles, ambiance and product, expanded rapidly across the UK. Such standardisation presented challenges in order to ensure consistency of customer experience, furthermore typically located in areas with high rents and business rates, these business sought ways to maximise spatial and labour efficiency. By outsourcing production and later menu development to catering supply companies, they were able to standardise the product, as well as increase the ratio of meals served per labour and spatial inputs. In turn catering supply companies identified small scale manufacturing units who offered the flexibility of quick production line turnaround and small production runs necessary to this sector. However the expansion of such businesses might have been presumed to have created a significant shift in the leverage position within the food service sector. As businesses expanded it might have been presumed that their position against suppliers might be improved. The research asked the question as to whether given the switch to catering supply branded prepared foods, whether indeed this would prove to be true.

PURCHASING AS A MEANS OF COMPETITIVE ADVANTAGE

Purchasing across all sectors has been has been traditionally seen across sectors to be a clerical activity,

(Cousins, 2001) one in which having received specifications from housekeeping, sales, front office, or food and beverage the purchaser looks to find an item at the lowest cost and highest acceptable quality. This premise assumes a condition of perfect market, in that items are standardised, readily interchangeable, and that purchasers are able to make value comparisons easily, i.e. that they are buying both from a perfect market, and that the product they are

1This figure includes sales direct from retail to the consumer and through catering businesses to the consumer.

buying is non specific to their business operation. This is in keeping with economist’s view of conditions of perfect competition where the impact of many buyers and many sellers of homogenous products and prices will tend towards the marginal cost of production and where the balance of economic surplus will be in the hands of the buyer (Watson et al 2003). However there are also economic models of monopoly and oligopoly in which the condition of large number of players are replaced with one of either one or more powerful players who coordinate the activities of the market, In such models assumptions of perfect substitutes, are removed, thus enabling firms to avoid price pressures from buyers. Whilst mainstream economists assume that monopolies are both exceptional and inherently unstable in that the presence of high prices will encourage new entrants an examination of current food supply chains would tend to place a question of the validity of these claims. |

This is predominantly because at their core, neoclassical economists have failed to recognise the both the

long term presence of monopolies and the complexity of the interactions between businesses and businesses and their environment. To the contrary strategic management literature with an interest in the maximization of value to the seller and strongly influenced either by Structure, Conduct and Performance analysis of competitive advantage which places power and leverage over competitive rivals at the heart of its approach (Porter, 1980) or the more recent resource-based school, which contends that the purpose of business is to obtain, and then deny to others, resources that create differentiation and an ability to earn sustainable rents(Barney, 1991; Grant, 1991; Peteraf, 1993; Foss, 2003), but the position of all of the above is one sided , with a focus on either the buyer or seller, rather than the respective power attributes of each party, an aspect which is critical in understanding the distribution of value or economic surplus between the two parties.

Porter does examine the implications of power attributes on the competitive position of a firm, he explicitly

identifies the attributes of power for the supplier in terms of concentration of the sector, share of the suppliers business, switch costs, substitution, threat of forward Integration, and identifies that threat from buyers in similar terms of buyer volume and concentration of the buyer’s market, brand identity, threat of backward integration, and access to distribution channels. Kraljic examines the problem in from the perspective of the comparative level of attributes held by the seller as against the firm (Kraljic, 1983). Other work such as the Power regime school have been examined also but given the over complex ideas presented by the school, the research has developed a far simpler amalgamation of Kraljic analysis framework and the Porter framework. The emphasis placed by Kraljic is to based on a series of comparable attributes, whether a buyer in business to business relationships should exploit the relationship, develop the longer term bilateral relationships or find either alternative suppliers or vertically integrate was on increasing interest on the appropriateness of ways of sourcing. Measures of relative power of buyer and supplier draw upon the power attributes identified within the Porter model. In figure 1 below, the relative power attributes are outlined, the balance of which determine the price and thus the distribution of economic surplus.

Figure 1 – the portfolio/power dependency model of power attributes and the area of distribution of economic surplus/value

RESEARCH METHODOLOGY

This case study is a result of number of research activities which have spanned a period of nearly two

decades. The research approach adopted a critical realist stance in order examine the proposition that and evaluated and the research pulls from a series of studies across this period ( Eastham, 1995; Eastham, 1997; Eastham, 1999; Eastham, 2000; Eastham, 2001; Eastham, 2003; Eastham, 2005; Eastham , et al 2007 ; Eastham, 2012). The portfolio/power dependency model in the first instance is used to examine on the basis of a number of studies of the wholesale sector, retail sector and branded and non branded catering establishments and their relative power attributes, and in the second the relative power attributes of alternative hub structures. The work draws upon a range of primary research activities including action research, participant observation, interviews and questionnaires. These, in some instances, have contributed to earlier publications as identified above but were drawn together and triangulated with published and unpublished secondary sources.

CASE STUDY - STRATEGIC IMPLICATIONS OF PURCHASING STRATEGIES The study will examine implications of the current supply chain on the leverage position of the food service

sector and potential for improving their leverage position over the longer term. The structure of both the supply chain to the catering sector and that of the retail sector places the food service sector under considerable threat from its suppliers. Decisions made to outsource supply in the last 2 decades were designed to improve operational efficiency as well as brand consistency but failed to consider their strategic implications. Where both sectors, the catering and catering suppliers, were highly fragmented the issue of power imbalances and their impact on the leverage position did not arise. It is possible that with the advent of prepared food and thus the need for multi-temperature delivery systems the catering sector would have in any case experience the consolidation of their supply base, nevertheless the dramatic restructuring of the supply chain has reduced the number of alternative suppliers and tipped the balance of power into the seller’s favour. This situation is particularly so in branded operations who are reliant upon catering supply company branded pre-prepared products. However there is a further threat to the catering sector in that changes to the structure of the supply base has restricted sources of supply for those caterers wanted to return to more traditional production systems.

Retailers traditionally supplied either through intermediaries such as wholesale traders or direct from

manufacturers who would deliver directly to the store. However, as the market became more contested the larger retailers, initially, sought ways to increase competitive advantage through cutting costs within the supply chain. The introduction of a central distribution system enabled the retailers to bypassing these intermediaries and buy directly from farmers, marketing agents and importers, which enabled them to reduce the costs through the development of economies of scale as well as extend their bargaining power. In a power dominant position, retailers have effectively become gatekeepers to the consumer; controlling shelf space, as well as consumer perceptions of quality and acceptable product standards. Retailers have attempted to reduce costs further through the more finely tuned centralisation of distribution systems and the introduction of category management sourcing strategies whereby retailers are looking for fewer, larger more efficient and innovative suppliers. Both measures have resulted in the decline of the tradition sources of supply for the catering sector and indeed have in effect disconnected the link between the UK farming sector and an alternative customer base which may be illustrated by the continual decline in the percentage share of UK grown produce. In the retail sector, overall self sufficiency is around 50-60 on indigenous produce, however the problem is more acute in the catering or where costs of produce plus a lack of a distribution infrastructure make imports even more attractive.

The wholesalers, who had the capacity, switched business interests to focus upon the foodservice sector. This proved to be an effective strategy and their position was further consolidated, where catering businesses outsourced food production. This presents an interesting paradox in that whilst the caterer’s decision to outsource was a measure designed to increase productivity, but in effect it potentially had the effect of increasing total costs through augmenting costs of purchase. The choice by foodservice businesses to buy from multiple retailers, who in effect are competitors, is potentially a consequence of the loss of bargaining power against mainstream catering supply companies. Contracts with catering supply companies to produce bespoke items further inhibit their ability to switch suppliers and undermine their leverage position. This is particularly so where the catering supply companies own the recipes and furthermore manage the relationships with the food manufacturers.

What is of greater concern is that the strategic importance of procurement/ purchasing remains unrecognised by the sector. Indeed it was apparent that purchasing per se had been largely unrecognised by the hospitality industry as a whole (Yip, 1992;Whita, 2007). This is because for the most part the hospitality professionals are more concerned with the management of the dilemma of how to improve operational efficiency while at the same time " delighting the customer" rather than deploying carefully laid strategies to improve their competitive position against their suppliers. Whitbread Plc can be used as an example. In two known instances it is apparent that Whitbread Plc originally one of the key brewers in the UK, has failed to recognise the strategic importance of the purchase decision. In the first in April 2008 when it disbanded its logistics operation and outsourced to Kuehne and Nagel on a five year deal, an operation had a turnover 9 times greater than that of Whitbread. A simple examination of their relative power attributes might have suggested that there are high risks of moral hazard associated with the deal. In the second Whitbread example, it can be seen that they have deployed the services of Farmright to develop a milk dispenser that reduced cost of labour in their rapidly expanding Costa coffee brand. Farmright was supplied by 7 farmers who were utilising a grassfed spring calving system and were based in Devon, a factor heavily highlighted on the Costa website. However the capacity of the operation would appear to be in-sufficient, particularly during the winter months, to meet the expanding demand. Farmright appears to have attempted to maintain the Costa contract through acquiring additional milk supply from Dairy Crest, most probably at a higher cost than the price it normally paid to its own farmers. Early 2012 the company went into administration, owing £4 million to Dairy Crest. The cost to Costa has been possibly relatively slight, but could have been avoided if due consideration had been made as to the capacity of Farmright to deliver during the drying off period in a spring calving system.

The attrition of the wholesale sector has potentially more serious implications if the sector continually fails to recognise the strategic importance of sourcing options. The separation of the two supply chains and the erosion of traditional marketing channels, as well as the search for cheaper and cheaper sources of food instigated by both the multiple retailers and the catering supply companies , have eliminated pathways to alternative markets for farmers and local sources of supply for the catering sector. This situation was further exacerbated, where the expectations of consumers of cheap food, have driven both sectors to seek supplies from overseas, in effect resulting in a missing middle in local food infrastructure (Morley et al, 2008).The last ten years has brought increased interest in the provenance of food with an emphasis on “local food”. Yet here in lies a problem which has attracted considerable interest from Regional food groups, private enterprise, lobby groups and educational groups such as Taste Real Food. The bifurcation of supply chains to retail and catering and the loss of the traditional wholesale bulkers and de-bulkers of produce have led to the loss of access for farmers to alternative markets and the loss of local sources of supply for the catering sector (IGD 2006). However recent years have seen the development of national, regional and locally operated systems of wholesaling and logistics systems, normally identified as Food hubs. A food hub can be defined as an intermediary who takes the responsibility of bulking, gathering together, de-bulking, segmenting The solution found has been the development of food hubs, the concern here is how food hubs should be formed in order to ensure the effective of marketing channels which will facilitate both increased leverage and the growth of the local food agenda in the catering sector.

INITIATIVES AND THEIR IMPLICATIONS

Food hubs have been established by a range of organisations with a view to reconnecting the countryside in line with the Curry report. There have been numerous, public bodies, lobby groups as well as private individuals have been actively involved in putting in the distribution infrastructure Lobby groups such as Sustain have encouraged the development of sustainable procurement strategy for the London hospitals. Another initiative, the embryonic Bedford food hub, has had considerable support from the educational food group Taste Real Food which is an offshoot of the Ludlow food festival. Regional food groups such as Heart of England and East Anglia Food link have entered a collaborative relationship with the commercial distribution companies. Whilst the Bristol food group which is operated as a not for profit organisation is supported by the Artist project earth group. A further distinction has related to the nature of their involvement in the wholesaling activities of bulking and de-bulking and distribution2. Some have been actively involved in all three roles, others have required suppliers to bring their

2 The terms bulking, de-bulking and distribution are generic terms used in logistics, which refer to a. collation of products from disparate sources, in order to facilitate transportation to where they are needed geographically, breaking them down on arrival to distribute to consumers or small scale businesses.

produce to the hub, whilst still others have been designed around the customer involvement in the pickup of produce. Seen to be a means of redressing the barriers that hinder the expansion of local food production and consumption, food hubs can be described as mechanisms through which farmers may connect to either wholesale or retailers, and may even include a communal place for processing and packaging of products. They allow for the coordination of supply and demand in much the same way as traditional marketing channels.

Yet whilst food hubs have put in place to enable UK food producers and buyers to have an alternative route to market, who benefits from the enterprise is both problematic and given the range of agendas probably extremely sensitive. Many of the critiques of initiatives relate to an examination of the relative value of different formats of food hubs on their ability to generate income for farmers (e.g. Morley et al, 2008), but there has been limited research into the diversity of exchange relationships and their implications in terms of the distribution of surplus between Catering and food hubs. The focus of this paper is the value generated by catering operators, but in any exchange relationship, it would be unfortunate to lose sight of the fact that where one party gains the other may lose. What can be noted is that Food hubs have emerged in a number of formats, (Morley et al, 2008) and it is the implications for catering organisations of these diverse food hubs that is our major consideration. In Morley et al,(2008) 5 distinct types of food hubs have been specified, namely, producer distribution, Third party distribution , partnerships models, wholesaler distribution and buyer collection, which are distinguished accord to who runs the hub, and the nature of the service delivered.

Figure 2 The five forms of food hubs - based on Morley et al 2008.

Producer hub Third Party Hub

Partnership/cooperative Hub

Wholesaler Hub Buyer hub

explan

ation

Organisation run by normally a producer for themselves, although sometimes for the benefit of more producers

Distribution company acts for the benefit

A group of producers offering a wide range of products collectively operate

Catering wholesaler sets up own local food hub drawing on local supplies

Either and individual or a number of buyers act collectively to coordinate delivery from local sources to plate

Com

mon

role

Bulk, de-bulk and distribute

Bulk may be done by producer or third party, de-bulking and distribution

Any or all of the three roles

Bulk may be done by producer or third party, de-bulking and distribution

Bulking de-bulking and distribution by customers.

However not only may the differences between these formats be distinguished according to who operates and the activities undertaken by the Hub but also according to the impact on the position of leverage of the food service operator. This is illustrated in more detail in figure 3 below. The differences in leverage is a function of their respective levels of dependency were they to enter into an exchange relationship, and as specified in figure 1 on page 3 is determined by their relative size, numbers of buyers versus number of suppliers, proprietary terms, consistency of supply, percentage of the market they hold respectively, numbers of alternative customers, available substitutes and costs of switching buyers or suppliers.

Figure 3: Leverage position for catering operations in varied food hub formats

Producer distribution

Third party distribution

Partnership models

Wholesaler distribution

Buyers distribution

Exam

pl

/ Marr Grange - Distributes directly to Rotherham school meals

Crawshaw Butcheries East Anglia Food Link -

Lakeland Beef brand

3663 – local food hubs- operated as part of their organisation A F Blakemore and sons – Heart of England

Farmers Markets Farm shops community food hubs –Bristol food hub

Case

Marr Grange - supplies own pork to schools and other retail outlets in Sheffield Area – Shop acts as hub for others – but buyers collect

East Anglia Food Link (EAFL) , where three butchers as nominated suppliers association with three nominated suppliers supplied through 3663

Lakeland Beef brand developed by Pioneer foodservice, the farmers, Bowland (abattoir) Harris and Herrington auctioneers)

3663 – local food hubs – initially set up the local food hub for East Anglia Food link in Suffolk and then extended operation to Kent , Swansea and Stevenage .

Numerous examples of Farmers markets, - varied success but with two key roles. Sales and Marketing- use of Farmers markets in Haverfordwest to market to tourists – then postal sales.

Details

of

ii

Supplies own pork , to local authority

Three butchers who have annual turnovers of between £12 million supply around £500 000 Varied, balanced re the initiative below – supply to local authority

Development of a collective brand to sell to catering sector, to add premium value

3663 – local food hubs – initially set up the local food hub for East Anglia Food link in Suffolk and then extended operation to Kent , Swansea and Stevenage – draw from local sources.

Food tends to be produced by a number of farmers and market is thus a bulking rent farms, de-bulking and distribution operated by the consumer

Details

of L

everageposition

Few buyers few alternative suppliers ( local pork). High proportion of business based on School contract

Few buyers Supplier Property rights large numbers of buyers, large numbers of farmers, -no competitors -barriers for new entrants

Highly fragmented buyers market with few alternatives for the catering supply which offer multiple product ranges

Fragmented buyers market 8-50 suppliers. Not an import purchase for buyer Switching costs low for buyer

leverage

position

Relative balance in leverage –may be capacity issues with larger buyers

Foodservice in slight imbalance due to brand identity- particularly if Used as own identity

Very weak leverage position

Stronger leverage position,

As illustrated above the nature of hubs are varied, and whilst it has been suggested by previous research that with the high costs of distribution there is value in deploying the resources of existing distribution companies, this may be to be to the benefit of food producers, but it is counter the interests of the catering operators. It is evident from the above that catering supply companies have entered the sector as distributors for the hubs. This is certainly the case for 3663 who have set up 4 local food hubs first of all in Suffolk, the South of England, South West of England and in South Wales in 2006 , an initiative arguably drew upon experience derived from acting as a third

party food hub within an initiative promoted through the East Anglia Food link in 2005, where Three councils Suffolk, Herefordshire and Cambridgeshire contracted three medium sized butchers to supply local meat to schools. In launching its own hubs the catering supply company and was able to supply a range of ambient, Chilled and Frozen foods to independent gastro pubs, as well as national brands such as Pizza Hut, Burger King, KFC and Green King (Datamonitor 2005, Bill, 2006; Anon, 2006). Similarly with the Heart of England initiative which is designed to reconnect the farmers to both the independent retailers and catering, A.F. Blakemore have signed up around 64 producers on a scheme with over a 1000 product lines. Yet the concern here is whether higher costs of produce which is an attribute of the relative position of power of the supplier makes a strategy of deploying the services of a large catering supply company a sustainable strategy. The argument would be different where issues of size etc are more balanced.

DISCUSSION

The function of the above case study was to examine the impact of relative levels of dependency or power on procurement strategies. The case study examined the factors which have lead to the current supply structure and the leverage position of much of the food service sector where the emphasis for operational efficiency has overshadowed the strategic view. The case study attempts to illustrate through the vehicle of the “local food” initiative what types of considerations need to be made by the catering operator in order with respect to the development of effective sourcing strategies. Findings from a range of research projects presented in figure 3 are by no means conclusive and indeed the level of their conclusiveness varies across projects. However the presentation of these findings is designed to be means of initiating discussion and consideration of what form of infrastructure should be developed in order to increase the position of power of catering operations. What is important to recognise is that the detail that matters, in that the actual determination of the relative power and dependency position is contingent upon detailed consideration of the unique characteristics of each buyer.

Nonetheless a comparison of the relative benefits of the formats of food hubs would seem to suggest that those food hubs which are managed by the large scale catering distribution companies place the catering in a less advantageous position than who are producer operators as in the case of Marr Grange and the initiative sponsored by the East Anglia Food link. However as illustrated by the case of Farmright and Costa considerations need to made with respect to supply characteristics of the commodity, capacity for expansion and growth strategies.

CONCLUDING REMARKS

The strategic value of purchasing within the Hospitality sector in general and the Catering sector more specifically has received little attention by academics, and rarely features in Undergraduate or Postgraduate programmes of study in UK universities. An analysis of prospecti leads one assume that there is limited coverage of purchasing and where it is considered, there is a strong focus on issues of operational efficiency. This failure to recognise the importance of Purchasing, within the hospitality industry Yip, 1992; Whita, 2007)., is largely because hospitality professionals are primarily concerned with the management of the dilemma of improving operational efficiency while at the same time " delighting the customer" rather than ensuring competitive advantage through the procurement decision. In many respects this paper reiterates the call for change, and a recognition of the increasing importance of procurement and how the comparative power attributes of both parties within the supply chain has an impact on the ability of the hospitality industry to select both operational procedures and a procurement strategy that optimises returns.

The matter is complex, factors which improve operational efficiency may be counter intuitive for the strategist. Similarly certain strategic options can have operational costs. Whilst decisions to adopt a multi-product distribution company may prove to reduce the transaction costs of delivery, there may be for example higher switching costs, particularly where the reputation and identity of the catering operator becomes intrinsically linked with the products supplied or few substitutes.

While the paper may not supply categorical answers, it is believed that the questions are interesting. In the context of local food, particularly with smaller operations the possible answer is that greater leverage to catering operations in the emergence of regional limited product ranges, where producers operate as food hubs either as

single operators, or in conjunction with other producers in a partnership model. Marr Grange is such an example, and he also sells to the wholesale sector to a number of intermediaries to the catering sector, such as Crawshaw catering butchers and also operates as a wholesaler with direct sales to Rotherham Borough council school meals. In this case it is apparent that the ability of the school meal service to buy at a comparable price to prices paid to key catering supply companies is a function of their importance to Marr Grange, in particular their share of his business. Yet considerations of these issues appear rare within the hospitality industry. Catering businesses predominantly focus upon operational issues and pay little attention to the buying function. Whilst we make this point in with particular reference to the sustainability of local food initiatives there is a much broader issue, that of the need for more proactive involvement within the supply chain by the catering industry, and an examination of the importance of strategic procurement as a significant factor which contributed certainly to gross margins but potentially to survival.

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From Cradle-to-Cradle: Food Sourcing and Attitudes of Restaurants to Sustainable Developments

The Cases of the Caribbean, USA, Switzerland and Wales

Working Paper

Dr Ian Jenkins, Professor Robert Bristow, Ralph Cervera

STAR (Swiss Tourism Applied Research), LRG-University of Applied Sciences, Switzerland

&

Westfield State University, Massachusetts, USA

KEYWORDS: Restaurants, GSTC, Sustainability, Quantitative Study

Preamble

This study aims to investigate how restaurants are addressing sustainability. Restaurants are at the forefront of tourism and an integral part of tourism systems and businesses (Davis et al. 2008); therefore it was considered that food outlets would have specific opinions and views on sustainable development. However, it is clear that sustainability and its definitions are not always cohesively understood or for that matter delivered by businesses in the tourism industry (Hall & Lew, 1998). This study has an international focus, sampling restaurants in the USA, Caribbean, Switzerland and UK. It has been divided into a number of project stages and is a co-operation between two universities.

The initiative for this study came from previous research using the Global Sustainability Tourism Criteria (GSTC 2009) for evaluating how tourism businesses were applying sustainable measures. The GSTC criteria have been used by this study to evaluate the attitudes of restaurants to sustainable development.

Literature Review

Sustainability has been on the political agenda for quite some time (Hall & Lew, 1998) and perhaps the Rio Summit of 1992, really highlighted its importance and relevance for many organisations, especially tourism. Academia has a plethora of texts relating to this subject, to the extent that one could assume that sustainability is now a commonly understood and accepted concept. This presumption is clearly untrue and possibly a more pessimistic viewpoint would be more realistic, especially in terms of the assimilation of sustainability principles in tourism and other sectors of business (Jackson 2009). Certainly, the ‘Green Movement’ has been around for quite some time (since the 1970s) but its incorporation into main stream business seems not so acceptable, even though certain companies do now appear to be adopting sustainable principles, for example Marks & Spencer and Virgin (Marks & Spenser 2011; Jackson 2009,).

How food is produced and the sourcing of food has been in the media spotlight for some time, nearly always raising concerns over issues related to sustainability and health. The ‘Foot and Mouth’ crisis of 2001, and the BSE crisis in the UK, certainly focused customers’ attention upon food sources. This has been underpinned by ’green food movements’ such as the Soil Association and Fair Trade labels (FairTrade 2011), which indicate to the consumer various aspects of sustainability. Certainly, the FairTrade symbol relates to one of the pillars of sustainability, that of employment; indeed the success of the FairTrade label can be seen through its proliferation within the supermarkets of developed countries.

“Fairtrade is a strategy for poverty alleviation and sustainable development. Its purpose is to create opportunities for producers and workers who have been economically disadvantaged or marginalized by the conventional trading system. If fair access to markets under better trade conditions would help them to overcome barriers to development, they can join Fairtrade.” (FairTrade 2011)

Fair Trade has been in operation for over 20 years, being first introduced in 1988 and fully recognized by 1992.

Furthermore, we now have the organic food movement whose products have become mainstream and commercialised and can be found on the shelves of most major supermarkets (Fasman, 2012; Southan 2011; Davis et al. 2008) Hence it can be surmised that there is clear evidence that consumers are becoming better educated and more aware of where their food comes from (Francis 2008) . Similar to Fair Trade, the Soil Association (UK) aims to address more environmental matters dealing with the production of food (Soil Association 2011). The Association states: ‘The Soil Association was founded in 1946 by a group of farmers, scientists and nutritionists who observed a direct connection between farming practice and plant, animal, human and environmental health’ (Soil Association 2011). This statement seems to confirm the longevity of sustainability agendas, decades before the media and globalization latched on to its principles.

Certain countries have always been concerned with where their food is sourced, so to some extent the debate about sustainable restaurants and food sources seems rather a paradox at the present moment. One could certainly cite perhaps France and Italy as countries that take their food seriously and therefore their consumers seem to be fully aware of what constitutes good food, commensurate with the notion of sustainability.

Restaurants can be seen as thermostats for sustainability, reflecting the public’s response to the sustainability agenda (Francis 2008,). Much is talked about the need for sustainability, but talking to some tourism actors, evidence emerges that perhaps the consumer is not really that interested in food sustainability or sustainability per se. Perhaps in the developing world in particular this is seen as a luxury. If you are living on or below the poverty line sustainability is hardly something you are going to be concerned about. Rather it is a pleasant, cosy concept which developed nations and their consumers can afford to debate.

In this paper the definition of sustainability is taken from the Brundtland Report (WCED 1987). This does not appear to conflict with the GSTC criteria (GSTC 2009); rather, the GSTC seems to reinforce this statement. Perhaps the biggest change since the principle of sustainability was developed has been the incorporation of the 4th pillar of sustainability: culture. It is hypothesised that culture is clearly an important element in restaurants and food sourcing. For this study, the main focus has been environmental and economic, and perhaps for many people when sustainability is mentioned, the idea of social and cultural sustainability is a little oblique. Not surprisingly sustainability has emerged from an environmental agenda rather than a social and cultural one. Nonetheless, the linkage between restaurant sustainability and the environment is not too hard to make. Food is the basis of restaurants and food production is linked to land use which impacts on the environment (Boucher 2012; Fasman 2012 ). This can be considered to be an equally significant impact as those pertaining to other tourism impacts, such as transport, waste disposal and water usage. GSTC

As discussed in the above the research was based on the Global Sustainability Criteria Partnership (GSTC 2009), which have recently been drawn up signifying a unified approach to assessment for tourism business and actors. The basis of this proposal relates to the way the Criteria have been constructed and also linked to the importance of UNWTO. The following points are the rationale for using the GSTC in this research:

GSTC clearly has a global reputation which many other criteria do not have based upon the following premises:

• Developed using private companies and validated by tourism agencies

• Summarized to 7 general sustainability segments from 60 identifiable outcomes

TABLE 1. GSTC SEGMENTS

GSTC also has a number of purposes that prove useful. It serves as basic guidelines for businesses of all sizes to become more sustainable and helps them choose sustainable tourism programs that fulfil these global criteria; it seems to have very adaptable elements which reduce the prescribed aspects of other sustainable guides.

It also ‘serves as guidance for travel agencies in choosing suppliers and sustainable tourism programs’(GSTC 2009) which could also be used for other sectors of the tourism industry allowing a number of measurement and assessment methods that could be applied to other areas.

Furthermore, it tries to help consumers ‘identify sound sustainable tourism programs and businesses’ (GSTC 2009), which from a restaurant customer’s point of view, could be very useful, as it also places pressure on restaurants to demonstrate what sustainable measures they are using. It is posited that very few customers would actually know whether a restaurant is acting in a sustainable way, therefore this evaluative system could be a useful guide to a restaurant’s sustainability index.

Once again the attempt is to try to standardise the meaning of sustainability, so that there is a unifying bond of evaluation, making assessment clear for everyone in terms of whether a restaurant is or is not sustainable. Hence, the GSTC ‘serves as a common denominator for information media to recognize sustainable tourism providers’ (GSTC 2009);

In addition the criteria can be used to help ‘certification and other voluntary programs ensure that their standards meet a broadly-accepted baseline’ (GSTC 2009) and can be seen as a unifying influence on sustainability and the tourism industry. The criteria can also ‘offer governmental, non-governmental, and private sector programs a starting point for developing sustainable tourism requirements’ (GSTC 2009) ; relating this to the developing world is a benchmark to begin to aim for. Finally, GSCT can provide ‘basic guidelines for education and training bodies, such as hotel schools and universities’ (GSTC 2009) who are the educators of the next generation of business and tourism developers.

The overall axioms of the GSTC produce a measurement system that can be used to reflect the founding principles of sustainable development as illustrated in Figure 1

FIGURE 1

As has been evidenced earlier in this paper, it is proposed that most food producers and those that provide food at restaurants would be fully aware of the need for sustainable principles not only given the GSTC criteria but also the length of time that consumers and the public have been exposed to green issues and sustainability. The evidence suggest that the environmental movement appears to have developed after the Second World War (late ‘40s/’50s) in the last century (Soil Association 2011). Although, as already mentioned, there is also the premise that even though sustainability should be embedded within all types of business, the reality is somewhat different, to the extent that ‘Green Washing’ (paying lip service to sustainability) is prevalent. There is certainly anecdotal evidence to support the view that consumers may not be interested in sustainability as a primary motivation factor, but rather on the more immediate aspects of cost and good experiences at restaurants.

Methodology

The research has taken a positivist approach to the collection of primary data (Brotherton 2010; Robinson 2006). It uses a quantitative questionnaire (Robinson 2006) which has been designed based upon some of the GSTC sustainability criteria. GSTC provides at least 60 criteria and it was not considered feasible to incorporate all these into the study, so the authors have focused upon the more environmental and employment oriented criteria, leaving out those related to the more cultural and social aspects of sustainability.

The sampling frames have been taken from lists of restaurants from the chosen designated survey areas. For example, the sampling process in the UK chose two locations, South Wales and London, based upon the judgement process (Robinson 2006), that these two areas might be representative samples of the UK; one being a peripheral regional rural milieu and the other an urban and global city location. The restaurants were sampled either on a random basis or in some cases on a judgemental basis.

The survey instrument is composed of numerous Likert statements and some open questions. These relate to the GSTC criteria, focusing on food sourcing, energy usage and employment practices.

The questionnaire was divided up into a number of sections:

Types of food prepared

Food sourcing

Management Practices

Membership of food organisations

The survey instrument (Robinson 2006), was produced in a number of formats, initially a web based Survey Monkey questionnaire, but this was found to yield a low response rate, so that a hard copy was used and physically distributed to restaurants. The targeting of the restaurants was done by individual visits with a letter and website link and was found to produce a high response rate. The next approach was to personally deliver the questionnaire and provide a stamped addressed envelope . In some cases a return visit was made to collect the questionnaire. Currently, the average response rate stands at around 30%.

The Swiss and UK surveys are still on-going and the response rate here is somewhat mixed, with rural locations responding better than urban locations. The Caribbean was the first stage of the research and this has now been collected and analysed revealing some initial findings which are shown below.

During the summer of 2011, restaurants in the Turks and Caicos were asked to participate in a sustainable tourism survey. The survey was designed to collect general information about the business, identify sources of food served to their customers, the importance of specialty foods in their menus and then an assessment of sustainable management practices. In the fall, the survey was administered to another sample of restaurants in the Pioneer Valley region of Massachusetts, USA.

The sustainable management practices were adopted from the Global Sustainable Tourism Criteria as prepared in 2009. The GSTC has recently been improved (February 2012) to address the different concerns of destinations in general, to those of hotel and tour operators in particular. Despite the change in administering the Criteria, our questions on sustainability still remain in the GSTC under the sections devoted to “Maximize benefits to the environment and minimize negative impacts” (nine Criteria explored) and “Maximize social and economic benefits to the local community and minimize negative impacts” (one Criteria).

Data for this study come from a questionnaire administered to a sample of restaurants in both locations. The survey was designed to collect general information about the restaurant including type of cuisine offered, sources of food and concludes with a few questions about sustainable management practices. Excluded from the sample were chain and fast food restaurants. A total of 53 restaurants participated in the study, with 12 refusals (check this). Turks and Caicos Islands restaurant population was determined from phone books, websites and travel documents and then randomly selected. Pioneer Valley restaurants were randomly selected from telephone directories in Hampshire and Hampden Counties, Massachusetts. A 25% response rate in TCI and 20% rate for the region in the States were obtained.

The data has been analysed using SPSS in order to produce descriptive and inferential statistics which have been used to differentiate the data and review initial trends.

Analysis

Restaurant Sustainability, Data and Results

A variety of restaurants was surveyed and range from 15 to 150 seats with an average of 75 seats and 12 full time staff. Also, a variety of cuisines was offered with the most common being American (52.8%), Caribbean (28.3%), Italian (28.3%) Seafood (24.5%) and Vegetarian (24.5%). A few restaurants noted Asian, BBQ, Cajun, Steak and other items on their menu. Note, since most offered more than one type of food, the percentages reflect that overlap. Table 1 summarizes the main offerings.

Table 1. Cuisine offered in Sustainable Restaurant Study.

Cuisine N Percent

American 28 52.8

Caribbean 15 28.3

Healthy 5 9.4

International 5 9.4

Italian 15 28.3

Jamaican 5 9.4

Seafood 13 24.5

Vegetarian 13 24.5

The next section of the survey solicited information about the sources of food offered on the menu. Local was defined as the total travel distance from producer to restaurant and was less than 2 hours transport time. On a 1 to 5 scale with 1 being all food of this type local, 2 most of the food is local, 3 some of the food is local, to 4 where none of the food is local. For the entire sample baked goods tended to be locally sourced with most of the food being local (mean equal 2.07, while some meats and poultry were found to be locally sourced (mean equal 3.01 each). Table 2 summarizes the sources of food for the island and mainland sample.

Table 2. Sources of food in sample.

Food offered on Menu N Mean SD

Meats 51 3.0196 1.08610

Poultry 51 3.0196 1.14000

Seafood 51 2.5294 1.34689

Dairy 51 2.9020 1.20424

Produce 51 2.4706 1.00703

Baked Goods 52 2.0769 1.36979

Beverages 51 2.8235 1.12616 Note: 1 = all local, 2 = most local, 3 = some local, 4 = none is local.

Consumers desire particular characteristics in their food. Besides vegetarian, gluten free and vegan menus, customers want organic food, range free chickens and eggs, grass fed beef and so on. Managers are sensitive to these requests but also desire high quality, reasonably priced food that is readily available and uniform in size, shape and color. Table 4 highlights the importance of these items on a five point scale, with 1 being most important, and 5 being not very important. The means and standard deviations are provided.

Table 3 Importance of Food Production and Characteristics.

Food Production Concerns N Mean SD

Organic 52 2.7115 1.07259

Chemical free 50 2.4800 1.09246

Integrated Pest Management 51 2.5686 1.08176

Grass-fed 50 2.9200 0.85332

Free range 50 2.8600 0.90373

GMO free 49 2.7755 1.06586

Fish sourced from certified sustainable stocks 50 2.4000 1.06904

Price 52 1.5962 0.79852

Uniformity 51 1.6863 0.73458

Availability 51 1.4510 0.61037

Quality 51 1.1373 0.40098 Note: 1 = very important, 5 = not very important.

As might be expected quality, price, availability and uniformity were most important to restaurant managers. Next in order of importance was fish sourced from certifiable stocks, chemical free, IPM, organic, GMO free, free range, and then grass-fed. Also note the standard deviation, or the variation of responses tended to be the least for price, uniformity, availability and quality indicating the overall and consistent importance to the managers.

The managers were then asked to assess the importance of the Global Sustainable Tourism Criteria. Ten of the Criteria were selected for this study and address the environmental impacts of restaurant management as well as one criteria directed to wages offered to employees.

Table 4. Importance of GSTC.

Criteria N Mean SD

Purchasing policy favors environmentally friendly products for building materials, capital goods, food, and consumables. 52 2.0769 1.00676

The purchase of disposable and consumable goods is measured, and the business actively seeks ways to reduce their use. 52 1.8846 0.80814

Energy consumption should be measured, sources indicated, and measures to decrease overall consumption should be adopted, while encouraging the use of renewable energy. 52 1.9423 1.07400

Water consumption should be measured, sources indicated, and measures to decrease overall consumption should be adopted. 52 2.0962 1.05272

Greenhouse gas emissions from all sources controlled by the business are measured, and procedures are implemented to reduce and offset them as a way to achieve climate neutrality. 52 2.4615 0.97943

Wastewater, including gray water, is treated effectively and reused where possible. 52 2.1538 1.09158

A solid waste management plan is implemented, with quantitative goals to minimize waste that is not reused or recycled. 52 1.9808 0.93914

The use of harmful substances, including pesticides, paints, swimming pool disinfectants, and cleaning materials, is minimized; substituted, when available, by innocuous products; and all chemical use is properly managed. 52 1.7115 0.80041

The business implements practices to reduce pollution from noise, light, runoff, erosion, ozone-depleting compounds, and air and soil contaminants. 52 2.2692 1.05003

The international or national legal protection of employees is respected, and employees are paid a living wage. 52 1.5577 0.63904

Note: 1 = very important, 5 = not very important.

All of the Criteria were important to managers. Highest on the list was “The international or national legal protection of employees is respected, and employees are paid a living wage (mean = 1.56), “The purchase of disposable and consumable goods is measured, and the business actively seeks ways to reduce their use” (mean= 1.88), “Energy consumption should be measured, sources indicated, and measures to decrease overall consumption should be adopted, while encouraging the use of renewable energy” (mean=1.94) and “A solid waste management plan is implemented, with quantitative goals to minimize waste that is not reused or recycled” (mean=1.98). Lesser importance yet still greater than indifferent were, “The business implements practices to reduce pollution from noise, light, runoff, erosion, ozone-depleting compounds, and air and soil contaminants “ (mean= 2.27) and “Greenhouse gas emissions from all sources controlled by the business are measured, and procedures are implemented to reduce and offset them as a way to achieve climate neutrality” (mean=2.46). Finally, in order to explore if there were differences between the island restaurants to those in the States, an Independent Sample t-test was used. Table 5 identifies the significant differences of food sources between the two locations.

Table 5. Food Sources

Island YN N Mean SD

t-test Sig?

Meat Source

Island 20 3.85 0.671 ** Pioneer Valley

22 2.32 1.041

Poultry Source

Island 19 3.84 0.688 ** Pioneer Valley

22 2.32 1.041

Seafood Source

Island 19 2.00 0.882 Pioneer Valley

18 2.17 1.043

Dairy Source

Island 20 3.85 0.671 ** Pioneer Valley

22 2.14 0.990

Produce Source

Island 21 3.14 0.655 ** Pioneer Valley

20 1.80 0.834

Baked Goods

Island 21 1.71 1.146 Pioneer Valley

18 1.78 1.003

Beverage Source

Island 21 3.19 1.030 ** Pioneer Valley

20 2.30 1.031

Note: significance *=0.05, **=0.01.

Meat, poultry, dairy, produce and beverages were more likely locally sourced on the mainland and were significantly different than the island manager’s importance. As might be expected, seafood was more likely locally sourced on the island but this was not significantly different than the States.

Beyond the sources of food products, characteristics of the food were ranked by the restaurateurs. Table 6. Shows the mean values of importance for food production (i.e., organic, range free, price etc.).

Table 6. t-test comparing Providenciales against Pioneer Valley Restaurants

Variable Island or not N Mean

Std. Dev Sig

Organic Island 21 2.67 .913 Pioneer Valley

22 2.82 1.006

Chemical free Island 20 2.70 .923 Pioneer Valley

21 2.43 1.076

Integrated Pest Management Island 21 2.76 .889 Pioneer Valley

21 2.48 .981

Grass-fed Island 20 2.85 .813 Pioneer Valley

21 2.90 .700

Free range Island 20 2.70 .801 Pioneer Valley

21 3.00 .707

GMO free Island 21 2.71 .902 Pioneer Valley

19 2.95 1.026

Fish sourced from certified sustainable stocks Island 19 2.37 1.065 Pioneer Valley

22 2.45 1.057

Price Island 21 1.38 .590 Pioneer Valley

22 1.82 .958

Uniformity Island 20 1.60 .754 Pioneer Valley

22 1.77 .612

Availability Island 20 1.25 .444 * Pioneer Valley

22 1.68 .716

Quality Island 20 1.10 .308 Pioneer Valley

22 1.18 .501

Note: 1= Very Important, 3=Indifferent, 5 Not Very Important. Sig *P=0.05, **P=0.01

While organic, grass fed, and free-range foods were desired, the only significant difference between the island and the mainland was availability. Most managers on the island recognize the limited availability of these products. Transportation costs, that impact on the cost and freshness of food, was more important on the island. On the other hand, price, uniformity, availability and quality are very important.

Assessing sustainable tourism practices were next evaluated by the participants. Using the Criteria prepared by the GSTC managers were asked to assess the importance. In general, all of the criteria were more important on island restaurants. Table 7 provides the t-test results and significances.

Table 3. GSTC Criteria

Global Sustainable Tourism Criteria N Mean SD P Purchasing policy favors environmentally friendly products for building materials, capital goods, food, and consumables.

Island 21 1.67 .796

*

Pioneer Valley

22 2.45 .963

The purchase of disposable and consumable goods is measured, and the business actively seeks ways to reduce their use.

Island 21 1.71 .717 Pioneer Valley

22 2.05 .844

Energy consumption should be measured, sources indicated, and measures to decrease overall consumption should be adopted, while encouraging the use of renewable energy.

Island 21 1.52 .750

*

Pioneer Valley

22 2.18 1.053

Water consumption should be measured, sources indicated, and measures to decrease overall consumption should be adopted.

Island 21 1.43 .598

**

Pioneer Valley

22 2.64 .902

Greenhouse gas emissions from all sources controlled by the business are measured, and procedures are implemented to reduce and offset them as a way to achieve climate neutrality.

Island 21 2.24 .889

Pioneer Valley

22 2.82 1.006

Wastewater, including gray water, is treated effectively and reused where possible.

Island 21 1.57 .746

**

Pioneer Valley

22 2.73 .985

A solid waste management plan is implemented, with quantitative goals to minimize waste that is not reused or recycled.

Island 21 1.81 .750

Pioneer Valley

22 2.27 1.120

The use of harmful substances, including pesticides, paints, swimming pool disinfectants, and cleaning materials, is minimized; substituted, when available, by innocuous products; and all chemical use is properly managed.

Island 21 1.67 .730

Pioneer Valley

22 1.82 .907

The business implements practices to reduce pollution from noise, light, runoff, erosion, ozone-depleting compounds, and air and soil contaminants.

Island 21 1.90 .944

*

Pioneer Valley

22 2.64 .902

The international or national legal protection of employees is respected, and employees are paid a living wage.

Island 21 1.38 .498

Pioneer Valley

22 1.77 .752

Note: 1= Very Important, 3=Indifferent, 5 Not Very Important. Sig *P=0.05, **P=0.01

Significant differences were found for “Purchasing policy favors environmentally friendly products for building materials, capital goods, food, and consumables”, “Energy consumption should be measured, sources indicated, and measures to decrease overall consumption should be adopted, while encouraging the use of renewable energy”, “Water consumption should be measured, sources indicated, and measures to decrease overall consumption should be adopted”, “Wastewater, including gray water, is treated effectively and reused where possible”, “The business implements practices to reduce pollution from noise, light, runoff, erosion, ozone-depleting compounds, and air and soil contaminants”.

CONCLUSION

In summary, island restaurants have limited choices in food sources and production practices. Further, while they are more sensitive to sustainable management practices than those in the United States, this study has not analysed the regulatory statutes in both locations. Conservation of energy and water is done out of necessity and is a cost reduction management tool, while in the States, where energy costs are lower and water is not an issue, the importance is just a convenience.

It should be expected that in the highly competitive market of food service, businesses that remain in operation have balanced the costs of operations with the provision of a high quality experience. Meeting the needs of customers is important since the customer determines which restaurants stay operational in the long run.

This research is sponsored by Westfield State University and Les Roches Gruyere University of Applied Science and the research team has no financial interests in the businesses surveyed.

References

Boucher H., 2012, Population and Profits: Food, Prospect, 64 & 67, Prospect Publishing Ltd., London Brotherton B., 2010, Researching Hospitality and Tourism, A Students Guide, Sage,London Davis B, Lockwood A, Pantelidis I, Alcott P, 2008, Food and Beverage Management, Butterworth-Heinemann, Oxford. Fairtrade Foundation, 2010, The FAIRTRADE Mark, http://www.fairtrade.org.uk/, Accessed: 21/6/2010 Fasman J., 2012, A Taste of History, Intelligent Life, July/August, 114-118, The Economist, Francis J., 2008, Future of Travel, Geographical Magazine, December, Brentford GSTC (Global Sustainable Tourism Criteria) 2009, Global Sustainable Tourism Criteria. Retrieved October 18, 2010 from http://www.sustainabletourismcriteria .org/index.php? option=com_content&task=view&id=13&Itemid=47 Hall M C, & Lew A A, 1998, Sustainable Tourism, Addison Wesley Longman, Harlow Jackson T., 2009, Prosperity without Growth, Transition to a Sustainable Economy, Sustainability Commission, London Marks & Spenser 2011, How We do Business Report 2011, http://plana.marksandspencer.com/media/pdf/how_we-do_business_report_2011.pdf, Accessed 29/6/2012 Pender L & Sharpley R, 2005, The Management of Tourism Robinson C, 2006, Real World Research 2nd Ed. Blackwell, Oxford Soil Association, 2012, Who Are We, http://www.soilassociation.org/aboutus/whoweare, Accessed 29/6/2012, Southan H., 2011, The Town That Wants to Feed Itself, Geographical, December, 44-48, RGS, Brentford. World Commission on Environment and Development (WCED) (1987). Our Common Future. New York: Oxford University Press.

The Relationship between the Use of Technology & Service Operations Management Tools and Hotel Profitability & Customer Satisfaction

Karolin Kokaz Pucciani* Ecole hôtelière de Lausanne

Lausanne, Switzerland Email: [email protected]

and Jean Hurpé

Swissôtel Nankai Osaka

ABSTRACT

The aim of this paper is to study the current trends concerning technological & service operations management tools used in the hospitality industry; and to investigate the relationship between the use these tools and profitability & customer satisfaction of hotels. The chosen population for this study is the Rooms Division of 4 star hotels around the world, as they are the most likely candidates to use these tools. The chosen methodology is an online questionnaire developed by using the MrInterview suite of SPSS statistical software, which was completed by 101 hotels in 50 different countries. The top 3 most used tools were: for IT – website, PMS, and GDS; for operations management tools – forecasting, statistics, and quality management. Hotels’ perception is that the use of operations management & IT tools improves their profitability and customer satisfaction (60 to 66% believe so). Statistical analysis including box plots, means plots, chi-squared tests, ANOVA, and cluster analysis are used to find statistically significant relationships: results are that hotels that use more IT tools have higher occupancy levels, and hotels that use more operations management tools have a greater participation in customer satisfaction surveys. Training and updates to these tools are found to be necessary factors as well.

Keywords: Technology, Operations Management, Hotel Occupancy Rates, Customer Satisfaction

INTRODUCTION

This research was initiated in 2010 when the economic crisis was jeopardizing hotel revenues. It was essential for hotels to find ways of improving their profitability and customer satisfaction by the use of technological (IT) and service operations management (SOM) tools which have already been used for long in the manufacturing industry to increase productivity and profitability. There is little research on the use of these tools in hotels and limited indication that hotels exploit these tools effectively (Kokaz & Murphy, 2009). However, significant impacts can be achieved on the productivity of the organization through the IT department (McLaughlin, 2007), and using operations management tools can potentially increase profitability, productivity and quality (Kokaz, 2007).

Over time, the hotel industry is beginning to implement more of these IT & SOM tools, however not at a very high speed. About 20 years ago only 11% of hotels were using SOM tools frequently (Witt & Witt, 1989), which in recent surveys, this turns out to be slightly above 30% (Kokaz & Murphy, 2011).

It is difficult to gather information about the use of IT and SOM tools in a hospitality context, as these concepts sometimes are perceived to be too complex by hotel employees and previous efforts in collecting this type of information has proven to be not easy (Kokaz and Murphy, 2009 and 2010). Bigger hotels (by number of rooms and employees) and higher service levels (4 stars and above) are more likely to use these tools, with also having more financial means at their disposal to pay for these expensive tools. The Rooms Department is the core product of the hotel with a large number of tasks. Hence, this research focuses on the Rooms division of 4 star hotels all around the world to get an overview specific to this segment with regards to the studied topic.

Therefore, the main objectives of this study are: - To explore the current use of IT & SOM tools & techniques used in the hospitality industry to identify

trends and the most commonly used tools, - To identify measures for both profitability and customer satisfaction for hotels, - To investigate the relationship between both the use of IT & SOM tools and the profitability & customer

satisfaction of hotels, both from the hotels’ perspective and through in depth statistical analysis.

LITERATURE REVIEW

The following literature review gives the reasons for the chosen target population, details the IT and SOM tools investigated in this study, and explains the chosen hotel profitability and customer satisfaction KPIs to be used in the relationship analysis.

Rooms Division

The chosen population for this study is the Rooms Division of 4 star hotels around the world, as they are the most likely candidates to use the investigated IT & SOM tools (Kokaz and Murphy, 2009). According to Walker (2009), Rooms Division is one of the key departments of a hotel and performs the key functions of the hotel. Not only it is the first point of contact with the guests, during check-in and check-out at the hotel, but also it is the core product a hotel offers. As a result, the Rooms Division should focus all its resources on providing the best service to the customer. Being the core economic and service center within the hotel, Rooms Division is the appropriate section of the hotel to run this study on.

Knowing the sub-departments of the Rooms Division of a hotel is key to anticipating and understanding how IT and SOM tools can create value for the customer and the company. According to Walker (2009), the Rooms Division of a hotel is divided into several sub-departments:

• Front office (check-in and check-out) • Reservations (sales of the rooms, switchboard) • Housekeeping • Concierge • Guest services (uniform service such as bell captain, door attendants, bell persons and guest complaints) • Yield management (the process of controlling rates and occupancy in order to maximize gross room revenue) • Security (providing guest safety and loss prevention)

IT & SOM Tools

The adoption of technology differs based on hotel’s service level (no significant difference has been observed in the number of tools used at lower levels, but higher differences observed above midscale), and as the amount of technology used increases so does the service level (Siguaw, Enz and Namasivayam, 2000). The relationship between the use of IT in upscale hotels and performance has been found to be significant and positive (Sunny et. al. 2005). Customer needs and wants are better met with IT incorporated operations than without, which would be expected to increase customer satisfaction leading to loyalty and increased revenues (Chathoth, 2007). IT tools can enhance service quality, reduce costs, improve productivity, and allow the organization to gain competitive advantage (Kasavana, Knutson & Lee, 2004). These are clear incentives for the hospitality industry to invest in IT tools. Given these indicative positive impacts of IT on performance, the following discussion helps identify the tools to be investigated in this study.

The World Wide Web not only provides all kinds of information to users, but also allows for communicating and exchanging information in real time (Cohen, 2006). Thus, the internet has become a mandatory tool for any company in the 21st century wishing to promote its products. This is especially true in the hospitality industry, where the World Wide Web has become one of the key tools for any hotel to get exposure in the market and hence generate sales. As a result, many third-party internet sites such as Trip Advisor, booking.com and others are also used for increasing room sales.

The main use of IT tools in the Rooms Division seems to be in reservations, as reservation information is the most important determinant of the hotel´s operation and the room rate is the most important attribute of the hotel (Law and Hsu, 2005). It is the information that any guest will consult before deciding to stay at the hotel. A study by Gazzoli, Kim and Palakurthi (2008) showed that internet providers and online reservation systems are the most commonly used tools for providing and consulting room rates day-to-day. Big chains experience more frequent direct reservations over their own corporate websites (81.4%) than indirect reservations over a third-party travel agency (18.6%) (Starkov and Price, 2007).

In addition to reservations, the operations of the Rooms Division use substantial IT tools. As in all organizations, in the hotel industry likewise, there is a fundamental relationship between supply and demand. Especially in the hotel industry, using IT tools enables hotels to answer quickly to customers’ needs. For instance, the Windows operating system supports several programs used in the hotel industry: (1) knowing the number and status of rooms in the hotel (vacant, occupied) through the Property Management System (PMS); (2) helping dispatch the rooms available for customers through Global Distribution System (GDS), Central Reservation System (CRS) and Reservation Management Systems; (3) managing of the property with Energy Management Systems (EMS); (4) making orders to the suppliers through the Enterprise Resource Planning (ERP); (5) knowing the customer through the Customer Relationship Management System (CRM); and finally (6) improving the revenue of the hotel through Revenue Management Systems (RMS). Unfortunately, most of these tools are not used to their full capacity. For example, a study done on data management in hotels using PMS shows the underutilization of the PMS and highlights the main issue to be the need for training (Kokaz & Murphy, 2010).

The most recent trend, which is the increasing use of smart-phone applications by providers such as Apple, may shift the power of hospitality IT tools away from Microsoft and its Windows solutions (Knowledge Factories, 2011). The importance of communication over smart-phone devices in hotels is becoming more and more important in the market of Apps and was reinforced by the launch of the iPad in 2010. Intercontinental Hotel Group decided on the 1st of April 2010 to equip their concierge desks with iPad; and then, on the 21st of December 2010, to offer concierge Apps for their customers (Intercontinental Hotel Group, 2011). By offering this new technology, the hotel group tries to enhance customer satisfaction, which may result in increased hotel performance. Another interesting tool, provided to customers by the Intercontinental Hotel Group, is the use of smart phones as a key to the rooms in its Holiday Inn Express branded properties. These hotels use a system which is entirely adapted to smart phones, an ideal tool for the business segment (Open Ways, 2010).

In summary, the IT tools that are investigated in this study are the following: • Property Management Systems (PMS) • Revenue Management System (RMS) • Global Distribution System (GDS) • Central Reservation System (CRS) • Energy Management Systems (EMS) • Enterprise Resource Planning (ERP) • Customer Relationship Management System (CRM) • Internet web-site • Smart phone application • Smart-card • Smart-phone use as a key for Rooms • Tablet PC

The hotel industry is in some regards lagging even more behind in the implementation of SOM techniques. According to a survey run by Witt and Witt (1989), 76% of hotels seldom or never use SOM tools, 13% used them occasionally and only 11% used them frequently. More recently a moderate increase in the use of these tools is seen, as the tools mature to be transferred into the hotel industry and the hotel employees become more educated. The SOM tools that are investigated in this study are the following: • Statistics (average, median, mode, standard deviation, histograms, etc.) • Probabilities and Probability Distributions • Service Mapping (flowcharts, flow diagrams, blueprints) • Capacity Management (bottleneck analysis) • Graphical tools (scatter plots, line charts, bubble charts, waterfall charts, bar charts, etc.) • Quality Management Tools (flow diagrams, check lists, Pareto charts, statistical process control charts, etc.) • Forecasting (time series, correlations, regressions, simulations, qualitative methods) • Project management tools (work breakdown structure, responsibility charts, Gant charts, critical path method, PERT – project evaluation and review techniques) • Decision making tools (decision trees, decision criteria – expected values, etc.) • Queuing analysis (queuing models with single or multiple servers) • Optimization techniques (linear programs, integer programs, goal programs, etc.) • Inventory management (ABC analysis, economic order quantity models)

Profitability KPIs

Past studies on performance measurement have identified Daily Occupancy Percentage, Average Daily Rate (ADR) and Revenue per Available Room (RevPAR) as the three most used metrics in the hotel industry (Neves and Lourenco, 2009). Another study done in 2005 with hotel general managers has identified Profit Margin, Occupancy Percentage – Month To Date, Cost of Labor Percentage, Daily Occupancy Percentage, Average Daily Rate, Total Revenue Percentage Change From Budget, Cost of Food Sold Percentage, Cost of Beverage Sold Percentage, Room Sales to Total Sales and Operating Efficiency Ratio as the most useful metrics (Schmidgall, 2006).

Occupancy rate is often mentioned as a measure of the profitability in the value chain of the Rooms Division (Jeffery & Barden, 2000). ADR, RevPAR, and occupancy rate together represents three typical measures for hotels; however by themselves they might be insufficient to look beyond day-to-day operations (Enz, Canina & Walsh, 2001).

An additional metric to be used might be the Profit per Available Room (ProfPAR) (Rohlfs, 2003). This has been shown to be a better measurement of hotel performance than RevPAR, as it produces generalized profit figures, which can be compared to other areas of a hotel. Besides, it also shows how successful managers generate income from property operations.

As a result, the following KPIs are deemed to be the most suitable metrics for a Rooms Division manager to collect information about profitability: • Occupancy rate • RevPAR • ProfPAR (income before fixed charges per number of available rooms)

Customer Satisfaction KPIs

Customer satisfaction is the emotional outcome of the comparison between a product’s perceived performance and its expected performance (Kotler, Leong, Ang and Tan, 1996). Therefore, satisfaction is understood as a function of the difference between performance and expectation (Stahl, 1999). This ultimately means that when trying to satisfy customers, hotels need to consider the experience they are providing, as well as the expectations they are generating – a fit between the two needs to be the goal of every hotelier.

Customer Satisfaction is one of the main ingredients to success for hotels on the market place (Weiser, 1995). Long-term customer relationships and repeat-business are the keys to long term business success and customer satisfaction (McColl-Kennedy & Schneider, 2000). Reichheld and Sasser (1990) stipulated that there is a positive relationship between loyalty and profitability.

As customer satisfaction clearly represents a key issue in the hospitality industry and is undergoing massive changes, IT tools and continuous customer contact are important elements in securing the success of a hotel operation (Dwivedi & Venkatsh, 2007). In the hotel industry, Customer Relationship Management (CRM) becomes a strategic imperative for attracting and increasing guests’ patronage. As the hotel industry is facing increasing competition, hoteliers have to differentiate their offer to match the customers’ needs. CRM is viewed as a tool to improve this adaptation and to also improve the communication and relationship with the customers (Sigala, 2005). A study done in the hotel industry in Malaysia analyzing the relationship between performance and CRM strategy showed significant positive relationship between the use of customer performance measures and performance (Kasim and Minai, 2009). They identified the measures on customers which should affect performance as percentage of repeat customers and the ratings from customer surveys (Kasim and Minai, 2009).

Traditionally, the usual measure of customer satisfaction involves a survey with a set of statements using a Likert scale. The participant is asked to evaluate each statement in terms of his or her perception and expectation of performance of the service measured (Kessler, 2003). It is difficult to measure customer satisfaction, because the results obtained are never representative of all hotel guests, due to the voluntary basis and the intervention of employee which might bias the data (Poria, 2004). Besides, service satisfaction might vary according to the customer’s background in terms of culture or other variables (Gilbert and Veloutsou, 2006).

To measure the customer satisfaction, one can employ the American Customer Satisfaction Index (ACSI) or the European Customer Satisfaction Index (ECSI). Both indices serve as a gross assessment of the viability of large economic blocs in USA and Europe (Yüksel and Rimmington, 1998). However, considering the fast pace of innovation and change present in the hospitality industry, both measures have been deemed to be outdated and unhelpful (Gilbert, Veloutsou, Goode and Monthinho, 2004).

As a result, the following KPIs are deemed to be the most suitable metrics for a Rooms Division manager to collect information about customer satisfaction: • % of satisfied customers • % of participation in customer satisfaction surveys • % of repeat customers

METHODOLOGY

A thorough literature review reveals that there is little empirical research done in this area and therefore makes an exploratory approach appropriate for this study. The literature review is also used to identify a set of 12 most dominant IT and SOM tools to be investigated.

An online questionnaire is used to collect data as it is the most time and cost effective method to gather data in a large geographical scope and to carry out inferential statistical analysis. The online questionnaire was developed with MrInterview suite of SPSS statistical software and was sent to the sample via email with three recalls. The sample of hotels is identified through internet search (4 star hotels according to Hotelstar (2011) standard of classification and Swiss Hotel Association international standards (Hotelleriesuisse, 2011) in 123 countries and that belong to different brands as well as independent hotels). The questionnaire was sent to 1550 such hotels and fully completed by 101 hotels in 50 different countries (6.5% response rate). The relatively low response rate is not unusual due to the complex and comprehensive structure of the questionnaire, and possible technical and time constraints hotels might have faced; similar response rates had been observed in previous research projects on the topic. However, a low response does limit the ability to make generalizations about the research findings as it gives an error margin of about 9.6%.

The questionnaire was designed and validated by professionals and academics through interviews (3 hotel management school professors in domains of IT, SOM and Rooms Division; and two professionals from two different hotels: one Front Office Manager and one Sales & Marketing Manager). The final version of the questionnaire consisted of 35 questions and was divided into five parts collecting information in the following areas: hotel information, IT tools, SOM tools, customer satisfaction, and profitability. The questionnaire included closed ended questions (yes/no questions, some specific information requests, and questions with a 5-point Likert scale used for example in the investigation of the frequency of use of the tools). An in-depth statistical analysis is carried out with the questionnaire responses: box plots, means plots, and regression analysis for all relationships investigated; chi-square tests of independence for customer satisfaction relationships as they were categorical variables; and ANOVA (normality and equal variances assumptions met), and cluster analysis for the profitability relationships. See Figure 1 below for overall methodology summary. Only some of the results are discussed in this paper and the most significant results are shown in the figures in the following sections.

Figure 1: Methodology

- Target population - Interviews to build - Data analysis - Relationships - List IT/SOM tools questionnaire - Graphical analysis - Limitations - Build hypotheses - Questionnaire to - Statistical Analysis - Define methodology collect data - Test the hypotheses

Literature Review

Data Collection

Synthesis Final Outcome

RESULTS

The questionnaire was fully completed by 101 four star hotels in 50 countries around the world. This sample is used to do the statistical analysis. Most of these hotels are city hotels (83) with an average number of rooms of 152. However, for descriptive analysis of the tools used, we had more responses we could use (201 hotels for IT tools used and 155 hotels for SOM tools used).

For objective 1: The top 3 most used tools by these hotels were: for IT – website (99.5%), PMS (78.1%), and GDS (70.6%); for SOM – forecasting, statistics, and quality management (see Figures 2 & 3 below). The average number of tools used per hotel was 5.5 tools for IT and 7.2 tools for SOM. Even though a large number of SOM tools & techniques are used, they are not used very frequently (only 33% used frequently, see Figure 3).

Following objective 2: Among the profitability KPIs investigated, most of the hotels did not want to share their RevPAR and ProfPAR due to confidentiality reasons. Therefore, only the occupancy rate KPI will be used in relationships analysis. The average occupancy of the 101 hotels in the sample was 60.7%.

Following objective 2: Regarding the customer satisfaction KPIs, 94% of the hotels stated that they do give out customer satisfaction surveys to collect data. 56% of the hotels had 81-100% customer satisfaction. 40% of the hotels had more than 41% of their customers participating in the customer satisfaction survey. 16% of the hotels had more than 60% of repeat customers.

Figure 2: The Distribution of IT Tools Used by Hotels in the Sample

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Figure 3: The Frequency of SOM tools Used by Hotels in the Sample

Following objective 3, the following paragraphs describe the analysis & results regarding the impact of the use of IT & SOM tools on the hotels’ profitability & customer satisfaction KPIs both through an in depth statistical analysis and from the participating hotels’ perspectives.

From the hotels’ perspective, a majority of hotels state that they believe the use of SOM & IT tools improves the hotels’ profitability (through improvements in occupancy rates, revenue per available room, and profit per available room). 59.4% of hotels believe this positive link exists for SOM tools and 66.3% for IT tools. A majority of hotels also believes that there is improvement in customer satisfaction KPIs due to the use of IT & SOM tools: 66.3% of hotels for use of SOM tools and 63.3% of hotels for use of IT tools believe there is a positive impact on customer satisfaction (see Figure 4 for details).

Furthermore, staff’s knowledge of IT & SOM tools, updates and training provided are investigated as these factors are necessary for the effective utilization of these tools. Results are better for IT tools. About 54% of staff has good knowledge of the IT tools, whereas this is only 20% for the SOM tools. 68% of staff get at least some training for IT tools, whereas 45% only for SOM tools. 53% of hotels have frequent/regular updates for IT tools, but only 24% of them for SOM tools (see Figure 5 for more details).

0 20 40 60 80 100 120 140 160

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Queuing analysis

# of hotels (total of 155 hotel respondents)

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Figure 4: Perception of the hotels regarding the impact of IT/SOM tools on Profitability & Customer Satisfaction Metrics

Figure 5: Knowledge, Training, and Update of IT & SOM Tools

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The next step is to statistically test the relationships identified through hotels’ perspectives.

- Occupancy Rate versus the use of IT & SOM tools: The means plots show an increase in occupancy with respect to the use of IT tools but not SOM tools. The positive relationship between occupancy rate and IT tools is statistically significant (linear regression p-value 3.2%). This relationship is more significant when clustering is applied to the sample with respect to the number of IT tools used (low cluster uses <=3 tools, high cluster uses >=4 tools): ANOVA p-value 0.3%. There is a statistically significant difference between the occupancy of hotels that use different number of SOM tools, but this relationship is not linear (ANOVA p-value 1.7%). See Figure 6 and Table 1 for details.

- Customer Satisfaction versus the use of IT & SOM Tools: Using a chi-square test of independence to see the relationship between the three customer satisfaction KPIs and the use of IT & SOM tools, only one KPI gave statistically significant results: a positive relationship between the % of participation in customer satisfaction (CS) survey and the number of SOM tools used. See Figure 7 and Table 1 for details.

- Knowledge, Training, and Updates of IT & SOM Tools: Through linear regression and chi-square tests or ANOVA where appropriate, the following statistically significant relationships are obtained. For Occupancy: positive relationship with IT Training and IT Updates. For Customer Satisfaction: positive relationship with IT Knowledge. For Participation to Customer Satisfaction Survey: positive relationship with IT Knowledge and SOM Knowledge.

Table 1: Statistical Test Results

Dependent Variable Independent Variable

ANOVA Linear Regression p-value R-Square Slope p-value

Profitability KPI

Occupancy Rate IT Tools 5.6% 0.051 1.835 3.2%* SOM Tools 1.7%* 0.008 -0.375 40.8%

Dependent Variable Independent

Variable Chi-Square Linear Regression

p-value R-Square Slope p-value

Customer Satisfaction

KPIs

% of satisfied customers

IT Tools 40.8% 0.008 0.063 37.5% SOM Tools 51% 0.024 0.057 12.4%

% of repeat customers

IT Tools 53.2% 0.004 0.035 54.9% SOM Tools 66.9% 0.017 0.039 19.8%

% participation in CS survey

IT Tools 10.3% 0 0.005 94.1% SOM Tools 3%* 0.046 0.077 3.2%*

*Significant at 5%

Figure 6: Number of IT/SOM tools (categorized) used versus Occupancy rate

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ANOVA: 1.7%

Linear Regression:R-square:0.008 slope: -0.375

p-value: 40.8%

Figure 7: Number of IT/SOM tools (categorized) used versus % of Participation in Customer Survey

Chi-square: 10.3%

Linear Regression:R-square:0 slope: 0.005

p-value: 94.1%

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Linear Regression:R-square:0.046

slope: 0.077p-value: 3.2%

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IT Tools

CONCLUSIONS & RECOMMENDATIONS

The current trends concerning IT & SOM tools used in the hospitality industry indicate an improvement over time in the adoption of these tools, however still remains at a relatively low level. Through the sample of 101 four star hotels in 50 countries around the world, the top 5 most used tools were identified to be: for IT tools – the hotel website, PMS, GDS, CRS and smart cards; and for SOM tools – forecasting, statistics, quality management, inventory management, and project management tools. Even though a larger number of SOM tools & techniques are used, they are not used very frequently (only 33% used frequently), which reduces their potential added value.

Clearly, having the IT & SOM tools, does not guarantee any benefits, if staff is not made aware of these tools, offered training and regular updates implemented. There appears to be not enough efforts done in these domains. In addition, hotels seem to have more knowledge & training about and updates regarding the IT tools compared to the SOM tools. More commitment is needed to offer training and provide constant updates to hotel staff to be able to fully benefit from the investments done in IT & SOM tools, and increase their impact on profitability & customer satisfaction.

Regarding the relationships investigated between the use of IT & SOM tools and profitability & customer satisfaction of hotels, some positive statistically significant links were identified, which were also backed up by hotels’ perceptions. Even though in addition to occupancy levels, RevPAR and ProfPAR were found to be the most suitable profitability KPIs, hotels were reluctant in sharing this data and so occupancy levels were used in the statistical analysis. Hotels using more IT tools have reported higher occupancy levels (significant ANOVA & positive linear regression). This was supported also by hotels’ perception showing that 66.3% of them believe there is an improvement in occupancy rates due to the use of IT tools (improvement in RevPar and ProfPar are believed to exist also by 61.4% and 55.4% of the hotels respectively). These results are in accordance with the literature review findings (Sunny et. al. 2005; Kokaz and Murphy, 2009 and 2011). In addition, providing training and regular updates have been found to have a statistically significant positive relationship with the occupancy rates. However, no statistical links have been found between the use of IT tools and customer satisfaction KPIs. Even though this is the case, hotels perception shows support by revealing 63.4% of hotels believing an improvement exists in customer satisfaction due to the use of IT tools. Also, staff having the knowledge of these tools, does have a significant positive relationship with customer satisfaction.

Concerning the SOM tools usage, a significant difference in occupancy rates by hotels using different total number of SOM tools have been identified, however this relationship was not a linearly positive one. Nevertheless, 59.4% of hotels do believe there is improvement in occupancy rates due to the use of SOM tools (56.4% and 49.5% of hotels state their belief of improvements in RevPar and ProfPar respectively). The use of SOM tools and having knowledge about these tools, have been found to have a positive relationship with the participation in customer satisfaction surveys (through chi-square tests and linear regression). Other customer satisfaction KPIs were not found to have statistically significant links. However, 66.4% of hotels do believe to have improvements in customer satisfaction due to the use of SOM tools.

The positive relationships identified statistically, also backed by hotels’ optimistic perceptions, emphasize the importance of investing in IT & SOM tools along with educating the staff about these tools through providing updates and training. Given the highly competitive nature of this industry, it will be very important to effectively manage the investment and use of these tools to keep ahead of the game. To reinforce the findings of this research, a larger sample can be analyzed and over time to monitor the trends. A more detailed study on the training of the tools versus the use and final impacts on profitability & customer satisfaction would be of high importance and have more explanatory power. Additionally, more profitability KPIs can be collected and the same relationships analyzed with them. Finally, some hotel case studies with direct interviews may result in new insights and a better understanding of the underlying mechanisms.

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The Relationship between Individualism/Collectivism and Food Handlers' Practices

Ma'moun A. Habiballah, Al-Hussein Bin Talal University

Petra, Jordan [email protected]

and Elizabeth M. Ineson*

Manchester Metropolitan University Old Hall Lane

Manchester M14 6HR, UK [email protected]

ABSTRACT

The relationship between food handlers' practices and the Individualism vs. Collectivism (I/C) cultural dimension is examined. The variables were measured quantitatively employing scaling techniques; using multi-stage cluster sampling, 347 Food and Beverage employees working in the Jordanian hotel industry were targeted. The majority were Jordanians (88.5%), male (86%), under 35 years of age (84%), working in classified hotels (94.9%) that employed under 101 employees (77.2%) and were managed locally (76%). The scales’ reliability and validity were confirmed by Cronbach’s alpha and factor analysis respectively. Standard Multiple Regression found employees' food handling practices associate positively with Individualism (r=0.610; p<0.001) and negatively with Collectivism (r=-0.459; p<0.001). Hence, a relationship between I/C and the food safety behaviour of food handlers is established. Keywords: Food handling practices; Culture; Individualism/Collectivism; Idiocentrism; Allocentrism.

Generation Y and organic wine: is it love at first sight1?

Elena Cavagnaro, PhD Professor in service studies

Stenden University of Applied Sciences, Academy of International Hospitality Research Rengerslaan 8, 8917 DD Leeuwarden

[email protected]

Abstract: Though interest in sustainable F&B is increasing, there is still limited research on organic wines and customers of the so called Generation Y (GY). From the existing studies a negative judgment on organic wine taste emerges. The research presented in this paper aims at better understanding GY knowledge about and judgment of organic wine trough a taste experiment followed by a focus group discussion. Outcomes suggest that GY members have not a negative opinion about organic wines, but that their choice for a wine will be led more by the (perceived) quality of the wine and the type of grape than by any sustainability claim. Keywords: organic wine; Generation Y

INTRODUCTION

After a difficult start in the 1980s, sustainability has got increasing attention by researchers, policy makers and practitioners also in the F&B sector. There is, though, still limited research on organic wines in general and in relation with Generation Y (referred to as GY) in particular. This is remarkable because, with 1.7 billion members worldwide, GY represents a huge economic force. Moreover, existing research on organic wines and GY gives mixed results. Stolz and Schmid (2008) revealed that GY has a positive health image of organic wine but also shares a negative taste perception of organic wines. Forbes et al. (2009), on the contrary, found that a slight majority of their respondents (53%) state that organic production practices will not influence the wine quality, whereas 37% believe that wine’s quality would actually be increased by sustainable production practices. Differences in quality and taste perceptions were also reported by Delmas and Grant (2010): experience with organic wine was found to be the discriminating factor.

From the above, it might be concluded that there is scope for more research on GY and organic wine.

The research presented here is part of a larger research program called ‘Greening Generation Y’ aimed at understanding the knowledge, attitude and behaviour of GY members towards sustainable products and services in order to develop innovative communication techniques to support GY choice of these products and services. The first stage of the larger study consisted of a quantitative survey (n=120) focussing on knowledge attitude and behaviour towards organic food of Dutch GY. This study confirmed Stolz and Schmid (2008) result: GY share a negative perception of the taste of organic food and wine. To better understand this outcome further research was conducted, including taste experiments. The present paper reports on the set up and major outcomes of the taste experiment and focus group focussed on organic wine.

After this introduction, the literature review will briefly touch upon existing research on GY; organic

vs. conventional wine and labelling. In the methodology the set up of the wine taste experiment and focus group discussion is described. Then main results are presented. A brief conclusion, with recommendations and limitations, closes the paper.

                                                            1 This research has been conducted with the support of Z. D’Aboy and M.van der Heide (3rd year International Hospitality Management students) and F. Struik and M. Venema (students of the Master in International Service Management). Dr. Klosse, professor in gastronomy, and Mr B. Cramwinckel, director of the Center for taste Research (Centrum voor Smaakonderzoek), have advised the author on consumers’ behavior regarding wine and on the taste experiment.  

LITERATURE REVIEW

Characteristics of Generation Y (GY) A generation consists of a group of people sharing the same experiences and teaching at the same age

(Underwood, 2011). Though there are different opinions on GY’s age range (Chrysochou et al., 2012), researchers most often refer to people born after 1977 and before 1999 as GY (Lancaster & Stillman, 2002; Fountain & Fisch, 2010; Charters et al., 2011). Specific characteristic shared by GY members are: knowledge and use of internet and social media; love for luxury good, including imported wine; hedonism; authenticity and a positive attitude towards environmental issues (Underwood, 2011; Wolburg & Pokrywczynski, 2001; Noble et al., 2009; Nowak et al., 2006; Thach and Olsen, 2006).

Already in the introduction, the huge spending power of GY has been touched upon as one of the

reasons why it is important to understand GY’s knowledge, attitude and behavior towards specific products. With 1.7 billion worldwide GY represents 25.5% of the world population and is considered to be the largest consumer group in the history in terms of their buying power. This power depends on their own disposable income and on the influence they have on the family decision-making (Nowak et al., 2006; Thach & Olsen, 2006). In the Netherlands, GY’s spending power is on average € 8900 p.y. p.p. (CBS, 2008). To these reasons it might be added that GY are in their formative years: their values and beliefs can still be influenced (Underwood, 2007).

Chrysochou et al. (2012) have already noticed that GY is and will more and more become of

significant importance for the wine industry. Olsen et al. (2007) and Thach and Olsen (2006) report an increase in wine consumption by GY in the US. However, research in other countries such as the UK (Mintel, 2009), New Zealand (Teagle, Mueller, & Lockshin, 2010) and France (Kevany, 2008) shows a lower consumption of wine by GY compared to the US.

Evidence suggests that GY’s positive attitude towards the environment does not translate into

behaviour (McKenzie-Mohr & Smith, 2006; Belz & Peattie, 2009; Arbuthnott, 2009). When it comes to buying organic products, this might be caused by their higher prices. Though, research also suggests that for GY value for money is more important than low price or high quality (Qenani-Petrela et al., 2007). Or, as Thach and Olsen (2006, p. 518) state, “Generation Y is positive, practical and responsive to brands that provide quality but at a fair price”.

Organic- vs. non-organic wine “Organic farming” is “a farming system which uses organic manure and avoids or largely excludes the

use of synthetic fertilizers, pesticides and chemicals" (Gil et al., 2001, p.2). The welfare of animals is also very important, while genetically modified foods and bioengineering are not accepted (Honkanen et al., 2006). In the EU, the European Council Regulation (EEC) no. 2092/91 sets standards for the production of organic wines (Iordachescu et al., 2009). This regulation focuses on the crop in the raw state, and not on the whole process of vinification “with the result that wine can only be promoted as being made from organically grown grapes rather than as organic wine” (Sharples, 1993, p. 32). Organic wine, on the contrary, should be “made from organically grown grapes and without any added sulfites” (Delmas & Grant, 2010, p. 33).

As it was observed above, several researches show that some people judge the taste of organic wine

negatively. Stolz and Schmid (2008) suggest as a possible explanation that in the first years of organic wine production the focus was not laid on the taste of the wines. Although increased knowledge has improved the quality of organic wine significantly, some consumers might still associate eco-labels with lower quality products and might be reluctant to purchase them.

Communication and labeling Alongside taste, packaging (bottle and label) influences GY’s choice of a particular wine (Lunardo &

Guerinet, 2006). Organic products are usually identified by an eco-label. The most widely used Dutch eco-label (EKO) does not apply to wine. As stated above, in the EU, wine may only be labeled as ‘wine made from organically produced grapes’, whereas U.S. and Australian wine make use of the labels: ‘100% organic wine’; ‘organic wines’ (95% organic) and ‘wines made with organic ingredients’ for wines with at least 70% organically produced ingredients (Delmas & Grant, 2010). Finally, biodynamic agriculture labels wine as ‘biodynamic’; ‘Demeter wine’; ‘Demeter certified wine’; and ‘wine made from biodynamic grapes’ or ‘wine made from Demeter certified grapes’. All these different labels might cause confusion in clients’ mind.

METHODOLOGICAL ISSUES As stated in the introduction, the design of the present research responds to the need to better

understand GY negative expectation regarding the taste of organic products, including wine. A mere taste experiment will not suffice to this scope. Firstly because, as prof. Klosse noticed (personal communication, January 2012), it is not possible to find two wines that share exactly the same characteristics except from being organic or non-organic. This means that a taste difference, if perceived, could not be exclusively ascribed to the variable ‘organic’ and ‘non organic’. Secondly because, as the reviewed literature suggests, knowledge and attitude (e.g. about organic production processes) influence people response to organic products. These factors should therefore also be taken into account. To cope with these needs, a mixed methodology was chosen: a double-blind taste experiment with two organic and two non-organic wines; a questionnaire and a focus group discussion.

Before and after the testing participants were asked to fill in a brief questionnaire. The questionnaires,

alongside demographic information, measured knowledge (logo recognition; definition); pro-environmental attitude (NEP scale, Dunlap et al., 2000) and behaviour (drinking behaviour; reason to buy or not organic wine etc.). The focus group discussion was guided by a series of questions, derived from the literature review and from results of the survey of the larger study Greening GY2. Major attention has been here given to labelling as a communication tool.

The focus group discussion has been recorded; transcribed and independently analysed by two groups

of researchers (content analysis). Eventual differences in the analysis were discussed with the research supervisor. For this study, 14 participants in the age category of 18 till 29 years from the North of the Netherlands with a certain interest for wine were selected3. Out of the 14 participants, 6 were males and 8 females; 8 were students and 6 were young professionals. The next section will cover the main results of the study.

MAIN RESULTS

During the taste experiment 9 out of 14 respondents preferred the organic wines over the conventional wines. As expected, no respondent was able to identify organic wine from the taste only.

Taste was also a topic in the questionnaire and in the focus group discussion: 8 respondents expected a

significant difference in taste of an organic wine compared to a conventional one; 2 a negative and 4 a positive difference. Respondents who had already tasted organic wine (n=12) reported that they had both positive and negative experiences with them, similarly with conventional wines. As one respondent mentioned “both traditional and organic wines might have a good or bad taste” (l.82).

About labelling, 12 out of 14 participants saw no counter indication of stating ‘organic’ on the bottle; 2

of the 12 found it a positive sign (proud about the product). Yet all respondents insisted that the fact that a wine is organic should not be pressed too much. An eco-label (if any) should be set on the back of the bottle or, if it was at the front, it should be nicely integrated into the wine label and not pop out. A wine choice – all participants stated – is led by the grapes’ variety and the expected (or already experienced) taste, more than any logo on the bottle. Though, participants admit that wine labels play an important role in choosing a wine because they give a first impression of the wine. Also, respondents confirmed that they take the grape variety, the price and the shape of the bottle into consideration when purchasing a wine. This is in line with findings from existing literature. New is the reference to the presence of a cork as a quality indicator.

As mentioned above, knowledge was tested by showing 4 organic logos. No respondent was able to

rightly identify all logos. Best recognised are the Dutch EKO and (surprisingly) the US organic logo (9/14). Though no one of the respondents knew exactly the difference between ‘organic wine’ and ‘wine made by organically grown grapes’, 11 defined ‘organic wine’ fairly well. The NEP mean score (36.5) reveals a slightly positive attitude towards the environment, and is comparable to the score obtained in the larger study. Looking at behaviour, 12 participants state that they buy sometimes (less that tow bottles per month) organic wine.

                                                            2 Further information on the survey and the focus group will be sent on request. 3 This is only a first study on the topic. Replication is planned. Feedback from colleagues during the EuroCHRIE conference is therefore much appreciated. 

The average spending on wine of Dutch people aged 16-24 is €7.20. The majority of our respondents

(8/14) spend between €5.01 and €7.50 per bottle. Our respondents are not willingly to pay more for an organic wine. Referring to Teagle et al. (2010), who state that GY uses price as a quality indicator – it might be concluded that GY does not consider ‘organic’ a clue of better quality.

CONCLUSIONS AND RECCOMENDATIONS The study suggests that tough some GY members share a negative perception about organic wines, the

majority expect from organic wine a similar experience than from conventional ones. Respondents insists that ‘organic’ is not a reason to choose a certain wine. Taste of a certain grape variety, alongside external clues offered by the bottle and price, is what guide their choice. They also observe that therefore an eventual organic logo should not interfere with the bottle and label aesthetics. Though research is needed on larger samples, on the basis of this study it might be recommended to take care that the organic logo is not too prominent on the bottle and to focus communication about organic wine on their taste. As noticed above, this study should be replicated to better substantiate its findings, both in The Netherlands and in other countries.

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INFLUENCE OF FESTIVAL ATTRIBUTE QUALITIES ON SLOW FOOD TOURISTS’ EXPERIENCE, SATISFACTION AND INTENTION TO RE-VISIT

Timothy Jung *

Manchester Metropolitan University Hollings Faculty, Old Hall Lane Manchester M14 6HR, England

e-mail: [email protected]

Mincheol Kim Department of Management Information Systems

Jeju National University Jeju City, South Korea

e-mail: [email protected]

and

Elizabeth M. Ineson Manchester Metropolitan University

Hollings Faculty, Old Hall Lane Manchester M14 6HR, England

e-mail: [email protected]

ABSTRACT The purpose of this study is to examine the impact of a Slow Food festival’s attributes on visitors’

overall experience, their level of satisfaction and intention to revisit. A total of 209 usable data were collected and Exploratory Factor Analysis (EFA) was conducted using SPSS and AMOS 19.0. A theoretical model representing the relationships among festival attribute qualities, experience quality, satisfaction and intention to re-visit is examined using path analysis. The final model suggests that all three festival attribute qualities (programmes, amenities’ and entertainment) have direct impacts on the visitors’ overall experience and visitor satisfaction; however only amenity quality contributed directly to intention to re-visit the Slow Food festival. Contributions and implications of the study are discussed. Key Words: Slow Food festival, amenity quality, festival attributes, satisfaction, visitor experience quality, intention to re-visit.

INTRODUCTION The Slow Food movement began in Italy in 1986 and its aim is to promote local farming and then to

utilise local products, hence ingredients, to produce local traditional and regional cuisine. In this way not only is the local culture and ecosystem preserved but also the local economy and employment are boosted. More recently, the Slow City movement (Cittaslow, of which Mold is unique in being the only Welsh representative) has evolved in which the town or city promotes a high-quality environment and healthy eating based on locally grown and prepared food. Recently, the Slow City movement was expanded globally and emerged as a niche market which attracts many visitors who would like to experience local foods and culture. As the Slow Food and Slow City movements are considered as alternative approaches to sustainable tourism development, local Destination Marketing Organisations (DMOs) and their partners involved in Slow Food and Slow City movement are making efforts to promote its town or city as Slow Food tourism destination through food festival.

Mold, an historic market town in North Wales, is the first Slow City in Wales and its first Food and Drink Festival was held in September 2006 in order to promote Mold as a Slow Food and Cittaslow destination. Like any other festivals, it is imperative for food festival organisers to design a unique experience which will encourage people to visit food festival again. Therefore, it is particularly important for festival organisers to understand the key aspects of a food festival, which have a strong impact on the positive experience of visitors, their satisfaction level and intention to revisit. Despite the importance of festival attributes’ quality, no academic research has been carried out to determine the influence of festival attributes on visitors’ quality of experience, satisfaction and their intention to revisit within the context of Slow Food tourism destinations. Therefore, the aim of the present paper is to examine the impacts of festival attributes (programmes’, amenities’ and entertainment quality) on the quality of the visitors’ overall experience, their level of satisfaction and intention to re-visit Mold food festival.

CONCEPTUAL FRAMEWORK Existing literature reveals that there is ample empirical evidence to support inter- relationships between

service quality, satisfaction and intention to revisit (Baker & Crompton, 2000; Petrick, 2004; Thrane, 2002; Lee & Beeler, 2007). Despite the tremendous research effort that has been focused on how to improve festivals’ service performance to provide visitors with satisfactory experiences, only a few studies have included the concept of visitor experience and empirically examined the visitor experience in relation to service quality, satisfaction and behavioural intention (Tian-Cole et al., 2002; Cole & Scott, 2004; Cole & Illum, 2006; Cole & Chancellor, 2009) and they all suggested that service quality only indirectly contributes to satisfaction and behavioural intentions through experience quality. Subsequently, based on the previous work of Cole and her colleague (Tian-Cole et al., 2002; Cole & Scott, 2004; Cole & Illum, 2006), Cole and Chancellor (2009) further developed a conceptual framework that models the festival’s service attributes as separate endogenous variables instead of treating them as indicators of the latent variable ‘service quality’. It was designed to examine staging attributes of festival services in order to induce desired experiences in the context of festivals and events. This framework examines the impact of each festival attribute (programmes, amenities and entertainment) on the visitors’ experience, satisfaction and behavioural intentions (Cole & Chancellor, 2009) and the assumption of the framework is that the visitor experience is a function of the quality of those staged festival attributes, and that positive experience will lead to visitors reaching a higher overall satisfaction level, which translates into a re-visit (Cole & Chancellor, 2009). The results of Cole and Chancellor’s study (2009) revealed that all three festival attribute categories had direct impacts on the visitors’ overall experience, but only entertainment quality directly contributed to visitor satisfaction and re-visit intention. However, the limitation of Cole and Chancellor’s study (2009) is that only entertainment quality was examined; other contributing attributes such as amenities and programmes were not studied. Further, their study focused on a downtown festival in a mid-western city in USA and the model has not been validated in any other context. Therefore, the initial research model for the present study (See Figure 1), based on Cole and Chancellor’s study (2009), was proposed in order to examine the impacts of all three festival attributes (programmes’, amenities’ and entertainment quality) on the quality of the visitors’ overall experience, their level of satisfaction and intention to re-visit in the context of the Slow Food festival in Mold, Wales.

Figure 1 Initial Model

METHODS The study was conducted at the Food and Drink Festival in Mold, Wales. The festival was held on 24th

and 25th of September 2011 and Flintshire Tourism Association organised the festival in order to increase sales for businesses in Mold area. Over 100 exhibitors and stands from the food and drink sector, primarily from the Mold area, resulted in a record 12,500 visitors to the festival which attracted not only locals but also tourists (http://www.moldfoodfestival.co.uk/news/visitors-in-for-a-real-buzz-at-food-and-drink-festival). The questionnaires were distributed to festival attendees at the Food Festival (www.moldfoodfestival.co.uk) on 24th

September to 25th September 2011. The questionnaire comprised five sections, namely, festival attributes, overall experience, overall satisfaction, re-visit intention and demographic questions. Festival attributes were measured using a scale adapted from Crompton and Love’s (1995) study and Cole and Chancellor’s (2009) study. Quota sampling with a target of 200 minimum was adopted for data collection. The interviewer approached visitors, attempting to stratify by gender and age, and asked if they were wiling to participate in the survey; once they agreed to participate, visitors were asked to complete the questionnaire and a total of 209 usable data were collected. Exploratory Factor Analysis (EFA) was conducted using SPSS and AMOS 19.0 in order to examine the dimensionality of the construct measured by the 15 items and Cronbach’s alpha was calculated in order to examine the reliability of data. A theoretical model representing the inter-relationships between festival attribute qualities, experience quality, satisfaction and intention to re-visit was examined using path analysis.

Amenities

Programmes

Entertainment

Overall experience

Overall satisfaction

Re-visit intention

RESULTS AND DISCUSSION

With regard to the demographic profiles of the 209 respondents, 86 (41.1%) were female, and 123 (58.9%) were male; the modal age categories were 30-39 years (24.9%) and 40-49 years (24.4%). With reference to marital status, 60.3% (n=126) of the respondents were married/with partner and 22.0% (n= 46) were single. Subdividing by occupation, 44.0% of the respondents were full-time employees and 46.0% were part-time employees; 10% were unemployed. Table 1 Exploratory Factor Analysis (EFA) of Festival Quality, Overall Satisfaction, and Re-revisit Intention Items Communality

value (Factor loading)

Factor Cumulative explanation

(Cronbach’s alpha) Quality of food and beverage .68 (.80)

Amenities

31.70 (.90)

Availability of locally produced Slow Food and drink

.75 (.77)

Friendliness of people running the stalls .71 (.77) Number of places to sit and rest .66 (.75) Cleanliness of festival site .62 (.75) Local food producers and local organisations exhibits

.56 (.70)

Interactive foodie activities, workshops and tasting sessions for all the family

.55 (.59)

Printed programmes and schedules .76 (.78)

Programmes

50.91 (.84)

Street maps on the site giving direction .64 (.67) Accessibility for those with special needs .68 (.64) Information booths giving site direction and performance information

.66 (.64)

Children’s activities .62 (.59) The variety of gifts at the stalls .79 (.86)

Entertainment

65.91 (.73)

Arts and craft exhibits .78 (.87) Live music at the food festival .42 (.50) I am as satisfied with this food festival as I expected to be

.87 (.93)

Overall satisfaction

84.03 (.91)

I am satisfied with the food and beverage provided at this festival

.87 (.93)

Overall, I am satisfied with my visit to this food festival

.79 (.88)

I would like to revisit this food festival next year

.97 (.98) Re-visit Intention

97.22 (.97) I will recommend other to attend this festival .97 (.98)

* ‘overall experience’ variable is single item in the research model.

Exploratory Factor Analysis was conducted to examine the validity and reliability of the independent and the dependent variables employed in the present study (See Table 1). The results of the Exploratory Factor Analysis show that there are five factors, the main three of which (amenities, programmes, and entertainment) map onto those factors identified in Cole and Chancellor’s study (2009). The first factor named ‘Amenities’ contained seven items related to the quality of the festival’s amenities and the second factor named ‘Programmes’ contained five items which were concerned with the programmes of the festival. The third factor named ‘Entertainment’ had three items related to the quality of the festival’s entertainment. Cronbach’s alpha was calculated for each of the three attribute scales to examine the internal consistencies; the scales of all three factors were above 0.7 which shows good internal consistency (Nunnally, 1978). Table 1 represents the communality value (factor loading above 0.4) of all variables. Path analysis was conducted to test the proposed theoretical model in Figure 1 and Table 2 represents the summarised test results for fitness level within the initial model and the revised models. The estimation based on the initial theoretical model revealed that there were statistically significant relationships among the

variables. However, the initial theoretical model did not show a good fit with χ2 = 105.92, df = 8, p-value = 0.00, GFI = 0.89, AGFI = 0.70, RMR = 0.10, CFI = 0.84. This result indicated that the theoretical model which was used in Cole & Chancellor’s study (2009) may not be appropriate in the context of this Slow Food festival. This result confirmed that there may be a possibility that the fit between the adopted model and the collected data could probably be improved substantially. Thus, direct paths from ‘Programme’ to both ‘Satisfaction’ and ‘Re-visit intention’ were added and the revised model 1 was re-estimated. The chi-square difference test for the initial and revised model 1 was significant (χ2 = 104.59, df = 8, p-value = 0.00, GFI = 0.89, AGFI = 0.70, RMR = 0.10, CFI = 0.84), indicating that the revised model provided a slightly better fit to the data and also this models’ fit could potentially still be improved substantially. Therefore, revised model 2 was re-estimated with the added paths from ‘Amenities’ to ‘Satisfaction’ and ‘Re-visit intention’. Goodness of fit indices showed that the revised model 2 provided a good fit with the data. The chi-square difference test of the revised model 1 and the revised model 2 was significant (χ2 = 36.72, df = 8, p-value = 0.00, GFI = 0.95, AGFI = 0.87, RMR = 0.06, CFI = 0.95), indicating that the revised model 2 provided a significantly better fit to the data. Therefore, the revised model 2 can be accepted as the appropriate model. Table 2 Test Results of Fitness Level among the Initial Model, and the Revised Models Model χ2 (p-value) df GFI AGFI CFI RMR

Initial model (New paths: Entertainment -> Satisfaction; Entertainment -> Re-visit intention)

105.92 (.00)

8 .89 .70 .84 .10

Revised model 1 (New paths: Programmes -> Satisfaction; Programmes -> Re-visit intention)

104.59 (.00)

8 .89 .70 .84 .10

Revised model 2 (New paths: Amenities -> Satisfaction; Amenities -> Re-visit intention)

36.72 (.00)

8 .95 .87 .95 .06

Revised model 3 (New paths under revised model 2: Entertainment -> Satisfaction; Programmes -> Satisfaction)

10.29 (.11)

6 .98 .95 .99 .02

Again, all the path coefficients were significant; however, the significant chi-square test (χ2 = 36.72, df

= 8, p-value = 0.00) combined with the value of AGFI of 0.87 indicated the model’s fit could potentially still be improved substantially. Thus, new paths from ‘Entertainment’ to ‘Satisfaction’ and from ‘Programmes’ to ‘Satisfaction’ were added under revised model 2 and the revised model 3 was re-estimated. The chi-square difference test of the revised model 2 and the revised model 3 was statistically significant at 1% level (χ2 = 10.29, df = 6, GFI = 0.98, AGFI = 0.95, RMR = 0.02, CFI = 0.99). Therefore, revised model 3 was accepted as the final theoretical model (See Figure 2). All three festival attributes had significant direct impacts on the visitors’ experience quality (Amenities: 0.4, Programmes: 0.24, Entertainment: 0.17) and overall satisfaction (Amenities: 0.5, Programmes: 0.19, Entertainment: 0.12). The impact from experience quality to overall satisfaction was high (0.50) and the strongest impact was from overall satisfaction to re-visit intention (0.71). It was found that only amenities’ quality contributed directly to re-visit intention (0.16).

Figure 2 Final Model

Amenities

Programmes

Entertainment

Overall experience

Overall satisfaction

Re-visit intention

Further, direct, indirect and total effects of the attribute categories were calculated in order to examine the strength of the impact of each festival attribute on experience, satisfaction and re-visit intention (See Table 3). It was found that: all three festival attributes had significant direct effects on experience quality with ‘Amenities’ being the highest (0.44); and all three festival attributes had significant direct effects on overall satisfaction, with ‘Amenities’ being the highest (0.50). While all attribute categories had indirect effects on ‘Re-visit intention’, only ‘Amenities’ had direct effects on ‘Re-visit intention’ (0.16) and also the total effects of ‘Amenities’ on ‘Re-visit intention’ (0.65) was more than triple the effects of ‘Programmes’ (0.21) and ‘Entertainment’ (0.14). This result showed that the most important festival quality the impacted on ‘Re-visit intention’ through mediation factors (overall experience quality and overall satisfaction) was amenities’ quality (total effect: 0.65).

Table 3 Direct, Indirect and Total Effects of Festival Quality on Visitor Experience Quality,

Satisfaction and Re-visit intention Festival quality

Overall experience quality Overall satisfaction Re-visit intention Direct Indirect Total Direct Indirect Total Direct Indirect Total

Amenities .435 - .435 .495 .217 .712 .155 .497 .652 Program .235 - .235 .186 .117 .303 - .211 .211

Entertainment .165 - .165 .124 .082 .206 - .144 .144

CONCLUSIONS The present study was conducted in response to the call for research by Cole and Chancellor (2009)

who suggested the inclusion of other attributes (amenities’ and programmes), in addition to entertainment, as a predictor of visitor experience, satisfaction and re-visit intention in future research. The findings from the present study suggested that all of the attributes proposed in the model had significant impacts on the quality of the visitors’ experience, satisfaction and re-visit intention to the Slow Food festival in the future. While all three festival attributes studied had significant impacts on the visitors’ experience quality, the impact of amenities’ quality was much stronger than the other two attribute qualities. At the same time, amenities’ quality also had a much stronger impact on visitors’ overall satisfaction and re-visit intention than programmes’ and entertainment quality. It is confirmed that amenities’ quality was the key to the success of the Slow Food festival, when using re-visit intention as an indicator of the festival’s success. Theoretically, this study confirmed that Cole and Chancellor’s model is not an appropriate one in the context of the Slow Food festival; unlike Cole and Chancellor’s study, it was found that amenities’ quality was the most important quality and also the most influential quality which affects re-visit intention. The present study contributes to the development of a best fit model for Slow Food festivals by adding new paths from programmes to satisfaction and from entertainment to satisfaction. Practically, the findings of this study suggest that the organisers of Mold Slow Food festival should focus more on encouraging participation from and promoting amenities-related features such as quality of food and beverage, availability of locally produced food and drink, local food producers, local organisations’ exhibits and interactive foodie activities during the food festival. Further, it is suggested that stakeholder collaboration and partnership among destination marketing organisations, local government, tourism associations and food producers in Mold are essential for the continued success of the Slow Food festival by increasing the amenities’ quality.

REFERENCES

Baker, D. A., & Crompton, J. L. (2000).Quality, Satisfaction and Behavioral Intentions. Annals of Tourism Research, 27(3), 785–804. Cole S. T., & Chancellor, H. C. (2009). Examination the Festival Attributes that Impact Visitor Experience, Satisfaction and Re-visit Intention. Journal of Vacation Marketing, 15(4), 323-333. Cole, S. T., & Illum, S. F. (2006). Examining the Mediating Role of Festival Visitors’ Satisfaction in the

Relationship between Service Quality and Behavioral Intentions. Journal of Vacation Marketing, 12(2), 160–73. Cole, S. T., & Scott, D. (2004). Examining the Mediating Role of Experience Quality in a Model of Tourist

Experiences. Journal of Travel & Tourism Marketing, 16(1), 77–88. Lee, J., & Beeler, C. (2007). The Relationships among Quality, Satisfaction, and Future Intention for First

-Time and Repeat Visitors in a Festival Setting. Event Management, 10, 197–208. Nunnally, J. C. (1978). Psychometric Theory. (2nd ed.). New York: McGraw-Hill. Petrick, J. F. (2004). The Roles of Quality, Value, and Satisfaction in Predicting Cruise Passengers’ Behavioral Intentions. Journal of Travel Research, 42, 397–407. Thrane, C. (2002). Music Quality, Satisfaction, and Behavioral Intentions within a Jazz Festival Context.

Event Management, 7, 143–50. Tian-Cole, S., Crompton, J. L., & Willson, V. A. (2002). An Empirical Investigation of the Relationships

between Service Quality, Satisfaction and Behavioral Intentions among Visitors to a Wildlife Refuge. Journal of Leisure Research, 34(1), 1–24.

CLEANER GUESTROOMS FOR A BETTER LODGING INDUSTRY - A HACCP-BASED MODEL FOR HOTEL HOUSEKEEPING - 

Sheryl Kline*, Ph.D.

Professor and Associate Dean School of Hotel Restaurant and Tourism Management, University of South Carolina

Columbia, SC 29208 USA [email protected]

Jack Neal, Ph.D., CHE

Assistant Professor Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston

Houston, TX USA [email protected]

Barbara Almanza, Ph.D., R.D.

Professor and Graduate Programs Director Hospitality and Tourism Management, Purdue University

West Lafayette, IN USA [email protected]

Olivia V. Stroia

Master Student/Graduate Assistant School of Hotel Restaurant and Tourism Management, University of South Carolina

Columbia, SC 29208 USA [email protected]

ABSTRACT

Most hotel room attendants are trained on how to clean a room with a focus on aesthetics, rather than

on the sanitary condition of the room. Concerns about the spread of illnesses such as Norovirus, SARS, swine and bird flus, and bed bugs are very current and have been the topics of multiple media coverage. The researchers analyze the guestroom cleaning manuals of two of the largest international hotel companies in the USA, and apply this content analysis to the HACCP model, proposing a standard guestroom cleaning procedure that will limit and prevent the spread of diseases. This paper is meant to demonstrate the need to improve the current guestroom cleaning procedures for a better and safer lodging industry. Key words: hotel, housekeeping, cleaning, prevent, disease, HACCP

OSTRICH MEAT AS A NEW PRODUCT IN THE HOSPITALITY OFFER IN REPUBLIC OF MACEDONIA

Gordana Petrovska-Rechkoska* University “St.Kliment Ohridski”- Bitola, Faculty of tourism and hospitality – Ohrid

Republic of Macedonia [email protected]

Risto Rechkoski

University “St.Kliment Ohridski”- Bitola, Faculty of tourism and hospitality – Ohrid

Republic of Macedonia [email protected]

and

Elena Petrovska

University “St.Kliment Ohridski”- Bitola, Faculty of tourism and hospitality – Ohrid

Republic of Macedonia [email protected]

ABSTRACT

This paper examines the ways in which food and tourism are being drawn together for the purpose of producing healthy food products on one hand and promoting healthy lifestyle and sustainable tourism on the other. This paper highlights food-related tourism initiatives in Republic of Macedonia. Moreover, starting from the philosophy of consuming healthy products for a better and sustainable future, there is a new initiative for producing ostrich meat. The aim of this paper is to present the the ostrich products as a healthy food and thus, they can be seen as enhancement of the hospitality offer and influence the tourism offer in general in particular parts of the country.

Key words : ostrich, menu, hospitality offer, healthy food, tourism products, legislation.

BODY

With the struggling economy, developing food-related tourism products is a challenging process, especially in developing countries. Increasingly, regional tourism development initiatives are utilizing locally-produced foodstuffs and beverages to: strenghten areas' tourism products; enhance visitors' experiences; and help maintain and enhance the viability of local food production and processing sectors.

Menu innovation is a key to encouraging guests to return toa a restaurant or any other type of hospitality objects. The aim of the paper is to show the enhancement of the restaurant offer in Republic of Macedonia by offering special crated menus consisting of culinary specialities from ostrich meat, eggs, etc.

Analyses of the different ostrich types and their breeding in Republic of Macedonia has been done as well as analyses of the ostrich meat by which nutritional and energetic values have been determined. Although this initiative is in an early stage, it can be seen as a starting point for developing niche market.

Аnlyses of the relevant tourism literature and the promotional material of variuos destionations indicate that the role of food in marketing of destinations has until recently received very little attention gobally and locally. All indications, however, are that the local food holds much potential to enhance sustainability in tourism; contribute to authenticity of the destionation; strenghten the local economy; and provide for the environmentally friendly infrstructure.

Although results are very promising, this sector also faces different kind of problems such as: no specialized slaughterhouses for ostriches, lack of organized buy products from ostrich, etc. Republic of Macedonia is currently drafting a guide for building slaughterhouses for ostriches in accordance with modern requirements and application of HACCP standards en EU legal framework. New standards in the production of food lead manufacturers to develop programs to ensure the quality of menu components. In Macedonia there should be prepared slecial legislative framework emphasizing the produciton and breeding of ostriches. For real promotion and further development of these food-related tourism products in our country, tourism organisations should provide education to the ones involved in this process as well.

REFERENCES

Official Gazette of Republic of Macedonia (2007). Manual on minimum technical and technological requirements to meet the facilities and equipment for slaughtering ostriches and facilities and equipment for cutting meat from ostriches-, No. 11-15338/1 from 22 October.

Marinoski, N. (2012). Touristic geography of Republic of Macedonia, Ohrid.

Martinoska, S. (2008). Food processing management in the hospitality, Ohrid.

Maslinkov, B. (2001). Environmental protection, Bitola.

Presilski, S. (2008). Technology of breeding ostriches and processing of products from ostriches- Faculty of biotechnical sciences, Bitola.

Reckoska, G. (2007). Nutrition, Ohrid.

Reckoska, G. & Proeva, K. (2011). Prospects for breeding ostriches in Macedonia. Tourism, ecology, nutrition – study project, Faculty for tourism and hospitality.

Reckoska, G. (2008). Research methods for food goods, Ohrid.

This, H. (2006). Molecular gastronomy. Columbia University press, New York.

ICT and E-Business in the Hospitality Industry in The Republic of Macedonia

by: prof. Mirjana Sekulovska, PhD University St. Kliment Ohridski - Bitola

Faculty of Tourism and Hospitality - Ohrid e-mail: [email protected]

Emilijan Sekulovski, BSc. in Computer Science

Master Study in Engineering of Computing Systems Politecnico di Milano, Italy

e-mail: [email protected] Abstract This poster presentation focuses on Information and Communications Technology (ICT) and e-business in the hospitality in the Republic of Macedonia. Internet and e-commerce are organizational resources and tools that are already widely used by businesses, people, government institutions and nongovernmental organizations (NGOs). Internet usage and e-commerce are becoming a necessity in the hotel and hospitality industry. The Internet as ICT becomes more massively and more widely used for communication between hospitality venues and their customers. Not only that, but it also becomes the basis for successful presentation of those venues in the hospitality industry. Our research describes how companies in this industry in the Republic of Macedonia are using ICT for running business. Also, considering the fact that today companies in the hospitality industry are faced with relevant competitive challenge, our research is focused on the implementation of ICT and e-business in their operations as crucial to rise above the others, keep the first place and in the end hospitality for a better world. For this purpose we used poll and interviews with top management from a representative number of hotels and hospitality venues located in the Republic of Macedonia. The poster presentation, along with the data from polls and interviews will be presented in tables, and we will also include some WEB sites/portals of hotels and restaurants. Data from polls and interviews reveals that in the Republic of Macedonia the use of Internet, modern software solutions and e-commerce in the hospitality industry is growing fast. But, the classic (static) WEB sites are still the most exploited Internet service of the hotels and hospitality venues in the Republic of Macedonia. Today, WEB site implementation does not require some big investment, therefore almost all small businesses in the hospitality industry have their own WEB sites. Web sites are usually implemented in a relatively short time, and besides the information regarding the hotel, the rooms and online reservation, they often contain information for the city and its tourist attractions and various events in the cities. Polls are revealing that large and medium businesses in hospitality in Macedonia have started implementing ERP systems, which can provide a bridge towards further evolution of the e-business in this industry. Financial and accounting software applications have even greater application in the hospitality. They are cheaper than the ERP systems and can generate various financial reports useful for the hospitality management for future decision-makings. It is too soon to talk about the standardization and interoperability of ICT and e-business. According to the EU directives through the state policy of Macedonia, they will be first introduced in the state institutions. From the polls we can conclude that the main restrictions of using the ICT and e-business solutions in hospitality are the size of the company and the cost of business reengineering. Small hospitality companies believe that it is not economically reasonable to invest in developing technologies for e-business. Also, according to the polls and interviews, Internet security is another barrier when it comes to applying e-business in hospitality. The conclusion from our research is actually a general conclusion, that ICT and e-business are becoming very important factors for maintaining an effective and efficient hospitality business, support its rapid development, strengthen the market competitiveness, and thus achieving better economic development. Key words: ICT-information communication technologies, e-business, internet, hospitality, management. 

SPECIFICITY, FINANCIAL CONTRACT, AND LIQUIDITY OF COMMERCIAL REAL ESTATE: A CONCEPTUAL MODEL FOR LODGING PROPERTIES.

Inès Blal *

Ecole Hôtelière de Lausanne HES-SO (University of Western Switzerland)

1000 Lausanne 25 Switzerland

[email protected]

Nicolas Graf ** ESSEC Business School Avenue Bernard Hirsch 95000 Cergy-Pontoise

France [email protected]

ABSTRACT

Although existing research shows that tangible attributes are critical to properties’ value, little is known about the relationship between the physical characteristics, the liquidity and the operating mode of lodging properties. Built around five propositions, the theoretical model proposed in this article integrates constructs from the real estate literature, financial contracts and Transaction Cost Economics (TCE) to depict the relationships between the liquidity of the hotel property, its specificity and its attached operating contract. This model underlies the dynamics of three highly significant phenomena in hospitality industry: the growing importance of the lodging properties as a class of asset in the real estate market, the development of asset-light strategies, and the choice and duration of contracts between asset owners and operators.

Key Words: lodging property, asset specificity, financial contract, liquidity.

INTRODUCTION

The market for lodging properties has significantly grown over the past two decades to reach a record $122 Billion in global transaction volume in 2007 (Jones Lang LaSalle, 2012). As the market is rebounding from its depressed levels of 2008 to 2010, there is little doubt it will continue to grow and remain a significant commercial real estate asset class.

The emergence of hotels as a core real estate asset class – joining the traditional group that includes retail, office, residential and industrial real estate - can be explained by three key factor: (1) the relative low performance of alternative investments, (2) the wider pool and increased sophistication of real estate investors, and (3) the asset-light strategies of most international hotel groups.

First, the decade-long low performance of equity markets, coupled with extended periods of low inflation and interest rates, have triggered capital to seek higher yields in alternative investment vehicles, including real estate. The scarcity of traditional real estate investment opportunities forced investors to broaden their investment territories and brought many to consider hotels – directly or indirectly – as potential investments (Larkin and Lam, 2007).

Secondly, the influx of new investors in the hotel market has been facilitated by the global development of Real Estate Investment Trusts (REITs) or of similar regimes, which increased the attractiveness of the industry through tax benefits. This was coupled with the increased sophistication of both the investors – with more expertise about hotels – and of the operating modes available to them, including fixed and variable leases and management contracts.

Third, the development of asset-light strategies followed by all major hotel management companies, involving the separation of the “bricks and mortar” from the management, branding and distribution of hotels, provided investors with knowledgeable and reputable partners. With this separation and the increasingly common use of management or lease contracts, as opposed to wholly owned subsidiaries, some hotel properties have likely gained in liquidity and it has become easier for investors to buy and sell them while retaining the choice to have it operated, branded and distributed by a preeminent management company.

These developments are well acknowledged by the industry and academic communities. Yet, little is known about the precise relationship between the physical characteristics, the liquidity and the operating mode of lodging properties. In other words, what roles do the physical characteristics of a hotel property play in determining its attractiveness in the real estate investment market? What makes a hotel property a more liquid investment? How does this liquidity affect the choice of the operating mode? If hotel operation is externalized, how does the asset liquidity affect the nature and duration of the operating contract?

In this conceptual article, we develop a model depicting these relationships and theoretically answer these research questions. We link arguments from TCE, financial contracting and real estate literatures to develop five propositions that contribute to the understanding of three highly significant phenomena: the growing importance of the lodging properties as a class of asset in the real estate market, the development of asset-light strategies, and the choice and duration of contracts between asset owners and operators.

LITERATURE REVIEW

Asset Specificity

Transaction Cost Economics (TCE) theory is concerned with the boundaries of the firm and details how “make” or “buy” decisions are made. The theoretical framework suggests that firms make choices that minimize the governance costs related to the acquisition of inputs necessary to the operation of the business, including the costs of searching, negotiating, bargaining, and contracting (Williamson, 1975). According to TCE, asset specificity, or the transferability of assets, is essential in shaping economic transactions and in determining the related governance costs (Rindfleusch and Heide, 1997; Riordan and Williamson, 1985). The TCE fundamental proposition is that the acquisition or sale of an asset which is specific to a contract will generate “differential costs of adaptation” (Riordan and Williamson, 1985:368). Specific assets being “nonredeployable physical and human investments that are specialized and unique to a task” (Erramilli and Rao,

1993: 21), their transfer of property have a high likelihood of generating significant costs as opposed to non-specific assets.

The main justification to linking specific assets to high transaction costs is that they generate “durable investments that are undertaken in support of particular transactions” (Williamson, 1985:55), and hence create a potential for ex- post holdup and opportunistic behavior from the party investing in the non-contractible asset. Consequently, the costs associated with the transaction are increased and augment the probability of seeing the asset integrated through hierarchical governance rather than externalized through a sequential contractual relationship.

Williamson (1996) lists six types of asset specificity in the TCE literature: site, physical asset, human asset, dedicated assets, brand name capital, and temporal. The general proposition of TCE has been extensively tested and validated empirically on all types of specific assets. Mahoney (1992) and Macher and Richman (2008) provide surveys of empirical research on the significance of asset specificity in the choice of vertical integration. The vast majority of these studies validate the TCE proposition.

TCE theory explains the costs involved in transactions – or contracts – and suggests that the tradeoff made between risk and return in a transaction is primarily governed by the notion of control obtained by ownership and integration. Yet, TCE theory does not provide many details on how organizations or agents implement effective control mechanisms through the various contractual arrangements that exist. In contrast, financial contracting theory provides detailed explanations as to the nature of the contracts and their key terms.

Financial Contracts

Financial contracting theory finds its roots in agency theory and the classic work of Jensen and Meckling (1976) which characterized firms as a nexus of contracts. Whereas agency theory is concerned with the principal-agent relationship in general, the financial contracting theory’s focus is on the determinants of the contractual terms between the principal and the agent, usually taking an investor (principal) and entrepreneur’s (agent) perspective. In other words, the financial contracting theory infers that contracts are the solutions to the conflicts of interests of agency problems between a principal and an agent.

Amongst the various issues studied in the financial contracting literature, the relationship between the liquidity of the asset, its financing and the allocation of control rights are the most relevant to our research questions. In financial contracts, the liquidity of an asset is defined by it liquidation value, which refers to the degree of redeployability of an asset in its current use and in its second-best use (Benmelech, 2009). Theoretical arguments generally suggest that liquid assets enjoy lower expected cost of financing and higher loan-to-value ratios as their market value in their current and second-best use are at or close to fair market value. Hence, the right to foreclose on an asset has a higher residual value for liquid assets, thereby diminishing the cost of financing and increasing the debt capacity of the asset (e.g. Shleifer and Vishny, 1992; Benmelech, 2009).

Theoretical arguments on the relationship between asset liquidity and debt or financial contract maturity are more ambiguous on their predictions. While most studies on the maturity of secured debts suggest that the degree of liquidity of an asset is positively related to the maturity of the debt, other studies argue that the relationship is more complex and that it is mediated by the allocation of control rights on the cash flows during the duration of the contract, and by the degree to which the ownership of the asset is transferred to the investor at the end of the contract. In the case of secured debts, Scheifer and Vishny (1992), Morellec (2001), Benmelech et al. (2005), and Benmelech, (2009) show that firms with a high proportion of liquid assets enjoy higher debt ratios with lower cost of debt and longer maturities than firms with fewer liquid assets. For instance, Benmelech (2009) studied the effect of asset liquidation value on the maturity of secured debt in the nineteenth-century U.S. railroad industry. Using the similarity of gauge between the buyer and the seller as a proxy for the salability of rolling stock and roads (i.e. liquidity of the asset), the author showed that buyers of both assets (i.e. rolling stock and roads) enjoyed a significantly higher debt ratio and maturity when the asset was liquid.

In contrast to those studies focusing on the maturity of secured debt, which assume the control of the cash flows during the duration of the contract through the collateralization of the asset and no transfer of ownership at the end of the contract – the ownership remains with the entrepreneur (i.e. the agent) and not with

the investor (i.e. the principal) – financial contracts involving an owner (i.e. investor or principal) and an operator (i.e. entrepreneur or agent) have been viewed as yielding different predictions. For instance, Gavazza (2010) studied the impact of asset liquidity on aircraft leases and showed that the liquid aircraft had longer lease maturities for capital leases, but shorter maturities in the case of operating leases. In capital leases, the lessee (i.e. the operator or the entrepreneur) acquires ownership of the asset at the maturity of the contract, while in an operating lease, no ownership is transferred and the lessor (i.e. the owner or the principal) retains the ownership of the asset. The theoretical argument explaining the relationship uncovered by Gavazza (2010) is that capital leases have a similar structure as secured debt since ownership is not transferred. Thus, as in the case of secured debt, liquid assets under capital leases enjoy higher loan-to-value ratios and longer maturities.

On the contrary, the preservation of ownership for the lessor at the end of the contract creates three incentives for both parties to engage in long-term contracts for illiquid assets (and hence, shorter-term contracts for liquid assets). First, illiquid assets being more difficult to redeploy, the lessor should favor longer contracts to avoid the potential loss resulting from the lower liquidation value of the asset. Secondly, illiquid assets require regular specific investments (i.e. non-contractible investments) which increase the probability of opportunistic behavior from either party. Hence, the lessee should also favor longer-term contracts for illiquid assets (Gavazza, 2010). Thirdly, liquid assets, when owned, offer an opportunity for the lessor to reallocate the asset to other lessees when outside options are of a higher value than in the initial lease. As a consequence, the lessor – again – should favor the option provided by shorter contracts for liquid assets (Ruzzier, 2009).

In summary, the literature on financial contracting suggests that the liquidity of an asset determines the duration of the contract between the principal and the agent. When the control rights or ownership of the asset is transferred at the end of the contract, as in the case of secured debt and capital leases, liquid assets will call for longer-term contracts than illiquid assets. On the contrary, when the control rights or ownership of the asset remains with the principal at contract maturity, then liquid assets will favor shorter-term contracts.

Real Estate Market Liquidity

Research in real estate explores market liquidity from two perspectives (Krainer et al. 2010). The first approach focuses on the real estate transaction and thus, regards illiquid markets as those where expected times to sale are long (Wheaton, 1990; Krainer, 2001). The second stream of research considers the role of debt in real estate markets and view liquidity as the cash available in the market at a certain time (Stein, 1995; Shleifer and Vishny, 1992; Kelly and LeRoy, 2007). Both research paths offer valuable insights into the relationship between liquidity and asset specificity of real estate assets. Defining market liquidity in terms of time of sale (or time on the market) relates to the question of asset redeployability from a transaction perspective. Similarly, considering market liquidity in relation to the financing and cash available on the market allows integrating findings from the financial contract theory and asset specificity to explore the dynamics relating properties specificities, liquidity and operating contracts.

In the first perspective on market illiquidity, the time to sale and marketing period are the determinants of the degree of liquidity. In other words, assets that are more difficult to transfer, or redeploy, are those that stay longer on the market and require more marketing time (Krainer, 1999; Lin and Vandell, 2007). The rationale is as follow: the real estate market is decentralized and characterized by the heterogeneity of its traded goods. As a result, research costs are higher in these markets than in financial markets, which are generally centralized and trade homogeneous goods. The buyer needs to invest in searching costs to appraise the degree of specificity of the asset. These search costs affect the marketing period and the time to sale of the real estate asset, which in turn affect its selling price, and liquidity. In sum, liquid markets are those that offer limited marketing period, time to sale and therefore low levels of search costs. In this perspective, real estate markets have “cold” and “hot” periods that are defined by the time to sale and marketing period (Krainer, 2001). As for the effect of the market on these relations, it demonstrates that financial constraints of the seller (through their available equity) affect their requirement of marketing periods and selling prices (Krainer, 2001; Genesove and Mayer, 1997; Stein, 1995).

In the real estate literature stream, which approaches market liquidity from a cash availability standpoint, illiquid markets affect the determinants of liquidation values of assets. Building on the fire sale literature in finance, this stream in real estate research proposes that the industry debt capacity affects the price of an asset in liquidation relative to its value in best use (Kelly and LeRoy, 2007; Kruse, 2002; Shleifer and Vishny, 1992, Stein 1995,). In other words, the lack of (or abundance of) financing in the asset’s industry affects the capacity

of all industry buyers to raise funds. As a result, it limits the number of potential buyers, and consequently its redeployability potential of the real estate asset. This increase in the specificity of the asset reduces its liquidity.

In conclusion, whether from a time to sale or cash availability perspective, real estate research demonstrates that market conditions affect the liquidity of the asset. In the first case, it affects the search effort and in the second, the number of possible buyers of the asset on the market.

THEORETICAL MODEL

In this section, we describe a theoretical model built around five propositions integrating the above review of literature on physical specificity, financial contracts and real estate market liquidity in the lodging context. This model depicts the fundamental dynamics of lodging properties as a commercial real estate asset (Figure 1). In particular, it explores a formal framework that underlie three highly significant phenomena: the growing importance of the lodging properties as a class of asset in the real estate market, the development of asset-light strategies, and the choice and duration of contracts between asset owners and operators.

Figure 1: Integrative Model: Dynamics of Lodging Properties as a Commercial Real Estate Asset.

The founding proposition of the model is grounded in the TCE and suggests that the physical characteristics of a hotel property define its specificity, which consecutively defines its liquidity. In the particular case of real estate assets, liquidity is best estimated in terms of relative prices (Forgey, Rutherford and Springer, 1996; Kluger and Miller, 1990). Also, driven by the non-synchronic nature of the real estate transactions, real estate liquidity can only be a normative measure, which is possible amongst assets of similar attributes. Consequently, liquidity discounts (or premiums) best reflect the liquidity of a real estate asset as it captures these distinctive features (Forgey et al., 1996).

Therefore, we refine the TCE proposition to suggest that the physical specificity of a property commands the liquidity discount conceded by the seller to the buyer to reflect the liquidity level of the asset. In practice, as lodging properties distance themselves from what is considered to be the norm in terms of physical characteristics, they will tend to be less redeployable as fewer contracts will be available to them. With fewer contracts available, any potential buyer for the asset will be faced with fewer options to enhance the asset’s use and thus will be pricing it at a discount relative to its fair value. Consequently, the seller will likely be willing to wait longer before accepting the discount. Hence, the time to sell specific assets will be augmented compared to more redeployable assets. We summarize this relationship in the following proposition:

P1. The specificity of a property’s physical asset specificity commands its liquidity.

As abovementioned, the normative nature of the evaluation that buyers and sellers establish on real estate assets implies that measuring liquidity is consistent when established within categories of similar assets. In the lodging properties investment context, similar assets are classified in market segments. There are several classification methodologies according to different variables (Berger and Chiaofaro, 2007), the most common rely on room rates (i.e.: upscale, economy), service level (i.e.: full-service or limited-service), location (i.e.: urban, airport, resort) or the customer profile (i.e.: business, convention). These classifications are used in the valuation processes to group lodging real estate properties as the correct positioning and the selection of the corresponding brand is the key for the success of a lodging property (Hanson et al., 2009). In sum, since the physical attributes of properties in each of this segment vary with the market it caters, we hypothesize that the relationship between the specificity of a property’s physical characteristics and its liquidity varies by segment. This relationship is presented in the following second proposition:

P2. The relationship between the specificity of a property’s physical characteristics and its liquidity varies by segment.

Building on this initial set of relationships derived from TCE and defining asset liquidity, we integrate the contributions of the theory on financial contract. In particular, we rely on research from this body of literature to explain how liquidity discounts determine the nature of the contract between the asset owner and the operator. We suggest that less liquid assets are more likely to be integrated and that more liquid assets are more likely to externalize the operation as in the case of management and lease contracts. As per TCE logic, less liquid assets would generate significant transaction costs related to searching and enforcing an external contract, such as a lease or management agreement. Consequently, hierarchical governance mechanism (i.e. owned and operated) is likely to be more efficient for illiquid assets as search and enforcement costs are more likely to exceed the internal governance costs.

To illustrate this relationship, consider a highly illiquid property operated by its owner. This asset’s physical attributes are highly specific to this particular operator, whose operations deviate from the standards of its market. When this illiquid asset is placed on the market for sale, potential buyers will appraise its income-generating potential as a commercial real estate investment. Since this asset was designed to fit a particular operator, the costs associated to enforce an external contract with another operator are likely to be high for the new owner. Not to mention that the investor will have to adapt the asset to the operating need of the new contract. Therefore, the option of externalizing it becomes too expensive and only potential owners-operators would be attracted by this property as they would not incur enforcement costs. We synthesize this relation in the following proposition:

P3. The specificity of a property’s physical asset specificity determines its operating mode (i.e. owned and operated vs. managed or leased).

The second stage of integration also pertains to the contributions from the theory on financial contracts. In this fourth proposition, we suggest that hotel asset liquidity affects the duration of the operating contracts. In particular, we integrate findings from the financial contracts to postulate that more liquid assets will command shorter operating contracts. Contrary to capital leases or debt, operating contracts – including operating leases and management agreements – see the ownership of the asset remain with the investor rather than with the entrepreneur. As a consequence, both parties have incentives for shorter contract durations for non-specific and liquid assets.

For example, reconsider the highly illiquid asset cited above, which is operated by its owner. In the event this owner decides to contract an operator under a lease or a management agreement, s/he will know that her/his asset will be difficult to redeploy on the market. Hence, to avoid the costs associated with having to redeploy it in the short-term, s/he will prefer to secure a longer duration for this contract. Based on the theory on financial contracts, the owner/lessor of this illiquid property aims at avoiding potential losses from the lower liquidation value of the asset. In other words, we formulate the following proposition:

P4. The specificity of a property’s physical asset specificity determines the duration of the operating contract when the management is externalized.

Finally, we complement this set of relationships with the findings from the real estate literature on the effect of market liquidity on asset liquidity. In particular, we integrate the fact that the availability of cash on the

market affects the total number of potential buyers at the time of sale of an asset and that search costs affect the time to sell and the marketing period for the asset. In other words, the degree of liquidity of the market can either amplify or reduce the effect of physical asset specificity on its liquidity. In our example of an illiquid lodging property, this means that, if the owner-operator is prospecting for a seller in an illiquid market, the liquidity of the asset is further hindered by the lack of cash for buyers or increased marketing and search costs. Hence, we postulate that:

P5. Market liquidity moderates the relationship between the liquidity and the physical asset specificity of lodging properties.

CONCLUSIONS

The contributions of the article lie in the innovative way in which it relates three bodies of knowledge into the hotel market context. It also significantly contributes to the understanding of three highly important phenomena: the growing importance of the market for lodging properties, the development of asset-light strategies, and the choice and duration of contracts between asset owners and operators. In sum, the model, through its five key relationships, depicts the dynamics of lodging properties as a commercial real estate asset class.

We mention in the introduction of this paper that the emergence of hotels as a key real estate asset class was due to the combination of three factors. First, the comparative performance of lodging properties to other asset classes, second the development of institutional public real estate equity and debt investors, and third, the asset light strategies of lodging groups. The founding proposition of this model suggests that the physical specificity of a property commands the liquidity discount conceded by the seller to the buyer. In particular, lodging properties that distance themselves from what is considered to be the norm in terms of physical characteristics will tend to be less redeployable. The fact that lodging groups pursue asset-light strategies, whereby they only operate real estate, combined with the increased role of public real estate equity and debt vehicles such as the REITs as property owners, has lead to a uniform offer of operating models. This development of new standardized offers, which allows each party to achieve its objectives and meet its needs, has lead to the development of the market for lodging properties. Consequently, this new market system has also affected the offer and duration of contracts between these two parties.

This new insights into the dynamics of lodging properties as real estate investment opens several leads for further theoretical integration as well as empirical research. Links and bridges with other findings related to the literature on TCE and financial contracts can be further examined. For instance, the integration of the works on vertical disintegrations (Jacobides, 2005) can be a subject for another conceptual combination. Decentralization and heterogeneity are not the only particularities of the real estate market and assets. This market is also characterized by unobservable owner preferences, which impact the probability of the sale of an asset in a single period (Krainer et al., 2010). This element from the real estate literature could enhance our understanding of the disintegration dynamics. Further, developing on the literature on financial contract in this setting would also lead to consider the question of the debt burden of the seller as a distorting effect on the transaction (Zhu, 2002) as the subject of future research. In particular, the impact of the loan-to-value of the seller on the liquidity premium could be examined and tested in future research endeavors.

Also, building on this model, future confirmatory studies can be conducted to empirically test these relationships. Thus, the first proposition could be tested through the examination of physical attributes of lodging properties and liquidity discounts and premium paid or conceded at their sales. This would entail the identification of norms within segments of the lodging markets that would to determine the degree of liquidity of an asset. Similarly, the fifth proposition suggesting that market liquidity moderates the relationship between asset specificity and liquidity could be tested by using “growth in sales and operating earnings” as proxy to market liquidity (Kruse, 2002) and liquidity premium as an operationalization of asset liquidity. In conclusion, future studies in these suggested areas would further contribute to our understanding of key investment questions pertaining to lodging properties as commercial real estate assets.

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A study of the evolution of high-end wines in Switzerland

Philippe Masset (*) [email protected]

Jean-Philippe Weisskopf

[email protected]

Vincent Deboccard [email protected]

Ecole Hôtelière de Lausanne

1000 Lausanne 25, Switzerland.

Abstract

In this paper, we analyze the evolution of fine wine prices over the period 2000-2010 on the Swiss market. We first estimate a fine wine index with several sub-indices (e.g. Bordeaux index, First growth index) using hand-collected hammer prices from Steinfels – the leading wine auction house in Switzerland. We then study the evolution of these wine indices. Not surprisingly, we find that high-end wines have achieved impressive returns over the last decade, with first growths from the Médoc being the very best performers. They have significantly outperformed Swiss stocks whilst maintaining a weak correlation with traditional asset classes like equities and bonds. These results confirm previous evidence that fine wine can be considered as an appealing alternative investment vehicle.

Keywords: wine, alternative assets, portfolio diversification

ACQUISITION PREMIUMS AND PERFORMANCE IMPROVEMENTS FOR ACQUIRERS AND TARGETS IN THE LODGING INDUSTRY

Jin-young Kim*

College of Hotel and Tourism Management Kyunghee University

1 Hoegi-Dong Seoul, Korea [email protected]

Linda Canina

School of Hotel Administration Cornell University

Ithaca, NY 14850, U.S.A. [email protected]

Abstract Merger and acquisition (M&A) theory suggests that mergers create value and that the offer premium is positively related to the synergistic gains. The possibility of non-value-related motivations has been raised due to the inconsistent empirical evidence. This paper analyzes manager’s motives for lodging acquisitions by examining the relationship between the offer premium and the performance changes of the target and the acquirer. We find a positive relationship only for the acquirer suggesting that the target serves as a crucial resource to improve the acquirer’s performance and the premium may be viewed as a payment for gaining control over those resources. We find no evidence for the argument of the market for corporate control or non-value-related motivations for M&A. Keywords: acquisition; premium; lodging industry

The Conditional CAPM in the Travel and Leisure Industry

Alexis Beck and Philippe Masset (*)

Ecole hôtelière de Lausanne Lausanne, Switzerland

Email: [email protected]

Abstract

This study aims at improving our understanding of hospitality stock returns and their determinants. We compare several asset pricing models and account for a variety of economic and financial factors that might affect the returns to gaming, lodging and restaurant stocks. The models compared are the static CAPM, the three-factor model of Fama and French (1992, 1993), the four-factor model of Carhart (1997) and the conditional CAPM of Ferson and Harvey (1991). So far, only a limited body of literature has addressed the issue of determining the most appropriate approach for the estimation of expected returns for hospitality companies (see, e.g., Lee, A. & Upneja, A. (2008)). This paper therefore aims at filing this gap.

Keywords: travel industry, hospitality industry, asset pricing models, CAPM, Fama-French, Conditional CAPM

1. INTRODUCTION AND LITERATURE REVIEW

It is generally agreed upon that investors will expect a higher return to compensate for a greater risk. However, while a significant part of research in finance is devoted to determining how investors as a whole value financial assets and cash flows, still many questions remain about how they perceive and quantify the risk-return relationship. Many models have been put forth over the last few decades but none has yet been able to fully explain how investors decide what premium to demand for a given level of risk.

A large number of studies have since tried to analyze and test the performance of the CAPM in explaining the returns on various securities. However, the empirical results of these papers do not tend to support the model in its original form as expected returns on many securities could not be explained satisfactorily by their systematic risk only. Many attempts have been made to devise other models that would correct the faults of the CAPM. Conditional models allow the risk factors to vary from period to period by making them functions of other variables, thus conditioning the risk factors (rather than the return itself). They are very similar in concept to the multi-factor model of Merton (1973) but bring an additional intuitive appeal by accounting for the dynamic nature of the world (Jagannathan and Wang, 1996) while keeping the general concept simple.

One of the problems associated with conditional models is that the state variables must be determined beforehand (Fama, French, 2004). In their work, Fama and French (1992, 1993) focus on the persistent anomalies that have been identified in many articles. The bottom line of their work is the development of a three factor model that supports the view that, while the CAPM might hold unconditionally (period per period), investors’ perception of risk might not be limited to systematic risk only.

This view is also shared in the lodging industry, where stocks are suspected to be consistently undervalued. A research paper by Lee and Upneja (2007) provides some empirical support to this claim. Following some evidence that the CAPM might be outperformed by other multi-factor models like the Fama-French (1992, 1993) model in predicting expected returns on hospitality stocks, Lee and Upneja (2008) and Lagji (2010) develop alternative models that include more “hospitality-specific” factors. Their results tend to confirm the failings of the single-factor CAPM in the industry. However, the body of literature on the subject remains quite limited and an efficient model for explaining the expected return (cost of equity) on hospitality stocks has yet to be developed. This paper thus aims at filling this gap. More specifically, it intends to test whether the advantage of the conditional CAPM of allowing integration of industry specific factors can provide better performance than the static CAPM and the Fama-French three-factor model.

The structure of the paper is as follows. In section 2, we describe our dataset and explain how we derive the various asset pricing models. Section 3 presents and analyses the empirical results and section 4 concludes.

2. METHODOLOGY AND DATA

Four particular sectors of the travel and leisure industry are considered: restaurants and bars, hotels, gambling and airlines. A conditional CAPM is initially derived and then compared to the other two most widely used models namely, the traditional CAPM and the Fama-French model. This provides an objective benchmark for measuring its performance.

The study is conducted for the US market since (i) more hospitality stocks are listed, which allows for a larger sample to be studied and thus generally better statistical significance; and (ii) the US market is by far the largest in market capitalization and volume, which should suggest a more efficient market and in turn reduce mispricing biases and time lags (Cornelius, 1993; Fama, 1998).

a. Model Selection

The conditional version of the CAPM as it was presented above seems the most appropriate model for the following reasons. First, it allows for variation through time of the parameters of the CAPM. As Jagannathan and Wang (1996) note, this idea of adjustment of the model to the conditions prevailing at the time of the test is more in line with the dynamic nature of the economy.

Second, in addition to allowing the adjustment of the parameters through time, it allows to adapt this variation with respect to the industry-specific risk factors of the assets being considered. This feature appears to be crucial in light of the findings of Lee and Upneja (2007, 2008) that support the fact that hospitality stocks might be undervalued and that it might be the case that investors’ perception of risk is multi-factorial. It emphasizes the importance of a better model, more adapted to the specifications of the hospitality industry.

Finally, the conditional CAPM maintains the intuitive appeal that has made the CAPM so popular. Furthermore, the addition of other variables (other than the systematic risk) does not necessarily involve complex data manipulation as it is the case with the Fama and French model. This last point is particularly important from an operationalization perspective. It is often forgotten but the ultimate objective of research is to deliver new knowledge and methods for them to be put in practice. Just as explanatory power has utility, complexity has disutility and one must take the two into account to evaluate a model. One too complex to be adopted in practice would therefore be no better than the CAPM.

Conceptually, the tested model takes the form of a time-series regression of observed excess returns on lodging stocks over multiple conditioning factors.

b. Model Derivation

For simplicity throughout the derivation of the model, let initially each of the conditioning factors be equal to such that the CAPM alpha and beta parameters can be written as followed

, , (1)

, , (2)

Expressing the general formula of the conditional CAPM in its regressive form one obtains equation (3), where ei is the error term.

, , (3)

The second step in the derivation is to substitute equations (1) and (2) into (3). In the interest of legibility, let also the market risk premium, , , , be equal to MRP.

, , (4)

Finally, distributing the terms and aggregating the error terms, which are all assumed to be normally distributed and uncorrelated, one obtains the general form of the conditional CAPM in equation (5).

, , (5)

The test procedure involves evaluating the alpha and beta as well as the and loading factors for each of the three conditioning variables through ordinary least squares regression.

c. The Conditioning Factors

The fundamental idea of a conditional CAPM model is to allow for time variation of both the market alpha and beta through explanatory state variables. This relies on the hypothesis that an asset’s systematic risk, its exposition to the business cycle, is multifactorial. In that sense, only macroeconomic variables should be economically meaningful in this framework as systematic risk, if indeed multifactorial, should be a function of systematic factors. Prior to more thorough analysis, a few of them appear of particular relevance to the present study.

LIBOR (L) – The effect of central banks’ discount rates has been successfully demonstrated by Chen, Huang and Chi (2008) and Chen (2011) but this effect has not been tested with a continuous scale and therefore ignores the amplitude of the changes. Discount rates are also not continuously adjusted and are therefore not as variable as other macroeconomic indicators. Furthermore, because of their corrective response nature, the changes in discount rates typically occur with a significant lag with respect to the state of the economy. On the other hand, the London Interbank Offered Rate (LIBOR) may act as a more dynamic proxy for base short-term interest rates.

Inflation (core) (I) – As argued by Chen, Roll and Ross (1986), financial theory suggests that inflation should be a determinant of systematic risk. They even provide empirical evidence in support of this statement in their study in which they evaluate the effect of changes in the consumer price index (CPI) on US stock returns.

Term Yield Spread (TS) – In the same study, Chen, Roll and Ross (1986), separate the effect of short term, unexpected inflation from that of long term, expected inflation. While unexpected inflation is measured by changes in the CPI, they use the spread between T-Bills and long term Treasury Bonds to proxy expected (equilibrium) inflation. This assumption is based on two essential theories: (i) the liquidity preference theory that states that the yield curve represents expectations about future short term interest rates to which investors apply a liquidity premium for longer terms for having to hold the asset for a longer period; and (ii) Fischer’s equation that states that nominal interest rates are approximately equal to real interest rates plus inflation. The LT/ST yield spread is also a useful forecaster of the business cycle since it proxies the shape of the yield curve. Based on the theory that the yield curve represents investors’ expectation about future short-term interest rates and given high interest rates are typically observed during economic expansion phases, a large spread might indicate the market expects an improvement of the economic activity.

Credit Risk Spread (CS) – The spread between the aggregated BAA and AAA graded corporate bonds has been used extensively in the literature to measure the credit risk in the market. An increasing spread can be the result of either an increase in the price of risk or a higher magnitude of risk in the market. This is because when investors anticipate an economic downturn, they tend to react by selling risker bonds to buy safer assets. This pushes low-quality bonds prices down and the yield up. In that sense, credit risk spread, just like term spread, can be interpreted as a forecaster of the business cycle (Gomes and Schmid, 2009). While some studies use it as a proxy for the excess return on the market portfolio (Evans, 1994; Jagannathan and Wang, 1996), some include it as a separate factor. For instance, Valkanov (2006), employs it in a multifactor non-CAPM model and applies to four sectors (financials, transportation, utilities and industrial) in the US over the period 1980-2001. He finds the credit spread to be significant for the financials and transportation sectors and only marginally so (0.10 level) for the other two. This factor, however, has not been tested in the context of hospitality stocks to my knowledge.

Crude Oil Price (O) – There is an obvious relationship between the performance in the travel and tourism industry and oil prices. Variation in oil prices as a determinant of systematic risk has received encouraging support from Boehme et al. (2008) in the broad market however the question remains as to whether this applies as well to the hospitality industry.

Volatility (V) – Stock price volatility has become an increasingly popular measure of market sentiment and futures and options contracts have been trading on the volatility index (VIX) since 2004 and 2006, respectively. Volatility is related to the theories of behavioral finance and this might be a reason why it was proven a significant systematic risk factor by Boehme et al. (2008). Perhaps its success lies in the fact that it captures elements of investors’ behavior that the traditional beta is unable to measure. In fact, DeBondt and Thaler (1985) show that investors tend to overreact upon disclosure of new unexpected information, which cause temporary imbalances and mispricing that return to equilibrium by creating volatility. This phenomenon is also covered by Olsen (1998) in his comprehensive review article on the implication of behavioral finance for price volatility. Furthermore, according to Schiller (1998), investors’ overconfidence and reluctance to change underlie a large number of behavioral finance theories and is one of the reasons that might explain overreaction and volatility as poor investment decisions are adjusted more drastically.

Exchange Rates (X) – Empirical evidence regarding the impact of exchange rates on stock returns and more specifically on systematic risk is still ambiguous. Graf (2008) in fact observes limited support of it in his study on US-listed hotel firms from 1998 to 2007. Nevertheless, it appears to be a major determinant of sales volume in the hospitality industry and thereby deserves further attention and investigation. In the context of US stocks, the CAD/USD exchange rate is supposed to be especially important, for Canada is the first country of origin of inbound visitors and the first in inbound tourism expenditures.

While the aforementioned variables appear to be relevant for the hospitality industry, all might not be suitable for simultaneous use in a multifactorial model, for too many variables tend to reduce the model’s stability by introducing noise through collinearity. In order to determine which variables should be retained in the final model, we have analyzed the correlations among the various variables.1

TS could reasonably be omitted since its very strong correlation with L suggests most of its potential impact on systematic risk could be effectively captured by L. Furthermore, as argued by Chen, Roll and Ross (1986), TS can also be interpreted as a measure of equilibrium inflation, which explains its correlation with Ic. CS also exhibits similar properties though its correlation with L is much lower but still relatively high. As argued by Gomes and Schmidt (2009), the credit risk spread can act as a proxy for the market’s expectations about the health of the economy, and so can L and TS. This is the reason why the correlations between the three variables are significant. Excluding TS and CS would then avoid potential redundancy problems.

Oil prices (O) and Core Inflation (Ic) could easily be combined by taking a measure of total inflation based on the CPI for all items including food and energy. This solution would integrate the part of total inflation that is more relevant to restaurants: food, while not excluding the energy component that is presumably significant to the other three sectors studied. Total inflation (I) is however slightly correlated with MRP but the very small magnitude should not cause major issues.2

Return Volatility (V) features significant correlations with all the other factors but O and X. According to the theories of the behavioral finance field, it is also strongly linked to the business cycle as it tends to surge during bearish periods when the fear and uncertainty is higher among actors in the market (and vice versa). In that sense, it can also be considered as a “contrarian” proxy for the state of the economy. This implies that its information about systematic risk should for the most part already be reflected in L which was chosen as the most appropriate variable for representing latent expectations about the business cycle. Therefore, it is reasonable to assume that the variable V could be excluded from the final model to improve its stability without major loss of information.3

                                                            1 Results available from the authors upon request. 2 Robustness tests were also performed to confirm the two variables could effectively be combined. Regressions were run using both Ic and O and either Ic or O. The outcome was a decrease or no clear improvement in adjusted R2 (less than 1%) in all cases for the four portfolios compared to using I alone as it the case in the final model. 3 A final set of tests were executed to determine whether the exclusion of stock-return volatility in the model could be accomplished at no significant loss of explanatory power. A version of the model to which V was added as a variable was

This reorganization results in the use of three conditioning variables on systematic risk: LIBOR, Total inflation and the USD/CAD exchange rate. While MRP is not in itself a conditioning factor, it is necessarily maintained in the model in order to preserve its intuition as a CAPM-based model.

d. Data

The data used was taken from Thomson Reuters Datastream database. 20 years of monthly time series were queried from January 1992 to December 2011 (240 observations per series) on the last day of the month. Throughout this paper, subscripts t apply to the end of the period except for growth rates (returns)4 which represent the growth over the period t. Formally, growth rates are calculated as the value at the end of the current period (t) divided by the value at the end of the previous period (t-1). Time series of the two Fama-French model factors (SMB and HML) were directly taken from French’s online database.

All firms classified under Datastream industry group classifications (i) Restaurants and Bars, (ii) Hotels, (iii) Gambling and (iv) Airlines traded on the NYSE or NASDAQ and whose listing was their primary quote. Furthermore, firms for which either adjusted price, market value or trading volume information was missing for the current and previous periods were excluded. Hence, firms were only included on their second month of trading so that a return could be calculated. The sample was also controlled for minimum liquidity based on shares turnover by volume (number of traded shares divided by outstanding shares) to avoid mispricing biases caused by illiquidity on the market. For each sector, firms were ranked by their average shares turnover over their trading period and those in the bottom 5 percentiles were excluded from the total sample. This procedure also avoids having firms with trading volumes fluctuating around a pre-defined threshold coming in and out of a portfolio during its listed period.

For each period t, firms that qualified given the criteria cited above were retained and classified in the according portfolio. Returns on the four portfolios created were calculated as the sum of the market values of all the qualifying firms at the end of the period divided by the sum the same firms’ market values at the beginning of the period. In other terms, only stocks that qualified for both the current and previous periods were included in the portfolio return calculation. Table 1 shows the average number of firms per period in each portfolio for the entire 20-year period.

Table 1 – Average Number of Constituents

Portfolio Average Number of

Firms

Restaurants and Bars 60

Hotels 16

Gambling 29

Airlines 12

The domination of a few large firms in comparison to their industry might however conceal the risk-return behavior of the smaller firms, effectively reducing the sample size to these. This would lessen the economic significance of the findings as they would more likely represent a handful of firms with presumably similar risk exposition profiles because of their size. All our four portfolios are indeed largely dominated by a few firms. Over the sample period, the three largest firms within each industry have on average concentrated 40% to 80% of the overall industry market capitalization. Hence, although the value-weighted returns might be more representative of the industry from an economic standpoint, they conceal much of the behavior of smaller stocks. Yet the interest here is not as much the evolution of the industry as a whole as the reaction of stock returns to changes in the risk level. Hence equally-weighted portfolios should better represent the typical behavior of a stock in each industry and, as it was argued before, reveal the reaction of smaller capitalizations. These are the portfolios that were used in the study.

                                                                                                                                                                                         compared to the final model devised in this study in which V is excluded. For all four portfolios, the addition of volatility as a factor did not improve the adjusted R2 significantly. 4 Variables calculated as growth rates are the returns on the four portfolios and the S&P 500 as well as I, Ic, O and X and the constructed variables based on them.

3. EMPIRICAL RESULTS

Using the three state variables previously defined implies that the excess returns on each of the four portfolios should follow a conditional CAPM model of the form of equation (6). This model is a more explicit version of equation (5).5 Coefficients for the state variables taken alone are written as alphas to better represent their conditioning effect on the “true” alpha of the ordinary CAPM. Similarly, the coefficients of the factors that condition the “true” beta are represented as betas as well. This notation is the one used in the results table for the rest of this section.

∙ ∙

∙ ∙ (6)

The time series of each factor for the 20 years of observations were regressed against the excess return of each portfolio. The results of the four ordinary least squares regressions are presented in Table 2. Part A summarizes the model’s explanatory power while Figures in part B represent the regression coefficients.

Table 2 – The Conditional CAPM

Restaurants Hotels Gambling Airlines

A

R2 .259*** .289*** .244*** .138***

Adjusted R2 .236 .267 .221 .112

B

.037*** .028** .035*** .041***

-5.700** -4.698 -4.700 -.659

-3.122* -1.021 -1.630 -12.556***

-1.088*** -1.558*** -1.441*** -1.266***

.324* .400** .534** .272

33.015 6.339 -39.207 -25.258

-130.126*** -103.981*** -119.446*** -40.920

-4.962 1.853 -4.300 8.329

***, **, * denote the value is significant to the 0.01, 0.05 and 0.10 level

The performance of the model in terms of explanatory power is comparable to what is typically observed with the Fama-French model. It provided similar fit for the returns of the restaurants, hotels and gambling portfolios while its performance in the airline industry is much more limited but still significant. An interesting point is the relatively lower importance of the market beta when compared to some conditioning variables in explaining stock returns. Inflation and exchange rate appear as significant determinants of beta and alpha (respectively) in most of the portfolios. The performance of the other state variables is rather disappointing as their importance is not very stable across the four sectors. The market alpha is strongly significant for all four portfolios. Since equally-weighted returns essentially depict the performance of small capitalization, this tends to support the findings of Banz (1981) and Fama and French (1992) that smaller firms tend to outperform larger firms in a way that is not captured by the market beta and which led to the introduction of the SMB term in the Fama-French model.

The appreciation of the US Dollar is largely significant at the alpha level. There is some intuition to explain why it is so. Large firms, especially in the hospitality industry, tend to have a much better internationally diversified portfolio of properties or activities, which, in the same way diversification reduces total risk, decreases their exposure to the exchange rate fluctuations. On the contrary, small firms typically concentrate

                                                            5 Subscript notation has also been simplified for better legibility.

their operations on the local market, hence the greater importance of this factor. It is worth noticing that the conditioning influence of X is only significant for abnormal returns and does not seem to help explain the variation of systematic risk since its beta coefficients are all non-significant.

On the other hand, the effect of total inflation (I) is somehow the opposite: while it is a very significant determinant of systematic risk for all portfolios but Airlines, its effect on alpha is not as clear. Airlines are the exception since all of the influence of inflation seems to occur at the alpha level. It is possible that the importance of inflation for beta for equally-weighted portfolios comes from the smaller bargaining power of small firms, which causes them to be more sensitive to changes in prices by their suppliers.

Table 3 presents the results of the regressions of the CAPM and Fama-French (FF) models. The performance of the CAPM is in line with usual results in the literature. R2 values have typically been much lower in most studies although they exhibit a large volatility from one paper to another.6 As a matter of fact, the model was unable to provide significant explanation of the returns on the airlines portfolio over the entire period. For the portfolios where the model is significant, although the value is very low, the market betas were different from zero, providing contradicting evidence to the proclaimed “death of beta” by Fama and French (1992). On the other hand, the Fama-French model delivers on its promise of enhancing the power of the CAPM as the adjusted R2 are clearly superior across all four sectors. It is interesting to note that this explanatory seems to be brought for the most part by the two Fama-French factors, for the significance of the market beta is far from being as definite as for the CAPM. Much of the predictive ability of the market return appears to be captured by the SMB and HML factors in spite of low correlations with MRP of .10 and .13 respectively.

Table 3 – Performance of the CAPM and Fama-French Models

CAPM Fama-French

Restaurant

s Hotels

Gambling

Airlines Restaurant

s Hotels

Gambling

Airlines

A

R2 .031*** .034*** .030*** .003 .205*** .220*** .174*** .064***

Adjusted R2 .027 .030 .026 -.001 .195 .210 .164 .053

B

.011** .010* .015** .012* .007* .005 .011** .009

.281*** .369*** .347*** .126 .164* .213* .217* .023

… … … … .009*** .012*** .010*** .008***

… … … … .004*** .007*** .005*** .004*

***, **, * denote the value is significant to the 0.01, 0.05 and 0.10 level

The difference in adjusted R2 between the Conditional CAPM and the CAPM is flagrant but this is not

the case when comparing it to the Fama-French model. Even though the explanatory power is higher for the Conditional CAPM for all four portfolios, this does not ascertain that the model contains the correct (and complete) set of predictors.

As it was mentioned earlier, the most traditional comparison test for nested models (which are typical for CAPM based models since most include at least the constant alpha and return on the market as independent variables) is to test whether the coefficients of the additional independent variables of the full, unconstrained model are jointly insignificant.7 The comparison tests were then run. The results are presented in Table 4 below.

                                                            6 For comparison, Aramov and Chordia (2006) perform monthly cross-section regressions on 2871 stocks on the NYSE, AMEX and NASDAQ from 1964 to 2001 and find the average adjusted R2 to be 5.18%. Lettau and Ludvigson (2001) test the CAPM in the US from 1963 to 1998 using quarterly cross-regressions and find a value of about only 1%. 7 This particular test procedure is called a Wald. The underlying idea of the test is that if the constrained model (CAPM) contains the correct set of predictors, adding the missing ones from the unconstrained model (Conditional CAPM) should not improve the power of the model.

Comparing the Conditional CAPM to the Fama-French model cannot be performed using the same test as for the CAPM since the two models are not nested as both models contain predictors that the other lacks. Joint significance is then not appropriate in this situation. Instead, a Davidson-MacKinnon (1981) J-test can be performed.8 The concept of the test is similar to the Wald test performed in part A of Table 4 in that it tries to verify which of the two compared models includes the best set of predictors.

Table 4 – Comparison Tests

Restaurants Hotels Gambling Airlines

A – Conditional CAPM vs CAPM

F 11.879*** 13.838*** 10.928*** 6.0425***

Sig. (DoF = 232) (.000) (.000) (.000) (.000)

B – Conditional CAPM vs Fama-French

Fitted (FF) on CCAPM

t-stat .805*** .793*** .789*** .868***

Sig. (2-tailed) (.000) (.000) (.000) (.001)

Fitted (CCAPM) on FF

t-stat .857*** .859*** .868*** .935***

Sig. (2-tailed) (.000) (.000) (.000) (.000)

***, **, * denote the value is significant to the 0.01, 0.05 and 0.10 level. Part A displays the results of Wald tests with null hypothesis that the returns are described by the constrained model (CAPM). Part B displays the results of both ways of J-tests.

Not surprisingly, for all portfolios, the results of the Wald test comparing the Conditional CAPM to the traditional CAPM lead to conclusion that the conditional version outperforms the static one as the addition of the conditioning factors increase the explanatory power of the model by a significant amount. This provides a clear and definite answer to the hypothesis that the Conditional CAPM outperforms the CAPM, as the performance of the Conditional CAPM appears higher than the CAPM in all sectors.

The comparison between the Conditional CAPM and Fama-French models on the other hand is not as straightforward, as it can be seen from the J-tests in part B of Table 4. In fact, the addition of the missing variables of one model to the other did help improve the power of both models.9 Based on the adjusted R2 values alone, the Conditional CAPM should be preferred to the Fama-French in all cases but according to the comparison test, it cannot be inferred that the model contains the right and complete set of predictors since the combined model’s power is significantly higher. It is therefore not possible to provide an accurate answer regarding the superiority of the Conditional CAPM over Fama-French. Rather, the combination of the two models is preferred to each taken separately. Its performance is summarized in Table 5.

It is possible to notice that the adjusted R2 values indeed increase with the addition of the SMB and HML factors, which remain clearly significant in the encompassing model. It is also very important to note that the significant coefficient values are consistent in terms of magnitude, sign and significance with both the

                                                            8 The idea of the test is to add the fitted value of the coefficients of the first model to the second model as additional predictors. If the R2 of the obtained “general” model is not significantly increased then the added predictors from the first model do not help towards improving the model and the second model is assumed to contain the right set of predictors among the pooled variables of the two models. This procedure implies that the test be performed in both ways to test whether both models contain significant predictors when added to the other model. The J-test is very similar to the Cox test, which is often used in this situation, but is preferred because of its less restrictive assumptions. 9 Identical test conclusions were reached using the more traditional Cox and Encompassing tests.

Conditional CAPM and Fama-French when they are run individually. This provides evidence against possible collinearity problems that would cause coefficients to become unstable across different samples.

Table 5 – Combined Conditional CAPM and Fama-French Model

Restaurants Hotels Gambling Airlines

A

R2 0.366*** .400*** .329*** .182***

Adjusted R2 0.341 .376 .303 .150

B

.030*** .019* .026** .034**

-4.243* -2.939 -3.086 .696

-3.171** -.975 -1.686 -12.603***

-.959*** -1.400*** -1.298*** -1.146***

.219 .253 .418** .174

34.730 9.462 -37.320 -23.678

-114.800*** -82.320** -102.500*** -26.655

-5.208 1.528 -4.572 8.101

.007*** .009*** .008*** .007***

.003*** .005*** .004** .003

***, **, * denote the value is significant to the 0.01, 0.05 and 0.10 level

4. CONCLUSION

The objective of the present study was to determine whether a conditional version of the traditional CAPM could reliably outperform the other two most frequently used models in the travel and leisure industry to estimate stock returns.

In spite of the sound theoretical roots of the CAPM, its poor empirical performance has been condemned on many occasions (Chan, Hamao and Lakonishok, 1991; Fama and French, 1992, 1993; Rouwenhorst, 1999). The finding of many different recurrent anomalies, most notably the size and value effects, led authors such as Jagannathan and Wang (1996), Chen, Roll and Ross (1986) or Fama and French (1992, 1993) to devise alternative models or extensions that would be able to provide better explanation of stock return variation. One of these, the conditional CAPM, aims at avoiding the problem of using static parameters to describe a dynamic economy while keeping the intuition of the CAPM by allowing the alpha and beta be functions of state variables.

The body of literature on the subject specifically oriented towards the travel and leisure industry is very limited. However there is general agreement that the CAPM is unable to accurately describe the risk-return relationship in the industry. This study therefore intended to fill this gap by devising a conditional CAPM model that would help provide explanation of travel and leisure stock returns. An analysis of the performance of the model over the entire 20-year period was then performed. The impact of each variable varies from a sector to another but generally the exchange rate appears as a significant determinant of abnormal return (alpha) while inflation seems to play a role on systematic risk (beta). Furthermore, market alpha was significant for all four portfolios and market beta for all but airlines, for which individual factors behave slightly differently from the other three sectors. Comparison with the other two benchmark models over the entire period revealed that the Conditional CAPM clearly outperformed the CAPM whose explanatory power was very limited, as expected. On the other hand, both the Conditional CAPM and Fama-French model contained relevant and complementary predictors so that none could be said to include the complete set of relevant variables. It was then shown that the preferred model for the period was the encompassing model of the pooled Conditional CAPM and Fama-French variables as it outperformed the other three models.

In conclusion it can be said with reasonable assurance that based on the results of the tests that were performed that the conditional CAPM model devised in this study can provide better results than the CAPM but should be seen as a complement to the Fama-French model, for the SMB and HML factors still capture information that the Conditional CAPM was unable to integrate.

5. BIBLIOGRAPHY

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Chen, M.-H., Huang, S.-S., & Chi, C. G. (2008). Changes in Monetary Policy and Hospitality Stock Returns. International CHRIE, (pp. 87-94). Atlanta.

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Berkley, Haas School of Management.

Restaurant Risk: Identifying the Gap between Research and Industry Practices

Meng-Mei Chen* and Raphael Zanoni Ecole hôtelière de Lausanne

Lausanne, Switzerland Email: [email protected]

ABSTRACT

Through literature review, this research identified four groups of restaurant risk research: using

financial ratios to identify factors impacting market risk; measuring the risk-adjusted restaurant performance; identifying restaurants with higher potential to file for bankruptcy; and estimating the cash flow risk. In contrast, risk factors and financial and operational instruments used to mitigate risk are identified from 18 UK restaurant corporations’ annual reports. The gap between research and industry reports has also been identified, and the potential explanation has been provided. Future research could define risk as factors impacting on a firm’s cash flows; while to mitigate risk is to reduce the variance of cash flows. This definition could better integrate research interest and industry needs.

Key Words: Restaurant, Risk, Cash Flows, Risk Management, Hedge

INTRODUCTION

Rising food commodity prices provoke questions as to how effectively restaurant companies mitigate this or any other business risks. The initial literature review surprisingly revealed very limited amount of research addressing restaurant risk. Hence, the purpose of this paper is to identify if there is a perceived gap between restaurant risk research and industry risk management practices. Research questions included first identifying risk factors acknowledged and instruments used by restaurant corporations. This is followed by determining if there is a perceived gap between research and industry practices. The identified perceived gap should be seen as opportunities for future research. The organization of this research starts with restaurant risk literature. Research questions and methods are presented. Findings, discussions, and limitations are presented last.

LITERATURE REVIEW

Through literature review, four major groups of restaurant risk research have emerged. The first group

of scholars identifies factors having an impact on either market risk or total risk. These factors are presented by various ratios such as current ratio, return on assets, debt and equity ratio. The second group of scholars intends to compare the risk-adjusted return between the market and the restaurant industry. The risk-adjusted return is estimated through the Sharpe ratio, Treynor Index, and Jensen Index. Although the second group investigated risk adjusted return, and could be seen as part of the first group, the researchers consider a separation into two groups is a better alternative. The justification is that the first group intends to capture firm-specific factors that influence firm’s risk (Borde, 1998); while the second group uses risk to evaluate returns. Both groups research risks, but from different angles. The third group of scholars proposes to identify financial indicators and models which could be used, at least one year before, to differentiate bankruptcy firms from non-bankruptcy firms. The financial indicators studied include return on assets; and earnings before interest and tax, depreciation and amortization (EBITDA) to total liabilities. Finally the fourth group of scholars recognizes the shortage and variance of cash flows that will increase a firm’s risk. Therefore, tools to assess cash flow at risk were developed; and factors that may have impacts on cash flows were identified.

Restaurant risk research Risk can be defined as the chance that some unfavorable event will occur (Brigham and Houston,

2009). The finance literature generally discusses risk as total risk consisting of market risk and unique risk. Capital asset pricing model (CAPM) is the most well-known model for estimating the relationship between risk and return according to which the much of the restaurant risk research has been structured. Kim and Gu (2003) provide a good review of CAPM and the risk return relationship. An underlying assumption of

this model is that unique risk, which is inherent in a specific investment, can be eliminated through diversification and investors will only be compensated for the market risk that is taken on (Brealey, Myers, and Allen, 2010). Market risk is measured by beta, is inherent to the entire market and cannot be diversified away.

As part of the first group of restaurant risk research, both Borde (1998), Kim, Ryan, Ceschini (2007)

have found a negative relationship between profitability and market risk. Profitability is measured by return on assets (Borde, 1998) and return on invested capital (Kim et al., 2007). It suggests that high efficiency in using assets to generate returns helps to lower risk. Firms with superior performance may face a low probability of loss and therefore exhibit low risk (Borde, 1998).

Liquidity is positively related to the market risk (Kim, et al. 2007; Ceschini, 2005; Gu and Kim, 2002;

Borde, 1998). Liquidity is measured through either quick ratio (Kim, et al. 2007; Ceschini, 2005) or current ratio (Borde, 1998); and represents the opportunity cost of investing in marketable securities instead of in high-earning operating assets. A high dividend payout ratio is negatively related to market risk, since cash not invested in the business should be paid out (Borde, 1998).

The relationship between growth and market risk is not clear. Growth, represented by the growth in

earnings before interest and taxes (EBITGRO), is found to be positively related to market risk by Borde (1998), but is found to be irrelevant to market risk by Kim et al. (2007) and Ceschini (2005).

Financial leverage, measured by the debt to equity ratio, is found to have a positive relationship

with market risk (Kim, et al., 2007; Ceschini, 2005). Financial leverage, measured by equity to total assets, is found to be unrelated to market risk and total risk (Borde, 1998).

Firm size and efficiency are irrelevant to market risk (Kim et al., 2007). Firm size is measured by the

total capitalization, while efficiency is measured by the receivable turnover ratio (Kim, et al., 2007). Factors impacting unique risk have been identified as profitability, leverage, and the firm

size. Profitable firms and bigger firms have less unique risk, while firms with higher financial leverage or operating leverage have more market risk (Hsu and Jang, 2008).

Factors impacting total risk have been identified as return on assets (ROA), growth, and

liquidity. While growth of EBIT and liquidity are positively related to total risk, ROA is negatively related to total risk (Borde, 1998).

To summarize, the impact of a wide range of factors on market risk, unique risk, and total risk has been

researched to date, mainly through the use of financial ratios. Researchers attempt to identify factors which may have impact on the market risk, because investors will only be compensated by taking on market risk. The findings are valuable for investors. However, since unique risk accounts for most of the total risk of an average stock (Kim and Gu, 2003), the findings are of limited use for managers of restaurant companies.

The second group of restaurant risk research is based on the assumption that investors prefer the

highest return given the same level of risk, and the lowest risk given the same level of return. Sharpe Ratio, Treynor Index, and Jensen Index measure the relationship between risk and risk-adjusted performance. Due to different study periods and classifications, previous research findings did not reach a congruent conclusion. Kim et al. (2003) found, between 1996-2000, full-service restaurants, economy/buffet restaurants, and fast-food restaurants all provided lower return and higher risk than the market did. Measured by Sharpe Ratio, Treynor Index, and Jensen Index, three restaurant segments under performed the market. Among the three restaurant segments, fast-food restaurants had the best return and lowest risk (Kim, et al., 2003). Madanoglu, Lee, and Kwansa (2008) found, between 1998-2002, that casual dining outperformed fast food and the market in return and Sharpe Ratio. Kim, Zhong, Chen, and Karadag (2009) found, between 1998-2004, that although economy/buffet restaurants provided higher return than the restaurant industry and fast-food, and full-service segments did, it also had the highest standard deviation, which is an indicator of total risk. Furthermore, economy/buffet restaurants outperformed three market indexes during the same period. However, except NASDAQ composite, economy/buffet restaurants had higher standard deviation than NYSE composite and S&P 500 did. Use of the Sharpe Ratio confirmed economy/buffet restaurants outperformed the restaurant industry and the other two segments (Kim, et al., 2009). The major contribution of this group of research is to quantify the risk and return relationship for investors through the Sharpe Ratio, Treynor Index, and Jensen Index.

The third group of restaurant research shows that EBIT to total liabilities ratio (Gu, 2002), EBITDA to

total liabilities and ROA (Youn and Gu, 2010) could differentiate potential bankrupt and non-bankrupt restaurants. This group of researchers also compare the accuracy of different methods including the multiple discriminant model, the logit model, and the artificial neural network model, in predicting and identifying bankruptcy firms (Kim and Gu, 2006; Kim and Gu, 2003; Gu, 2002). Bankruptcy destroys investors’ wealth and could cause substantial loss to creditors. If investors and lenders could predict bankruptcy, they could reduce their risk.

The fourth group of research evolves around cashflow at Risk (CFaR), a tool that has been developed

to estimate the likelihood of extreme events that could produce significant drops in cash flows (Stein, Usher, LaGattuta, Youngen, 2001). Considering that a shortage of cashflow is among the most damaging risks in the industry, CFaR is a valuable tool for restaurant managers. Jang, Park and Lee (2011) examined CFaR for the restaurant industry in the US, and found full-service restaurants, firms with smaller market capitalization and lower profitability have higher cashflow risk. The cashflow data used in the research inherently accounts for the combined effects of all relevant risks that a firm may face, and could not address the firms’ specific risk components facing managers (Jang et al., 2011). Madanoglu, Olsen, Kwansa (2010) examined how 30 industry risk factors impact on operating cash flows. Three factors, Output, PPI Meats, and PPI restaurants, explained over 75% of the variance. Specifically, risk factors included in Output are food cost, labor cost, and industrial production. PPI Meats are three meat-related producer price variables. PPI restaurants consist of two industrial production variables and one employment variable. To summarize, these researchers emphasis the importance of cash flows, and the risk caused by the cash flow variances.

Not limited by the word ‘risk’, research addressing managers concern and factors, which may lead to

bankruptcy, has been reviewed to provide a more comprehensive understanding of risk. Previous research found managers’ concerns include finding and retaining skilled employees, offering competitive compensation and benefits; government taxation, legal liabilities, government interference; cash flow management, cost control; advertising, customer satisfaction, and customer relationship (Enz, 2004). Factors contributing to bankruptcies include being new in the market, being independent instead of franchised, located in a restaurant concentrated area (Parsa, Self, Djite, and King, 2005). Concerns and bankrupt likelihood are different among independent managers and franchised managers (Enz, 2004; Parsa, et al., 2005). It’s worth noting that subjects for research addressing restaurant risk and managers concerns are different. Restaurant risk research use corporation data, while managers’ concern research was able to collect data from independent restaurants and restaurant corporations.

Recommendations to mitigate risk Recommendations include improving operating results through enhancing sales, controlling costs,

managing liquidity, and managing debt. To enhance sales, restaurant companies should count on improving sales from existing properties, instead of opening new properties (Youn, et al., 2010; Kim et al., 2003). To improve revenues and control costs at the same time, companies should consolidate through M&A, review menus, recruit and retain qualified employees, and improve marketing (Kim, et al., 2003). Sufficient human resources and internal control are needed in supporting growth (Borde, 1998). Companies should manage liquidity by either investing in operating assets or distributing to shareholders (Borde, 1998). Companies should be aware of the financial risk caused by financial leverage, and use less debt financing (Kim, et al., 2007; Mao and Gu, 2008). It can be concluded that the research on tools to mitigate risks in the restaurant industry is scarce, with a high proportion of them being operational tools that are described only in a broad manner.

METHODS

The aim of this research is to identify if there is a gap between restaurant risk research and industry operation. Restaurant corporations are required by government to disclose the risk they are exposed to. Therefore, the first research question is to examine risk identified from restaurant corporations’ annual reports.

Research question 1: What are the most frequently identified risks found in restaurant corporations’

annual reports? Literature reviewed summarized recommendations to mitigate risk. On the other hand, restaurant

corporations disclose tools to mitigate risk. The second research question is to identify the tools used to mitigate risk, and presented in the annual reports by restaurant corporations.

Research question 2: What are the instruments, identified in restaurant annual reports, used by restaurant corporations to mitigate risks?

Research question 3: Is there a perceived gap between restaurant risk research and risk disclosed in

restaurant corporations’ annual report? The research subjects are the restaurant corporations listed at London FTSE. At the time of the research

a total of 21 restaurant companies were part of the FTSE index in the category “Travel & Leisure” and subcategory “Restaurants & Bars”. Due to lack of data provided by the companies, only 18 are part of the final sample. The annual reports for 2010 for these corporations were used to collect relevant data. According to the Hampel Committee’s "Combined Code", companies are required to disclose the risk that they are exposed. The researcher conducted the content analysis of the annual reports, and manually coded risks and instruments used to mitigate risks into several metrics. To answer research question 1, an inventory of risk indicated in the restaurants’ annual reports has been conducted. This will help to give a first indication of the perceived risk exposure, and whether these risks are market or unique risk.

To answer research question 2, the methods and tools used to mitigate risk and indicated in the annual

reports have been inventoried. The findings from the first two research questions and literature review will be used to answer the third research question.

RESULTS

Table 1 presents the risk factors identified, and instruments used by corporations. A total of 50 risk

factors have been identified among the annual reports for 18 companies. These 50 risk factors have been classified into either market risk or unique risk. Both financial instruments and operational instruments used to mitigate risk factors have been presented in Table 1 as well. Among these 50 risks, corporations mitigate 14 risks. It is worth noting that five restaurant corporations did not report any financial instruments to mitigate risk, while only one corporation did not report any operational instruments to mitigate risk.

Table 1

Risk and Instruments Identified from Corporate Annual Reports Risk Factors

Total Market Risk

Unique Risk

Financial Instrument

Operational Instrument

Credit risk 18 x x x Liquidity Risk 18 x x Interest rate 17 x x x Economic/Industry risk 14 x x Foreign currency risk 11 x x x Regulation/ Licensing 11 x x Suppliers 11 x Health, Safety and Environment 11 x Reputation 9 x IT infrastructure 9 x Commodity prices 8 x x Capital Management 8 x People retention and motivation 7 x Pension risk 7 x Labour cost inflation 6 x x Tax risk 5 x Availability of capital 4 x Consumer relevance 4 x Leasehold rents payable 4 x x Property Valuations 4 x Consumer spending 3 x x Key contracts 3 x Ability to find location for expansion 3 x Political stability 2 x x Competition 2 x x

Beer tie (current issue regarding pubs) 2 x Counterparty risk 2 x x Litigation 2 x Commissary production issues 2 x Fraud/ Compliance 2 x Damage to buildings 2 x Executive Remuneration 2 x Management 2 x Service standards 2 x Price risk (changing market prices) 1 x x Client retention 1 x Purchasing 1 x Franchise concentration 1 x Adverse changes to planning regimes 1 x Continued expansion 1 x Acquisitions and investment risk 1 x Service delivery and compliance with contract terms and conditions

1 x

Changes in consumer preferences 1 x Traceability 1 x Financial covenants risk 1 x Internal control 1 x Change management 1 x International expansion (loss of control) 1 x Termination of master franchise agreement

1 x

Product quality 1 x Table 2 presents financial instruments used by restaurant corporations to mitigate risks. Interest rate, foreign currency risk, credit risk, price risk, and liquidity risk are mitigated through interest rate SWAPs, caps/basis SWAPs, forward interest rate SWAPS, Forward foreign exchange contracts, cross-currency SWAPs, derivative, and inflation SWAPSs. Overall, interest rate SWAPs is the most used risk mitigation instruments.

Table 2 Financial Instruments Used To Mitigate Risks

Risk Factors Financial Instruments Interest Rate Risk Interest rate SWAPs (10 firms)

Caps/Basis SWAPs (1 firm) Forward interest rate SWAPs (1 firm)

Foreign Currency Risk Forward foreign exchange contracts (2 firms) Cross currency SWAPs (3 firms)

Credit Risk Derivatives (1 firm) Price Risk Inflation SWAPs (1 firm)

Table 3 presents operational instruments, or non-financial instruments that are used to manage interest rate risk, foreign currency risk, credit risk, labor cost inflation, commodity prices, economic/industry risk, political stability risk, competition, consumer spending, counter party risk, liquidity risk, leasehold rental payable risk.

Table 3 Operational Instruments Used to Mitigate Risks

Risk Factors Operational Instruments

Interest Rate Mix of fixed and floating rates (8 firms) Effective borrowings in a number of currencies (1 firm)

Foreign Currency Risk Match inflows in a currency with outflows (2 firms) Fixed rates with suppliers and franchisees (1 firm)

Credit Risk Maintaining minimum credit rating (8 firms)

Diverse and unrelated nature of client base (1 firm) Franchise selection criteria are considered sufficient (1 firm) Insurance (1 firm) Close monitoring of relationship (1 firm)

Labor Cost Inflation Optimize labor productivity (2 firms)

Commodity Prices Secure long-term contracts with key suppliers (6 firms) Substitute in ingredients (2 firms) Cost indexation of contracts (1 firm)

Economic / Industry Risk

Foster mutually beneficent and long-term relationship (2 firms) Variable and flexible nature of costs (1 firm) Offer product at good value (1 firm) Innovative marketing with loyal customer base (1 firm)

Political Stability Not invest in countries where risk outweigh benefits (1 firm) Regulation / Licensing Diversification of offer (1 firm)

Competition Nurture good relationship with clients (1 firm) Concentrate on segments with high barriers of entry (1 firm)

Consumer Spending Target wide spectrum of customers (1 firm) Altering products sold and price charged (1 firm)

Counter party risk Use several financial institutions (1 firm)

Liquidity Risk

Long-term and short-term borrowing (6 firm) Overdraft facilities (2 firms) Several sources to raise capital (1 firm) Cash collection targets throughout the group (1 firm) Detailed financial forecasts (1 firm) Maintenance of bank facilities (1firm)

Leasehold Rents Payable Sales-lease back program (1 firm)

DISCUSSIONS, CONCLUSIONS & RECOMMENDATION

Research question 1 is answered by the findings presented in Table 1. Among the 50 risk factors

identified from corporation annual reports, 15 are considered as market risk, while 35 are unique risk. These 15 market risk are macroeconomic risks, government regulation risks, financing risks, consumer risks, and inflation related risks. Included in macroeconomic risks are credit risk, interest rate, economic/industry risk, and foreign currency risk. Government and regulation risks are tax, regulation and licensing, political stability, and pub related issues. Consumer risks are consumer relevance, consumer spending, and competition. Inflation related risks include price risk, labor cost inflation, and commodity price. These are external forces having impact on all business in the economy. Parsa et al. (2005) stated that external forces may lead to failure if an individual restaurant is not prepared.

These 35 unique risks can be classified into human resource related risks, legal liabilities and tax

related risks, financial risks, consumer related risks, operation risks, and stakeholder risks. Included in the human resource related issues are people retention and motivation; executive remuneration; and management. Legal liabilities and tax related risks are health, safety, and environment; litigation; and fraud/compliance. Financial related risks are liquidity; capital management; pension risk; leasehold rents payable; property valuation; acquisitions and investment risk; and financial covenants risk. Customer related risks are client retention; and changes in consumer preference. Stakeholder related risks are suppliers; key contracts; counterparty risk; franchise concentration; and termination of master franchise agreements. Operation risks are reputation; IT infrastructure; ability to find location for expansion; commissary production issues; damage to buildings; service standards; purchasing; adverse changes to planning regimes; continued expansion; service delivery and compliance with contract terms and conditions; traceability; internal control; change management; international expansion (loss of control); and product quality.

The literature review presents four groups of restaurant risk research; using financial ratios to identify

factors impacting market risk; measuring the risk-adjusted restaurant performances; differentiating restaurants with higher potential to file for bankruptcy from the rest; and estimating cash flow/liquidity risk or identifying factors which may have impact on cash flows. These research studies offer valuable insights by identifying key ratios investors could monitor in order to assess the performance and risk of their investment; while managers

could use them to monitor and assess their companies’ performance and risk. However, the examined variables from restaurant risk literature and findings from Table 1 are different.

The examined variables from literature include profitability, liquidity, growth, financial leverage, dividend payout ratio, ROA, Sharpe Ratio, Treynor Index, Jensen Index, EBIT or EBITDA to total liabilities ratios, and CFaR. On the contrary, risk factors presented in Table 1 have been identified from corporation annual reports; and could be seen as forces or variables which may create uncertainty or risk to corporation performances. In other words, there may be relationships between risk factors identified in Table 1 impacting on examined variables from restaurant literature. The only research that actually links corporate identified risk variable to risk is by Madanoglu et al (2010). In this study, they found labor cost, food cost, and industrial product contributed to more than half of the cash flow variances (Madanoglu, et al., 2010).

The explanation of the gap between almost all restaurant risk literature and corporation risk factors

could be that researchers are grounded by the CAPM model (Kim, et al., 2003) and the risk-return relationship notion (Kim, et al., 2009; Kim, et al., 2007). The assumption of CAPM is that investors will be compensated by taking on the market risk, not by taking on the unique risk which could be eliminated by diversification. Given the same level of risk, investors will prefer investment with the highest return. Given the same level of return, investors will prefer investment with the lowest risk. Most researchers examined factors which may have impact on the market risk. However, CAPM model is more valuable to investors who are interested in the risk and return relationship (Kim, et al., 2009), than managers who are more interested in understanding factors which may contribute to overall risks. As shown in Table 1, managers need to prepare for external forces caused by macroeconomic factors, and to manage unique risks in their operations. In addition, unique risk accounts for most of the total risk for restaurant corporations (Kim, et al., 2003). Therefore, research needs to expand from understanding market risk to unique risk (Parsa, et al., 2005).

It may be constructive to define risk as factors impacting cash flows and the variance of cash flows, as

shown in Jang et al. (2011) and Madanoglu et al. (2010). The wealth of investors is maximized when future operating cash flows are maximized and the variance of future operation cash flows is minimized (Madanoglu, et al., 2008; Kim, et al., 2003). A corporation’s value is the sum of the present value of all future cash flows (Maganoglu, et al., 2010; Vernimmen, et al. 2009). Therefore, any factors, which may have negative impacts on the cash flows, especially the operating cash flows, could be seen as risky (Maganoglu, et al., 2010). Managers should minimize the potential impact caused by risk factors on the amount and variances of cash flows. The effect of mitigation could be assessed through the variance of cash flows. Taking this approach, the risk factors could be more aligned to manager’s operation decisions and to shareholders’ interests. Furthermore, this approach implies any risk factors, whether market risk or unique risk, needs to be mitigated.

Most factors identified in Table 1 have been examined in general restaurant literature (Enz, 2004;

Parsa, et al., 2005) or general business literature. Most general restaurant literature identified risk factors, but did not quantify the financial impact of these risk factors on the firm’s risk. For example, the managers concern over finding and retaining skilled employees (Enz, 2004). However, what is the financial impact of this concern on a firm’s cash flows? Could this concern be translated into a longer recruitment period for new hiring while simultaneously a longer over-time pay period for existing labor force, and reduce the firm’s cash flows? Another example will be the raising of the minimum wage. What is the financial impact of raising minimum wage to a firm’s cash flows? A relationship quantifying the impact of risk factors on cash flows could assist managers to prioritize their resources to address the most risky factors. While general business literature have addressed most of these risk factors, their findings could be examined under the restaurant industry domain, and under different segments. Kim et al. (2003) stated that different restaurant segments are subject to various operating and financing risks. Applying general business research in to the restaurant industry should contribute more understanding of restaurant risks for restaurant managers.

Research question 2 is answered by Table 2 and Table 3. Findings from Table 2 show that

corporations are using more sophisticated financial instruments to mitigate risks, but these financial instruments have not been addressed in the restaurant literature. On the contrary, researchers have examined the exposure of interest rate and foreign currency risks, as well as the extent of hedging for the lodging industry (Lee and Jang, 2010; Singh, 2009; Singh and Upneja, 2007). Table 2 presents a comparable picture for the restaurant industry to the lodging industry in financial instruments used. The most popular hedging instruments is SWAPS; and the lack of future contracts indicating the restaurant industry may prefer customization and flexibility offered by forward contracts (Singh, et al., 2007). Table 3 presents operational instruments or operational strategies to mitigate risks. Based on Table 2 and 3, future research should quantify the impacts of these financial and operational instruments on restaurants’ risk or cash flows, and examine their effectiveness.

Given the literature review, findings presented in Table 1, 2, and 3, there is a perceived gap between

current restaurant risk literature and industry practices. The perceived gap should be recognized as research opportunities. Work from Jang et al. (2011) and Madanoglu et al. (2010) contribute to fill the gap. Nevertheless, further research is necessary for the advancement of the field. As advocated by Singh (2009) and Singh et al. (2007), researchers could assess the magnitude of financial hedging and operational hedging, as well as their impacts on restaurant companies’ cash flows and earnings.

Operational instruments have been used by corporations to mitigate both financial and operational risk.

None of the operational methods identified in the literature review have been mentioned in annual reports. This could be explained by the fact that operational methods recommended by scholars are not of a specific nature. The methods applied by the companies, as can be seen on Table 3, are of a wide range. The most mentioned operational instruments are: taking on debt with a mix of fixed and floating rates to counter interest rate risk; to maintain minimum credit ratings of third-parties to prevent credit risk; secure long-term contracts with key suppliers to counter commodity price risk; and maintain lending sources for both long-term and short-term borrowing to reduce liquidity risk. Whereas financial instruments are more suited to larger companies, operational instruments are also suitable for small and medium enterprises. SME restaurants may consider using these operational policies to mitigate risk.

Restaurant risk researches have been built on public corporations, due to the availability of financial

data. Previous research has showed different concerns among independent restaurant and franchised restaurant managers (Enz, 2004). Given the heterogeneous nature of the restaurant industry, and the high proportion of SMEs, restaurant risk research could further expand study subjects to include private companies and SMEs.

The first contribution of this research is identifying four groups of restaurant risk research through the

literature review. The second research contribution is to present the financial instruments and operational instruments used by public corporations to mitigate risk. The third research contribution is to advocate future restaurant risk research to define risk as variables having impact on a firm’s cash flows; and to investigate the impact of risk factors on a firm’s cash flows. This approach also contributes to restaurant managers who are responsible for taking operational procedures to mitigate total risk, including both market risk and unique risk.

The first limitation of this research is trading the comprehensiveness of the literature review for

focusing on restaurant risk literature. The emphasis is to review restaurant risk related literature, therefore literature not entirely focusing on the restaurant industry is excluded. The second limitation is that the researchers examined all 2010 annual reports from only 18 corporations. The decision is to emphasize the comprehensiveness from a small sample over diversities from a large sample. Future research could examine risk factors identified from restaurant corporations from different countries, or over several years to identify changes.

In conclusion, by comparing restaurant risk literature review, and risk factors identified from

corporation annual reports, this research identified future research topics which could fill in the current gap between industry practices and academic research. Risk should be defined as factors impacting on a firm’s cash flows. To mitigate risk is to reduce the variance of cash flows. Existing restaurant risk literatures are scarce (Jang, et al., 2011); and contribute more to the benefits of corporation investors than of managers. While general restaurant literatures (Enz, 2004; Parsa, et al., 2005) may examine broader risk factors, they have not developed quantitative relationships between risk factors and cash flows. Future research should examine and develop quantitative relationships between risk factors and the variance of cash flows. In addition, research could assess the effectiveness of mitigating instruments on a firm’s cash flows as advocated by Singh (2009) and Singh et al. (2007). Last, future research could expand to private companies and SMEs.

REFERENCES

Borde, S. (1998). Risk diversity across restaurants. Cornell Hospitality Quarterly, 39(2), 64-69. Brealey, R.A., Myers, S.C. and Allen F. (2010). Principles of Corporate Finance. New York: McGraw-Hill

Companies. Brigham, E.F. and Houston, J.F. (2009). Fundamentals of Financial Management. Mason: South-Western

Cengage Learning. Ceschini, S. (2005). Analyzing risk in the restaurant industry (Unpublished master’s thesis, Oklahoma State

University, USA). Retrieved from http://digital.library.okstate.edu/etd/umi-okstate-1291.pdf

Enz, C.A. (2004). Issues of concern for restaurant owners and managers. Cornell Hotel and Restaurant Administration Quarterly, 45(4), 315-332.

Gu, Z. (2002). Analyzing bankruptcy in the restaurant industry: A multiple discriminant model. Hospitality Management, 21, 25-42.

Gu, Z. and Kim, H. (2002). Determinants of restaurant systematic risk: A reexamination. Journal of Hospitality Financial Management, 10(1).

Hsu, L., & Jang, S. (2008). The determinants of the hospitality industry’s unsystematic risk: A comparison between hotel and restaurant firms. International Journal of Hospitality and Tourism Administration. 9(2), 105-127

Jang, S., Park, K., and Lee, J. (2011). Estimating cashflow-at-risk (CFaR): A comparables approach for restaurant firms. Cornell Hospitality Quarterly, 52(3), 232-240.

Kim, H. and Gu, Z. (2003). Risk-adjusted performance: A sector analysis of restaurant firms. Journal of Hospitality & Tourism Research, 27(2), 200-216.

Kim, H. and Gu, Z. (2006). Predicting restaurant bankruptcy: A logit model in comparison with a discriminant model. Journal of Hospitality & Tourism Research, 30(4), 474-493.

Kim, W.G., Ryan, B., and Ceschini, S. (2007). Factors affecting systematic risk in the US restaurant industry. Tourism Economics, 13(2), 197-208.

Kim, W.G., Zhong, J., Chen, M., Karadag, E. (2009). Risk-adjusted performance of three restaurant segments in the USA. Tourism economics, 15(1), 139-152.

Lee, S. K. and Jang, S. (2010). Internationalization and exposure to foreign currency risk: An examination of lodging firms. International Journal of Hospitality Management, 29, 701-710.

Madanoglu, M., Lee, K., and Kwansa, F. (2008). Risk-return analysis of fast-food versus casual-dining restaurants: Who moved my cheeseburger? Journal of Hospitality and Tourism Research, 32(3), 327-340.

Madanoglu, M., Olsen, M.D., Kwansa, F.A. (2010). Restaurant industry risk dimensions and their influence on operating cash flows. (July 30, 2010). International CHRIE Conference-Referred Track: Page 12.

Mao, Z., and Gu, Z. (2008). The relationship between financial factors and firm performance: Empirical evidence from U.S. restaurant firms. Journal of Foodservice Business Research, 11(2), 138-159.

Parsa, H.G., Self, J.T., Njite, D. and King, T. (2005). Why restaurants fail? Cornell Hotel and Restaurant Administration Quarterly, 46(3), 304-321.

Singh, A. (2009). The interest rate exposure of lodging firms. International Journal of Hospitality Management, 28, 135-143.

Singh, A. and Upneja, A. (2007). Extend of hedging in the US lodging industry. Hospitality Management, 26, 764-776.

Stein, J.C., Usher, S.E., LaGattuta, D. and Youngen, J. (2001). A comparable approach to measuring cashflow-at-risk for non-financial firms. Journal of applied corporate finance, 13(4), 100-109.

Vernimmen, P., Quiry, P., Dallocchio, M., Le Fur, Y., and Salvi, A. (2009). Corporate Finance Theory and Practice. West Sussex: John Wiley & Sons Ltd.

Youn, H. and Gu, Z. (2010). Predict US restaurant firm failures: The artificial neural network model versus logistic regression model. Tourism and Hospitality Research, 10(3), 171-187.

PERFORMANCE MEASUREMENT IN THE CROATIAN HOSPITALITY INDUSTRY – A COMPARATIVE STUDY

Milena PERŠIĆ, Ph.D. Faculty of Hospitality and Tourism Management

Primorska 42, 51210 Opatija [email protected]

Sandra JANKOVIĆ,* Ph.D.

Faculty of Hospitality and Tourism Management Primorska 42, 51210 Opatija

[email protected]

and

Katarina POLDURGOVAC, Assistant Faculty of Hospitality and Tourism Management

Primorska 42, 51210 Opatija [email protected]

Abstract

Performance measurement (PM) is an integral part of the management processes with the goal identifying areas of poor performance and opportunities for better achievements. It should provide useful information for short and long term decision-making and for meeting the needs of the triple bottom line. The aim of the paper is to examine the use of performance measures in Croatian hospitality industry. Many researchers emphasise that the hotel industry still does not have a properly developed performance measurement system (PMS) that could provide useful information for short and long term decision-making, and some of them offer a specific PMS model for the hospitality industry. It can be argued that research and development in the field of PM in the hospitality industry lags behind that in other industry sectors (Quintano, 2011; Yilmaz and Bititci, 2006; Atkinson (2006); Brander Brown and Atkinson (2001). The existence of Uniform System of Accounts for Lodging Industry (USALI) plays an important role in hospitality performance measurement. Recent researches show that non financial measures are being included, especially in the field of corporate social responsibility and corporate environmental responsibility (Mihalič et al., 2012).

The research has been carried out by the Department of Accounting at the Faculty of tourism and hospitality management in Croatia in 2010 (Peruško-Stipić) and 2011(Zanini-Gavranić). The data was collected using a questionnaire. The research shows an increase of 91% in 2011 in fully implemented USALI standards in comparison to 2010. 36,17% of the hotel companies in 2010 had partly implemented USALI standards and in 2011 there were none. Accompanying these results there was decrease in companies that have not implemented the standards from 34,04% in 2010 to 9% in 2011, which is a change of 73,56%. The research has also shown that 37,50% of users use the reports daily, 25% weekly, 85% monthly, and 92,50% annually. Table 1 shows the usage of quality and eco performance measures, while Table 2 shows the level of quality and eco performance measures usage.

Table 1: The usage of USALI reports

Report

% of use

Dai

ly

Wee

kly

Mon

thly

An

nu

all

y

Rooms 61,29 9,67 29,00

Food and Beverage 61,29 6,67 29,00

Other operated departments 25,28 15,66 53,56 11,64

Rentals and other income 16,12 48,38 3,22

Overhead costs 8,6 3,22 57,00 6,45

Non-controllable fixed costs 6,45 54,00 7,25

Source: Prepared based on Peruško-Stipić, 2010.

Table 2: The level of usage of quality and eco performance measures in hotel reports

Department QUALITY COSTS in % ECO COSTS in %

Rooms 66,08% 63,00%

Food and Beverage 72,16% 64,50%

Other operated departments 49,66% 37,33%

Overhead costs 17,00% 9,00%

Source: Prepared based on Zanini-Gavranić 2011.

The research results show an increasing implementation of the USALI and a growing trend of segment report preparation and their usage by middle and low management. In order to satisfy the requirements of the triple bottom line, it is required to implement an upgraded performance measurement system for Croatian hotel industry with new dimensions and key performance indicators, using the USALI as a starting point.

REFERENCES:

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Managerial capability for innovation in Irish tourism micro firms

Mr Arthur Kearney, Doctoral student, School of Business, Waterford Institute of Technology, Waterford.

Professor Denis Harrington *, Head of Graduate Business,

School of Business, Waterford Institute of Technology, Waterford. Telephone 00 353 51 302427; email [email protected]

Abstract

Tourism micro firms can play a vital role in Irish economic regeneration. These firms face significant competitiveness challenges, which can be overcome through innovation. Research into managerial capability for innovation has concentrated on larger firms, opening a research gap in the micro firm literature. A critical review of literature premised on the resource based and dynamic capabilities perspectives is used to develop a tentative theoretical model of managerial capability for innovation in the tourism micro firm. The potential for future research, based on qualitative methodology is argued and contributions at the level of practice, policy and academic research are posited.

Key words: Micro-firm; innovation; managerial capability; competitiveness.

THE IRISH TOURISM INDUSTRY

The tourism industry is a vital contributor to economic and social activity in Ireland. In 2010 it sustained over 180,000 jobs (T.R.I.G. 2011) making a G.D.P. contribution of 2.7 billion euro (Department of Taoiseach, 2011). Tourism is primarily indigenous in nature (Failte Ireland, 2012), and counterbalances the high dependence of the Irish economy on foreign investment. The economic recession which affected the Irish economy has led to a renewed interest in the tourism industry, as a potential source of economic growth and national recovery (Department of Taoiseach, 2011). Realisation of this potential remains contingent on addressing and overcoming some deep competitiveness challenges which are both external and internal to the industry. The external challenges are largely driven by high cost structures which emerged during the pre 2008 economic boom: these cost burdens include high property costs; competition from hotels which are effectively insolvent but maintained by government support; high levels of taxation; low levels of consumer confidence and high labour costs (Failte Ireland, 2012). There is also the challenge from the globalisation of the tourism industry which is being transformed by competitive forces, namely the proliferation of new information technologies, low cost transport connections and increasingly volatile consumer behaviour as tourism customers become more sophisticated and knowledgeable (Sundbo, 2007). Finally funding is also a key challenge with many firms deprived of credit facilities (I.T.I.C., 2011). Recent government policy decisions have begun to show awareness of the competitiveness challenges which the industry faces and, specifically, there has been an implementation of the deregulation of industry labour markets; reductions in value added tax on industry services; reductions in airport charges and the provision of funding, at industry level, to improve marketing of

the industry (Department of Taoiseach, 2012). Internally tourism firms face considerable competitiveness challenges with the solutions to these challenges frequently within the ambit of the general managers of these firms. There are deficits in terms of the capability of management, and though there has been considerable investment in management development over the past ten years, this remains an area that warrants further research attention today (Failte Ireland, 2010). Specifically tourism industry managers take an inward focus, often failing to engage with environmental change (Hallin and Marnburg, 2007); they lack experience of innovation (Failte Ireland, 2010) and leave human resources underdeveloped (Baum, 2007).

INNOVATION

Traditionally innovation has been assigned an important role in the tourism industry as a leverage mechanism for providing profitable new products and services (Sundbo et al. 2007). While continuing to emphasise the role of product/ service innovation, more recent research in tourism has expanded the nature of innovation and posited that the generation of such innovation involves complex organisational processes (Camison & Montfort-Mir, 2011). In an Irish context there have been calls for greater innovation by tourism firms (Department of Taoiseach, 2011). However there are concerns that these firms are failing to engage proactively with innovation activities, especially at the level of the firm. Specific reasons for this lack of engagement by smaller tourism firms are: a lack of experience of innovation which induces a risk intolerance among managers and employees; a lack of awareness of the importance of this activity; a lack of time leading to inadequate levels of strategic thinking; an inward focus of tourism businesses whereby firms are slow to receive signals of environmental change and a lack of tailored market information, with firms often exhibiting marketing competences but ones which are inappropriate to their size (Failte Ireland, 2010).

TOURISM MICRO FIRMS

Almost ninety percent of Irish tourism firms are micro firms employing less than ten employees and possessing a turnover of less than two hundred and fifty thousand euro (European Commission, 2012). They contribute to economic growth, competitiveness and employment of both national and regional economies (Komppula, 2004). They are also contributors to the sustainability of local communities through the provision of seasonal employment (Morrison, 2006). Micro firms are unique organisational entities distinct from large, medium sized or small firms. They are dominated by an owner/ manager figure who owns resources and manages the firm at operational and strategic levels (Devins et al. 2005).

This dominance is manifest in impacts on the organisation’s employees (Chell, 1985); culture (Kruse cited in Devins et al. 2005 and stakeholder engagement (Greenbank, 2000). Communication in the micro firm is informal in nature and patterned through complex social narratives (Kelliher and Reinl, 2009). The assets and resources of micro firms are limited (Phillipson et al. 2004) creating challenges in terms of supporting the long term development of the business. These assets and resources are often premised on simple technologies and processes (Liberman-Yaconi et al. 2010) which are easily imitated by competing firms and new entrants to the industry. Owner/ managers of micro firms exhibit preference for operational as opposed to strategic work (O’Dwyer and Ryan, 2000) supporting the development of knowledge of all aspects of the firm but, potentially, creating a barrier to long term strategic thinking and business development (Beaver, 2007). Decision making processes in micro firms are rooted in intuition and heuristics (Greenbank, 2000) and differ fundamentally from the more formal and rational decision making mechanisms found in larger firms (Liberman-Yaconi et al. 2010). Micro firms are characterised by being embedded within local community environments (Phillipson et al. 2004) and sometimes within the context of a family (Oughton et al. 2003; Wheelock and Baines, 1998). This embedded nature generates both positive impacts on the firm, through the creation of resource endowments (Phillipson et al. 2006 but also, simultaneously, barriers to change and new ideas (Atterton, 2007).

The tourism micro firm is identified as possessing characteristics which can enable innovation (Corrocher et al. 2009; Walsh et al. 2009). The structure of the micro firm facilitates the development of simple communication mechanisms which enable the narratives of the owner/ manager (Kelliher and Reinl, 2009) to

shape an innovation culture. Micro firms are close to market with owner/ manager involvement in day to day business activities enabling the sensing of market signals (O’Dwyer and Ryan, 2000). The dominant role of the owner/ manager enables a risk taking focus, which facilitates innovation (Morrison and Conway, 2007). Micro firms develop innovation which is often incremental in nature (Thomas et al. 2011), informal (Simpson, 2001) and is shaped by powerful suppliers and customers (Corrocher et al. 2009). Premised on this review of literature micro firm innovation is defined. It is the creative use of resources and development of firm level capabilities which generates new commercial outcomes through the development of new products and services; the reconfiguration of organisational processes; and the development of new modes of market access. Inherent in this innovation is the important role of the owner/ manager, who through the development of innovation, continuously develops managerial capability for innovation, which of itself becomes a source of sustainable competitive advantage within the micro firm.

BARRIERS TO INNOVATION IN TOURISM MICRO FIRMS

Micro firms are characterised by numerous and often deep barriers which inhibit the emergence and development of innovation. These barriers may be grouped into owner/ manager barriers; internal barriers and external barriers (Table 1). The operational focus of many micro firm owner/ managers inhibits innovation through the immersion of this individual in day to day work and a failure to utilise the market information which though readily available remains unanalysed (O’Dwyer and Ryan, 2000). Managerial resources in the form of time are consumed by poor time management (Samujh, 2011). Owner/ managers manage their firms on the basis of lifestyle objectives as opposed to objectives which are narrowly economic (Greenbank, 2000). Risk intolerance emerges where there is a fear of losing family owned assets (Wheelock and Baines, 1998) and the slowness of response and the fear of change which this risk intolerance creates, makes innovation both difficult and, at times, unlikely to take place. While the dominance of owner/ manager possesses potential to develop communication and organisational culture (Kelliher and Reinl, 2009), this characteristic of micro firms may prove a barrier to innovation where it is manifest as a reluctance to sacrifice control inhibiting communication and the sharing of ideas (Chell, 1985). Internally micro firm assets and resources are limited (Phillipson et al. 2004) and there is a lack of awareness of the potential of human resources leading to their under development by owner/ managers (Matlay, 1999). Externally, the nature of the micro environment renders innovation generation difficult as the firm is often simply a price taker in a rapidly changing environment (Kelliher and Reinl, 2009). The limited resources of the micro firm render this challenge particularly difficult. While larger firms possess well honed marketing competences, enabling active market engagement and proactive anticipation of market change, the micro firm relies on the owner/ manager’s own engagement with the market (Devins et al. 2005; Greenbank, 2000). The micro firm also lacks market power of larger firms. Similarly micro firm embeddedness, while providing access to resources, may become a barrier to innovation where strong ties between stakeholders and the firm strengthen the maintenance of the status quo, building ramparts against new ideas and nurturing a dominant logic which is inclement towards innovation (Atterton, 2007).

Table 1: Micro firm innovation barriers

Internal barriers External barriers Owner/ manager barriers Human resource constraints Environmental turbulence Operational focus Asset / resource limitations Embeddedness Risk intolerance Lifestyle motivation Time constraints Owner/ manager dominance

MANAGERIAL CAPABILITY FOR INNOVATION

Despite the significance of innovation for micro tourism firms relatively little research has been carried out in the area (Corrocher et al. 2009). Simpson (2001), in a theoretical paper, argues the importance of an approach to micro firm innovation based on the insights of cognitive psychology. Thomas et al. (2011), in a critical review of tourism small firm research, argue the dearth of studies in the area, specifically highlighting the limited research into innovation in the very small tourism firm. Contemporaneously there has been increasing interest in how managerial capability can shape and influence innovation, however this research concentrates on larger firms (Salaman and Storey, 2009). While there is specific research into the nature of managerial capability in the work of Byrne et al. (2009), Mol and Birkinshaw (2009), Hamel et al. (2008) and Moss Kanter (2006) this work takes an organisational as opposed to a managerial focus. Hence a research gap in the literature has been identified as to what is the nature of managerial capability for innovation in micro tourism firms? The present paper builds a theoretical model of managerial capability for innovation in tourism micro firms. The building of this model is guided by four research questions. These are 1. What is the nature of tourism micro firm innovation? 2. What is the extent of tourism micro firm management capability? 3. What is the nature of tourism micro firm management capability for innovation? 4. How does management capability for innovation impact on innovation in tourism micro firms?

THEORETICAL FRAMEWORK

One perspective through which this gap in the research may be viewed is through the lens of the resource based view (Barney, 2001; Barney, 1991; Wernerfelt, 1984) and the related dynamic capabilities approach (Winter, 2003; Eisenhardt and Martin, 2000; Teece et al. 1997). Resources are stocks of available factors that are under the control of the organisation (Amit and Schoemaker, 1993). Capabilities are activities which an organisation can accomplish (Grant, 1996) and capabilities possess intangible qualities due to dependence on people (Nothnagel, 2008) . In the micro firm the owner/ manager, by virtue of playing a dominant role, is the key resource allocator (Greenbank, 2000) and plays a vital role in developing and shaping capabilities (Kelliher and Reinl, 2009). Critically from the perspective of long term competitiveness the owner/ manager who takes a more strategic perspective in shaping capabilities (Beaver, 2007) can shape the emergence of dynamic capabilities, deeply rooted learning capabilities (Winter, 2003) within the micro firm, which enable proactive engagement of the firm with environmental change (Eisenhardt and Martin, 2000). Therefore it is argued that managerial capability, understood as the human capability, builds an organisation’s long term competitive advantage (Groysberg et al. 2006; Barney, 2001), and is a capability which can lead to micro firm innovation.

MICRO FIRM MANAGERIAL CAPABILITY CRITERIA

In this section it is argued that the nature of the micro firm environment presents owner/ managers with three primary sources of resources. One source of resources exists in the form of endowments such as are present in the family context or the local community context, where both contexts provide the firm, where the owner/ manager is capable of interacting with the resources embedded in these contexts, with a resource which can be developed towards competitive advantage. Families offer social and emotional support to owner/ managers (Samujh, 2011), supply the micro firm with low cost, flexible labour (Wheelock and Baines, 1998) and contribute to decision making (Habershon and Williams, 1999 cited in Morrison, 2006) while local communities enable owner/ managers to gain access to both social support, as in membership of unofficial business fraternities and knowledge of the rules of the local business game (Phillipson et al. 2006). A second source of resources takes the form of a stakeholder environment, theorised as strong and weak ties (Granovetter, 1973), which provide the owner/ manager with a source of resources manifest as sources of business advice and innovation opportunities, which managerial capability may leverage (Atterton, 2007; Phillipson et al. 2004) and which helps to overcome the resource poverty characteristic of the micro firm (Liberman-Yaconi et al. 2010). The third source of resources is predicated on the closeness of the micro firm owner/ manager to the market

environment of the firm (Kelliher and Reinl, 2009), whereby the owner/ manager is given the opportunity to observe and interact with potential innovation, by nature of direct contact and proximity to the market (Morrison and Teixeira, 2004). The process of this interaction may result from owner/ manager interaction, in the role of a businessman with suppliers, customers and other stakeholders (O’Dwyer and Ryan, 2000).

The unique nature of the micro firm gives the owner/ manager a dominant role in shaping the competitive advantage of the firm (Matlay, 1999), through ownership of resources (Devins et al . 2005, working at operational level (Greenbank, 2000), and providing leadership/ shaping organisational culture (Kelliher and Reinl, 2009). One perspective, through which the process whereby the owner/ manager shapes the competitive advantage of the firm may be viewed, is through an examination of the managerial capabilities of the owner/ manager. It is proposed that micro firm managerial capability enables the owner/ manager to interact with the resources: endowments/ stakeholder ties and market environment and to develop these resources. A critical review of literature argues that there are four aspects of managerial capability. The first, leadership, is defined as a behavioural capability through which the owner/ manager influences micro firm members towards organisational goals through the creation of shared meaning. It encompasses owner/ manager skills which shape micro firm culture (Kruse, 1997 cited in Devins et al. 2005) and personal resilience in the face of business and other difficulties (Phillipson et al. 2004). Leadership develops micro firm resources in encouraging employees to engage with the firm’s markets and enables the owner/ manager in being resilient in the challenges posed by resource exploitation (Samujh, 2011). A second aspect, strategic thinking implies the application of business tools such as formal planning, accounting and marketing techniques, manifest in a strategic approach to the firm (Beaver, 2007) so that through the use of business techniques the owner/ manager is enabled to reflect on organisational performance and to plan the future of the firm (Kelliher and Reinl, 2009). Strategic thinking thus enables the strategic leveraging of endowments and stakeholder ties and market relationships, as sources of business information, as opposed to mere opportunities for cultivation of lifestyle motivation (Greenbank, 2000). Thirdly an aspect of managerial capability, manifest as people relationships, enables the utilisation of human resources in ways which are unique to the micro firm (Phillipson et al . 2004; Matlay, 1999. There is potential for the development of potential in the form of employees through the promotion of internal learning and communication within the firm (Kelliher and Reinl, 2009) and through the process of realisation of new ideas new methods of working may be unearthed (Walsh, et al. 2009). Finally, the owner/ manager possesses a problem solving capability, manifest in the ability to solve day to day business problems, with speed and premised on an intuitive basis (Greenbank, 2000). The problem solving capability encompasses market sensing (Lindblom et al. 2008; Foley and Fahey, 2004), and while in the large firm literature (e.g. Foley and Fahey, 2004) the conceptualisation of market sensing is at organisational level, it is arguable that in the micro firm, the dominant role of the owner/ manager, necessitates the conceptualisation of market sensing at the individual level of the owner/ manager.

Figure 1

Taxonomy of managerial capability for innovation

Problem Solving

Strategic thinking

Leadership

PeopleRelationships

endowments

Owner‐Manager

StakeholderTies

Closeness to market

MCI

Capabilities Resource

A model of managerial capability for innovation is offered below. The micro firm market environment forms the outer circle. It bounds and interacts with the stakeholder environment shaping and to an extent being shaped by this. Inside is the near environment, within which endowments such as the family are found. The internal nature of the micro firm is inside this and then the owner/ manager. In this “model” the inner circle is the source of MCI, almost the organisation as a brain (Morgan, 1986). The owner/ manager’s capability for innovation is shaped by these environments, and though the owner/ manager is closest to the internal environment of the firm, this does not imply this environment influences innovation capability most. Innovation capability is actively shaped by four managerial capabilities: leadership; strategic thinking; problem solving and people relationships which provide the interaction mechanisms through which the owner/ manager exploits resources.

Figure 2

Model of managerial capability for innovation

Micro firm market 

environment 

Near environmentendowments

Microfirm

Owner‐Manager(MCI)

StakeholderTies

RESEARCH METHODOLOGY

It is proposed to take a qualitative approach to the research for a number of reasons. The study is exploratory in nature, reflecting calls for research into this area (Thomas et al. 2011; Simpson, 2001). Qualitative research is appropriate in these circumstances enabling the mapping out a new field of investigation (Silverman, 2005). The ability of qualitative research to surface contextual data (Patton, 2002) enables the capturing of the embedded nature of micro firm managerial capability. Qualitative research enables the capturing of social aspects of reality manifest in micro firm lifestyle motivation and in the complex social processes underpinning the micro firm. It is proposed to use the owner/ manager as unit of analysis as this figure dominates the life of the micro firm, shaping its narratives and communication patterns (Kelliher and Reinl, 2009). Specifically it is proposed to use in depth interviews with these individuals, a research method which enables the capturing of data which is both contextual and rich in detail (Kvale, 1996).

CONCLUSION

Three specific outcomes are anticipated from the research. The model will enable practising tourism micro firm owner/ managers to engage with a model of managerial capability for innovation specific to their own unique context. It is anticipated this will enable them to contribute to the development of innovation in their own firms. Policy makers will also benefit through being more effectively and efficiently able to target their scarce resources, often manifest as grant aid and training interventions, towards the development of innovation and enhancing the competitiveness of the tourism sector. Finally, from the academic perspective, the research aims to address the research gap identified. Specifically the work will address the identified gaps in the

literature regarding the call for greater research into tourism micro firm innovation (Thomas et al. 2011; Sundbo et al. 2007) and, specifically, the roles played by owner/ managers in developing innovation (Morrison, 2006; Simpson, 2001) thus contributing to an evolving knowledge base in the tourism micro firm context.

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Social entrepreneurship in the hospitality and tourism industries as a business model for bringing about social improvement in developing economies

Philip Sloan International University of Applied Sciences Bad Honnef – Bonn

Muelheimerstrasse 38 Bad Honnef 53604, Germany

e-mail: [email protected]

Claudia Simons-Kaufmann International University of Applied Sciences Bad Honnef – Bonn

Muelheimerstrasse 38 Bad Honnef 53604, Germany

e-mail: [email protected]

Willy Legrand International University of Applied Sciences Bad Honnef – Bonn

Muelheimerstrasse 38 Bad Honnef 53604, Germany

e-mail: [email protected]

ABSTRACT

Using 3 case studies from sustainable hospitality and tourism destinations this paper reports on

preliminary research set in developing economies in order to understand the development of social entrepreneurship in this context. The applicability of sustainable hospitality management systems as a means of fostering wellbeing for under-privileged sections of indigenous societies is analysed. Preliminary conclusions show that the positive effects of employing local indigenous people in these Hospitality operations far outweigh minimal negative aspects and that local infrastructures including schools, libraries and roads have all come about as a direct result. In addition, the authors wish to contribute to the further development of the theory of social entrepreneurship in the context of the hospitality and tourism industries in developing economies.

Key words: social entrepreneurship, community-based sustainable hospitality and tourism, social value INTRODUCTION

Tourism has become a major activity in our society and an increasingly important sector in terms of economic and social development. (Giaoutzi and Nijkamp, 2006). The aim of this paper is to show how the tourism and hospitality industries have the means to provide opportunities for poverty alleviation and wellbeing for under privileged people in developing economies through the process of social entrepreneurship. Poverty is one of the severest problems in almost all developing countries and constitutes a limiting factor to development. Todaro (1998) defines development as both an improved physical reality and a state of being where individuals in society can secure the means for obtaining a better life. Lack of capital, education, business skills present serious obstacles for poor people wishing to move up the economic ladder and participate in economic growth (Todaro, 1998: 18).

Edgell (2006) suggests that tourism “has the potential to participate in, change, and improve the social,

cultural, economic, political, and ecological dimensions of our future lifestyles.” Virtually all nations practice tourism as a development strategy using it as a means of “earning foreign exchange, creating employment, promoting deprived regions and developing infrastructure” (Singh, 2003). The boom in all forms of tourism and hospitality has given rise to millions of new jobs and increased economic prosperity in countries around the world. Although the numbers of international arrivals decreased by 4% in 2009, UNWTO forecasts an increase of between 3%-4% for 2011. In 2008 tourism and hospitality generated US $946 billion in export earnings (UNWTO, 2010). Consequently, there is growing potential for enterprise development and employment creation, which in turn, stimulates further investment and supports the development of local services. As a result, it generates income and can forward productive intercultural understanding. It also has the potential for earning substantial foreign exchange and contributing to the balance of payments. Developing countries typically have comparative advantages in the tourism. They not only possess land, sun, sea, and adventure possibilities but also assets like wildlife, landscape and cultural experiences which are all demanded by consumers from richer and often more densely populated countries. Unless properly managed, tourism can have many negative effects on

the environment and on local society. In primitive and isolated areas, the arrival of too many visitors can even cause local people to leave their settlements and move to new areas where they can remain undisturbed. (Brunet, et al., 2001). Basu (2003) emphasises the development of destinations should be fundamentally built around local participation, representation and empowerment, the promotion of local interests, the preservation of local landscapes, cultures and heritage, and the matching of the industry to local carrying capacity. Singh (2003) supports this, as “community involvement in policy framing, planning and development of local resources and monitoring success and failure of the project” lead to a more “authentic, meaningful and satisfying experience for both the visitor and the visited.” Singh argues that there is a great number of examples, where tourism development contributes towards economic growth, but where societal effects were ignored. Therefore, Singh (2003) concludes that “no tourism development however ingeniously conceived, can foster sustainability if it fails to respect the needs and aspirations of the local people. It has to be a community industry to become viable, sustainable and self-perpetuating.” Consequently, sustainable tourism and hospitality development should not only involve the local population, but should actively preserve local culture.

By definition, social entrepreneurs practicing sustainable hospitality and tourism are opposed to any

negative or societal impacts (UNWTO, 1987). The hospitality and tourism industries are considered to have been among the first industries to embrace the principles sustainability (Johnson 2002). “With the publishing of Agenda 21 for the Industries in 1992, individual businesses were encouraged to adopt codes of conduct, promoting sustainable travel and tourism best practices for the first time (Sloan et al. 2009:7).” The foundations of sustainable development were set by the United Nations World Commission on Environment and Development (WCED) who formulated the Brundtland Report “Our Common Future” in 1987. The World Tourism Organization (UNWTO, 1987) defines sustainability in the context of tourism as a set of principles referring “to environmental, economic and socio-cultural aspects of tourism development, and a suitable balance [which] must be established between these three dimensions to guarantee long-term sustainability” (UNWTO, 2006).

Until the 1990’s economic policy making did not fully embrace social impacts very much, in the last

twenty years consideration for environmental and latterly social aspects of business gained ground in economic and developmental theory and practice, companies began to realize that they have responsibilities towards the “wider” community (Baumüller et al. 2011: 4). One of the best known “social entrepreneurs” who took the argument further and addressed social gains more than financial gains was Muhammed Yunus who started a micro-lending scheme for the poor (Yunus, 2007). Reis (1999) and Paton (2003) also recognised that entrepreneurship is also an important factor driving the growth of the social emancipation and the integration of deforised minorities. They drew attention to the emergence of a new type business governance model by introducing the concept of hybrid service in organizations that promote social entrepreneurship. As emphasized by Fowler (2000), any socially minded enterprise whether in tourism or elsewhere requires “a specific type of capability to manage a non-profit-for-profit organisation under one roof”. As the term social entrepreneurship implies, it is multi-disciplinary and draws on what were previously two distinct research directions (“society” and ‘entrepreneurship’). While other approaches follow the principle of profit first or complementarity of social and corporate objectives, social entrepreneurs use entrepreneurial principles to organize, create and manage a venture with the primary aim of bringing about social change. Unlike a business entrepreneur who typically measures performance in terms of profit and return, a social entrepreneur measures success in terms of progress towards the creation of social values (Baumüller et al. 2011: 11). Nevertheless there is no commonly accepted definition and it is not clear if the attribute non-profit or profit-seeking distinguishes a social entrepreneur or business from a “normal” business. Hybrid forms and organizations may also exist. The same semantic dilemna holds for non governmental organisations applying entrepreneurial approaches.

A common thread running through all academic literature is the element of social problem-solving as

the primary mission for social entrepreneurial organizations. Social entrepreneurship is not a philanthropic or charity approach to poverty reduction, it offers an approach based on the strategic use of market forces to promote social improvements. In brief, social entrepreneurial activities can be seen as initiatives that mainly focus on creating social value and where the creation of economic value, if present, is seen as a necessary means to ensure financial viability (Mair & Marti, 2006). Although numerous studies have been carried out in the field of entrepreneurship as a driving force for social change following purely capitalist doctrine (e.g. Scott and Venkataraman, 2000) in the field of hospitality research, little attention has been paid to social entrepreneurship. During the last 21 years only 2% of the articles published in the top hospitality and tourism journals have addressed the topic (Lin, 2008). Research into the implications of social entrepreneurship for the hospitality industry is virtually nonexistent. A reoccurring theme in the literature on social sustainability in tourism, is the significance of the community and local development (e.g. Edgell 2006), where the importance of a participatory

planning and development process is stressed. Moreover, socially equitable tourism should not merely involve the community, but a substantial share of the profits should benefit the local population. Again, academics agree that this is beneficial for both tourism organisations and the host community, “the full involvement of local communities in the tourism sector not only benefits them [...], but also improves the tourism experience” (Edgell 2006). METHODOLOGY

This research was the result of several online contacts with the selected destinations. 5 were initially contacted and 3agreed to take part. All respondents were required to supply a 10-15 page written report on their ventures, 1/4 page summaries are included in this paper. These reports supplied offer a wealth of background information on the state before and after the projects’ inception on local society, the environment, economic development and local culture. In addition, the respondents were asked to describe the development of their projects pointing out not only successes but also the problems they encountered. They were then requested to answer an open ended on-line questionnaire. This was considered the best way by the authors to undertake a contextual analysis of similar situations in multiple organisations. The 3 lodge hotels were selected as the units of analysis for theoretical as well as practical reason. Firstly, the types of accommodation in this research are designed to appeal primarily to Western tourists who largely wish to experience an authentic vacation where they will enjoy local traditional culture in an un-spoilt environment. The establishments offer a particular combination of meal and drink services, staff and guests operate generally to given social codes where Western norms are met. In the Inkaterra case study guests were told in advance that they would only experience local cultural behavior and that no attempt to westernize the experience would be made. The strong desire to make the tourist experience more digestible to foreign tourists can of course be disturbing for some indigenous local people whose own social behavior codes are at odds with those of their tourist guests and even their own traditional interpretation of hospitality. However, it must be stated, that these very differences in behavior have been proven to be factors that attract visitors to what can be referred to as the cultural component of tourism in at least two of the cases. Each of the operations questioned has a stated policy of achieving equitable employment opportunities while protecting the natural environment and achieving financial profit while hopefully stimulating regional socio-economic development. The following case study summaries come from three very different socially and ecologically diverse destinations yet perform all the principles sustainability within hospitality. While each has its own goals and challenges, each hotel strives to regenerate damaged biodiversity, educate local communities in rural cultures and maintain financially successful hotel lodges that reach a wide customer base of travellers and vacationers. Chumbe Island Coral Park Ltd in Zanzibar/Tanzania, Case Study Summary

This case study on Chumbe Island Coral Park focuses on sustainability initiatives established by the hotel and a marine research centre. It strives to work with the local people on issues of education, sustainable fishing, preservation of coral-rag forests and of course the coral reefs in Zanzibar, Tanzania. Chumbe Island is registered with the World Conservation Monitoring Center and has exceeded anticipated goals in community aid and in the protection of biodiversity. Chumbe Coral Park organises excursions for local schools offering educational programs on the reef and forest habitat as well as classes in children’s snorkeling and swimming. Village fishermen, who previously practiced fishing in all areas of the reserve, now respect the boundaries of the coral park and fish only outside the protected areas. Previously the coral reef was not valued by local people and the relationship between the resort developers and the fisherman was strained. The fishermen did not want to accept that this was not their fishing territory. They agreed to learn from former fisherman turned park rangers and slowly began to understand that the fish would slowly migrate outside the boundaries, which would be to the fisherman’s benefit. Through providing fisherman the opportunity to become park rangers, a form of social entrepreneurial tourism has developed. The park rangers now manage the Coral Reef Sanctuary. In supporting the local economy, Chumbe purchases local food produce from spice and fish markets which provides around 90% of their needs in their hotel lodge restaurant. Buying locally grown produce supports farmers in the region, local women are employed to cook and serve meals based on local traditions. These women are also employed as operatives in the Chumbe lodge hotel. Job opportunities are also offered by international research institutions who have set up a highly reputable marine research centre. Profits from the hospitality operations are re-invested into conservation area management and free island excursions for local school children through environmental educational programs.

The Periyar Tiger Reserve, Kumily in Kerala, India, Case Study Summary

The Kumily eco-tourist lodge in Kerala, India is home to important ecosystems sustaining roughly 30% of India’s plant, animal and freshwater species. However, like many areas in the country the environment faces issues such as deforestation, paddy field conversions and disruption of black water ecosystems which have all led to increased levels of poverty and social upheaval. The social entrepreneurial mission of the Kumily project leaders reveals the importance of linking community development with biodiversity conservation within protected areas without harming the livelihood of local people or degrading the natural environment by means of tourism. Originally funded by the India Ecodevelopment Organisation Project the Periyar Tiger Reserve produces not only benefits for the environment and well being for local people but also revenue for the local economy that funds improvements to local infrastructure such as roads and schools. One of the key benefits is the integration of tourists in the life of the villages by introducing them to local activities based on traditional knowledge. Tourists lodge with local people in so called “homestays” where the villagers open up their homes to the westerners who both gain valuable insights into local culture and provide financial support to a traditional way of life. Locals also work as guides, rickshaw drivers and plantation farmers who in turn provide food products to their visitors. They also have the opportunity of working in the local hotels where they make no secret about learning the trade while harbouring the hope to one day have their own accommodation operation.

The Case of Inkaterra - Pioneering Ecotourism in Peru, Case Study Summary

This case study focuses on Inkaterra Amazonica and how they have over the years pioneered a new form of social entrepreneurship and environmentally friendly tourism in Latin America. The project has given much needed support to local cultures through staff trained to develop a sustainable retreat resort. All have expert knowledge of surrounding ecosystems and the immense regional biodiversity. Inkaterra has successfully created a market for high quality, luxurious, sustainable hospitality and tourism. The first hotel project was in the Ese’eja - Sonene community where travelers were introduced to local communal traditions exemplified by hunter and gatherer lifestyles.. Another benefit to the communities is the training given by locally educated personnel to represent the interests of Inkaterra in local governments. Benefits such as accommodation, food, airfare and insurance are provided to the local staff of Inkaterra. This, along with educational support, health campaigns, agro-forestry workshops raising the awareness of biodiversity are just some of the activities of Inkaterra in their contact with local communities. In addition to providing an example to all social entrepreneurs and environmental stewards, Inkaterra is now a financial profit making organization. Starting from humble beginnings in the Amazonian rainforest where all services are non-existent the organisation overcame enormous difficulties in obtaining equipment and an indigenous population that although were more than happy to cooperate required extensive training. This conversion to the principles of sustainable tourism and hospitality has been achieved in such a way as to not endanger cultural heritage.

CONCLUSIONS

The research presented sets out to contribute to the further the understanding and development of social entrepreneurship theory in the context of the hospitality and tourism industries in developing economies. The 3 respondents to the questionnaire brought to light an intriguing picture of relationships between management models, entrepreneurship and indigenous local work forces . The research indicates that due to the many different variables no one social entrepreneurial model for the Industry exists. The social challenges of hybrid hospitality and tourism organisations are embedded within the context in which they operate. An assumption of this research was that indigenous peoples in developing economies represent a defavorised section of the population. The study suggests that the expected outcome of all the businesses but especially in the Chumbe Island project is the maximisation of social benefits determined by the creation of a new type of organisation characterized by a high degree of financial independence from grants and charities.. This aspect was inferred through the responses but is in no way proven. The three case studies show that such hybrid organisational forms consist of a combination of democratic and stewardship initiatives enacted in various proportions Hopefully, the main message for Industry consists in the fact that this study contradicts a popular perception that companies cannot combine the financial profit motive with the promotion of social values and that in order to be socially and environmentally responsible companies need to be idealistic and impractical from a main stream management point of view. Social benefits can indeed be achieved without losing focus on business objectives. The number of companies surveyed in this research was relatively small and critics could even point out that

sustainable hospitality is a particular niche product. However, the social commitment of the interviewed companies should guide and inspire entrepreneurs in the future to create both social and economic value.

This study shows that in terms of bringing social harmony to the work place and creating successful hospitality and tourism ventures, social entrepreneurship can produce many advantages in terms of added value. It can also be concluded that hospitality operations are perfectly suitable for local populations with no previous understanding of the hospitality product or international visitor standards. In all the destinations the staff and in some cases the lower and middle management positions were occupied by local employees with little or non-existant educational levels. These case studies show that in an age of minimal assistance for defarorised minorities governments and civil society can gather some comfort for the future of social entrepreneurial hospitality ventures from these success stories REFERENCES Basu (2003). „Is Sustainable Tourism Development Possible? Broad Issues Concerning Australia and Papua New Guinea in Ghosh, R.N., Siddique, M.A.B, and Gabbay, R. (2003). Tourism and Economic Development: Case studies from the Indian Ocean region. Hampshire: Ashgate Publishing Ltd. Baumueller, H. & Ladenburger, C. & von Braun, J. (2011) Innovative business approaches for the reduction of extreme poverty and marginality? ZEF Working Paper Series 80, Bonn. Brunet, S., J. Bauer, T. De Lacy, and K. Tshering. 2001. Tourism Development in Bhutan: Tensions between Tradition and Modernity. Journal of Sustainable Tourism 9(3): 243–263. Edgell, D.L. (2006). Managing Sustainable Tourism: A Legacy for the Future. New York: The Haworth Hospitality Club. Fowler, A., (2000). "Breaking The Politics Of The Aid Chain - The Case For A Systems Approach To Impact Measurement", @lliance, Vol. 5, No. 3, pp. 31-32, Charity Aid Foundation, London. Giaoutzi, M., and Nijkamp, P. (eds.) (2006). Tourism and Regional Development: New Pathways. Hants: Ashgate Johnson, S. (2000). Literature Review on Social Entrepreneurship. Canadian Centre for Social Entrepreneurship, pp. 1-17. Johnson, C. (2002). Mintel Report on Sustainable Development in Hotels. Travel and Tourism Analyst. Lin, L. (2008). A review of entrepreneurship research published in the hospitality and tourism management journals. Tourism management , 29 (5): pp. 1013 – 1022. Mair, J., & Marti, I. (2006). Social entrepreneurship research: a source of explanation, prediction, and delight. Journal of World Business, 41(1): pp. 36-44. Paton, R. (2003). Managing and measuring social entreprises. London: SAGE. Reis, T. (1999). Unleashing the new resources and entrepreneurship for the common good: A scan, synthesis Scott, S., and Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1): pp. 217-226. Singh, T.V. (2003). „Tourism and Development: Not an Easy Alliance‟ in Ghosh, R.N., Siddique, M.A.B, and Gabbay, R. Tourism and Economic Development: Case studies from the Indian Ocean region. Hampshire: Ashgate Publishing Ltd Todaro, M. (1998). Economic Development, Harlow. United Nations World Commission on Environment and Development (1987). Our common future: Report of the World commission on environment and development. Retrieved April 20, 2011, from http://www.worldinbalance.net/agreements/1987-brundtland.html UNWTO (2006). Sustainable Development of Tourism. Retrieved April 20, 2011, from http://www.unwto.org/std/mission/en/mission.php Yunus, M. (2007: Creating a world without Poverty: Social business and the future of capitalism, New York.  

Hospitably Social or Socially Sustainable? An examination of social entrepreneurship within the hospitality industry.

GeoffreyDesa

SanFranciscoStateUniversity

SanFrancisco,California,USA

[email protected]

ColinJohnson*

SanFranciscoStateUniversity

SanFrancisco,California,USA

[email protected]

MehmetErgul

SanFranciscoStateUniversity

SanFrancisco,California,USA

[email protected]

ABSTRACT

In its broadest sense, social entrepreneurship may be defined as the innovative use of resources to explore and exploit opportunities that meet a social need in a sustainable manner. Despite being widely reported in the generic business world, examples of social entrepreneurship within the hotel and tourism industries do not seem to have often been reported or analyzed. The paper examines cases of hospitality entrepreneurship, structured through three theoretical lenses from classical entrepreneurship that each attempt to explain the equilibrating process that drives the establishment of new ventures (Zahra et al 2009).

SOCIAL ENTREPRENEURSHIP: A HOSPITALITY PERSPECTIVE

Social entrepreneurship, a term used to describe innovative approaches to solve social problems, has received a lot of recent attention. Non-profits and non-governmental organizations, foundations, governments, individuals and corporations promote, fund, and advise social entrepreneurs around the world. In this article we explore the dynamic relationship between social mission and commercial viability within the restaurant industry. Through a comparative case study of three sustainable, socially conscious food service organizations in the San Francisco Bay Area, we explore viable business models within the social entrepreneurship domain. Social Entrepreneurship

Research on social entrepreneurship is growing rapidly (Defourny & Nyssens, 2008; Zahra et al., 2008; Desa, 2009) as scholars are beginning to study social ventures operating in diverse geographical areas with varying levels of economic and institutional development, such as the United States (Short, Moss & Lumpkin, 2009), United Kingdom (Salamon et al., 2004), Western Europe (Borzaga & Spear, 2004, Mendoza & Vernis 2008), Latin America, Asia, and Africa (Bornstein, 2004; Austin, Marquez & Reficco, 2006). While there are

some differences in how social entrepreneurship is conceptualized, the striking commonality in this body of work across a wide range of activities, organizational forms, and sectors, is that such entrepreneurship is conducted in the public interest to target markets and customers that traditional profit-maximizing commerce has overlooked or insufficiently served. Specifically, we employ Mair & Marti’s (2006: 37) definition of social entrepreneurship as “a process involving the innovative use and combination of resources to pursue opportunities to catalyze social change and/or address social needs”. In line with Austin et al (2006), we contend that social entrepreneurship is a subset of the broader field of entrepreneurship and complementary to commercial entrepreneurship. Social entrepreneurship includes innovative, social value creating activity that can occur within or across the nonprofit, business, or government sectors (Austin et al 2006:2). Tension Between Social and Financial Bottom Lines The principal theoretical differences between social and commercial entrepreneurship center on different approaches toward a) Market failure: Social entrepreneurs address needs for public goods (Weisbrod 1975, 1977) or needs not served by commercial market forces as a result of contract failure (Nelson & Krashinsky 1973), b) Performance drivers: The primary emphasis is on social impact rather than maximizing financial return and, c) Organizational mission: The creation of public goods vs. private economic gain changes the strategic focus of the organization (Austin et al 2006, Fottler 1981). To guide our discussion we draw upon three theoretical lenses from classical entrepreneurship that each attempt to explain the equilibrating process that drives the establishment of new ventures (Zahra et al 2009). From our field study, we provide examples of each type of social entrepreneur, and identify the associated business model necessary to maintain a dual social-economic bottom line. We conclude with a discussion of the implications of social entrepreneur categories on venture growth and social welfare improvement. Social Venture Approaches Toward Equilibration.

The typology is built upon alternative conceptualizations of the equilibrating process of entrepreneurship as derived from Hayek (1945), Kirzner (1973) and Schumpeter (1942). We provide illustrative examples from the hospitality industry of these three types of social entrepreneurs: Social Bricoleurs, Social Constructionists and Social Engineers. Though these entrepreneurs share a passion for pursuing social issues, major differences exist among them in how they discover social needs (i.e., search processes), pursue social opportunities, and impact the broader social system. We also look at the business models employed by each type of social entrepreneur in pursuit of the opportunity.

Type 1: Social Bricoleurs: Social entrepreneurs who act on locally discovered opportunities with locally available resources.

“There is beyond question, a body of very important but unorganized knowledge...the knowledge of the particular circumstances of time and place. It is with respect to this that practically every individual has some advantage over all others in that he possesses unique information of which beneficial use might be made”. (Hayek 1945: 522)

Hayek's (1945) work highlights the critical role that private, local knowledge or contextual information play in the entrepreneurial process. Rather than describing markets as rational, broadly understood and predictable arenas, Hayek emphasizes the ‘kaleidic’ nature of the landscape (Zahra et al 2009), inhabited by individuals with minds unobservable and inaccessible to external actors, and in possession of tacit knowledge. This tacit feature leads some individuals to make informed and intuitive judgments based on data not easily codified or transferred between individuals or across organizations (Nelson and Winter, 1982; Conner and Prahalad, 1996, Lam 2000).

Complementary to Hayek's position of entrepreneurship as a result of idiosyncratic, local or tacit knowledge is Levi-Strauss' (1966) concept of bricolage. Baker and Nelson (2005) consider bricolage characteristically entrepreneurial because it involves combining existing resources to solve problems and leverage new opportunities. Consistent with Hayek's premise of asymmetric knowledge, successful bricolage requires intimate knowledge of both local environmental conditions and locally available resources.

Equilibrating function: Social Bricoleurs perform an important equilibrating function by socializing a community toward addressing a local social problem. Without them, many social needs would remain unaddressed or unrecognized. Even though the solutions they craft are sometimes small in scale and limited in scope, they help assuage serious local social problems. As a result, Zahra et al (2008) suggest that Social Bricoleurs move us closer to what Parsons (1971) described as an ideal “social equilibrium” where social peace and order exist. These entrepreneurs derive their power to act from being in the right place at the right time, as well as possessing the skills to address needs not on the radar screens of larger and less proximate parties. As a result of their localized and oftentimes tacit knowledge, Social Bricoleurs are uniquely positioned to discover local social needs where they can leverage their motivation, expertise and personal resources to create and enhance social wealth.

Hospitality Industry Example: Five Green Forks

Five green forks is a sustainable accreditation system for the food service industry. The company has recognized that the restaurant/food service and hospitality industries are rife with inefficiencies, including Inefficient use of resources, time constraints, high labor turnover and often outdated management and organizational dynamics. High proportions of food from US restaurants end up in land-fill and restaurants are seen to operate significantly behind other industry norms in terms of energy efficiency.

Five Green forks recognizes that a major market opportunity exists to enable restaurants to operate in a more sustainable manner that will be more in line with the demands of green consumers.

Social Bricoleur Business Model: Fee for service

The fee-for-service model of social enterprise commercializes its social services, and then sells them directly to the target populations or "clients," individuals, firms, communities, or to a third party payer (Alter 2001). The fee-for-service model is usually embedded: the social program is the business, its mission centers on rendering social services in the sector it works in. The social enterprise achieves financial self-sufficiency through fees charged for services. This income is used as a cost-recovery mechanism for the organization to pay the expenses to deliver the service and business expenses such as marketing associated with commercializing the social service. Surpluses (net revenue) may be used to subsidize social programs that do not have a built-in cost-recovery component.

Five green forks exemplifies the fee for service model in the hospitality industry. Through the Mission– aligning strategies, Five green forks creates an embedded business model in which the social mission is the business. Five green forks also focuses on revenue generation directly through client businesses, and the social impact is delivered through reduced inefficiencies in the business and improved performance of restaurants with greatly enhanced sustainability of the business model.

Type 2: Social Constructionists: Social entrepreneurs who build, launch and operate ventures which tackle those social needs that are inadequately addressed by existing institutions, businesses, NGOs and government agencies.

Opportunities do not necessarily arise from an entrepreneur's specific local knowledge, but rather from their alertness to opportunities which they leverage by developing products, goods and services. (Kirzner, 1973: 71, emphasis added).

Kirznerian entrepreneurs successfully and profitably exploit opportunities by addressing those customer needs not yet realized by current providers. Though commercial entrepreneurs seek profits by quickly identifying and exploiting market opportunities, the needs that Social Constructionists identify and pursue typically center on creating social wealth (Zahra et al 2009, Fowler 2000). The need for these organizations arises because for-profit companies often do not have the incentive to address social problems, while non-profit organizations may not have the cognitive basis or the means to develop a solution (Desa & Kotha 2006).

Successful social constructionists are often alert to opportunities, bold and innovative in action (Dees, 1998; Zahra et al 2008, Johnson, 2000), acting as if they can accurately forecast future events and bring about a future desired state (Mueller & Thomas 2001). They also develop organizations to match the scale and scope of the social needs they seek to address.

Social Equilibrating Function: In contrast to Social Bricoleurs who improvise solutions to local social problems, Social Constructionists seek to remedy broader social problems by planning and developing formalized or systemized scalable solutions to meet growing needs or could be transferred to new and varied social contexts (Grant, 1996). These entrepreneurs' advantages do not stem from local knowledge; they result from their unique capacity to spot and pursue those opportunities that generate social wealth by creating and reconfiguring the processes enacted to deliver goods and services. This opportunity spotting capacity can arise from knowledge bridged from past-specialized experience, a direct search for meaning, or strategic alliances (Desa & Kotha 2006).

As a result, social constructionist initiatives that leverage the resources and collaborative capabilities of individuals, for-profit and not-for-profit organizations can create mutually beneficial outcomes that, in turn, generates a sustained momentum toward a new social equilibrium (Pearce and Doh, 2005, Zahra et al 2009).

Hospitality Industry Example: Karma Kitchen

Karma Kitchen was started in Berkley California in 2007 by a small number of volunteers who attempted to bring the spirit of gifting into a mainstream restaurant. It offers a unique dining experience by making no charge for the meal or service. Since its beginning over 24,000 meals have been cooked and served by its completely volunteer workforce. Karma Kitchen seeks to embody the three tenets of the organization, to move from a transactional relationship to trust, from a feeling of isolation to that of community and from a belief in scarcity to that of abundance. The restaurant provides the vehicle for these paradigm shifts to take place.

Social Constructionist Business Model: Market Intermediary model

The market intermediary model of social enterprise provides services to its target population or "clients," small producers (individuals, firm or cooperatives), to help them access markets. Social enterprise services add value to client-made products through product development; credit assistance, or marketing assistance. The market intermediary either purchases the client-made products outright or takes them on consignment, and then sells the products in high margin markets at a mark-up (Alter 2001). The market intermediary model is usually embedded: the social program is the business, its mission centers on strengthening markets and facilitating clients' financial security by helping them develop and sell their products. The social enterprise achieves financial self-sufficiency through the sale of its client-made products. Income is used to pay the business' operating expenses and to cover program costs of rendering product development, marketing and credit services to clients.

Karma Kitchen exemplifies one specific subset of the market intermediary business model, by focusing on a “gift economy”. The social mission is embedded within the business, the return to the “clients” preparing food is not monetary self-sufficiency, but ‘soul-sufficiency’ achieved through acts of volunteerism. Income is generated from the market of diners who eat for free, but offer charitable contributions for future diners or volunteer time to sustain the operation.

Type 3: Social Engineers: Social entrepreneurs who tackle complex social problems in the face of inadequate institutions, entrenched governments or resistant business elites (Carney and Gedajlovic 2002, Mair & Marti 2009).

In capitalist reality as distinguished from its textbook picture, it is not price competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization –competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.Schumpeter 1942, Capitalism, Socialism and Democracy: 82

Social Engineers differ significantly from the other two social entrepreneurial types because they identify systemic problems within the social systems and structures and address them by bringing about revolutionary change. Social Engineers often introduce dramatic changes in the social sphere, resembling what Schumpeter's (1942) entrepreneurs perform in the world of business enterprise. They act as prime movers of innovation and change, engendering “gales of creative destruction” to destroy dated systems, structures and processes to be replaced by newer and more suitable ones (Zahra et al 2009).

Social Equilibrating Function: By fracturing existing and often dominant institutions and replacing them with more socially efficient ones, Social Engineers can have a profound influence on society. Consequently, they can be a powerful force for social change. This is especially true where entrenched incumbents and prevailing practices have become formidable barriers to reform. Given the “systemic” nature of the problems they target, Social Engineers often attack national, transnational or global social issues. Social engineers may also engage in catalytic alliances (Waddock and Post 1995: 951) and use the media as a strategic resource to place an issue on the public agenda and change public attitudes. These alliances usually tackle difficult and complex social problems and reshape public attitudes about these problems. They may also help generate dramatically different patterns of resource allocations and service delivery methods. Social engineers may not necessarily fix social problems, but rather inspire others to spearhead social change.

Hospitality Industry Example: Table for Two

Table for Two seeks to address the opposing problems of obesity and malnutrition. TFT partners with restaurants and cafeterias that will provide a branded “TFT” meal. The meal has to be of nutritionally balanced to receive the TFT label. A 25 cent surcharge is added to the price of the meal. The revenue from the surcharge is used to pay for school lunches in African countries including Uganda, Rwanda, Ethiopia and South Africa.

Social Engineer Business Model: Service subsidization model

The service subsidization model of social enterprise sells products or services to an external market and uses the income it generates to fund its social programs. The service subsidization model is usually integrated: business activities and social programs overlap, sharing costs, assets, operations, income and often program attributes. Although the service subsidization model is employed primarily as a financing mechanism--the business mandate is separate from its social mission--the business activities may enlarge or enhance the organization's mission (Alter 2001).

For effective social engineers, commercialization of core social services leads to enterprise activities that are close in nature to the organization's social programs and may enhance the mission. In financial terms the business benefits from leveraging and cost sharing relationships, and provides a stream of unrestricted revenue to subsidize, amplify or wholly fund one or more social services.

Table for Two exemplifies the service subsidization model by creating an integrated overlap between the social mission in Africa and the social + financial mission in developed countries. By providing aggressively-priced healthy meals that tackle the issue of obesity in developed countries, Table for Two creates a viable business that directly subsidizes the provision of meals for children in under-developed parts of Africa.

DISCUSSION AND CONCLUSIONS

This is an exploratory study with examples of the three categories of social bricoleurs, social constructivists and social engineers being presented.

Five green forks provides a good example of an hospitality industry social bricoleur. San Francisco within the USA has long been at the vanguard of social and environmental progress especially in terms of energy efficiency and new and existing building regulations (especially through LEED). Five green forks brings these themes together seamlessly for the food service industry. It is a model that can also be codified and used in other regions, however and can be replicated in Asia and Europe.

Karma Kitchen through its emphasis on ‘gifting” and the moving of the customer relationship from transaction to trust shows the social constructionist model of the program being the business. Within the food service industry, it is hard for an enterprise to exist with a zero appearing on the bottom of each bill presented to the customer. Karma Kitchen, however, appears to tap into a willingness of both customers and service and back of house staff to provide their services for the greater good, thereby transforming the business model one meal at a time

Table for Two was used as a service subsidization model that effectively seeks to brand its core social programs through the support of major donors. It’s very clear social mission of “redistributing calories” from those that have too many to those that have too few, may be seen to be intuitively appealing to many major corporations and individual donors with a social conscience who wish to address one of the most glaring injustices in the world today: while almost one billion people go hungry each day roughly the same amount consume too many calories.

Although these are just three examples, it may be fair to assume that through their influence new equilibriums will be achieved in the future.

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A CONCEPTUAL MODEL FOR MANAGING THE HOSPITALITY INNOVATION PROCESS

Robert J. Harrington University of Arkansas

Fayetteville, Arkansas USA [email protected]

and

Michael C. Ottenbacher

Heilbronn University Heilbronn, Germany

[email protected]

While a high percentage of new innovations result in failure, earlier studies indicate that innovative service organizations demonstrate stronger performance. In addition, these studies have demonstrated the value of utilizing a model for managing the innovation process whether in new product development, new service development or in hospitality innovation. Several innovation studies in hospitality are synthesized to propose a conceptual model of the innovation management process in a hospitality context. Innovation has been a topic area in several literature streams; our synthesis supports the inter-disciplinary nature of successfully managing the innovation process as well as differences in the hospitality process compared to traditional models of new product or service development. This model is derived from concepts in the fields of marketing, leadership, strategic management, entrepreneurship, teams, new product development, new service development, sensory evaluation, and product-dominant logic vs. service-dominant logic concepts as well as hospitality innovation best practices that appear as keys to innovation success.

The traditional new product development model includes six main steps: Idea generation, screening, concept development, final testing and commercialization. The proposed hospitality innovation model incorporates three main phases and 16 potential steps. The inclusion or exclusion of some of these steps is dependent on several cultural, institutional and contextual factors. An overview of the three phases, steps and key considerations are briefly outlined below. Phase I: Idea generation to prototype or service blueprint stage. This first phase includes an idea generation stage (strategy generation and idea formulation), screening I (key considerations - financial and operational viability), concept test and development (outcomes at this stage include creation of service blueprints, idea refinement and optimization), screening II (key considerations – level of risk involved, informal market research, consumer liking and purchase intention, firm’s ability to deliver, and strengths and weaknesses of the concept), and prototypes (variations of concepts, critical factor checks, operational checks, reliability issues and robustness).

Phase II: Concept refinement and action plans. This second phase includes a screening III (success factors - tangible quality, technology use/integration, differentiation, market responsiveness, “fit”, and strategic alliances needed?), concept refinement (refinement methods, test with multiple sources, and test marketing), screening IV (cross-functional assessment), and test market (verify pricing consideration, verify purchase intent and liking, test market and evaluation on limited scale, and documentation of improvement).

Phase III: Final pre-launch, launch and evaluation. The final phase includes final pre-launch screening (key factors and implementation issues), launch and implementation (internal/external considerations, methods required to enhance likelihood of success), and evaluation (multi-functional evaluation: consumers, internal groups, franchisees, learning outcomes, etc.).

This poster provides additional detail on key considerations and proposed steps in the innovation process; this concept highlights the connection to the appropriate literature streams and earlier studies of innovation in hospitality sectors.

Key Words: new service innovation, managing the innovation process, hospitality innovations.

Online marketing practices of different hotel segments: content analysis

Maryam Khan, Ph.D. Howard University

Washington, D C, USA Email: [email protected]

ABSTRACT

The purpose of this study is to evaluate the websites of full-service luxury, full-service, and limited-service hotels using content analysis. Seven criteria consisting of 72 items were evaluated. The finding reveals websites of different hotel segments were somewhat similar regarding facility, reservation, and contact information. However, luxury and full-service hotels have more information and extra web features compared to limited-service hotels. Several differences relating to hotels’ overall website look, design, and navigation scheme exists, for example, virtual tours and audio feed, green-hotel information, pet policies, and social network sites. The majority of the hotels are using some form of social media. The finding of this research would be of interest to hotel operators/researchers as it highlights innovative marketing strategies.

Key Words: Internet, hotel marketing, website, social media, online marketing

INTRODUCTION

The lodging industry has been in existence ever since the first traveler looked for a place to spend the night thousands of years ago. Over the years, these facilities have evolved and have been known as ordinaries, taverns, inns, hotels, motels, resorts, and bed and breakfasts. According to AH&LA report (2011), the lodging industry in the USA has over 51,015 properties with over 4.8 million guest rooms. It generates $99.3 billion in sales and supports more than 7.5 billion jobs. During the past decade, advancement in technology has significantly shaped the way that the lodging industry plans, controls, manages, and markets operations.

The Internet is being increasingly used as an important communication and distribution channel to

market all types of business. The hospitality and tourism industry started using internet as part of its marketing strategy in the 90’s (Connolly et al., 1998). Its validity as an advertising and marketing strategy has been already established (Kasavana et al., 1996). The internet advent has introduced a variety of new marketing tools which are accessible by both large and small organizations. The size, type, or location of the hotel has no effect on the use of internet as a marketing tool (Connolly and Sigala, 2001; Sigala, 2001; Parets, 2002). In today’s unstable economy, with tightened budgets and reduced staffing, hospitality marketers are increasingly turning to online marketing solutions. The online marketing channel was the only growth channel in 2009 and the trend is expected to continue (Anonymous 1, 2010). The Internet presents limitless opportunities to engage with customers and offers the potential to develop powerful and long lasting relationships. Not only are consumers overwhelmingly choosing the Internet as their source for travel information, but the web often provides the most cost-effective solution for travel marketers. While the GDS (Global Distribution System) and voice booking is declining, the Internet CRS (Central Reservation System) booking for top 30 hotel brands is growing. According to AH&LEF lodging survey (2010) new technologies are becoming more common. Wireless Internet in hotels rose to 94% from 91% in 2008. Overall it is predicted that 50 to 70 percent of all hotel bookings will be made online in 2012. In addition, social networking platform is being used by 75% of the hotel operations.

The Internet has changed how hotels market their product and services. Today just having a presence

on the web is not enough. Consumers are driving the content of the web. With 44% of internet users active in social media, many hotels are looking into social networking as a cost-effective way to attract and maintain customer relations (Anonymous 2, 2010). According to Gartner Research, the worldwide social media revenues are estimated to exceed $10 billion in 2012, approximately a 41.4 % rise from 2010 (Peak, 2011). Social media has evolved into an interactive, two-way communication tool. Today’s digitally driven consumers broadcast their experiences directly online via social media. Over 60 percent of consumers researching products through online sources learned about a specific brand through social networking sites. Social media is increasingly becoming a favorite platform for consumers to express their brand loyalty and are promoting the brand they like or don’t like. Besides having a well-designed website, the lodging industry is looking toward social media sites, such as, Twitter, Facebook, Flickr, Blog, Web apps, and YouTube to attract potential customers. Therefore, it is not surprising that hotel companies, in order to stay competitive, are shifting marketing dollars to online channels at the expense of traditional channels. With the importance given to Internet marketing and the advent of new social media channels of distributions, the purpose of this study is to evaluate the websites of three hotel segments using content analysis, namely, full-service luxury, full-service, and limited-service hotels. The finding of this study would benefit the hotel operators by highlighting the current internet marketing practices used by different hotel segments.

REVIEW OF LITERATURE

A review of research show that there have been several studies devoted to Internet marketing and lodging websites (Murphy, et al., 1996; Sigala, 2001; Leong, 2001; Wan, 2002; Chung and Law, 2003; Baloglu and Pekcan, 2006; Law and Hsu, 2006). Murphy et al. used five search engines to identify 32 features from 36 hotels in Florida. The 32 features were divided into four categories: promotion and marketing, service and information, interactivity and technology, and management. Leong (2001) studied the marketing strategies and role of information technology by local hotels in Singapore. The findings show that though most hotels appear to have successfully adopted the marketing concept, their level of commitment seems to be insignificant. Sigala (2001) reported that hotels in Greece are using their Internet and interactive capabilities in a limited manner. The majority of the hotels are using the Internet to disseminate information and receive reservation requests through e-mail, whereas very few are using the Internet for more sophisticated activities. Wan (2002) examined the websites of international tourist hotels and tour wholesalers in Taiwan. Three evaluation criteria, user interface, variety of information, and presence or absence of online reservation system were used. It was reported that 50% of hotels have websites and most hotels provide on-line reservations.

Content analysis was used by Baloglu and Pekcan (2006) to examine the websites of a select group of 4 and 5 star hotels in Turkey in terms of design characteristics and site marketing practices on the Internet. It was reported that hotels in Turkey are not using the Internet to its full potential and not effectively e-marketing their hotels. Another study examined two groups of international hotel website users on their perceived importance level of specific dimensions and attributes on hotel websites. The findings showed no significant difference in most of the included dimensions and attributes between these two groups of users (Law and Hsu, 2006). However, reservation information and room rates were rated as the most important dimension and the most important attribute respectively. The aforementioned studies show that hotels around the world are using the Internet extensively to position and market their products and services on the web. It was also evident that none of these studies include the advent of social media, use of search engine, pet friendly and green properties, language options, currency calculator, and interactive customer relations. The present study includes these items in its evaluation of hotel websites.

PURPOSE OF STUDY

The purpose of this study was to evaluate the websites of three hotel segments using content analysis, namely, full-service luxury, full-service, and limited-service hotels. The finding of this study would be of interest to hotel operators and researchers as it highlight online marketing strategies currently used by different hotel segments.

CONCEPTUAL FRAMEWORK

Web-based marketing and the Internet has become an important channel of distribution for the lodging sector. Just like a hotel lobby, a hotel’s website provides the “first moment of truth” experience to its customers. The web page design, content, navigation, management, and usability are very important for it to be an effective marketing tool. In order to achieve this goal, a conceptual framework was formed to evaluate the hotel website. Seven criteria with 72 items were evaluated in this study. These criteria were based on a thorough review of several global hotel websites. The seven criteria are: Reservation information; Facility information; Contact information; Social media; Area information; Web design; and Web management. The seven criteria and items are discussed below:

1. Reservation information criteria cover all the items that are necessary to help and facilitate a customer

to reserve a room online easily with least hassle. This include information relating to room rates, availability, payment options, cancellation policies, secured payment guarantee, toll-free phone number, currency calculator, multilingual options, and hotel policy.

2. Facility information criteria include all items that provide necessary information to make a room

reservation possible. This is the most important criteria as it displays the brand or product to the customer. It creates a curiosity while satisfying customers’ information needs. It includes a history of the facility, hotel features, guest room descriptions and photos, virtual tours, audio feed, a list of hotel amenities, hotel promotions, dining options, fitness or spa options, meeting and events information, green hotel policies, pet policies, safety and security tips, and star ratings.

3. Contact information criteria include the location address, phone number, toll-free number, fax number, FAQ (frequently asked questions), guest feedback, chat-now, and guest comments section. If the guest needs more information or is having problem navigating the website, contact information will be very helpful.

4. Social media criteria include links to Facebook, Twitter, Flickr, YouTube, Mobile apps, LinkedIn,

Google+, Blog, TripAdvisor, RSS feed, and/or live chat. With an overwhelming majority of the online population engaged in social networking, hotel websites find social media as a cost effective way to engage customer’s attention.

5. Area information criteria include information such as, site map, driving directions, parking, public

transportation, airport information, shuttle service, local tourist attractions, weather report, and local time. Information about the destination is important for customers to make an informed decision.

6. Website design criteria include photos, virtual tour, color scheme, clear details or too much clutter. A well designed, informative, attractive, and interactive website will entice the customer to take a good look at the hotel website.

7. Website management deals with how effectively the site is managed and maintained. It includes up-to-

date information, down load features, down load time, user friendliness, interactive capability, search engines, and links to other sites.

METHODOLOGY

Population and sample

The focus of this study was to analyze the website contents of three hotel segments in Washington, DC, USA. These segments are: 1) Full-service luxury hotels - hotels that offer rooms, variety of food and beverage options, meeting space, room service, fitness and spa, concierge floors, and personalized service. Most of these hotels have 4 star or 5 diamond ratings; 2) Full-service hotels – hotels that offer rooms, food service options, meeting space, fitness, room service, concierge floors, and other amenities. Majority of these hotels have 3 diamond ratings; and 3) Limited-service hotels – mostly economy hotels which offer only rooms and some hotels may also offer complimentary breakfast.

Methodology and data collection

This study used content analysis to analyze the websites of selected hotels from the Washington, DC,

area (USA). Washington, DC is a major tourist destination that attracts both national and international visitors. Tourism to the capital city grew by 5.9% and international visitation by 13% in 2010 (Destination DC, 2010). DC is home to a variety of hotel properties that cater to the needs of travelers from all around the world. Some of world’s well-known hotels are located in Washington, DC. Therefore, it is considered a viable location to conduct hotel website content analysis. The hotel listing found on the Destination DC web site (the official tourism website for Washington, DC) was used to identify the select hotels (Destination DC, 2012). A structured questionnaire based on seven criteria consisting of 72 items was used to evaluate the contents of hotel web sites. These seven criteria were: Reservation information; Facility information; Contact information; Social-media, Area information; Website design; and Website management. Description of each criteria and content items is given in the conceptual framework section. In order to limit the influence of type of computer, time of the day, and internet connection during content analysis, efforts were made to use the same computer, same internet connection, and timings of day. A total of 106 hotels were content analyzed from January 27 to February 15, 2012. Each hotel site was visited three times if it was not accessible the first time. Majority of the hotels were accessible the first time. Out of 106 hotels, 13 were full-service luxury hotels, 65 were full-service hotels, and 28 were limited-service hotels. Each hotel web site was viewed and the questionnaire checked for 72 items. Descriptive analysis was used to compare the three hotel segments’ web contents.

FINDINGS and DISCUSSION

This study used seven criteria including 72 items to evaluate the websites of three segments of hotels, namely, full-service luxury hotels, full-service hotels, and limited service hotels. From the findings it was evident that almost all types of hotels have some kind of presence on the Internet and are using it extensively to promote their products and services. The full-service luxury hotels have the majority of the 72 items on their website compared to the other two segments, and full-service hotels have more items compared to limited-service hotels. Websites of the three hotel segments of hotels were somewhat similar when it comes to facility and reservation information. However, luxury and mid-level hotels have more information, more photos, and extra amenities and services compared to limited-service hotels. Several differences relating to hotels’ overall web site look, design, search engine, and navigation scheme exist. Other notable differences were found relating to items, for example: food service options, virtual tours and audio feed, green hotel information, pet policies, food and beverage promotions, social media links, weather, multilingual options, and links to other sites. The seven criteria used in this study to evaluate the three hotel segments are discussed below.

Reservation information:

A review of the hotel websites shows that each luxury hotel website is unique and creative. It has attractive and colorful web pages displaying reservation information including room rates, payment options, view or/and cancel reservation options, reservation policies, toll-free numbers, and currency calculators. Only a

couple of luxury hotels have “chat with an agent now” and “email now” option to engage the customer during reservation process. Few luxury hotels also use airline calendar type pop ups to select available dates. Most of the full-service hotels are very similar to luxury hotels as far as reservation information is concerned. The majority of full-service and limited-service hotels are brand names and the websites of chains and franchises are similar to the parent company websites. The positioning is focused on the brand and links are provided to real-time online reservations and links to parent company website. For example, on a Hilton website there are links to the company’s history, careers, privacy policy, hotel policies, and Hilton HHonors. All types of hotels offer variety of room rates, for example, discount, corporate, government, AAA, and other packages. Luxury and full-service hotels provide currency calculator upfront, but it was hard to find for limited-service hotels. It takes at least five clicks to get information and reserve a room on luxury hotel website compared to three to four clicks on full-service hotel website and less than three clicks for limited-service hotel website. In fact, all the reservation information is provided on the main page for limited-service hotels, which makes it easier and faster, whereas, the other two segments give more information about extra amenities and services before the reservation can be made. Sixty-five percent of all hotels have access to multilingual sites out of which 92% are luxury hotels, 70% are full-service hotels, and 32% are limited-service hotels. For a destination like Washington, DC that draws lot of international travelers, having a website with a multilingual link would be very helpful. Many of these hotels have links to four to nine language options. Facility information:

Almost all of the hotel types describe their lodging history. Specifically, all the luxury hotels have a story to tell about their historic and political background. The majority of luxury hotels display a list of exclusive amenities with colorful photos, exclusive chef driven food service options, unique spa and fitness services, frequent guest programs, and meeting facility options. But there are differences between the three hotel segments when it relates to virtual tours, audio feed, food service options, fitness and spa services, green hotel policy, and pet friendly policies as shown in Table 1. Thirty-two percent of all hotels have virtual tour on their websites. Almost 46% of luxury hotels, 35% of full-service hotels, and 11% of limited-service hotels are using virtual tour features on their websites to appeal to online customers. Twenty-two percent of all hotels also have audio feed along with virtual tour. Here too more luxury hotels (46%) have audio feed compared to full-service hotels (35%) and limited-service hotels (0%). While luxury and full-service hotels display a variety of food and beverage options, select limited-service hotels emphasize complimentary breakfast promotions and links to nearby restaurants. With so much importance given to greening of the lodging industry, about 33% of all hotels have green initiatives displayed on their websites. It was evident that a vast majority of luxury hotels (69%) had some green initiatives in place compared to full-service (38%) and limited-service hotels (only 4%). For example, Hay Adams Hotel provides details about their environmental policies and also has a carbon calculator, whereas the Park Hyatt offers “hypo-allergenic rooms.” The Fairmont Hotel proudly display’s various green hotel awards, whereas, the Four Season’s offers green meetings, and Hotel Sofitel exhibits green key hotel award. Besides going green many lodging properties are going pet friendly as well. In this study, about 30% of all hotels have pet friendly policies with an additional fee. A majority of luxury full-service hotels (38%) have pet friendly policies compared to full-service (32%) and limited service hotels (21%). In the facility information criteria it can be said that full-service luxury hotels lead the way when it comes to hotel websites having virtual tours, audio feeds, food and beverage options, fitness and spa facilities, green hotel initiatives, and pet friendly properties (See Table 1). Moreover, all luxury hotels are either 4 diamond or five star hotels and full-service hotels have a 3 diamond ratings. The majority of the luxury hotels display their star rating and awards on its websites.

Contact information

Having contact information on the website is a very important criteria and it is no surprise that all three segments of hotels have property address, phone number and fax number on the first page of the website, but not all of the hotels have email address, frequently asked questions, or guest comment links. Social media

Instead of having a website that read like a static online brochure, the use of social media and other search engines can create an interactive site that constantly engages the customer’s attention. With a majority of the online population using online social media networks, marketers are depending on their customers to spread the word. Recommendation from a friend is more powerful than any other form of marketing strategies. Consumers are reaching beyond search engines and tuning into new channels such as Facebook, Twitter, Flickr, YouTube, Google+, LinkedIn, Blog, and mobile apps. By having a Facebook page link on its website, a hotel

can interact with its customers, and those customers in turn share their interest with their friends. Twitter, the micro-blogging site, offer creative ways (within 140 characters) for the hotel to extend its brand and engage the customer. A hotel can tweet its promotions or other events to its online customers and spread the word instantly. By having YouTube and Flickr sites on its webpage a hotel allows the customer to share photos and videos of their hotel stay with their friends.

The extensive use of social media as a marketing strategy by hotels in this study is evident in Table 2.

A majority of all the hotels combined are using Facebook (70%) and Twitter (62%) compared to Flickr (9%), Mobile app (22%), YouTube (20%), Blog (19%), Google+ (15%), and E brochure (15%). Email, LinkedIn, Chat-now, or TripAdvisor (6% or less hotels are using these channels) is not that popular with this group of hotels or it can be said that consumers in general are just getting started with these new social media channels. Overall it appears that full-service luxury hotels in this study are utilizing more social media network platforms compared to full-service and limited-service hotels. Though social media sites do allow the hotels to push their promotions or property news quickly at a low-cost, there are certain drawbacks that need to be addressed. The disadvantage of social networking sites is that it is time consuming and it has to be updated and monitored constantly. A negative tweet or blog of a disgruntle customer cannot be left without a timely, prompt, and proper response. Another matter to be addressed is the ROI (Return on Investment) on these new channels of distribution. Social media success is measured by visibility and interaction. It creates lot of interaction, but does this interaction and visibility result in added revenue!

Area information

With Washington, DC, being a major tourist destination for international and national travelers, it is not surprising that almost all of the hotels in this study have surrounding area information on their websites. This includes information, such as, location, site map, driving directions, parking options and fees, public transportation, airport information, and destination attraction links. During the spring season, many hotels were seen promoting the Cherry Blossom Festival to lure travelers. About 50% of the hotels provide information on shuttle bus services and about 20% show local time on their site next to weather report. Approximately 35% of all hotels provide weather information on its website. Majority of luxury hotels (38%) and full-service hotels (37%) display weather reports compared to limited-service hotels (28%).

Website design and management

A hotel might have the best looking website, but if it is not managed properly or is not user friendly the hotel may lose a potential customer. In this study, all luxury hotels appear to have attractive websites with colorful and engaging photos but not all hotels had a “virtual tour” or “audio feed” available. Full-service and limited-service hotels were mostly brand name hotels, and these hotels’ websites were very consistent with their brand image. Websites of limited-service hotels were very simple with not much clutter and easy to use. The majority of the hotels’ website design and content was increasingly user friendly and the information was easily available. There were two instances when the virtual tour button led to page error. Most of the information for the limited-service hotels is provided on the main homepage, which makes it easier and faster to manage. It took at least five clicks to get information and reserve a room on luxury hotel websites compared to three to four clicks on full-service hotel web site. Since these hotels pride themselves about their exclusive amenities, they encourage customers to browse a little longer by displaying an array of products and services.

CONCLUSION

The findings of this study demonstrate that web-based marketing and the Internet has become an

important channel of distribution for the lodging sector. All three hotel segments have a presence on the web and the majority of these hotels are utilizing some form of social media network to engage the customers’ attention. Facebook and Tweeter seem to be more popular social media networks for hotels in Washington, DC, compared to Flickr, YouTube, Google+, Blog and others. The 72 items used in this study for the seven criteria to evaluate the three hotel segments appear to be valid. Since the majority of the luxury and full-service hotels appear to have these items on their web pages. It was also evident that besides social media, hotels are also promoting green hotel policies and pet friendly properties. In conclusion it can be said that hotels in order to be effective should understand what the potential customer is looking for and provide a user friendly and easy to navigate website. The website should have a clear objective with the potential customer in mind. The focus should be to create an online presence, to differentiate the business, and to draw in potential customers. The seven criteria used in this study can be a guideline to hotel operators to include information based on the needs

of each property. Keeping the website updated is also very important, therefore constant managing and monitoring of the website is required.

For those 30% of hotels that are not utilizing any form of social networking platform, it is advisable to

start using it to create an interactive site that engages the customer. For today’s customer is very Internet savvy and are constantly emailing, texting, tweeting, exchanging photos, and communicating via social media. As new technologies and applications appear constantly, opportunities might arise to collaborate, engage, optimize, and create value online. An effective marketing strategy would be to stay with the basics and embrace new technologies as needed.

Efforts were made to control any limitations, but due to time and other constraints there might be few

limitations in this study. This study utilized selected hotels in a major metropolitan city in the USA therefore caution is advised before any broad generalization can be made. There might be other criteria, other than the seven criteria used in this study, which might generate similar or different results. Descriptive analysis were used to analyze the data, other studies can use other method of data collection or analysis to generate results. The objective of this study was to evaluate the websites of three hotel segments, and a later study proposes to measure the effectiveness of these websites. The findings of this research should be of interest to hotel practitioners and researchers as it shed light on current or innovative Internet marketing strategies implemented by lodging companies in a major US city. With internet marketing strategies evolving rapidly, research on current Internet hotel strategies should be an on-going effort for hotel researchers and operators.

REFERENCES

Annonymous 1 (2010). Top ten online marketing resolutions for hotel marketers in 2010.

http://www.hotelmarketing.com/index.php/content/article/top_ten_online_marketing_resolutions_for_hotel_marketers_in_2010/ Retrieved January 05, 2010.

Annonymous 2 (2009). The time is now for hotels to get involved with social media. http://www.hotelmarketing.com/index.php/content/article/the_time_for_hotels_to_get_involved_with_social_media_is Retrieved November 17, 2009.

AH&LA, (2011). At a glance - AH&LA's 2011 Lodging industry profile. http://www.ahla.com/content.aspx?id=32567 Retrieved November 15, 2011.

AH&LA (2010). Lodging survey identifies key trends in amenities, facilities, programs. http://www.ahla.com/pressrelease.aspx?id=30793&terms=hotel+trends Retrieved January 15, 2011.

Baloglu, S. and Pekcan, Y. A. (2006).The website design and Internet site marketing practices of upscale and luxury hotels in Turkey. Tourism Management, 27(1), 171-176.

Chung, T. and Law, R. (2003). Developing a performance indicator for hotel websites. International Journal of Hospitality Management, 22(1), 119-125

Connolly, D. J., Olsen, M. D., and Moore, R. G. (1998). The Internet as a distribution channel. The Cornell Hotel and Restaurant Administration Quarterly, August, 42-54.

Connolly, D. and Sigala, M. (2001). Major trends and IT issues facing the hospitality industry in the new economy. International Journal of Tourism Research, 3(4), 325-327.

Destination DC. (2010). Washington DC visitors statistics. http://washington.org/images/pdfs/2010_Visitor_Statistics_FINAL.pdf Retrieved February 20, 2012.

Destination DC. (2012). Browse DC by accommodations. http://washington.org/visiting/browse-dc/accommodations Retrieved January 08, 2011.

Kasavana, S. K., Knutson, B. J. and Polonowski, S. J. (1997). Netwoking: The future of hospitality Internet marketing. Journal of Hospitality and Leisure marketing, 5(1), 31-44.

Leong, C. C. (2001). Marketing practices and internet marketing: A study of hotels in Singapore. Journal of vacation marketing, 7(2), 179-187.

Law, R. and Hsu, C. (2006). Importance of Hotel Website Dimensions and Attributes: Perceptions of Online Browsers and Online Purchasers, Journal of Hospitality and Tourism Research, 30(2), 305-312

Murphy, J., Forrest, E. J., Wotring, C. E. and Brymer, R. A. (1996). Hotel management and marketing on the Internet. The Cornell Hotel and Restaurant Administration Quarterly, 37(3), 70–82.

Parets, R. T. (2002). Getting the word out: profiting from Internet marketing isn’t just for big boys. Lodging Magazine, August, 37-38.

Peak, K. (2011). Hotel brands allotting more funds for social media. http://vator.tv/news/2011-11-18-hotel-brands-allotting-more-funds-for-social-media Retrieved December 12, 2011.

Sigala, M. (2001). Modeling e-marketing strategies: Internet presence and exploitation of Greek hotels. Journal of Hospitality and Tourism Marketing, 11(2/3), 83-97.

Wan, C. S. (2002). The websites of international tourist hotels and tour wholesalers in Taiwan. Tourism Management. 23 (2002), 155–160.

Table 1. Facility information for full-service luxury, full-service, and limited-service hotels

Table 2. Social media information for full-service luxury, full-service, and limited-service hotels

Items All hotels=106 Full-service luxury =13

Full-service=65 Limited-service =28

Virtual tour 32 (30%) 6 (46%) 23 (35%) 3 (11%) Audio feed 22 (22%) 6 (46%) 16 (25%) 0 Food service options

81 (76%) 13 (100%) 63 (97%) 5 (18%)

Fitness and Spa 73 (69%) 12 (92%) 57 (88%) 4 (14%) Green hotel policy

35 (33%) 9 (69%) 25 (38%) 1 (4%)

Pet friendly policy

32 (30%) 5 (38%) 21 (32%) 6 (21%)

Items Total hotels=106

Full-service luxury =13

Full-service=65 Limited-service =28

E Brochure 16 (15%) 3 (23%) 9 (14%) 4 (14%) Face book 74 (70%) 10 (77%) 47 (72%) 17 (61%) Flickr 10 (9%) 3(23%) 7 (11%) 0 Twitter 66 (62%) 10 (77%) 39 (60%) 17 (61%) YouTube 21 (20%) 6 (46%) 15 (23%) 0 Mobile apps 23 (22%) 3 (23%) 19 (29%) 1 (4%) Blog 20 (19%) 3 (23%) 13 (20%) 4 (14%) Google+ 16 (15%) 2 (15%) 7 (11%) 7 (25%) Email 4 (4%) 2 (15%) 2 (3%) 0 LinkedIn 3 (3%) 1 (8%) 2 (3%) 0 Chat-now 6 (6%) 2(15%) 4(6%) 0 Trip Advisor

6 (6%) 0 3 (5%) 3 (11%)

CSR: ARE VISITORS WILLING TO PAY FOR RESPONSIBILITY?

Henri Kuokkanen*, Lecturer

Les Roches Gruyère University of Applied Science Glion Institute of Higher Education

CH-1630 Bulle, Switzerland e-mail: [email protected]

Michael Macdonald, Lecturer

Les Roches Gruyère University of Applied Science Glion Institute of Higher Education

CH-1630 Bulle, Switzerland e-mail: [email protected]

Abstract

The business opportunity of Corporate Social Responsibility (CSR), proposed by Porter and Kramer (2006), is the promotion of CSR as a competitive advantage rather than as a cost. This study hypothesizes that financial benefits are yet to be fully realized due to a mismatch between current supply and demand for CSR. Based on a sample of visitors to the alpine resort of Zermatt in Switzerland, a statistical analysis was conducted on the respondents’ perceptions of the importance of CSR, their past responsible purchase decisions and their willingness to pay extra for responsibility in the future. The findings point to a dislocation between the respondents’ perception of the importance of responsibility and their actions; they further suggest that if CSR were defined according to consumer perceptions, it could have an impact on future purchase behaviour.

INTRODUCTION

The business opportunity of Corporate Social Responsibility (CSR), proposed by Porter and Kramer (2006), is the promotion of the idea of CSR as a competitive advantage rather than a cost, suggesting that consumer purchase decisions could be influenced by the inclusion of responsibility. However, achieving this in practice has proved difficult. Many researchers have attempted to establish a connection between social and financial performances of companies, but results have been mixed, ranging from mildly positive to neutral (Margolis & Walsh, 2003; Orlitzky, Schmidt, & Rynes, 2003; Waddock & Graves, 1997). Thus, unlocking the “Holy Grail” of CSR, converting the consumer interest in CSR expressed in a multitude of surveys (Vogel, 2006, p. 47), into a competitive advantage and financial benefits, remains unaccomplished to date.

A real-life relationship between the tourism and hotel sector and the surrounding environment exists (Kasim, 2006) and thus hospitality and tourism businesses cannot remain oblivious to their responsibilities. International travel agencies have started promoting responsibility in various forms on their websites, and some even attempt to involve the customers themselves in the activities (Thomas Cook, 2009; Travelocity, 2010; Virgin Holidays, 2011). To respond to the call for standards in measurement, organizations such as Sustainable Travel International (2009) work to create certification programs to increase trust in the ecological and responsible messages delivered by operators. This raises the question of whether these initiatives are targeted at increasing profits, or are merely a hygiene factor.

With the growing interest in responsibility, ever more scholarly work on the supply of CSR in tourism and hospitality has emerged (Argandona, 2010; Golja & Krstinic Nizic, 2010; Henderson, 2007; Holcomb, Upchurch, & Okumus, 2007; Sheldon & Park, 2011). Hospitality researchers have also begun to explore the link between social and financial performance; the results have been mixed, similar to the wider performance-link studies (Lee & Park, 2009; Kang, Lee, & Huh, 2010). One element of CSR in hospitality and tourism has, however, received less attention. Ironically, this is the customer, usually considered the central element around which everything should revolve in a service business. This paper attempts to explore the business potential CSR could offer as a competitive advantage, from the customer perspective. Furthermore, we investigate how much interest visitors typically take in the existing supply of CSR when participating in holiday activities and events. In other words, we will ask one of the oldest questions in economics: does the supply of CSR meet the demand?

CORPORATE SOCIAL RESPONSIBILITY

The origins of CSR can be traced back to 1950’s. Carroll (1999), himself a key academic in the field, names Howard Bowen ‘the father of CSR’ based on Bowen’s work during the 50’s. Carroll (1979) formulated a fundamental conceptual model of CSR, indicating that companies have several responsibilities including economic, legal, ethical and discretionary ones. He later developed this concept into his widely referenced CSR pyramid, which suggests that the four different levels of responsibility build on each other, with philanthropic responsibilities (an evolution from discretionary responsibility) forming the top of the pyramid (Carroll, 1991). Another groundbreaking contribution to CSR research was the stakeholder theory of Freeman (1983): the notion that companies should acknowledge all groups impacted by their actions rather than emphasizing only the shareholders. Donaldson and Preston (1995) and Jones (1995) advanced this theory by formulating instrumental and normative approaches, a division based on whether stakeholder management is perceived as a means to improve business performance, or an ethical requirement. Modern CSR largely builds on these fundamental theories. Additionally, the Triple Bottom Line (TBL) model of Elkington (1997), dividing responsibility into economic, social and environmental areas, is widely applied among practitioners, especially in CSR reporting.

Scholars have attempted to establish a relationship between Corporate Social Performance (CSP) and Corporate Financial Performance (CFP), using reputation rankings such as KLD or Fortune to measure CSP and accounting or stock market valuations to measure CFP. The results of these studies have been mixed; while some researchers have found a positive link between the two variables (Orlitzky et al., 2003; Waddock & Graves, 1997), others were not able to establish any significant connection (Margolis & Walsh, 2003; Griffin & Mahon, 1997). A study by Berman, Wicks, Kotha and Jones (1999) evaluated the relationship between stakeholder management style and financial performance, but did not find a direct connection; instead, their results indicated a moderating role of stakeholder management style between company strategy and performance.

Research in marketing has proposed that consumers identifying themselves with a company are the key for a successful business relationship, and this requires clear and coherent communication of company identity (Bhattacharya & Sen, 2003). Luo and Bhattacharya (2006) studied the link between CSR and customer satisfaction; their findings demonstrate that for innovative companies, CSR can increase customer satisfaction and competitiveness, while less innovative companies may actually suffer from investment in CSR. Despite

these findings Oberseder, Schlegelmilch and Gruber (2011) make an important point in asking why even socially aware consumers seem to ignore CSR in marketing.

CSR in tourism and hospitality

In tourism and hospitality the concept of CSR is usually encompassed by the term sustainable tourism, though no single definition exists and terminology is still plentiful (Dolnicar, 2006). The World Tourism Organisation’s (WTO) Global Code for Ethics in Tourism, which emphasizes controlling the effects of tourism on both social and environmental levels, is adopted in this paper (UNWTO, 2011). It must be noted that several authors have criticized the notion of sustainable tourism as a feasible and ethical concept (McKercher, 1993; Sharpley, 2000; Liu, 2003). Furthermore, Lansing and de Vries (2007) claimed that there is not enough evidence of sustainability in tourism for it to be an ethical choice and not mere advertisement.

The supply of responsibility in tourism and hospitality is an established field of research, and many exploratory studies have concentrated on the CSR actions of hospitality businesses (Holcomb et al., 2007; Henderson, 2007; Sheldon & Park, 2011). In one of the early studies, Holcomb et al. (2007) examined the information that top hotel companies present in their CSR reporting and found that discussing donations, diversity policies and CSR vision and mission were the most common items. Henderson (2007) investigated the actions undertaken by hotel companies in Thailand after the tsunami of 2004 and found that efforts coincided with CSR theories; both philanthropic and business motives behind the actions were observed. Argandona (2010) analyzed responsibility in Spanish hotels, and concluded by suggesting that CSR might be the future path to maintain the competitiveness of Spain as a tourist destination. A survey by Golja and Nizic (2010) in Croatia revealed the low level of CSR reporting and environmental awareness within the three regions studied. Investigating the US travel industry, Sheldon and Park (2011) concluded that environmental CSR initiatives dominate the supply; however, no definite explanation for this was stated and the researchers suspected that easier implementation of such activities may play a role. These studies illustrate the focus of research on the existing supply of responsibility, and while exploring the field well, there is little discussion of the reasons for selecting some actions over others; customer demand of responsibility is not addressed.

Earlier, Miller (2001) examined CSR in the UK, again from the supply side, by interviewing a variety of officials and tour operators. His results revealed that the tour operators anticipated future change to be principally driven by customers, while National Tourism Organizations unanimously agreed that change would arise from government. This industry emphasis on responsibility was confirmed by Sheldon and Park (2011), who found that the travel industry in the US strongly agrees on the importance of CSR, and that almost a quarter of the companies in their study had employed a dedicated CSR employee. A study made in Cape Town by Frey and George (2009) suggests a gap between the attitude businesses have towards responsibility and the actions they take. Among the stated obstacles creating this gap were costs and competition.

In the past few years, researchers have taken up the challenge of exploring the CSP-CFP link within the tourism and hospitality industries. Clavier-Cortés, Molina-Azorin, Pereira-Moliner, and Lopez-Gamero (2007) were not able to find a significant link between the environmental pro-activeness of Spanish hotels and their financial performance, though some positive correlation between the two was evident. On the other hand, Nicolau (2008) found that stock markets reacted in a positive way to CSR announcements in his sample group of Spanish hotels, indicating that CSR could benefit shareholders and not only project ethical behaviour. The difference between these results could arise from the indicators of financial performance employed; stock markets tend to react to expectations of higher returns before these returns materialize in accounting.

Studies from the US support the Spanish mixed results. Lee and Park (2009) investigated the link between CSR and financial performance in US hotels and casinos, and found that CSR activities can enhance the profitability of hotels, provided that the hotel is financially strong enough to bear the initial costs of CSR. This connection was not evident for casinos, and the authors suggest that customers perceive gambling differently; the fit between CSR and gambling may be weak. In line with the earlier findings, Kang et al. (2010) arrived at mixed results when analyzing the impact of CSR activities in four different hospitality and tourism related industries: hotels, restaurants, casinos and airlines. Lee and Heo (2009) used US hotels and restaurants to study whether customer satisfaction would be a mediating factor between CSR actions and company performance but found no evidence to support their hypothesis. However, positive CSR and customer satisfaction appeared to be linked to company market value. They concluded that this could indicate the involvement of factors related to employees or communities, with the link between customers and CSR remaining ambiguous. The evidence suggests that CSR in hospitality and tourism has not been a guaranteed source of extra profit, but some promising examples exist. In a survey delving beyond the basic CSP-CFP link, Garay and Font (2011) discovered that within the Spanish tourism SME –sector the reasons for CSR activities are largely altruistic; however, an intriguing detail was that the companies motivated by other reasons, such as competitiveness, had a stronger CSP-CFP link. The study did not attempt to decipher this finding, but a

performance-oriented business might intrinsically be better motivated at defining consumer demand and thus excel in attracting customers, including with CSR.

Jamrozy (2007) suggested a model of sustainability as part of tourism marketing based on the TBL structure, but customer preferences were not considered in his work. Kasim (2004) studied whether responsibility affected tourists’ choices in Malaysia and discovered that customers were reluctant to change hotels or pay extra for more responsible operators. Instead, much emphasis was put on the quality of the holiday experience. The results of Bohdanowicz and Zientara (2008), interviewing the customers of Scandic hotels, were more encouraging. The respondents first listed CSR activities they found worthwhile, and afterwards slightly over 50% of them stated that the attractiveness of the hotel chain would be increased through such actions; the rest indicated no impact. Thus customer-defined CSR seemed to make a difference.

Consumers and CSR as a competitive advantage

Fuller, Hanlan and Wilde (2007) developed the concept of latent demand, presented by Kotler, Brown, Adam and Armstrong (2001), into a key competitive factor in tourism and argued that “latent demand may be defined as an activity not demanded by consumers at a particular time because the cost of supplying the activity is regarded as too high, but which, if supplied, would be demanded by consumers” (Fuller et al., 2007, p. 85). This concept could provide a key to designing CSR actions that meet consumer demand.

Orlitzky et al. (2003) discovered that reputational indices of CSP demonstrate a stronger correlation with CFP than other variables tested in the study. Margolis and Walsh (2003) tied their mixed CSP-CFP results to how CSR benefits the society, suggesting that consumer demand for certain benefits could be an explanatory variable. Findings on the importance of “fit” between the company and its business environment regarding the CSR activities undertaken (Brammer & Pavelin, 2006; Husted & Allen, 2007) seem to support the idea that consumer demand for CSR varies. Some activities appear more desirable than others, depending on the business and the individuals. Mohr and Webb (2005) uncovered the potential of CSR in altering consumers’ evaluation of a company and their purchase intentions. Inoue and Lee (2011) worked out the effect of the various CSR dimensions on financial performance, and their findings confirmed that all dimensions have a different effect on profitability. Their results thus suggest that consumers have different preferences for various aspects of CSR. This underscores how understanding demand is essential when companies design CSR programs.

In a conceptual paper on implementation of CSR in marketing, Maignan, Ferrell and Ferrell (2005) take a partially demand-oriented view by suggesting a stakeholder model that identifies stakeholders and their concerns as part of CSR implementation. Sen and Bhattacharya (2001) concluded that consumers react to CSR based on C–C congruence (Consumer-Company congruence), the perceived overlap between the companys’ CSR and the consumers’ own values. Their results also suggest that CSR might directly and indirectly alter purchase decisions. Dolnicar and Leisch (2008) analyzed tourists’ appreciation of environmental actions in Australia, and concluded that tourists can be segmented based on the size of their ecological footprint. The study concentrated on the environment, and did not attempt to establish whether the respondents would be willing to pay more if their criteria were met. Women and older respondents were defined as the most attractive target groups for environmental advertising. François-Lecompte and Prim-Allaz (2010) found that the French tourist sector also contains groups characterized as responsible tourists. These indications of the existence of responsible customer segments encourage exploring demand for CSR; this could provide a potential solution for converting responsibility into a competitive advantage through meeting related consumer expectations.

Ecotourism, as opposed to sustainable tourism, has been described as demand-oriented (Dolnicar, 2006). However, as Sharpley (2006) notes, demand for ecotourism is no proof of the existence of ecotourists – there is scant evidence of ecotourism customers being more eco-friendly than average tourists. Thus, Dolnicar, Crouch and Long (2008) urge that more research should concentrate on environment-friendly tourists to define them and determine their environmental demands. There is no reason that this approach could not be expanded to encompass all stakeholders, not only the environment.

CSR is an established business concept, with the supply and effects of CSR studied widely. However, a review of the literature suggests a gap related to consumer demand for CSR, particularly in tourism and hospitality. Meeting customer demand is essential when searching for the competitive advantage through CSR advocated by Porter and Kramer (2006). While responsibility is promoted as a potential marketing tool, the findings on its effects on financial performance are mixed. This paper takes a demand-oriented approach to investigate why the CSP-CFP link has been inconsistent, by considering consumer perceptions of CSR. First we ask whether consumers actually consider responsibility and incorporate it in their choices; we hypothesize that currently consumers do not act based on the importance they place on CSR because the supply is dislocated from the demand.

H1: The supply of responsibility in holiday activities and events does not match customer demand.

CSP-CFP studies offer some support for the idea of financial benefits from CSR. Research findings have also suggested that some hospitality customers find CSR worthwhile. Thus we test the hypothesis that responsibility could create a competitive advantage by consumers being willing to pay more for a service that meets their demand for responsibility, drawing on the concept of latent demand in suggesting that there is demand but only for a desirable choice of CSR.

H2: Responsibility can be a source of competitive advantage for businesses in holiday activities and events.

METHODOLOGY

This study employed quantitative methods, to investigate the CSR-consumer link, and to build on previous quantitative studies in the area of consumers’ preferences and attitudes towards companies and CSR (Mohr & Webb, 2005; Bhattacharya & Sen, 2003). The data was collected using questionnaires, a standard approach when studying consumer preferences, with the questions focusing on three different variables: the perceived importance of responsibility, responsible choices made in the past and willingness to pay extra for responsibility in the future. A seven point Likert-scale (Strongly agree – Strongly disagree) was used to measure the respondents’ level of acceptance of the statements given. According to Lozano, Garcia-Cueto and Muniz (2008), the optimal number of alternatives on a Likert-scale is between four and seven, and reliability and validity increase with alternatives as long as the respondents are capable of distinguishing between them. We felt that when trying to establish the level of the tie between beliefs and actions, more choice is essential. The questionnaire was piloted at the Montreux Christmas market in December 2010, and French and German versions were translated by native speakers to assure validity between the languages.

Questions associated with the importance of responsibility measured agreement with statements related to event and holiday activity organizers practicing responsibility, using the questions of Mohr and Webb (2005) as guidance. Statements such as ‘Responsibility and sustainability in holiday activities and events are important’ were used to devise the variable. Practical responsible choices made by the respondents in the past were measured using statements such as ‘I have paid extra to choose an event or holiday activity that is responsible or environmentally sustainable’. Finally, the questions associated with willingness to pay extra were oriented towards the respondents’ future intentions to select a more expensive provider, assuming the responsibility of a product / service would satisfy them. The approach of ‘paying extra’ was chosen not because responsibility would always cost more, but because a choice between a responsible and a normal product, ceteris paribus, might make the analysis invalid; the choice for responsibility might be too obvious. Statements such as ‘I could consider paying extra for responsible and sustainable practises if the arguments were convincing” were used.

The questionnaires were distributed in March 2011 among visitors to the Swiss alpine resort of Zermatt, located at the foot of the Matterhorn. Zermatt was selected as it is a destination for both daily and longer-term visitors. Additionally, the international reputation of the resort allows for a better mix of domestic and foreign tourists. A Saturday was chosen as many package holidays and apartment rentals start and end on Saturdays; along with regional day-visitors, the turnover was thus maximized. As Zermatt is a no-car village, all visitors must travel the last stretch of the trip (Täsch-Zermatt) by a rail shuttle. With the permission of the rail company, we distributed the questionnaires at the beginning of the train ride and collected them at the end of the 12-minute trip. Passengers of every second row on each side of the compartment were asked to participate in the questionnaire. This stratified random sampling prevented the selection of ‘suitable’ candidates as the row pattern was pre-determined, increasing the validity for testing statistical significance. Few visitors declined to participate. A total of 273 questionnaires were collected, and after excluding local residents, the sample size was 266 visitors. The questionnaires were generally completed properly but N varies across the results due to some missing answers.

Data Preparation

The first step was to create the three variables and test them using Cronbach’s alpha. Two questions were excluded from the analysis; they created a significant deviation in the alpha, and a post-study examination of the questions suggested issues that were not discovered during the pilot run. Thus the variables consisted of two to four questions and each variable scored a qualifying alpha of over 0.7. The use of seven-point Likert scales, combined with averaging over multiple questions, justified considering the data as interval, although the disqualification of two questions limits interpretation of the results.

When testing for normality of the variables, only ‘responsible choices made’ fulfilled the criteria on skewness and kurtosis (skewness / kurtosis < 1 and (measure / std. error of measure) < 2). A closer examination of the two other variables revealed that ‘importance of responsibility’ and ‘willingness to pay extra’ were highly skewed toward “Mostly Agree”’; ‘importance of responsibility’ also demonstrated a significant double peak

between “Mostly agree” and “Strongly agree”. Facing the choice of normalizing the data or using only non-parametric tests, normalization was preferred. Several authors have criticized the use of non-parametric tests on non-normal data, including Zimmerman (2000) for a false sense of security and Tanizaki (1997) for low statistical power. A logarithmic transformation LG10 (8 – value) was performed to normalize the variables to a level acceptable for statistical analysis based on skewness and kurtosis, with the sample size of 266 supporting normality conditions. Visual inspection of Q-Q plots suggested that the data is distributed roughly in a linear fashion versus normal distribution, but a Kolmogorov-Smirnov test contradicted this. Tukey (1986), among others, has criticized the use of interval-based statistics with Likert-type data. Due to the mixed normality results we decided to run parallel non-parametric tests to increase the reliability of the analysis. The results presented here are based on parametric tests but in all cases non-parametric tests confirmed the results to overcome this limitation.

Additionally, to test the first hypothesis, whether visitors base their purchase decision on the responsibility offering, ‘importance of responsibility’ and ‘responsible choices made’ (without normalisation) were regrouped into seven Likert categories. This enabled cross-tabulation and further analysis of the two variables.

FINDINGS

Males were slightly over-represented in the sample (56%). Approximately 80% of respondents fell within the age category of 25-64, and they were fairly evenly spread within this range (the most frequent group was 45-54 year-olds). All levels of education were represented, but higher education was overemphasized, as half of the respondents held a bachelors’ or masters’ degree and another 10% a doctorate. This is not surprising for a high-end resort such as Zermatt.

Table 1: * indicates significant (p<0.05) differences between categories (non-normalized original means reported).

Category Item Percentage Mean importance of responsibility

Mean past responsible choices made

Mean willingness to pay extra

Gender Female Male

44% 56%

5.98 5.73

(F = 4.996*)

4.39 3.93

(F = 4.898*)

5.40 4.99

(F = 7.16*)

To understand the sample more thoroughly before testing the hypotheses, differences between categories were tested using ANOVA (p<0.05) for each normalized variable. Levene’s statistic (p>0.4 for all variables) confirmed the homogeneity of variances in each case. Age and education had no significant impact on any of the three variables. However, as shown in Table 1, women were more positively inclined towards responsibility for each variable, the difference between the genders increasing as perceptions should produce action, from 0.25 to 0.46. The non-parametric Mann-Whitney U and Kruskal-Wallis tests confirmed these results; women seem to be more disposed towards responsibility than men.

Does supply meet demand?

The first research objective was to investigate whether respondents found the supply of responsibility currently offered appealing. Should current responsibility genuinely meet the demand of the respondents, the responsible choices made should match the perceived importance of responsibility, and the means of the two variables should come from the same distribution. Correlation analysis suggested that the two are linked, with a Pearson correlation of 0.506 (p < .001). On the other hand, the level of agreement with ‘importance of responsibility’ (M = 5.81, SD = 0.92) was higher than the level of ‘responsible choices made’ (M = 4.11, SD = 1.38), indicating that there is a discrepancy in how perceived importance translates into actions (paired samples t-test using normalised variables, t = 39.7, p < 0.001).

To further analyze the nature of this lag, the variables ‘responsible choices made’ and ‘importance of responsibility’, placed back into the seven original Likert categories, were cross tabulated (Figure 1). While correlation between the variables is visually evident, the tabulation also suggests that the there are consistently fewer responsible choices made compared to the perceived importance of responsibility; visually, the 45-degree line created by the gray cells does not extend from the top left to the lower right corner as indicated by the dotted lines. The cross-tabulation thus suggests that the actions taken by the respondents lag behind the importance they perceive in responsibility. The number of respondents indicating any disagreement with the importance of responsibility was very low with a total of 4 respondents disagreeing, and thus these groups were excluded from further analysis.  

 Figure 1 Cross-tabulation between the perceived importance of responsibility and the choices respondents had made in the past. Dotted cells indicate the most common answers; the channel represents a situation of equal importance and choices.

To test the hypothesis, we theorized that if the supply of responsibility in the past would have matched demand, the mean level of ‘responsible choices made’ would match the level of agreement with ‘importance of responsibility’, separately for each category of importance. For example, the mean level of responsible choices made for the group where the ‘importance of responsibility’ equals four (=Neither agree nor disagree) would not significantly deviate from four. Before analysing the results, it must be noted that only the group ‘Strongly agree’ does not fulfil the previously stated normality criteria related to skewness. The categories as subsamples were also tested for normality using Kolmogorov-Smirnov and Shapiro-Wilkins (when N < 50) tests. The groups ‘Neither agree nor disagree’ and ‘Slightly agree’ passed the Shapiro-Wilkins tests (p= .128 and p=.602, respectively), qualifying for normality. The groups ‘Mostly agree’ and ‘Strongly agree’ failed the Kolmogorov-Smirnov tests. As the use of parametric tests could not be unanimously backed up with the normality criteria, the one sample t-test results were supported by running one-sample Wilcoxon Signed Rank tests on the subsamples, obtaining the same results as the t-test results discussed next.

Table 2 The level of responsible choices made organized by categories of importance of responsibility Importance of responsibility

Expected group mean

Mean of responsible choices made

Gap: Importance vs. Choices made

One sample t-test vs. expected group mean

Neither / nor 4 2.30 -1.70 -4.770, p < 0.001 Slightly agree 5 3.44 -1.56 -11.765, p < 0.001 Mostly agree 6 4.07* -1.93 -18.138, p < 0.001 Strongly agree 7 5.00*,** -2.00 -10.733, p < 0.001 *Does not meet Kolmogorov-Smirnov normality criteria. **Does not meet skewness / kurtosis normality criteria.

As indicated in table 2, the level of ‘responsible choices made’ was lower than the perceived level of ‘importance of responsibility’ in each group. Furthermore, the difference between ‘importance’ and ‘choices’ seems to get wider the more important the respondents perceived responsibility; in the group that neither agreed nor disagreed with importance (4), the average choices made were at 2.3, whereas in the group strongly agreeing with importance (7), the average choices made were only at a level of 5.0. All the differences were confirmed to be significant using t-tests, but in the group where respondents strongly agree with the ‘importance of responsibility’, high skewness may weaken the analysis. This result demonstrates the need to understand the behaviour of CSR enthusiasts further, but to accomplish this, a larger sample is necessary. Despite this, the results support the idea that respondents do not find that the supply of responsibility adequately meets their demand, as their actions clearly lag behind their perceived importance of responsibility. A correlation between the two variables exists and the respondents are thus not indifferent to the current supply; however, their choices do not fully reflect their perceptions of the importance of responsibility and this suggests that the available choices do not represent what the respondents demand. Thus the research hypothesis H1 was supported: the current supply of responsibility in holiday activities and events does not appear to match customer demand.

Could responsibility attract customers to pay more?

Strongly disagree

Mostly disagree

Slightly disagree

Neither / nor

Slightly agree

Mostly agree 

Strongly agree 

Count  0 0 0 0 0 0 0

% 0% 0% 0% 0% 0% 0% 0% Count  0 0 1 0 0 0 0

% 0% 0% 100% 0% 0% 0% 0% Count  1 0 1 1 0 0 0

% 33% 0% 33% 33% 0% 0% 0% Count  2 5 1 2 0 0 0

% 20% 50% 10% 20% 0% 0% 0% Count  1 5 19 16 5 0 0

% 2% 11% 41% 35% 11% 0% 0% Count  3 6 21 47 23 14 0

%  3% 5% 18% 41% 20% 12% 0% Count  1 3 8 9 9 27 7

% 2% 5% 13% 14% 14% 42% 11% 

Importance of resp.

Strongly disagree Mostly disagree Slightly disagree Neither / nor Slightly agree Mostly agree Strongly agree 

 Responsible choices made

The second part of the analysis concentrated on exploring whether responsibility could motivate customers to pay more for a holiday activity or event; in other words, to create a competitive advantage for a business. This analysis attempted to establish a link between the perceived importance of responsibility and the willingness to pay extra for a responsible service in the future, provided the respondents find the message of responsibility convincing. An analysis of variable means showed that the respondents’ agreement with the importance of responsibility (M = 5.81, SD = 0.92) was higher than their agreement with willingness to pay extra for it (M = 5.19, SD = 1.38). Ranking the means of all the three variables in order demonstrated that the respondents agreed most with the importance of responsibility; willingness to pay extra ranked second (M = 5.19); and responsible choices made in the past came last (M = 4.11), indicating decreasing agreement when intentions are expected to turn into actions. Similarly, Pearson correlation between perceived importance and willingness to pay extra was 0.612 (p < 0.000) while the correlation between perceived importance and choices made in the past was 0.54 (p < 0.000).

The next phase was to analyze whether perceived importance can explain changes in willingness to pay extra for responsibility in the future. A linear regression model was fitted with ‘perceived importance’ as the independent variable and ‘willingness to pay extra’ as the dependent variable. Category variables (gender, age and education) were tested as dummy variables but they were removed as they weakened the adjusted R squared value. Regression through origin (RTO) was also explored; as a result of the logarithmic transformation both variables could be zero at the same time. Comparison of RTO and model with a constant showed that the constant was significant and the standard error smaller in the later model, and thus RTO was rejected (Eisenhauer, 2003).

The results show that perceived importance of responsibility partly predicts future willingness to pay. Perceived importance is not the only criteria for willingness to pay extra, as the adjusted R-squared value is fairly low at 0.373; however, there is a significant connection between the two variables (F = 151.258, p < 0.000). When perceived importance increases by one standard deviation, willingness to pay extra increases by 0.612 standard deviations (t-test 12.3, p<0.000), supporting the expectation that responsibility could provide a potential competitive advantage. Based on this regression, respondents seem willing to take future actions if responsibility is part of their value system, which is the case for a large segment of the respondents, although currently this link is not strong. The residuals of the regression fulfil the criteria for normality based on a visual inspection of the P-P plot. The scatter plot of residuals show a slight funnel shape but overall homoscedasticity can be assumed. The Durbin-Watson statistic (1.741) suggests independence of the errors. Thus the regression fulfils the conditions for statistical validity.

The results support the idea that responsibility could be a competitive advantage if correctly presented, as importance of responsibility is a predictor for willingness to pay extra. Although the link is not strong, it does exist. The potential reasons for the relative weakness of the link, however, are of key interest and will be discussed later. Furthermore, the higher correlation between the perceived importance of responsibility and the willingness to pay extra, compared with the correlation between the importance of responsibility and responsible choices made in the past, suggests that responsibility may have more potential to create a competitive advantage in the future than it does in its current form. Responsibility must be convincing though, as determined in the questions concerning the variable ‘willingness to pay extra’. With this evidence, the research hypothesis H2 was somewhat supported: Responsibility can be a source of competitive advantage for businesses in holiday activities and events.

DISCUSSION AND CONCLUSIONS

The results of this study offer support for the hypothesis that there is a dislocation between supply and demand of responsibility within the domain of holiday activities and events. While the respondents are not oblivious to efforts made by operators and organizers, the actions they have taken clearly lag behind the importance they place on responsibility. If supply met demand, the perceived importance should convert more directly into actions, whereas at present there is a significant difference. The dislocation could partly explain the mixed findings in many of the hospitality related CSP-CFP studies (Clavier-Cortés et al., 2007; Nicolau, 2008; Lee & Park, 2009; Kang et al., 2010). While these studies attempted to discover a link between CSR activities and financial performance, they were either concentrated on only one domain within hospitality (e.g. hotels, casinos) or used the domain as a factor to explain the strength of the link. The attitude of consumers towards a mixed group of CSR activities was not included in these studies. Consumer preference for some activities over others could explain why some of the companies fared better than others in these studies, creating the mixed overall picture described earlier.

The demand of consumers for responsibility has not been studied nearly as widely as the supply of CSR or the CSP-CFP link, especially within hospitality and tourism. In marketing, responsibility has been considered as a potential factor to be incorporated in business, and the conceptual “C-C congruence” of Sen and

Bhattacharya (2001) could be an explanatory factor for the results of this study. The respondents may not perceive that the typical CSR activities undertaken align with their understanding of responsibility, and thus their actions clearly demonstrate less enthusiasm than their beliefs and values would predict. There is evidence that tourists can be categorized based on environmental attitudes and responsibility (Dolnicar & Leisch, 2008; François-Lecompte & Prim-Allaz, 2010), and these tourists often are customers for holiday activities and events. The findings of Dolnicar and Leisch (2008) found support in this study; women seem to be a more attractive target group for CSR activities as they are more willing to pay extra for it. However, this initial categorization is only the beginning, and future research could delve deeper into understanding the values and preferences ofe CSR-oriented categories of visitors and tourists. Inoue and Lee (2011) suggested that different dimensions of CSR have different impacts on profitability, but this analysis could be taken further. Instead of merely dividing CSR into dimensions, the dimensions might be split into separate actions. Studying the consumers’ reactions to individual actions could reveal what kind of CSR is “in demand”, and would help in finding the key to competitive advantage through CSR.

Before launching such a study, it is important to know whether CSR, even if designed according to consumer preferences, could actually be a source of extra profits for businesses. In this study, the benefits of CSR for a company were simulated through the visitors’ expressed willingness to pay more for a responsible holiday activity or event. Simply offering a choice between a responsible and non-responsible service could lead to insignificant results; if the price was the same, the respondents could easily be led to select the responsible alternative. On the other hand, willingness to pay more indicates a readiness to contribute scarce resources to the cause, in this case making a financial commitment toward certain business practices. The results of this study somewhat support the research hypothesis, according to which their perceived importance of responsibility increases consumers’ willingness to pay more for it. The reputation of Zermatt as a high-end resort must also be taken into account when interpreting the results, as the visitors may be wealthier than visitors to an average ski resort. This may play a role in being prepared to pay more, and the high percentage of visitors with post-graduate degrees supports this observation.

It must be noted that the regression results may be clouded by the respondents’ own perceptions of what “meaningful” responsibility is. This was deliberately left somewhat vague in the questionnaire, as defining “meaningful” would have been impossible at this stage. Despite this shortfall, the link between perceived importance of responsibility and willingness to pay more for it is encouraging for two reasons. First, it supports the potential of responsibility as a competitive advantage through marketing (Jamrozy, 2007; Porter & Kramer, 2006; Mohr & Webb, 2005), and validates the call for further research into categories of customers. Second, it builds on earlier results that found hospitality customers favourably inclined towards CSR (Bohdanowicz & Zientara, 2008) and offers hope that older results, in which responsible actions were rejected (Kasim, 2004), are the past. The link between the two variables was not strong in this study, and this calls for further investigation into details of consumer preferences for responsibility to discover other significant contributing factors. The results do, however, suggest that a link exists, and thus it could be possible to obtain competitive advantage through responsibility, provided that the supply is correct.

The results of the analysis of the choices made within groups, categorized based on the respondents’ perceived importance of responsibility, indicated that the group strongly agreeing with importance of responsibility was highly skewed. Further research into this particular group could provide valuable insights into why even socially aware consumers seem to ignore CSR in marketing, an issue raised by Oberseder et al. (2011). After all, it is these enthusiasts that are the prime candidates for businesses to provide extra revenue through responsible practice.

The popularity of CSR studies within hospitality is growing rapidly. This paper aims to contribute to an area of lesser attention: the consumer demand for CSR. A demand-led approach, concentrating on consumers and their perceptions, was taken to determine the current and potential business benefits of CSR. For practitioners, this paper provides some insights for the process of planning CSR policies and activities by emphasizing the importance of customer interest in these actions. This study concentrated on responsibility as part of events and holiday activities, and it should be expanded to cover tourism and hospitality as wider fields. CSR appears to have potential as a competitive advantage, but unless consumers are consulted, this potential may never be realized.  

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CAPTURING THE GUEST EXPERIENCE IN HOTELS. PHASE TWO: EXPLORATORY STUDY ON THE SENSORY CHARACTERISTICS OF A COMFORTABLE AND INVITING AMBIENCE

Ruth Pijls*

Saxion University of Applied Sciences Handelskade 75, 7417 DH Deventer, the Netherlands

[email protected]

Brenda Groen Saxion University of Applied Sciences

Handelskade 75, 7417 DH Deventer, the Netherlands [email protected]

ABSTRACT

Given that it is essential for hotels to understand how guests experience hospitality, hotel managers need more concrete and tangible insights into this issue to improve their service. Quantitative research on experience of the physical environment and employee contact has shown that the comfort of hotel rooms and an inviting ambience are the factors that most influence guest loyalty. This exploratory paper employs verbal and visual association methods to translate comfortable and inviting into tangible sensory characteristics. Results show association of comfortable with lingering, sitting, resting, natural colours, rounded-off rectangles, and multiple layers. By contrast, inviting is associated with common (meeting) areas such as corridors, white, grey, transparency, and colourful accessories. Visual data proved suitable for identifying tangible (sensory) characteristics, and delivering concrete recommendations for improving invitingness and comfort. Key words: Guest experience, hotels, physical environment, comfortable, inviting

INTRODUCTION

Hotels are increasingly aware that it is essential to understand how guests experience hospitality. Hotels routinely measure guest satisfaction by using comment cards, asking the guest to comment on specific elements such as the check in/check out and room amenities. However, guest experience is related to perceived atmosphere and feelings experienced during a hotel stay. Though a better predictor for brand loyalty than guest satisfaction, it is less commonly measured (Bennett, Hartel and McColl-Kennedy, 2005).

The goal for hotels in the coming years is to gain insight into the guest experience. What is it and how can it be measured? What is the relationship between guest experience and guest loyalty? And what tangible elements in the physical environment of hotels and the contact with hotel employees positively influence the experience of hotel guests? Which elements show room for improvement?

Figure 1. Conceptual Model

Phase one of the research project, Guest Experience, involved designing the Experience Scan, a quantitative instrument that measures the experience of the physical environment and interaction with employees (Pijls, Schreiber and Van Marle, 2011). Results of this quantitative study provided insight into how the hotel environment and contact with hotel employees are perceived in 55 NH hotels. However, to translate those insights into concrete action by the hotels, another study was needed to find tangibles associated with the experience aspects that need improvement or have a strong relationship with guest loyalty. Phase one showed that the comfort of the hotel room and an inviting ambience ranked highest for guest loyalty. To obtain a deeper insight into these aspects, a qualitative follow-up study was conducted in phase two.

This paper presents the exploratory study (phase two of the Guest Experience project), aimed at translating a comfortable and inviting ambience into tangible sensory characteristics as a first step in identifying tangible sensory characteristics that are relevant for guest loyalty in hotels. Figure 1 presents a conceptual model of the constructs that are measured in the Guest Experience project. The model contains several components of the guest experience process (Pijls et al., 2011) and is based on models by Bitner (1992) and Mehrabian and Russel (1974), among others. The present study focuses on a deeper understanding of two aspects related to the physical environment of a hotel: a comfortable and inviting environment. The grey area in Figure 1 represents that part of the conceptual model that is relevant for the present study.

THEORETICAL BACKGROUND Guest Experience

The goal of the Guest Experience project in hotels is to define what guest experience is and to identify relevant tangibles that hotels can adjust in order to improve the guest experience and thereby increase guest loyalty.

What is guest experience? Based on a literature review, Pijls et al. (2011) concluded that there is no

consensus among researchers and practitioners regarding the concept of guest experience. Is it a result or is it a process? Does it involve cognition and/or emotions? In this study, (guest) experience is defined as the interaction between an individual and his or her environment, and the inner response to this interaction. The inner reaction consists of feelings and thoughts resulting from the sensory perception of the environment. In the hospitality industry the environment is an essential element of the service delivery process, which consists of the physical environment where the service delivery takes place as well as the social environment (contact with service employees and other guests) (Mei, Dean & White, 1999). In the present study we looked for the visual characteristics in the physical hotel environment that result in an experience of comfort and invitingness. In the next section, the role of the physical environment or ambience in the experience of services, particularly in hotels, is discussed in more detail. The physical environment Research on the experience of services has shown that customers form an impression of a service based on several dimensions of their interaction with the service and the service provider, such as the physical surroundings and contact with service employees (Bitner, 1992; Heide, Lærdal and Gronhaug, 2007; Brunner-Sperdin and Peters, 2009; Kim and Moon, 2009; Jeong and Jang, 2010; Berry, Wall and Carbone, 2006; Mei et al., 1999). As the present study focused on the physical surroundings, this dimension will be further discussed. The physical environment where a service is delivered and experienced by the customer plays an important role in forming perceptions. Ryu and Han (2010) state that a pleasant physical setting, for example featuring innovative interior design, pleasing music, subdued lighting, pleasant colour scheme and ambient odour, spacious layout, and appealing table settings, determines to a large extent the degree of overall customer satisfaction and loyalty. Likewise, Mattila and Wirtz (2001) emphasize the role of the physical environment by stating that ambient factors such as scent and music affect customer evaluations of service experience and induce either approach or avoidance behaviour. However, there is still a lack of empirical research on this subject. Bitner (1992) identifies the ‘lack of empirical research or theoretically based frameworks addressing the role of physical surroundings in consumption settings’ (p. 57). More recently, Heide et al. (2007) argued that ‘there is an apparent lack of empirical research that addresses ambience and its role in hospitality settings’.

Within the physical environment, a distinction can be made between different types of elements. Most categorizations are based on the dimensions introduced by Bitner (1992), and contain the subdivision of the physical environment into ‘ambient conditions’, ‘functionality and lay-out’ and ‘design’ (Heide, Lærdal and Gronhaug, 2007; Brunner-Sperdin and Peters, 2009; Liu and Jang, 2009). Ambient conditions are background features such as temperature, air quality, noise, music, lighting and olfaction (Bitner 1992). In a review of empirical research on servicescapes, Kearney, Kennedy and Coughlan (2007) state that music has received most attention (Milliman, 1992; Spangenberg, Grohmann and Sprott, 2005). Other variables that have been researched, according to Kearny et al., are olfaction (Bone and Ellen, 1999; Spangenberg et al., 2005), colour (Chebat and Morin, 2007), and lighting (Summers and Herbert, 2001). Functionality and lay-out refer to spatial arrangement of the interior (lay-out), furnishing and equipment (Bitner, 1992). Furnishing is defined as an element that directly affects the comfort and performance of both customers and employees in the servicescape (Bitner, 1992; Harris and Ezeh, 2008). Arneill and Devlin (2002) show that visual interpretations of the furnishings of a context contribute to the perceived service quality. Lay-out also affects people’s impression of the service environment. Aubert-Gamet (1997) states that ‘the internal layout of buildings may either ease or restrict movement, thereby evoking a sense of crowding or spaciousness’. In turn, the extent of crowding of personal space affects people’s mood and behaviour (Kaya and Erkip, 1999). Design refers to aesthetic elements such as architecture and intangible aspects of the physical surroundings (Slåtten and Mehmetoglu, 2010). According to Alonso and Ogle (2008), for hotels, for example, design is a significant tool in enhancing the building’s attractive appeal, creating an atmosphere in the public arena. Nguyen and Leblanc (2002) argue that décor and visual symbols, used to create an appropriate atmosphere within the servicescape, can influence a customer’s belief about whether a firm is trustworthy or untrustworthy, expensive or affordable (Bitner, 1992), and successful or unsuccessful (Nguyen and Leblanc, 2002). Use of visual images in qualitative research Elements of the physical environment can be described in words, but also visualized. The use of visual imagery in qualitative research reveals information with a depth and richness beyond that available from text alone. Images can serve as a tool for understanding informants’ deep emotions and experiences that are not always easily articulated through words (Hunting & Conroy, 2011). Zaltman (1997) argues for the use of research methods that take into account the nature of thought production, which includes both verbal and non-verbal elements. The majority of human communication is non-verbal and people’s thoughts and emotions often occur unconsciously. Therefore, pictures can serve as entry points for concepts and associations stored in memory (Coulter and Zaltman, 1994).

The use of visual images in qualitative research can be divided into two categories. The first category contains research in which subjects are confronted with visual stimuli and are asked to react to those images by, for example, making a selection or talking about what they see. Here, visual images function as cues for storytelling (Donoghue, 2000) or cues for retrieving memories, as often used in clinical psychology. Research on brand image, product development and advertising (Chang & Huang, 2009; Coulter and Zaltman, 1994) often uses a second approach. Subjects are asked to produce visual stimuli, for example by taking pictures or creating collages (Chang and Huang, 2009; Hunting and Conroy, 2001). In the Zaltman Metaphor Elicitation Technique (ZMET), developed by Zaltman, respondents also choose their own images. Coulter and Zaltman (1994) argue that the participants’ control of the visual stimuli increases the likelihood of uncovering important customer issues not previously considered.

Analysing visual data Literature on the use of visual data collection describes techniques that use visual methods to elicit data rather than methods analysing these visual data (Gleeson, 2011). According to Braun and Clark (2006), thematic analysis is a method for identifying, analysing and reporting patterns (themes) within visual data. A theme captures an element in the data that is relevant for the research question. Braun and Clark (2006) distinguish two approaches to thematic analysis: inductive or ‘bottom up’ (Frith & Gleeson, 2004) and deductive or ‘top down’. An inductive approach means the themes identified are strongly linked to the data themselves, and they may have little relationship to the specific questions to the participants. Neither would they be driven by the researcher’s theoretical interest in the area or topic. Inductive analysis is therefore ‘a process of coding the data without trying to fit it into a pre-existing coding frame, or the

researcher’s analytic preconceptions’ (Braun and Clark, 2006) and is data-driven. In contrast, a ‘deductive’ thematic analysis is guided by the researcher’s theoretical assumptions and is analyst-driven. This form of thematic analysis is not aimed at providing a rich description of the data overall, but at a more detailed analysis of a particular aspect of the data. The present study has an inductive character, as there were no specific assumptions from theory about the themes that are related to ‘comfortable’ and ‘inviting', except for the categories of environmental characteristics given in Table 1.

The level at which themes are to be identified is also important for the analysis of visual data. Braun and Clark (2006) distinguish a semantic and a latent level. On the semantic level, the themes are identified within the explicit or surface meanings of the data and the analyst is not looking for anything beyond the explicit information from the participants. In contrast, a thematic analysis at the latent level goes beyond the semantic content of the data and starts to identify the underlying ideas, assumptions and conceptualizations behind the explicit data. In the present study, both types of analysis were performed: first the identification of themes emerging from the visual data (latent level) and subsequently the explicit environmental sensory characteristics which express the (latent) themes (semantic level). Heide and Grönhaug (2009) is relevant for the latent level. They inventoried the fundamental descriptors of the atmosphere in hotels. These descriptors – which may be interpreted as themes – were grouped into four higher-order themes (based on factor analysis): distinctiveness, hospitality, relaxation and refinement. These themes, together with the environmental characteristics of the physical environment (elements of the ambience, functionality/lay-out and design), serve as the theoretical framework for this study. Table 1 provides an overview of these elements.

Table 1. Themes and environmental elements associated with the ambience in hotels

Themes (Heide & Gronhaug, 2009)

Distinctiveness Special, fascinating, different, unusual, one of a kind, memorable, rarefied, peculiar, seductive, characteristic, attractive, dream, charming

Hospitality Welcoming, hospitable, professional, genial, communicating, effective, civilized, true, feel-good, flexible, serious, well-being

Relaxation Pastoral, resort, holiday, family-like, serene, quiet, easy, suburban, simple

Refinement Classical, traditional, historical, upper-class, rich, luxurious

Environmental elements (e.g. Bitner, 1992)

Ambience Light, colour, sound (noise, music), smell, taste, temperature, material, air quality

Functionality/Lay-out Furnishing, lay-out (special arrangement of objects), equipment

Design Architecture and style of the interior, including art, signs, typology, accessories

Gleeson (2011) developed a ‘recipe’ consisting of 10 steps for polytextual thematic analysis of visual

data. This procedure identifies and defines themes and higher-order themes in the data. This recipe has several elements in common with the five-phase thematic analysis described by Braun and Clark (2006). These two procedures for performing thematic visual data analysis have been used for the present study.

METHOD

In order to discover environmental characteristics that people associate with comfortable and inviting, two data collection techniques were used: verbal associations and visual associations. Because visuals and text are used, not all senses are directly involved. This means that the study provides visual elements such as colour, light and shapes directly, but elements perceived by the other senses, such as scents, sounds, tastes and materials, can only be measured indirectly.

Verbal associations To obtain a deeper understanding of what people associate with ‘comfortable’ and ‘inviting’, guests of hotel NH Krasnapolsky in Amsterdam were interviewed during breakfast and asked: ‘a comfortable environment, what does that mean to you?’ and ‘an inviting environment, what does that mean to you?’. Over two days, 35 guests participated, 21 male and 14 female. Most guests were British (40%), Dutch (20%), or Belgian (11%). The remaining participants were American, German, French and Irish.

Visual associations The qualitative technique of gathering visual associations by creating mood boards was used to reveal associations stored in memory. Fourteen guests of hotel NH Utrecht participated in the study. They were asked to select images from a variety of magazines (interior, lifestyle and outdoor life) and individually create two mood boards, one with images they associated with ‘a comfortable environment’ and one for ‘an inviting environment’. Fourteen mood boards were created for ‘inviting’ and 13 mood boards for ‘comfortable’. All participants were Dutch and aged from 20 to 54. Of the mood boards, 33% were created by males and 66% by females.

RESULTS

Based on the procedures of Gleeson (2011) and Braun and Clark (2006), both the textual and the visual data were analysed at the explicit, semantic level (environmental categories) as well as at the latent level (themes). Four researchers were involved in the analysis. They first analysed the data individually and then the results were put together and discussed. Tables 2 and 3 show the results of the word associations with comfortable and inviting. Looking at the themes, ‘clean’ is a theme that is associated with both comfortable and inviting. However, comfortable is additionally associated with soft, easy, large and calm, while inviting is associated with tidy, fresh, cosiness, interiors and attracting attention. Concerning the environmental cues, comfortable is associated with a modern and luxurious style, warm and light colours, delicate materials, sitting on a bed or in a bath, and with pillows and carpets. On the other hand fresh, light and warm colours, mood lighting, distinct shapes, flowers, something to eat and drink, and having a view express inviting. Thus, there seems to be both some overlap and distinct differences between comfortable and inviting. Moreover, inviting is more stimulating and refers to more senses (see, touch, smell, taste) than comfortable (only see and touch).

Table 2. Results word associations comfortable

Association Themes Large, soft, clean, easy, calm Environmental category Ambience Arousal --

Colour red, orange, light colours, light, Shape -- Materials -- Sound -- Smell -- Temperature warm

Functionality / layout Social/solitary -- Location bed, bathroom, shower Time -- Functionality sitting, fitness Sight -- Objects furniture, cupboard, space, pillows, carpet, radio/television, delicate materials In/outside --

Design Modern, luxurious

Four exemplary mood boards for comfortable are presented in Figure 3, and Table 4 shows the results of the analysis. Six main themes emerge from the visual data associated with a comfortable environment: alone, inward, quiet, inactive, massive and soft. Comfortable and the associated themes are expressed by rooms in which people can sit or lie on beds or couches, or in baths, with soft materials such as blankets, clothes and pillows. In a comfortable environment, natural soft colours such as brown, blue and green prevail, and shapes are square, but with rounded edges. The room is warm and not too tidy. Comfortable is communicated by a basic, classical style with modern elements. This description shows elements that are recognizable in most of the mood boards. However, some mood boards also show elements that are less clear. For instance, some contain red or yellow elements, or cool elements (cool water). The number of mood boards is too small to decide whether these elements are exceptions or really belong to comfortable.

Table 3. Results word associations inviting

Association Themes Space, clean, tidy, fresh, interior, cosy, attracting attention Environmental category Ambience Arousal --

Colour colourful, fresh, light and warm colours, mood lighting, Shape distinct shapes Materials beautiful materials Sound -- Smell flowers Taste coffee, champagne, snacks and drinks Temperature --

Functionality / layout Social/Solitary -- Location -- Time -- Functionality -- Sight view Objects entrance, open door, windows, wardrobe, chairs, pillows, presents In/outside --

Design Not too modern

Figure 3. Examples mood boards comfortable

Table 4. Results visual associations comfortable

Association Themes - Alone individual, solitary

- Inwards inside, inwards, closed, withdrawn, introvert - Quiet rest, calm, still, quiet, relaxed - Inactive stable, unmoved, passive, slow, loose - Massive heavy, dense, massive, solid, grounded - Soft

Environmental category Ambience - Arousal low arousal, not stimulating, no associations with smell, food, noise

- Colour mainly dark, natural and cool colours such as brown, blue, green, but sometimes also colourful items in red or yellow - Shape square with rounded edges - Material dull/dim (no glimmer), textile, fabric, cloth, wood, stoneware, - Sound -- - Smell -- - Taste -- - Temperature warm (blankets, pillows, bare feet, fireplace, lamp, oven, bath, but also some cool (water, swimming pool)

Functionality / layout - Social/solitary mostly solitary - Location bathrooms, bedrooms - Time long stay - Functionality Place for sitting and lying, to repose, relax, lounge - Sight -- - Objects furniture: pillows, clothes, blankets, beds, chairs, couches, baths - In/outside inside a building

Design - Loosely, approachable, basic, classical as well as modern style

Additional searching for ‘comfortable’ within Google images show pictures that are in accordance with the present study, also including soft but large/massive beds, couches and chairs with square shapes in natural colours (brown, beige, green, blue) and also sometimes with red, orange and yellow.

The themes that are recognized in the visual associations are in line with the themes calm and soft in the verbal associations. Easy and large are also reasonably applicable to the visual data. However, cleanliness is not a typical characteristic of the pictures selected for the mood boards. Moreover, the visual data yield more and richer data, adding themes such as alone, inward, inactive and massive, and more tangible environmental characteristics.

Figure 4. Examples mood boards inviting

Table 5. Results visual associations inviting

Association Themes - Fresh

- Active energetic, vivid - Styled composed, tidy, clear - Impersonal - Fragile light, transparency - Distraction

Environmental category Ambience - Arousal stimulating

- Colour grey and white with colourful catchy accents (rose, red, orange, lime) also sometimes with dark colours providing contrast - Shape different shapes - Material transparent, shiny, glass, steel - Sound associations with resonant sound, loudness, - Smell flowers - Taste: bar, coffee cups, coffee pot, alcoholic beverages - Temperature predominantly cool (water, use of steel and glass, some pictures outside), but also a fireplace, lamps (warm)

Functionality / layout - Social/solitary mostly social, rooms for multiple persons (tables/chairs, kitchen, corridors) - Location bathroom, corridors, parts of rooms (corners) - Time short stay - Functionality -- - Sight look through/line of sight - Objects: lot of (small) objects / details - In/outside mostly inside, home interior

Design - Variety of styles: austere, modern, baroque, classical

Figure 4 shows four exemplary mood boards for inviting, and Table 5 presents the analysis. Six main themes emerge from the visual data associated with an inviting environment: fresh, active, styled, impersonal, fragile and distraction. These themes are in line with the themes fresh, interior, attracting attention and tidiness (Table 3). Again, cleanliness did not show up in the mood boards. Cosy (verbal associations) is in contradiction with impersonal (visual associations). Inviting and the associated themes are generally expressed in the mood boards by pictures of the interiors of rooms, lines of sight and corridors. Colours associated with inviting are grey and white in combination with colourful accents. Shiny materials and transparency, and a fresh, not too warm environment characterise invitingness. These results are to a large extent in line with the characteristics mentioned in the verbal associations. An inviting environment, furthermore, seems not to be related to a specific style; a variety of styles are depicted in the mood boards, from modern to baroque to classical. As can be deduced from the attempt above to describe an inviting environment based on the mood boards, it is difficult to grasp the elements. There is variety across the mood boards. Searching for inviting

within Google images shows pictures of places indoors but also outdoor locations (i.e. holiday destinations) and many images of people spreading their arms and people with flirtatious looks (mostly women). Thus, people seem to play a significant role in the case of inviting. It seems to be much harder to design an inviting environment compared to a comfortable environment, since comfortable is probably indeed associated with the physical environment, while for inviting the appearance and behaviour of people may play a considerable role.

CONCLUSION AND DISCUSSION

The present study provides insight into what constitutes a comfortable and an inviting environment, as well as insight into using visual data in investigating guest experience. Comfortable is associated with themes such as alone, inward, quiet, inactive, massive, large and soft. These themes refer to a large extent to the element ‘relaxation’, one of the four elements of the ambience in hotels as defined by Heide and Grönhaug (2009). A comfortable environment can be expressed by tangible elements in the (hotel) environment such as bed(room)s, bath(room)s, couches, soft materials including carpets, blankets and pillows, natural soft colours such as brown, blue and green, and square shapes with rounded edges. Furthermore, basic or classical styles with modern elements cause an environment to be experienced as comfortable. Inviting is associated with themes such as fresh, active, styled, fragile and attracting attention. An inviting environment can be expressed by tangible elements in the (hotel) environment such as lines of sight, corridor details in rooms, where people can meet each other and have a bite or a drink, grey and white in combination with colourful accents, shiny materials such as glass and steel, and a fresh, not too warm environment. An inviting environment is difficult to describe and to visualise: the responses and mood boards do not show a consistent representation of inviting. The appearance and behaviour of people is most probably an essential element for an inviting ambience. However, the human component was not included in this study, and this may explain the variety of images on the mood boards. Further research on ‘inviting’ should include the characteristics of people’s appearance and behaviour. Pictures found through Google images support this idea, since people are present on a large proportion of the images. The themes related to inviting are related to the element ‘distinctiveness’, as defined by Heide and Grönhaug (2009). The overlap can be expected to become even larger when the human component is added. The characteristics associated with comfortable and inviting are based on the verbal associations of 35 hotel guests and 27 mood boards. Further research, yielding more data, is necessary to confirm the outcome of the present exploratory study and further investigate the variability in characteristics. A larger number of mood boards will show whether these characteristics are exceptions or really belong to comfortable. A comparison of the results of the visual associations with those for the mood boards shows that the latter indeed deliver more in-depth and richer information, in accordance with Hunting & Conroy (2011), among others. Mood boards appeal to more sensory channels, provide more associations, and elicit more tangible elements and deeper information regarding the themes, despite the fact that the choice of images was limited to those in the magazines that were provided for the mood boards. These limitations may be overcome by asking participants to supply photographs of situations or places that they associate with inviting or comfortable. Even so, the verbal and the visual associations turned out to be complementary. This suggests that multiple methods for data collection should be used, preferably including additional methods using sound, touch, taste and smell. Finally, in the present study the researchers analysed/interpreted the mood boards, while in the next phase the participants will be asked, prior to the analysis, to explain why they selected particular pictures.

RELEVANCE FOR PRACTICE How does the outcome of this study help hotels in directing the experience of their guests? The results of the Experience Scan performed in phase one of the project on guest experience in hotels showed that the comfort of the hotel room and an inviting ambience ranked highest for guest loyalty. However, to increase guest loyalty by making the ambience more inviting and the hotel room more comfortable, we need a greater understanding of the tangible elements that make people perceive an environment as comfortable and/or inviting.

The goal of the project is to find relevant tangibles that hotels can use to understand and influence the experience of guests. The present study, phase two of the project, shows that it is possible to find relevant tangible (visual) characteristics in the physical environment (the use of certain colours, materials, shapes, styles, etc.). If we compare visuals of the present hotel rooms with the mood boards, recommendations for improving the comfort and invitingness of hotel rooms follow naturally from the differences in shapes, colours, materials, accessories and light. The results can be used directly by the hotels. By looking at the differences between the mood boards and the environment in the hotels (figure 6),we can see clearly how to make the environment more comfortable or inviting.

Figure 6. Present and desired atmosphere hotel rooms NH Hotels

For comfortable, provide a large bed with multiple layers of blankets, bedcovers and pillows, use natural colours and add items with square shapes and rounded edges. Covering the windows with translucent curtains elicits feelings of protection and comfort. People are essential in order to create an inviting ambience. Regarding the physical environment, eye-catching accessories throughout the whole hotel, such as flowers, vases, pillows, soap and napkins will create an inviting atmosphere. These kinds of accessories are easy to change and can be adjusted to suit the seasons, for example. By changing these items, hotels can refresh their environment at regular intervals and remain inviting and surprising. As a next step, it would be interesting to determine what tangibles involving other sensory elements, such as sounds, smells and tastes, are associated with comfortable and inviting. Tangibles related to other themes that are important for guest loyalty would also be interesting. We are currently researching which tangible elements of the appearance and non-verbal behaviour of hotel staff represent flexible and approachable. Deeper understanding of the aspects of behaviour and appearance that are associated with flexible and approachable will help hotels to train their staff in order to improve their service and increase guests' loyalty.

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EFFECT ON PRICES OF THE ATTRIBUTES OF THE SAILING BOATS: A HEDONIC PRICES

APPROACH

Neven Sipic Zagreb School of Business

Zagreb, Croatia email: [email protected]

ABSTRACT

This article examines the effect on price of different characteristics of sailing boats in the nautical segment of travel and tourism industry. The effect on price is estimated under the hedonic function by means of ordinary least squares model (OLS), as the data used in study are cross-sectional. Some 10,791 prices were gathered from approximately 400 sailboats from adriatica.net, a largest web based site for renting travel/tourism products in Croatia. The study reveals huge price differences between sail boats of different sizes, coupled with practically no difference between boats of same size but different brand. Other attributes with a significant effect on price are season, number of rental days, ship length, number of cabins, year of production, skipper, and number of persons. The resulting equation can assist charter companies in shaping inflation-proof pricing and investment strategies.

Keywords: pricing; hedonic functions; sailboats; ordinary least squares model; Croatia.

INTRODUCTION

The purpose of this study is to examine the determinants of sailboat rental prices. The practical significance of research lies in its potential to aid in developing a model for determining rental prices of nautical tourism products in Croatia. This possible model would be useful to charter rental agencies, travel agencies, governmental and tourism institutions, as well as other interested investors. There are many ways to go about determining rental price for a sailing boat. However, it is essential to produce a mathematical formula that will provide an easy way of determining sailboat rental prices. This will help charter companies determine a practical and competitive price. Building on the research of price determination in the real estate industry which used hedonic pricing model, the study involved the collection, compilation, and analysis of contemporary data on sailing boat attributes, characteristics, specifications, and prices in the scope of adriatica.net website database. The research includes collection and analysis of quantitative data from the above-mentioned web site. The crux of this research lies in the extensive collection of raw data that will help to determine the variables, variations in pricing model, averages, and regressions using the hedonic pricing model. The results and findings will be discussed using descriptive and inferential statistics. The challenge of price determination concerns those in the academic world, as well as those in business sphere. Academia proposes how it should be determined, and offers solutions (i.e. means of doing it), businesses can use it and benefit from its application. Since there has been very little research on this topic, professionals in the industry are not accustomed in using and implementing research results. This and other quantitative research may help businesses develop future plans, through more accurate predictions, measurements and the simplification of otherwise complex material. This study is significant for multiple reasons. Its initial practical use is in aiding charter companies in determining their sailing boat rental prices. Moreover, it offers a theoretical way for solving practical problems facing businesses, charter companies, tourist agencies, and the government. This could be a great tool for those companies wishing to better manage their prices, and to re-evaluate their current pricing systems and databases (or lack of). This research and the proposed results should provide a model for companies to determine if they are over pricing or under pricing. Such information can help companies become a competitive player in this growing industry. By having a mathematical formula that would easily show a price for renting a boat, charter companies could increase their efficiencies, and become a price leader by having comparative and competitive advantage over the others. These are some of the ways Croatian charter companies can battle the increasing surge of foreign companies trying to capitalize on this fast growing market. Even banks have started giving away “easy-to-pay” loans to ones wanting to become ship owners realizing it is a win-win position for both parties (based on the previous data which show a huge growth in both profits and number of yachtsmen entrepreneurs).

LITERATURE REVIEW

Studies Using Hedonic Model One of the most extensively used models in real estate research has been the hedonic model. Despite significant simplifications in the assumptions the model has proven to be empirically viable, especially in examination of the relationship between the property values and preferences for its different attributes. Specifically, the value or price of the property is defined as a function of the bundle of its attributes. The model’s methods have long been used in research, before Court (1939) formally proposed the name hedonic in his seminal paper on price indexes in automobile studies. Stemming from the Greek word hedonikos, the name relates to the derivation of utility from consumption of goods and services. The theoretical and statistical foundations of hedonic price theory are found in the works of Lancaster (1966), Rosen (1974), and Feenstra (1995). The early hedonic literature focuses on the explanations of the attribute or characteristic price. One understanding of it, proposed by Court (1939), views the attribute price as consumer’s willingness to pay for the attribute. Lancaster (1966) expanded on this by “…breaking away from the traditional approach that goods are the direct objects of utility and, instead, supposing that it is the properties or characteristics of the goods from which the utility is derived”. Furthermore, Lancaster’s theory goes to say that goods are arranged in groups based on their attributes and that in the group they are consumed in various combinations. Rosen (1974) altered Lancaster’s approach and assumed that goods within a group are consumed discretely. In other words, consumers do not maximize their utility by purchasing a bundle of goods with desired characteristics, but by consuming one that has the most desirable combination of them. Rosen assumed a non-linear relationship between price of a good and its attributes, while Lancaster saw this relationship as linear. The differences between Lancaster’s and Rosen’s approaches are not mutually exclusive as they seem to apply to different types of goods. Lancaster’s

theory best applies to non-durable goods, while Rosen’s applies to durable goods.

Studies on Price Determinants in the Tourism Industry Research on sailing boat rental price determinants has so far been non-existent. The most extensive research done on price determinants using hedonic model, as stated before, is in the real estate industry (especially research on price determinants in housing). However, there is a recent trend of using hedonic model in tourism research. The following is the body of knowledge in tourism research on hedonic price models: The influence of dependent variables on hotel room prices (Coenders, Espinet, and Saez 2003; Israeli 2002; Monty and Skidmore 2003; White and Mulligan 2002), inclusive tour or package tour prices (Aguilo, Alegre, and Riera 2001; Aguilo, Alegre, and Sard 2003; Clewer, Pack, and Sinclair 1992; Espinet et al. 2003; Papatheodorou 2002; Sinclair, Clewer, and Pack 1990; Taylor 1995), restaurant prices (Gunawardana and Havrila 1996), and airfare prices (Schwieterman 1995). The most significant article that inspired this study is the one by Coenders, Espinet, and Saez (2003). As mentioned above, the biggest influence for this study was Coenders, Espinet, and Saez (2003) article “Effect on prices of the attributes of holiday hotels: a hedonic prices approach." Unlike the combination of time series and cross-sectional modeling (used in that study), which is random effects method (mixed modeling or panel modeling), this study introduces cross-sectional modeling by using ordinary least squares method (OLS), specifically log linear model. The real difference is that Coenders, Espinet, and Saez are using data based on information on the months from May to October for a time period from1991 to 1998. On the other hand, the data used in this study is for the month of July (two dimensions opposed to one). The results found by both of the studies are similar. One of the most relevant characteristics of a sailing boat in determining price is its length; likewise, Coenders, Espinet, and Saez found the most relevant characteristics of a hotel to price is star category. That article has identified some important variables that affect the price paid by tourists in the sun-and-beach segment, for which the major motivations of tourists are basically the same worldwide. Such results were found in this study where important variables affect the price paid by tourists in nautical tourism, specifically sailing boat rental. The previously mentioned study also found that many of the hotel room characteristics have no significance in explaining the price, and the difference between prices. This study also showed that the majority of boat characteristics are irrelevant for price determination. However, a few significant ones provided a healthy model which explains a lot of functions, even correlation between the attributes. Another informative article on the matter is a study done on Norwegian sun-and-beach package tours by Christer Thrane. Thrane followed the work of Espinet and provided a research similar to his. The researcher used two regression models to show the difference between a model without hotel star rating variable, and model with the hotel star rating variable.

METHODOLOGY

Theory For this study, Hedonic regression, or more generally hedonic theory, is used. It is a method of estimating demand or prices in economics. It decomposes the item being researched into its constituent characteristics, and obtains estimates of the value of each characteristic. Essentially, it assumes a separate market for each attribute. One of the ways for estimating it is by using ordinary least squares (OLS) regression analysis. Usually, a dummy variable (an attribute vector) is assigned to each attribute or group of attributes. Each characteristic within a vector is either included in the regression or not, by multiplying it by either 1 or 0. In nautical tourism, it is used to adjust for the problems associated with studying a good that is as heterogeneous as a sailing boat. Because sailing boats are different, it is difficult to estimate the demand for them generically. Instead, it is assumed that a boat can be broken down into characteristics such as number of cabins, or number of beds. In this study, different characteristics specific to sailing boats were used. A hedonic regression equation treats these attributes (or bundles of attributes) separately, and estimates prices (in the case of an additive model) or elasticity (in the case of a log model) for each of them. This information can be used to construct a price index that can be used to compare the rental price of sailboats in different cities, regions and countries, or to do time series analysis. As with Consumer Price Index (CPI) calculations, hedonic pricing can be used to correct for quality changes in constructing a sailing boat price index. It can also be used to analyze the demand for various sailboat characteristics, and sailboat demand in general. The Hedonic model may be estimated using ordinary least squares (OLS) regression analysis, which is used for the purpose of this study. Least squares or ordinary least squares (OLS) regression analysis is a mathematical optimization technique which, when given a series of measured data, attempts to find a function which closely approximates the data (a "best fit"). It attempts to minimize the sum of the squares of the ordinate differences (called residuals) between points generated by the function and corresponding points in the data.) The formulas essential to this study are theoretical (a.), statistical (econometrical) (b.), and practical (c.).

a. Ln price = F (X) Ln price = F (lnlength, age, gps, number of cabins, fuel capacity, engine power, gas cooker) The equation shows the determinants of selling price on the right side of equation and selling price as a dependent variable on left side. The specification is log-linear as the dependant variable is in logarithmic form while independent variables are in either linear or logarithmic forms. In a case where the logarithm of a dependent variable is linearly related to some independent variable, we interpret it as a percentage (%) change in dependent variable caused by a change in the independent variable. In the case where we regress a logarithm of an independent variable on a logarithm of a dependent variable, we interpret coefficients as constant elasticities. The use of logarithmic transformation goes beyond interpretational conveniences, as it is primarily used as a tool in prevention of heteroskedasticity, since the distribution of percentage changes tends to have more of a constant variance than distribution of changes. b. Ln price= β0+ β1 x lnlength – β2 x Bavaria – β3 x age + β4 x gps + β5 x cabins + β6 x central Dalmatia+ β7 x fuel capacity + β8 x engine power + β9 x gas cooker Example: ship name

constant β0

lnlength Bavaria age gps cabins central Dalmatia

fuel capacity

engine power

gas cooker

Benetau first 265

3.8575 1.4597 -0.0775 -0.0253

0.0674 0.0452 0.0220 0.0002 0.0034 0.0299

8 0 1993 1 2 0 30 Volvo 19

1

c. Ln price= 3.8575 + 1.4597 x ln 8 – 0.0775 x 0 – 0.0253 x 13 + 0.0674 x 1 + 0.0452 x 2 + 0.0220 x 0 + 0.0002 x 30 + 0.0034 x Volvo 19 + 0.0299 x 1

Data Studies on boat rental prices are still rare in Croatia. Charter boat rental prices are not even systematically collected by any official tourist or statistical office. An existing database of rental boat prices was used from adriatica.net for the purpose of this study. The database covers the whole coastal region of Croatia (Istria, Kvarner and Dalmatia). Hedonic functions are estimated by means of ordinary least squares model, specifically the log linear model. This study provides quantifiable results which should prove to be more easily applied to sailboat rental price determination than the qualitative data. The web site was chosen because of its simplicity, data availability and data extensiveness in sailing boat characteristics and because of the large number of boats it contains. All of the quantitative data collected originates from this web based site. The boat characteristics are divided into appliances, structural variables, and other. Appliances are: Gas cooker with oven, electric refrigerator, compass/echo sounder, nautical charts and nautical guide, GPS, VHF radio, pillows and blankets, radio-cassette players or CD, life jackets, distress flare kit, first aid kit, fire extinguisher, main anchor, dinghy inflatable, bimini top, navigation kit, cutlery, shower and/or toilet, auxiliary anchor, sun shade, deck shower, calibrated anchor chain, heating system, radar, port or starboard thruster, and electric winch for anchor. Structural variables are: The boat length, length at waterline, draft, maximum beam, number of cabins, number of beds, weight, ballast, water tank capacity, and fuel capacity. Other variables not mentioned are put under the “other” category. This study is focused on the month of July, since it best represents high summer season characterized by moderate sailing conditions (“good winds”). Furthermore, this study examines the data for renting a boat in one-week intervals (seven days). Price for the month of July is determined by finding the average price for four weeks in July. Furthermore, data for Bavaria sailing boats, the low-cost brand within the industry, is analyzed for possible correlations between engine type and other boat attributes. The following text briefly describes the process of data collection: Data was accessed via the Adriatica.net website. First choose the option “Sailboats", which directs you to http://adriatica.net/charter/charter_en.htm where you choose the rental time period. Specified period for this study was

from 1/6/2007 (Date of Departure) till 12/29/2006 (Date of Return), in order to get the listing of all the boats being available for rent in 2007. There are also several options one can choose to make the search more specific. However, to get the most data possible, the following options were selected before the search was conducted. “All sailboats” under boat type; number of persons is specified as “one," overall length as “not important," and “whole Adriatic” as region or port. When all those options were entered, the search was carried out. This listed 58 pages of sailboats each having 8 on average. The data range was approximately 464 sailboats. There were also a total of 56 boat characteristics.

EMPIRICAL ANALYSIS AND RESULTS Prior studies on hotel room price determinants and plain logic dictate that some attributes obviously explain a lot about the price (Coenders, Espinet, and Saez 2003; Israeli 2002; Monty and Skidmore 2003; White and Mulligan 2002). In those studies such characteristics were room size, number of beds, hotel location, etc. What is expected of this study is to show positive relations with the length of the sailboat, the number of cabins, the number of beds, the year in which it was made, the sailboat brand, etc. Analysis The following explains what was expected of each boat attribute prior to the analysis of the data and the collection of the results: 1 Industry recognizes certain brands as market leaders in price, others in luxury, design, and some in the functionality they serve (i.e. regatta sailboats made for races or serial boats that provide minimum of luxury but a plethora characteristics positively affecting the performance). Depending on its perceived function to the renter, the boat is chosen among numerous alternatives. Sailing boat brands, such as Bavaria and Salona are definitely “the least expensive” boats to buy, thus their rental price is accordingly set, and make an optimal choice for price conscientious customers. Such customers may prefer maximum space, and look for boats that offer maximum number of cabins, and thus beds. On the other hand, Benetau and Janeau are brands that offer an abundance of gadgets, a sleek design, are made of the finest materials, and serve to people less concerned with price. Those boats, in most occasions, have several types that one can choose from. The sailing boat may have a single spacious cabin with plenty of space throughout the vessel, or even the best usage of space in terms of sleeping accommodations. Sailboats such as Sun Fast, Sun Odyssey, Y, Elan, Feeling, Oceanis, SAS, Hunter, Gib Sea, Aventure, DuFour, Grand Soleil, and First are average priced brands that prove to be good alternatives when looking for a moderate luxury, performance, and price. 2 Season (i.e. seasonality) is probably the single most important attribute, after the boat length, in determining the appropriate rent price. It is highly significant for the model. Seasons can be divided in several ways, of which the most common one is “season” and “off season”. Additional ways to categorize seasonality, specific for Croatia and other Mediterranean countries is the following: The main season is from the beginning of July till the end of August. The Semi-season is from the mid May until the end of June, and through the entire month of September. Additional seasons include the Christmas season and the Easter semi-season. Periods from late January until Easter, from Easter until May, and from October until December are considered off season, and are much more affordable than other periods characterized by high demand. 3 The number of days one seeks to rent a sailboat, as shown in this study (which is a general renting policy worldwide), are 7, 14, and 21 days. Daily rental price diminishes as the number of rent days increases. So, a daily rate for 21 days of rent is much less than a daily rate for 7 days of rent. When renting for 14 days, daily rate is usually somewhere in between the two previously mentioned. 4 Ship length, which shows the biggest correlation to price, is the single most significant boat attribute in determining boat rental price. The longer the ship, the more cabins it has, beds, and most often other amenities, thus the final rental price is also higher. It is important to note that the number of cabins and the number of beds are highly dependent of each other, and increase together proportionally. 5 The number of cabins is expected to be a significant boat characteristic, and is very important to boat renters, since it usually determines the number of beds available in the vessel, which has shown to be a priority among yachtsmen seeking to rent a sailboat. 6 The number of beds, as discussed before, is important since it determines the boat’s carrying capacity (i.e. the number of people than can reside in it for a number of days specified by the rental agreement). 7 The year of production is an important price determinant because the value of the boat is expected to decrease as time passes. Since the boat’s net value decreases, the rental price also decreases. However, there is a line to which a price decreases, below which it rarely drops. That is probably because older boats are not up for rent because of their poor condition, or they are renovated and rented for premium prices. The price also falls as the boat ages, not only because of wear and tear, but also because of its unattractive old-fashioned design and decreased sailing performances compared to the newer models. The maintenance costs are also an important factor, since they increase as the boat

ages. 8 The engine type somewhat shows significance in that it follows the latest technologies, and as a boat is newer, so is the engine type and its fuselage (i.e. how much fuel it spends) and performance. 9 Draft tends to be bigger as the boat is longer and heavier. The estimate is that it does not have special significance in rental price determination. 10 Maximum beam is somewhat of value in price determination in the sense that as the boat is longer it is also wider, which provides more space inside the vessel and ultimately raises the rental price. 11 The length of the hull is likely to be significant in determining price, in that by showing the correlation with boat length, they increase proportionally. Also, the longer the hull length, the greater the boat's stability, and thus the crew's security. 12 The length at waterline is simply the reflection of the boat’s stability. 13 Another factor to stability is the boat’s weight. The heavier the boat, the more stable the boat. However, the heavier the boat is, the bigger the decrease is in its sailing speed and maneuverability. 14 Ballast is contributing to boat’s stability. 15 Water capacity does not seem like a significant attribute in determining price. Water is important as a source of liquid for drinking on-board, cooking, and washing the vessel, however it does not seem to be significant in determining the rental price). 16 Fuel capacity is somewhat significant in that it gives you an estimate of how long the boat can go without refilling the gas (i.e. the distance it can cross). It is important in conserving space that might be used for carrying spare fuel tanks to have safety supplies. 17 The Compass/Echo sounder is the first dummy variable used in this study. It is somewhat standard equipment for boats, and I would expect that sailboats which did not list it among its attributes simply lacked the information because owners forgot to include it in their offer (i.e. the list of boat characteristics). (Table 2) 18 VHF radio is a part of boat equipment that is required by law. In some boats, the information about it was omitted, probably because of data insufficiency. 19 Electric shore connection with cable/water hose with connectors may or may not be included among boat amenities, since the majority of marinas and harbors have this available for boaters’ use. However, most of the boats carry it as a safety net for instances in when the boat's battery needs to be charged and/or the water tanks need to be refilled in places lacking the infrastructure to facilitate the yachtsmen’ needs. 20 An electric refrigerator is a must in every boat, and the estimate would be that some boats did not have data on it because of the omission and data insufficiency. 21 Gas cooker with oven follows the same argument used for an electric refrigerator. 22 Pillows and blankets are offered in some boats, while not in others. The reason is that some owners clean sheets after they have been used, while other owners require the renters to bring their own pillows and blankets, to reduce their costs. Many people even prefer to bring their own, so the demand for them in a boat is lower, thus the supply follows it accordingly. 23 Radio-cassette player or CD is also a must in a boat since it offers entertainment to yachtsmen. Its significance is minor in determining the rental price. 24 The law requires all vessels to have life jackets to protect passengers from drowning, which is why all the boats have it in their inventory. The number of life jackets on the sailboat has to correspond with its carrying capacity, as described by law. 25 Distress flare kit, first aid kit, and fire extinguisher are also present in all the boats due to law requirements. A few boats did not have them listed in their inventory probably due to data inaccuracy. 26 Main anchor is obviously required for every boat on the sea. 27 Dinghy (inflatable) is a part of additional equipment. It enables the yachtsmen’s easier access to the shore when the boat is anchored. It certainly seems that this attribute should raise the boat’s rental price. 28 The harbor location seems not to influence the final rental price. However, it is important for the guests since they always look for a convenient place to embark on a voyage. The following harbor locations were used in this study: Pula, Zadar, Sukosan (Zadar), Sibenik, Primosten (Sibenik), Split, Trogir, Kastel Gomilica (Trogir), Jezera (the island of Murter), Murter (the island of Murter), Dubrovnik, Vodice, and Biograd. It has been noticed that boats in Central Dalmatia are priced above the average, which places it in the “pricy” region to rent a boat. 29 The region the sailing boat is located in is irrelevant except for accessibility. It correlates with harbor location, and does not influence rental price. 30 Spinnaker/Blister is additional equipment for experienced yachtsmen who often pay extra for such commodities. It has no influence on rental price, since it is paid separately. 31 Hiring a skipper is an option for inexperienced yachtsmen wanting professional guidance of an experienced captain who can suggest everything from harbor selection, local entertainment to teaching boaters how to sail and

operate the vessel. It has no influence on rental price since it is paid separately. It is an extra cost for the renters. 32 Outboard engine, another additional equipment item, is used for dinghy (inflatable) for faster transport of boaters to the shore when the boat is anchored. It may be also used in cases of main engine malfunction. It has no influence on rental price since it is paid separately. It is an extra cost on the renters. 33 The number of people the boat can accommodate is determined by the number of beds that are determined by the number of cabins. It shows the optimal number of people that a sailboat can facilitate. The boat can accommodate more people when it has a number of extra beds available, which increases a boat’s carrying capacity. 34 Navigation kit is special equipment for advanced and professional boaters who can efficiently make use of it. It has poor correlation to rental price. 35 Cutlery usually accommodates the number of people a boat can carry, that is, it is related to number of people the boat can accommodate which was already discussed. 36 Shower/toilet is a cabin within a ship that provides a space for personal hygiene that every boat should have. Some of the boat owners obviously omitted this information probably thinking it is presumed a boat has a toilet facility. 37 Final cleaning is additional service sometimes included in rental price and charged additionally and separately from the rental price. It has no influence on rental price since it is paid separately. It is an extra cost for the renters. 38 Auxiliary anchor is additional equipment for those who may lose their main anchor and serves as an additional feeling of safety during bad weather when the boat is anchored. It increases the boat stability when it is not in operation. 39 Sun shade and bimini top are commodities most boaters prefer, since majority of yachtsmen rent sailboats during the summer, which is characterized by having the many sunny days. They also protect the crew from the sun and sun-related dangers (UV radiation). They are somewhat significant in price determination, but not enough to be included in the major attributes that influence final price. 40 Deck shower is extra equipment bigger boats usually have. It is frequently used during the summer, mainly for rinsing off sea/ocean water (salt). 41 Size of genoa sail is important for experienced yachtsmen who want to maximize sail’s size for better sailing performance and a boat speed while using wind power. It is commonly used in combination with the main sail. 42 The size of main sail is also important for experienced yachtsmen who want to maximize sail’s size for better sailing performance, and a boat speed while using wind power. It is commonly used during low or medium strength winds. 43 Calibrated anchor chain serves as additional equipment for easier anchoring. 44 The number of extra beds attribute is important for increasing boat’s carrying capacity. Boats with extra beds usually have a higher demand. It somewhat increases boat's rental price. 45 Transit log is a document required by law. It gives description of a boat and its equipment and the information on people currently using it. It is commonly used for chartered boats and is important for easier police identification. 46 Heating is a characteristic very few boats have. Usually larger boats posses such an attribute. It should be an insignificant sailboat characteristic, since the boats are mostly used during the summer months. 47 Radar is a luxury only mega-sailboats have at their disposal. It simplifies navigation and provides a precise positioning system, and is greatly appreciated by most boaters. However, it is not a necessity for boaters renting sailboats. It is more often found in motor yachts. It significantly increases rental price. 48 Port or starboard thruster is a necessity mega-sailboats have. It eases maneuvering in small spaces where big boats are hard to operate. It is significant in increasing rental price. It is a luxury that boats with crew members usually have. 49 Electric winch for anchor is used by larger vessels for easier anchoring. It has some significance in rental price, but boats rarely posses such a device.

SUMMARY AND FUTURE RESEARCH RECOMMENDATIONS The goal of this paper has been the examination of the sailboat attributes and current rental prices for the month of July using seven day rental period as a template. The results produced were expected, and proved the common belief that the boat length is the most important attribute for determining its rental price. Furthermore, other attributes such as engine type/power, number of cabins, and fuel capacity as well proved to be important in price determination, even more than thought off. This article has identified some variables that affect sailboat rental price for which the major ones are the same across the world. Croatia, the newest discovery in nautical tourism, can be considered a perfect fit for this article which will

hopefully indicate its usefulness even outside Croatia. The growing stage of nautical tourism in the country still needs more variety in sailboat types to adjust its offer to the consumers’ needs. The characteristics that allow an increase in sailboat rental price can also be seen as attributes. There are many ways for expanding on this research. Considered options could include the research being extended to other months (maybe even the whole year), so seasonal changes can be visible. Such study could better describe the variations between sailboat rental prices and possibly reveal more important results. After that, the data from other countries can be included and some generalities can be drawn that could affect the whole region, or even larger area. Formally assessing extensive data might lead to results that could be generalized for sailboat rental prices universally. Furthermore, studies involving motor boats and catamarans could be conducted, giving charter companies important tools for determining rental prices of all the products they offer. This would lead to better understanding of price determination in general, especially in nautical tourism. The research can be expanded beyond tourism into other fields lacking scientific support for pricing goods and/or services. Since this tourism issue is still not explored adequately, the supplementary research may lead to a greater body of knowledge being produced for the betterment of the industry and academia.

REFERENCES

Aguilo, Eugeni, Joaquin Alegre, and Maria Sard (2003). Examining the Market Structure of the German and UK Tour Operating Industries Through an Analysis of Package Holiday Prices. Tourism Economics: the Business and Finance of Tourism and Recreation. Čorak, Sanda, and Zrinka Marušić (2005). Ministarstvo Mora, Turizma, Prometa I Razvitka RH, Institute for Tourism. Zagreb: Nautika TOMAS. Espinet, J M., M Saez, G Coenders, and M Fluvia (2003). Effect on Prices of the Attributes of Holiday Hotels: a Hedonic Prices Approach. Tourism Economics: the Business and Finance of Tourism and Recreation. Gracan, Daniela (2005). Uloga Nautickog Turizma U Repoziciranju Turizma Istarske Zupanije. Tourism and Hospitality Management Journal 11. 17 Oct. 2006 http://www.fthm.hr/hrv/zs_rad/casopisi/web-vol11-2.pdf Gržetić, Zvonko, and Srećko Favro (2006). Studija Razvitka Nautickog Tuirizma Hrvatske. Hydrographic Institute of the Republic of Croatia- Split. Hydrographic Institute of the Republic of Croatia. 10 Nov. 2006 <http://www.hhi.hr/srnth/3.pdf Haroutunian, Stephan (2005). Using Brochure Information for the Hedonic Analysis of Holiday Packages. Tourism Economics: the Business and Finance of Tourism and Recreation 11. Klein, Yehuda L., Jeffrey P. Osleeb, and Mariano R. Viola (2004). Tourism Generated-Earnings in the Coastal Zone: a Regional Analysis. Journal of Coastal Research. Kolega, Josip (2004). NautičKi Turizam – Jedan Od Najperspektivnijih Oblika Hrvatskog Turizma. Hrvatsko Geografsko Drustvo.17 Oct. 2006 http://www.geografija.hr/novosti.asp?id_novosti=387&id_projekta=0&trazi= Marušić, Zrinka, Siniša Horak, and Sanda Čorak (2006). Attitudes and Expenditures of Yachtsman in Croatia. Institut Za Turizam, Zagreb. 17 Oct. 2006 http://bib.irb.hr/prikazi-rad?&rad=199920> Monty, Ben, and Mark Skidmore (2003). Hedonic Pricing and Willingness to Pay for Bed and Breakfast Amenities in Southeast Wisconsin. Journal of Travel Research. Papatheodorou, Andreas (2002). Exploring Competitiveness in Mediterranean Resorts. Tourism Economics: the Business and Finance of Tourism and Recreation. S, Dijana C (2006). Stanje I Razvoj Ponude Nautickog Turizma U Republici Hrvatskoj, Stavovi Nauticara Visoke Skole Za Turisticki Menadzment U Sibeniku. Elektronicki Zbornik Radova. 17 Oct. 2006.

http://www.vstsi.hr/TIM/Vol1_1.pdf Thrane, Christer (2005). Hedonic Price Models and Sun-and-Beach Package Tours: the Norwegian Case. Journal of Travel Research 43 (2005): 302-308. Weber, S (2002). Stavovi i potrošnja turista u Hrvatskoj. TOMAS, Institut za turizam. 17 Oct. 2006. http://www.mmtpr.hr/UserDocsImages/SRNT-IZR.pdf

AN EXPLORATION OF THE RELEVANCE AND RECALL OF SOCIAL MEDIA IN HOTEL ROOM PURCHASE

Hilary Catherine Murphy & Meng-Mei Chen Ecole hôtelière de Lausanne

Lausanne, Switzerland

Email: [email protected]

Abstract

Though some research has focused on social media as a marketing tool, the relevance and recall of social media sites during the purchase process has not been fully examined, particularly in comparison to other marketing channels. Recall has been one of the key metrics used to measure effective communication and the main aim of this paper is to investigate the recall of the various websites visited during an online session and the relevance of social media in the context of the purchase of a hotel room. Given this relatively un-researched topic, an exploratory research approach and observation method is adopted. A goal-directed scenario with 19 participants is designed and the hotel purchase behaviour of the participants is monitored and recorded via Desktop Screen Record 5 software. In addition, on the completion of the goal directed scenario, a further “unaided vs. aided recall” method is used, using a short questionnaire to measure recall to compare to actual sites recorded during the experiment. This qualitative research approach reveals that though participants visit social media sites at various stages of the purchase process, these are the least relevant channels. Results also show that there are several anomalies between their tracked behaviour and their recall / aided recall. Though limitations are evident in the small sample and qualitative approach, some managerial implications are suggested regarding channel optimisation.

Keywords: Hotel booking channels, social media, recall, relevance

EXPLORING THE MOTIVES OF HOTEL GUESTS IN THEIR CHOICES ABOUT

SUSTAINABILITY WITH REGARD TO HOTEL STAY

Arjan van Rheede, PhD * Senior Research Fellow Hotelschool The Hague

Brusselselaan 2 2587 AH The Hague, the Netherlands

Email: [email protected] Tel: 31 (0) 70 3512481 Fax: 31 (0) 70 3512155

Rob J. Blomme, PhD Director Research Hotelschool The Hague

Hotelschool The Hague Brusselselaan 2

2587 AH The Hague, the Netherlands Email: [email protected]

Tel: 31 (0) 70 3512481 Fax: 31 (0) 70 3512155

Abstract

The hospitality industry is starting to take responsibility for environmental sustainability (Van Rheede,

and Blomme, 2012). Knowing the motives and the ambition level of guests can be an important driver for organizations to formulate a more sophisticated sustainability policy (e.g.: Van Rheede and Blomme, 2012, Greenhoteliers, 2005). Will sustainable practices motivate – certain type of - hotel guests to select a hotel, or pay a premium price? This paper discusses the results of testing a validated questionnaire on “awareness of environmental consequences” (AC) in a hotel. The study has found additional evidence, based on Cronbach alpha and a Factor Analysis, that the alternative explanation of the AC scales - 3 components of benefits and cost of (in) action - were reliable and valid. Key Words: Hotel guest, Awareness of, Corporate Social Responsibility, Environmental sustainability,

Validated questionnaire.

Introduction

There continues to be a great deal of attention for green issues in the hospitality industry (see for

example, Van Rheede and Blomme, 2012, 2010a 2010b, Sloan, Legrand, & Chen, 2009 and Holcomb, Upchurch, Randall and Okumus, 2007). When running a sustainable business, decisions on products and technology are important, but actual behaviour is important too. Knowing the motives and the ambition level of both guests and employees might be an important driver for organizations to formulate a more sophisticated sustainability policy (e.g: Greenhoteliers, 2005).

How is attention on sustainability affecting the guests’ stay. Will this motivate – a certain type of -

hotel guests to select a hotel, or are they willing to pay a premium price? So how do guests experience sustainability in a hotel setting, this question is not yet answered (Van Rheede and Blomme, 2012). Both psychology and economic approaches have been developed. Ryan (2011) distinguishes the following scientific fields that focus on this: Conservation Psychology, Environmental & Resource Economics and Ecological Economics. The psychological approach focusses on individuals, while the other approaches are on an aggregated level.

The motives of consumers have been studied in other settings – outside the hospitality. The measures

that have been developed will be applied in this explorative study to this topic in the hospitality industry. Ryan (2011) argues that conversation psychology focuses on two issues: The examination of

cognitions and emotions of individuals to the natural world, and the exploration of the drivers of environmentally friendly behaviour. An important topic which is discussed amongst conservation psychologists is the importance of values which not only lead to specific attitudes and preconceptions about the environment but might be also more stable than belief constructs and emotions. Ryan stresses that values are a result of how individuals value the environment cognitively and emotionally. How people value the environment is rather stable over a long period, is influenced by the social context and personal traits, and is constructed in a interaction process in which people are actually moving in an environmental context and as a result psychological attributes are affected and developed. Hence, this value orientation can be used also to examine group values and ethical norms to investigate the attitudes and underlying values of guests on environmental issues.

According to Ryan (2011) the perspective of environmental & resource economics examines the relationship between resource use options and the way how agents value the environment. Agents comprises all actors such as individuals, institutions, organizations and societies who are eligible to act of have the power or authority to act in this relationship. Environmental & resource economics has its roots in neo-classical economy and considers the environment as a source of valuable human consumption materials which demands specialised management and conservation (Ryan, 2011: 54). The environment has only significant value when it contributes to the quality of the human condition as well in the present as in the future. Hence, the environmental & resource economics approach examines the value of the environment and in which way this will contribute to human wellbeing now and in the future instrumentally.

The instrumental approach by the environmental & resource economics has been criticised by the ecological economics. The main critique is that the environmental & resource economics are using an utilitarian framework for granted but are neglecting principle ethics of issues such as intergenerational and intragenerational fairness, and the discussions involved in valuing the loss of human life, the detrimental effects of migration on human populations and the intrinsic rights of non-human life (Ryan, 2011: 60). Therefore, ecological economists are focusing on the intrinsic value of the environment which has value in its own right and sake.

Present study

The three discussed approaches are providing us with different angles to examine the attention of

guests on sustainability. Although many research studies have been conducted to this topic, not many studies have been conducted to guests’ attitudes and values on sustainability in the hospitality industry. Hence, this supports the necessity of this study.

The measures that are developed will be applied in this explorative study to this topic in the hospitality industry. This study uses the Awareness of Consequences (AC) scale; a value-based approach to environmental concern (Hansla 2011, Ryan and Spash, 2008 and De Groot and Steg, 2007). This approach can be placed under the umbrella of Conservation Psychology. One important reason to choose for this approach is because it looks

at motives of individuals. The outcome obtained from an experimental design, namely that social norms encourage people to adopt an environmentally-friendly approach more than sustainability standards do (Goldstein, Cialdini, & Griskevicius, 2008) in also raising this issue.

This psychological approach distinguishes between egoistic, social-altruistic and biospheric value

orientations. Altruistic value orientations emphasise that individuals are motivated to act pro-socially in order to benefit others. Egoistic value orientations stress the importance of benefiting yourself when acting pro-socially. A third value, “biospheric”, is less well known, and is a special type of pro-social behaviour, namely behaviour manifested in an environmental context. In the literature the AC scale has been debated because research has shown that it should “ .. be reinterpreted of a measure of concern over the positive and negative consequences of environmental action and inaction”(Ryan and Spash, 2008) . This brings us to 2 issues that should be discussed: the first being: what are the motives of hotel guests? And how can we measure these motives in a hospitality setting?

The main research question in this paper is: How to measure the motives of hotel guests in making

choices regarding sustainability during a hotel

Methods Hotel guest were asked to participate in a questionnaire to make what the hotel offers in terms of

product and service more sustainable. A total of 105 completed questionnaires were returned. The survey contained both open and closed questions. Initial questions were about age, gender, country

of origin, purpose of visit and hotel night per year. Second, questions were asked on participation in reuse towel programs and unwanted replacement of towels. Additionally 4 questions on motives for the hotel to offer both a towel program and soap dispensers were asked. Third, the 15 question of the AC scale were asked (see Ryan and Spash, 2008).

In the survey a five point Likert scale (1= strongly disagrees till 5- strongly agrees) Was used for the AC scale.

This study was conducted with 105 participants in 2011. The sample of the survey is a convenience

sample (see Table 1). The convenience sample exists of hotel guests who stayed in two training hotels of Hotelschool The Hague. The findings were analyzed with SPSS 19 overall, by country, gender, age, purpose of visit and number of hotel nights, reliability of the scales were checked with Cronbach Alpha. Finally a principle-components factor analysis, using varimax was conducted, to explore for other factors.

Table 1

Descriptives

N Valid

%

Mean SD

Gender Male Female Missing

53 51

1

51 49

Age 48.0 15.72 Reason Business Leisure ....Missing

44 57

4

44 46

Country of Origin The Netherland Other Europe Outside Europe Missing

56 31 16

2

54 30 16

Hotel nights/year

21.2 50.5

Findings and implications

The Cronbach Alpha’s of the AC construct of the AC scales were all below .7. This suggests that the scales are not reliable. Also, after deleting some items the scales are still not high enough for a reliable scale (see table 2)

Table 2:

Reliability Scales Scales N No. of

items Cronbach’

s alpha

Mean SD

AC scales Ego e.g. Environmental protection will provide a better world for me and my children.

88 3 .706 4.25 0.74

Bio e.g. Tropical rain forests are essential to maintaining a healthy planet earth.

83 3 .631 4.02 0.77

Socio e.g. Environmental protection will help people have a better quality of life

80 4

.640 4.29 0.70

New subscales for AC scales Benefits of action (ACego1, ACego2, ACego5, ACsoc1, ACsoc2, ACbio4)1

82 6 .825 4.32 0.63

Benefits of inaction (ACsoc3, ACbio1, ACbio3)

74 2 .533 2.14 1.16

Costs of action (ACego3, ACego4)

84 2 .775 2.23 1.06

Cost of inaction ( ACsoc4, ACsoc5, ACbio2, ACbio5)

77 4 .679 3.90 0.80

Ryan and Spash (2008) discussed the validity of the AC scale questionnaire, and suggested an

alternative explanation of the constructs. In this study the same the same constructs as Ryan and Spash (2008): (1) benifits of action, (2) cost of inaction, (3) costs of action, and (4) Benefits of inaction where used. (see also Table 2).

A principle-components factor analysis, using Varimax was conducted, which resulted in four factors in line with the studies of Spash (2) and Snelgar (Ryan and Spash, 2008) explaining 70% of the variance. The Kaiser-Meyer-Olkin measure of sampling adequacy was .69, above the recommended value of .6, and Bartlett’s test of sphericity was significant (2 (105) = 397.91, p= .000). This analysis identified 3 of the 4 constructs that were also identified by Ryan and Spash (2008): (1) benefits of action, (2) cost of inaction, (3) Benefits of inaction. The fourth variable could is not identified (see also Table 3).

How to use these differences in motives between guests? This paper explores this idea by looking into

the correlations between the (new) AC scales and the likelihood to participate in the towel or soap dispenser program. Especially the scale of Benefits of Action has an average positive correlation with importance of the towel program on the environment (p= .47, sig .00) and the likelihood to participate in the towel ((p= . 38, sig .00) or soap dispenser program (p= .38, sig .00)

An independent samples T-test was conducted to look at differences between the importance of the

social motives for business and leisure guests. A significant difference on the importance of social issues was found for leisure guests (M=3.59 SD=.74) over business guests (M=3.88, SD=.52), t(89)=2.15, p=.034).

While gathering the data, the researchers noticed and received remarks from guests who found the 15

questions of the AC-questionnaire long and difficult to answer. Based on this study, certain questions can be removed and some questions perhaps need updating because of the increased awareness of guests (and customers in general) on sustainability. Also applying the questions more directly to the hotel operations seems to make sense. Combining this questionnaire with the “Value instrument” of De Groot (2008) might help to get more straightforward questions. Improving the questionnaire would mean making the questionnaire shorter, and making it easier to understand statements and more applicable to staying in a hotel or travelling.

1 See for details on questions table 3.

Table 3:

Factor analysis

Component

1

BoA

2

CoI

3

BoI

4

?

ACsoc2 Environmental protection will help people have a better quality of life ,844

ACego1 Environmental protection will provide a better world for me and my children ,831

ACsoc1 Environmental protection benefits everyone ,781

ACego2 Environmental protection is beneficial to my health ,683

ACbio4 Tropical rain forests are essential to maintaining a healthy planet earth ,559

ACsoc4 The effects of pollution on public health are worse than we realise ,816

ACsoc5 Pollution generated here harms people all over the earth ,798

ACego5 A clean environment provides me with better opportunities for recreation* ,545

ACsoc3 We don’t need to worry much about the environment because future generations

will be better able to deal with these problems than we are

,830

ACbio1 While some local plants and animals may have been harmed by environmental

degradation, over the whole earth there has been little effect

,781

ACego4 Laws to protect the environment limit my choice and personal freedoms ,625

ACego3 Protecting the environment will threaten jobs for people like me ,547

ACbio3 Claims that current levels of pollution are changing earth’s climate are exaggerated -,844

ACbio5 Modern development threatens wildlife ,686

ACbio2 Over the next several decades, thousands of species will become extinct* ,507

* factor loaded in study Ryan and Spash (2008) on another component.

The study has not solved the debate on what actually is measured by the AC questionnaire. The results

of the study, based on Cronbach alpha and a factor analyse, support the alternative explanation of the scales. Three out of the four scales for benefits and cost of (in) action were found reliable and valid. The original eco-, socio - and biospheric value scales were not reliable in this study, and are therefore not valid.

A limitation of this study is that at both hotel locations the actual sustainability practices applied in the

hotel are limited. During the research soap dispensers were being tested. Some regular guests complained in this period about missing amenities such as individual soap and shower gel. And other complains by the guests were empty soap dispensers, because housekeeping did not replace them in time.

Another limitation of this study was the limited sample size. Some scales are based on 74 valid items (see Table 2).

Follow-up research will also include ideas of Environmental & Resource Economics and Ecological

Economics. The study to be performed will include a conjoint analysis. This will help to gain a more realistic idea what drives guests’ behaviour. Additionally, actual experiments with more sustainable and less sustainable rooms can be applied where guests themselves can decide which room they prefer (with one variable a premium prices for one alternative).

The result of this study is the first step to help the hospitality industry choose their sustainability

measures in line with the motives of their (hotel) guests. The preliminarily results show a preference of the hotel guests for measures related to ‘benifits of action’ and ‘costs of inaction (m=4.3 and m=3.9, see table 2). When a hotel applies measures on sustainability that are linked to those motives, it is likely that hotel guests will be more positive about these measures, and their overall experience in the hotel.

References

Greenhotelier (2005). Saving energy in kitchens. 37(1): 1-4.

De Groot, J.I.M., Steg, L. (2007). Value orientation and einvironmental beliefs in five countries: Validity of an instrumetn to measure egoistic, altruistic and biospheric value orientations. Journal of Cross-Cultural Psychology, 38, 318-332.

De Groot, J.I.M (2008). Mean or green: value orientations, morality and prosocial behaviour, Thesis, Rijksuniversiteit Groningen.

Goldstein, N. J., Cialdini, R. B., & Griskevicius, V. (2008). A room with a viewpoint: Using social norms to motivate environmental conservation in hotels. Journal of Consumer Research, 35, 472-482.

Hansla, André (2011). Value Orientation, Awareness of Consequences, and Environmmental Concern, University of Gothenburg, Sweden.

Ryan, A. and Spash, C.L. (2008). Measuring “Awareness of environmental consequences”: two scales and two interpretations, CSIRO Working Paper Series 2008-10: Canberra.

Ryan, A (2011). An exploration of the descriptive validity of surveys designed to measure psychological and economic definitions of environmental value. http://hdl.handle.net/1885/8857 [Accessed the 15th of May 2012].

Van Rheede, A. & Blomme R.J.. (upcoming publication), Sustainable practices in hospitality: a research. Advances in hospitality and Leisure, Vol. 8.

Van Rheede, A., Blomme R.J. & Tromp D.M. (2010a), Sustainability in the Dutch hospitality industry Review of the current practice in a theoretical framework, CRRC conference Marseille.

Van Rheede, A., Blomme R.J. & Tromp D.M. (2010b), Exploring the adoption of Eco-labels in the Dutch hospitality industry: the impact of government actions and guests expectations, EUROCHRIE conference Amsterdam.

Acknowledgement

The authors would like to thank the following persons who helped us in the preparation of this paper. Kevin Simmonds, Global Market Intelligence Manager, Diversey UK Services Limited for his help during the design of the study and Sjaak Smit, Manager Skotel The Hague / Skotel Amsterdam and all the practical students and instructurs at the Skotel for helping us with the collecting the questionnaire.

THE PRESENCE OF A VIRTUAL AGENT ON THE RESTAURANT’S WEBSITE: THE IMPACT ON WEB-USERS’ PERCEPTION

Reza Etemad-Sajadi

Ecole hôtelière de Lausanne Lausanne, Switzerland

[email protected]

ABSTRACT

The aim of this study is to measure the perception of the web-users who interact with a virtual agent and evaluate the add-value of this communication system in term of service providing. We will try to measure how the presence of a virtual agent on a restaurant website can affect the desire of web-users to visit concretely the restaurant.

Key Words: Virtual agent, Website humanization, Interaction, Web-user experience, Restaurant website

INTRODUCTION

Several terms refer to interactive animated characters on websites. McGoldrick et al. (2010) summarized several terms found in literature, such as “virtual agents” (Abbattista et al., 2002), “avatars” (Wood et al., 2005; Holzwarth et al., 2006), “embodied conversational agents” (ECAs) (Cassell et al., 2000), etc. These animated characters can be found on the website of some companies, such as Ikea (Anna), Fnac (Clara), etc. The role of a virtual agent is to welcome, assist the users in their navigation, as well as answer questions. It is a kind of FAQ humanized, much faster and more interesting in terms of "experience" for users. The goal of a virtual agent is to simulate a real time conversation. It helps in strengthening the brand and influences the company’s image. The fun part of the exercise plays also a non-negligeable role. Some previous research indicates that humanization of the websites increases the confidence level of the web-users, as well as their desire to consume services concretely. This research can help restaurant managers, but also general marketing practitioners in their desire to manage relationships with current and potential clients through their website.

LITERATURE REVIEW

The relationship between quality of website, satisfaction, and patronage intention  

The Internet is considered as a huge service. Indeed, the website of each company represents somehow the service that the company in question can provide. It is not necessary the core service provided by the company, but it keeps a service or a supplementary service. According to Bitner (2001, p. 375), “All businesses and organizations that operate on the Internet are essentially providing services – whether they are providing information, performing basic customer service functions, or facilitating transactions”. Thus, it is important to identify the quality of service provided by a website and its impact on customer satisfaction. Indeed, several authors claimed that service quality is an important antecedent of customer satisfaction (Parasuraman et al., 1985; Cronin and Taylor, 1992; Baker and Crompton, 2000; Lee et al., 2000; Caruana, 2002; Hong and Goo, 2004; Ladhari, 2009). Especially in the case that the web-users have never been in a specific restaurant, the website can play a significant role. In order to motivate potential clients to come to the restaurant, the experience on the website must be highly satisfying. In a research done related to websites’ quality, Wang et al. (2007) found that hedonic and utilitarian value influence significantly the patronage intention of current and potential customers. Several authors argued that the quality of website will increase customer satisfaction (Fassnacht and Koese, 2006; Law and Bai, 2008; Wen, 2009; Yi and Gong, 2008) and customer desire to purchase (Kuan et al., 2008; Schmidt et al., 2007; Jeong et al., 2003; Yi and Gong, 2008).

The impact of the virtual agent on web-user experience

On Internet, it is more complicated to establish a social connection between the company and the potential client (Schijns, 2003). Indeed, the social distance is one of the major reasons. Social distance is described as the feeling of warmth and sociability within a website (Gefen and Straub, 2003). One of the cues to the perception of social presence is interactivity (Keeling et al., 2010). Several researchers analyzed the impact of social presence on behavioral intention (Gefen and Straub, 2003). The use of a virtual agent can reduce the social distance. Indeed, the virtual agent can increase the website experience and indirectly the desire of clients to visit and patronage the company. Moreover, the virtual agent effectively increases online trust (Steinbrück et al., 2002). However, customer trust related to a restaurant website can be different from trust related to an e-commerce website.

METHODOLOGY

In this research we applied the virtual agent to the website of the restaurant called Berceau des Sens (restaurant of Ecole hôtelière Lausanne). With the help of a computer service company named Askom, we developed a virtual agent named Laura (see Figure 1). Initially, we trained Laura to answer basic questions. For that we collected a database of FAQ found on more than 50 restaurant websites. We started by teaching to Laura to answer to these questions. In a second step, we integrated it to the restaurant’s website and tested it with the users (learning phase). These interactions helped to improve the response satisfactory rate. This means that the virtual agent will evolve and improve its knowledge based on its interactions. We estimate to 80% the percentage of successful answers given by Laura (in the cases when the questions are linked with the restaurant). Based on interviews we did with virtual agent developers, they estimate that a good virtual agent will answer to 70-90%. It requires too much cost to develop an agent capable to have a better score.

Figure 1: The virtual agent Laura developed and used in our case

Measures

We used and readapted WEBQUAL in order to measure the website quality perceived. Indeed, WEBQUAL is an instrument for assessing the usability, information, and service interaction quality. To adapt it to restaurant industry, we selected ten of the twelve dimensions of WEBQUAL which are: a) informational fit-to-task (the information provided meets task needs and improves performance), b) tailored communication (tailored communication between consumers and the firm), c) visual appeal (the aesthetic of the website), d) innovativeness (the creativity and uniqueness of the website), e) emotional appeal (the emotional effect of using the website and intensity of involvement), f) ease of use (easy to understand where to find the information and easy to operate/navigate), g) relative advantage (better than other ways of interacting with the company), h) trust (secure communication and observance of information privacy), i) consistent image (the website image is compatible with the image projected by the firm), j) response time (time to get a response after a request or an

interaction with a site). We also add 2 items linked to the general satisfaction about the website and 2 items linked to patronage intention. Figure 2 represents our research framework and Table 1 summarizes our items.

Figure 2: Research framework

Table 1: Questionnaire items

Constructs Items WEBQUALa Informational fit-to-task

The information contained on the website is useful. The website addresses the information I need. The information on the Web site is effective.

Tailored-communication

The website allows me to interact with it in order to receive information suited to my request. The website has interactive features to meet my needs. For my needs, I can communicate with the website to obtain appropriate information. The site gives me the impression to have empathy toward me. It is easy to contact the restaurant.

Visual appeal

The home page is attractive and makes you want to visit. The design of the website is visually pleasing. The website is visually unattractive. (N)

Innovativeness

The website is innovative. I see creativity in this website.

Emotional appeal

I feel unhappy due to the coldness of the website. (N) I feel cheerful due to the friendliness of the website.

Ease of useb It's not easy to access the required information. (N) It is easy to see how / where to look for the information. It is easy to find information about the hours / days of operation. It is easy to find information about the Access/address. It is easy to find information about the contact. It is easy to find information about prices. It is easy to find information about menus. It is easy to find information about booking.

Relative advantage

This website allows to easily find the desired information without having to call the restaurant. On this site I can access the desired information without having to write an email to the restaurant.

Trust

I trust the reliability of information found on this site (text, images, etc.). I trust this website to keep personal information secure.

Consistent image

The website projects an image consistent with the company’s image. The website fits with my image of the company.

Response time The website loads slowly. (N) Website Satisfaction

Compared to other restaurant websites, I find this website less good. (N) Overall, I am satisfied with this website.

Patronage intention

Visiting this website increases my desire to come to the restaurant. The website gives me the impression that the experience in this restaurant will be positive.

Notes: a WEBQUAL adapted to restaurant industry. We selected ten of twelve dimensions. b This dimension is a combination of ease of understanding and intuitive operation dimensions. The items of this

dimension are highly oriented for restaurant website.

Sampling and data collection procedures

Two on-line surveys were conducted with two samples. To the first one, we asked to evaluate the website without the presence of virtual agent. To the second one, we asked to evaluate the website but this time, we added the virtual agent. We took care to have two samples with the same characteristics. In overall, we received 208 questionnaires back. We had to delete 6 respondents in the sample one and 8 respondents in the second sample due to the fact that the questionnaires were incomplete. At the end, we have 104 respondents (without virtual agent) in our first sample and 90 respondents (with virtual agent) in our second sample.

Data analysis method

Structural equation modeling (SEM) was adopted to test the hypotheses because the model contains latent variables. We chose partial least square (PLS), because it does not require a large sample (Fornell and Lacker, 1981). SmartPLS 2.0 was used for the analysis. We employed bootstrapping method (200 sub-samples) to test the significant level of regression path coefficients. We also used ANOVA in order to compare the means with/without the presence of the virtual agent.

RESULTS

Reliability and validity of measures

Table 2 shows that all latent variables (instead of trust dimension) have a cronbach’s α higher than 0.6, confirming that the scale reliabilities have adequate and stable measurement properties. The two items of trust dimension are highly correlated. However, cronbach’s α is equal to 0.51. Even if this value is lower than 0.6, we decide to keep it as it is higher than 0.5. Validity is assessed based on three main criteria, namely unidimensionality, convergent, and discriminant validity. An exploratory factor analysis can verify unidimensionalty. For each construct, only the first eigenvalue is over one and thus, unidimensionality is confirmed and validated (Dröge, 1996). Convergent and discriminant validity are components of a larger measurement concept known as construct validity (Straub et al., 2004). Convergent validity is shown when each measurement item is strongly correlated with its construct. It is usually satisfied by retaining variables which loadings are greater than 0.5, indicating that they share sufficient variance with their related construct. Discriminant validity is satisfied when each measurement item is weakly correlated with all other constructs

except with the one to which it is theoretically associated (Gefen and Straub, 2005). Table 2 shows the intercorrelation of the research constructs. The diagonal of this matrix represents the square root of the average variance extracted. For adequate discriminant validity, the diagonal elements should be significantly larger than the correlation of the specific construct with any of the other constructs and should be at least 0.5 (Fornell and Larcker, 1981). In our case, discriminant validity is confirmed and sufficient to support the model.

Table 2: Reliability and discriminant validity

Constructs αa 1 2 3 4 5 6 7 8 9 10 11 121. Informational fit-to-task .73 .88b 2. Tailored-communication .83 .64** .77 3. Visual appeal .86 .46** .53** .88 4. Innovativeness .94 .41** .66** .59** .97 5. Emotional appeal .75 .49** .57** .81** .58** .88 6. Ease of use .81 .67** .58** .50** .38** .51** .74 7. Relative advantage .88 .78** .60** .43** .37** .43** .69** .94 8. Trust .51 .41** .53** .41** .39** .43** .47** .40** .82 9. Consistent image .77 .39** .47** .54** .52** .54** .36** .41** .40** .90 10. Response time 1 .29** .18** .31** .18** .35** .44** .27** .20** .16* 1 11. Website Satisfaction .85 .51** .61** .76** .70** .73** .54** .50** .38** .56** .31** .93 12. Patronage intention .83 .49** .59** .66** .67** .63** .47** .48** .47** .55** .18** .76** .92 Notes: * Correlation is significant at the 0.05 level. ** Correlation is significant at the 0.01 level. a Cronbach’s Alpha b Diagonal: (Average Variance Extracted)1/2 = (Σλi

2/n)1/2

Results and discussion

Table 3 shows the comparison of means between with and without the presence of the virtual agent. The impact of the virtual agent seems to be very important. Results show that with the presence of Laura, users evaluate the entire website more positively. Almost all dimensions of WEBQUAL are better evaluated with the presence of the virtual agent.  It seems not only funny to interact with the virtual agent, but also useful, interesting and easy.

Table 3: Results of ANOVA comparing without (n = 104) and with (n = 90) the presence of the virtual agent

Mean Min Max ANOVA (F)

p-value Without With 1. Informational fit-to-task 5.26 5.57 1 7 3.997 .047* 2. Tailored communication 4.46 4.98 1 7 10.887 .001** 3. Visual appeal 4.46 5.06 1 7 8.203 .005** 4. Innovativeness 3.61 4.26 1 7 6.680 .010* 5. Emotional appeal 4.31 4.98 1 7 10.597 .001** 6. Ease of use 5.18 5.57 1 7 14.532 .000** 7. Relative advantage 4.85 5.50 1 7 12.758 .000** 8. Trust 5.23 5.15 1 7 .230 .632 9. Consistent image 4.61 4.60 1 7 .003 .958 10. Response time 4.96 5.05 1 7 .183 .669 11. Website satisfaction 4.08 4.67 1 7 6.940 .009** 12. Patronage intention 4.20 4.50 1 7 2.530 .113

Notes: * Significant at the 0.05 level. ** Significant at the 0.01 level.

When we compare the means, we observe that for seven dimensions, the difference is significant. For the first dimension called informational fit-to-task, the items selected were ‘the information contained on the website is useful’ and ‘the website addresses the information I need’. We see that the difference is significant (F = 3.997). Indirectly the presence of Laura seems to increase the web-users perception such as what information on this website is more useful. Moreover respondents judge that with the presence of Laura, the communication is more personalized and tailored. We selected 5 items to measure the tailored-communication dimension. By comparing the means for this dimension, we observe that the difference is very significant (F = 10.887). Respondents feel more the empathy of the website with the presence of Laura. For the dimension called visual appeal, we asked questions such as ‘the home page is attractive and makes you want to visit the website’ and ‘the design of the website is visually pleasing’. The difference of mean is significant (F = 8.203). Laura seems to have an important impact on this dimension. This is very important because the more users will spend time on our website, the more it will increase the company’s brand awareness. The innovativeness dimension also seems to be better perceived with the presence of Laura (F = 6.680). Respondents judge that the website is more creative and unique with Laura. As far as the emotional appeal dimension is concerned, respondents visiting the website with the presence of Laura judge that the level of positive emotion is higher compared to our second sample (F = 10.597). This point is also very important because it will somehow give the possibility to the firm to develop a relationship with the person visiting the website. If respondents have a positive emotion, they will keep it in their mind. It also can create a positive word-of-mouth related to the website. To deal with the ease of use dimension, the respondents judged that it is easier to access to the information with the help of Laura. Without the virtual agent, the mean is equal to 5.18 and with the virtual agent, the mean is equal to 5.57. The difference is very significant (F = 14.532). Laura reduces the risk perceived in the mind of clients such as the waste of time to reach the information desired. Laura will try to answer directly to the request and it seems to be considered easy to use. Comparing the relative advantage dimension, we observed that respondents judge this interaction channel very helpful (F = 12.758). This result shows that with the presence of Laura, clients will use more this channel to interact with the company instead to write email and/or phone. Of course the virtual agent will not replace the two other ways of communication but it will reduce them. As far as the trust dimension is concerned, we have no significant difference between our two samples. Even if the difference is not significant, we can see that the trust level of respondents is higher without the presence of Laura. Maybe some respondents judge that their communications with Laura will be used by the company in order to train the virtual agent or to collect information about them. Therefore we observe that the presence of Laura brings no add-value to the website trust level. As far as the dimensions called consistent image and response time, the results show no significant difference between the means. Finally the general satisfaction of respondents about their web-experience is significantly different between the two samples. The virtual agent seems to bring more satisfaction and value to the website (F = 6.940). Comparing the patronage intention, the mean with the presence of the virtual agent is higher than without the presence of the virtual agent (respectively 4.50 and 4.20). However one cannot say that the difference is significant at the 0.05 level.

Figures 3a and 3b show the impact of WEBQUAL on satisfaction and patronage intention. Figure 3a shows the case without the virtual agent and Figure 3b shows with the presence of the virtual agent. One can observe that in the two cases, patronage intention is highly explained by website satisfaction. With the presence of the virtual agent, 73.5% of patronage intention is explained by website satisfaction. Without the presence of the virtual agent, this value is equal to 48.9%. It means that with the presence of the virtual agent, the degree of satisfaction of users about the website influences more their intention to visit the restaurant. This means that if a virtual agent is integrated to a website, it is important to render the user highly satisfied about the website. Indeed, with the presence of a virtual agent, user’s level of satisfaction will influence its patronage intention much more than without the presence of the virtual agent. Thus, if a virtual agent is not well developed and not ready to answer to questions related to users’ expectations, it is better to not integrate it to the website. In other words, the virtual agent can play a positive role by increasing patronage intention of users, but it can also play a negative role if users are not sufficiently satisfied about the website. As far as the relationship between the

quality and satisfaction is concerned, one can argue that the quality of the website perceived by respondents, explains the degree of general satisfaction in the two cases (79.9% without the presence of the virtual agent and 85.3% with the presence of the virtual agent).

Figure 3: Results of the PLS analysis (a) without virtual agent (n = 104); (b) with virtual agent (n = 90)

a)

b)

Notes: ** Significant at 0.01 level. WEBQUAL items define the construct website quality.

As far as the gender is concerned, Table 4 shows that women are more satisfied of their interaction with

the virtual agent than men. This confirms previous research done mentioning the same results. Indeed, women may be more receptive to websites where emotion or hedonic elements are present (Rodgers and Harris, 2003; Dittmar et al., 2004). Rodgers and Harris (2003) argued that women want a more expressive orientation than men.

Table 4: Results of ANOVA comparing male/female perception of the virtual agent (n = 90)

Mean Min Max ANOVA (F)

p-value Male Female

Customer satisfaction based on interaction with the virtual agent 4.88 5.46 1 7 3.999 .049*

Note: * Significant at the 0.05 level.

CONCLUSION

The aim of this study was to observe the impact of a virtual agent on a restaurant website and its add-value. Based on our findings, we see that the impact is clearly positive. On the ten dimensions selected in our case to evaluate the quality of website, seven are significantly perceived better with the presence of the virtual agent. Laura significantly increases the experience of users. The humanization of the website with the presence of Laura creates a positive emotion in users' mind and increases the desire to visit the restaurant in the future. In addition to the pleasure of a playful and friendly talk to Laura, users seem to find useful, interesting and easy this method of interaction in real time. Moreover as the knowledge of Laura may evolve in the future, we can estimate that the interactions will be more and more interesting and users increasingly satisfied.

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Customers’ lighting needs and wants at the restaurant

Caroline Jacquier* & Agnès Giboreau

Food and Hospitality Research Center – Institut Paul Bocuse

8 chemin du trouillat, 69130 Ecully, FRANCE

[email protected]; [email protected]

ABSTRACT

Many researchers have underlined the influence of the lighting on mood, subjective impression and on food consumption. However, light is often underestimated in the conception of a restaurant. The question is which customers’ expectations for lighting are. In-depth interviews were conducted with 22 consumers on their lighting needs and wants at the restaurant. In addition, 3 waiters have been interviewed to give their professional opinion concerning lighting. Customers underlined different needs according to the period of the day, the social environment and the type of the restaurant where they eat. And their wanting about lighting is functional or aesthetic according to their activity during the meal. Different scenarios are recommended to take into account customers’ lighting needs and wants.

Keywords: Restaurant, Lighting, Qualitative method, Perception, Attractive Environment.

INTRODUCTION

Eating at the restaurant is a more common leisure activity. Customers choose a restaurant for the cooking but also for the atmosphere. The perception of the atmosphere i.e. the affective evaluation of the environment (Vogels, 2008) as consumer emotions associated with food (King & Meiselman, 2010) are closely related. Giboreau (2009) suggested a theoretical framework to underline the relationships between the environment, the object (e.g., food) and the subject (e.g., consumer) (Figure 1). Indeed, several studies have underlined these relations: color of the environment influences the perception of a room and has an impact on the emotions and the physiology of people (Küller, Mikellides & Janssens, 2009) and eating contexts influence food appreciation (Meiselman 2007).

Physical & chemical properties

OBJECTSUBJECT

UsageMental representation – Cognitive categories

ENVIRONMENT

Perception

Language & gestures

Physical &Social

Physical & chemical properties

OBJECTSUBJECT

UsageMental representation – Cognitive categories

ENVIRONMENT

Perception

Language & gestures

Physical &Social

Figure 1: Theoretical framework for perceptual processes in situ. From Giboreau (2009).

Many researches have underlined the influence of light on subjective impressions, mood, well being at the work environment (Manav et al.,2010), but also on food perception and food appreciation (Lampi, 1973). Veitch and Newsham (1998) proposed a definition of the lighting quality based on the behaviour. Light quality exists when lighting conditions are in accordance with users’ needs. Needs are classified in 6 categories: visual performance (e.g., reading, eating, walking), communication and social interaction, emotional state (e.g., happy, satisfaction, alertness), health and security, and aesthetic judgments (space appearance or lighting evaluation).

It is primordial to take into account users’ perception to describe the atmosphere of a restaurant. Atmosphere can be explained differently by customers towards their senses. Two types of atmosphere exist: the designers’ one corresponding to objective sensory qualities and the consumers’ one varying according to their subjective experiences. It depends of the sensory sensations feel by consumers and induced by the environment. This reflects mental representations built by users and determine the final appreciation of the situation.

However, light is often underestimated by managers of restaurant. The comfort of customers is very important for their satisfaction and to develop loyalty. Light influences the atmosphere perception by consumers thus adapted lighting ambiances could improve their well-being.

Our main objective is to highlight customers’ lighting needs and wants at the restaurant in order to enhance their satisfaction, their well-being and their loyalty. Some recommendations will be given in conclusion.

METHODOLOGY

Participants

22 customers have been interviewed individually (12 women, mean age = 45 years, SD = 15). Figure 2 represents participants’ repartition by class of age. The recruitment of the customers was made using a data base from our experimental restaurant. This investigation was presented as a survey on the comfort factors at the restaurant. No particular mention of light was made. The interviews took place in a meeting room at the Research Centre before a lunch was offered to participants. All customers declared to go at the restaurant at least

ones a week for leisure. In addition, 3 waiters have been interviewed. They have all more than 5 years of experience in food and hospitality. They all worked in different types of restaurant: gastronomic, hostel or brasserie.

5

1 1

5

4

2

3

1

25‐35 36‐45 46‐55 56 and +

Women Men

Figure 2 : participants’ repartition by class of age (N=22).

Interviews

An interview guideline was used during the interviewing process. It followed a semi directive methodology: asking non directive questions and going from the general to the particular. Interviews started with general observations which led us to identify the customer’s conception of restaurant comfort. The questions then focused on the role of lighting in the general assessment of the spaces. The questions were as follows: i) Which type of restaurant do you prefer? ii) What is your first impression when you enter in a restaurant? What do you remark in first? iii) What is a “great atmosphere” for you? iv) What does comfort/well-being mean to you? Which criteria contribute to it? v) Which lighting ambiance do you expect at the restaurant? Would you like that restaurant change their lighting ambiance? vi) Would you like to control the light of your table? Interviews lasted around 30 to 60 minutes each.

The interview guideline was almost the same than for customers. Interviews started with general observations which led us to identify the waiters’ conception of restaurant comfort. The questions then focused on the role of lighting in the general assessment of the spaces. The questions were as follows: i) Where have you already worked? ii) What is a “great atmosphere” for you? iii) ) What does comfort/well-being mean to you? Which criteria contribute to it? iv) Which lighting ambiance do you expect in your restaurant? Would you like to have the possibility to change it? v) Would you like that customers could control himself their lighting on the table? Interviews lasted around 30 minutes each.

Data Analysis

The complete transcription of each interview stands for the corpora. Discourses analyses allow us to highlight some elements which were mentioned in the interviews. No interpretation has been done by the researcher who analyzed the corpora. These elements are analyzed according to five axes i) comfort criteria, ii) roles of light, iii) influence of light, iv) lighting needs and v) scenarii. This approach consists in emphasizing the subjective information of the customers on luminous environment (everyone has their own perception and evaluation), and in comparing discourses. The ultimate goal is to identify consensual criteria as well as differences.

RESULTS

Comfort criteria

Material environment is the first comfort criteria expressed by customers (e.g., chairs, tables) and then the atmosphere is expressed composed by service, sound environment, hospitality, decors, cleanness and dishes. Light is mentioned as the global environment including in the general atmosphere:

[Concerning lighting] « I think that it is part of the general ambiance, it composes the decors. » W33 (Women, 33 years)

« Comfort is based on equipment, tables, chairs, etc. The manner we are seating, the direct environment. Then we have the sound comfort because it is often very noisy in brasseries while in gastronomy restaurant is less noisy… » Waiter’s opinion

When customers enter in a restaurant, firstly, they notice the waiters’ hospitality and the atmosphere. Secondly, decors and space environment, then colors of walls, curtains and finally lighting is taking into account.

« I have rarely consciously considered lighting, it has never been a criterion to choose a restaurant but it takes part of the global ambiance: light, sound and space. » M45

 Light is not a criterion of choice but a marketing touch participating to the identity or thematic of the

restaurant.

« According to the concept of the restaurant we are going to apply a different lighting, everything depends on what we want to show to the customer and what we want to create as atmosphere. » Waiter’s opinion

Roles of light

Welcome. Symbolism of light is very important for the customer and the waiter are aware of this expectation. A lighted restaurant warmly welcomed the customer.

« It is important to switch on the light even for lunch, even if there are a lot of daily light to feel warmer and more welcome, to say to customers we are waiting for you… » Waiters’ opinion

Functional. The main objective of the light at the restaurant is to see what you have on your plate, the environment and to read the menu.

« Yes you should not be dazzled by projectors in all directions but I like to see clearly what takes place around us. » M78

Aesthetic. We noticed that light is often associated to the global ambiance or to the décor. Light permits to highlight objects or persons in the restaurant conducting to create a dynamic, warming or festive ambiance.

«I like the lights which embellish. There are lights which highlight circles if we had somebody whom we want to seduce we prefer to have a light which favours us. » W64

« For me candles does not serve to light, a candle serves to create an atmosphere that serves not to light thus it is rather an artificial light which I thus see it is lamp but candles for me serves not at all to light. Finally that creates no enough light for the comfort of the customer that is that creates a good atmosphere, we feel good when we have a candle on table moreover very often there are customers the table is enough lighted but they ask you for a candle because that creates an atmosphere, an intimacy with the person with whom we are etc… But that is not enough to light the table, what the customer is going to eat, to read a menu, etc … » Waiter’s opinion

Influence of the light

Food choices. A subdued light, a dark atmosphere or a cold light would lead to choose dishes with fat taste or copious. While a brighter place or if the weather is beautiful and if there is a natural light, the meal would be less fat and lighter.

Duration of the meal. If we do not see well or if the light is too aggressive, we shall stay less for a long time at table.

Atmosphere perception. In a dark place, people are quieter, less noisy while when the light is livelier, people are more excited.

“ [Brasserie] Because on a lively place very lit with a lot of noise many traffic we are tired and the nervousness is high whereas when we work in gastronomic restaurant we finish the day more relaxed generally it is really noticeable on both types of restaurant… " Waiter’s opinion

All this verbatim shows the influence of the light on the satisfaction and indirectly on the development of customer loyalty. It thus seems that a reflection around the light and around the lighting of the dining room is essential for a restaurant owner. For example, if the place is too dark and there is not enough light to read the menu, certain customers will not return.

Lighting needs

Customers emphasize that their lighting needs are related to several variables. We identified several situations for which needs in lighting of the users are different. The occasion and the moment of the day are strictly connected: at noon, the lunches are very often business lunches, while in the evening the dinner is more festive between friends, in family or in couple. The moment of the year, the season associated with the weather report and thus the outside natural light also modify needs in terms of lighting, especially in noon. The expectations towards the type of restaurant and/or the level of range of the restaurant will not also be the same.

The moment of the day. At noon, the meals are very often for business thus needs are important in terms of light for having a dialogue with the interlocutor, for observing these reactions, its behavior, a lively and stimulating light is preferred. The major objective of the lunch is to feed. While in the evening, more often between friends or in family thus we need less light, less strong light, more subdued that is a discreet light which does not draw the attention: an indirect lighting, on the sides which lights walls and decoration. The evening, the customers go to the restaurant to relax and eat by pleasure. The light is going to relax and to create an intimate atmosphere.

“Noon, well lit restaurant, to see what we have in our plate, after the evening it is particular: more cosy atmosphere, more subdued, not big lively lights, more pleasant, as if we were in our salon. In noon generally it is often within the framework of the work, the fact of being exposed to the light it is not important but in the evening it is good to be in an a little more intimate atmosphere. …” M30

What also characterizes noon, it is the presence of natural light that lead to a very clear and bright place.

«The light creates an atmosphere especially in the evening, at noon we have the daylight. » W58 “According to the moments of the day, the lighting is totally different because generally we take advantage of the daylight to light its room, we try to decrease a maximum the energy consumption especially now.” Waiter’s opinion.

Concerning colors, at noon, colors yellow, blue or green lead to a more cheerful place, while the evening, the atmosphere is more festive thus warmed colors as red, orange were expressed by customers. These warmed colors create a warming atmosphere as at home.

The social environment. The persons with whom we go to the restaurant are also a factor of variation of needs in light. In family or during a meal with colleagues, the light needs to be more important for seeing itself, for exchanging. With friends or in couple, the level of light can be lower. In couple, the atmosphere wants more subdued to create a more intimate, romantic atmosphere. It is also convenient to the relaxation. In terms of lighting, this subdued atmosphere can be translated by candles or light on the table: a discreet light which creates a private atmosphere and a light which embellishes. Concerning colors, the yellow, the green and the blue correspond to the relaxation.

“In couple, felted light and in group, more lively light because so big table, more difficult communication between feet of the table.” M51

The weather or the season. Changes of atmosphere can be also envisaged according to the seasons and thus the corresponding weather report. It exists a congruence according to the seasons with the proposed menu and the light. In summer, most of people prefer to eat outside and thus to take advantage of natural light, for the

lunch but also for the dinner, the light is not aggressive. In summer, the customers less need light than the winter: discreet lights on the table. The colors of the lightings are more floral or yellow. In winter, so the weather is gray, the customers need to find of the luminosity in the restaurant. Colors are warmer: orange, red, etc.

“In winter, I prefer when there is more light. (...) I would say that in summer if I have the feeling that the light is less strong, that would disturb me less. On the other hand in winter it is clear that I like having a little more light. (...) Clear and yellow light rather the summer and conversely I prefer white light in winter.” M40

The type of restaurant. Customer expectations also depend on types of restaurant that they chose. They expect that the bright atmosphere is in coherence with the cooking, the concept and the theme of the restaurant. In these cases, the bright atmosphere is more easily accepted if there is a harmony with the spirit of the restaurant because it is the food which is highlighted in these restaurants.

“In the brasserie Georges, a lot of neon, that does not disturb me because I know what to expect. According to the type of restaurant that we choose the atmosphere be going to be friendlier, more intimate...” M51

“The lighting has to adapt itself to the spirit of the restaurant, traditional or contemporary where the light is going to be different where we want to be surprised (…) The lighting has to adapt itself to the structure, to the room (…) The light has to be in adequacy with the environment. It is a little bit paradoxical because the customer likes to be surprised but he likes to have his marks.” Waiter’s opinion

The change of atmosphere allows surprising the customer but while keeping the integrity of the basic concept of the restaurant which the customer likes. Also, according to the level of range of the restaurant, the expectations can be different in terms of bright atmosphere. Furthermore, the light can be associated with the cleanliness of the restaurant.

Scenarios

What is paradoxical is that the customers wish to feel as at home but also as host. Thus, it is necessary to try to recreate the atmosphere of their housing environment by surprising them. It is worth noting that the scenario has to be in accordance with the theme of the restaurant and that there is a coherence in the change of atmosphere.

Different scenarios have been proposed by customers (e.g., dynamic lighting: brightness at the beginning of the meal and dimming at the end of the meal). Few parameters have been cited by customers to induce lighting changes. For instance, customers declare to want high-intense lighting at the beginning of the meal, at the entrance or with colleagues. This dynamics would follow the evolution of the menu, but also implies an individual management of every table or all the tables should have the same rhythm (e.g. the experimental restaurant of the Research Centre of the Institute Paul Bocuse).

“To read the menu we need all the same the light and then after if we, for example, have an apéritif we can dim the light, when the dish arrives we can raise just a little, because when we eat we need to see what we eat, but for example for the apéritif if there is a little less light, a little more subdued atmosphere, it is more pleasant.” W32

« We could imagine a rather strong light to begin because we meet each other, because we have an apéritif, because we need to see itself and then as the meal begins we decrease a little the light by putting very precise points of light on the table and then we could end the meal with small notes of colour. We would leave in a traditional way to end in a contemporary way that would be funny to see. I think that customer would be surprised by this change, can be that he would have the impression of dinner in 3 or 4 different establishments.” Waiter’s opinion

The dynamic light can guide the customer to its table and create a “Waouh effect” which personalizes and gives an identity to the restaurant.

Another recurring idea cited by the customers but also by the waiters is the separation of the room in small areas to isolate tables, for example by means of bright curtains. This diversity of small areas and

"privative" sectors is perceived as an argument of development of customer loyalty. The possibility of proposing two rooms is positively accepted by the customers.

“For me it is a choice of the restaurant owner in the room in which he welcomes us. I do not find that inconsistent that a restaurant has 4 rooms and that in and whether it is 4 different bright atmospheres.” W44

“For me it is always important to stay on this principle to create a space for the customer that it does not feel he in the middle of a room, that he feels that his table it is the center of the room. " Waiter’s opinion

Otherwise, participants would control the light of their table by themselves while others consider themselves as guests so they do not want to do anything. The latter is in agreement with the point of view of waiters.

“Anyway I always thought that the customer had to be there to take advantage but he had to avoid interacting with what we propose him because very often that be the latest fashion for a moment to make the customer interact but I think that we deviate from what we want to propose really and what we propose him and we risk to have a rather important modification of the end product which we wanted to present. " Waiter’s opinion

CONCLUSION

The role of the light

However in the sector of the catering and hotel business, the light plays an important role, most of the time unconsciously. The light is a strong symbol that the customer is welcome; a lit lamp means to the customer that we wait for him.

The light is also going to influence the behavior of the customers at the restaurant and is thus going to have an effect on their comfort and their well-being. It is thus important for the restaurant owner to take into account this sensory aspect during the conception and the creation of his establishment (Ryu & Han, 2011).

The light has two very different roles: the first one is to emphasize people and objects that is an aesthetic dimension while the second is to light to allow certain activities, it is the functional dimension. The light is often associated with the decoration, in the atmosphere and the customers do not pay it particularly attention. On the other hand, when they are disturbed by a lack or a surplus of light and when it prevents them from making an activity, they perceive the lighting.

Needs in terms of lighting are variable according to the situations

To the restaurant, needs vary, mainly, according to the moment of the day (lunch, dinner), the occasions and the persons who accompany us (family, friends, colleagues).

The recommendations in terms of scenarios

It is important to take into account these various situations at the restaurant to imagine the various scenarios that can be proposed. Various scenarios were proposed in the results section. However, the parameters to be made vary are only a few of them: the luminous intensity, the color of the light, the orientation and the position of lamps and also the number of light sources. Thanks to the modification of these parameters, numerous scenarios can be envisaged but a number restricted by scenarios countered preferable not to complicate the access to the system by the customer and the restaurant owner.

The customer of the restaurant considers as a guest at his host thus he wants to be surprised and taken care. The implementation of dynamic and automatic scenarios is relevant to surprise the customer and satisfy him. Furthermore, the creation of various rooms with different bright atmospheres could answer customer expectations according to the situations (work, leisure).

A difficulty revealing by all the professionals of the catering and hotel business is the sustainability of a bright atmosphere. The changes of staff and the changes of arrangement of the furniture lead to a loss of the harmony of the direction and the result can be annoying for the final user.

Managers of restaurant have to think about the lighting during the conception of their project and especially to make it durable. Indeed, many studies have shown the importance of the light in a customer’s experience. Our study has evidenced that it is relevant to take care of several aspects for lighting as situations (e.g., lunch or diner), target population and parameters of variation. The main proposal would be to have the opportunity to instate different areas in the restaurant differently lighted or to have only one service starting at the same time with a dynamic lighting (e.g., this is conceivable at the experimental restaurant of the Institut Paul Bocuse).

REFERENCES

Giboreau, A. (2009) De l'analyse sensorielle au jugement perceptif : l'exemple du toucher, Habilitation à diriger des recherches, Université Claude Bernard Lyon 1, 12 février 2009.

King, S.C., & Meiselman, H.L. (2010). Development of a method to measure consumer emotions associated with foods. Food Quality and Preference, 21(2), 168-177.

Küller, R., Mikellides, B., & Janssens, J. (2009). Color, Arousal, and Performance – A comparison of three experiments. Color Research & Application, 34(2), 141–152.

Lampi E. (1973). Hotel and Restaurant Lighting. Cornell Hotel and Restaurant Administration Quarterly, 13, 58-64.

Manav, B., Kutlu, R. G., & Küçükdoğu, M. S. (2010). The Effects of Colour and Light on Space Perception. Colour and Light in Architecture First International Conference 2010 Proceedings.

Meiselman, H. L. (2007). The impact of context and environment on consumer food choice. In Frewer L. & van Trijp H. (Eds.) Understanding consumers of food products (pp. 67–92). Cambridge: Woodhead.

Ryu, K., & Han, H. New or repeat customers: How does physical environment influence their restaurant experience? International Journal of Hospitality Management, 30(3), 599-611.

Veitch, J.A., & Newsham, G. R. (1998). Lighting Quality and Energy-Efficiency Effects on Task Performance, Mood, Health, Satisfaction and Comfort. Journal of the Illuminating Engineering Society. 27(1):107–29.

Vogels, I. (2008). Atmosphere Metrics: Development of a Tool to Quantify Experienced Atmosphere. International Symposium Creating an Atmosphere.

Frequency and magnitude of Emotional descriptors of hospitality customer reviews: an index validation

Samad Laaroussi & Lohyd Terrier

Ecole hôtelière de Lausanne Lausanne, Switzerland

Email: [email protected] [email protected]

ABSTRACT

The main objective of this paper is first to validate from the customers’ point of view the accuracy of the

emotional word descriptors based on Geneva Affective Label Coder (Scherer, 2005). What word is mostly describing a specific emotion? Which word is stronger than the others in describing the same emotion? The final objective of this exploratory research is to build an emotional index that measures, based on expressed commentaries, how customers are delighted or frustrated by a brand or a specific property. Methods initially used are a literature review, followed by a quantitative approach where respondents were asked to rank various terms depending on the intensity with which they described a specific emotion. The final version of the dictionary will be applied to over 50 random properties, located in London with approximately 2685 commentaries and 500,000 words to assess the accuracy of the suggested emotional index. Key words: social media, commentaries, text-mining, emotions descriptors

INTRODUCTION

The terms user generated content (UGC) and social media are often used interchangeably with Web 2.0 (Constantinides & Fountain, 2008; Kaplan & Haenlein, 2010). As hospitality organizations place more emphasis on social media for communication and feedback from customers and potential customers, it is important to examine the emotions, also referred to as sentiments, expressed in the context of social media in the post-purchase sharing of experiences. Emotion acts as a “memory marker” (Ahn, Liu & Soman, 2007), therefore it raises important issues as to how customers summarize their hotel experience in text-based commentaries on sites such as TripAdvisor. Particularly of interest are how they express emotions in these commentaries and how the negative and positive emotions are translated into words. The words people use reveal important aspects of their hotel experience evaluation. It is now broadly accepted that our consumption behavior and decisions are significantly influenced by our emotions (Kwortnik & Ross, 2007). In the context of decision-making processes, Morris, Woo, Geason & Kim (2002) concluded that emotions are twice as important as “facts” in the process by which people make buying decisions. The hospitality industry is more than ever an experience provider and consumers are not only buying a room or a meal but an extended stay or event. The hotel is often only one component of an experience which could also be in the context business, leisure or business / leisure. Therefore, depending on the travel motivation, the emotions experienced in a hotel vary by nature and intensity (Barsky & Nash, 2002). Emotions are subjective reactions that could be generated by a positive or negative stimulus in the hotel service scape (Barsky & Nash, 2002). Consequently, a measurement of the emotional experience based on the word expressed by guests may enhance our understanding not only of the drivers of on line recommendation but also the key differentiating factors from one brand to another.

Anonymity in online environments allows people to express themselves and assume authority which they could not as easily claim in an offline situation (Brown & Reingen, 2001). Earlier research (Murphy &

Holzgreve, 2008) show that motivation is usually altruistic but that the highest ranking negative motivation to publish comments is to” warn others” that they have had a negative experience rather than motives of “revenge” or “venting anger”. In the positive motivations, it is clear that both the motivation to comment, to support the hotel and share a positive experience is significant. This motivation and desire to share emotions and opinions is facilitated and encouraged by the wealth of platforms that are now available online, with commercial websites like TripAdvisor, which are actively soliciting opinions from hotel guests, particularly those that have booked through their partner travel agencies.

LITERATURE REVIEW

Emotions Studies regarding emotions have created considerable debated since James (1890) and Lange (1885)

foundational works. To avoid going into any of these details, related to the theoretical and methodological debates, we chose to focus on the cognitive evaluation approach (Sander, Grandjean & Scherer, 2005; Siemer, Mauss & Gross, 2007), such as the actual reference, to give meaning, differentiate and evaluate emotions (Coppin and Sander, 2010). They depend on the fact that the release of an emotion is due to a cognitive evaluation of a stimuli. To be more precise, an emotion would be a sequence of steps generating the subjective feeling that we would consider as an emotional episode. Going back to Scherer’s (2001) definition, the emotion would correspond to “a group of episodic variations within several parts of the organism, responding to events evaluated as important for the organism”. In other words, we should consider an emotion as a dynamical phenomenon, to which the manifest character is only an aspect. Scherer (1984) postulates indeed that an emotion is multidimensional, and implies five dimensions:

- (a) a component evaluating the cognitive aspect of the stimuli or situation, that would be an aspect part of the emotional process (Clore & Ortony, 2000),

- (b) a physiological component, - (c) a motor expression component (facial and vocal expression, posture and gestural), - (d) a motivational component, including tendency to action, - (e) a subjective feeling component, reflecting emotional experiences.

It is very frequent that this last component tends to be considered as an emotion and not only as one of its component. The subjective feeling corresponds to the changes operated in the four other emotional process components (Scherer, 2005). In the case of a client that discovers a dead insect in his bath.

- (a) He is surprised to find an insect in his bath - (b) This surprise, directly linked to the unpleasant nature of the stimuli, generates an increase of the

general level of activity, his eyes and his mouth opens… - (c) His face crunches, he jumps back - (d) He moves away from the insect - (e) He feels disgust

A few days later, when he will give his opinion regarding his stay in the hotel, it is this emotion, disgust, that will influence his speech. This conception of emotion answers the critics made towards basic emotions theories (Ekman, 1992), such as setting limits to the study of emotions, to seven primary emotions (surprise, anger, joy, sadness, fear, contentment and disgust) and reducing the precision of the emotional episode evaluation (Mandler, 1984). In fact, this model, suggests redrawing any theoretical limits to the amount of emotions. Potentially, every stimuli evaluation could generate a particular emotion.

Measuring Emotions On this basis, accepting this definition also implies reconsidering and multiplying the tools used to measure

emotions (Mauss & Robinson, 2009). Therefore, complete methods that could measure each aspect of an emotion do not yet exist. Thus, according to the objectives of the research, an emotion will be measured by the nervous system activity (although these results are still discussed, Cacioppo, Berntson, Larsen, Poehlmann & Ito, 2000), the level of arousal (Mauss & Robinson, 2009), the cerebral system activity (Izard, 2007; Panksepp,

2007), behavior measurement such as facial movement (Ekman & Friesen, 1971), or self-report measures (Robinson & Clore, 2002). These, could help come closer to the perception an individual will have of the emotional episode by asking him to auto-evaluate this episode. Furthermore, according to Robinson and Clore (2002) the self-report measures – when reporting to recent emotional episodes – provide a correct measurement of the subjective feeling experienced by the individuals. These self-report measures may become a reality through two types of methods:

- The first one implies asking individuals to report the experienced emotion by choosing one amongst a set of emotions. If this method allows collecting relatively simple answers, it also implies a restriction in the individual’s choice of answers. Furthermore, these categories are usually linked to the researchers’ objectives, and therefore could possibly direct and influence the individual’s answers.

- The second method requires individuals to express the emotion experienced in a free manner. Doing so, researchers avoid restricting individuals’ answers, getting closer to a natural setting, comparable to an online hotel journey survey. Nevertheless, giving entire freedom to individuals to name their emotions makes the results data process more complex. In fact, the custom aspect of this method, usually translates, in terms of results, into a considerable amount of labels, but a considerable lack of occurrence. It is therefore up to the researchers to realize a category, a posteriori, able to process the obtained quantitative results. This categorization, based on a semantic or intuitive ground, on X theory or Y theory, also brings the question related to the researcher’s subjectivity up.

To answer this question, and face the problems linked to a subjective coding of the emotional answers, Scherer (2005) suggests the use of a standard tool: The Geneva Affective Label Coder. Inspired by a macro Excel program, the GALC allows the coding of any written message with the help of 36 affective categories, each including words that enhances the use of a natural language, used to describe an emotion (synonym and associated words). This tool was created from an experimental survey, used to collect verbal labels involved in the description of episodes, or emotional situation, and several preexisting inquiries conducted on emotional terms (Averill, 1975; Gehm and Scherer, 1988; Russell, 1983). It enables a certain coordination of the collected data coded in a free manner, using a basic emotion glossary, based on cognitive evaluation theories (Coppin & Sanders, 2010). To this day, the GALC allows the coding of individual’s answers, according to the following categories: Admiration, amusement, anger, anxiety, being touched, boredom, compassion, contempt, contentment, desperation, disappointment, disgust, dissatisfaction, envy, fear, feeling love, gratitude, guilt, happiness, hatred, hope, humility, interest / enthusiasm, irritation, jealousy, joy, longing, lust, pleasure /enjoyment, pride, relaxation / serenity, relief, sadness, shame, surprise, tension /stress and two other categories (negative and positive) (Scherer, 2005). Nevertheless, the GALC may define the emotional valence of a message, it doesn’t yet give any information regarding the intensity of it. In fact, labels such as happy and euphoric may be related to the joy emotional category, they don’t necessarily express it with the same intensity. Yet, the intensity of an emotion is an essential aspect to define the impact it has, and also the reading the individual will make of it (Sonnemans & Frijda, 1994).

Emotions expressed online and hotels Are emotions online different? Certainly there are now more opportunities to express one’s opinions and

thoughts than ever before with a potentially wider audience including less censorship and more multi-media sharing of content. Social desirability of responses and monitoring it implies classic criticisms against self-report measures (Mauss & Robinson, 2009). Therefore, we could even think that online emotions are closer to reality than emotions measured with traditional tools. Desmet, Güiza Caiedo & Van Hout (2009) state that hotels do not generally measure emotions and rely on an assessment of service attributes rather than emotional measurements i.e. guest surveys. Desmet et al. (2009) gather data from customers regarding the online context using 14 emotions indicators and drew conclusions that particular eliciting conditions gave rise to particular emotions with the most common positive emotions expressed as enjoyment, satisfaction and admiration with the negative emotions most expressed concerning hygiene.

The main objectives of this paper are: 1. To validate from the customers’ point of view the accuracy of the word descriptors developed in the

“Geneva Affective Label Coder”, in the context of hotel customer reviews. 2. To apply and validate the accuracy of an emotional index (based on comments from Tripadvisor) by

investigating the differences between “Five star/ luxury” and “Economy /budget” hotels in term of emotions scores.

METHODOLOGY

Our methodology is divided in two steps Step 1: Based on the GALC, a dictionary composed of 14 positive emotions and 11 negative was created. On

this basis, a survey was created and published online. A snowball sampling technique was applied allowing to build a sample of 95 respondents. All respondents were asked to classify the key words associated with each of the 25 emotions by classifying them, based on their own point of view, according to their intensity levels. The survey clearly asked the respondents to project them-selves in the context of hotels comments. Therefore, we were able to calculate an average weight for the 101 word descriptors associated with the 25 emotions. Not all the words were equally interpreted by the reader or the publisher of commenst about hotel customer experiences. Theoretically, this allowed calculating the emotional load average, based on the frequency of a particular word in a comment left by a customer. By subtracting the total score of positive emotions from the negative ones, we were able to calculate an emotional net score index.

Step 2: consisted in applying our theoretical emotional net score index to a set of unsolicited comments collected

through Tripadvisor. London hotel properties were chosen as a test market for our emotional index because of its variety of proprieties and international travelers with a good combination of business and leisure. For a comparative purposes and for this paper only, this sampling frame was divided into “Five star/ luxury” and “Economy /budget” hotels. There are 107 economy /budget hotels category and 68 in the category of five star/ luxury rated in tripadvisor.com. Within each of these two samples, 30 properties are randomly selected and the 50 to 100 most recent comments were used per hotel. The sample of our study was composed of 30 economy /budget hotels (16 from one star and 14 of two star rating) and 1767 unique commentaries are collected. The five star/ luxury category is composed of 10 hotels with a total 918 commentaries collected to calculate the emotional net score index (ENSI) for each of these properties located in London. The total of commentaries used in this study was 2685 (> 500 000 descriptive words). The last step consisted of comparing the ENSI with the Ranking calculated by Tripadvisor based on the 1069 hotels located in the region of London.

RESULTS

An average weight for the 101 word descriptors associated with the 25 emotions was computed (appendix n°1). The theoretical formulation of the emotional net score index (ENSI) was the following:

ENSI = ∑npositiveemoscore ∑nnegativeemoscore Where ∑npositiveemoscore ∑ descriptors ∗ avergeweight nemotion

The ENSI for the total properties in our sample was calculated (appendix n°2). The ENSI score were then compared to the actual score attributed by Tripadvisor based on the total reviews collected for 1069 hotels in the region of London by using a correlation analysis. The results show a strong significant relationship (P= -0.735) sig 0.01 and proves the accuracy of the ENSI in estimating and classifying hotel performance based on the emotions they generate to their customers. On the other hand the strength of the relationship clearly varies by segment. In the Graph n°1 the listing of the hotels on the X axe is ascending from

the 1 star to five stars hotels. By moving from left to right and comparing the ENSI scores with Tripadvisor ranking, we can see that the ENSI has a stronger correlation with Tripadvisor ranking for the upscale categories of hotels. For example, the n° 1 hotel in London according to Tripadvisor’s ranking, also obtains the highest ENSI score.

Graph n°1: ENSI Scores Vs Tripadvisor official ranking

To better explore the accuracy and the validity of the ENSI calculation, a regression analysis was also performed by using the Tripadvisor official ranking as the dependant variable and the weighted average descriptors scores of the 25 emotions as the independents one. The model showed a high accuracy with an R square = 0.8 (details are provided in table n°1)

Table n°1: Regression table where the dependant variable is the Tripadvisor ranking and the independent variables are the 25 positive and negative emotions

Coefficientsa

Model Unstandardized Coefficients Standardized Coefficients

B Std. Error Beta

1

(Constant) 614.174 95.466 Admiration -2.711 3.193 -0.294Amusement -0.762 7.331 -0.032

Beingtouched / Gratitude -3.372 4.259 -0.311

Compassion 10.168 13.244 0.141

Contentment -2.935 2.772 -0.279Happiness 2.949 3.88 0.293

‐200

0

200

400

600

800

1000

ENSI Tripadvisor ranking

Hope 0.755 11 0.018Interest/ Enthusiasm -1.857 4.393 -0.14Longing -1.11 4.934 -0.12

Pleasure/ Enjoyment/Joy -7.37 6.06 -0.269

Pride -0.893 28.173 -0.007Relaxation/ Serenity 3.364 7.027 0.171Surprise 5.57 6.545 0.241Anxiety 5.615 17.603 0.056Boredom -4.292 10.775 -0.074Disappointment -4.892 5.457 -0.176Disgust 6.788 4.666 0.39

Dissatisfaction / Hatred / Desperation 19.219 19.38 0.166

Fear -0.658 5.686 -0.038Guilt -21.38 40.046 -0.084Irritation / Anger -1.024 18.617 -0.014Sadness 1.275 12.018 0.017Shame -9.72 13.173 -0.132

a. Dependent Variable: Tripadvisor ranking , R2 = 0.802

80% of the variance in the official Tripadvisor ranking in our sample could be explained by the Emotions measurement based on the weighted average score of each emotion. By showing a high level of convergence with the official ranking (based on the total comments of 1096 hotels in London), the approach based on emotions prove the validity of using a detailed set a positive and negative emotions to deliver more insight about customer experiences and ensure the convergence with the total macro ranking established by Tripadvisor.

Graph n°2: hotel positioning map based on the positive emotions expressed

0

20

40

60

80

100

120

140

160

180

51 Buckingham

Andaz Liverpool

Brown's Hotel

Edward lear Hotel

Fairway Hotel

Garden View Hotel

Holiday Inn ExpressWimbledon

Hotel 41

Hotel Verta

Ibis London Euston

London Town Hotel

Olivia Plaza HotelOne Aldwych

Plaza on the river

Renaissance ChanceryCourt

Sofitel St James

St. James Hotel and Club

The Capital Hotel

The Langham

The Milestone Hotel

The Soho Hotel

Threadneedles Hotel

Westbury Kensington

admiration

amusement

Beingtouched /Gratitude

Compassion

Contentment

Happiness

Hope

Interest/ Enthusiasm

Longing

Pleasure/ Enjoyment/Joy

Pride

Relaxation/ Serenity

Surprise

Graph n°2 reveals the positioning of the five stars hotels in our sample based on the positive emotion set. The number one hotel in London Hotel 41 shows clearly a high ability of generating a combination of positive emotion exceeding the competition. The other hotels can also identify the emotion that clearly differentiates them on the market.

CONCLUSIONS AND RECOMMENDATIONS

The objective of this research was to adapt the GALC in hospitality field. To do this, we have reduced Scherer's categories (2005) in 25 categories making sense to assess the quality of a hotel. Here, our dictionary, more than just a description of the emotional content of a message, can access its intensity. This is essential both to assess the valence of a message (positive and negative intensity), but also to create messages. In the interest of the comparability and cumulativeness of findings from different studies, we propose to use this index in future research on this topic. Thus, the results can be compared on a common basis (e.g. to create scenarios, or comments, needed to study emotions).

Beyond the mere validation of our dictionary, results also show that the emotional score allows us to predict the ranking of a hotel on Tripadvisor. Therefore, it offers to hoteliers the opportunity to assess the emotional impact of their hotel and to measure impact of this variable on its ranking on Tripadvisor. Finally, beyond the simple ranking on Tripadvisor, the emotional impact of a product is an essential element of customer satisfaction. Hoteliers could then use the dictionary to determine the variables on which they must work and those on which they can rely.

From a methodological point of view, the usage of unstructured and unsolicited data from Tripadvisor shows a real opportunity for researchers to understand more about customer experience without using the classical survey methods. The challenge is to translate this raw material and give a meaning to it by quantifying a qualitative content. For this purpose, the results of our research are very promising and encouraging to continue exploring this new field. On the other hand, there are obvious limitations related to the two samples used in this research and mainly the sample used to test the accuracy of the ENSI related only to London city hotels.

Based on our approach, hoteliers can now explore the impact of the experience their deliver to their customers and their ability to generate certain type of emotions. It is not only anymore about how satisfied my customers are about my hotel but how delighted, relaxed or inspired there are. Hoteliers can exploit the emotional appeal in these commentaries to improve brand image or sales conversions through search engine marketing optimization. The most frequent or important word descriptors could be used to improve the organic ranking through search engine websites. The set of positive and negative emotions could also be used to generate positioning maps (Graph n°2) and give hotelier a clear idea of how their value proposition and the brand values are perceived and interpreted by the customer. Additionally, identifying the key emotions that provoke recommendations is critical to hoteliers as they might concentrate on stimulating these emotions, through both tangible elements and non-tangible elements to encourage repeat visits and visible recommendation trough customer review websites and social media.

REFERENCES Ahn, H-K, Liu, M., & Soman, D. (2009), Memory markers: How consumers recall the duration of experiences, Journal of Consumer Psychology, 19 , 508-516. Averill, J.R. (1975). A Semantic Atlas of Emotional Concepts, JSAS Catalog of Selected Documents in Psychology 5, 330. (Ms. No. 421) Barsky, J., & Nash, L. (2002). Evoking emotion; affective keys to hotel loyalty. Cornell Hotel and Restaurant Administration Quarterly, 43(1), 39-46. Brown, J. J., & Reingen, P. H., (1987). Social Ties and Word-of-Mouth Referral Behaviour. Journal of Consumer Research, 14, 350-362. Cacioppo, J. T., Berntson, G. G., Larsen, J. T., Poehlmann, K. M., & Ito, T. A. (2000). The psychophysiology of emotion. In M. Lewis & J. M. Haviland-Jones (Eds.), The handbook of emotion. New York: Guildford Press. Clore, G.L., & Ortony, A. (2000). Cognition in emotion: always, sometimes or never? In R.D. Lane, & L. Nadel (Eds.), Cognitive neuroscience of emotion (pp. 24-61). Oxford: Oxford University Press. Coppin, G., & Sander, D. (2010). Théories et concepts contemporains en psychologie de l’émotion. In C. Pelachaud (Ed.). Systèmes d’Interaction Emotionnelle (pp. 25-56). Paris : Hermès Science. Constantinides, E., & Fountain, J.S. (2008). Web 2.0: Conceptual Foundations and Marketing Issues. Journal of Direct Marketing, Data and Digital Marketing Practice: Special Issue: Web 2.0, 9(3), 231-244. Retrieved March 17, 2010, from ABI/INFORM Global database. Desmet, P.M.A., Güiza Caicedo, D., & Van Hout, M, (2009). Differentiating Emotional Hotel Experiences. Paper and presentation at EuroCHRIE Helsinki. Ekman, P., & Friesen,W. V. (1971). Constants across cultures in the face and emotion. Journal of Personality and Social Psychology, 17(2), 124-129. Ekman, P. (1992). An argument for basic emotions. Cognition and Emotion, 6, 169-200. Gehm, Th. and Scherer, K.R. (1988). Factors Determining the Dimensions of Subjective Emotional Space, in K.R. Scherer (ed.) Facets of Emotion: Recent Research (pp. 99–114). Hillsdale, NJ: Erlbaum. James, W. (1890). The Principles of Psychology. Dover Publications. Kaplan, A.M., & Haenlein, M. (2010). Users of the World Unite! The Challenges and Opportunities of Social Media. Business Horizons, 53(1), 59-68. [Retrieved February 26, 2010, from ScienceDirect database.] Kwortnik, R.J., & Ross, W.T. (2007). The Role of Positive Emotions in Experiential Decisions, International Journal of Research in Marketing, 24, 324-335. Lange, C. (1885). Om Sinsbevaegelser : Et psykfysiologiske Studie. Copenhague : Rasmussen. Mandler, G. (1984). Mind and Body. New York: Norton Mauss, I. B., & Robinson, M. D. (2009). Measures of emotion: A review. Cognition and Emotion, 23, 209-237. Morris, J. D., Woo, C., Geason, J. A., & Kim, J. (2002). The power of affect: Predicting intention. Journal of Advertising Research, 42(3), 7-17.

Panksepp, J. (2007). Neurologizing the psychology of affects: How appraisal-based constructivism and basic emotion theory can coexist. Perspectives on Psychological Science, 2(3), 281_295. Robinson, M. D., & Clore, G. L. (2002). Episodic and semantic knowledge in emotional selfreport: Evidence for two judgment processes. Journal of Personality & Social Psychology, 83(1), 198_215. Russell, J.A. (1983). Pancultural aspects of the human conceptual organization of emotions, Journal of Personality and Social Psychology, 45, 1281-8. Sander, D., Grandjean, D., & Scherer, K.R. (2005). A system approach to appraisal mechanisms in emotion. Neural Networks, 18, 317-352. Scherer, K.R. (1984). On the nature and function of emotion: a component process approach. In Scherer, K.R. & Ekman, P. (Eds.). Approaches to emotion (pp. 293-317). Hillsdale, Erlbaum. Scherer, K.R. (2001). Appraisal considered as a process of multi-level sequential checking. In K.R. Scherer, A. Schorr, & T. Johnstone (Eds.). Appraisal processes in emotion: Theory, Methods, Research (pp. 92-120). New York and Oxford: Oxford University Press. Scherer, K.R. (2005). What are emotions? And how should they be measured? Social Science Information, 44(4), 695-729. Siemer, M., Mauss, I., & Gross, J.J. (2007). Same situation – different emotions: How appraisals shape our emotions. Emotion, 7, 592-600. Sonnemans, J., & Frijda, N.H. (1994). The structure of Subjective Emotional Intensity. Cognition & Emotion, 8(4), 329-350.

Appendix n°1

Admiration/Awe

admirable 2.97

adorable 2.91

awesome 3.69

wonderful 2.34

Amusement

amusing 3.09

funny 3.29

laughable 3.69

playfull 2.69

smile 2.57

Anxiety

anxious 2.77

apprenhensive 1.91

nervous 3.43

worried 1.69

Beingtouched / Gratitude

affect 4.40

grateful 3.57

thank 3.43

touching 2.69

Boredom

boring 3.97

indifferent 3.91

Tedious 3.26

weary 3.60

Compassion

compassion 3.54

empathetic 3.60

pitiful 3.20

Contentment

comfortable 3.40

content 3.77

Fulfilled 3.63

satisfy 3.34

Disappointment

disappointed 3.80

disgruntlement 3.06

frustating 3.80

sour 3.40

Disgust

abhorrent 3.83

disgusting 3.86

dislike 2.91

repulsive 3.20

sickening 3.00

Dissatisfaction / Hatred / Desperation

desperate 3.97

Disatisfied 3.83

hate 2.80

unhappy 3.63

Fear

afraid 4.31

dreadful 3.26

fear 3.00

horrific 3.29

Feelinglove fond 3.57

friendly 4.14

lovely 3.89

tenderness 3.00

Guilt

blame 3.46

guilty 3.66

remorse 4.29

Happiness

blissful 4.23

cheerful 2.71

delightful 2.77

enjoyable 4.46

happy 3.49

Hope

confident 4.06

faith 2.29

hopeful 3.71

optimistic 2.11

Interest/ Enthusiasm

attentive 3.94

curious 2.94

eager 4.03

interesting 1.89

Irritation / Anger

angry 2.86

annoying 2.86

furious 3.37

grumpy 2.29

irritating 1.97

Longing

fantastic 3.14

longing 3.60

regret 4.00

wish 4.23

Pleasure/ Enjoyment/Joy

glowing 2.71

joy 3.71

pleasant 3.34

thrilled 4.03

Pride

distress* 3.00

pride 3.91

proud 3.06

strain* 3.34

Relaxation/ Serenity

calm 3.23

casual 3.63

easily 3.80

peaceful 3.09

relaxed 3.34

Sadness

gloomy 3.86

sad 3.71

tearing 4.54

Shame

ashamed 3.23

crush 3.11

disgraceful 3.11

embarrassing 3.57

shame 4.57

Surprise

amazing 3.86

astonishing 3.51

stunning 4.40

surprising 4.09

Appendix n°2

Sample of the study ENSIAn-Nur Hotel 7.228571429

Apollo Hotel 71.45714286

Beaconsfield 12.62857143

Boka Hotel 55

Chiswick 20.68571429

Colliers 11.82857143

Corbigoe 47.37142857

County London 126.6285714

Dolphin 84.25714286

Enrico 104.3142857

Flexistay Apparthotel 12.51428571

Lords Hotel 68.05714286

Olimpic Hotel -10.94285714

Park Hotel 13.4

Devonport House 460.1428571

Holiday Inn Express 324

Holiday Inn Newbury 171.7714286

Ibis London city 229.0857143

Luna & Simone Hotel 374.8

Top Hotel Kensington Garden 168.6571429

51 Buckingham 428.2571429

Andaz Liverpool 556.0571429

Brown's Hotel 260.1142857

Edward lear Hotel 138.8

Fairway Hotel 90.48571429

Garden View Hotel 97.85714286

Holiday Inn Express Wimbledon 97.82857143

Hotel 41 708.5428571

Hotel Verta 175.0857143

Ibis London Euston 174.4285714

London Town Hotel 165.2571429

One Aldwych 228.1714286

Plaza on the river 545.7142857

Renaissance Chancery Court 189.5428571

Sofitel St James 402.6857143

St. James Hotel and Club 606.8857143

The Capital Hotel 479.6571429

The Langham 243.3714286

The Milestone Hotel 676.8857143

The Soho Hotel 515.6

Threadneedles Hotel 747.7142857

Westbury Kensington 62.54285714

Hotel 1*

Hotel 2*

Hotel 5*

Examine the Antecedents and Outcomes of Relationship Quality

Christina Geng-qing Chi, Ph. D. (Corresponding Author)

School of Hospitality Business Management Washington State University

Pullman, Washington, USA 99164 Tel: (509) 335-5828 Fax: (509) 335-3857

Email: [email protected]

Wen Biyan, Ph. D. School of Management, Jinan University

Guangzhou, P. R. China 510632 Email: [email protected]

In this study, the authors examined the antecedents and outcomes of relationship quality. Drawing on consumer behavior and service marketing literature, the authors proposed a comprehensive model that hypothesized the interrelationships between service fairness (interactional, procedural and distributive justice), service quality (hard quality and soft quality, customer satisfaction, customer trust, affective commitment, repurchase intentions, and word-of-mouth intentions. The LISREL results indicate that 1) relationship quality is consist of three interrelated components: customer satisfaction, trust and affective commitment; and a causal chain is established that satisfaction influences trust which in term influences commitment; 2) perceived justice and service quality are antecedents to relationship quality; 3) the outcomes of relationship quality are customers’ repurchase and referral intentions, with customer satisfaction, trust and affective commitment all directly leading to referral and WOM intentions. Key words: relationship quality; perceived justice; hard quality; soft quality; affective commitment; trust

Introduction

Quality of customer relationships has been widely studied in the academic marketing literature for the past three decades (e.g. Crosby et al. 1990; Bejou et al. 1996; Bowen and Shoemaker, 1998; Garbarino and Johnson, 1999; Scanlan and McPhail, 2000; Roberts et al. 2003; Huang and Chiu, 2006; Hyun 2010). Earlier studies concentrated more on industrial products, but in recent years the focus has changed to services, either business-to-business or business-to-customers. The main research questions addressed by these studies are related to the conceptualization of relationship quality and/or its antecedents and consequences. Depending on survey contexts, the antecedents of relationship quality that were examined vary considerably from study to study. Athanasopoulou (2009) summarized these antecedents into four major categories: 1) characteristics of the two relationship parties (buyer and seller), for example, similarity between seller and buyer; seller’s attributes such as their expertise/strengths, reputation, and their ethical behaviors and orientation; buyer and seller’s orientation towards relationships, etc.; 2) characteristics of the relationship, for instance, length/duration of the relationship, relationship termination/switching costs, relationship benefits, the nature and quality of communication between the two relationship parties, etc.; 3) characteristics of the product/service offered, for example, product performance, service quality, etc.; and 4) the role of environment such as economic, political, technical, etc. There were more consensuses on the consequences of relationship quality. High quality relationships will result in increased customer retentions/loyalty, which is the ultimate goal that companies pursue in order to maintain a sustainable competitive edge.

The hospitality industry has long been interested in developing high quality relationships with their customers, and different studies have attempted to discover what lead to relationship quality. For example, Bowen and Shoemaker (1998) examined antecedents of building relationships with luxury hotel guests, including benefits, value, certainty and trust. Scanlan and McPhail (2000) identified four attributes that were most influential in forming long term relationships with business travelers at upscale hotels: personalization, social bonding, reliability and familiarization. Kim, Han and Lee (2001) studied three variables that may affect relationship quality in luxury hotels: guest confidence, guest contact and communication between frontline employees and hotel guests. In another study that’s conducted in luxury hotel setting, Kim and Cha (2002) investigated four constructs that may influence relationship quality: customer orientation, relational orientation, mutual disclosure, and service provider attributes. There are also relationship quality studies conducted in other hospitality segments. For instance, Lee and Hiemstra (2001) investigated relationship quality from meeting planners’ perspective and tested the following factors that may affect relationship quality: frequency and feedback of communication; salespersons’ expertise, willingness and power; gender difference, and turnover. Kim, Lee and Yoo (2006) selected luxury restaurants as the survey context and studied seven predictors to relationship quality: physical environment, food quality, customer orientation, communication, relationship benefits, and price fairness. Hyun (2010) examined what factors influence relationship quality in the chain restaurant industry and identified five attributes: food quality, service quality, price, location and environment.

However, few previous studies paid attention to the role of perceived justice in the development of cooperative long-standing relationships, even though researchers in philosophy and social psychology suggest that justice is the starting point in relationship building between organizations and individuals. In the marketing literature, perceived justice is primarily studied in the service recovery context whereby perceived justice is found to be a major contributing factor to customers’ post recovery satisfaction and positive behaviors (Tax et al. 1998; Blodgett et al. 1997; Chebat and Slusarczyk 2005). Additionally, a few marketing channel relationships studies examined fairness as a determinant of relationship quality (Kumar et al. 1995; Anderson and Weitz, 1989, 1992). This study will measure the role of perceived justice in relationship development during normal service delivery and consumption settings.

Numerous studies supported that service quality, i.e. customers’ evaluation of a service provider’s

performance, will lead to customer satisfaction and loyalty (e.g. Cronin and Taylor 1992; Anderson and Sullivan 1993; Anderson et al., 1994). This study will study service quality as another antecedent to long term relationship between service firms and customers.

Drawing on consumer behavior and service marketing literature, a comprehensive model was proposed

that hypothesized the interrelationships between service fairness (interactional, procedural and distributive justice), service quality (hard quality and soft quality, customer satisfaction, customer trust, affective commitment,

repurchase intentions, and word-of-mouth intentions. The model was tested using data collected from eight hotels located in different parts of China.

LITERATURE REVIEW

Components of Relationship Quality (RQ)

Relationship quality between end customers and companies refers to customers’ perceptions of how well the relationship fulfills their needs (Hennig-Thurau et al. 1997). Although there is no common consensus on the conceptualization of relationship quality, it is regarded as an overarching concept that consists of several key components. Athanasopoulou (2009) conducted a comprehensive literature review of relationship quality studies from 1987 to March 2007. He observed that most studies operationalized relationship quality with three dimensions: satisfaction, trust and affective commitment, especially in service-related research. This study adopted the same approach. In this study, satisfaction refers to customers’ overall evaluative judgment about their service/product consumption experience (Westbrook & Oliver 1991; Westbrook 1987). Trust exists when customers have confidence on a company’s integrity and are willing to rely on the company to provide long-term interests for them (Morgan and Hunt, 1994; Crosby et al., 1990). Commitment is defined as customers’ enduring desire to maintain a long term relationship with a company (Moorman et al. 1992). Affective commitment reflects a customer’s emotional attachment to a company and is based on feelings of identification, affiliation and loyalty (Gundlach et al. 1995; Mattila 2006). Customer satisfaction is at the core of relationship quality. When a customer is not satisfied with the service provided by a company, he/she cannot be expected to have a good relationship with the company. Trust is the cornerstone of long-term relationships, which is cultivated over the course of successful and satisfactory interactions between customers and firms (Nicholson et al 2001). Commitment is another essential ingredient for successful long-term relationships (Gundlach et al 1995) and it is built on customer satisfaction and trust. The relationship literature has treated the three core variables of relationship quality as interrelated rather than independent, and established a causal chain that satisfaction influences trust which in term influences commitment (Garbarina and Johnson 1999; Morgan and Hunt 1994). Therefore the following hypotheses were drawn:

H1: customer satisfaction has positive influence on a) customers’ trust for the company, and b) customers’

affective commitment. H2: customer trust has positive influence on customers’ affective commitment.

Antecedents of RQ Service Fairness

According to social exchange theory, people tend to assess the equity of an exchange in terms of outcome, procedure and interactions between exchange parties, and determine their behaviors thereafter (Adams, 1965). Justice theory can be used to explain the relationship between customers and service enterprises during various service encounters. Distributive justice refers to customers’ perceived fairness of the outcomes received from a service exchange. Procedural justice concerns customers opinions on a service company’s process and procedures used in arriving at the outcomes. Interactional justice addresses customers’ views on the attitude and behavior with which the service company and its staff treat them (Blodgett et al. 1993), such as being respectful, polite, and fair. Previous studies indicated that customers’ justice evaluation affects their level of satisfaction which further leads to customers’ trust and commitment (Andreassen, 2000; Hocutt et al., 1997; Sparks and McColl-Kennedy, 2001; Tax et al. 1998; DeWitt et al., 2007). The following hypotheses are therefore developed:

H3: a) Interactional justice, b) procedural justice, and c) distributive justice have positive influence on

customer satisfaction.

Service Quality Service quality refers to customers’ overall impression of the relative inferiority/superiority of an

organization and its services (Bitner and Hubbert, 1994). Service quality has received considerable attention in the marketing literature due to the key role it plays in differentiating service products and building competitive edge. The most well-known scale to measure service quality (SERVQUAL) was developed by Parasuraman, Zeithaml, and Berry (1985, 1988) who proposed a five-factor structure (22 items): reliability, responsiveness, assurance, empathy and tangibles. Johnston (1995) developed a more complete list of service quality determinants (include all SERVQUAL items) and found that some determinants are primarily satisfiers and others are predominantly

dissatisfiers. Driver and Johnston (2001) classified Johnston’s list of attributes (1995) as interpersonal and non-interpersonal (shorthand as soft and hard, respectively). Hard (non-interpersonal) quality entails attributes such as availability, comfort, cleanliness/tidiness, functionality, and security; while soft (interpersonal) quality includes attributes such as attentiveness/helpfulness, care, communication, courtesy, and friendliness. The link between service quality and satisfaction has been well established (Cronin and Taylor 1992; Anderson and Sullivan 1993; Anderson et al., 1994; Cronin et al. 2000; Baker and Crompton 2000), it is thus proposed that:

H4: a) Hard quality and b) soft quality have positive influence on customer satisfaction.

Relationship between service fairness and service quality Berry (1995) has pointed out in On Great Services that fairness/justice and service quality are inseparable.

If a customer thinks a service company is not fair, he will also think the company has poor service quality. Service fairness is expected to influence service quality because justice dimensions correspond with factors that determine quality (Brady and Cronin 2001). However, few empirical studies investigated the relationship between service fairness and service quality. Han et al. (2008) examined an integrative service loyalty model in which service fairness and service quality were two evaluative antecedents to customer satisfaction, and service fairness was found to significantly influence service quality which in turn influenced customer satisfaction. Aurier and Siadou-Martin (2007) studied the impact of the three justice dimensions on service quality and satisfaction in the context of a customer experience evaluation (service delivery). They observed significant direct effects of perceived justice on service quality, and indirect effects of justice on customer satisfaction via quality. More specifically, service quality in their study was operationalized as outcome quality (the core service), interaction quality (functional quality), and environment quality. Outcome and environment quality are similar to hard quality in our study, while interaction quality is close to soft quality. Aurier and Siadou-Martin (2007) hypothesized the path leading distributive justice to outcome quality, and the paths leading procedural and interactional justice to interaction quality, all of which were found to be significant. Based on the above review, we propose:

H6: a) Procedural justice and b) distributive justice have positive influence on hard quality. H7: a) Interactional justice and b) procedural justice have positive influence on soft quality.

Outcomes of RQ There are a lot of benefits derived from strong relationship quality between a company and its customers, among them, the most prominent ones are customer retention/loyalty and their positive WOM intentions (Garbarino et al, 1999; Verhoef et al, 2002; Kim et al, 2001; Kim & Cha, 2002; Lee & Hiemstra, 2001; Hennig-Thurau et al, 2002; Gustafsson et al. 2005; Papassapa & Miller 2007; Kim et al, 2006; Hyun 2010). Strong relationship quality indicates that customers are satisfied with a company’s past performance, trust the company’s future performance and feel emotional commitment to the company (Roberts et al. 2003; Hyun 2010). Satisfied customers are more inclined to behave in a way that’s beneficial to the company. Customer trust and commitment also lead to cooperative and positive behaviors that are conductive to company success. In other words, when customers develop high quality relationship with a company, they are more likely to engage in repurchase and referral behaviors. Consequently, it is hypothesized that:

H9: customer satisfaction has positive influence on a) customers’ repurchase intentions, and b) WOM intentions.

H10: customer trust has positive influence on a) customers’ repurchase intentions, and b) WOM intentions. H11: customers’ affective commitment has positive influence on a) customers’ repurchase intentions, and b)

WOM intentions.

Conceptual Model

A comprehensive literature review showed a lack of empirical studies examining service fairness and service quality simultaneously as antecedents to relationship quality. In order to explore in depth the antecedents and outcome of relationship quality, a conceptual model was proposed as shown in Figure 1. In this model, service fairness was conceptualized as three dimensions: interactional justice, procedural justice and distributive justice. Service quality was operationalized with two dimensions: hard quality and soft quality. Customer satisfaction is related to customers’ evaluation of their service consumption experience. Trust represents the trust customers have

of a service company. Affective commitment reflects customers’ emotional attachment to the hotel. Customers’ behavioral intentions were measured using customers’ repurchase and word-of-mouth intentions.

METHODOLOGY

Survey instrument

Based on a comprehensive literature review and findings from focus groups and in-depth interviews with managers, employees and customers of several service firms, the first draft of the survey instrument was developed. An exploratory study was conducted in order to assess the internal consistency of the questionnaire items, and the reliability and validity of the measurement model. Data was collected from a convenient sample of about 600 customers in a three-star hotel in Guangzhou, China. A reliability analysis (Cronbach’s alpha) was performed for all the constructs in the model, including procedural justice, interactional justice, distributive justice, hard quality, soft quality, customer satisfaction, customer trust, affective commitment, repurchase intentions and word-of-mouth intentions. The Cronbach’s alphas for all 10 constructs exceeded the cut-off value of 0.7 (ranging from 0.93 to 0.98), considered a good indication of reliability (Nunnally & Bernstein, 1994). Based on the results of the exploratory study and feedbacks from several service marketing scholars, the final version of the survey instrument was developed. Each construct in the conceptual model is measured with multiple items and all questions were measured on a 7-point likert scale with 7 indicating strongly agree and 1 being strongly disagree.

The scale of perceived justice was adapted from Seiders and Berry (1998), Severt (2002) and Clemmer and

Schneider (1996)’s study. Interactional justice was measured from six aspects: hotel personnel’s honesty, politeness, respectfulness, enthusiasm, and fair treatment of customers (2 questions). Procedural justice was measured with six questions: the hotel’s service procedure was fair, sensible, clear, flexible, prompt, and the hotel tried to minimize information errors. Distributive justice was measured with five items: fair price, fair outcome relative to what’s paid (2 questions), and the hotel provided what customers need without mistake (2 questions).

Seven items were used to measure hard quality: adequacy, cleanliness, physical comfort, and serviceability

of service facilities, reliability and timeliness of service, and customers’ safety. Soft quality was measured with five items: hotel staff’s willingness to serve, commitment to work, communication skills, caring about customers’ needs, and being proactive to serve customers (Johnston, 1995).

Customer satisfaction was measured with four items: customers’ satisfaction with the experience and the

service, and customers’ feeling that they made a right and wise choice (Hausknecht, 1990; Cronin et al. 2000). Affective commitment was consisting of five items: likeness and enjoyment of the hotel, emotional attachment and personal attachment (2 questions) to the hotel. Based on Verhoef et al. (2002)’s trust scale, a 5-item measurement was established to measure customer trust: the hotel’s trustworthiness to provide good service (4 questions) and the hotel’s care about customers’ interest. Customers’ repurchase and word-of-mouth intentions were both measured with three questions (Parasuraman, Zathaml, and Berry, 1996).

Fig. 1 Conceptual Model

IJ

PJ

DJ

HQ

SQ

S AC

T

WI

RI

In order to reduce the number of estimated coefficients and increase indicator reliability and estimated coefficients stability, the items of each construct were split into two groups and the mean of each group was used as construct indicators (Sweeney et al., 1999; Han et al., 2008).

Survey procedure and sampling

This study was conducted in two stages. First an exploratory study was implemented to examine the reliability and validity of the measurement model, using data collected from a three star hotel in Guangzhou, China (located in the southeast part of China). A total of 800 surveys were distributed to hotel guests by the front office staff during the checked-out, and 588 usable ones were received, indicating a response rate of 73.5%. In the exploratory sample, more than half of the respondents were male (56.8%). Large percentage of the respondents (65.2%) was aged between 31 and 50, with approximately 20% of the respondents 30 years old and under, and another 14.3% over 50 years old. A large majority of the respondents (65.9%) were college/university graduates or post graduates. The following were the respondents’ occupation profile: public sector (18.3%), private enterprises (33.2%), and self-employed (40.7%).

Next, a validation study was conducted with data drawn from eight hotels located in various regions of

China: Gansu (northwest), Henan (north central), Hubei (south central), Yunnan (southwest), and Inner Mongolia (north). These hotels were independent domestic hotels with different star ratings: five of them were rated two-star and two were rated three-star by China’s National Tourism Bureau (http://www.travelchinaguide.com/hotel/rate.asp). Questionnaires were mailed to the general managers of these hotels with detailed survey procedure instructions. One thousand and twenty nine (1,029) usable surveys were collected from 1,300 surveys distributed by the front office staff to guests when they checked out, representing a 79.2% response rate. As for validation sample, male respondents accounted for about half (51.4%). Over half of the respondents (57%) were aged between 31 and 50, with 35.6% of the respondents 30 years old and under, and 7.6% over 50 years old. Over sixty percent of the respondents (62.2%) were college/university graduates or post graduates. It was almost an equal split in terms of the respondents’ occupation: public sector (26.7%), private enterprises (27.6%), and self-employed (25.1%).

RESULTS

Analysis of measurement model

In the exploratory study, the Cronbach of the 10 constructs is between 0.93 and 0.96, which shows the high internal consistency of each construct. Confirmatory factor analysis was conducted to test the measurement model using LISREL 8.80. The various measures of overall model goodness-of-fit suggest a satisfactory model fit. χ² value is 302.61 with 154 degrees of freedom (p < 0.001). Due to the χ² value’s sensitivity to sample size and model complexity, other goodness-of-fit indices were also used to assess the overall fit of the measurement model. The χ² value over degrees of freedom is 1.965, between 2.0 and 3.0; NFI, NNFI, CFI, IFI, RFI, GFI and AGFI are respectively 0.98, 0.99, 0.99, 0.99, 0.97, 0.96, 0.93 - all greater than the recommended level of 0.90; RMR is 0.072 and RMSEA is 0.041, smaller than the cut off value of 0.08 (Hu and Bentler, 1999).

Next the uni-dimensionality, reliability and validity of the measurement model were assessed. All indicator

loadings were found to be significant at the 0.01 level, confirming the posited relationships among indictors and constructs. The composite reliability (CR) of each variable exceeds the suggested level of 0.70, indicating the internal consistency among the 11 sets of construct indicators. All average variance extracted (AVE) values are larger than the minimum cutoff of 0.5, suggesting that the indicators are representative of the latent constructs. The convergent validity for the measurement model is thus established. To examine the discriminant validity of the measurement model, the AVE values for the latent constructs were compared to the squared correlations between the corresponding constructs (Fornell and Larcker, 1981), and none of the squared correlations surpasses the AVE. The above tests indicated that the discriminant validity is upheld for the measurement model.

Analysis of structural model

In the validation study, the structural model was estimated using maximum likelihood estimation. The fit indices of the model are as follows: χ² value = 852.18 with 183 degrees of freedom (p < 0.001); NFI = 0.99; NNFI =

0.99; CFI = 0.99; IFI = 0.99; RFI = 0.99; GFI =0.93; AGFI = 0.90; RMR = 0.059; RMSEA = 0.060. The results show that the structural model has fairly high fit to the data. The significance tests for the estimated path coefficients provide the basis for accepting or rejecting the proposed relationships between latent constructs (hypotheses). Table 1 shows the results.

Table 1 Standardized Structural Path Estimates

Hypotheses Path Standardized estimates t-value Results

H1a S → T 0.56 18.04 Supported H1b S → AC 0.62 16.17 Supported H2 T → AC 0.11 2.72 Supported H3a IJ→S 0.08 1.85 Not Supported H3b PJ→S 0.12 2.25 Supported H3c DJ→S 0.33 6.37 Supported H4a HQ → S 0.31 7.64 Supported H4b SQ → S -0.01 -0.20 Not supported H5a PJ→HQ 0.54 11.49 Supported H5b DJ→HQ 0.29 6.47 Supported H6a IJ→SQ 0.44 11.51 Supported H6b PJ→SQ 0.41 10.86 Supported

H7a S→RI 0.29 5.67 Supported H7b S→WI 0.21 4.16 Supported H8a T→RI 0.40 9.99 Supported H8b T→WI 0.55 13.88 Supported H9a AC→RI 0.23 4.88 Supported H9b AC→WI 0.16 3.46 Supported

IJ = interactional justice PJ = procedural justice DJ = distributive justice HQ = hard quality SQ = soft quality S = customer satisfaction T = trust AC = affective commitment RI = repurchasing intentions WI = WOM intentions

Hypotheses 1 and 2 test the inter-relationships between the three components of relationship quality, and all hypotheses are supported, confirming findings from prior literature that customer satisfaction (S) influence affective commitment (AC) directly and indirectly through trust (T).

Hypotheses 3 to 6 examine the antecedents to relationship quality (H3 – 4) and the inter-relationships among

these antecedents (H5–6). Only two links are found not significant: the link between interactional justice (IJ) and customer satisfaction (H3a), and the link between soft quality (SQ) and customer satisfaction (H4b).

Hypotheses 3a-c which proposed direct positive relationships between the three justice dimensions and

customer satisfaction are largely supported, indicating that customers’ perception of procedural justice (PJ) and distributive justice (DJ) may directly lead to customer satisfaction (H3b and H3c respectively), whereas interactional justice has no significant direct impact on customer satisfaction.

Hypotheses 4 a-b hypothesized direct positive relationship between service quality and customer

satisfaction with mixed results, suggesting that hard quality (HQ) directly impacts customer satisfaction (H4a), but soft quality does not directly influence their satisfaction.

Hypotheses 5 and 6 for linking perceived justice and service quality are supported, suggesting that

procedural justice (H5a) and distributive justice (H5b) positively influence hard quality; while interactional (H6a) and procedural justice (H6b) positively influence soft quality.

Hypotheses 7 to 9 predict outcomes of relationship quality, and all proposed paths are found to be

significant. Customer satisfaction, trust, and affective commitment all directly lead to repurchase intentions (RI) and word-of-mouth intentions (WI). This finding is consistent with that of previous studies.

Conclusions

The LISREL results indicate that 1) relationship quality is consist of three interrelated components: customer satisfaction, trust and affective commitment; and a causal chain is established that satisfaction influences trust which in term influences commitment; 2) perceived justice and service quality are antecedents to relationship quality; 3) the outcomes of relationship quality are customers’ repurchase and referral intentions, with customer satisfaction, trust and affective commitment all directly leading to referral and WOM intentions. The results of this study validated the major hypothesis of this paper: customers’ judgment of service fairness and service quality play an important role in customer-enterprise relationship which in turn affects customers’ post consumption behaviors.

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HOTEL SEARCH AND SELECTION ATTRIBUTES FOR LEISURE TRAVELERS – THE CASE OF SWISS OFFICIAL STAR RATING

Horatiu Tudori*, Senior lecturer Ecole hôtelière de Lausanne

[email protected]

Francine Federer, Graduate Ecole hôtelière de Lausanne

[email protected] Abstract The paper compares the usage of the Swiss Official Star Rating versus different information sources

such as traveler review platforms, social media or online travel agencies, and new hotel selection attributes such as user generated hotel reviews. The study examines the usage of the star rating filter existing on search websites compared to other online filters. The survey consists in a self-administrated questionnaire distributed on paper (93 responses) and online (265 responses). The study demonstrates empirically that the Swiss Official Star Rating system is frequently used as online filter, but it is not a source of information consulted frequently and it is not an important attribute to consider by leisure travelers when selecting a hotel.

Status-Seeking Consumer Behaviour and its Impact on the Hospitality Consumption of Young Professional

Females

Kimberley Anne Kirk-Macaulay Bournemouth University UK

Dorset House Talbot Campus

Fern Barrow Poole, Dorset BH12 5BB

e mail: [email protected]

Dr Susan Horner Bournemouth University UK

Dorset House Talbot Campus

Fern Barrow Poole, Dorset BH12 5BB

e mail: [email protected]

ABSTRACT

Understanding consumer behaviour in hospitality purchasing is essential (Williams 2002). The large variety of goods and services available in the modern world allow consumers to make clear statements about their values, personalities and aspirations (Peter and Olson 2005). This research investigated the effect of status-seeking hospitality consumer behaviour amongst young professional females (YPFs), an important new market segment. A focus group was used to elicit ideas, raise issues and gain a greater understanding of consumer behaviour relating to hospitality decisions. Indications are that status-seeking consumption is highly prevalent amongst the segment and that elements such as the ideal and actual self-concepts, reference groups and media exposure all have an impact on the choices of where to eat and drink.

Keywords: Young Females, Consumer Behaviour, Hospitality Marketing

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Using Hotel Stories to add new value to the hotel experience

Bastienne Bernasco, MA

Team manager Saxion Hospitality Business School,

Saxion University of Applied Sciences Kerklaan 21

7311 AA Apeldoorn The Netherlands

Abstract This paper describes how a hotel stories exhibition triggers two hypotheses about the relevance to hoteliers of works of art reflecting hotel experiences. The paper assumes that such sources can inform hotel staff on the guest experience in novel ways, and that this information will contribute to their emotional intelligence. On the basis of literature research, the concepts of hospitality and emotional intelligence are explored. The hypotheses are tested using the hosting qualities and by using the resulting labels in an experimental session with hotel management students. The results show that artistic source materials can reveal people’s associations with and emotional experiences of hotels. Further research should focus on the investigation of fictional narratives as reflections of hotel experiences. Key words: guest experience—hotel narratives—emotional intelligence

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Introduction: The Hotel Stories project

The Hotel Stories exhibition is a multimedia art exhibition open to the general public from 31 May-16 September 2012. The exhibition was initiated by Saxion Hospitality Business school and co-produced by CODA museum, both located in Apeldoorn, the Netherlands. The aim of the exhibition was to show how the hotel experience has been constructed in fictional and non-fictional stories. The exhibition was developed by a project team of creative designers, content researchers, marketing staff, hoteliers, artists and students from Saxion Hospitality Business School and Saxion Academy of Creative Technology.

Hotel stories can be found in many art genres. Hotels form an inspirational backdrop for films,

literature, songs, photographic art and video. No wonder: hotels are in many ways predictable and recognizable. Hotels are made up of fixed and standardized elements: the hotel sign, the receptionist welcoming the guest, the exchange of money for hospitality, the room, the hotel bar, the concierge, and so on. But hotels are used as more than just a décor. Many stories have tapped into the common or universal experiences that anyone who has stayed in a hotel, recognizes. Successful storytellers create “stories that stick” by applying storytelling schemes (Heath, D. & Heath, C., 2007). What makes good stories memorable is that they have a core message, are surprising, make use of concrete details and capture people’s emotions. What makes hotel stories interesting for hospitality experts in particular, is the way in which they “boil down” the variety of everyday, real hotel experiences into a widely recognized “essence” of the hotel experience.

The Hotel Stories project collected a database of stories from film, television series, literature, pop

music, video art, photography, games, blogs and websites, and even classical music. Fictional material was complemented with documentary material and descriptions of historic events. Some of the stories had become urban legends, such as the Bed-In for Peace by John Lennon and Yoko Ono at the Amsterdam Hilton, or the more gruesome events such as suicides of celebrity pop stars.

This database was quickly recognized for its potential uses in research. The central issue was

formulated as: “What can hotel stories teach us about the hotel experience of people who work and stay in hotels?” Theoretical Framework

Hotels can be defined as organisations where people expect to provide and receive hospitality.

Hospitality has been defined using socio-cultural and historical perspectives and management perspectives. Lashley (2008) sought to integrate these perspectives and argued that “an understanding of hospitality as a human relationship involving people in host and guest roles is essential to better inform the marketing of hospitality and tourism operations.” [Lashley, 2008, p.6]. This understanding of hospitality needs to be considered within the framework of the experience economy, where goods and services must be experientialized because customers seek rewarding, memorable and pleasurable consumption experiences. (Pine and Gilmore, 1999).

The guest experience has been conceptualized in the Guest Journey Model (Thijssen, 2007), which

shows that experiences occur when guests engage in activities that involve their emotions and their senses. Guests award meaning to experiences by evaluating, repeating or recommending the experience. Lashley (2008) holds that hospitality staff should be welcoming and that good hosting leads to strangers becoming friends (Lashley, 2008, p. 26). Hospitality companies such as Ritz Carlton and Singapore Airlines have shown that their service will be recounted in “legends of service excellence” because they maintain a consistent dedication to people, their guests and employees. (Solnet, Kandampluuly and Kralj, 2010, p.895).

Hotel staff and guests will influence each other’s emotional wellbeing, if only because of their close

contact within the confined spaces of the hotel. The investigation of emotions is still at its beginning in the field of economics and in tourism in particular (Brunner-Sperdin, 2009, p. 180). Emotional intelligence was defined in the Bar-On model (2006.), as effectively understanding oneself and others and relating well to people, and adapting to and coping with the immediate surroundings to be more successful in dealing with environmental demands. Qualifying the Bar-On model is the Trait Emotional Intelligence Theory, which acknowledges that emotional intelligence is composed of personality traits that can only be measured subjectively. (Petrides, 2010, p. 138). Certain emotional profiles will be advantageous in some contexts but not in others. (Petrides, 2010, p. 138).

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Lashley’s model of the key hosting qualities incorporates emotional intelligence as one of three components that define hospitality. These components are the culture of hospitality, hospitableness and emotional intelligence. When used consistently, the key hosting qualities have the potential to bring hotels closer to the ultimate goal of hospitality--to turn strangers into friends. (Lashley, 2008, p.24-26). This may intensify the levels of loyalty because of the emotional attachment of the relationship. (Lashley 2008, p. 26). For this study, we assumed that the key hosting qualities are an essential part of the hotel experience so that they could be used to qualify this experience as it appears in hotel stories.

The understanding of one’s own feelings and those of other people became one of the core issues in

the Hotel Stories project. If hotel stories could trigger people to share their own (emotional) experiences of hotels, this would in our view contribute to a mutual understanding among hosts and guests and ultimately improve the hotel experience.

Table 1 Key hosting qualities [Lashley 2008, p. 20] A culture of hospitality Q1 The stranger is treated as a guest and potential ‘friend’ Q2 Guests included into the social context without limits Q3 Acceptance of all guests as equally valued individuals irrespective of guest characteristics Q4 No evidence of hostility to guests Q5 Guests protected and provided with a safe and secure environment Q6 Host gives gifts – the host welcomes the guest by providing the best gifts possible Q7 Host expresses compassion for the needs of others Qualities of hospitableness Q8 The desire to please others Q9 General friendliness and benevolence Q10 Affection for people; concern for others and compassion Q11 The desire to meet another’s need Q12 A desire to entertain Q13 A desire to help those in trouble Q14 A desire to have company or to make friends Q15 A desire for the pleasures of entertaining Displaying emotional intelligence (Cooper and Sawaf, 1997) Q16 Hosts recognize their own emotions and are able to express them to others Q17 Hosts recognize and understand the emotions of guests Q18 Hosts use emotions with reason and emotional information in thought Q19 Hosts regulate and manage their own and the emotions of others Q20 Hosts control strong emotional states – anger, frustration, excitement, anxiety, etc.

Hypotheses

It would be interesting to see if hotel stories actually worked in this way. Would they reveal essential

experiences of hospitality in hotels? Two hypotheses were formed to help answer the core question: “What can hotel stories teach us about the hotel experience of people who work and stay in hotels?”: 1.Hotel stories provide insight into the ways in which people experience the key hosting qualities. 2.Hotel stories can be used as cues to generate people’s associations with hotels. Research Method

Hypothesis 1 was tested using the key hosting qualities as defined by Lashley (2008). These were

identified in a sample of 175 quotes from films and television series. What made this sample relevant, was that films and tv-series had been successful and were widely distributed online, in English, so they were widely known. The stories reflected both the perspective of the guest and of the host. From each movie or tv-series a maximum of 3 quotes was taken. To illustrate the selection, five of the film sources were: Grand Hotel (1932), Psycho (1960), Barton Fink (1991), Ocean’s Eleven (2001), 1408 (2007). Five of the tv-series were Fawlty Towers (1975), Dynasty (1981), Twin Peaks (1990), Frasier (2001) and Hotel Babylon (2007). However, the 20 key hosting qualities could not be used as straightforward coding for the data set. All 20 qualities were framed in a positive tone. The quotes were taken from fictional texts that would often be comic or dramatic in tone. They were ironic, humorous or sarcastic. Many of the quotes tended to show the “flipside”

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of hospitality. For example, a host would not treat a stranger as a guest and potential friend, but would decline service, make fun of him or lose his temper. To account for this style phenomenon, data were classified “positive”, “negative” or “modified” (if used to create comic effects).

The underlying assumption in coding and classifying the data in this way, was that the occurrence of

each of the 20 qualities would show the relative importance attached to each of these qualities by the (fictional) persons involved in the guest-host interaction. As part of the coding method, one of the qualities was altered slightly so that it would relate to the quotes. Q3, giving gifts, was also used to describe the provision of luxury comforts such as rooms service, amenities etc. In the negative sense Q3 occurred when guests steal hotel luxuries, such as towels, lamps etc. (because hosts do not give these as gifts).

To test hypothesis 2, all quotes were first briefly summarized in terms of what hotels meant to people,

what function they had for people, what events happened in hotels and what people did and experienced in hotels. These brief descriptions were condensed to a one-word label, to see if a pattern could be made visible of recurring topics. The 175 quotes generated 35 one-word labels. These labels were then marked for frequency. Results

With reference to hypothesis 1, the top 3 of qualities most referred to was: Q6: (36: 15 negative, 4 positive, 17 modified), Q3: (34: 6 negative, 4 positive, 24 modified) Q1: (20: 8 negative, 3 positive, 9 modified). The top 3 of qualities least referred to was: Q11 (0), Q13 (0), Q14 (1 modified). A tentative conclusion might be that the key hosting qualities based on hospitableness do not lead to

stories or dramatizations of the experience of these qualities. Three of the qualities based on the culture of hospitality are recognized and used in stories but then usually in an ironic or negative sense—hosts usually do not perform the way they should. Qualities displaying emotional intelligence hardly occur (2-5 instances).

With reference to hypothesis 2, the labels occurring more than 10 times were:

Indulgence (22); Fear (17); Anyone (14); Personal-Impersonal (19); Lust-love (19). This indicates that while guests expect to be indulged and get the privacy to engage in romantic and erotic relations, they might also be concerned about safety and about the way hotels recognize them as unique individuals.

The labels were then used in a focus group session consisting of hotel management students, as most

of them had been hosts and guests at hotels. Participants were first asked to associate freely on the word “hotel”. This generated mostly positive associations related to luxury, leisure, good service and beautiful locations. They were then shown some of the original film excerpts. They then read the quotes in film and movie excerpts, as well as the one-word labels. They were then asked to share their memories and associations of hotels and finally, to use the labels to form short meaningful word clusters. The experiment generated quite varied associations and personal stories of hotels, which supports the conclusion that hotel stories can be used as an innovative cue to uncover memories and associations of hotels.

Table 3 One-word labels generating word clusters 1: Privacy + chase + hiding + protection + prison = hotels enable people to escape or hide. 2: Anyone + impersonal + standard + bodies + loneliness = hotels do not recognize people as individuals. 3: Indulgence + friendliness = hotels show friendliness and indulge people. 4: Fear + depression + anger = hotels cause negative emotions. 5: Love + lust + prostitution + privacy = hotels encourage people to engage in romantic and (illicit) sexual encounters. 6: Limits + privacy + indulgence = hotels isolate and indulge people. Indulgence suggests abandoning control. 7: Anyone + privacy + personal + impersonal + standard= hotels accept people as “anyone”, rather than as “someone”. People are not recognized as individuals.

Recommendations for further study

Marketeers usually look at guest reviews to assess the hotel experience. Hotel stories are different

from the realistic evaluation of hotels found in guest reviews. They are hidden in people’s memories and touch

5

on emotional experiences of hotels. As such, they may provide insights into how people really feel about hotels. Reaching this understanding will require extensive research. It should be based on a comprehensive database of stories or narratives about the hotel experience. It must incorporate theoretical insights from areas such as service management, host-guest encounters, multimedia discourse analysis, storytelling, emotional intelligence, and socio-cultural studies. This short paper has attempted to validate that hotel stories will provide novel starting points to understand and improve the reality of the hotel experience.

References Bar-On, R.,The Bar-On model of emotional-social intelligence (ESI). Psicothema, 18 , suppl., 13-25. (2006) Brunner-Sperdin, A. and Peters, M., What Influences Guests’ Emotions? The Case of High-quality Hotels. International Journal of Tourism Research, 169-183 (2009) Gilmore, J.H. and Pine, B.J. II, Differentiating hospitality operations via experiences. Why selling service is not enough. Cornell Hotel and Restaurant Administration Quarterly, 43(3), 87-96 (2002) Heath, C. & Heath, D., Made to Stick (2007) Heide, M. & Gronhaug, K., Key Factors in Guests’ Perception of Hotel Atmosphere, Cornell Hospitality Quarterly, 29-42 (2009) Lashley, C. (2008), Handbook of Hospitality Marketing Management, p.4-31 (2008) Petrides, K.V., Trait Emotional Intelligence Theory, Industrial and Organizational Psychology, 3, p.136-139 (2010) Solnet, D., Kandampully, J. and Kralj, Legends of Service Excellence: The Habits of Seven Highly Effective Hospitality Companies, Journal of Hospitality Marketing & Management, 19, 889-908 (2010) Thijssen, T., Groen, B. and Pijls, R., Klantbeleving begrijpen, meten en bevorderen, FMI 12, 87-89 (2009) Wu, C. and Liang, R-D, Effect of experiential value on customer satisfaction with service encounters in luxury hotel-restaurants. International Journal of Hospitality Management, 586-593 (2009)

EXPLORING SERVICE ENCOUNTER QUALITY WITH TOURISM STUDENTS

Sanna-Mari Renfors *, MSSc. Senior lecturer in tourism, Satakunta University of applied sciences, Tiedepuisto 3, Finland,

[email protected]

Vappu Salo, Ed.D. Senior lecturer in tourism, Satakunta University of applied sciences, Tiedepuisto 3, Finland,

[email protected]

ABSTRACT

This practical paper reflects a practice how to integrate teaching with research activities in order to provide an opportunity for bachelor students studying tourism to learn behavioural skills needed in service delivery. The paper presents a study regarding service encounter quality that serves as students’ active learning process. For this study the students gather data during three different courses visiting tourism organizations as mystery quests, observing employees’ behaviour in different contexts and writing a narrative about their perceptions. We as the teachers and the researchers translate the data with the help of our students into customer-defined service encounter quality criteria that also assist regional tourism organizations to target their service delivery efforts in a more specific manner. The criteria is developed using thematic analysis.

Keywords: service encounter, service quality, active learning, critical incident technique

INTRODUCTION TO SERVICE ENCOUNTER QUALITY

Encounters between customers and front-line employees are a critical component of service quality (Chandon, Leo, & Philippe, 1997). What happens in these encounters has a significant impact on the perceived service. Nickson, Warhurst, and Dutton (2005) state that for service organizations these interactions are crucial as they aim to create high quality service encounters. According to Bitner, Booms, and Tetreault (1990) interaction is the service from customers’ point of view, yet front-line employees are not trained to understand customers. Thus, service organizations need to have better understanding how customers evaluate employees’ performance in service encounters (Winstead, 2000).

Employees’ behaviours will impact on customers’ perceptions of service quality in service encounters (Bitner et al., 1990). Customers’ service quality evaluations are based almost entirely upon the behaviors of frontline employees, and organizations rely heavily upon these employees to improve overall service quality provision (Farrell, Souchon, & Durden, 2001). Thus, the behaviours of employees play an important role in shaping customers’ perceptions of service quality. This is also noticed by Wilson (2001) who highlighted the fact that successful management of service delivery involves the co-ordination of employees’ behaviours in service encounters. In order to manage quality in these encounters, it is important to understand how these behaviours are perceived from customers’ perspective.

Previous studies have also identified interaction as a critical dimension of service quality (Grönroos, 1984; Lehtinen & Lehtinen, 1991; Brady & Cronin, 2001). Interaction service quality is produced in the interaction between the customer and the employee (Lehtinen & Lehtinen, 1991). According to Brady and Cronin (2001) customers’ perceptions of the interpersonal interactions is a dimension of perceived service quality. Grönroos (1984) conceptualise this as functional quality meaning the manner in which the service is delivered in terms of the interactions during the service encounter. Farrell et al. (2001) refer to service quality implementation behaviour, which they defined as “behaviours associated with the implementation of the organization’s service quality policy”. This service quality implementation behaviour represents the service delivery process and the functional quality.

We define quality by focusing on the front-line employee’s behaviours in a service encounter. We follow the narrow definition of Suprenant and Solomon (1987) and define service encounter as a dyadic interaction between the customer and the front-line employee. Thus, service encounter quality is the customer’s personal, subjective perception and qualitative evaluation of the employee’s behaviours in a service encounter.

INTEGRATING TEACHING WITH RESEARCH & DEVELOPMENT

In the Satakunta University of Applied Sciences students participate in the research and development activities. Therefore, we are conducting a study about service encounter quality with tourism students. The study concentrates on exploring customers’ perceptions of service encounter quality and expressing their requirements as specific front-line employee behaviours. As a result customers’ requirements are translated into customer-defined service encounter quality criteria that can act as a guideline for the front-line employees. We are not concentrating on the outcomes of the process or on the physical surroundings of the service, but in the delivery of the service and on customers’ subjective evaluations of employees’ behaviors. We do not establish target levels or weight the behaviours.

This study is integrated with teaching and the data gathering is executed during three different courses. The data is collected by first, second and third year tourism bachelor students acting as customers during their customer service, restaurant management and travel agency management courses. The aim is to teach about customer perceptions of service encounter quality in different contexts and how the interactions between customers and employees affect perceived quality. By doing this, their understanding about customers’ needs towards the front-line employees’ behaviours in service encounter increases. Therefore the study serves as their active learning process.

Active learning suggests students learn better when they are fully engaged in the learning process (Inks

& Avila, 2008). In addition, research indicates that active leaning is effective when it comes to behavioural skill development (Inks & Avila, 2008). This method is suitable, because according to Gremler, Hoffman, Keaveney, & Wright (2000, 36) students are often both service consumers and service employees and these activities help them to understand how their own experiences relate to the course material and learning objectives. Students’ past service experiences also allow them to construct new knowledge fairly easily based on existing cognitive structures (Wright, Bitner, & Zeithaml, 1994, 9). Thus, the paper also reflects a practice how to integrate teaching with research activities in order to provide an opportunity for tourism students to learn critical workplace skills and to develop current teaching methods and practices in tourism bachelor programme.

In the Satakunta University of Applied Sciences research activities serve also its region by helping organizations to develop their operations successfully. Thus, the criteria are also a valuable management tool and assist tourism organizations to target their service delivery efforts in a more specific manner. After the study we can also employ this same practice and help individual organizations to create their own specific, context-related criteria with the help of our students. The criteria can then be used to determine employee’s training and development needs. By using these criteria employees also have clear instructions how to perform their job. According to Wilson et al. (2008) the criteria provide direction, guidance and feedback to employees in ways to achieve customer satisfaction. The criteria can also be developed further and used as a basis of perceptual measurement through the use of surveys or employee monitoring providing feedback on employee performance.

In sum, the study regarding service encounter quality has a two-fold purpose. First, it acts as a tourism students’ active learning process. Second, it assists regional tourist organizations to target their service delivery efforts and to improve service encounter quality.

RESEARCH METHODS

Data collection

The data collection of this qualitative study is organized during three different courses. The students that gather the data are both male and female, ranging in age from 20 to 65 years. Their age range is very vast because the degree programme is targeted both to youth and adult learners. The students usually work during their studies in various service jobs, hence they have gained work experience.

Mystery shopping and critical incident techniques are used as the data collection tools. Previously Czepiec (1983) has used mystery shopping when teaching marketing principles. Borin, Metcalf, and Tietje (2008) expressed that observation and mystery shopping techniques are effective when preparing students to understand customers. Farber and Fox (1994) as well as Sautter and Hanna (1994) employed critical incident

technique in services marketing courses. Tomkins (2009) asked leisure management students to reconstruct prior learning from critical incidents experienced in the workplace using storytelling technique.

The critical incident technique (CIT) is the most used qualitative approach when measuring service quality. Because the importance of service encounters in building perceptions, researchers have analysed encounters to determine the sources of customer favourable and unfavourable impressions by using the critical incident technique (Wilson et al., 2008, 92). The critical incident technique (Flanagan, 1954) is an attempt to identify the most important aspects of job behaviour. It consists of a set of procedures for collecting observations of human behaviour and classifying them in such a way as to make them useful in addressing practical problems (Flanagan, 1954). A critical incident is a specific interaction between a customer and an employee that is especially satisfying or especially dissatisfying (Bitner et al., 1990). We employ this technique and a critical incident is considered as an employee behaviour that is especially satisfying or dissatisfying according to the customer.

The main data consists of narratives (n=92) written by second year tourism students (n=92) acting as mystery quests in face-to-face service encounters. In this study the students are asked to visit a restaurant or a travel agent, to observe employees’ behaviours and to write an evaluative, detailed narrative about their perceptions in a chronological order. The observation is unstructured, and the students are informed to pay particular attention into critical incidents in the encounter. We do not want to use the traditional check list used in mystery shopping nor the students to observe any specific behaviour. The observation is unstructured, because we want to understand the point of view of the customer in his own words. We also have four group discussions with the students, where they can express their opinions about employee’s behaviour and the critical incidents.

The second year students (n=30) gather also narratives (n=90) regarding voice-to-voice service encounters in different tourism organizations (restaurants, travel agencies, tourism information centres, hotels, airlines). Each student is asked to phone three tourism organizations acting as a mystery quest, to observe employees’ behaviours and to write an evaluative narrative about the experiences. The students are also informed to pay particular attention into critical incidents in the encounter.

Furthermore additional data is gathered by first year tourism students using the critical incident

technique as a retrospective method. The students (n=42) interview restaurant quests (n=84) and ask them to remember and to describe a specific negative or a positive critical incident they have had. The students write a detailed description of the incidents (n=84). The third year students also conduct narrative interviews of employees (n=18) and supervisors (n=18) in order to get their perspective of service encounter quality. They are asked to describe front-line employees’ behaviours in a service encounter and to identify the critical incidents.

Data analysis

All together we have three different data sets. The first set includes the narratives and interviews

collected in the face-to-face restaurant context, the second set of narratives is collected in the face-to-face travel agency context and the third set represent narratives from voice-to-voice encounters in different tourism context. These three data sets are analysed first separately, and in the end similarities are determined across the contexts.

We analyze the data in interpretive fashion, because we do not treat narratives as reports of facts. We

choose interpretative approach also because Gremler (2004, 79) point out that service researchers should consider taking a more interpretive approach in analyzing the CIT data. Gremler (2004) recommends that when analyzing the data the researchers should gain insight from interpreting respondent’s experiences instead of reporting facts. Our approach is interpretative, because we analyze the incidents with interpretation from the respondent and want to gain insight from interpreting customer’s experiences. Therefore longer sections describing positive and negative incidents are chosen as a unit of analysis.

The aim of the analysis is to identify themes emerging from the data. According to Riessman (2004) thematic approach is useful for finding common thematic elements across participants and the events they report. In thematic analysis narratives are examined as they are written in order to find patterns of themes (Eriksson & Kovalainen, 2008, 219). Thus, in the analysis the focus is on the content of the narratives and on the critical incidents the narratives include.

Our approach is inductive, hence patterns are formed as they emerge from the data. First, we examine

and code the text closely. We organize customers’ perceptions relating to similar topics into categories

describing specific front-line employees’ behaviours. When the themes are beginning to emerge, we take each theme separately and re-examine the original data for information relating to the themes. When constructing the final form of each theme, we consider also the previous theory regarding service encounter quality. In the report we illustrate the themes with vivid quotations from the original texts. When the analysis is conducted, all the categories and the behaviours they include together form the service encounter quality criteria. Both researchers code the data independently and the categories are compared. We also use a third researcher, whose task is to analyse the data and find any possible controversies.

In May 2012 the students have gathered all the necessary data. The next phase is the data analysis, which should be conducted in the autumn 2012-winter 2013.

REFERENCES Bitner, M., Booms, B., & Tetreault, M. (1990). The service encounter: Diagnosing favourable and unfavourable

incidents. Journal of Marketing, 54, 71–84.

Borin, N., Metcalf, L., & Tietje, B. (2008). Implementing Assessment in an Outcome-Based Marketing Curriculum. Journal of Marketing Education, 30, 150–159.

Brady, M., & Cronin, J. (2001). Some new thoughts on conceptualizing perceived service quality: A hierarchical approach. Journal of Marketing, 65, 34–49.

Chandon, J-L., Leo, P-Y., & Philippe, J. (1997). Service encounter dimensions – a dyadic perspective:

Measuring the dimensions of service encounters as perceived by customers and personnel. International Journal of Service Industry Management, 8, 65–86.

Czepiec, H. (1983). The mystery shopper technique as an experiential exercise to teach undergraduate marketing

principles. Journal of Marketing Education, 5, 33–36. Eriksson, P., & Kovalainen, A. (2008). Qualitative methods in business research. London: Sage. Farber, B., & Fox, K. (1994). Training marketing students to be service problem solvers: A framework for

integrating training for services (FITS). Journal of Marketing Education, 16, 81–93. Farrell, A., Souchon, A., & Durden, G. (2001). Service encounter conceptualisation: employees’ service

behaviours and customers’ service quality perceptions. Journal of Marketing Management, 17, 577–593.

Flanagan, J. (1954). The critical incident technique. Psychological Bulletin, 5, 327–358.

Gremler, D. (2004). The critical incident technique in service research. Journal of Service Research, 7, 65–89.

Gremler, D., Hoffman, K., Keaveney, S., & Wright. L. (2000). Experiential learning exercises in services marketing courses. Journal of Marketing Education, 22, 35-44.

Grönroos, C. (1984). A service quality model and its marketing implications. European Journal of Marketing,

18, 35–42. Inks, S., & Avila, R. (2008). Preparing the next generation of sales professionals through social, experiential, and

immersive learning experiences. Journal for Advancement in Marketing Education, 13, 47–55. Lehtinen, U., & Lehtinen, J. (1991). Two approaches to service quality dimensions. The Service Industries

Journal, 11, 287–303.

Nickson, D., Warhurst, C., & Dutton, E. (2005). The importance of attitude and appearance in the service

encounter in retail and hospitality. Managing Service Quality, 15, 195–208. Riessman, C. (2004). Narrative analysis. In M. Lewis-Beck, A. Bryman, A. & T. Futing Liao (Eds.), The Sage

Encyclopedia of Social Science Research Methods (pp. 705–709), Vol. 3. London: Sage. Sautter, E., & Hanna, J. (1994). Using the critical incident technique as a learning tool in services marketing

course. Journal of Marketing Education, 16, 94–100. Suprenant, C., & Solomon, M. (1987). Predictability and personalization in the service encounter. Journal of

Marketing, 51, 86–96. Tomkins, A. (2009). “It was a great day when…”; An exploratory case study if reflective learning through

storytelling. Journal of Hospitality, Leisure, Sport & Tourism Education, 8, 123–131. Wilson, A., Zeithaml, V., Gremler, M., & Bitner, D. (2008). Services marketing: Integrating customer focus

across the firm. London: McGraw-Hill. Winstead, K. (2000). Service behaviors that lead to satisfied customers. European Journal of Marketing, 34,

399–417. Wright, L., Bitner, M., & Zeithaml, V. (1994). Paradigm shifts in business education: using active learning to

deliver services marketing content. Journal of Marketing Education, 16, 5–19.

A Modified Organizational Buying Behavior Model of the Meeting Professional’s Site Selection Process

Carole Sox Doctoral Student

University of South Carolina/School of Hotel, Restaurant and Tourism Management Columbia, SC USA

[email protected]

Sheryl Kline, Ph.D. Associate Dean

University of South Carolina/School of Hotel, Restaurant and Tourism Management [email protected]

Sandy Strick, Ph.D.

Interim Department Chair University of South Carolina/School of Hotel, Restaurant and Tourism Management

[email protected]

Xiang (Robert) Li, Ph.D. Associate Professor

University of South Carolina/School of Hotel, Restaurant and Tourism Management [email protected]

ABSTRACT:

This conceptual paper reviews the site selection processes for association, corporate and government meetings, and proposes a modified and more comprehensive model for the overall site-selection process within the MEEC industry. This modified model proposes that the first step in the site selection process is to identify which type of meeting is being planned (corporate, government or association). Once determined, the planner then reviews the variables impacting the meeting type, and addresses the buying stages for final site selection.

Assessing attendees’ attitudes towards a special event: Applying hedonic dimensions

Deborah Breiter, Ph.D. * Professor

Rosen College of Hospitality Management University of Central Florida

9907 Universal Blvd. Orlando, FL 32819

[email protected]

Diehdra Potter Student

Rosen College of Hospitality Management University of Central Florida

9907 Universal Blvd. Orlando, FL 32819

[email protected]

Duncan Dickson, Ed..D. Assistant Professor

Rosen College of Hospitality Management University of Central Florida

9907 Universal Blvd. Orlando, FL 32819

[email protected]  Abstract: Hedonic scales have been used for over 50 years to measure customers’ preferences in relation to sensory experiences. In the fields of hospitality and tourism, a number of authors have employed hedonic scales in their work. Event researchers have utilized hedonic scales as well to measure aspects of fairs and festivals. But the niche market of special events used as fundraisers has rarely been investigated. The study proposed here will fill a gap in the research by examining how attendees at this type of event rate the elements of event design and the overall hedonic value of the event.  Key words: Special events, fundraising, hedonic scales, event design    

GUEST JOURNEY EXPERIENCE MAPPING

Jan Huizing, Drs.*

Professor of Marketing & Strategy and Research Fellow City Hospitality& City Marketing Hotelschool The Hague/ City Hospitality & City Marketing

Brusselselaan 2, 2587 AH, The Hague, Netherlands [email protected] 

Karoline W. Wiegerink, Dr. Professor and Chair of City Hospitality & City Marketing

Hotelschool The Hague/ City Hospitality & City Marketing Brusselselaan 2, 2587 AH, The Hague, Netherlands

[email protected]

and

Danilo S. Huss, Mr. International Fast Track Student and Honorary Member City Hospitality & City Marketing

Hotelschool The Hague/ City Hospitality & City Marketing Sonnenweg 7, 79618, Rheinfelden, Germany

[email protected]

ABSTRACT

This short paper reveals the current practice of Guest Journey Experience Mapping, illustrated on one specific case. Guest Journey Experience Mapping has the purpose to provide customer insight about how guests experience certain services, and it is part of the modern marketing topic Service Design Thinking. The case was conducted by Hotelschool The Hague’s City Hospitality and City Marketing Chair Team within the framework of a research-project called “Service Design in Tourism” and in co-operation with two of the destination marketing organisations of The Hague: Bureau Binnenstad and Stichting Marketing Haagse Binnenstad . Various other Service Design Thinking tools such as Personas or the innovative MyServiceFellow application are applied within the practice. The practice’s process and implications further reveal benefits for the service owner, and additional stakeholders. Key Words: Customer Insights, Guest Journey Experience Map, Marketing, Service Design, Service Management, Stakeholders

The Senior Traveler: Perceptions of Chinese Seniors Towards Future Travel

Howard Adler Ed.D Professor Purdue University

West Lafayette, Indiana [email protected]

Tong Ji, M.S. Purdue University

West Lafayette, Indiana

Abstract

This research examined motivations and attitudes of Chinese senior citizens towards travel attributes. The senior travel market in China is one of the fastest growing markets in the world and will continue to grow as disposable income increases. A semi structured interview was conducted with 40 Chinese senior citizens in the Beijing area. Results from the interviews indicated that Chinese seniors were extremely dependent on the income and travel decisions of their adult children. In addition Chinese seniors preferred to travel to Asian destinations because of familiarity with food and customers. Seniors also discussed reasons why international travel and travel in general was difficult for them.

Key Words: Chinese seniors, Senior travel, Chinese travel market, barriers to travel

Introduction and Background

Currently seniors constitute approximately 1/5 of the worlds population and will reach 1/3 of the worlds population by 2050 (World Population Prospect 2004). In Asia the percentage of people aged 65 and older will almost triple by 2040 ( U.N. 2004). China is aging faster than any other country of similar stature. The number of Chinese seniors and the group’s rate of growth is significantly large. By the middle of the 21st century there will be 400 million Chinese aged 60 and over ( Mao & Song 2004). There is a great deal of research regarding senior travelers from Western Countries ( Bai, Smith,Cai & O’Leary 1999) and on Asian seniors from developed countries such as Japan and Korea. However very little has been done regarding the new and upcoming Chinese market. The Chinese senior travel market is expected to be very different from either Western countries or other Asian countries ( Hsu,Cai & Wong 2006). For most Chinese seniors, traveling after retirement could mean the first time that they have actually traveled. Chinese seniors will be dependent on their adult children who have grown richer during the last 20 years. China is growing old before it grows rich ( Economist, 2005). This bond is only growing stronger as the generation consist of more only children born under the one child policy.

Purpose of the Study

The purpose of the present research is to identify the perceptions of Chinese seniors towards travel. The major objectives of the study include (a) determining the major preferences of Chinese senior travelers,(b) what role do relationships with family members play and what are their influence in travel decisions (c) analyze the constraints that seniors will encounter when traveling and (d) what do Chinese tourism product and service providers need to do to improve and better attract and serve the Chinese Senior market. Seniors often face more barrier when they travel compared to younger travelers due to their physical, emotional and financial situation. Other limitations include lack of a companion to travel with, perceptions that they are too old to travel and the fear of disapproval by others as well as feeling guilty about traveling ( McGuire, 1984).

Review of the Literature

The Asian Travel Market

Among existing studies regarding Asia, most have focused on more developed Asian countries such as Japan and Korea ( Mak, Carlile & Dai 2005). Seniors in those countries are more affluent and more open to western culture. Participating in travel activities has become a style trend among seniors after their retirement. Research on the Korean market has shown that most seniors feel that they are capable of traveling and consider traveling as a way to improve their physical and mental

condition (Lee & Tidewell, 2005). The study also found that Korean seniors take their families attitudes very seriously and that their opinions can become a major deterrent for seniors if the travel activities are not fully supported by their families.

In relation to the Chinese senior travel market, one study interviewed 27 seniors in Beijing and Shanghai. They built a travel motivation model which included external and internal desires. Results indicated a major travel motivation is that it is subject to personal financial conditions and the availability of time both of which were affected by their family support ( Hsu, Cai and Wong 2007). Li and Luo’ study ( 2006) of senior travel behavior in Guangzhou found that traveled stated and relatives attitudes was a major barrier to traveling.

Cultural Influences

The accumulation of shared meaning, rituals, norms, traditions among members of a society distinguishes members of one society from another (Solomon 1996). Hofstede (2001) noted that “ Culture is to human collectivity what personality is to the individual”. There is a great amount of information in the literature which supports the fact that national culture is one of the forces which influence consumer behavior (Litvin, Crotts and Hefner 2004. One of the most famous of the most influential research was Hofstede ( 1980) who identified four value dimensions that distinguish individuals in different societies: power distance, uncertainty avoidance, individual-collectivism and masculinity-femininity. A fifth construct was added in 2001 related to the Confusian idea of long term orientation versus short term orientation. He evaluated 66 nations and created an index score for the five constructs. If visitors tolerance for risk and uncertainty is less than that of their host country travelers will engage in risk reducing behaviors by doing such things as (1) spending more time in planning trips, (2) use of travel packages, (3) use of tour operators, (4) traveling in larger numbers, and (5) fever destinations according to Money and Crotts ( 2003)

Chinese seniors tend to feel more responsible to their families ( Yan & Sorenson 2004). It is not unusual for Chinese seniors to live with their children after retirement to take care of their grandchildren and because their own children want this. Therefore research to explore and identify the different characteristics of the Chinese senior travel market is essential. Chinese seniors are different from other seniors around the world in that they grew up in a politically and diplomatically isolated communist regime and they did not have the financial means to travel. The majority of seniors who are able to travel today come from the more prosperous coastal regions are able to travel. Even today the majority of seniors living in rural areas are not able to travel intensively due to financial constraints. They are more likely to start traveling with cheaper less risky domestic trips, especially considering the fact that China is a big country with many things to do and see.

To most Chinese seniors who have grown up under the influence of Confucianism, their family always included married children and their grandchildren and they usually live with their married children. The children feel obligated to provide financial support for their senior parents. If there is any conflict between traveling and their family, seniors are more apt to give up traveling ( Hsu, Cai & Wong, 2007). Confucian emphasis on work and study does not leave much tie for leisure activities including travel ( Chang, 1972). Another factor which influenced or could deter Asian seniors from traveling related to their own or other’s perceptions about being “too old” to travel ( Kirkbridge & Tang 1992).

Even with the aforementioned fact, many Chinese travel agents have not recognized the potential of the upcoming senior markets. In fact many have implemented policies discriminating by price in favor of the young ( Hsu, Cai & Wong 2007). Customers 55 and older are charged higher prices in order to participate in tour groups.

Methodology

The present study used a qualitative research methodology by means of administering a semi structured personal interview. The questions were designed after a thorough review of the related literature. The researcher chose the capital city of Beijing. Although rural residents account for a larger percentage of the total population, citizens from urban areas have much higher incomes and propensity to travel. Citizens of Beijing have a longer life expectancy that most other Chinese urban areas ( Xi, 2004). The survey instrument consisted of 3 parts. Part 1 consisted of seniors travel preferences and how their adult children affected these. The second section of the survey was open ended questions related to difficulties seniors encountered when traveling, and the third part of the survey related to demographic questions. The interviews were conducted at Bejing Behai Park and Beijing Capital International Airport. In total 40 seniors ( 55 and over) were interviewed in Mandarin and the results were analyzed according to the themes stated in the objectives of the research.

Findings and Discussion

The findings were grouped into various themes uncovered through the interviews. Among the 40 seniors who were interviewed, 47% were male and 52.5% were female. Somewhat over 77% were married and 23 % reported that they were widowed. None of the widowed individuals reported that they had remarried. Fifty percent reported that they live with their spouse and children and 45% said that they lived with only their spouse and 5% alone. Seventy five percent of the seniors noted that they were fully retired with the rest still working part time or full time. Results indicated that while Chinese seniors intend to travel to a greater extent than in the past, they feel obligated to consult with and travel with their children whenever possible. They also felt that traveling domestically was their first preference before they would even consider traveling internationally. Seniors also felt that the physical strains of travel would be a major limitation in their future considerations.

The majority of the interviewed seniors lived in the Beijing area and reported that the number one domestic place they had traveled to was Shanghai mainly to see the World exposition of 2010, followed by Lijang and Dali, followed by Sanya, Xiamen, and Guilin. In regards to international travel many considered traveling to Hong Kong and Macau as international destinations since they had to have visas to go there. Taiwan was also high on the list because of distant family living there. A total of 31 seniors claimed that they have international travel experience with the most concentrations of trips to Japan followed by Singapore, United States, France, Germany, Italy and Britain. Seniors reported that the most popular region was Asia because of the similarities of cultures to theirs as well as the shorter travel distances, less expensive prices and similar foods. A few seniors mentioned that taking longer flights would inconvenience them because of having to get up and go to the bathroom frequently and they did not want to be embarrassed.

Seniors who had not traveled overseas were asked whether they would like to do so in the future. Eight responded that they would like to but even with the help of their families they would could not afford the major expenses. Another reason for their fear of taking overseas trip was because of the language differences. Many mentioned that if they had a choice that the United States would be their future choice. They would prefer to either travel to these places with their children or on all inclusive tour packages. While travel abroad is still considered a luxury by most Chinese most seniors felt that it was worth the money. Twenty seven of the seniors reported that their children had paid for their last few trips and that their travel was based around the travel schedules of their children. These same seniors noted that they were very proud of their children for paying for their travel expenses. A few seniors said that they could afford to pay for their own trips and did not want to put the financial burden on their children.

Some of the seniors reported that they had stopped traveling for various reasons. One such reason was the birth of grandchildren that they had to stay at home and care for. Others reported that they felt that they were too old to take any out of town trips. A major reason behind this related to the fact that physical difficulties had slowed them down and made it hard to be away from home. Another area of discomfort on the part of seniors was that they felt that they do not trust travel agents because the agencies make it difficult for them and only care of money and not giving them good service. In fact a few of them felt that they were discriminated against because some of the travel agents charged seniors more money for trips than people who were in younger age categories that they know.

Many of the seniors spent a great deal of time watching television therefore one third reported that they felt that radio and television was important to them in gaining information and making decisions about travel. An equal number said that reading books and magazines and newspapers was important to them in their travel planning.

Conclusions

Chinese travel agencies should be aware that Chinese seniors are a very powerful market in China and that their purchasing power is closely tied to their children. In 20 more years the children of these seniors will become seniors themselves and will have long memories of organizations that have not taken care of their children. While Chinese seniors do not make as much use of the internet as their children, they do view television and magazines as important advertising and information sources, therefore advertisers should not put all their efforts into internet ads only. Chinese seniors prefer domestic locations but are slowly branching out into more adventuresome destinations, however they still prefer Asia. Seniors are concerned with health issues when traveling, so travel modes and destinations should help seniors to alleviate these fears by educating them on the excellent healthcare options that are available.

References:

World Population Prospect: The 2004 Revision Population Database (2004). Retrieved from http://esa.un.org

Bai, B.,Smith, W., Cai, L. & O’Learly, J.T. (1999). Senior-sensitive segments: Looking at traveler behavior. In K.S. Chon, The Practice of Graduate Research in Hospitality and Tourism. Binghamton, N.Y.: Haworth Press

Chang, P.K. ( 1972). Korea: Past and Present. Seoul: Kwangmyong Publishing

Crotts, J and S, Litvin ( 2003) “ Cross Cultural Research: Are Researchers Better Serving by Knowing Respondents. Journal of Travel Research Research 42 (2) 186-190

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YOUTH TRAVEL AND THEIR DESTINATION CHOICE

Ali Sukru Cetinkaya* Selcuk University

Visiting Professor at Virginia Tech Turkey

[email protected]

Yuliya Skorobogatova Università della Svizzera Italiana

Exchange Master Student at Virginia Tech Switzerland

[email protected]

and

Muzaffer Uysal, PhD. Virginia Tech

USA [email protected]

Abstract

Tourism is a highly dynamic industry affected by various factors such as fashion, climate change, economic development, etc. The current trend shows an increasing importance of youth tourism. More and more younger people travel every year, their expenditure and length of stay at the destination increases as well. This paper is aimed at investigating the process of their destination choice considering such factors as travel motives, perceived risks and barriers and the role of social media. It is hoped that the results of this research reveal valuable information for practitioners in the tourism industry, particularly for destination management and marketing entities.

Key Words: youth travel, destination choice, push and pull factors, perceived barriers, social media.

Introduction

Youth tourism starts to play an increasingly important role in the travel industry. Around 160 million young travelers make at least one international trip a year, which makes up over 20% of international tourist arrivals. The segment shows a stable growth of 3-5% a year. Such factors as growing frequency to travel (from 6.2 trips over 5 years in 2002 to 7.3 in 2007) and increased total expenditure (by 39% in the years 2002-2007) makes youth tourism market a strategically important research area (UNWTO, 2008). However, few works were recently focused on young travelers and their travel preferences. Thus, this paper aims at investigating the destination choice process of young travelers addressing such issues as travel motives, perceived risks and barriers and the role of social media. It is expected that proposed theoretical model will help to better understand youth travelers as a market segment and apply this knowledge for both more efficient marketing campaigns and tourism development.

There is a plethora of research concerning destination choice (Baloglu & McCleary, 1999; Hong, Lee,

Lee, & Jang, 2009; Mohammad & Som, 2010; Vengesayi, 2008). However, little attention is given to the particular segment of young travelers. Information about their motivation to travel or risk perception is quite limited. Moreover, social media is one of the latest trends in the tourism industry, influencing both marketing and management of tourism destinations (Parra-Lopez, Buichand-Gidumal, Gutierrez-Tano, & Diaz-Armas, 2011; Tribe, 2006). Young people are known to be the first users of Information Technologies. Various social

network platforms such as Facebook and Goggle+ are inherent part of modern life. Thus, it will be important to investigate the role of social network in pre-trip phase. Therefore, this current tries to answer the following questions:

1. What factors are crucial for youth tourism in making a decision about their next tourism destination? 2. How is a destination choice of young tourists influenced by travel motives, perceived barriers and

social media?

Literature review

The theoretical model chosen for this paper consists of four main parts: travel motives, perceived barriers, role of social media, and destination choice. Each part is based on the previous research and adapted according to the current theoretical model and the research question.

Travel motives: Certain reasons (motives) for travel may correspond to certain benefits that are to be

valued and obtained at the destination site.One of the most widely accepted approaches to studying travel motivation is push and pull factors (Baloglu & Uysal, 1996). For the given research paper the push and pull factors are extracted from the work of Mohammad and Som (2010) and combined with attributes of a tourist destination which Pandza (2007) determines as “the most important attributes of tourist destination for tourists’ perception”. She identifies the key role of perceived quality of transportation, accommodation, food and beverage, tourism infrastructure, emotional experience and tourists’ attractions. These attributes were added to the questionnaire.

Perceived Barriers: Making travel decisions is not a simple task since a tourist must make decisions

regarding timing, transportation mode, budget, secondary destinations, and activities in addition to the primary destination. Moreover, every potential traveler faces a certain level of risk in traveling because the travel experience relies on intangible services that are consumed simultaneously with production (Zeithaml, 1981).

Modern travel is characterized by instability both political and economic. Moreover, every individual traveler acts based on his or her own perceived risks and barriers. The given construct is designed to investigate the perceived barriers of young travelers when they chose destinations. Thus, the theoretical models of Han (2005) and Wolfe (2002) were combined.

Social Media: In the last few years, we have seen a huge growth of user-generated content on the

Internet through the use of a series of tools that have generically been defined as online social media, although other terms such as Web 2.0 technologies have also been used (Sigala & Marinidis, 2009). Younger tourists make intensive use of social media and they have thus been called the Net generation (Tapscott, 2009). In this study, it will be examined how young generation (Net generation) chooses a tourism destination based on the effect of social media. The most popular social media sites (Web 2.0 sites) include wikis e.g., Wikitravel, blogs e.g., Travelblog and microblogs e.g., Twitter, social networks e.g., Facebook, media sharing sites e.g., Flickr, YouTube, review sites e.g., TripAdvisor, and voting sites e.g., Digg (Zarrella, 2010). In the case of social electronic networks such as Facebook, much information is accessible only to network members and sharing of personal profiles is an essential feature. In order to investigate the construct, the theoretical model proposed by Parra-Lopez et al. (2011) was applied.

Destination Choice: The destination choice is the ultimate decision of a potential traveler and it is also

the ultimate dependent variable in the study. The construct items of probability and willingness to visit any destination were used to determine their intention to visit a destination.

Based on the literature review of relevant studies and constructs, the following hypotheses were proposed:

H1: There is a positive direct relation between social media and travel motives. H2: There is a negative direct relation between social media and perceived risks. H3: There is a positive direct relation between social media and destination choice.

Methodology

The research was focused on young travelers (at least 18 years old). The initial target sample size was between 300 and 400 young travelers. All respondents were college students from almost all disciplines at the time of the survey. The sample was chosen randomly. The respondents were asked to complete an online questionnaire. The questionnaire consisted of 5 parts: motives to travel (including push and pull factors), perceived barriers, and role of social media, destination choice, and demographic characteristics of the respondents. Figure 1 shows the proposed theoretical model for the research. The constructs of the model were drawn from the previous research studies (Baloglu & Uysal, 1996; Han, 2005; Mohammad & Som, 2010; Parra-Lopez et al., 2011; Wolfe, 2002). The items of the study constructs were measured on a Likert type scale from 1 strongly disagree to 5 strongly agree. The instrument was pilot tested with a group of tourism experts. Participants were asked to evaluate the instrument as well as provide comments related to the improvement of the instrument. Modifications were made to the instrument based on the responses.

Data Analysis and Findings

The survey was completed by 422 young people. Due to some missing data, 27 cases were eliminated. Moreover, to guarantee the reliability of responses 3 control questions were included in the questionnaire. The control questions were designed to check whether respondents gave thoughtful answers or completed the questionnaire randomly. After eliminating 54 questionnaires from the study, the subsequent data analysis of the study was based on 368 valid responses.

The descriptive analysis of the study showed that 51.9% of respondents were male, 96.2% of respondents were at the age of 23 or below, 28 % of respondents have fewer than 25,000 USD annual household incomes, and 85.5% of respondents were Caucasian.

All the constructs of study had a reliability alpha value of .70 or higher. An explanatory factor analysis was performed to reduce item size by grouping most correlated items. Based on the results of explanatory factor analysis, composite variables were generated. As a final data analysis step, path analysis (Figure 1) was conducted to make inferences and support the hypotheses.

Figure 1 Path Analysis

Conclusion and Implications

Results of path analysis revealed that social media has a positive effect on travel motives, direct and positive effect on destination choice, and negative effect on perceived risk. It can be inferred that social media has effect on motivating young people in choosing a tourist destination. It is interesting that social media has the effect of removing perceived risks associated with a given destination. Having information about a destination from various social media helps young people to compare and judge more reasonably. Travel motives have direct effect but not expectedly high. This implies that there may be other factors that not included in the model, may also affect young people in choosing a destination. Perceived risk has also direct but negative effect on destination choice. When there are high perceived risks associated with a tourist destination, it is unlikely or less likely that young people would choose the destination.

The study also revealed valuable information for practitioners in the tourism industry, particularly for the destination management organizations (DMOs). Social media should become the first channel to interact with this market. Knowing the importance of the salient aspects of the youth travel market in relation to destination factors, virtual and digital oriented tourism market may allow DMOs to develop more customized destination management opportunities. The results of this research and the proposed model may also serve as a framework for further research in examining mediating and possible moderating variables.

References

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Zeithaml, V. A., & Bitner, M. J. (2000). Services Marketing: integrating customer focus across the firm (2nd ed.). Boston: McGraw-Hill Companies, Inc.

Acknowledgements This paper presentation is granted and supported by Selcuk University, Directorate of the Scientific

Researches Projects Committee (BAP). Authors thank the Selcuk University Rectorate for supplying this grant.

Exploring the Influence of Four Realms of Experiential Marketing on Impulse Buying in Chinese

New Year Festival

Austin Rong-Da Liang*, assistant professor Department of Recreation and Tourism Management/National Kaohsiung University of Hospitality and

Tourism Address: No. 1, Songhe Rd., Xiaogang Dist., Kaohsiung City 812, Taiwan (R.O.C.)

Email: [email protected] Jun-Shu Zhang Master of Industrial Economics

Department of Industrial Economics/Shanghai Normal University Email: [email protected]

Abstract

Scholars of tourism and event practitioners both believe that event management and marketing are important issues in the 21 century, although few studies have investigated the specific consumers’ behavior associated with cultural festivals. This study thus focuses on a cultural festival (Chinese New Year Festival) and examines the influence of experiential marketing realms on impulse buying. Using a questionnaire survey, 743 valid samples were collected in three popular spring product streets in Taiwan. The logistic regression results indicate that educational experience, entertainment experience, esthetic experience and escapist experience positively affect impulse buying. The implications and contributions of this work are discussed in the conclusions.

Keywords: Chinese New Year Festival, Impulse buying, Experiential Marketing Realms.

1. Introduction

Scholars (Felsenstein & Fleischer, 2003; Formica & Uysal, 1998; Van Der Wagen & Carlos, 2005) argue that events increase the demand for local tourism, improve the identity of the local residents, and are key elements to attract tourists (Allen et al., 2008; Getz, 2008). Such events not only have social and financial benefits for the local community, but also attract tourists in the off-peak season (Chang, 2006; Getz, 2008; Lee and Beeler, 2009). Therefore, scholars of tourism and event practitioners both claim that event management and marketing are important research issues.

Yeung and Yee (2011) stated that although many event marketing studies have been carried out, few examine the specific purchase patterns in specific festive settings. For example, Tkacynski, and Rundle-Thiele (2011) reported that five studies examine consumption behaviors in cultural festive out of 120 event segmentation researches, with most of them focusing on Korean cultural events (Boo and Busser, 2006; Boo, Ko, and Blazey, 2007). Park, Kim and Forney (2006) also stated that exploring the influences of specific situational elements on consumers’ impulse buying could help to clarify certain aspects of consumer behavior. As the statement of Getz (2008), this study argues that cultural events are important and provide unique tourism/retailing environments for consumers. Meanwhile, we focus on the Chinese New Year Festival and impulse buying, because it is the most important of all the festivals for Chinese, and is also associated with specific cultural and consumption behavior.

In addition, event activities are part of the experience economy (Pine and Gilmore, 1998), and the aim of the event activities is to establish a temporary creative space to attract tourists (Prentice and Andersen, 2003; Mossberg, 2008; Richards and Wilson, 2004). Therefore, this study believes that adopting a experiential marketing perspective is an effective way to discuss the impulse buying behavior. Overall, this study aims to understand: (1) the specific impulse buying behaviors that occur in a specific event background, and (2) the antecedents of consumers’ impulse buying behavior in Chinese New Year Festival.

2. Literature review

2.1 Impulse buying

Impulse buying refers to making unplanned and immediate purchases based on a stimulus, and is often accompanied by feelings of excitement and pleasure and/or a powerful urge to buy (Rook, 1987). Park, et al. (2006) reported that previous studies focus on the definition of and the differences between impulse and non-impulse purchase behavior. Weinberg and Gottwald (1982) argued that impulse purchase included: (1)

affective-high emotional activation, (2) cognitive-low cognitive control, and (3) reactive-reactive behavior based on a specific motivating situation. Therefore, unplanned and sudden purchases in a specific time and location can be defined as impulse purchases. Stern (1962) proposed that impulse buying can be divided into four categories: (1) pure impulsive buying – new product or emotional appeals make consumers feel curious, and thus they purchase the product. (2) Reminder impulsive buying – when consumer see the product and recall related product information or past experiences, and this results in buying behavior. (3) Suggestion impulsive buying – the consumers have no related knowledge or consumption experience, but decide to buy the product after seeing it. (4) Planned impulsive buying – consumer have their own buying plan, and decide to buy the product because of a discount or promotion program. These four categories have common characteristics, in that with all the consumers are motivated by external stimuli, as proposed by Stern (1962).

2.2 The relationship between experiential marketing and impulse buying at a festival activity

In the tourism literature, the key motivating factor for travel is self-educate (Prentice, 2004; Masberg and Silverman, 1996). Prentice’s (2004) romantic paradigm suggests that tourists are thought to be motivated to “consume the extraordinary” and learn new things. Williams (2006) stated that many tourism activities include educational elements factors, such as education program, landscape background information. As the definition of education experience, that are designed to actively engage consumers and enhance their desire to learn new things (Pine and Gilmore, 1998). In other words, an educational experience is an active and absorptive consumption activity, and consumers play vital roles in creating their own experiences. Consumers can thus participate in the tourism activities with the aim of obtaining good memories (Poulsson and Kale, 2004), learn new things, and then make impulse purchases.

H1: Educational experiences have a positive influence on the consumers’ impulse buying in the street during the Chinese New Year season.

The definition of escapist experience is “the extent to which an individual is completely engrossed and absorbed in the activity” (Csikszentmihalyi 1990). Tourism provides many chances to have escapist experiences. Tourists also search for ‘authenticity’ (Boorstin, 1964) to compensate for their ‘inauthentic lives’ they experience at home (MacCannel, 1973).For instance, Krippendorf (1987) proposed that vacations are a means of “escape aids, problem solvers, suppliers of strength, energy, new lifeblood and happiness”

H2: Escapist experiences have a positive influence on the consumers’ impulse buying in the street during the Chinese New Year season.

Pine and Gilmore (1998) noted that companies deliver the feeling of delight to consumers, and entertainment is a necessary component of tourism products (Hughes and Benn, 1995). For instance, cruise ships vacation provide stimulating environments and have even been characterized as theme parks (Showker and Sehlinger, 1998; Wood, 2004), with nightly shows, comedians, live music bands, and casino-style gaming. Quan and Wang (2004) proposed that celebrations create different kinds of pleasurable entertainment activities, so consumers can experience specific entertainment feelings when they participate in a tourism activity (e.g., tasting food when traveling). In other words, tourism activities offer abundant and diverse forms of entertainment for consumers, and this may lead to impulse buying.

H3: Entertainment experiences have a positive influence on the consumers’ impulse buying in the street during the Chinese New Year season.

Aesthetic experience represents the consumers’ interpretation with regard to the physical environment. Bitner (1992) divides the physical environment into three dimensions: ambient conditions; spatial layout and functionality, and signs, symbols and artifacts. Bellenger, Robertson and Hirschman (1978) argued that the shopping environment has a strong ability to influence impulse buying. Mehrabian and Russell (1974) indicated that environmental factor,s emotions, and individual shopping trends in specific store environments have strong correlations with each other. For example, Peck and Childers (2006) replicated the research of Rook and Fisher (1995), and demonstrated that individual and environmental touch-related factors (e.g., music or lighting) enhance consumers’ desire to engage in impulse buying. Researchers also recognize that aesthetics play an important role in consumer behavior, decision making and service evaluation (e.g., Turley and Milliman, 2000; Brady and Cronin, 2001).

H4: Aesthetic experiences have a positive influence on the consumers’ impulse buying in the street during the Chinese New Year season.

3. Research method

The scale used in this study was developed from previous studies and modified to apply to the Chinese New Year context. The questionnaire consisted of three parts intended to assess experiential marketing realms and Chinese New Year purchase behavior, and collect demographic information. The final questionnaire contained five-point Likert scale questions, with responses ranging from strongly disagree (1) to strongly agree (5). In the first part, the experiential marketing realms were divided into Chinese New Year shopping knowledge (educational experience), street market shows (entertainment experience), store decoration (aesthetic experience), and escaping daily cares (escapist experience)1. This study considered the individual and interacting effects of these experiential marketing realms based on the statement of Yeung and Yee (2010) and then developed 16 items. After a pilot study with 15 consumers, 14 items were used to measure the consumer’s impulse buying in the street during the Chinese New Year season. The statements used in the questionnaire explained various conditions with the presence or absence of the four realms of experiential marketing discussed above. For example, “the shopkeeper tells me a lot of knowledge about Chinese New Year goods” refers to for stand-along experiential marketing realm; “the shopkeeper tells me a lot of knowledge about Chinese New Year goods, the show in the store makes the shopping more interesting, and the store decoration is attractive” refers to a combination of three experiential marketing realms. Impulse buying was measured with a nominal scale, with yes or no responses. In the second part, seven questions were used to measure shopping behavior in the street during the Chinese New Year season. (e.g., time and money spent). Finally, demographic information was collected from seven questions that gathered details of the respondents' gender, age, income, profession, and so on, adapted from Park et al. (2006).

Data collection points were identified based on Taiwan’s regional shopping and infrastructure characteristics. Each region in Taiwan has its own Chinese New Year shopping street. In this study, Taiwan was geographically divided into three regions: north, central and south. The best known New Year shopping street in each region was then selected based on market size, management system, and level of government support (e.g., public transportation access, advertising, and so on). Using this approach, Tihua Street in Taipei, Tianjin Street in Taichung, and Middle San Fung Street in Kaohsiung were selected for data collection. Rest areas and public transportation stations were selected as sampling locations since, as Finneran and Zhang (2005) noted, consumer experience is often very easily acquired after purchases have been completed. A total of 750 questionnaires were collected (250 from each area). Excluding erroneous and incomplete responses, 743 questionnaires were deemed valid.

4. Statistical results

The sampling locations were the most famous Chinese New year shopping streets in Taiwan, including Tihua Street (north area), Middle San Fung Street (south area) and Tianjin Street (middle area). The results indicated that the majority of respondents were female (73.4%), and the largest group were over 40 years old (39.7%) and married with children (49.8%), and buyers of Chinese New Year products. Most respondents (37.1%) were housewives or worked in the service industry. Over half the respondents (52.8%) had more than seven years work experience and a monthly income (49.5%) of between NTD$20,000 and NTD$40,000.

This study adopts the approach used in Yeung and Yee (2010) to test the individual and interactive influential effects of the various experiential marketing realms on impulse buying based on logistic regression. The Chi-square result for the model was 1467.684 (464.121) with a df of 4, and the p-value < 0.001, indicating an adequate fit of the data to the model; in other words, one or more of the EVs could significantly predict the DV. In addition, the Cox and Snell’s R-Square equaled .164, which attempted to imitate the interpretation of the multiple R-Square based on the log likelihood of the final model vs. log likelihood for the baseline model. Although its maximum was less than 1, it was difficult to interpret. The 1the shopkeeper tells me a lot of knowledge about Chinese New Year goods(educational experiences); the peddle show in the store makes the shopping more interesting(entertainment experiences); the store decoration is attractive (aesthetic experiences); The shopping process let me escaped from the vexation of daily life (escapist experiences).

Nagelkerke R-Square, which divides Cox and Snell's R-Square by its maximum in order to achieve a measure that ranges from 0 to 1 equaled .226. The Hosmer and Lemeshow goodness-of-fit was 0 (df=3, p> .5) at the fifth iteration of the estimation. The overall correct prediction rate was 71.6% when using the cutoff value of 0.5 to reflect the tendency to purchase at the spring product street during the Chinese New Year Festival. These values indicate that the model had good predictive power. The Wald test In order to test the hypotheses, and the results indicated that all the hypotheses were accepted at the 95% confidence level, with p values less than 0.01. It can thus be concluded that there are relationships between each marketing realm and impulse purchases. The resulting model is as follows:

Ln(pi/1-pi) = -.592+2.672 × educational experience (Exp(β)=14.472, p<.001) + 1.120 × aesthetic experience (Exp(β)=3.064, p<.001) + 2.341 × entertainment experience (Exp(β) = 10.396, p<.001) + .863 × escapist experience (Exp(β) = 2.369, p<.001).

The model shows that educational and entertainment experiences have the highest positive effect, followed by aesthetic and escapist experience. In other words, the odds of a of a consumer impulse purchase will be increased by 14.472 and 10.396 times by implementing educational and entertainment experiences, respectively. In addition, the implementation of aesthetic and escapist experience will increase the odds of a consumer impulse purchase by 3.064 times and 2.369 times respectively.

Table 1 Logistic regression analysis results. Variable

β S.E. Exp(β) 95%CI for Exp(β)

lower upper Wald df p-

value Educational experience 2.672 .083 14.472 12.288 17.044 1025.08 1 .000 Escapist experience 1.120 .064 3.064 2.700 3.477 301.70 1 .000 Entertainment experience

2.341 .077 10.396 8.942 12.086 928.04 1 .000

Aesthetic experience .863 .064 2.369 2.091 2.684 183.48 1 .000 Constant -.592 .046 .553 166.99 1 .000

5. Discussion and conclusions

Exploring the consumption behavior in the cultural festival activities (Alen, et al., 2008; Getz, 2008) is an important topic in the festival tourism field (Mossberg, 2008; Tkacynski, and Rundle-Thiele, 2011), while experiential marketing attempts to present new experiences for consumers (Williams, 2006). The Chinese New Year Festival has a number of traditional cultural features (e.g. family reunion dinners, posters of Spring Festival couplets and staying up late on New Year's Eve), and also stimulates consumers’ to make special purchases. Therefore, it is worth examining impulse buying behavior during New year shopping from an experiential marketing mix perspective. This research follows the call of Park et al. (2006) and Yeung and Yee (2010) to investigate specific buying models in a festival context, and fills the gap in existing research on this topic. Meanwhile, this paper adopts the analysis method used in Yeung and Yee (2010) to evaluate various experiences’ individual and interactive effects on impulse buying. Therefore, the results of this research have important contributions, both academically and empirically.

First, according to Yeung and Yee (2010), a logistic regression test is an effective way to examine experiential marketing mix’s influence on impulse buying. The results show that educational experience, aesthetic experience, escapist experience and entertainment experience have very positives influence on festival shopping impulse buying behavior, and thus hypotheses 1 to 4 are supported. As argued by Poulsson and Kale (2004), experience is an attractive activity that is co-created by producers and consumers. Educational experience means individuals are eager to learn knowledge about festival goods. For example, the teamed bread with jujube has a Chinese name that is a homophone for getting rich, and may foster the impulse purchase when consumers obtained this information. This result supports the proposal of previous research, that educational experience helps consumers play a co-create rule in the consumption process (Pine and Gilmore, 1998) and that consumers like to learn by themselves (Prentice, 2004; Yarnal and Kerstetter, 2005). Entertainment experience is also a key factor influencing impulse buying behavior, and many vendors try to sell their goods in humorous and interesting ways. that consumers find entertaining (Getz, 2008; Wood, 2004). Aesthetic experience means the stalls are decorated with seasonal object, which make people feel the holiday is coming.

There are three limitations to this study. First, the Chinese New Year festival occurs in China, Taiwan,

Macao, Hong Kong and other Chinese areas (e.g., China towns in many cities), and this work only chose three areas in Taiwan as the sampling locations, and this may limit the generalizability of the findings. The authors thus suggest that future studies should add expand the sampling scope, such as undertaking surveys in China to compare the impulse buying behavior that occurs in Chinese New Year festival in different countries. Second, this study used the experiential marketing realms based on the definitions in Pine and Gilmore (1998), and adopts the method suggested by Yeung and Yee (2010) to analyze the individual and interaction effects of the four kinds of experiential marketing. Future researches could use different marketing perspectives (e.g., interactive marketing perspective) to examine their influences on specific consumption behaviors. Third, impulse buying intention was the dependent variable in this study, and consumers’ actual impulse buying behaviors could be examined in the future research. Acknowledgement

The author is grateful for the kind help of Dr. Yeung (Institute for Tourism Studies, Colina de Mong-Ha, Macau) and Dr. Yee (University of Macau, Kung Cheong U Teng, Macau) for developing the statistical analysis method used in this study. References

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Is Generation Y Ready to Go Green?

Marketa Kubickova* Rosen College of Hospitality Management

University of Central Florida [email protected]

H. G. Parsa

Rosen College of Hospitality Management University of Central Florida

[email protected]

K. Nusair Rosen College of Hospitality Management

University of Central Florida [email protected]

Abstract

Today, protection of the environment has become a global issue, one, that businesses can’t overlook. In addition, generation Y (also called the Millennial Generation) is becoming a significant part of lodging consumer segment in the US. Previous studies have pointed out the influence of image on future consumer behavior. The purpose of this paper is to analyze the determinants of green hotel image on word-of-mouth, willingness to pay, and revisit intentions in the context of Generation Y. A structural equation model (SEM) has been estimated. Findings support the hypothesis that image has effect on word-of-mouth, willingness to pay, and revisit intentions. In addition, theoretical and practical implications are being discussed before the article concludes with limitations and directions for future research. Keywords: green hotels, generation Y, word-of-mouth, image, willingness to pay, revisit intentions, structural equation model

Online Hotel Brand Image: Hotel Marketing Managers’ Perspectives

Duangthida Nunthapirat* PhD Researcher

School of Hospitality and Tourism Management University of Surrey,

Guildford, Surrey GU2 7XH [email protected]

Hesham Al-Sabbahy, Dr.

Programme Director, MSc International Hotel Management School of Hospitality and Tourism Management

University of Surrey, Guildford, Surrey GU2 7XH

[email protected]

Key words: Brand Image, Online Brand Image, Hotel, Internet, Marketing

It is becoming difficult to ignore the importance of brand image management in the virtual

world. The internet has been used directly and indirectly to boost brand awareness, brand recognition and brand loyalty (Porter & Claycomb, 1997). Although the concept of brand image has received a lot of attention in the literature, there is little agreement on the definition of brand image. It is suggested that five factors affect brand image in customer mind. These are brand associations, brand personality, brand attitude, past experience, and marketing communication (Levy & Glick; 1973; Keller’ 1993; Sirgy 1985; Gardner & levy, 1995).

The influence of the internet on individual’s perceptions and behaviours necessitates a change in how brands are managed. The internet offers an array of platforms for customers to express their views and share their experiences on a scale that was never possible before. As such, the internet offers an unrivalled transparent medium for brands to become more visible and stronger if managed effectively, or exposed and vulnerable if not. Despite this change in how people communicate and formulate their perceptions, there is very little research to address how the management of marketing and brands is responding especially in hospitality industry

The current study builds on two theoretical approaches: online brand equity based on cognitive and emotive psychology and online brand attributes based on functional and emotional brand evaluation to form online corporate brand image (Christodoulides & de Chernatony 2004; Da Silva & Syed Alwi, 2008). Although, Da Silva & Syed Alwi (2008) have found ease of use, personalization, security and customer care are important factors to determine brand image of the online e-tailer, their findings are based on bookstore rather than hotel context. The current study investigates marketing managers’ views on how brands may be managed online using semi-structured interviews with a sample from the UK and Thailand. The findings suggest some distinct factors in the virtual context as opposed to offline brand image. From managers’ perspective, brand concept, online brand attributes, e-image, and online marketing channels are key factors in creating brand image. There seems to be a divergence between what managers think and how previous research suggests brand image is formulated from the customer perspective.

Given the lack of research on examining online brand image, this study furthers understanding of this phenomenon. The paper offers implication for hospitality marketers for managing brand image online. It is recommended that further studies be conducted with hotel customers in order to assess and validate the dimensions of online brand image and how they impact on subsequent behaviour. References

Christodoulides, G., & De Chernatony, L. (2004). Dimensionalising on- and offline brands' composite equity. Journal of Product & Brand Management, 13(3), 168-179.

Da Silva, R. V., & Syed Aiwi, S. F. (2008). Online brand attributes and online corporate brand images. European Journal of Marketing, 42(9/10), 1039-1058.

Gardner, B. G., & Levy, S. J. (1955). The Product and the Brand. Harvard Business Review(March-April), 33-39.

Keller, K. L. (1993). Conceptualizing, Measuring, Managing Customer-Based Brand Equity. Journal of Marketing, 57(1), 1-22.

Levy, S. J., & Glick, I. O. (1973). Image and Symbolism; Marketing Manager's Handbook. Chicago: Stewart Britt II.

Porter, S., S., & Claycomb, C. (1997). The influence of brand recognition on retail store image. Journal of Brand Management, 6(6), 373-387.

Sirgy, M. J. (1985). Using Self-Congruity and Ideal Congruity to Predict Purchase Motivation. Journal of Business Research, 13, 195-206.

WHICH FACTORS ARE IMPORTANT FOR CUSTOMERS CONCERNING HOTEL LOYALTY PROGRAM DESIGN?

Mareike Haas

Heilbronn University Heilbronn, Germany

[email protected]

Michael Ottenbacher* Heilbronn University Heilbronn, Germany

[email protected]

and

Robert J. Harrington University of Arkansas Fayetteville, AR, USA

[email protected]

Abstract

Before making substantial investments in loyalty programs (LPs), it is advisable to first understand the factors that are important for customers and that encourage them to participate in a loyalty program (Ashley et al., 2011). According to Leenheer et al. (2007), the design of a LP has a significant influence on the likelihood whether a customer participates in a program or not. Unfortunately, there exists a knowledge gap of the factors that are important for a customer concerning LP design (e.g. McCall and Voorhees, 2010) and little is known about “the factors that determine how such programs are evaluated by consumers” (Kivetz and Simonson, 2002:155). This knowledge gap might exist due to the fact that especially in the hospitality industry, many loyalty generating strategies are developed by managers with little or no consultation with their customers regarding their preferences (Dubé and Renaghan, 1999). Additionally, LPs are often not understood by managers and therefore misapplied (O’Brien and Jones, 1995). According to Liu and Yang (2009), a LP’s design comprises the three key elements (1) participation requirements, (2) point structure and (3) rewards. Thus, this study aims to address a research gap in the hotel literature. Therefore, the aim is to find out which factors are important for customers concerning hotel loyalty program (LP) design. Data was collected through a face-to-face survey in Germany in the fall of 2011. The questionnaire was made up of three sections. The survey contained an introduction section, followed by a section that asked the respondents how important specific factors are regarding hotel LP design, and ended with the third section containing demographic questions about the interviewees. The sample consisted of 250 people from whom 54,8 % were female and 45,2 % were male. For testing whether the hypotheses can be verified or falsified, the method of large-sample tests of hypotheses is used, a so-called T-Test. The aim of this statistical method is to make a decision about a hypothesis (Mendenhall et al., 1993). The T-Tests are performed in a 1 % significance level. The results of the study suggest that two factors are important for customers concerning hotel LP design: (1) easy to understand rules which are not changed too often and (2) point thresholds that are not too high so that they can be reached in a reasonable time. While not significant, hotel LPs that make it possible for its members to collect or redeem points without needing to carry the LP card and (2) hotel LPs with at least three different tier levels were rated as important by customers. Nevertheless, this study has limitations. For example, the sample size and that the survey was a face-to-face survey and thus, the respondents could have been influenced by the interviewer to give a desired answer (Scholl, 2003). Another limitation is that the survey was only conducted in a German context.

Key Words: loyalty program design, hotels

References Ashley, C., Noble, S., Donthu, N. & Lemon, K. (2011). Why customers won’t relate: obstacles to relationship marketing engagement. Journal of Business Research, 64(7): 749-756. Dubé, L. & Renaghan, L. (1999). Building customer loyalty: guests' perspectives on the lodging industry's functional best practices (Part I). Cornell Hospitality Quarterly, 40(5): 78-88. Kivetz, R. & Simonson, I. (2002). Earning the right to indulge: effort as a determinant of customer preferences toward frequency program rewards. Journal of Marketing Research, 39(2): 155-170. Leenheer, J., Van Heerde, H., Bijmolt, T. & Smidts, A. (2007). Do loyalty programs really enhance behavioral loyalty? An empirical analysis accounting for self-selecting members. International Journal of Research in Marketing, 24(1): 31-47. Liu, Y. & Yang, R. (2009). Competing loyalty programs: impact of market saturation, market share and category expandability. Journal of Marketing 73(1): 93-108. McCall, M. & Voorhees, C. (2010). The drivers of loyalty program success: an organizing framework and research agenda. Cornell Hospitality Quarterly, 51(1): 35-52. Mendenhall, W., Reinmuth, J. and Beaver, R. (1993). Statistics for Management and Economics. Belmont: Duxbury Press. O'Brien, L., & Jones, C. (1995). Do rewards really create loyalty. Harvard Business Review, 73(3): 75-82. Scholl, A. (2003). Die Befragung, Sozialwissenschaftliche Methode und Kommunikationswissenschaftliche Anwendung. Konstanz: UVK Verlagsgesellschaft mbH.

GETTING TO KNOW THE CONTENT OF THE ‘WOW’

Key Words: Quality, Service, Customer Experience, Customer Retention, Competitive Strategy

Authors:

Lysbeth Vink* (Corresponding author)

Hospitality Instructor Hotelschool The Hague

Brusselselaan 2 2587 AH Den Haag

[email protected] 

Annette Kappert-White

Hospitality Lecturer Hotelschool The Hague

Brusselselaan 2 2587 AH Den Haag

[email protected]

Dr. Daphne Dekker

Lector Hospitality, Personality & Behaviour Hotelschool The Hague

Brusselselaan 2 2587 AH Den Haag

[email protected]

INTRODUCTION

The WOW factor has been branded and wielded by companies to describe new products and experiences for generations, yet there are very few studies that have objectively defined what it is, assessed its ‘manipulativeability’, or determined its true impact on quality within the hospitality industry. Despite extensive research conducted to understand the relationship between fulfillment and customer satisfaction (Kano, 1984), the conclusion that “customer experience” has replaced price, product and service as the new competitive strategy (Shaw and Ivens, 2002), little has been done to understand the relationship between experience, quality and guest retention (Reichheld, 2012).

This small scale research seeks to fill these gaps; by utilizing the ethnographic qualitative method (Dubé and Le Bel, 2010, Fehr and Russell, 1991, Russell and Fehr, 1994) to define WOW, assess its reprability and to determine if there is a direct link between ‘WOW’ experiences, quality and guest retention?

THE RESEARCH METHODOLOGY AND FINDINGS

Initially, we conducted focus groups: 32 hospitality industry professionals and 8 trainee managers (n=40), to record their intent to supply or create a ‘WOW’ for guests. We coded the data into: Manipulative factors that can be influenced to generate a ‘WOW’, and Non-manipulative factors; cannot be influenced.

The second stage of the research: aimed at formulating the guest’s definition of ‘WOW’, involved 32 interviewees: 18 men and 14 women, who frequented hospitality establishments on average of eight or more times a month. In keeping with the methodology (Dubé and Le Bel, 2010), we also asked the participants (n=32) to recall a ‘WOW’ experience.

After coding, three broad categories emerged: Experiences, Emotions and Antecedents. These were independently sub divided into: Staffing, Service, The unexpected, Price, Location, ‘Hostmanship’ (Blom et al, 2007), Design and Feelings.

Diagram 1.1: Results from WOW interview From this we were able to determine: Staffing and Feelings are the most important when considering ‘WOW’. Design is more important than location and price The unexpected has the least baring on ‘WOW’. Simply being hospitable is not enough to create a ‘WOW’.

0 20 40 60 80

Feelings

Design

Hostmanship

Location

Price

The Unexpected

Service

Staffing

Feelings DesignHostmans

hipLocation Price

TheUnexpect

edService Staffing

Series1 71 63 25 28 19 9 40 71

WOW is:

DISCUSSION AND CONCLUSION

Although not a direct request, many of the participants gave their definition of ‘WOW’:

‘WOW is an emotional experience; a sort of eruption inside!’ ‘A nostalgic feeling of being at home’ ‘Genuine staff, who smiled and cared’

From these findings we can conclude that despite some naturally occurring ‘WOWs’, they can recreated. However, in response to our final question; more data is required, hence we intend to host a round table talk with: leading industry professionals, hospitality staff and guests, to determine any relationship between WOW, quality and guest retention.

Nevertheless, we are able to conclude that creating a ‘WOW’ should be part of an organization’s culture, time and investment must be allocated to staff training, and despite factors: Service and Feelings, being preferred over others, having all of them in correct proportions, will enhance the guest’s experience.

Finally, we acknowledge that further research needs to be conducted to: identify

resources required to ‘WOW’ a guest and to locate examples of good practice in the Dutch Hospitality industry.

LIST OF REFERENCES

Blom, O. & Gunmasson, J. (2007) Hostmanship. Vardskapet Utveckling AB

Dubé, L. & Le Bel, J. (2010). The concept and structure of Laypeople’s concept of pleasure. Cognition & Emotion, 17, 263-295.Fehr, B., & Russell, J. A. (1991). The concept of love viewed from a prototype perspective. Journal of Personality and Social Psychology, 60, 425-438. Kano, N., N. Seraku, F. Takahashi and S. Tsuji: "Attractive Quality and Must-be Quality", Hinshitsu. The Journal of the Japanese Society for Quality Control, (April 1984), pp. 39 -48. Reichheld, F, (2012) The value in wowing your customers. Harvard Business review Russell, J. A., & Fehr, B. (1994). Fuzzy concepts in a fuzzy hierarchy: Varieties of anger. Journal of Personality and Social Psychology, 67, 186_205.

Shaw, C. and J. Ivens (2002). Building Great Customer Experiences. Palgrave Macmillan, New

York.

THE EFFECTS OF HOPE AND WORK ENGAGEMENT ON FRONTLINE EMPLOYEES’ PERFORMANCE OUTCOMES

Osman M. Karatepe

Faculty of Tourism Eastern Mediterranean University

Gazimagusa, TRNC via Mersin 10, Turkey

E-mail: [email protected] This paper proposes and tests a research model that investigates whether work engagement (WE) mediates the effect of hope on job performance (JP), service recovery performance (SRP), and extra-role customer service (ERCS). These relationships were tested using data gathered from full-time frontline hotel employees and their managers in Romania. The results from structural equation modeling (SEM) suggest that the impact of hope on JP, SRP, and ERCS is fully mediated by WE. Based on the results reported in this study, several useful implications concerning acquisition and retention of frontline employees who can display high quality performance in the workplace are provided. Key Words: Hope, Hotel employees, Performance outcomes, Romania, Work engagement

Introduction

At a time of increasing competition from other hospitality firms, intensifying customer demands, and rapid rates of technological change, hospitality managers need to acquire and retain frontline employees who can deliver quality services to customers, return disgruntled customers to a state of satisfaction after a service failure, and go beyond their formal role requirements for meeting or even exceeding customer expectations (cf. Deery, 2008; Kusluvan, Kusluvan, Ilhan, & Buyruk, 2010). Hopeful frontline employees who are engaged in their work can show successful performance in service encounters.

As a positive psychological strength, hope is defined as “a cognitive set that is based on a reciprocally

derived sense of successful (a) agency (goal-directed determination) and (b) pathways (planning of ways to meet goals)” (Snyder et al., 1991, p. 571). Hope includes both willpower and waypower thinking (Avey, Luthans, & Jensen, 2009). Employees need to have the will and a viable means to achieve a specific task (Luthans, Norman, Avolio, & Avey, 2008). As a motivational construct, WE refers to “a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication, and absorption” (Schaufeli, Salanova, Gonzáles-Romá, & Bakker, 2002, p. 74). Employees high in hope are more engaged in their work, because they have more goal oriented strategies and are motivated for goal achievement (Bakker & Demerouti, 2008). These employees in turn perform successfully in the workplace.

Against this background, the current paper proposes and tests a research model that examines whether

WE acts as a mediator of the effect of hope on JP, SRP, and ERCS. JP, SRP, and ERCS are the three organizationally valued performance outcomes used in the present study (e.g., Karatepe, 2011; Karatepe & Sokmen, 2006). Data obtained from frontline hotel employee-manager dyads in Romania are utilized to assess these relationships.

This paper contributes to the existing knowledge base in the following ways. First, hope is an important personal resource for accomplishing a specific task. There are several studies indicating that personal resources (e.g., self-efficacy, self-esteem) increase employee performance through WE (e.g., Bakker & Demerouti, 2008; Xanthopoulou, Bakker, Heuven, Demerouti, & Schaufeli, 2008). However, very little is known about the relationship between hope and WE in the relevant literature (Ouweneel, Le Blanc, Schaufeli, & van Wijhe, 2012). In addition, the hospitality management and marketing literature is devoid of empirical research concerning the effect of hope on WE in frontline service jobs in the hotel industry. This is surprising, because frontline employees have intense face-to-face or voice-to-voice interactions with customers, provide feedback about customer requests and problems to managers, and have to perform effectively in service delivery and complaint handling processes. More importantly, empirical research regarding WE as a mechanism that links personal resources to performance outcomes is scarce (Rich, LePine, & Crawford, 2010).

Second, Line and Runyan’s (2012) recent study on hospitality marketing research demonstrates that the

overwhelming majority of the empirical studies have used self-report data that are prone to common method bias. Common method bias is a potential threat to the magnitudes of relationships among variables. Consistent

with the suggestions made by Podsakoff, MacKenzie, Lee, and Podsakoff (2003), this study collects data from multiple sources and measures frontline employees’ JP, SRP, and ERCS as assessed by their managers. Third, engaged employees display better performance than nonengaged employees. Specifically, Bakker (2011) argues that engaged employees have positive emotions and regularly work on their personal resources. Bakker (2011) also discusses that engaged employees dedicate their skills and energy resources to their work and transfer their engagement to other people in their immediate work environment (Bakker, 2011). Therefore, understanding the previously mentioned relationships would provide useful strategies for acquiring and retaining high performing employees in the organization. Finally, to the best of the author’s knowledge, this is the first study in the hospitality management and marketing literature that links hope to JP, SRP, and ERCS through WE using data gathered from frontline hotel employees and their managers.

Research model and hypotheses

Research model

The research model in Figure 1 demonstrates the study relationships. Specifically, the model proposes that employees high in hope have elevated levels of WE. Such employees in turn display higher JP, SRP, and ERCS. In short, WE has a full mediating role in the relationship between hope and performance outcomes. As discussed by Rich et al. (2010), it is critical to examine WE that can serve as a mechanism through which personal resources or personality variables influence performance outcomes. The model also indicates that gender is treated as a control variable, because it may significantly influence study variables and confound the relationships (e.g., Karatepe, 2011; Karatepe & Sokmen, 2006; Sonnentag, Mojza, Binnewies, & Scholl, 2008). Hypotheses Hope seems to share some similarities with other personality variables such as self-efficacy and core self-evaluations. As cogently argued by Peterson and Byron (2008), self-efficacy and core self-evaluations do not consist of the pathways dimension of hope. Consistent with Peterson and Byron’s (2008) study, hope is conceptualized and measured as “individuals’ psychological appraisal of their general level of hopefulness” (p. 788). There are several studies that hope enhances JP, job satisfaction, and organizational commitment and reduces stress symptoms, job search behaviors, and turnover intentions (Avey et al., 2009; Peterson & Byron, 2008; Youssef & Luthans, 2007). However, very little is known about the relationship between hope and WE. It appears that agency thoughts (e.g., positive past experiences) motivate employees to pursue or take advantage of strategies that would result in achievement of goals. When employees find that the strategy they prefer to pursue seems to prove difficult, they focus on other alternative strategies to overcome problems or difficulties to reach their goals. While pursuing strategies that would lead to goal attainment, employees are engaged in their work. That is, employees high in hope direct their energy in pursuing strategies through WE. In short, personal resources, due to their motivational potential, enhance employees’ WE (Bakker & Demerouti, 2008). In Ouweneel et al.’s (2012) study, it was reported that hope had a positive impact on WE. Therefore, the following hypothesis is proposed: Hypothesis 1. Hope is positively related to WE. JP, SRP, and ERCS are the three organizational valued performance outcomes used in the current study. JP refers to “the level of productivity of an individual employee, relative to his or her peers, on several job-related behaviors and outcomes” (Babin & Boles, 1998, p. 82), while SRP refers to frontline employees’ abilities and actions to resolve a service failure to the satisfaction of the customer (Babakus, Yavas, Karatepe, & Avci, 2003). In addition, ERCS is defined as “discretionary behaviors of contact employees in serving customers that extend beyond formal role requirements” (Bettencourt & Brown, 1997, p. 41). Although not abundant in the current literature, there is empirical evidence that employees with higher WE perform effectively in service delivery and complaint handling processes and display ERCS behaviors for meeting or even exceeding customer expectations (Bakker & Demerouti, 2008; Karatepe, 2011; Xanthopoulou et al., 2008). Therefore, the following hypotheses are proposed: Hypotheses 2. WE is positively related to (a) JP, (b) SRP, and (c) ERCS.

Figure 1. Research model The aforementioned relationships implicitly suggest that the effect of hope on JP, SRP, and ERCS is fully mediated by WE. The Job Demands-Resources (JD-R) model provides directions for developing hypotheses regarding the mediating role of WE. Specifically, the motivational process of the JD-R model proposes that job resources and personal resources, due to their motivational potential, influence WE independently or jointly (Bakker & Demerouti, 2008). Employees who score high on personal resources such as self-efficacy and self-esteem have high levels of energy, feel dedicated, and are happily engrossed in their work (Xanthopoulou, Bakker, Demerouti, & Schaufeli, 2007). Such employees in turn demonstrate high quality performance in the workplace. In empirical terms, Xanthopoulou et al. (2008) found that WE fully mediated the impact of self-efficacy on in-role and extra-role performances among flight attendants. Rich et al.’s (2010) study also provided support for the full mediating role of WE in the relationship between personality traits (e.g., core self-evaluations) and performance outcomes. As presented in Figure 1, this study contends that WE functions as a full mediator of the impact of hope on JP, SRP, and ERCS. That is, employees high in hope are goal and task oriented. Employees with agency and pathways thinking are highly engaged in their work, and therefore, display high levels of performance in service encounters. In short, as a personal resource, hope enhances WE, which is a motivational construct. Engaged employees in turn deliver quality services to customers, deal with customer requests and problems successfully, and go beyond their formal role requirements. Based on the precepts of the motivational process of the JD-R model and limited empirical evidence, the following hypotheses are proposed: Hypotheses 3. WE fully mediates the effect of hope on (a) JP, (b) SRP, and (c) ERCS.

Method Sample and procedure This study used a sample of full-time frontline hotel employees (e.g., front desk agents, wait staff, bell attendants, guest relations representatives, bartenders, door attendants) and their managers in the Poiana Brasov region which is one of the most important winter tourist destinations in Romania. There are two main reasons

Hope

Work engagement

H3(a)-(c)

Service recovery

performance

Job performance

Extra-role customer service

H1

H2(a)

H2(b)

H2(c)

Employee assessment Manager assessment

for choosing frontline employees in the present study. First, frontline employees have frequent face-to-face or voice-to-voice interactions with customers, represent the hotel to customers and other related parties, and have to be high performers in service encounters. Second, frontline employees provide useful information about customer expectations and complaints to management of the hotel. At the time of this study there were 7 four-star hotels and only 1 five-star hotel in the Poiana Brasov region. Managements of these hotels agreed to participate in the current study. However, they did not allow the researcher to directly contact their employees. Therefore, self-administered questionnaires that consisted of information about the assurance of anonymity and confidentiality were distributed to frontline employees through their managers. Each frontline employee sealed the questionnaire in an envelope and placed it in a special box. The researcher received the questionnaires from this box. The employee questionnaire included the hope and WE measures and items pertaining to age, gender, education, and organizational tenure. The manager questionnaire consisted of the JP, SRP, and ERCS measures. The researcher prepared a master list that comprised the names of frontline hotel employees. Each employee in this list was assigned an identification number. An identification number appeared on each employee’s questionnaire. An identification number was also written on each manager questionnaire. Managers evaluated each frontline employee’s JP, SRP, and ERCS under their supervision. A total number of 123 questionnaires were distributed to frontline employees. 114 questionnaires were returned by the cut-off date for data collection. However, 110 questionnaires had complete information. That is, 110 questionnaires were returned, yielding a response rate of 89.4%. Such a response rate is comparable to other studies (e.g., Boles, Wood, & Johnson, 2003). These employee questionnaires were also matched with the manager questionnaires using the identification number. Forty-one respondents (37%) ranged in age from 18-27 years, while 43 respondents (39%) ranged in age from 28-37 years. The rest were older than 37. The sample consisted of 64 (58%) males and 46 (42%) females. In terms of educational attainment, 7 respondents (6%) had primary school education, while 55 respondents (50%) had secondary and high school education. Forty-two respondents (38%) had two- and four-year college degrees. The rest had graduate degrees. The sample included 73 respondents (66%) with tenures of five years or less. Twenty-six respondents (24%) had tenures between 6 and 10 years. The rest had been with their hotel for eleven or more years. Measurement

All variables were measured through multiple items in the current literature. Twelve items from Snyder et al. (1991) were used to measure hope. Sample items are ‘I can think of many ways to get out of a jam’ and ‘I energetically pursue my goals.’ Response options for items in hope ranged from 4 (definitely true) to 1 (definitely false). The shortened version of the Utrecht WE scale was used to operationalize WE (Schaufeli, Bakker, & Salanova, 2006). Specifically, this scale consisted of nine items. Sample items are ‘At my work, I feel bursting with energy’, ‘I am enthusiastic about my job’, and ‘I feel happy when I am working intensely.’ Responses to items in WE were rated on a seven-point frequency rating scale ranging from 6 (always) to 0 (never). Five items adapted from Babin and Boles (1998) were used to measure JP. Sample items include ‘This employee is a top performer’ and ‘This employee knows more about services delivered to customers than others.’ Five items came from Boshoff and Allen (2000) for operationalizing SRP. Sample items are ‘Considering all the things this employee does, he/she handles dissatisfied customers quite well’ and ‘No customer this employee deals with leaves with problems unresolved.’ Finally, ERCS was measured through 5 items from Bettencourt and Brown (1997). Sample items include ‘This employee voluntarily assists customers even if it means going beyond job requirements’ and ‘This employee willingly goes out of his/her way to make a customer satisfied.’ Responses to items in JP, SRP, and ERCS were rated on five-point scales ranging from 5 (strongly agree) to 1 (strongly disagree).

The back-translation method was used to prepare the employee and manager questionnaires.

According to the back translation method, the researcher prepared the employee and manager questionnaires in English. Then, two bilingual individuals (fluent in both Romanian and English) participated independently in the translation process. Finally, the researcher further checked the two versions of the employee and manager questionnaires in English for any inconsistencies. The employee questionnaire was tested with a pilot sample of 10 frontline employees. The manager questionnaire was tested with a pilot sample of 5 managers. There was no need to make changes in the questionnaires as a result of each pilot study.

Data analysis This study utilized a two-step approach that included confirmatory factor analysis (CFA) and SEM (Anderson & Gerbing, 1988). The first step consisted of the assessment of the measurement model in terms of convergent and discriminant validity (Anderson and Gerbing, 1988; Fornell and Larcker, 1981). The second step included a model comparison through the χ2 difference test. This is also consistent with the suggestions made by James, Mulaik, and Brett (2006) that it is important to identify the model which seems to offer useful explanations against the model that does not. The relationships shown in the research model were tested using the SEM. The overall χ2 measure, CFI [Comparative fit index], IFI [Incremental fit index], RMSEA [Root mean square error of approximation], and SRMR [Standardized root mean square residual] were used to evaluate model fit. The sample size of this study seems to be congruent with many suggestions that pertain to the minimum sample size of 100 for SEM (Hair, Black, Babin, & Anderson, 2010). Reliability of each variable was measured based on composite reliability (Bagozzi & Yi, 1988). All of these analyses were employed through LISREL 8.30 (Joreskog & Sorbom, 1996).

Results Measurement results Several items were dropped during CFA due to low standardized loadings (< .50) and correlation measurement errors. That is, four items from the hope measure, two items each from the WE, JP, and SRP measures were dropped during CFA. The results demonstrated that there was an acceptable fit of the five-factor model on the basis of a number of fit statistics (χ2 = 421.37, df = 289; χ2 / df = 1.46; CFI .91; IFI = .92; RMSEA .065; SRMR .062). The magnitudes of the standardized loadings ranged from .60 to .91. The average variance extracted by each variable was greater than .50. That is, the average variance extracted by hope, WE, JP, SRP, and ERCS were .52, .66, .65, .71, and .67, respectively. The average variance extracted by each variable was also larger than the respective shared variance. Overall, there was evidence of convergent and discriminant validity (Anderson & Gerbing, 1988; Fornell & Larcker, 1981). Table 1 presents means, standard deviations, correlations of study variables, and composite reliability. The results show that female employees perform better than male employees. This is consistent with the work of Karatepe and Sokmen (2006) that female employees are more relationship oriented, and therefore, seem to display more caring behaviors to customers or complainants in service encounters. As reported in Table 1, composite reliability for each construct was also larger than the .60 threshold. In short, the results revealed that the measures were reliable (Bagozzi & Yi, 1988). Table 1 Means, Standard Deviations, Correlations of Study Variables, and Reliability Variables 1 2 3 4 5 6 1. Gender 1.000 2. Hope .116 1.000 3. Work engagement .113 .628 1.000 4. Job performance .209 .344 .380 1.000 5. Service recovery performance .132 .290 .346 .721 1.000 6. Extra-role customer service .143 .432 .532 .694 .680 1.000 Mean .42 2.82 3.26 3.38 3.33 3.27 Standard deviation .50 .60 1.06 .88 .93 .89 Composite reliability - .90 .93 .85 .88 .91

Note. Composite scores for each construct were calculated by averaging respective item scores. Correlations .209 are significant at the .05 level. Structural model results

The fully mediated model (χ2 = 445.36, df = 313) is compared with the partially mediated model (χ2 =

441.09, df = 310) via the χ2 difference test (p < .05). The fully mediated model seems to have a better fit than the partially mediated model (∆χ2 = 4.27, ∆df = 3, not significant). Therefore, the results for the fully mediated model are used to assess the study relationships. Consequently, the results reveal that the fully mediated model fits the data acceptably (χ2 = 445.36, df = 313; χ2 / df = 1.42; CFI .92; IFI = .92; RMSEA .062; SRMR .066).

The results in Figure 2 show that hope has a significant positive impact on WE (β21 = .68, t = 6.26). Such a finding provides empirical support for hypothesis 1. The results also demonstrate that WE significantly and positively influences JP (β32 = .39, t = 3.84), SRP (β42 = .37, t = 3.54), and ERCS (β52 = .57, t = 5.84). Therefore, hypotheses 2(a), 2(b), and 2(c) are supported.

The results in Figure 2 reveal that all standardized indirect effects are significant. Specifically, the

standardized indirect effect of hope on JP (.27), SRP (.25), and ERCS (.39) through WE is significant based on Sobel test. Hence, there is empirical support for hypotheses 3(a), 3(b), and 3(c). Gender does not significantly affect hope (γ11 = .11, t = 1.05), WE (γ21 = .03, t = .36), JP (γ31 = .18, t = 1.89), SRP (γ41 = .10, t = 1.02), and ERCS (γ51 = .09, t = 1.10). As a control variable, gender does not confound the relationships among study variables. In addition, the results account for 1% of the variance in hope, 46% in WE, 20% in JP, 15% in SRP, and 34% in ERCS.

Discussion and Implications

This study proposes and tests a research model that examines WE as a mediator of the effect of hope on

JP, SRP, and ERCS. These relationships are tested using data obtained from full-time frontline hotel employees and their managers in Romania. All hypotheses are supported by the empirical data. There are several useful findings arising from this study. First, the result concerning the relationship between hope and WE suggests that hopeful frontline employees pursue strategies to reach their goals by feeling vigor, being involved and happily immersed in their work. Such employees also take advantage of alternative paths to achieve their goals. This finding lends credence to limited empirical evidence in the current literature (Ouweneel et al., 2012). Second, the results pertaining to the effect of WE on JP, SRP, and ERCS suggest that engaged employees perform effectively in the workplace. A close examination of the SEM results also suggests that WE appears to have a stronger impact on ERCS than on JP and SRP. That is, frontline employees with higher WE attach a priority to exceeding customer expectations through their ERCS behaviors. The results regarding the effect of WE on JP, SRP, and ERCS are consistent with the works of Karatepe (2011) and Xanthopoulou et al. (2008).

Third, the results suggest that WE is a full mediator of the effect of hope on JP, SRP, and ERCS. As a personal resource, hope enhances JP, SRP, and ERCS through WE. Consistent with the precepts of the JD-R model (Bakker & Demerouti, 2008), employees with agency and pathways thinking are engaged in their work, and therefore, perform effectively in service delivery process, respond to customer requests and complaints successfully, and perform activities that are not included in their formal role requirements. In short, this study contributes to the current knowledge base by examining WE as a mediator of the relationship between hope and performance outcomes based on data gathered from frontline hotel employee-manager dyads in Romania.

There are several useful implications for managers emerging from the study findings. The foremost

implication of this study appears to be related to the hiring mechanism in the organization. That is, it is important for managers to acquire a pool of engaged employees. However, managers should make sure that the shortened version of the Utrecht WE scale that is used during the selection process should always be checked in terms of validity for frontline service jobs in the hotel industry. Such an implication is important, because engaged employees regularly work on their personal resources (i.e., hope), transfer their engagement to other individuals in their immediate work environment, and display high levels of performance in the workplace (Bakker, 2011). Training also seems to be a critical tool for enabling employees to set challenging goals, consider contingency planning for coping with potential problems, and avoid false hope (cf. Peterson & Byron, 2008; Youssef & Luthans, 2007). Employees’ elevated levels of WE, when coupled with these training programs, would give rise to better JP, SRP, and ERCS. Consequently, the abovementioned implications would be helpful for hotel managers to acquire and retain employees who may display high levels of performance in the organization.

Note. All standardized estimates are significant (p < .05). All standardized indirect effects are significant based on Sobel test. The non-significant effect of gender on study variables is not shown for the sake of clarity. WE = Work engagement; JP = Job performance; SRP = Service recovery performance; ERCS = Extra-role customer service; CFI = Comparative fit index; IFI = Incremental fit index; RMSEA = Root mean square error of approximation; SRMR = Standardized root mean square residual.

Figure 2. Structural model results

Service recovery

performance

Hope

Work engagement

Job performance

Extra-role customer service

β21 = .68, t = 6.26

Employee assessment Manager assessment

Standardized indirect effects: Hope → WE → JP .27, t = 3.44 Hope → WE → SRP .25, t = 3.21 Hope → WE → ERCS .39, t = 4.65 R2 for : Hope = .01, WE = .46, JP = .20, SRP = .15, ERCS = .34 Model fit statistics χ2 = 445.36, df = 313, χ2 / df = 1.42; CFI = .92; IFI = .92; RMSEA = .062; SRMR = .066

β32 = .39, t = 3.84

β42 = .37, t = 3.54

β52 = .57, t = 5.84

This study is not without its limitations. Specifically, cross-sectional data were used to assess hypotheses. With this realization, in future studies collecting longitudinal data would be useful for making causal inferences. The present study tested JP, SRP, and ERCS as performance outcomes. Including other performance outcomes such as creative performance, team performance, and coworker performance in future studies would provide a detailed analysis of the mediating role of WE. Hope is one of the dimensions of psychological capital. In future studies examining WE as a mediator of the effect of psychological capital on the abovementioned outcomes would be beneficial. In addition, all relationships were tested using the individual frontline employees as the unit of analysis. In future studies assessing the study relationships at the organizational level would enhance the understanding concerning WE as a mediator. In closing, replication studies with large sample sizes in different tourism and hospitality settings in Romania and other countries are needed for broadening the database in this research stream. References

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WHEN EMPLOYEES WALK THE COMPANY TALK: THE BENEFITS OF INVOLVEMENT IN CORPORATE PHILANTHROPY FOR EMPLOYEE COMMITMENT AND GOODWILL

Steffen P. Raub

Ecole Hôtelière Lausanne Lausanne, Switzerland

[email protected]

ABSTRACT

Corporate philanthropy is often viewed as a vehicle for fostering employee commitment. However, research suggests that it does not always accomplish this goal. We propose that involving employees in corporate philanthropy encourages more benevolent attributions for philanthropy, thereby promoting higher attitudinal and behavioral commitment. In Study 1, a field study, employee involvement in corporate philanthropy predicted higher attitudinal and behavioral commitment to the firm. In Study 2, a laboratory experiment, participants reported higher attitudinal and behavioral commitment to a company when it was described as involving employees in philanthropy. In both studies, benevolent attributions mediated this relationship. We discuss implications of this research for understanding the impact of corporate philanthropy on a particularly important group of stakeholders — employees.

Key words: Benevolent attributions, corporate philanthropy, corporate social responsibility, commitment, involvement, participation.

THE IDEAL BOSS IN HOSPITALITY INDUSTRY - THE SEARCH GOES ON A Qualitative Analysis of Hospitality Students’ Views of Leadership Traits

Kari Nurminen

MSc., CHE, Sen. Lecturer HAAGA-HELIA University of Applied Sciences

Ratapihantie 13 FI-00520 Helsinki [email protected]

Abstract

This paper studies the picture of the ideal hospitality leader in the mind of the hospitality student. The research is explorative and qualitative in nature; the data was collected in 38 classes 12.11.2007 - 01.11.2011 at HAAGA-HELIA. Observations were reduced into six categories. The ideal boss demonstrates professional qualities, a positive personality, team membership, excellent communication, results orientation and encouraging subordinates. International classes stress personality and results orientation, as Finnish classes emphasize team membership and values such as equality. Consequently, hospitality industry and educators alike benefit from recognizing generation Y expectations. This suggests further study with larger populations and with an international focus.

Key words: Leadership, managers, hospitality, students, generation Y

THE USE OF THE PSYCHOLOGICAL CONTRACT TO EXPLAIN SELF-PERCEIVED EMPLOYABILITY

Jenny Sok * Hotelschool The Hague

Brusselselaan 2 2587 AH The Hague, The Netherlands

T: +31 (0)70 351 24 81 F: +31 (0)70 351 21 55

E-mail: [email protected]

Rob Blomme Nyenrode Business University

Straatweg 25 3621 BG Breukelen, The Netherlands

E-mail: [email protected]

Debbie Tromp Hotelschool The Hague

Brusselselaan 2 2587 AH The Hague, The Netherlands

E-mail: [email protected]

*corresponding author

ABSTRACT

This study examines the relationship between psychological contract and self-perceived employability (intra-organizational mobility intentions, employee development and perceived labor market opportunities). A survey was filled out by 247 hospitality workers, all alumni of the Hotelschool The Hague. Our results suggest that offering intra-organizational) mobility and development opportunities and autonomy can stimulate employees’ (perception of) employability. It is especially important for organizations to know and match the needs of women and older workers regarding development and mobility opportunities. Keywords: Perceived employability; psychological contract; intra-organizational mobility intentions; employee development; perceived labor market opportunities

INTRODUCTION

Employability refers to the extent to which an employee is capable of gaining and maintaining employment (Hillage and Pollard 1998). The subject came to the fore because organizations, operating in a rapidly changing environment, have an increasing need for flexible and employable workers (Fugate, Kinicki and Ashforth 2004). For individual employees these developments entail that they have to work on their employability constantly (Hall and Mirvis 1995; Rothwell and Arnold 2007). Scholars seek to understand what contributes to employees’ employability, particularly since one of the most important challenges in many industries nowadays is to attract and retain highly educated personnel (Walsh and Taylor 2007). Also in the hospitality industry, where the focus of this study lies, management-level turnover is growing (Blomme, Tromp and Van Rheede 2010; Walsh and Taylor 2007). This industry is characterized by long, irregular and unpredictable working hours and is often associated with work-family conflict (Cleveland et al. 2007). These work characteristics are potential work stressors associated with turnover intentions. Although stimulating worker’s feelings of employability may result in losing employees to other employers, an employability (development oriented) culture has been found to relate negatively to turnover intentions (Nauta, Van Vianen, Van der Heijden, Van Dam and Willemsen 2009). So, in the social exchange relationship that today’s employers and employees have, insight into the relationship between employer’s practices

on the one hand, and the perception of employees on how employable they are on the other hand, can be advantageous for both employers and employees.

Increasingly, the psychological contract is seen as an important framework for understanding the modern employer-employee relationship. ‘Psychological contract’ is defined as “individual beliefs regarding the terms and conditions of a reciprocal exchange agreement between that focal person and another party” (Rousseau 1989 p. 123). The psychological contract is founded on Social Exchange Theory (Blau 1964), in which it is expected that the employee’s perception of the employer’s practices will affect his or her feeling of obligation to reciprocate in terms of attitudes and behaviors (Rousseau 1989). Particularly the social exchange perspective of the psychological contract approach can be fruitful in employability research. In the employer-employee relationship of today, employers provide employees with opportunities to become or remain employable (Hall and Mirvis, 1995). In return, employees develop skills and experiences that ensure employability, such as employee development, intra-organizational and external mobility intentions (Hillage and Pollard 1998; Van der Heijde and Van der Heijden 2006; Ten Brink 2004). Therefore, as suggested by Thijssen, Van der Heijden and Rocco (2008), we studied employability within the theoretical framework of the psychological contract. This study aims to extend the research into the relationship between the psychological contract and (perceived) employability, which has not been well-examined (Thijssen et al. 2008).

Employability has been defined and measured in many ways. Since we focused on the perceived reciprocal relationship with the employer via the psychological contract, we also wanted to include attitudinal elements, instead of only capabilities. Therefore, we adopted the broader view on employability of Hillage and Pollard (1998). They state that employability can encompass not only knowledge and skills (Rothwell and Arnold 2007) but also perceptions on the capacity of gaining employment on the internal or external labor market (Van der Heijde and Van der Heijden 2006), developmental and mobility elements, such as willingness to manage their own employment transitions within organizations and willingness to learn (Hillage and Pollard 1998). In this paper, we focus on an internal and an external employability measure as dependent variables (Torka, Geurts, Sanders and Van Riemsdijk 2010), and a developmental measure (Hillage and Pollard 1998). All three measures have received relatively little attention in the literature so far and can be considered to be important in relation to psychological contract.

‘Intra-organizational mobility intentions’ refer to the extent to which employees are willing to fulfill the

current position in another department or to fulfill another (upward or lateral) position within the same organization (Fugate et al. 2004; Thijssen et al. 2008). Willingness to make lateral movements can be seen as fulfilling the employee obligation to remain employable (Thijssen et al. 2008). Hall and Mirvis (1995) state that intra-organizational mobility opportunities can help employees to remain employable, although these changes do not necessarily suggest an upward promotion. Scandura and Lankau suggested that employees who experience a good work-home balance will react with intentions to reciprocate with loyalty and commitment (1997). This could result in more willingness to accept another job within the organization. Ten Brink’s study (2004) showed indeed, that the more opportunities for a good work-family balance their employer offered, the more employees were willing to change their job or their workplace. Others found that autonomy and job content positively influenced employees’ willingness to move within the organization (Schyns and Von Collani 2002). It can also be expected that other positive employer practices, such as offering development opportunities, intra-organizational mobility opportunities and promotion opportunities, job security, a clear task description and high salary will be reciprocated with the intention to fulfill another job within the organization. However, Ten Brink’s results suggested that in some types of organizations, the more positive the job content, job security and clarity of the task description was evaluated, the less willing employees were to change their job or workplace within the organization (2004).

‘Employee development’ refers to the extent to which employees develop knowledge and skills for their

current and future positions (Hall and Mirvis 1995). In the present view on psychological contract, development and mobility intentions are viewed at as career self-management responsibilities, or employee obligations (Rousseau 1995; Thijssen et al. 2008). A review of the literature suggests that perceptions of the work situation are important antecedents of employees’ development. It has been found that job and task changes can give rise to job enrichment and fulfillment of development needs (e.g., Birdi, Allan, and Warr 1997). More specifically, researchers found that career development support and job content were related to development (Van Dam 2004; Ten Brink 2004). In the same way we expect other positive practices, such as offering work-home flexibility, intra-organizational mobility and promotion opportunities, a clear task description, job security and a high compensations to positively influence development activity of the employee. On the other hand, ten Brink found that, the more clear the task description

was and the higher the salary, the less employees seemed to develop themselves; but only in some types of organizations.

‘Perceived labor market opportunities’ encompasses the individual’s beliefs about how easy it is, to find

new employment in the external market (Rothwell and Arnold 2007). We followed Ten Brink’s suggestion (2004) to include this external employability measure in our analyses. Previous research found autonomy and job content to predict occupational self-efficacy, suggesting individuals feel competent enough to manage new tasks in extra-organizational alternatives (Schyns and Von Collani 2002). In the same line of reasoning it can be expected that positive employer practices, such as work-home flexibility, high compensations, a clear task description and job security, development, intra-organizational mobility and promotion opportunities will enhance employees’ feelings of competency, and therefore of external employability.

Considering the relationships found in the literature, the general expectation about the relationship between the psychological contract and employability is that the more employees evaluate the state of the psychological contract as positive, the more they will be willing to be flexible and adaptable, and fulfill a position in a different department; the more they will feel obligated to keep developing themselves; and the more positive they will evaluate their chances on finding a job elsewhere. Therefore, we hypothesize:

H 1. The psychological contract measures relate positively to perceived employability.

Women can be expected to have a different notion of the psychological contract than men. For example, they seem to expect less in terms of pay and promotion and “trade” these benefits for flexibility (Herriot, Manning and Kidd 1997). Several studies have shown that women receive a lower wages for the same work, fewer opportunities for development, education, training and promotion, and less job security (International Labour Office 2010). Also, women experience fewer job alternatives with their current employer (Goudswaard 2003; cited in Torka et al. 2010). We therefore expect women to be also less positive about their job content and autonomy. Because women in the hospitality industry have been found to experience more work-home stress than men (Doherty 2004; Blomme et al. 2010), we expect them to evaluate work-home flexibility as being lower. Therefore, the general expectation is that women score lower on the assessment of their psychological contract than men. Moreover, as a result of being offered fewer opportunities, we also expect women to show less intra-organizational mobility intentions and development, and perceive their external opportunities as being lower, compared to those of men. Our hypotheses are, therefore:

H 2a. The mean groups scores on the psychological contract construct are lower for women, compared to those of men.

H 2b. The mean group scores for perceived employability are lower for women, compared to those of men.

Because both genders have been found to value certain employer’s practices differently, we expect relations

between psychological contract and employability to differ for women and men. For example, men seem to value pay and promotion opportunities more, while women trade these benefits for work-home flexibility (Herriot et al. 1997). Also, research within the hospitality industry has shown that employer’s practices influence men’s and women’s intention to leave and commitment differently (Walsh and Taylor 2007; Doherty 2004; Blomme et al. 2010); for example, work-family conflict was associated strongly with women’s intention to leave the organization. We hypothesize, therefore, that different employer’s practices might also have different influences on the perception of employability, willingness to work in another department, development and perception of external employability of women and men:

H 2c. Gender is a moderator for the relation between the psychological contract and perceived employability.

Since the proportion of the workforce aged over 45 is increasing steadily in North America and Europe

(European Commission 2005), organizations struggle to adapt to the needs and abilities of older workers (Bal, Jansen, Van der Velde, de Lange and Rousseau 2010). It has been argued, that employees of different ages perceive their psychological contract differently (Thijssen et al. 2008; Hess and Jespen 2009). For example, the opportunities for development offered by organizations have been found to diminish with age (Birdi et al. 1997). Also, older

workers’ might be less prepared to develop (Van der Heijden et al. 2009). Some studies have found internal as well as external employability and age to be negatively correlated (Van der Heijden et al. 2009; Rothwell and Arnold 2007). Age has also been found to negatively relate to attitudes towards employability, within a current employer (Van Dam, 2004).We therefore expect the psychological contract measures, as well as the perceived employability levels to be lower for older workers. In this study we compare two age groups: ‘under-forty or forty’ and ‘over-forty’, comparing being mid-career or older (Finkelstein and Farrell 2007; Van der Heijden et al. 2009). Our hypotheses regarding age differences are:

H3a. The mean groups scores on the psychological contract construct are lower for over-forties, compared to those of younger employees.

H 3b. The mean group scores for perceived employability are lower for older employees, compared to those of younger employees.

We also expect relations between psychological contract and employability to differ for younger and older

employees. For example, development opportunities might be valued more by younger workers (Van der Heijden et al. 2009; Lub, Nije Bijvank, Bal, Blomme and Schalk 2011, in press). Findings of research within the hospitality industry suggest that also job content is more important to younger employees (Lub et al. 2011, in press). Older workers place more value on work-life balance, autonomy and job security. Furthermore, older workers were found to be less affected by psychological contract breach (Bal et al. 2010), and therefore, in general, more positive reciprocal behavior might be expected of them. It can therefore be expected that different employer’s practices lead to different employability outcomes, for younger and older employees. We hypothesize, therefore:

H 3c. Age is a moderator for the relation between the psychological contract and perceived employability.

METHODS Sampling

Data for this study were collected using the alumni of the Hotelschool The Hague, an internationally oriented hotel management school in the Netherlands. The respondents were working in the hospitality industry, defined as food, lodging, transportation, attractions and entertainment (e.g., theme parks, casinos) and events (e.g., Yu 2008; Christie-Mill 2008) all over the world. For the confirmatory factor analysis of the psychological contract measure, we had access to two different samples. Sample 1, our study sample, (2006) consisted of 247 respondents, 157 males (64%) and 90 females (36%). In this sample, the mean age was 37.3; 167 of the respondents were 40 years or younger (68%) and 80 were over forty (32%). Most respondents had a bachelor’s degree in higher professional education (n = 218; 88%), the others (12%) had a master’s degree, mostly MBA. Sample 2 (2008) consisted of 135 respondents, 75 males and 60 females (56% and 44% respectively). In this sample most of the respondents were between 23 and 43 years old (84.5%). In this sample, most of the respondents had a bachelor’s degree in higher professional education (n = 317), the others (22.1%) had a master’s degree. Measures

Psychological contract was measured with Ten Brink’s validated questionnaire (2004) measuring the “state” of the contract, referring to employee’s perception of what the organization offers them in terms of many different intrinsic and extrinsic employment practices. It builds on work from other scholars (Van Dijk 1997; Schalk, Freese and Van den Bosch 1995; Herriot, Manning and Kidd 1997; Meyer and Allen 1997; Rousseau 1990; all cited in: Ten Brink 2004). The 36 items refer to a broad set of frequently used transactional and relational elements: job content (five items), work autonomy (three items), working atmosphere (seven items), development opportunities (six items), intra-organizational mobility opportunities (three items), work/family balance (four items), clear task description (three items), job security (one item), promotion opportunities (one item), and salary (three items). The three outcomes variables were measured by adapting and adding to Ten Brink’s instruments (2004), developed for measuring employability. Intra-organizational mobility intentions were measured using three items, such as: “I am willing to perform my current position in another department”. Employee development was assessed adding one item to ten Brink’s instrument (2004): “I develop new skills and knowledge for jobs in the same profession in the future”.

Perceived labor market opportunities were measured using three items, such as: “If I wanted, I could easily find a new job elsewhere”, as suggested but not researched by Ten Brink (2004). Items of all measures were scored on a five-point scale, ranging from 1 (totally disagree) to 5 (totally agree). All measures showed acceptable internal consistencies, with Cronbach’s αs ranging from .70 to .90. (Table 2). Analyses

Confirmatory factor analysis (CFA) was executed using the AMOS 19 computer program (Arbuckle 2010), a. to confirm Ten Brink’s measuring instrument for this particular group of respondents (hospitality workers) in two independent data sets (sample 1, 2006 and sample 2, 2008), b. to compare the final seven-factor solution with a higher order one-factor model (sample 1 and 2), and c. to test cross-group validity for both genders and age-groups; the latter analyses were only conducted for sample 1, because of the small sample size of sample 2. We used the change in chi-square (∆χ2) and the associated change in degrees of freedom (∆df) to compare models, combined with the fit measures CFI, change in CFI (∆CFI), SRMR, RMSEA and change in RMSEA (∆ RMSEA) (Stevens 2009). Constraining, respectively, the factor loadings (model b), variances and co-variances (model c), and residuals (model d) to be equal for both genders and age-groups, made it possible to assess a significant reduction in fit in each subsequent step. When factors are correlated it is important to examine whether the factor correlations can be explained by one or more higher-order factors (Stevens 2009). We performed several second-order analyses, varying with different combinations of variables, based on the literature. Mean scores and Pearson correlations were computed for all psychological contract and employability variables. Independent-Samples T tests were performed to test differences in mean scores on the psychological contract and the employability measures, between men and women, and between younger employees and those who were over 40. Hierarchical stepwise regression (SPSS 19.0) was used to assess the relative contribution of employer practices to employability; for the total group of respondents, and separately for men and women and both age groups, because the sample size was too small to include interaction terms.

RESULTS Confirmatory factor analyses

We conducted confirmatory analyses (CFA) on the psychological contract variables. None of the correlations between the original items exceeded .80 (Stevens 2009). We removed six items because their loadings on the first factor were below .30, or because the second highest loading exceeded .30 and counted for 4/5 of the loading on the first scale (Stevens 2009; Ten Brink 2004). For the same reason the complete work atmosphere scale was removed. The remaining measuring instrument contained 23 items. The seven scales were work-home flexibility, job content, autonomy, development opportunities, a clear task description, salary and intra-organizational mobility opportunities, the three single-item variables were job security, performance related pay and promotion opportunities. Construct validity was assessed by inspecting the standardized factor loadings, which were all >.50 and statistically significant. Internal consistency reliability was assessed with Cronbach’s α, that ranged from .74 to .90 (Table 2). The fit measures of the final model were acceptable (Table 1). We considered χ2 and χ2 /df, which was < 2, comparative fit index (CFI) was >.90, the root mean square error of approximation (RMSEA) was below .06 and the standardized root mean square (SRMR) was <.08 (Hu and Bentler 1999). The fit measures of model 5 for the, much smaller, sample of 2008 were slightly worse; SRMR was just above .08, and RMSEA was <.08, which indicates an ‘acceptable fit’ (Hu and Bentler 1999).

Higher order analyses showed that all factors combined could be represented by one second-order factor (Table 1, model 2 and 5), which can be viewed at as an overriding construct (Stevens 2009). However, since we were interested in the potential differential contributions of each construct, we decided to continue our analyses with using the psychological contract variables separately. Second, despite the acceptable fit of the higher-order factor, both samples show a significant change in χ2, and in sample 2 the change in CFI >.01 (Cheung and Rensvold 2002). In future research studies however, combining the psychological contract factors could prove to be useful.

The multi-group analyses showed that the model could be accepted for males, females, younger employees

and over-forties (Table 1). Despite the fact that χ2 increased significantly in models 3b and 4b, 4c and 4d, the

relatively small changes in CFI, SRMR and RMSEA gave enough rise to assume equivalence of the measurement model for the compared groups (Stevens 2009).

Table 1 Model comparisons and fit statistics for Sample 1 (2006) and Sample 2 (2008)

M Description χ2 df χ2/df χ2 ∆

df ∆

CFI CFI ∆

SRMR RMSEA

Sample 1 1 final model 225.1 149 1.5 - - .968 - .048 .046 2 2nd order 248.2 163 1.5 23.1** 14 .964 .004 .040 .046 3 multi-group (gender) a unconstrained 385.5 298 1.3 - - .961 - .058 .036 b factor weights 412.2 311 1.3 26.7* 13 .955 .006 .057 .038 c (co-) variances 440.8 339 1.3 28.6 28 .955 .000 .058 .036 d residuals 470.4 359 1.3 29.6 20 .950 .005 .058 .037 4 multi-group (age-group) a unconstrained 427.7 298 1.3 - - .948 - .060 .042 b factor weights 455.9 311 1.5 28.2** 13 .942 .006 .061 .044 c (co-) variances 500.8 339 1.5 44.9* 28 .935 .007 .074 .044 d residuals 573.9 359 1.6 73.1*** 20 .913 .022 .073 .049 Sample 2 5 final model 255.1 149 1.7 - - .943 - .060 .073 6 2nd order 309.5 163 1.9 53.9** 14 .920 .023 .082 .082

***: p<.001; **: p<.01; *p: <.05

Table 2 gives an overview of the scores on the study variables, including the number of items per scale and Cronbach’s αs. With regard to the psychological contract, men scored significantly higher than females on the performance-related pay construct. Men and women showed no differences in how they perceive their employability. Hypotheses 2a and 2b were therefore rejected. However, the older groups evaluated the work-home flexibility practices, the salary and performance related pay significantly better, while the younger group scored higher on organizational mobility opportunities. Also, older workers scored significantly lower on all three employability measures. Hypotheses 3a and 3b were therefore supported.

Table 2 Descriptive statistics Sample 1

Variables

Nr. of items

αa Mean SD Mean males (157)

Mean females (90)

Mean ≤ 40s (167)

Mean over-40s (80)

T-value difference m/f

T-value difference y/>40

Work-home flexibility 3 .74 3.33 .91 3.30 3.38 3.21 3.57 -.668 -2.961** Job content 3 .84 4.33 .58 4.31 4.36 4.30 4.38 -.641 -.915 Autonomy 3 .85 4.20 .64 4.18 4.23 4.15 4.30 -.512 -1.574 Development opportunities 4 .85 3.84 .78 3.81 3.89 3.87 3.79 -.801 .848 Clear task description 2 .90 3.34 .97 3.36 3.31 3.30 3.48 .381 -1.074 Salary 2 .77 3.01 .96 3.05 2.94 2.82 3.41 .905 -4.868*** Intra-organizational mobility opportunities

3 .86 3.39 .91 3.43 3.33 3.48 3.22 .837 2.076*

Job security 1 - 3.39 1.13 3.39 3.38 3.44 3.29 .114 .970 Performance related pay 1 - 3.17 1.24 3.38 2.82 3.02 3.50 3.445** -2.897** Promotion opportunities 1 - 3.43 1.04 3.45 3.41 3.52 3.26 .252 1.870 Intra-organizational mobility intentions 3 .70 3.50 .82 3.57 3.37 3.62 3.26 1.885 3.444*** Employee development 3 .81 3.77 .72 3.79 3.73 3.87 3.55 .644 3.004** Perceived labor market opportunities 3 .75 3.88 .68 3.87 3.90 3.96 3.71 -.241 2.628** ***: p<.001; **: p<.01; *p: <.05 α: Cronbach’s α

Table 3 shows the correlations between the study variables; none of them exceeded the criterion of .70 (Stevens 2009). Moderate to strong inter-correlations were found between the psychological contract variables. Of the employability variables, only intra-organizational mobility intentions and employee development were moderately correlated. Development opportunities, intra-organizational mobility opportunities and promotion opportunities showed moderate positive correlations with some of the employability measures. Overall, as expected,

the more positive the psychological contract was perceived, the more positive respondents were about their employability.

Table 3: Correlations among study variables (2006; N = 247)

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 1. Work-home flexibility 2. Job content .161* 3. Autonomy .171** .469** 4.Development opportunities .092 .601** .462** 5.Clear task description .045 .209** .218** .358** 6.Salary .157* .204** .218** .265** .219** 7.Intra-organizational mobility opportunities

.038 .374** .283** .530** .193** .132*

8. Job security .105 .299** .230** .387** .225** .198** .424** 9.Performance related pay .042 .239** .241** .335** .179** .513** .257** .096 10.Promotion opportunities -.003 .455** .310** .666** .292** .348** .606** .335** .369** 11.Intra-organizational mobility intentions

-.042 .256** .111 .327** .151* .021 .354** .213** .118 .356**

12.Employee development .039 .271** .226** .458** .114 .044 .298** .136* .122 .358** .400** 13.Perceived labor market opportunities -.001 .176** .226** .165** .006 .002 .147* .139* .044 .063 .158* .249** ***: p<.001; **: p<.01; *p: <.05

The results for the regression analyses are displayed in Table 4, 5 and 6. Not surprisingly, in general, organizational mobility opportunities contributed significantly to intra-organizational mobility intentions. Other significant predictors were promotion opportunities, job content, age (negative) and gender (negative). For men, development opportunities emerged as the most important predictor, followed by intra-organizational mobility opportunities and age. For women, only intra-organizational mobility opportunities and age showed significant results. In the younger group intra-organizational mobility opportunities and job content were of influence, but in the older group promotion opportunities and performance related pay accounted for the explained variance. Overall, about 22% of the variance in intra-organizational mobility intentions could be explained by the psychological contract variables, in combination with age and gender. The explained variance in employee development was slightly higher: about 25%. Overall, development opportunities were the important psychological contract variable in explaining variance in employee development. Also age proved to be an important predictor. For men, work-home flexibility and organizational mobility opportunities proved to be important predictors for development. For women, besides development opportunities, only age added significantly to their development. For the over-forties only development opportunities was a significant predictor for development, while besides development opportunities, a clear task description (negative) and autonomy were significant predictors for the younger employees. The predictors did not explain much of the variance in perceived labor market opportunities (9%). Only autonomy and age were significant predictors. None of the psychological contract variables were significant predictors of the perceived labor market opportunities according to the women, while autonomy, age (negative), job security and work-home flexibility accounted for the explained variance in perceived external opportunities for men. Autonomy proved to be a significant predictor of external opportunities for both the younger and the older group, while only job content added significantly to that for the over-forties. Concluding, hypothesis 1 was partly supported, since many psychological contract variables were significantly positively correlated with the outcome variables, and the regression analyses showed a fair amount of explained variance in the outcome variables. Hypotheses 2c and 3c were supported, since gender as well as age moderated the relationship between several psychological contract constructs and the employability variables.

Table 4 Hierarchical stepwise regression analyses to explain Intra-Organizational Mobility Intentions.

Total (n=247)

Men (n=157)

Women (n=90)

≤ 40s (n=167)

Over-forties (n=80)

Β Β β β β Step 1 Gendera -.16** - - -.13 -.25* Ageb -.25*** -.22** -.29** - - Step 2 Gender -.15** - - -.12 -.19 Age -.21*** -.18* -.26** - - Promotion opportunities .17* .22* Intra-organizational mobility opportunities .17* .19* .31** .27** Job content .14* .18* Development opportunities .32*** Performance related pay .40*** Regression model Explained Variance R2 22% 24% 18% 17% 32% Adjusted R2 20% 22% 16% 16% 29% F value 13.31*** 15.66*** 9.62*** 11.14*** 11.92*** ***: p<.001; **: p<.01; *p: <.05 a males are coded 1, females are coded 2 b ≤ 40s are coded 1, over-forties are coded 2

Table 5 Hierarchical stepwise regression analyses to explain Employee Development.

Total (n=247)

Men (n=157)

Women (n=90)

≤ 40s (n=167)

Over-forties (n=80)

Β Β β β β Step 1 Gendera -.08 - - -.06 -.12 Ageb -.22** -.21** -.24* - - Step 2 Gender -.10 - - -.07 -.13 Age -.20*** -.19** -.22* - - Development opportunities .45*** .42*** .37*** .42*** .51*** Work-home flexibility .17* Intra-organizational mobility opportunities .17* Job content Clear task description -.19* Autonomy .18* Regression model Explained Variance R2 25% 36% 19% 25% 28% Adjusted R2 24% 34% 17% 23% 26% F value 27.32*** 21.04*** 10.21*** 13.33*** 14.90*** ***: p<.001; **: p<.01; *p: <.05 a males are coded 1, females are coded 2 b ≤ 40s are coded 1, over-forties are coded 2

Table 6 Hierarchical stepwise regression analyses to explain Perceived Labor Market Opportunities.

Total (n=247)

Men (n=157)

Women (n=90)

≤ 40s (n=167)

Over-forties (n=80)

Β Β β β β Step 1 Gendera -.02 - - -.14 .25* Ageb -.18** -.31*** .11 - - Step 2 Gender -.03 - - -.13 .21* Age -.21** -.28*** .12 - - Autonomy .25*** .27*** .22** .51*** Job security .18* Work-home flexibility .16* Job content .30** Regression model Explained Variance R2 9% 23% 1% 7% 15% Adjusted R2 8% 21% 0% 6% 13% F value 8.17*** 11.07*** 1.04 6.15** 6.77** ***: p<.001; **: p<.01; *p: <.05 a males are coded 1, females are coded 2 b ≤ 40s are coded 1, over-forties are coded 2

DISCUSSION AND CONCLUSIONS

Our analyses showed that psychological contract measures can explain a fair amount of variance among hospitality workers regarding their self-perceived employability. Our respondents, highly educated hospitality workers, considered themselves quite employable, although over-forties were less confident than their younger counterparts. These findings agree with Torka et al. (2010), with regard to external employability. Men and women, however, rated themselves equally employable. These findings contradict with the expectations and earlier research of Torka et al. (2010), in which women perceived fewer alternatives to obtain a job at the same or a different employer. Furthermore, the explained variances in employability were, in general, higher for men and older workers. This leaves the question to be answered, how employers can contribute to the feelings of employability of women and, to a lesser extent, employees younger than forty. In general, offering (upward or lateral) movement and development opportunities positively seem to influence intra-organizational mobility intentions. Offering development opportunities helps employees to develop themselves (see also Fuller and Unwin 2005). For women and older workers it seems to be the only way, with respect to the employer activities that we measured. It seems that organizations will have to find other ways to stimulate women and over-forties, such as job enrichment (Blomme et al. 2010). Autonomy proves to be an important predictor for perceiving more labor market opportunities. This can be explained by experience and self-assurance giving rise to confidence that people gain by being able to work independently (Schyns and Von Collani 2002). Limitations and recommendations for future research

The question of causality in this study cannot be determined, because of the cross-sectional research design. The nature of the study, employees’ assessment of the state of their psychological contract and self-perceived employability, asked for a single (self-reporting) method. We suggest that researchers try to clarify underlying mechanisms in the relationship between psychological contract and employability, by studying mediating and moderating factors. Furthermore, we found support for the structural consistency of the constructs of the psychological contract measures of Ten Brink (2004) in the hospitality industry, by performing CFA in two different samples. However, due to the adjustments we had to make because of the overlap among scales, we had to deal with smaller scales, with the danger of being variable-specific (Stevens 2009). It is recommended that in future research new items, derived from the literature, are added to the dimensions of the instrument. Another limitation is that no external factors such as the size of the organization (Rothwell, Sanders and Soper 1999), or macro-economic

circumstances such as unemployment rates (Torka et al. 2010) were included in the analyses. Also, personality factors could reveal more about the underlying mechanisms of the relations (Tokar, Fischer and Subich 1998; Mignonac 2008). More research is needed to explain the age differences concerning employability and psychological contract (Thijssen et al. 2008). Our sample was too small to include another age-group, but we suggest that researchers, in future research, also study employees over-fifty (Armstrong-Stassen and Schlosser 2008; Bal et al. 2010). Practical implications

In the hospitality industry, as in other industries, management-level turnover is growing rapidly (Walsh and Taylor 2007), and today’s human resources (HR) managers are pressed to attract and retain highly educated personnel. Much can be gained however, by knowing and responding to the expectations that different groups of employees have of their employers. Our results suggest that offering mobility and development opportunities and autonomy can help to stimulate employees’ (perception of) employability. Concluding, especially with regard to women and older workers, we want to stress the importance for organizations of knowing their needs regarding development and mobility opportunities (see also Armstrong-Stassen and Schlosser 2008; Thijssen et al. 2008; Bal et al. 2010).

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Acceptance of low pay: a study of people in low paid jobs

Dr Sumeetra Ramakrishnan Department of Health and Social Sciences

Middlesex University Hendon, London

NW4 4BT [email protected]

ABSTRACT The aim of this research through empirical analysis was to understand the acceptance of low pay. The study employed a rough measure of acceptance as that of ‘not searching for a better job’. A quantitative data analysis was carried out through questionnaires distributed to individuals working in the hotel, restaurant and travel sectors in London. A total of 152 questionnaires of full time employees were used for the purpose of this study. The sample overall portrayed low pay, lower hours of work and limited aspirations. Searching had a significant influence on perceived opportunities and overtime availability was defined as the key characteristic of a better job. The findings provide an interesting insight of an extremely low paid group. Key words: Acceptance, low pay, perceived opportunities, aspirations, hospitality workers

INTERCULTURAL COMPETENCE AS AN ANTECEDENT OF FRONTLINE EMPLOYEES’ JOB ATTITUDES AND BEHAVIORS IN THE HOTEL SECTOR

Ankie Hoefnagels Ma*

Senior Lecturer in Communication Management Maastricht Hotel Management School

Bethlehemweg 2, 6202 NX, Maastricht, the Netherlands [email protected]

Armand Odekerken BSc Mba

Senior Lecturer in Business Administration Maastricht Hotel Management School

Bethlehemweg 2, 6202 NX, Maastricht, the Netherlands [email protected] 

 Josee Bloemer Phd

Professor of Market Analysis and Relationship Management Radboud University, Faculty of Management Studies

Thomas van Aquinostraat 3.2.10, 6500 HK, Nijmegen, the Netherlands [email protected]

ABSTRACT

This study explores the effect of frontline employees’ intercultural competence on work engagement, job

satisfaction, service attentiveness and organizational citizenship behavior. Using survey data from 169 Dutch hotel front office staff members in the Netherlands, a conceptual model is tested in which intercultural competence acts as a driver of positive job attitudes and behaviors. Analyses show that work engagement is a powerful mediator between the frontline employee’s intercultural competence and job satisfaction.

KEY WORDS

Intercultural competence, work engagement, job satisfaction, relationship quality, service attentiveness, organizational citizenship behavior

INTRODUCTION

The hospitality sector has increasingly become a global business. Recent estimates show that the number of worldwide international tourist arrivals grew by over 4% in 2011 to 980 million and is expected to reach the billion mark by 2012 (UNWTO, 2011).This growth in international travel, combined with shifting economic power to emerging markets like the BRIC countries (Ng, Lee, & Soutar, 2007) leads to increased attention for intercultural service encounters, the encounters in which the host and the guest have different cultural backgrounds (Sharma, Tam, & Kim, 2009; Stauss & Mang, 1999) . These intercultural service encounters are likely to add complexity to the service interaction because of potentially differing expectations and service scripts of both participants (Solomon, Surprenant, Czepiel, & Gutman, 1985b). Culturally different customers have even been found to perceive discrimination in some employee’s behavior, leading to perceptions of inequitable service and lower satisfaction levels (Barker & Hartel, 2004). Because hotels traditionally host guests from all corners of the world, and can be categorized as high-contact services, catering for the needs of people with culturally diverse backgrounds is already an important determinant of success in this industry. But the above-mentioned global trends will make it even more crucial to deal competently with culturally diverse guests.

Frontline employees tend to prepare for intercultural service encounters by acquiring culture-specific knowledge at the country-level. Examples of this type of knowledge are for instance that German guests appreciate

being addressed in a formal manner or that Chinese guests’ business cards must be accepted with both hands and deliberate care. Though this factual knowledge is certainly relevant, it may be subject to within- country variance or even be obsolete due to cultural changes, like hybridization or contamination (Craig & Douglas, 2006). Besides that, the variety in the international guest population is very large. Considering this, it may not be effective to deal with intercultural service encounters on the basis of a ‘cultural recipe-book’. Therefore, rather than culture-specific knowledge of several guest-cultures, a more generic intercultural competence should be required, consisting of an affective, cognitive and behavioral component. In other words “the ability to deal effectively and appropriately with culturally diverse people, based on one’s knowledge, skills and attitude” (Deardorff, 2004). There is a growing agreement among practitioners and academics on the thought that a global mindset is a critical success factor which is positively related to business performance (Levy, Beechler, Taylor, & Boyacigiller, 2007).

Besides being highly international, the hotel sector is also highly competitive. Because of the relation between perceived service quality and the performance of the hotel in terms of market share, profitability and return on investment (Heskett, Jones, Loveman, Sasser, & Schlesinger, 1994), the employee’s performance in the ‘moment of truth’ (Carlzon, 1989), i.e. the service encounter, makes a crucial difference. In an intercultural service encounter, both the guest and the service provider are responsible for success or failure (Sharma, 2009). However, it is the employee’s behavior that makes a substantial difference in the guest’s perceptions of the quality of the service encounter (Brady and Cronin, 2001; Zeithamml et al, 2009). Therefore, hotel managers have a vested interest in attracting and keeping employees who show initiative, are committed to high quality performance standards, are satisfied with their jobs, feel energetic and dedicated, absorbed in their work and willing to go the extra mile. The corporate need for engaged workers is also illustrated by best-selling books that make this case (Covey, 2004).

Therefore, the focus of this study is to test if there is a relation between a frontline employee’s intercultural

competences on the one hand, and his/her job attitude and behavior towards the organization and the customer on the other hand.

The findings of this study will have implications for both academics and managers. First of all, though

intercultural competence has proved to be a predictor of well-being, performance and success in an expatriate context (J.G Ponterotto et al., 2007 ; Van Oudenhoven, Zee, & Van Kooten, 2001), there is relatively little empirical evidence for the role of intercultural competence in intercultural service settings. This study will add to the literature by testing a model in which both intercultural competence and performance indicators are incorporated. Moreover, though the intercultural service encounter has been examined from the customer’s perspective (Mattila, 1999) less attention has been devoted to the role of service employees in these encounters. In addition, while the value of having intercultural competent staff makes sense intuitively, the concept has not been tested in the marketplace. As a result, management is reluctant to make the training investments until they see some evidence of its benefits (Sizoo, Plank, Iskat, & Serrie, 2005). If intercultural competence indeed enhances work engagement and leads to increased levels of job satisfaction and extra-role behavior towards the customer and the organization, this would provide managerial support for the consideration of intercultural competence in both recruitment and training efforts of hotel companies.

In the following sections, we will discuss the theoretical justification for our conceptual model as well as

the conceptualization of its constituent variables on the basis of a literature study. This is followed by a description of the sample strategy and the methodology that was used to test the model. Finally, we will discuss our results and their implications for theory and practice.

THEORETICAL BACKGROUND

Intercultural service encounters, in which the host and the guest have different cultural backgrounds are likely to add complexity to the service interaction (Stauss & Mang, 1999). A theoretical underpinning for this complexity can be found in role theory (Broderick, 1999; Solomon, Surprenant, Czepiel, & Gutman, 1985a). According to role theory, people are social actors who learn appropriate behaviors to the position they occupy in

society. Role theory suggests that each party in a service encounter has learned a set of behaviors that are appropriate to that situation. The role patterns can lead to a role script within the service encounter.

Customers and employees from different cultures may have different role expectations and have been socialized with different service scripts. These dissimilar cultural backgrounds may surface during intercultural service encounters (Sharma et al., 2009; Wang & Mattila, 2010), lead to misunderstandings and conflict, and result in an unhappy customer, a frustrated provider, and lost business (Donthu & Yoo, 1998; Liu, Furrer, & Sudharshan, 2001; Sizoo, Iskat, Plank, & Serrie, 2003).

Another feature of service encounters is that they are often fairly routine, i.e. they take place in an almost automatic style with a minimum of cognitive activity. In contrast to this, intercultural service encounters are likely to require mindfulness, characterized by a state of alertness, active information processing and the ability to create and refine categories and an awareness of multiple perspectives (Langer & Moldoveanu, 2000). Frontline employees are supposed to display a chameleonic ability to adjust to the international guest’s expectations while at the same time maintaining their authenticity. They are required to make a cognitive effort to orient their behavior as the predictability of the role enactment is diminished. This is likely to require high levels of intercultural competence.

The second theoretical lens that we employ in this study is the job-demands resources model (JD-R)

(Bakker, Demerouti, & Verbeke, 2004). This model has been developed within the field of positive organizational behavior that is concerned with individual psychological states and human strengths that influence employee performance (Luthans, 2002). According to the JD-R model, job demands are stressors that may evoke strain if they exceed the employee’s adaptive capability. Employees in intercultural service encounters face several unique demands, such as customer diversity, limited predictability of customer needs and behaviors which may lead to role conflict. The JD-R model defines job resources as those aspects of the job that a) reduce job demands, b) are instrumental in achieving work goals and c) stimulate personal growth, learning and development (Demerouti & Bakker, 2007). The central construct of the JD-R model is work engagement, a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication and absorption (Bakker & Demerouti, 2008). Engaged employees have a sense of energetic and effective connection with their work activities and see themselves as being able to deal well with the demands of their job. According to the JD-R model, work engagement mediates the relationship between job resources on the one hand, and positive organizational outcomes - such as organizational citizenship behavior- on the other hand. Besides job characteristics such as organizational and supervisor support, personal characteristics of the employee are considered as important resources (Suanet & Van de Vijver, 2009). In this study we focus only on intercultural competence which we suggest to be an important resource for service employees in intercultural service contexts and helpful to cope with the demands of customer diversity.

From the above discussion, we find that intercultural competence and work engagement are two important

constructs to be used in the study of the employee perspective on intercultural service encounters. In the next section, we present our conceptual model, describe the five constructs based on our extensive review of the intercultural competence and service encounter literature and build hypotheses about the relationships between these constructs.

Figure 1 Conceptual Model

The role of Intercultural Competence There is no 100% agreement among scholars as to what exactly constitutes the concept of intercultural

competence. The literature study reveals a myriad of labels that have been used as a synonym: intercultural sensitivity, global competence, global citizenship, cross-cultural adaptation, international competence, to name but a few. Many researchers have adopted the affective, cognitive and conative dimensions from intercultural communication competence research (Gudykunst & Ting-Toomey, 1988; Lustig & Koester, 1993). Chen and Starosta (1996) introduce the concepts of effectiveness and appropriateness that were previously used in communication competence literature. Deardorff (2006) defines intercultural competence as “the ability to communicate and behave effectively and appropriately in intercultural situations based on one’s intercultural knowledge, skills and attitudes” (Deardorff, 2006, p. 184). Deardorff’s model is a pyramid in which the lower levels are viewed as enhancing the higher levels. The model represents motivational (requisite attitudes), cognitive (knowledge and comprehension) and skills elements and incorporates context within these components. In Deardorff’s model, there is an implicit ordering of elements with a visible external outcome which is the effective and appropriate communication and behavior in intercultural situations. It allows degrees of competence (the more you acquire and develop, the greater the degree of competence as an outcome). According to Deardorff, the model is not limited to the components mentioned in it. Specific assessment indicators can be developed in a specific context (Spitzberg & Chagnon, 2009). In this study Deardorff’s conceptualization of intercultural competence is adopted. We therefore define intercultural competence as “the ability to communicate and behave effectively and appropriately in intercultural situations based on one’s intercultural knowledge, skills and attitudes” (Deardorff, 2006, p. 184) and we expect it to influence the evaluations and behavioral outcomes of frontline employees .

In prior research, intercultural competence has been associated with job satisfaction , successful performance and well-being in expatriate contexts (J.G Ponterotto et al., 2007 ) and international education (De Beuckelaer, Lievens, & Bucker, 2010). Individuals with higher intercultural competence exhibit a greater ability to learn foreign languages, communicate effectively with and adapt to other cultures (Redmond, 2000). Employees with high levels of cultural sensitivity score higher on service attentiveness, interpersonal skills, social and job satisfaction (Sizoo et al., 2005). It can be argued that discomfort in intercultural service is reduced when a service provider gains on- the- job experience with international guests (Wang et al, 2010) and reaches higher levels of intercultural competence (Deardorff, 2004). On the other hand, a service provider’s low levels of intercultural competence may cause discomfort in intercultural service encounters, because he will either be unable to select appropriate and effective behaviors and interpret the behavior of their service counterpart, or they will judge this behavior negatively. They might for instance feel intimidated or humiliated by a display of status difference or power distance.

It is expected that service providers with high intercultural competence are able to ‘read’ the culturally

different guest better. Moreover, they are able to react to unfamiliar or culturally distant behavior by suspending judgment until they have more information beyond the ethnicity of the other person, are more aware of the nuances

of different cultures, and are able to use this knowledge to adjust their own behavior (Sharma et al., 2009; Triandis, 2006). For instance, when an Arabic guest displays high power distance to a low power distance service provider. Or when an Asian guest is unable to express himself in English, an intercultural competent service provider can arguably bridge this distance by behaving flexibly and look for creative solutions.

Work Engagement Work engagement is one of the aspects of an emerging trend in organizational psychology that studies ‘Positive Organizational Behavior’; focusing on what makes people function optimally rather than what makes them ill or become burn-out. POB studies individual positive psychological conditions and human resource strengths that are related to employee well being or performance improvement (Bakker, Schaufeli, Leiter, & Taris, 2008). Both job resources, such as autonomy and supervisor support, and personal resources, such as self-efficacy and competences are considered antecedents of work engagement in the work engagement model developed by Bakker et al (Bakker & Demerouti, 2008; Demerouti & Bakker, 2007; Wilmar B Schaufeli et al., 2001). In their conceptualization, work engagement is defined as ‘a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication and absorption (Bakker et al., 2008). Engaged employees have a sense of energetic and effective connection with their work activities and see themselves as being able to deal well with the demands of their job. Other related definitions also emphasize the dual roles of both cognition and emotion in creating a state of engagement.

Work engagement has been linked to a number of positive consequences at both individual and organizational levels. Employee engagement is positively associated with resources like task variety and the opportunity to learn and develop. It is also positively related to individual’s intentions, behaviors and self-efficacy (Saks, 2006). Possible consequences of work engagement that have been found pertain to positive attitudes towards work and towards the organization, such as job satisfaction, organizational commitment, and low turnover intention (Demerouti et al., 2001; Salanova et al., 2000; Schaufeli, Taris & Van Rhenen, 2003), but also to positive organizational behavior such as personal initiative and learning motivation (Sonnentag, 2003), extra-role behavior (Salanova, Agut & Peiró, 2003), proactive behavior (Salanova et al., 2003) and organizational citizenship behavior (Saks, 2006). Finally, work engagement has been positively related to job performance. For instance, a study among about one-hundred Spanish hotels and restaurants showed that employees’ levels of work engagement had a positive impact on the service climate of these hotels and restaurants, which, in its turn, predicted employees' extra-role behavior as well as customer satisfaction (Salanova, Agut, & Peiró, 2003). Intercultural competence can be considered as a personal resource of the employee that has proven to be a strong predictor of well-being, satisfaction and service attentiveness in several contexts. Because the interaction with culturally diverse guests is a daily element of the hotel frontline employee’s job, the development of this employee’s intercultural competence is likely to be an important resource for both the employee and the organization. An employee who has developed this competence is better able to ‘read’ the international guest and, we argue, will be more dedicated to and invigorated by providing service to culturally diverse guests. Therefore, we expect that: H1: There is a positive association between intercultural competence and work engagement Job Satisfaction

Job satisfaction refers to the extent to which the employees feel satisfied with the kind of work they do and with the nature of their job (Mukherjee & Malhotra, 2006). Job satisfaction has been conceptualized as a job attitude (P. Podsakoff, S. MacKenzie, R. Moorman, & R. Fetter, 1990). A service provider’s job satisfaction is highly important for the success and survival of a firm. Low job satisfaction has been associated with low performance, limited service quality and reduced customer satisfaction (Batt and Moynihan, 2002). Low job satisfaction can also lead to higher staff turnover (Shields and Ward, 2001) which generates substantial costs for the organization. In the context of this study, job satisfaction is considered an attitude. The cumulative perspective of satisfaction is applied, whereby employee satisfaction is based on multiple encounters between the service provider and a range of international guests. In prior research, work engagement has been positively linked to job satisfaction (Saks, 2006; Salanova, Bakker, & Llorens, 2006). Employees who are intercultural competent, are likely to appreciate the challenges of meeting the expectations of a range of international guests more. Generally, employees feel higher overall satisfaction with their job as well as its

various facets if their performance is appreciated by customers (Schoefer & Ennew, 2005). If a frontline employee is able to tune in to the needs and expectations of foreign guests, is open to developing new behavioral categories and feels engaged in encounters with these guests, he is likely to experience more satisfaction with his job. Therefore, we expect the following relation: H2: There is a positive association between work engagement and job satisfaction Extra-Role Behavior: attentiveness to foreign customers and Organizational Citizenship Behavior

According to role theory, two dimensions of role performance can be distinguished; in-role versus extra-role performance (Tsaur & Lin, 2004). In a service context, in-role performance concerns the task performance of an employee’s formal job requirements in interacting with a customer in contrast with extra-role performance which involves activities that support the customer and the organization but are not specifically required of employees. In this study, we distinguish two types of extra-role performance behaviors. First of all, extra-role behavior towards foreign guests, which we label as Service Attentiveness (Sizoo et al., 2005) and extra-role behavior towards the organization, which we label as Organizational Citizenship Behavior (Organ, Podsakoff, & MacKenzie, 2006). Going the extra mile for the organization: Organizational Citizenship Behavior

Work behavior that is discretionary, not directly or explicitly recognized by the formal reward system and that, in the aggregate, promotes the effective functioning of the organization (Katz, 1964) is labeled as ‘organizational citizenship behavior’ by Organ (1988). Organ proposed a taxonomy of OCB that included altruism, conscientiousness, sportsmanship, courtesy and civic virtue. Podsakoff et al (1990) operationalized Organ’s dimensions, and the resulting OCB scales have served as the basis for OCB measurement in a large number of empirical studies(MacKenzie, Podsakoff, & Fetter, 1991; Moorman, 1993). OCB has been linked to the conceptually similar construct of extra-role behavior (Organ et al., 2006), behavior that attempts to benefit the organization and that goes beyond existing role expectation (Organ et al., 2006, p.33). In the literature, we find OCB linked to antecedents as personality characteristics and leadership behavior (Organ & Ryan, 1995). It has also been suggested that avoidance of stress and other unpleasant emotional states, maintenance of positive mood and job satisfaction might enhance organizational citizenship behavior (Organ et al., 2006). Furthermore, multiple studies have been conducted on the relationship between OCBs and organizational performance (Podsakoff and MacKenzie, 1994; Walz and Niehof, 1996; Koy, 2001). Finally, OCB also extends to the customer; Podsakoff, Blume and Whiting (2009) found a positive relation between OCBs and customer satisfaction. On the basis of evidence from the literature, we therefore expect extra-role behavior towards the organization to be positively linked to job satisfaction: H3: There is a positive association between job satisfaction and organizational citizenship behavior Going the extra mile for the guest: Service Attentiveness

Behaviors like anticipating the guest’s needs, being able to handle problems and complaints, dealing with the unexpected, reacting personably and making a special effort, are generally associated with service –minded behavior ( Samenfink, 1994). Yet these behaviors are particularly salient in the context of an intercultural service encounter where the guest’s and host’s expectations of this behavior may differ. It can be argued that an intercultural competent service provider is able to select the appropriate behavior for a wide range of culturally different guests based on his cultural- general and cultural- specific knowledge, his skills and attitude which have led to his shifted frame of reference. Individuals with high intercultural competence are more motivated to learn different languages, are open to learning about and from other cultures (Redmond, 2000), they are more empathic, open-minded, emotionally stable and are better able to adjust their social norms and role interpretations to those of people with culturally dissimilar backgrounds(K. Van der Zee & Van Oudenhoven, 2000). Because of their cultural openness and adaptability, they enjoy interacting with foreign customers. Therefore, we expect that they have more willingness to go the extra mile: H4: There is a positive association between work engagement and service attentiveness

METHODOLOGY

Sample and Procedures

We tested our hypotheses using data collected from Dutch Front Office Employees in two to five star hotels with at least 30 rooms, and at least 30% international guests in the Netherlands, in an urbanized area, comprising the cities of Utrecht, Amsterdam, Rotterdam and The Hague.

Prior to data-collection, the questionnaire was pilot tested for legibility and face validity by a sample of 5 receptionists from local hotels. Furthermore, the survey was pre-tested among a sample of 35 Hotel Management students with at least six months experience in the front office of a hotel. This pretest showed adequate reliability of all the scales used. On the basis of the pre-test some items were revised and some changes were made to the format of the questionnaire to enhance legibility.

The hospitality branch organization ‘Koninklijk Horeca Nederland’ was approached. They provided a mail address list of their members in the Randstad area. The General Managers of 250 hotels were approached for permission by letter. This resulted in a pool of 70 hotels who granted their support. Of the total sample, 243 Front Office staff members filled in the questionnaire. The dataset was inspected for incomplete questionnaires, extreme answers, and respondents that did not meet the sampling criteria, for instance on nationality. The response from two star hotels appeared to be relatively low. Therefore, the two star hotels were removed from the sample. Through this rigorous procedure, the dataset was reduced to 169 respondents. Questionnaire development

This section describes the measurement instrument that was used. The entire questionnaire was in Dutch. All scales were borrowed from existing instruments. Some statements were slightly reformulated to make them more appropriate for the hotel service setting. English language scales were translated and back-translated by a qualified translator. Unless indicated otherwise, all items were rated on a 7-point Liker Scale (‘completely disagree’ – ‘completely agree’). The questionnaire consists of three sections. Section 1 consists of 12 background questions about gender, age, education, work experience, experience abroad and linguistic skills. Section 2 contains 64 items measuring the constructs of the conceptual model. These will be explained in more detail below. Section 3 consists of 8 questions about the hotel, such as location, member of hotel chain, star qualification, and number of rooms, percentage business guests and percentage foreign guests. Intercultural Competence

Intercultural competence is operationalized by the Multicultural Personality Questionnaire (Van der Zee & Oudenhoven, 2001) This instrument integrates the cognitive, behavioral and attitudinal dimensions in a ‘multicultural personality’ construct, consisting of five traits, which can be considered as the internal outcome of Deardorff’s (2006) conceptualization, the prerequisite for effective and appropriate behavior . Many theorists have argued that personality traits exist at various levels of abstraction(Allport, 1961; Eysenck, 1947) The five Multicultural Personality traits can be considered as so-called ‘surface traits’. These are defined as enduring dispositions, inclinations or tendencies to behave within a certain context. Surface traits are closer to the specific behaviors needed to achieve a certain performance than basic personality traits(Brown, Mowen, Donavan, & Licata, 2002). First of all ‘Cultural Empathy’, defined as the capacity to clearly project an interest in others as well as to obtain and to reflect a reasonably complete and accurate sense of another’s thoughts, feelings and/or experiences (Ruben 1976). The second dimension is ‘Open-mindednes’, referring to an open and unprejudiced attitude toward out-group members and different cultural norms and values (Arthur and Bennett, 1995). Thirdly, ’Flexibility’ means that one has to be able to switch easily from one strategy to another because the familiar ways of handling things will not necessarily work in a culturally different setting (Arthur and Bennett 1995). The fourth dimension ‘Emotional Stability’ refers to the tendency to remain calm in stressful situations versus a tendency to show strong emotional reactions under stress. Hammer et al (1978) define the ability to deal with psychological stress as a key dimension of intercultural effectiveness. The fifth and last dimension is ‘Social Initiative’. This is defined as the tendency to approach social situations in an active way, to take initiatives and to be able to establish and maintain

contacts (Hawes and Kealy, 1981). McCall (1994) mentions ‘the courage to make things happen’ as a clue to intercultural competence. The five multicultural personality dimensions have predicted variance in criterion variables beyond the variance accounted for by Big Five personality measures (Joseph G. Ponterotto, 2008). Thus, they add cultural dimensionality to, and are also closer to focal service behaviors than general personality measures.

The Multicultural Personality construct has demonstrated construct and predictive validities over a range of outcome indices in different sample groups (e.g. expatriates, students), using a combination of research methods (e.g. Leone, Van der Zee, Van Oudenhoven, Perugini & Ercolani (2005). The five distinctive dimensions of intercultural competencies have consistently emerged from multi-group confirmatory factor analyses and they predicted the different facets of international orientation and adjustment. In a group of expatriates based in Taiwan, MPQ predicted effective personal, professional and social adaptation (Van Oudenhoven, Mol & Van der Zee (2003). On interpersonal relations, individuals who have high as opposed to low MPQ scores, indicated less negative reactions to potentially stressful situations involving cross-cultural contact (Van der Zee, van Oudenhoven & Grijs (2004). In our study, we collapse the five MPQ dimensions into the three dimension model, in accordance with van der Zee (K. I. Van Der Zee, Ali, & Haaksma, 2007); cultural empathy and openmindedness are combined as ‘cultural openness’, emotional stability and flexibility are combined as ‘adaptability’. The third dimension is ‘social initiative’. We use the short, 30-item version of the MPQ to operationalize the concept of Intercultural Competence in a hotel service setting. Work Engagement

Work engagement is measured by means of the short, 9 item version of the Utrecht Work Engagement Scale (UWES) , that includes the three elements of work engagement; vigor, dedication and absorption. Vigor is assessed by items that refer to high levels of energy and resilience, the willingness to invest effort, not being easily fatigued, and persistence in the face of difficulties. Dedication is assessed by items that refer to deriving a sense of significance from one’s work, feeling enthusiastic and proud about one’s job, and feeling inspired and challenged by it. Absorption is measured by items that refer to being totally and happily immersed in one’s work and having difficulties detaching oneself from it so that time passes quickly and one forgets everything else that is around.

Psychometric analyses with the UWES have shown factorial validity (Salanova, Schaufeli, Llorens, Pieró & Grau, 2000; Schaufeli et al., 2002a; Schaufeli, Martínez, Marques-Pinto, Salanova & Bakker, 2002b; Schaufeli, Taris & Van Rhenen, 2003). Moreover, the three dimensions are closely inter-related. Correlations between the three scales usually exceed .65 (e.g., Demerouti et al., 2001; Salanova et al., 2000; Schaufeli et al., 2002a, 2002b), whereas correlations between the latent variables range from about .80 to about .90 (Salanova et al., 2000; Schaufeli et al., 2002a, 2002b). Besides that, the internal consistency of the three scales of the UWES is good. That is, in all cases values of Cronbach's α are equal to or exceed the critical value of .70 (Nunnaly & Bernstein, 1984). The nine-item version of the UWES has also demonstrated factorial validity, internal consistency and test-retest reliability (Wilmar B. Schaufeli, Bakker, & Salanova, 2006). Job Satisfaction

Job satisfaction is operationalized as overall job satisfaction and measured with three items based on Hackman and Oldham’s (1976) Job Diagnostic Survey which has been widely used in other studies (e.g.Mukherjee & Malhotra, 2006). Extra-role behavior towards foreign guests

This construct is operationalized by means of 7 items from the Service Attentiveness Scale (Sizoo et al., 2005). This scale was specifically developed to measure service attentiveness towards foreign guests, is based on research in the food service sector (Samenfink, 1994). It contains items such as ‘I make an effort to make a foreign guest feel comfortable’, and ‘I adjust the way that I deliver service to the preferences of the foreign guest’. Organizational Citizenship Behavior

In order to measure the OCB construct, we used the 36-item Organizational Citizenship Checklist developed by Fox and Spector (Fox, Spector, Goh, Bruursema and Kessler, 2009). The 36- item version is subdivided into two parts: 15 items of acts directed towards the organization (OCBO) and 14 items that reflect acts directed towards co-workers (OCBP). We limited our measurement to the 15 OCBO items because these were most relevant in the context of our study. Internal consistency reliability (coefficient alpha) was found to be .92 for the OCBO (Fox, Spector, Goh, Bruursema and Kessler, 2009).

RESULTS For the statistical analysis the following procedure was followed. First, exploratory factor analysis was

used to assess the unidimensionality and validity of the constructs. Four items which exhibited high cross-loadings were dropped. The model was fitted using a Partial Least Squares (PLS) procedure. PLS was chosen because the sample size was relatively small. One advantage of PLS in comparison to covariance-based approaches to structural equation modeling is that PLS does not presume any distributional form for measured variables (Chin, 1998, p. 295). Furthermore, PLS can be applied more easily to relatively small data sets, as it only requires ten cases per predictor in the regression with the largest number of parameters (Chin, 1998, p. 311). The complete model was tested using software package SmartPLS 2.0 (Ringle, Wende, & Will, 2005).

The measurement properties of the different constructs in the model were checked by assessing convergent validity, reliability and discriminant validity. For the structural models, t-values were computed on the basis of 169 bootstrapping runs. The overall fit of the model was evaluated using Tenenhaus, Vinzi, Chatelin & Lauro’s (2005) goodness-of-fit (GOF) measure. This measure is computed as follows: √(Mean (communality)* Mean (R2)).

All scales met the standard requirements for reliability, given that the lowest score for composite reliability was 0.73 (see table 1). To evaluate discriminant validity, we checked for each construct whether the square root of the AVE was higher than the individual correlations with other latent variables (Fornell & Larcker, 1981). As shown in Table 2, this was indeed the case.

Table 1 Measurement and structural properties

Com

posi

te r

elia

bili

ty

Var

ianc

e ex

plai

ned

Loa

ding

Intercultural Competence (IC)

Adapt Cult_Open SocInt

.73 .54 .19 .88 .89

Work Engagement (WE) Absorp_1 Absorp_2 Absorp_3 Ded_1 Ded_2 Ded_3 Vig_1

.92 .56 .75 .76 .72 .83 .78 .71 .69

Vig_2 Vig_3

.78

.70

Satisfaction (SAT)

Sat_1 Sat_2 Sat_3

.93 .81 .92 .92 .87

Organizational Citizenship Behavior – towards the organization (OCBO)

OCB_4 OCB_5 OCB_6 OCB_7 OCB_8 OCB_9 OCB_10 OCB_11 OCB_12 OCB_13 OCB_14 OCB_15

.92 .42 .38.87 .75 .75 .83 .62 .46 .54 .56 .73 .61 .54

Service Attentiveness SA_1 SA_2 SA_3 SA_4 SA_5 SA_7

.87 .54 .49 .72 .84 .81 .73 .77

Table 2 Discriminant Validity

IC WE SA SAT OCBO

IC 0,732a WE 0,565b 0,748 SA 0,413 0,402 0,734

SAT 0,186 0,561 0,248 0,903 OCBO 0,145 0,244 0,171 0,269 0,652

a Numbers shown in boldface denote the square root of the AVE b The other numbers represent correlations between latent variables

The results for the structural model can be seen in Table 3. All effects were significant. Intercultural Competence had a positive effect on Work Engagement, Work Engagement had a positive effect on Service Attentiveness, Work Engagement had a positive effect on Job Satisfaction, Job Satisfaction had a positive effect on Organizational Citizenship Behavior. Thus, all hypotheses were supported by the data.

Table 3 Beta coefficients and t-values (in parentheses)

From-to IC WE SA SAT OCBO

IC .319

(9.13)** H1

WE .402

(5.68)** H4

.561 (6.03)**

H2

SAT .065

(2.79)** H3

The variance explained by the latent variables can be seen in Table 4. The goodness-of-fit for the tested model was √(0.575*0.217) = 0.353. This exceeds the cut-off value of 0.25 for medium effect sizes of R2, as proposed by Wetzels, Odekerken-Schröder, and Van Oppen (2009).

Table 4 Communalities, R2 values and goodness-of-fit

Communality R2

IC 0,535

WE 0,560 0,319

SA 0,539 0,162

SAT 0,815 0,315

OCBO 0,425 0,072

average 0,575 0,217 GOF = 0,353

DISCUSSION In this paper, the aim was to find evidence for a relation between a frontline employee’s intercultural

competences on the one hand, and this provider’s job attitudes and extra-role behaviors on the other hand. Moreover, this relation was hypothesized to be mediated by the frontline employee’s work engagement. General support was found for these predictions.

The results demonstrate that a frontline employee’s intercultural competence significantly influences his engagement at work. A frontline employee who is able to sense a culturally different customer’s thoughts, feelings and expectations accurately (Ruben, 1976), has an open and unprejudiced attitude towards out-group members (Arthur & Bennett, 1995) and approaches situations pro-actively, is likely to have high levels of energy and resilience, to be willing to invest effort, not being easily fatigued, and persist in the face of difficulties. Moreover, this employee feels enthusiastic and proud about his job, and inspired and challenged by it. Finally, frontline employee’s with high levels of intercultural competence tend to be to happily immersed in their work (Wilmar B Schaufeli et al., 2001). This is in line with the Job-Demands-Resources Theory (Xanthopoulou, Bakker, Demerouti, & Schaufeli, 2007) which considers employee competences as a personal resource that is likely to influence attitudinal and behavioral outcomes. Besides this, the findings reveal a highly significant influence of work engagement on job satisfaction. No less than 81% of job satisfaction is explained by work engagement. This is in line with previous research by Saks (2006) and Salanova et al. (2006) and Ganzach (2003), who showed that job satisfaction is determined to a large extent by employees’ intrinsic motivations. Moreover, the data show a significant effect of work engagement on extra-role behavior towards the foreign guest. Employees with high levels of work engagement provide their foreign customers with better service, are more attentive to their needs and adjust their service to adjust their service style to the preferences of the foreign guest. Finally, the hypothesis of a positive relation between job satisfaction and OCB was confirmed, in other words extra-role behavior towards the

organization. Apparently, satisfied employees are willing to go beyond their formal in-role expectations and contribute voluntarily to their organization’s success. For instance, by accepting extra projects or by giving advice about the optimization of the working environment. This finding fits in with prior research (Podsakoff et al., 2009).

The findings contribute to the literature because, to our knowledge, a conceptual model in which intercultural competence is linked to work engagement , job attitudes and extra-role behaviors has not been tested empirically yet. There are also managerial implications, which will be explained below.

From a managerial perspective, the findings show that in an international service environment, the development of intercultural competence adds value to the workforce. Intercultural competence is a personal resource that can be trained, coached and developed. It implies that frontline employees who are intercultural competent, do not only possess culture-specific knowledge about their foreign guests, but also the skills and attitude required to provide optimum service to this diverse customer-base. In the light of globalization and the emergence of new markets such as Russia, India and China , which are culturally distant to many European destinations (House, Javidan, Hanges, & Dorfman, 2002), it would be wise for hotel managers to integrate intercultural competence in their recruitment and development policies. In order to develop and acknowledge the intercultural competence of their frontline staff, hotels should offer their employees personal responsibility in their jobs and allow them to deviate from the standard service script, if a culturally distant customer requires this. This form of empowerment will likely result in extra-role behavior towards the organization. Finally, hotel companies could incorporate their staff’s intercultural competence in their marketing communication efforts. For instance, by encouraging their foreign customers to express their special requests.

Hotel companies experiencing intercultural service encounters are recommended to invest in identifying, motivating and retaining service employees with high levels of intercultural competence or training and developing these competencies with existing staff. Employees with high levels of intercultural competence are more engaged in their daily operations and are more willing to go the extra mile for both the customer and the organization. Eventually, in accordance with the service profit chain (Heskett et al., 1994), this will help companies to build a more satisfied and loyal customer-base and profitability in today’s increasingly diverse and competitive marketplace. In a competitive environment as the international hotel industry, this might make a critical difference.

LIMITATIONS AND SUGGESTIONS FOR FURTHER RESEARCH

Like most research, our study has its limitations. Firstly, we focused on front office employees, because they are very suitable due to their boundary-spanning role and their substantial impact on the guest’s perceived service quality (Hartline & Jones, 1996). We could address the issue of generalizability by including employees from other hotel departments, such as food service, or by involving a broader range of service sectors with an international clientele, such as airlines and tourism (Yu, Weiler, & Ham, 2002). Secondly, within the Job- Demands- Resources model (Bakker et al., 2004), we have limited ourselves to the links between Intercultural Competence as a personal resource, work engagement and attitudes/behaviors. For a more comprehensive grasp of what constitutes the frontline employee’s role in intercultural service encounters, it is recommendable to also test the influence of job resources, such as peer and supervisor support and job demands such as work pressure, emotional, mental and physical demands. Since working in the hotel industry has often been associated with emotional labor (Hochschild, 1983; Lovell, 2009; Price & Arnould, 1999), it would be recommendable to test the role of intercultural competence in the full JD-R model. A third limitation is the fact that we have used a self-assessment questionnaire, which may have been subject to socially desirable responses. This may explain the low loadings of the ‘adaptability’ scale and 3 OCB-O items. In future studies, social desirability could be remedied first of all by controlling for it and by means of multi-level assessment, in which the respondent’s intercultural competence is also assessed by the supervisor and the customer, taking all sides of the ‘ service-triad’ into consideration. Fourthly, single method bias may be a shortcoming of our study. The use of experimental designs, observations, critical incidents, computer simulations and discourse could be a valuable addition to the survey methodology. We also recommend an adjustment of the 30-item MPQ instrument, which has been validated primarily in an expat and educational context. For the hotel service context, a specific selection and wording of items is advised.

The authors would like to thank Valerie Jurrij, Merijn Gerats, Annemarijn Ouwehand and Aviva Stuit for

the data collection and the two anonymous reviewers of this paper for their valuable comments

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Expatriate managers in the hospitality industry and negotiation success:

An empirical analysis of Spanish hotel chains in Latin America

Agustín Alonso

Ana Arencibia

Desiderio J. García-Almeida *

Ancor Suárez

University of Las Palmas de Gran Canaria

Contact author: Desiderio J. García-Almeida

[email protected]

ABSTRACT

Many multinational corporations employ expatriate managers from the home country to lead the operations in the subsidiaries set up in host countries. Firms in the hospitality industry are not an exception and top management usually assigns expatriate managers to work in hotels abroad. Those expatriate managers need many interpersonal skills, and negotiation becomes a topic of interest in that context. Several factors that can influence negotiation success by expatriates are explored and seven research hypotheses are set. The empirical data to test those hypotheses were obtained from Spanish general managers in Latin America. Results show the relevance of the level of organizational decentralization, the expatriate’s adjustment to the local culture, and his/her emotional control as determinants of negotiation success.

KEYWORDS

Expatriates, negotiation, hotel chains, internationalization

PSYCHOLOGICAL EMPOWERMENT IN THE JORDANIAN HOSPITALITY INDUSTRY: DOES THE CONTEXT MATTER?

Andrew Lockwood

University of Surrey, UK, Guildford [email protected]

Hesham Al-Sabbahy

University of Surrey, UK, Guildford [email protected]

Khaled Odeh

Al-Hussein bin Talal University, Jordan, Ma'an. [email protected]

Samer Al-Sabi

Al-Hussein bin Talal University, Jordan, Ma'an [email protected]

ABSTRACT

The aim of this study is to examine the psychological empowerment construct within the Jordanian hospitality industry. The multi-dimensional scale developed by Spreitzer 1995 was used. A total of 800 questionnaires were distributed to a sample of frontline employees, and out of these a total of 682 usable questionnaires were used in the analysis. The results of the Exploratory Factor Analysis (EFA) introduced a two dimensional structure. The results of t-tests and one-way ANOVA revealed that only employees’ nationality and educational level could be used to segment employees based on their perception of the psychological empowerment overall and on the extracted dimensions. Implications and recommendations for future research are presented Key words Psychological empowerment, Restaurants, Hotels, Jordan, Hospitality, Frontline Employees

INTRODUCTION

The Hospitality Industry is characterised as a continuous operation and it has unstable customer demand. This emphasises the importance of managing the interactions between customer contact employees and customers. The quality of service is determined by the actions of employees whose ability, knowledge, loyalty and experience may vary, and whose reaction to customers may differfrom one to another (Lewis and McCann, 2004). Due to the rapid changes in the business environment, competitive strategies and customer demands (Cho et al., 2006), human resource departments have begun to improve the performance of their organisations using empowerment as a tool for handling rapid changing and complex situations, with the purpose of establishing satisfactory solutions that can respond to customer demands and improve the quality of service (Ginnodo, 1997).

Despite abundant studies of employee empowerment in the organisational and services marketing literature (e.g. Conger and Kanungo, 1988; Thomas and Velthouse, 1990; Bowen and Lawler, 1992; Fulford and Enz, 1995; Spreitzer, 1995), much remains unexplored about the concept itself and its possible consequences in the hospitality industry. Whereas Spreitzer’s model suggests that psychological empowerment is a four dimensional construct namely: meaning, competence, self-determination and impact, research in hospitality has revealed that psychological empowerment has different results with regards to its dimensionality. Some researchers have shown that it has only three dimensions: meaning, competence and influence (e.g. Fulford and Enz 1995; Hancer and George 2003; and Amenumey, 2007), while others have shown only two dimensions: attitude and influence (George and Kim, 2005). This might be due to the context in which the original Spreitzer model was tested, namely from the manager’s perspective rather than the employees, and in a manufacturing context where a clear division between departments might make managers feel that they can have impact within their organisations. Given the position of frontline employees in the hospitality industry and the nature of the decisions that they can take, it is likely that theirs feeling of being empowered arise in a different way from those in managerial positions. It may be more critical for a manager than for a non-manager to perceive having some impact within their department to feel empowered. As such, there is a real need to retest the concept in the hospitality context and from the employees’ perspective to verify the construct and its dimensions, as well as identify the characteristics of service employees who are more likely to feel empowered and embrace the practices that reflect this.

The current study was conducted in Jordan. Many of the previous studies on psychological empowerment have been conducted in the context of western economies and very little research has been done in the Middle East in general and Jordan in particular. However, there is evidence to suggest that different geographic, industrial contexts, cultural valuesas well as demographic factors (e.g. Fock et al., 2011; Dimitriades, 2005; Boudrias et al., 2004; Hui et al., 2004; Sigler and Pearson, 2000) can provide different interpretations of the dimensions of empowerment. In addition, theJordanian context provides a different cultural environment within which to explore the dimensions of psychological empowerment in the hospitality industry and how these may or may not vary from other (western) contexts. As such, this research will contribute to the empowerment literature by testing a generally accepted theory in a different context.

THEORETICAL BACKGROUND

There are two main approaches to understanding employee empowerment in the management literature: a structural/relational frame and a motivational/psychological frame. First, structural empowerment is understood as those managerial and organisational practices that create the necessary conditions to empower workers (Bowen and Lawler, 1995, 1992; Cunningham, et al., 1996; Forrester, 2000; Klidas, 2007). Power, in this context, is viewed as the “the ability to get things done, to mobilise resources, to get and use whatever it is the person needs” (Kanter, 1977, p.166). In this respect, empowerment concerns all individuals in the organisation, in whatever position, at whichever level, as they are assigned tasks, which they must perform. Thus, empowerment has been defined as “the notion of developing decision-making authority and responsibility for the control and enhancement of product and/or service quality to the point of production” Klidas (2001, p.27). Empowerment also has been seen as sharing with frontline employees four organizational ingredients: power, information, knowledge and skills, and rewards (Bowen and Lawler, 1995). Bowen and Lawler stress that if any of these essential components are missing, then true empowerment will not exist.

By comparison, as a psychological construct, empowerment has received comparatively less attention. Psychological empowerment can be viewed as an individual’s feeling toward their jobs and it is reflected in their assessments of their own ability to perform their jobs. More specifically, the psychological approach focuses on the employees’ intrinsic motivation rather than on the managerial practices used to increase the individuals’ levels of power. Power here means energy, thus to empower can also mean to energize (Thomas and Velthouse, 1990). That is, empowerment is conceptualized here as a state of mind, rather than something management does to employees. Spreitzer (1995a, p.1444) defined psychological empowerment as an “intrinsic task motivational construct manifested in four cognitions: meaning, competence, self-efficacy, and impact. Together, these four cognitions reflect an active rather than a passive, orientation to a work role”.

Lee and Koh (2001) argued that the term empowerment is ambiguous conceptually, and is often used interchangeably with similar words, such as authority delegation, motivation, self-efficacy, job enrichment, employee ownership, self-determination, self-control, self-influence, self-leadership, high-involvement, and participative management. They therefore suggested that empowerment should really be seen as a new concept defining it as: “The psychological state of a subordinate perceiving four dimensions of meaningfulness, competence, self-determination and impact, which is affected by the empowering behaviours of the supervisor” Lee and Koh, (2001, p.686 ).

DEFINITION AND DIMENSION OF PSYCHOLOGICAL EMPOWERMENT

The starting point in psychological empowerment began with Conger and Kanungo (1988) who considered empowerment to be an enabling process. Thus, empowerment is seen as a motivational construct focused on enabling employees rather than simply delegating to them. Utilizing Bandura’s (1977) self-efficacy concept, they considered empowerment as a process by which the organisation creates conditions for heightening motivation for task accomplishment through the development of a strong sense of personal efficacy. Although, this empowerment experience, in turn, is maintained by Conger and Kanungo (1988, p.476) to increase “both imitation and persistence of subordinates’ task behaviour”, Thomas and Velthouse (1990) disagree with Conger’s definition, because they considered that empowerment is multifaceted and cannot be captured by a single concept.

Thomas and Velthouse (1990) therefore built on the work of Conger and Kanungo (1988) with a focus on management practices that enable employees by enhancing their self-efficacy. Thomas and Velthouse (1990) developed a psychological model of empowerment that focused on the power of organisational practices to energise or internally motivate employees rather than just enable them. These researchers identified empowerment with a type of motivation that they refer to as “intrinsic task motivation”. They believed that this allowed employees to derive positive value directly from their job tasks. Hence, they proposed that psychological empowerment results from a set of cognitions, called task assessments, connected to an individual’s task role: self-determination, meaning, competence (i.e. self-efficacy) and impact, stating also that these task assessments influence behaviour through both reinforcement and expectancy dynamics. Strong perceptions of these four variables generate positive feelings in workers that reinforce their task efforts. They also shape workers’ experiences about receiving these intrinsic rewards in the future. Thus, here the employees themselves rather than anything else determine if they are empowered or not and their perceived level of empowerment.

Spreitzer (1992) took another step forward from the work of Conger and Kanungo (1988) and Thomas

and Velthouse (1990); she attempted to develop an operational definition of empowerment and validated a measure of psychological empowerment in the manufacturing context. Her research provided support for the “construct validity of psychological empowerment in the workplace” with the four dimensions together contributing to an overall construct of empowerment. These dimensions are: Meaning: a sense of meaning is the value of the work goal, judged in relation to an individual’s own values (Thomas and Velthouse, 1990). Competence or Self-efficacy: this is an important motivational construct, which refers to a belief in one’s capability to perform the work activities with the necessary skills (Gist, 1987). Self-determination: this is an individual’s sense of having choice in initiating and regulating actions (Deci et al., 1989). It reflects autonomy. Impact: this is the final dimension, and, refers to the degree, to which one can influence strategic, administrative, or operating outcomes at work (Ashforth, 1989).

According to her validation study (1995a; 1995b; 1996), Spreitzer found, that these four components all contributed to a person’s sense of empowerment. In another study, of manufacturing managers and lower-level service employees, Spreitzer and her colleagues (1997) found that different empowerment dimensions are related to different outcomes (effectiveness, satisfaction, and job related strain), and no single dimension was related to all work outcomes. They, therefore, concluded that employees must experience all four of the empowerment dimensions in order for the organisation to achieve the desired outcomes (Spreitzer et al., 1997).

PSYCHOLOGICAL EMPOWERMENT IN THE HOSPITALITY INDUSTRY Over the last decades, considerable attention has been given by both researchers and practitioners to the concept of empowerment in the hospitality industry. At the practical level, Lashley (1999) notices that the increasing interest of the hospitality industry in gaining competitive advantage through service quality leads hospitality organizations to increase their emphasis on empowerment as a human resource strategy. On the other hand, the hospitality literature reveals that the majority of research efforts have focussed on the organizational practices and managerial role in creating empowering conditions and there is a scarcity of literature so far on psychological empowerment.

The antecedents and outcomes of psychological empowerment were first explored by Sparrowe (1994).

Sparrowe confirmed the factor structure of the Thomas and Velthouse (1990) model in the hospitality industry. Sparrowe’s (1994) study of over thirty-three different hospitality organizations revealed that the relationship between subordinates and supervisors will generate feelings of having meaningful work, competence and impact. On the other hand, psychological empowerment failed to predict employees’ pay satisfaction while it influenced significantly and negatively on employees’ withdrawal behaviour. Another study by Fulford and Enz (1995) used a modified version of Spreitzer’s (1995) scale to study employee empowerment in the club industry. Fulford and Enz found that service delivery performance and employee satisfaction were influenced significantly but differently by one or more dimensions. Several other studies (e.g., Corsun and Enz 1999; George and Thomas 2003; Kim and George, 2005; Amenumey, 2007 and Chiang and Jang 2008) focused on the relationships between certain organisational factors and psychological empowerment components. Corsun and Enz (1999) assert a relationship between an employee’s feeling of psychological empowerment and the supportive work climate in which care and trust prevail. Amenumey (2007) found that service climate was significantly related to hotel employees’ perceptions of empowerment. Chiang and Jang (2008) reported that supportive leadership behaviour played an important role in influencing the managerial trust and organizational culture that support decision making and job autonomy and consequently encourage empowerment in the hotel industry.

The four dimensions of empowerment outlined by Spreitzer (1995) were further evaluated by several

studies (Fulford and Enz 1995; Hancer and George 2003; Kim and George, 2005; Amenumey, 2007; Odeh, 2008 and Stander and Rothmann, 2009). Fulford and Enz (1995), for example, validated the four empowerment dimensions in a club environment. According to their findings, the two dimensions of empowerment; impact and self-determination; are thought to overlap conceptually when applied to a service industry. Thus they found that the items from the dimensions of impact and self-determination loaded onto just one factor, creating a single dimension they called influence. The other two dimensions (meaning and competence) were consistent with those conceptualized by Spreitzer (1995). Subsequently, Hancer and George (2003) assessed the influence of perceived empowerment on employees in an empirical study of a number of restaurants, where data were collected from lower level employees. The result of this study provides support for this three dimensional structure of empowerment (meaningfulness, competence and influence) in a service industry. Finally, (Kim and George 2005 and Al-Sabi, 2011) confirmed a two dimensional structure of the construct in five star hotels and high end luxury restaurants; on one hand, they found self-determination and impact overlapped to introduce a new dimension “Influence”, on the other competence and meaningfulness collapsed significantly into a second single dimension they called “job attitudes”.

To conclude, the concept of empowerment has been examined by several researchers. However, the

inconsistency in the outcomes regarding the dimensions of the construct raises the issue of construct validity. Indeed, the debate regarding the number of dimensions and their validity in the service context in general and the hospitality industry in particular reflects a real need for more studies that should be done to evaluate the construct itself, its antecedents and outcomes in different environments. The mixed findings in the literature, and

in particular the overlapping between the self-determination and impact dimensions, raises the following question: do psychological empowerment dimensions vary in different environments and industrial contexts and between different demographic groups? The current study contributes to the empowerment research stream by re-examining Spreitzer's scale and dimensions in a non-western hospitality industry context as well as testing for significant differences among different demographic groups.

METHODS

Measurement

To measure psychological empowerment a scale developed by Spreitzer (1995) was used. Four dimensions of empowerment were assessed: meaning (3 items), competence (3 items), self-determination (3 items) and impact (3 items). All items were measured on a seven-point Likert scale where 1= strongly disagree and 7= strongly agree. Demographic questions on gender, age, nationality, education, job mode and work experience were also included in the second part of the questionnaire. The questionnaire was translated from English to Arabic using a back translation procedures. Data Collection and Analysis

The data were collected from a sample of frontline employees’ working in tourist restaurants and hotel

front office departments in Jordan. The questionnaire was distributed and collected by one of the researchers, using a face-face approach. A total of 800 questionnaires were distributed to frontline employees, of which 628 usable questionnaires were returned and used in the analysis. Data analysis included descriptive analysis, exploratory factor analysis, one-way ANOVA and t-tests. All tests were performed using SPSS.

FINDINGS

Sample Characteristics Table 1 presents demographic profile of the sample.

Table 1: Sample Characteristics (N=682)

Age Percentage Educational background Percentage

25 or under 26.8 Hotel management 56.2

25-30 49.5 Business administration 9.1

31-40 17.2 Accounting 10.8

41-50 5.9 Others 23.9

51-60 .6 Number of years in the industry

Gender Less than 1 year 46.1 Male 80.7% 1 to 5 years 43.0 Female 19.3% 6 to 10 years 7.3 Nationality 11 to 15 years 2.4 Jordanian 87.6% 16 to 20 years 1.2 Others 12.4% Educational level Job mode Secondary 49.2 Full time 83.8% College (2-yrears) degree 21.0

Part time 16.2% Baccalaureate (4-years) degree 20.2

Graduate degree 9.6

Table 1 that shows 80.7% of respondents were male and only 19.3 % were female. 26.8% of survey respondents were 25 years of age and under, 49.5 % were between 26 and 30, 17.2% were between 31 and 40, and 5.9 % were 41 or over. Respondents reported their nationalities as 87.6 % Jordanian and 12.4 % others. Mode of employment showed 83.8 % were full time and 16.2 % were part time. The education reported by respondents showed 49.2 % had primary school, 21.0 % were two years college graduates, 20.2% had bachelor degree, and less than 10% had a graduate degree. For educational background 56.2 % of contact employees’ were holding a degree in hotel management, 19.9 % studied administration sciences, and other majors accounted for 23.9 %. Finally, 46.1 percent of the respondents reported working in the hospitality industry less than 1 year, 43.0% between 1 and 5 years, 7.3 % between 6 and 10 years, 2.4 % between 11 to 15 years, and 1.2 percent reported working longer than 16 years. All aspects of this demographic profile reflect the known composition of the workforce in the Jordanian hospitality industry. Factor Analysis

The current study used Spreitzer’s scale to measure psychological empowerment. The scale was originally developed in a western culture and showed good validity and reliability results through different working contexts. However, as this study was conducted in a non-western culture, it was important to purify the scale and examine its validity. To do so, after collection of the survey data, an exploratory factor analysis was conducted to establish the construct validity. A principal component analysis with Varimax rotation was used to show the significant factor loadings for this study. Table 2 presents the final outcomes of the factor analysis after rotation.

Table 2: Psychological Empowerment Factors: Rotated Component Matrix

Items

Factor Loading

Influence α = .863

Attitude α = 0.861

Communality

I have a great deal of control over what happens to my department

.667 __ .667

My impact on what happens in my department is large .669 __ .669

I have significant influence over what happens in my department

.634 __ .634

I have significant autonomy in determining how I do my job .650 __ .434

I have considerable opportunity for independence and freedom in how I do my job

.689 __ .545

I can decide on my own how to go about doing my work .760 __ .626

I am confident about my ability to do my job __ .780 .641

I am self-assured about my capabilities to perform my work activities

__ .747 .599

I have mastered the skills necessary for my job __ .732 .590

The work I do is meaningful to me __ .714 .579

My job activities are personally meaningful to me __ .704 .589

The work I do is very important to me __ .702 .565

Eigen value 3.531 3.608

Percentage of variance explained 29.427 30.063

Cumulative (Total explained) 29.427 30.063 59.490

As shown in Table 2, somewhat contrary to expectations, and deviating from the initial four dimensions, the factor analysis presented a dual-dimensional structure of psychological empowerment. The extracted dimensions are consistent with other studies that used Spreitzer’s scale in the hospitality industry (e.g. Kim and George, 2005). The first dimension, ‘influence’, is made up of three of the initial impact items, and three of the self-determination items. Item loadings on this dimension ranged from 0.66 to 0.76. The study found that the meaning and competence dimensions also merged as a single factor. The combined factor was named “attitude”. Item loadings were all above 0.70. Furthermore, the obtained Cronbach alpha show that the extracted dimensions have clearly exceeded the minimum recommended value (α = 0.70). Following from this, these two dimensions are maintained.

Descriptive Statistics of the Empowerment Dimensions The scales used in this study range from 1=strongly disagree to 7=strongly agree. The first dimension;

influence; is made up of six items, showed a mean score of (5.32) and a standard deviation of (1.09). The second dimension; attitude; was measured by six items and scored a mean of (5.62) with a standard deviation of (1.04).

In addition, the mean score for the psychological empowerment scale overall was calculated. The total sample mean score for psychological empowerment was (5.46) with a standard deviation of (0.96). Between Group Analysis

A series of t-test and one-way ANOVA analyses were conducted, in order to examine if the sample’s perception of psychological empowerment and its sub-dimensions differed significantly by demographic characteristics. Table 3 shows the results of the analysis for those variables that gave significant results.

Table 3: Comparison Between Groups (t-test and One way ANOVA results)

Variable Groups N Mean F. Ratio Sig

Attitude

Jordanian Others

550 78

5.67 5.24

.142 .001

Influence Jordanian

Others 550 78

5.36 4.96

1.06 .003

Overall empowerment

Jordanian Others

550 78

5.51 5.01

0132 000

Variable Education N Mean F. Ratio Sig

Attitude

Secondary College

Bachelors Higher Education

309 140 127 52

5.72 5.31 5.60 5.89

6.308 .000

Influence

Secondary College

Bachelors Higher Education

309 140 127 52

5.42 4.99 5.29 5.52

5.928 .001

Psychological empowerment

Secondary College

Bachelors Higher Education

309 140 127 52

5.56 5.15 5.44 5.71

7.627 .000

As presented in Table 3, out of the eight demographic characteristics, only employees’ nationality and educational level yielded a statistically significant difference. In terms of nationality, Jordanian employees perceived that they had more influence over their job tasks than other employees did and had higher attitude scores. In the same pattern, Jordanian workers reported a statistically significant higher level of overall psychological empowerment than other nationalities. Based on the educational level characteristic, employees with university education or higher reported higher scores on the overall empowerment score and both of its dimensions.

DISCUSSION OF FINDINGS

This study investigated psychological empowerment in the hospitality industry in Jordan. The 12-item

scale developed by Spreitzer (1995) was adapted for measuring the psychological empowerment of a sample of frontline employees in Jordanian hospitality industry. The original scale had four dimensions. These dimensions are: meaning, competence, self-determination and impact. To validate the scale and its sub-components in the Jordanian hospitality environment, principal components factor analysis was undertaken. A two-factor structure was obtained as a result of this analysis, following the pattern of Kim and George (2005). Table (2) shows that two of the original dimensions, namely meaning and competence, merged into single factor called attitude. It was also found that both the self-determination and impact dimensions from the original scale merged to form a new dimension; influence. The findings of this study matched previous studies that used Spreitzer’s scale in the hospitality industry (Fulford and Enz, 1995; Hancer and George, 2003; Amenumey, 2007).

The two factor structure shows that the psychological empowerment construct is highly influenced by the industry and working environment. Amenumey (2007) contended in his study that the social behaviourism philosophy, which assumes that the type of interaction between group and organisational members influences their interpretations of specific matters in question, can be one of the issues that explains different conceptualisations in different organisations and studies. In different studies that have resulted in either a two-factor or a three-factor solution, there has been some combination between self-determination and impact on the one hand and between meaning and competence on the other. Fulford and Enz (1995) noted that “self-determination and impact may indeed combine when the organisation under study is small, the levels of management are fewer (less bureaucratic), and the nature of the work brings employees directly into contact with the customer (service firm versus manufacturing organisation)” (p. 165). Boudrias, Gaudreau, and Laschinger (2004) also found that the self-determination and impact dimensions of psychological empowerment had something in common and that they could be reflected in one single dimension, while Stander and Rothmann (2009) pointed out in their study that the relationship between meaning and competence is strong and it seems that, although these are separate dimensions, they are strongly related. Therefore, it is important to consider that implementing empowerment in different types of organisational structures may influence employees’ perception of their value and their belief about how well they will perform their goals or tasks, and their ability and choice in influencing, initiating and regulating their own work.

After examining the factor structure, the scores for psychological empowerment and the scores for the extracted dimensions were calculated for the study sample. The mean score of psychological empowerment was 5.46. The scores for the two dimensions of psychological empowerment were also calculated. The attitude dimension had a mean score of 5.62 and the influence factor score was 5.31. From the mean scores of the psychological empowerment construct and its dimensions, it could be concluded that Jordanian workers exhibit a relatively high level of overall psychological empowerment in the hospitality industry. Employees reported their work to be meaningful, that they were competent in doing their tasks and that they had influence and control over their tasks and work related issues. The higher score was for attitude, and the lower was the perception of influence. These results indicated that employees felt that how competent they were in doing their job and how meaningful their job was for them, were more positive than their ability to control and influence their jobs or work related issues.

In this study, eight demographic factors were used to describe the study’s sample. These included employees’ gender, age, nationality, job mode, educational background, educational level, experiences, and job tenure. To explore the effect of these factors on the psychological empowerment perception, a series of t-tests and one-way ANOVA were conducted. The results indicated that among all the demographic variables, the

nationality and the educational level were the only variables to yield a significant impact on overall psychological empowerment. This study found that Jordanian employees perceived themselves as more psychologically empowered (5.11) than other nationalities’ employees did (4.82). Likewise, in examining the educational level characteristic, it was found that those having a college or higher degree reported higher scores on overall empowerment (5.17) than did those with a secondary or lesser level of education (4.82). This result did not match Hancer and George’s (2003) findings that the less educated employees reported higher levels of empowerment than higher educated employees.

As discussed earlier, this study has confirmed the two factor structure of psychological empowerment in Jordanian hospitality industry. This finding in general, and the emergent new dimension of influence, in particular, matches the previous studies that investigated the concept in the hospitality context (e.g., Fulford and Enz, 1995; Hancer and George, 2003; Amenumey, 2007). This study is not exceptional in relation to that. However, as the individual’s perception of the influence dimension is based on freedom to choose which tasks to do and how to do them, as well as the ability to have influence over their organisation’s issues, this dimension, not surprisingly, has the lowest score compared with the other empowerment components (attitude). The explanation of this might be because the nature of the frontline employees’ job in the hospitality context reveals limited decision making and impact beyond their work area level. The second possible explanation, which is related to the context of the study, is that the nature of the Arab working context reveals a concentration of important decisions being in management’s hands, and it is likely that this affects the perception of influence. Finally, investigating a study like this in the Jordanian hospitality industry, and looking for high levels of expectations with regard to services and guests, it would be expected that the industry would employ relatively well experienced, trained and qualified employees. It is, therefore, not surprising that the employees would find their attitudes toward their work to be more positive (having confidence in their values and beliefs on how well they will perform their goals and tasks while they are interacting with their guests) as well as having a high level of trust in their abilities and choices in influencing, initiating and regulating their own work.

CONCLUSION, RECOMMENDATIONS AND FUTURE RESEARCH

The main objective was to measure employees’ psychological empowerment in Jordanian hospitality industry. For this objective a scale developed by Spreitzer (1995) was used. The 12 item scale was initially developed to measure four dimensions: meaning, competence, self-determination and impact. The results of the factor and reliability analysis indicated that the Arabic version of the Spreitzer (1995) scale worked in the Jordanian hospitality environment. The findings indicated that the meaning and competence dimensions didn’t match the original scale. One the other hand, a new dimension “influence” has emerged. However, this result was consistent with Odeh (2008) and Amenumey (2007) but it was not consistent with Kim and George (2005), who found that employees perceived their influence more positively than their attitudes in their work tasks, units, departments and organisations. After that, employees’ perceptions of psychological empowerment overall, and the extracted factors, were examined. At the aggregate level, the results indicate that the sampled employees perceived themselves as being highly psychologically empowered. At the dimensional level, the results indicated that most employees have a high perception of confidence in their values and beliefs, and on how well they will perform their goals and tasks (attitude), whereas their perception of trust in their abilities and choices in influencing, initiating and regulating their own work (influence) was relatively lower. Finally, the t-test and one-way ANOVA analyses indicated only two demographic factors (e.g., nationality and educational level) that significantly influenced employees’ perceptions concerning psychological empowerment overall, and its dimensions.

This study has tested the Spreitzer (1995) scale in a non-western working context. It is one of the research efforts that attempt to validate the translated scale into the Arabic language. However, the consistency of the current study outcomes with the hospitality literature gives more validity to the translated scale as a tool that can be used in future research. Moreover, it also supported the generalisability of the two factors of the psychological empowerment construct in a non-western environment and in the service context in particular. This leads to support the main argument of the current research that the context of the study has influence on employee's perception of empowerment.

Related to this, researchers in developing countries are suggested to do more research concerning psychological empowerment, and to validate and expand the theory of empowerment. In particular, studies that test the scale in non-service contexts and/or from a managerial perspective could test further the four factor structure of the construct as originally developed by Spreitzer (1995). In this study, however, the two structural factors are consistent with the hospitality literature. Therefore, comparing the results between managerial and non-managerial jobs in the hospitality industry is highly recommended, so that the validity of the current research can be generalised. This study looked at psychological empowerment theory, thus future research can examine other perspectives of empowerment (e.g., team empowerment, structural empowerment). More specifically, examining the organisational practices and managers’ role in enhancing an employee’s empowerment is significant in the Jordanian restaurants. In particular, research could look into some antecedents of employees’ empowerment such as service culture, leadership behaviour, information sharing, rewards, etc.

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HUBS AND SPOKES: CHARACTERISTICS OF CAREER NETWORKS OF MICHELIN-STARRED CHEFS

Florian Aubke*

Department of Tourism and Hospitality Management MODUL University Vienna

Email: [email protected]

Marc Stierand Academy of Hotel and Facility Management

NHTV Breda University of Applied Sciences Email: [email protected]

Stefanie Krätz

MODUL University Vienna

Abstract

Despite a general fascination for the work of haute cuisine chefs, this profession has sparsely been subject to scientific study, although advances have been made in exploring some aspects of creativity and culinary innovation. Understanding creativity as a systemic phenomenon, this study pursues the question of “who makes a star-decorated chef?” The career progression of 262 German Michelin-starred chefs was examined. The majority of three-star chefs are closely connected to a strong core with densely connected chefs and restaurants, suggesting that few restaurants function as ‘career hubs’. Similarly, some chefs are more influential in forming the network structure than others. The findings of this study introduce an alternative approach to studying culinary creativity which contrasts network structure and individual agency.

Keywords

Gastronomy, Michelin, Network Analysis, Career Progression, Creativity

TO WHAT EXTENT DOES A STAR RETAIN TALENT?

Stéphanie POUGNET Ecole Hôtelière de Lausanne – IFSOM Institute Chalet-à-Gobet, 100 Lausanne 25, Switzerland

Université de Grenoble – Laboratoire CERAG - UMR 5820 ED275 BP 47, 38040 Grenoble Cedex 9, France

[email protected] Abstract: In the European restaurant industry, the war for talent is exacerbated by the war for stars. Within the context of a “culinary underbelly” culture, the talent management practices of restaurants are contingent. In particular, gaining or losing a Michelin-star can lead to changes in how a restaurant acquires, develops and retains talent. These contingent changes may be explained. Thanks to a literature review of how some researchers address talent management issues in the restaurant industry in general, and of the contingent factors that charaterise the European restaurant industry in particular, especially in relation to its specific “star-system”, not only will we set a path to understand the impact of stars on talent attraction and retention, but we will also define practical implications.

Key-words: European Michelin-star restaurants; talent retention; contingency theory; management of change; third-party evaluation / certification; occupational culture.

Role Ambiguity and Role Conflict in Outsourced and Proprietarily-Managed Spas

Veronica Waldthausen Ecole hôtelière de Lausanne

Chalet-à-Gobet 1000 Lausanne 25

Switzerland [email protected]

Demian Hodari* Ecole hôtelière de Lausanne

Chalet-à-Gobet 1000 Lausanne 25

Switzerland [email protected]

(*corresponding author)

Key Words: Role Ambiguity, Role Conflict, Job Satisfaction, Role Stress, Outsourcing, Spas, Hospitality

The outsourcing of auxiliary services in the hotel industry has become increasingly prevalent as organizations often consign their non-core activities to specialist firms that are able to perform these functions much more effectively and efficiently. Despite the benefits, the delivery of peripheral hotel services by third parties can become complex, particularly due to conflicting organizational cultures, structures and management policies. This can directly impact human resource issues since employees may have trouble meeting the different organizations’ potentially contradictory demands (Hemmington & King, 2000).

The hotel’s spa department suffers from particularly high rates of employee turnover due in part to poor communication and uncertain expectations. The lack of employee satisfaction, coupled with the hotel’s lack of expertise in managing spas and spa personnel, are among the reasons that hotels increasingly outsource the management of their spas to third-party spa management companies rather than rely on proprietary management (Lenhart, 2002).

The lack of clear expectations and uncertainty about whom to report to has been shown in other industries to lead to two role stressors: role ambiguity and role conflict (e.g., Onyemah, 2008; Walker, Churchill, & Ford, 1975). These two role stressors, which result in increased turnover and reduced job satisfaction (Rizzo, House, & Lirtzman, 1970), are caused by insufficient communication, unclear policies, a lack of close supervision, and having to report to both internal and external supervisors (e.g., Kahn et al., 1964); and are all present in outsourcing relationships where managers must assume a boundary-spanning role in order to coordinate the relationship across the different organizations (Adler, 2003; Solli-Saether, 2011).

This study investigated whether there is a difference in the levels of role ambiguity and role conflict between outsourced and proprietary managed hotel spas. It hypothesized that when spa management is consigned to a third party then the level of role ambiguity and role conflict would be greater since in outsourced companies stakeholders from multiple firms are typically involved in shaping management policies and decisions.

A self-administered, internet-mediated questionnaire was used to collect data from eleven international hotel companies and five specialized spa management firms globally. Product moment correlations were used to gain an overview of the relationship between the variables. Hypothesis tests were conducted using the Mann-Whitney U test to determine whether the outsourced and non-outsourced responses were similar enough to permit the assumption that they were drawn from the same population.

The analysis of 166 completed questionnaires found no significant differences in the level of role ambiguity and role conflict between proprietary-managed spas and spas that work with a third party. Several explanations for this were put forth during interviews with spa industry experts. First, spa managers who work with a third party communicate frequently with only one of the stakeholders, usually the third party since they are experts in the field, thereby reducing role conflict and thus stress. Second, while the level of stress was not different, the sources of stress that lead to role conflict and role ambiguity varied. Third, communication between the spa manager and the third party were surprisingly frequent, which was initially thought to be a significant problem since previous studies had found a lack of communication to be directly correlated with higher levels of role ambiguity.

Managerial implications resulting from this study include recommendations for improved training for spa managers and enhanced communication channels and frequency between these managers and their supervisors. In addition, the results should provide additional arguments to hotel owners and managers who opt for outsourcing their spa that such a decision does not seem to weaken the spa manager’s job satisfaction, an important finding since managerial turnover in the spa is a real and costly reality in the industry today. Further research examining the impact of outsourcing in the hotel and spa industries on employee satisfaction, strategy implementation, and customer satisfaction is recommended.

THE INFLUENCE OF COMMUNICATION QUALITY BETWEEN SUPERIORS AND

SUBORDINATES ON THE TRANSFER OF KNOWLEDGE IN THE HOTEL INDUSTRY

José Luis Ballesteros Rodríguez*

Departamento de Economía y Dirección de Empresas Universidad de Las Palmas de Gran Canaria

[email protected]

Desiderio J. García Almeida Departamento de Economía y Dirección de Empresas

Universidad de Las Palmas de Gran Canaria [email protected]

Crisanto Román Montoya Lopesan

San Bartolomé de Tirajana [email protected]

Carmen Domínguez-Falcón Departamento de Economía y Dirección de Empresas

Universidad de Las Palmas de Gran Canaria [email protected]

ABSTRACT

This paper will analyze the influence of internal communication practices in the organization as a way

to influence the upward vertical knowledge transfer. To that end an empirical study has been conducted in a leading hotel chain in the Canary Islands in which the opinions of 187 employees have been analyzed using structural equation modeling. The results show that superior's motivation to communication with their subordinates may influence the increased presence of communication of such aspects as innovation and performance. The existence of an adequate level of communication on these issues favorably influences the subordinate's perception that there is a close relationship with the superior. Finally, this fluid relationship is positively related to upward vertical knowledge transfer.

Keywords: Knowledge transfer, communication management, superior-subordinate communication

relationship, hospitality industry

REVISITING HOSPITALITY COMPETENCIES: THE CASE OF CYPRUS

Stelios Marneros European University of Cyprus

Nicosia, Cyprus email: [email protected]

and

Anastasios Zopiatis

Cyprus University of Technology Limassol, Cyprus

email: [email protected]

ABSTRACT

Competencies are probably one of the most popular subjects in scholarly hospitality research. Numerous scholars are trying to clarify the required “success” competencies for hospitality professions for the last 30 years. Despite the plethora of studies there seems to be a consistent inconsistency both in terms of utilized methodologies and findings. Moreover, the narrow geographic origin of most of these studies may not reflect how unique and complex hospitality environments in regions such as Asia, Europe and Africa are. This study takes a slightly different approach since it investigates the perception of hospitality professionals in Cyprus, a major Mediterranean tourist destination, as to what they consider to be the most important competencies necessary for a successful career, as well as the degree to which these competencies are developed by hospitality graduates entering the industry. Findings derived are of value to stakeholders both in the industry and academia. Keywords: Hospitality Industry, Competencies, Education, Cyprus

INTRODUCTION

Many argue that the primary objective of education is to provide the industry with high-caliber individuals able to meet the demands and challenges of their specific career choice (Hansson, 2001; Christou, 2002). For the past 30 years, with the utilization of numerous methodologies, scholars attempted to clarify the required “success” competencies for hospitality professions (Tas, 1988; Okeiyi et al., 1994; Kay and Russette, 2000; Christou, 2002; Chung-Herrera et al., 2003; Kay and Moncarz, 2004; Testa and Sipe, 2011). Despite the plethora of competency-related studies, Zopiatis (2010: 460) argues that such findings should be viewed with caution since “…there appears to be an inconsistency as to the methodologies utilized, the competencies under consideration and the actual competencies revealed as most and least important.”

In an attempt to further explore hospitality “success” competencies, aiming to contribute to the existing body of knowledge, this study takes a slightly different approach. The primary purpose is to investigate the perception of hospitality professionals as to which they consider the most important competencies necessary for a successful career, as well as the degree these competencies are developed by hospitality graduates entering the industry.

LITERATURE REVIEW

As previously stated, many scholars have investigated hospitality competencies from an array of perspectives. The following section will provide a definition of what constitutes a competency, an overview of competency models, and a review of the most notable competency studies in hospitality and tourism literature. What is a Competency?

Many competency definitions have surfaced over the years from academic literature. One of the most cited definitions is suggested by Boyatzis (1982: 97) who defines competency as “an underlying characteristic of a person which results in effective and/or superior performance in a job”, whereas Spencer and Spencer describe a competency (1993: 9) as “an underlying characteristic of an individual that is causally related to criterion-referenced effective and/or superior performance in a job or situation”. In a recently published work, Zopiatis (2010: 460) defines competency as “as the personal qualities and talents needed to do a pre-described

job effectively and efficiently according to established quantifiable organizational standards able to meet specific goals.” Competency Frameworks/Models

Competency frameworks have been introduced and utilized by scholars in an attempt to investigate this complex subject from an array of perspectives. Going back more than 50 years, Katz (1955) proposed a model with three distinctive domains; technical, human and conceptual skills. Katz model formed the basis for Sandwith’s (1993) five domain model (conceptual/creative, leadership, interpersonal, administrative and technical), which is probably the most cited framework in hospitality literature (see the work of Tas et al., 1996; Kay and Russette, 2000; Hu, 2010; Zopiatis, 2010). Another framework, the Competing Values Framework (CVF), which emerged from the original work of Quinn et al. (1996), also captured the attention of hospitality scholars and has been extensively utilized in related studies (see the work of Dimmock, 1999; Walo, 2001; Dimmock et al., 2003). Reflecting on four classic models of organizational theory, CVF proposes eight managerial leadership roles: mentor, facilitator, monitor, coordinator, director, producer, broker and innovator. Competency Studies in the Hospitality and Tourism Industry Numerous competencies related studies have been conducted over the years by hospitality and tourism scholars. Nevertheless, despite the quantity, a certain element of caution is necessary when trying to reflect upon the findings and safely reach some conclusions. Factors such as the methodology utilized, the sample size, the geographic location, the conceptual framework applied (if any), and the uniqueness of the particular hospitality environment tend to provide mixed messages even to the most informed hospitality reader. Table 1 (see next page) exhibits nine notable competency studies conducted in the hospitality and tourism industry.

RESEARCH METHODOLOGY

In an attempt to further explore hospitality “success” competencies, and aiming to contribute to the existing body of knowledge, this study purpose is to investigate the perception of hospitality professionals as to which they consider the most important competencies necessary for a successful career, as well as the degree to these competencies are developed by hospitality graduates entering the industry. Reflecting the study’s primary purpose, the following three research questions were formulated:

RQ1. Which competencies are perceived by hospitality professionals as important for career success in the hospitality industry? RQ2. To what degree these competencies are developed by hospitality graduates entering the industry? RQ3. Do the professionals’ perceptions differ with regards to their age, gender, educational background, managerial level and functional/operational area? Following a comprehensive review of existing literature, a quantitative survey was developed in order

to address the three postulated research questions. Thirty competency statements, falling into five competency domains, which are closely related to Sandwith’s (1993) model, were included in the survey. Respondents were asked to provide their perceived level of importance on each of the thirty statements, as well as, the degree to which these competencies are developed by hospitality graduates entering the industry. Finally, the survey includes numerous demographic and other background questions that will enable the researchers to further explore the topic in order to address the third research question.

The research involved input by individuals (n=186) currently holding full-time managerial positions in

hotel establishments in Cyprus, with the utilization of a quantitative survey. Prior to administration, the questionnaires were pilot-tested for reliability with the test-re-test method and for validity with a panel of experts, both from academia and the industry. Minor changes were conducted to the original survey following the comments and suggestions of the experts. The surveys, which were addressed to hotel general managers and two departmental heads, were administered either through the mail or via a direct personalized distribution. Descriptive and inferential statistics - namely frequencies, reliability analysis (Cronbach's Alpha), independent sample t-test, and one-way ANOVA were utilized in analyzing the data and addressing the research questions. Moreover, quadrant analysis was conducted to create a two-by-two matrix of the competencies under investigation based on high or low perceived level of importance and high or low level of perceived development of graduates entering the industry. It is important to note that numerous hospitality studies (see, for example, Zopiatis, 2010; Beldona and Cobanoglu, 2007) have utilized quadrant analysis mainly because it is a “low-cost, easily understood technique that can yield important insights” (Martilla and James, 1977: 79).

Table 1 Competencies Related Studies in the Hospitality and Tourism Industry (Presented in Chronological Order)

Author(s) Year (of

publication)

Population Country Sample Size

Instrument Used

Primary Findings

Tas Richard 1988 Managers of Hotels with more than 400 rooms

USA n=75 Study Specific

Managing guest problems with understanding and sensitivity, maintaining professional and ethical standards in the work environment, professional appearance and poise, effective communication, the development of positive customer and working relations were considered as essential, thus most important.

Tas Richard, LaBrecque Susan and

Clayton Howard

1996 Hotel General Managers

USA n=107 Sandwith’s Model

Interpersonal, leadership and conceptual creative areas were ranked as more important, whereas administrative competencies were ranked in the middle and technical competencies in the lower end.

Beth Chung-Herrera, Cathy Enz and

Melenie Lankau

2003 Senior Level Industry

Executives

USA/ Worldwide

n=137 Study Specific

Self management competency was ranked highest, followed by strategic positioning, implementation and critical thinking.

Christine Kay and Elisa Moncarz

2004 Members of AHLA and FIU

Alumni

USA n=184 Study Specific

Highest importance was placed on human resources management competencies; nevertheless, financial management appeared to be a stronger indicator of top-level success.

Zopiatis Anastasios 2010 Chef Professionals Cyprus n=92 Modified Sandwith’s

Model

The findings revealed that technical (culinary-specific) competencies were considered as most important followed by leadership management competencies. In contrast, conceptual (creative-adaptive) competencies were ranked low by the respondents.

Ciara Nolan, Edel Conway, Tara Farrell

and Kathy Monks

2010

Hospitality Employers and

Graduates

Ireland n=74 Study Specific based on literature

Interpersonal communication and professional knowledge were ranked as the most important competency domains by both hospitality employers and graduates.

Mike Raybould and

Wilkins Hugh

2010

Hospitality Managers and

Hospitality Mgmt Students

Australia n=850 HM n=211 HS

Generic Skills Framework

Interpersonal, problem solving and self-management skills were ranked as most important by hospitality managers. Hospitality management students rated conceptual and analytical competency domains significantly higher than hospitality managers.

Horng Jeou-Shyan, Hsu Hsuan, Liu Chih-

Hsing, Lin Lin and Tsai Chang-Yen

2011 Top Hotel Managers

Taiwan n=25 Study Specific

Leadership, crisis management and problem solving were revealed as the top competency domains.

Koenigsfeld Jason Paul, Joe Perdue, Hyewon Youn, Robert Woods

2011 Private Club Managers

(Members of CMAA)

USA n=596 Modified Sandwith’s

Model

Leadership followed by interpersonal, administrative (accounting), administrative (human resources) and technical (food and beverage) were revealed as the most important competency domains for private club managers.

Additional Reading: Testa, M.R. & Sipe, L. (2011). Service-leadership competencies for hospitality and tourism management. International Journal of Hospitality Management, doi:10.1016/j.ijhm.2011.08.009 (Article in Press).

RESEARCH FINDINGS

The questionnaires were administered to a total of 480 individuals, both Cypriots and non-Cypriots, currently holding full-time managerial positions in hotels in Cyprus. One hundred and ninety (190) questionnaires were completed and returned to the researchers. Four of those were incomplete, thus excluded from the study, reducing the number of usable surveys to 186 (Response Rate = 38.75 %). The following Table shows the demographic profile of the respondents as regards the variables of gender, age, educational background, managerial level and functional/operational area.

Table 2

Demographic Profile of the Respondents Frequency Valid Percentage

Gender Female 42 22.6 Male 144 77.4 Age 18 – 30 years old 24 12.9 31 – 40 years old 93 50.0 41 – 50 years old 42 22.6 Over 50 years old 27 14.5

Educational Background High School / 2 Years College 75 40.3 4 Years College 72 38.7 Graduate Degree (MSc, MA, PhD, etc) 39 21.0 Managerial Level Entry Level – (Supervisory) 30 16.1 Middle Level – (Department Heads) 87 46.8 Upper Level (Top Administration) 69 37.1 Functional Areas Upper Management / Top Administration 70 37.6 Food and Beverage 72 38.7 Rooms Division 29 15.6 Other 15 8.1

Note: n=186 Our first objective was to investigate which competencies are perceived as important by hospitality

professionals for career success in the hospitality industry of Cyprus. Thirty statements, falling into five competency categories (leadership, financial analysis, human resources management, human relations/communication, and operational knowledge) have been investigated. Findings presented in Table 3 suggest that human relations/communication competencies were ranked as the most important competencies, followed by operational knowledge, leadership, human resources management and financial analysis.

In terms of individual competencies “communicating effectively with clients and customers” was

ranked first, followed by “managing guest problems with understanding and sensitivity”, “maintaining professional appearance and poise”, “to follow hygiene and safety regulations”, and “communicating effectively with clients and customers”. The fact that financial analysis competencies were ranked in the last four positions by the respondents in terms of importance is noteworthy.

Similarly, in terms of actual development, human relations / communication was ranked first by the

respondents, followed by operational knowledge, leadership, human resources management and financial analysis. In terms of individual competencies, “communicating effectively with clients and customers” was ranked first, followed by “working as a member of the team”, “to follow hygiene and safety regulations”, “communicating effectively with other employees”, and “maintaining professional appearance and poise”. Despite the similar ranking, differences exist between the perceived importance and the actual development in all five competency categories. The perceived level of actual development of graduates entering the industry is significantly lower than the attributed level of importance, therefore, in order to further clarify this relationship a quadrant analysis was conducted.

Table 3 Descriptive Analysis for the Competency Variables (Importance and Actual Development)

IMPORTANCE ACTUAL DEVELOPMENT

Competency Categories

Mean (Reliability

Alpha Cronbah)

Std Dev

Rank in Category (Overall Rank)

Overall Category

Rank

Mean (Reliability

Alpha Cronbah)

Std Dev

Rank in Category (Overall Rank)

Overall Category

Rank

COMP 1: Leadership (7 items) 4.15 (.783) .469 3 3.76 (.916) .779 3

Directing and supervising the work of others 4.19 .739 3 (14) 3.63 .974 6 (25) Adapting to changing circumstances 4.08 .657 5 (20) 3.47 .998 7 (30) Developing innovative ways to work 3.87 .685 7 (26) 3.65 .971 5 (23) Making decisions under pressure or in crisis situation 4.15 .802 4 (17) 3.81 1.032 3 (16) Staying informed about industry practices and new developments 4.05 .684 6 (22) 3.79 .885 4 (17) Maintaining professional appearance and poise 4.45 .666 1 (3) 4.05 .890 1 (5) Acting in an ethical manner 4.24 .736 2 (11) 3.94 .934 2 (9)

COMP 2: Financial Analysis (4 items) 3.74 (.881) .797 5 3.60 (.905) .874 5

Using financial analysis techniques 3.68 .859 3 (29) 3.50 .914 4 (29) Analyzing factors that influence the controllability of profits 3.76 .839 2 (28) 3.71 .960 1 (19) Using past and current information to predict future dept. revenue and expense 3.84 .956 1 (27) 3.61 1.024 2 (26) Analyzing weekly, monthly, and annual financial and statistical reports 3.68 1.047 4 (30) 3.58 1.059 3 (27)

COMP 3: Human Resources Management (5 items) 4.07 (.784) .642 4 3.65 (.873) .762 4

Motivating employees to achieve desired performance 4.27 .768 2 (9) 3.69 .946 2 (21) Selecting and assigning personnel 3.97 .844 3 (23) 3.68 .966 3 (22)

Appraising employee performance 3.89 .884 5 (25) 3.53 .982 5 (28) Defining and setting up quality standards for employees 4.29 .833 1 (7) 3.69 .856 1 (20)

Providing employees with access to information 3.92 .850 4 (24) 3.63 .922 4 (24)

COMP 4: Human Relations - Communication (7 items) 4.31 (.826) .470 1 4.01 (.940) .764 1

Communicating effectively with other employees 4.40 .582 3 (5) 4.06 .916 3 (4) Communicating effectively with clients and customers 4.50 .668 1 (1) 4.16 .904 1 (1) Communicates effectively both in writing and orally 4.21 .746 5 (13) 3.89 .866 6 (12) Interacts smoothly with a wide variety of people 4.16 .654 6 (16) 3.82 .836 7 (15) Promoting respect and appreciation for diversity and individual differences 4.06 .671 7 (21) 3.92 .791 5 (11) Managing guest problems with understanding and sensitivity 4.48 .737 2 (2) 4.05 .890 4 (6) Working as a member of a team 4.37 .630 4 (6) 4.16 .886 2 (2)

COMP 5: Operational Knowledge (7 items) 4.23 (.850) .526 2 3.93 (.927) .738 2

Using front-office (computer) equipment effectively 4.08 .924 7 (19) 3.85 .898 6 (14) Anticipating guest wants and needs to provide service 4.29 .683 2 (8) 3.97 .952 3 (8) Working knowledge of product-service 4.27 .701 3 (10) 3.92 .924 4 (10) Identifying and defining problems of operation 4.11 .723 6 (18) 3.71 .889 7 (18) Follows hygiene and safety regulations to ensure compliance by organization 4.42 .776 1 (4) 4.15 .933 1 (3) Knowing the realities involved in this type of work 4.21 .653 4 (12) 3.89 .884 5 (13) Knowing the basic terminology used in the industry 4.18 .686 5 (15) 4.03 .726 2 (7)

IMPORTANCE Scale: 1= Not at all important, 2= Unimportant, 3=Neutral; 4= Important; 5= Very Important – Essential; LEVEL OF DEVELOPMENT Scale: 1= Extremely Poor, 2= Below Average, 3=Average; 4= Above Average; 5= Excellent

Quadrant Analysis

In an attempt to further clarify the relationships between the perceived level of importance and the actual development of graduates entering the industry of hospitality competencies, a quadrant analysis was utilized. Quadrant analysis is a popular diagrammatic technique which allows the mean importance and development results to be graphically illustrated on a two dimensional grid. The grid is divided into four quadrants that distinguish competencies according to perceived low and high importance and expressed low and high levels of development. The interpretation of the results is influenced by the cross-hairs used to divide the matrix, exhibited at Table 4 into the four quadrants. As suggested by Martilla and James, (1977) the mean values of 4.14 (median = 4.18) for the importance cross hair line and 3.81 (Median = 3.88) for the development were utilized.

Table 4

Quadrant Analysis: Importance-Development (30 Hospitality Competencies)

IMP

OR

TA

NC

E

LO

W

HIG

H

Quadrant III (High I – Low D) Defining and setting up quality standards

for employees (HRM) Motivating employees to achieve desired

performance (HRM) Directing and supervising the work of

others (LED)

Quadrant IV (High I - High D) Communicating effectively with clients and

customers (HRC) Working as a member of a team (HRC) Follows hygiene and safety regulations to ensure

compliance by organization (OK) Communicating effectively with other employees

(HRC) Maintaining professional appearance and poise

(LED) Managing guest problems with understanding and

sensitivity (HRC) Knowing the basic terminology used in the industry

(OK) Anticipating guest wants and needs to provide

service (OK) Acting in an ethical manner (LED) Working knowledge of product-service (OK) Communicates effectively both in writing and

orally (HRC) Knowing the realities involved in this type of work

(OK) Interacts smoothly with a wide variety of people

(HRC) Making decisions under pressure or in crisis

situation (LED) Quadrant I (Low I – Low D) Staying informed about industry practices

and new developments (LED) Identifying and defining problems of

operation (OK) Selecting and assigning personnel (HRM) Developing innovative ways to work (LED) Providing employees with access to

information (HRM) Using past and current information to

predict future departmental revenues and expenses (FIN)

Analyzing weekly, monthly, and annual financial and statistical reports (FIN)

Analyzing factors that influence the controllability of profits (FIN)

Appraising employee performance (HRM) Using financial analysis techniques (FIN) Adapting to changing circumstances (LED)

Quadrant II (Low I - High D) Promoting respect and appreciation for diversity

and individual differences (HRC) Using front-office (computer) equipment

effectively (OK)

LOW HIGH LEVEL OF DEVELOPMENT OF GRADUATES ENTERING THE INDUSTRY

LED = Leadership Competencies; FIN = Financial Analysis; HRM = Human Resources Management; HRC = Human Relations – Communication; OK = Operational Knowledge.

Quadrant I displays competencies that are perceived by the respondents as low in both importance and actual level of development. Based on the findings, quadrant one includes all four financial analysis competencies, three out of the seven leadership competencies, three human resources management competencies and only one operational knowledge competency. Quadrant II includes competencies that are perceived high in the actual level of development but are perceived low in terms of importance. “Promoting respect and appreciation for diversity and individual differences”, and “using front-office equipment effectively” are the only two competencies that fall into this category. The competencies of “defining and setting up quality standards for employees”, “motivating employees to achieve desired performance”, and “directing and supervising the work of others”, which fall into Quadrant III, require the immediate attention of stakeholders. These three competencies are perceived as important by the respondents however, their actual level of development is low. Finally, Quadrant IV includes fourteen competencies which are considered high in both importance and development. It is important to note that six out of the seven human relations/communication competencies, and five out of seven operational knowledge competencies are included in this category. Differences according to Demographic and other Characteristics

Finally, the study aimed to investigate whether there are any significant differences between the professionals’ competency perceptions of importance and actual development upon entering the industry according to variables such as age, gender, educational background, managerial level and functional/operational area. In order to address this, a number of independent sample t-tests and one-way Analysis of Variance (ANOVA) with post hoc multiple comparison tests (Tukey Honesty Significant Difference) were conducted. The primary results from the comparisons are:

Age: Differences in terms of importance were revealed in the competencies of human resources management (f=3.941; p= .009), human relations / communication (f=4.042; p= .008); financial analysis (f=3.155; p= .026), and leadership (f=7.324; p= .000). In all cases, respondents between 20 and 30 years of age attribute more importance compared to their older counterparts. In terms of the actual level of development, differences exist in all five competency categories. Similarly to the importance ratings, respondents between the ages of 20 to 30 attribute higher levels of actual development in all five categories.

Gender: One significant difference exists suggesting that men attribute more importance to human resources management competencies compared to women (t=3.321; p=.001). No differences were revealed amongst the respondents in terms of the actual level of development of graduates entering the industry.

Educational Background: In terms of importance, significant differences (p<0.05) were revealed in all five competency categories. Overall, respondents with higher academic qualifications attributed more importance to all five categories. Similarly, significant differences were also found in three out of the five competency categories in regards to actual development. Operational knowledge and leadership were revealed as the only categories without a difference.

Managerial Level: Significant differences in terms of importance were revealed in the competency categories of human relations / communication (f=4.950; p= .008), and financial analysis (f=3.165; p= .045). In regards to human relations / communication, respondents holding upper and middle level managerial positions attribute more importance, whereas in financial analysis, respondents holding entry level positions are the ones who attribute more importance. Moreover, differences in two categories, human relations / communication (f=4.576; p= .012) and operational knowledge (f=5.762; p= .004) were revealed in terms of actual development. In both cases differences exist between respondents holding mid-level managerial positions, who perceive a higher level of development, and their upper and lower level counterparts.

Functional / Operational Areas: Three differences exist amongst the respondents according to their operational area in the perceived level of importance of the five categories. In particular, differences exist in human relations / communication (f=5.548; p= .001), operational knowledge (f=3.451; p= .018) and financial analysis (f=6.047; p= .001). In terms of financial analysis, respondents working in the food and beverage division attributed significantly less importance to such competencies compared to their colleagues working in upper management, rooms, and other divisions. Finally, findings revealed no significant differences in terms of actual development in any of the five retained competency categories. The following section of the paper provides a brief discussion of the research findings, including the

likely implications of the findings for the industry’s major stakeholders.

DISCUSSION, IMPLICATIONS AND CONCLUSIONS This study set out to investigate the perceived importance level of hospitality competencies as

attributed by industry professionals in Cyprus. Adding to existing knowledge on hospitality competencies, the study highlights the importance professionals attribute on human relations / communication competencies, and operational knowledge. Moreover, findings of the study, in accordance to Zopiatis (2010) study, fail to reaffirm the notion suggested by numerous scholars (see for example Chung-Herrera et al., 2003; Kay and Moncarz, 2004) that generic management competencies, especially finance, have become more important at the expense of industry-technical knowledge. The fact that financial analysis competencies were ranked extremely low by the respondents is noteworthy.

Special attention should be given to the three competencies which are perceived as important by

industry professionals whereas their actual level of development of hospitality graduates entering the industry is low. Relevant to human resources and leadership, the three competencies should be viewed in relation to formal management development programs and other initiatives. Furthermore, it is important to realize that competencies such as the ability to motivate, direct and supervise others are extremely difficult to nurture in a purely theoretical and academic environment. Empirical engagement in the actual hospitality environment will most certainly enhance the competencies of newly hires towards such operational imperatives.

The study also revealed significant differences amongst the respondents according to demographic and

other characteristics. Interestingly, respondents between 20 and 30 years of age, all members of the newest generation of hospitality professionals, attribute more importance to all competency categories, except operational knowledge. Similarly, respondents with higher academic credentials attribute more importance to all five competency categories. Both findings may suggest a shift towards more westernized beliefs as to the necessity of generic management knowledge in reaching the top echelons of the profession.

These findings should be viewed with an element of caution, in terms of generalization, since they

depict the unique environment of the hospitality industry of Cyprus based on the views of a homogeneous – all full time hospitality managers - sample. Findings may be utilized to enhance the horizons of educators currently developing or delivering related courses, assist students in clarifying current industry demands, and aid hospitality professionals in providing competency-specific training programs, especially to their new hires. Moreover, educators should get the industry involved when it comes to developing or revising the academic curriculum. Academia’s reluctance to engage hospitality professionals in such a crucial function may result in programs incapable of satisfying even the fundamental needs of the industry.

Finally, new knowledge, which has ensued, may inspire academic scholars to further investigate this

topic in their respective professional environment from an array of different perspectives. It is suggested that scholars investigate competencies in relation to both personal (for example, career planning and development) and organizational success (for example, competencies in relation to cultural and management style differences). Finally, continuous vigilance by all stakeholders is crucial in defining, cultivating and promoting the “success” competencies of the hospitality professions in an era of unprecedented changes and uncertainty.

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Managing Human Resources in Hospitality. The Importance of Having Committed Employees.

Ana Machado Sampaio*

ISMAI - CEDTUR, Portugal, [email protected]

Av. Carlos Oliveira Campos, 4470-690 S. Pedro de Avioso, Portugal

Ángeles Lopez Cabarcos Universidad de Santiago de Compostela, España,

[email protected]

ABSTRACT Organizational commitment is an attitude, an orientation towards organizations that connects

or attracts a person identity to the organization. It is a psychological attachment that contributes positively to the overall performance of the organization. The main goal of this investigation is to study organizational commitment in hospitality employees, and organizational justice as predictor and organizational citizenship behaviors as result of it. Through structural equations, it was possible to conclude that organizational justice is related to all three components of organizational commitment, and organizational citizenship behavior results only from affective and continuance commitment. This study shows that if employees feel they are being treated fairly they will commit and part of this commitment will contribute to the development of voluntary behaviors for the benefit of their organization.

Key-words: organizational commitment, organizational justice, organizational citizenship behaviours, hospitality industry.

LITERATURE REVIEW

Organizational commitment is the strength of identification between an individual and the organization (Lee, 1971) and in a competitive environment as today, having individuals that identify and dedicate themselves to the organization is very important (Tansky, Gallagher, and Wetzel 1997). It is a way of being that leads all individuals to act coherently with their beliefs and their involvement with the organization (Mathieu & Zajac, 1990; Meyer & Allen, 1997; Porter, Steers, Mowday, & Boulian, 1974). This psychological link can assume different intensities contributing to the behavioural orientation of the individuals, especially when expectations and quality conditions are not met or do not work (McNeese-Smith, 1996). A committed employee is willing to exert a considerable effort on behalf of the organization and desires to maintain organizational membership (Porter et al., 1974).

With research, organizational commitment was recognized as being a multidimensional

variable (Angle & Perry, 1981; Dunham, Grube, & Castenada, 1994; Mathieu & Zajac, 1990), allowing us to talk about different types of organizational commitment. Meyer & Allen (1984; 1991; 1997) identified and defined affective, continuance and normative commitment. Affective commitment concerns the emotional connection, identification and involvement of the individual with the organization (Mowday, Porter, & Steers, 1982). Continuance commitment is related to the individual’s perception of the existent costs in leaving the organization (Meyer & Allen, 1991; Meyer, Allen, & Gellatly, 1990). Normative commitment is a feeling of duty to the organization, based in norms and personal values (Meyer & Allen, 1997; Meyer & Allen, 1997) It is based on an opinion, a moral obligation of remaining in the organization (Wiener, 1982) and has the tendency to develop when a worker internalizes the organizations’ norms through socialization, receiving the benefits that lead to act reciprocally or to establish a loyalty contract with the organization (Rego, Pina e Cunha, & Souto, 2007). All types of commitment are important but for managers employees affectively committed are the more desirable, since they stay in the organization because they really want (Cha, Cichy, & Kim, 2011; Meyer, Allen, & Smith, 1993). Organizational commitment has been related with: employee behaviors and performance effectiveness; attitudinal, affective and cognitive constructs; characteristics of the employee’s role; and employee’s personal characteristics (Angle & Perry, 1981; Bateman & Strasser, 1984; Porter et al., 1974).

Organizational justice cares about the description and explanation of justice in the workplace

as essential for an efficient functioning of the organizations and for the satisfaction of its members

(Greenberg, 1990). It refers to the study of individuals’ perceptions in an organization (Greenberg, 1987) about the received treatment and their behavioural reaction to these perceptions (Lam, Schaubroeck, & Aryee, 2002). Initially, only two main sources of organizational justice were identified: procedural and distributive justice (Moideenkutty, Blau, Kumar, & Nalakath, 2001; Rego, 2000a). Later, a third component grew in importance, namely interactional justice. Procedural justice cares about the process, about the justice of the means used to reach the ends (Lind & Tyler, 1988; Thibaut & Walker, 1975). It is related with the justice inherent to the decisions that affect employees (Trevor & Nyberg, 2008). The distributive component corresponds to the perceived justice about the amount of compensations that workers receive comparatively to their contributions (Yoon & Thye, 2002). Derived from procedural justice, interactional justice analyses the consideration taken by peoples’ rights, respect for individual dignity or a honest and true relationship among workers, the adequate explanation about the decisions taken (taking into account other peoples’ opinion) and assessments based on accurate and impartial information (Rego, 2000b).

Several authors have studied the influence of organizational justice on organizational

commitment and in its types, trying to collect evidences that lead, in a neutral context, the employee to reinforce his organizational commitment (Colquitt, Conlon, Wesson, Porter, & Ng, 2001; Jamaludin, 2011; Leventhal, 1980; Lowe & Vodanovich, 1995; Restubog, Bordia, & Bordia, 2009). Employees that feel they are being treated with justice have found to be more dedicated and having more emotional delivery towards the organization (Goleman, 1998). According to the literature review, for this study, the following hypotheses were proposed: H1: Organizational justice relates in a positive way with the workers’ affective commitment; H2: Organizational justice relates in a positive way with the workers’ normative commitment; H3: Organizational justice relates in a positive way with the workers’ continuance commitment.

Organizational citizenship behaviors (OCB) are voluntary behaviors not recognized by the

organizational formal reward systems (Chegini, 2009; Organ, 1988). These behaviors, which are discretionary because they go beyond what is formally defined by the organization, promote more efficiency and a better global performance. It is a type of extra-work behavior (punctuality, good and positive presence and attitude, volunteering or helping others) that its presence cannot be enforced and absence penalized (Organ, 1988, 1997). Several conceptually different dimensions of OCB were identified. In their investigation, for example, Van Dyne, Graham, & Dienesch (1994), based on the dimensions found by Graham & Keely (1992) - obedience, organizational loyalty and organization participation-, developed an OCB measure where three forms of participation were found: social, protection and functional (Graham & Keely, 1992; Van Dyne, Graham, & Dienesch, 1994). But as Podsakoff, Ahearne, & MacKenzie (1997) mentioned, managers and researchers still have many difficulties in distinguishing these concepts and agreeing with a core body of dimensions. So, in most part of the studies OCB analyzed as whole.

OCB have been growing in interest as possible results of organizational commitment (Cho,

Johanson, & Guchait, 2009; Johnson & Chang, 2006; Lavelle et al., 2008). According to the literature review, for this study, the following hypotheses were proposed: H4: Affective commitment relates positively with organizational citizenship behaviours; H5: Normative commitment relates positively with organizational citizenship behaviours; H6: Continuance commitment relates positively with organizational citizenship behaviours.

Finally, some authors have found that organizational justice relates positively with OCB

(Fassina, Jones, & Uggerslev, 2008; Hemdi & Nasurdin, 2007; Kim, Ok, & Lee, 2009; Leung, Wang, & Smith, 2001; Moorman, 1991; Nadiri & Tanova, 2010; Wu & Wang, 2008; Zhang & Agarwai, 2009), being its antecedent, so a new hypothesis was proposed, H7: Organizational justice relates positively with OCB.

METHODOLOGY

Participants The population target of study is constituted by 1,995 workers from 47 hotels in northern

Portugal. With several purposes the portuguese government divided the country in seven regions and adopted the Nomenclature of Territorial Units for Statistics (NUTS II). The North is one of the seven regions and was chosen due to its representativeness in tourism sector: not being the largest, it has been a good sample of the country tourism results and behaviors. The requirements were that all hotels had

been rated with four or five stars and had been working for more than a year, since the goal of the study made indispensable the existence of a certain specialization in hospitality management, probably absent from lower category hotels or with less experience /antiquity in market.

Once selected the study population, it was calculated the sample through statistical procedures for finite samples (e=±5%; p=q=0.5; level of confidence = 95%). The process of data collection started in August 2008 and ended in December 2008, obtaining a total of 325 valid questionnaires (162 women and 163 men; 37.7 years on average; 69.8% with non universitary studies; 61% with temporary contract; 7 years of antiquity on average; 82% work in medium size companies).

Procedure After an extensive data search with all the institutions related to the tourism sector and the

portuguese hospitality industry (National Statistic Institute – INE and Portugal Tourism Institute – ITP, Portuguese Association of Hotel Directors - ADHP), a list with all four and five hotels of the northern region was constructed. Every hotel manager was contacted by letter and by email with a presentation of the study and requesting their cooperation. The questionnaire was available online and by paper to all hotel employees. The collection of the questionnaires was made by the research group or by the hotel managers. The data and the hypotheses were analyzed by Structural Equation Modelling (SEM) with AMOS 16 and SPSS 16.0. By using SEM we can test statistically in a simultaneous analysis the whole system of variables to determine the extend to which it is consistent with the data. This technique also allows to incorporate unobserved and observed variables.

Instruments Three different concepts were analyzed – organizational justice (OJ), organizational

commitment (OC) and OCB – and the scales used had been already highly used and had good results in terms of reliability and validity in other Portuguese studies.

Organizational justice was measured with a scale based on the work of Moorman (1991) and

Colquitt (2001) and adapted to Portugal by Rego (2000b). Rego based on bibliography and 57 exploratory interviews with persons from different industries and in different positions, developed 17 items used as a whole related to three basic concepts: distributive justice, interactional justice and procedural justice. Examples of included items are: “In general, the rewards I get are fair”, “My superior shows genuine interest in me”. All items were measured with a Likert scale ranging from 1 (completely false) to 6 (completely true) points.

OCB was measured with a scale developed by Rego (1999) for portuguese organizations

based on Borman & Motowidlo (1993) scale. In total, there were 20 items used as a whole related to four concepts: team spirit, conscientiousness (obedience behaviours and resources protection), spirit of initiative / proactivity and organizational identification / loyalty. Examples of included items are: “When something doesn’t work, I try alternatives that work”, “ I share my knowledge and experience with other organizational members”, “ I encourage friends and family to use the products or services of the organization”. All items were measured with a Likert scale ranging from 1 (It doesn’t apply at all) to 6 (It applies completely).

Organizational commitment was measured with a scale developed from Meyer & Allen

(1997) and adapted to Portugal by Rego (2002b). In this study 14 items analyzed the three components of organizational commitment: affective commitment (AC) – 5 items, normative commitment (NC) – 4 items and continuance commitment (CC) – 5 items. Some of the items included are: “I really care about the future of my organization” (affective commitment); “I feel in dept with my organization” (normative commitment); “I feel I have few opportunities if I leave the organizational” (continuance commitment). All items were evaluated through a Likert scale ranging from 1 (The statement does not apply to me) to 7 (The statement applies completely to me) points.

RESULTS Before analyzing the hypotheses, a study of the psychometric properties of the scales was

performed. Concerning organizational commitment scale, the first step consisted in analyzing the reliability of the scale through Cronbach’s α analysis. The results indicated that three organizational commitment dimensions presented minimum recommend levels of reliability (Hair, Anderson, Tatham, & Black, 1999), not being necessary to eliminate any item – affective commitment (α=0.839), normative commitment (α=0.853) and continuance commitment (α=0.922).

To evaluate convergent and discriminant validity of the dimensions composing the scale, a

CFA was made using estimation through maximum likelihood and bootstrapping to correct issues related to the possible failure of the normality multivariate conditions (Batista-Foguet & Coenders, 2000). The analysis of the convergent validity shows that all indicators loaded in a significant (p<0.001) and substantial way (λ>0.5) their own factors (Steenkamp & Van Trijp, 1991). Moreover, before the discriminant analysis, and as a complement to the reliability analysis done through Cronbach’s α, two additional indicators were calculated to evaluate the reliability of the scale (composite reliability index and extracted variance index [AVE]), surpassing the recommended limits of 0.7 and 0.5, respectively (Fornell & Larcker, 1981). Therefore, the scale’s reliability was considered more than proved. The goodness fit indices of CFA from organizational commitment scale showed acceptable values: (χ2 (g.l.) = 259.162 (68), p 0.000, GFI = 0.902, RMSEA = 0.093, AGFI = 0.849, NFI = 0.915, TLI = 0.913, CFI = 0.935, (χ2 / g.l.) = 3.811.

The variable organizational justice is usually used distinguishing its three basic components

(distributive, interactional and procedural justice), but it is also used as a single global variable, the option for this study. In order to refine the scale, those items whose correlation item-total corrected did not exceed the recommended limit of 0.30 or those items whose elimination allowed to obtain a significant improvement in Cronbach's alpha, were eliminated (Hair et al., 1999). Once the analysis was made, the reliability of organizational justice scale was α = .928.

In relation to OCB variable and based on the recommendations of LePine, Erez, & Johnson

(2002), who made the analysis of previous studies, using OCB as a whole is so appropriate, or even better, than studying the variable in its different dimensions. As in the case of organizational justice, we proceeded to refine the scale obtaining a final Cronbach alpha of 0.87.

Measure model The measure model was estimated taking into account the maximum likelihood criteria and

the bootstrapping technique (Batista-Foguet & Coenders, 2000; Luque, 2000) and introducing the dimensions of organizational commitment – affective, normative and continuance – as obtained from the CFA calculated before. Similarly, we introduced organizational justice and OCB as obtained previously.

The AVE from OCB scale is lower than the recommended, so item VI.59 was eliminated

since the factorial load was lower than 0.5 recommended and, if eliminated, the reliability of the scale was higher enough3. So, the AVE of the scale presented a slightly lower value, but nearby the recommended (Fornell & Larcker, 1981). All other indicators loaded in a significant (p<0.001) and substantial way (λ>0.5) in their respectively factors confirming the existence of convergent validity. Table 1 presents the results of the composed reliability index and AVE of all variables in the model. The discriminant validity was also proved (Table 2).

Table 1 - Composite reliability and AVE

Latent variable Indicator Standardized weights

Standard errors

t ReliabilityComposite reliability

AVE

OJ

II.3 0.787*** 0.035 22.49

0.928 0.926 0.676

II.7 0.753*** 0.038 19.82

II.8 0.856*** 0.027 31.70

II.12 0.828*** 0.035 23.66

II.15 0.872*** 0.023 37.91

II.17 0.831*** 0.041 20.27

AC

III.18 0.550*** 0.051 10.78

0.839 0.873 0.633

III.19 0.597*** 0.054 11.06

III.21 0.809*** 0.030 26.97

III.22 0.761*** 0.046 16.54

III.27 0.851*** 0.034 25.03

NC

III.24 0.831*** 0.035 23.74

0.853 0.873 0.633 III.25 0.784*** 0.026 30.15

III.26 0.835*** 0.033 25.30

III.28 0.727*** 0.035 20.77

CC

III.20 0.748*** 0.037 20.22

0.922 0.916 0.690

III.23 0.678*** 0.040 16.95

III.29 0.940*** 0.015 62.67

III.30 0.944*** 0.018 52.44

III.31 0.809*** 0.028 28.89

OCB

VI.44 0.705*** 0.049 14.39

0.864 0.865 0.480

VI.46 0.684*** 0.046 14.87

VI.49 0.679*** 0.048 14.15

VI.50 0.589*** 0.050 11.78

VI.51 0.705*** 0.039 18.08

VI.55 0.732*** 0.040 18.30

VI.57 0.743*** 0.043 17.28

***p<.001.

Table 2 – Discriminant validity

Latent variables Confidence intervals (Covar)2 Latent variables Confidence intervals (Covar)2

AC-NC 0.549; 0.757 0.426409 NC-OJ 0.236; 0.448 0.116964

AC-CC -0.147; 0.125 0.000121 NC-OCB 0.080; 0.380 0.052900

AC-OJ 0.363; 0.587 0.225625 CC-OJ -0.342; -0.082 0.044944

AC-OCB 0.385; 0.677 0.281961 CC-OCB -0.327; -0.095 0.044521

NC-CC 0.079; 0.315 0.038809 OJ-OCB 0.172; 0.452 0.097344

The goodness fit indices of the model present acceptable values: χ2 (g.l.) = 883.214 (304), p

0.000, GFI = 0.833, RMSEA = 0.077, AGFI = 0.793, NFI = 0.858, TLI = 0.886, CFI = 0.902, (χ2 / g.l.) = 2.905.

Structural model Once proved the reliability of the convergent validity and discriminant validity of the scales,

an analysis to the hypotheses was done estimating the model through the maximum likelihood model. The dependent variables (endogenous) are affective, normative and continuance commitment and OCB, and the independent variable (exogenous) is organizational justice. The scales included in the path analysis were the ones obtained in the measure model. In practice there are several alternatives to test this type of models, but the one chosen consists in proposing an initial model, that, if not fitting well to the data, starts to be modified until reaching an acceptable fit (Del Barrio & Luque, 2000). So, the more conventional approach is applied and is based on specification, identification, estimation, fit evaluation, re-specification and interpretation (Kaplan, 2000).

The goodness fit indices showed that the model does not fit in a correct way to the data,

leading to its re-specification (Chi square= 122.125; g.l. 4; p=0.000; GFI=0.881; RMSEA=0.302; AGFI=0.554; NFI=0.675; TLI=0.192; CFI=0.677; χ2/g.l.=30.531).

After doing that, the estimation results indicate that the relation between organizational justice

and OCB doesn’t result significant (γ = 0.016; t = 0.24), rejecting hypothesis H7. The same situation occurs with the relation between normative commitment and OCB (γ = -0.031; t = -0.56), rejecting hypothesis H5. The other relationships are significant, although the relation between organizational justice and continuance commitment and the relation between continuance commitment and CBO have opposite sign than expected in the raised hypotheses. The estimation of all parameters is in Table 2.

Table 3 - Structural model estimation

Standardized weight Standard error t

OJ AC

0,468*** 0,0479,

96 OJ CC -0,179** 0,058 -3,09 OJ

NC 0,343*** 0,046

7,46

AC OCB 0,540*** 0,057

9,47

CC OCB -0,139** 0,053 -2,62

*p<.05; **p<.01; ***p<.001.

The results indicate that organizational justice explains 22.1% of affective commitment,

12.0% of normative commitment and 3.5 % of calculate commitment of hospitality workers in northern Portugal. Additionally, affective and calculate commitment explain 33.0% of organizational citizenship behaviours.

Concerning the model fit, despite Chi square value continues to be significant, it’s necessary

to take into account that sample sizes bigger than 200 have the tendency to penalize the model fit, converting it into an unreliable indicator (James, Mulaik, & Brett, 1982). All fit indexes are inside the established boundaries: χ2 (g.l.) = 2.555 (3), p 0.000; GFI = 0.997; RMSEA = 0; AGFI = 0.984; NFI = 0.993; TLI = 1; CFI = 1; (χ2 / g.l.) = 0.120. R2 of each endogenous variable is: R2 (CC) = 0.035, R2

(CA) = 0.221, R2 (CBO) = 0.330, R2 (CN) = 0.120.

DISCUSSION Affective commitment and normative commitment showed to be related with organizational

justice, so the hypotheses H1 and H2 from the proposed model were proved. The relationship between continuance commitment and organizational justice showed to be significant, although with the opposite sign than expected in the raised hypotheses, so H3 was not proved. It is possible to assume that organizational justice is a good predictor of affective, normative and continuance commitment, as several other authors have proved before (Chai-Amonphaisal & Ussahawanitchakit, 2008; Hendrix, Robbins, Miller, & Summers, 1998; Hopkins & Weathington, 2006; Meyer et al., 1993). The reason for the lack of positive relationship between continuance commitment and organizational justice can, in this case, be justified by the sample characteristics. In Portuguese hospitality industry people have low levels of training, high turnover rates and very discrepant wages, so their perception of organizational justice is not probably the variable that more contributes to the feeling of having to commit towards the organization due to the lack of alternatives.

According to Blau (1964) and the principle of reciprocity, people react and interact with the

organizations that benefit them. When workers realize that they are receiving positive actions from the organizations, they relate more intensively and feel the duty of answering with the same type of committed behavior. For Greenberg (1996) people behave in an altruistic way to the organization if they believe they are being treated fairly and will continue in the future. In terms of practice, managers who search to promote and maintain a fair environment can expect to have committed employees and by that waves of good feelings inside the organization, dedication, search for perfection and also creation of role models that other workers tend to imitate. This reality is positive for the organization in many different ways, for example the clients’ perceptions of the service.

OCB are crucial to efficiency and efficacy, innovation, performance and the flexibility needed

in organizations (Organ, 1988; Pierce, Gardner, Cummings, & Dunham, 1989; Walz & Niehoff, 2000). Some researchers have also proved the relation between organizational commitment and OCB (Morrison, 1994; O’Reilly & Chatman, 1986; Organ & Ryan, 1995). Specifically, there is empirical evidence that affective commitment is a good predictor of OCB (Gautam, Dick, Wagner, Upadhyay, & Davis, 2005). The more they feel connected with the organization (for example, because they feel they are being treated with justice), more behaviors in favor of the organization they will show. On the other hand, when employees feel they have no other job alternatives beyond the organization, they tend to develop more OCB as a security mechanism: they work late without expecting rewards, they help colleagues or they behave in benefit of the organization (McFarlin & Sweeney, 1992). According to the literature, the hypothesis H4 was proved. The hypothesis H5 from the proposed model could not be proved, since the relationship between normative commitment, namely, the sense of moral duty to stay in the organization and OCB could not be tested. In the same way, the relationship between continuance commitment and OCB showed to be significant, although with the opposite sign than expected in the raised hypotheses, so H6 was not proved. The reason to justify this is again related with the characteristics of the people in the sample, which show low levels of training and high turnover rates. This explains that only those who develop bonds of affective commitment are willing to carry out OCB. Other reason can be related to the difficulty that still exists in differentiating what is and is not a discretionary behavior.

The final hypothesis of the model was the relation between organizational justice and OCB.

The empirical study proved that organizational justice wasn’t related with this type of behaviors: H7

could not be proved. Managers can not expect the employees to go beyond was is a functional obligation just because they are being treated with justice. They will do what is in their competence but to go further, more emotional bonds have to be promoted.In literature the results have been very different. Moorman et al. (1993) in a study conducted with television workers could not test the relation between the two variables, however other authors found some positive, although weak, results, since not all the components of organizational justice were related to OCB (Moorman, 1991). As mentioned in literature review, OCB are more susceptible to be the influenced by attitudes (organizational commitment or job satisfaction) than by perceptions (organizational justice). Tansky (1993) concluded that justice perceptions had overall influence in job satisfaction and in organizational commitment but didn’t have a direct impact in OCB (Podsakoff & MacKenzie, 1993). The effects of the first variable over the second were moderated by job satisfaction. According to Organ (1994) this relation could get stronger if moderating variables were included, since people can react differently to situations of (in)justice. One of these moderators proposed in the literature is personality characteristics (Rego, 2002).

CONCLUSIONS

The importance of the tourism activity to the nations has been gorwing and htis is possible to understabd by the number of studies appearing concerning different variables. Although starting more with financial and economic concerns, managers now recognize that the study of human resources is equally or even more important. Hospitality industry is continuously modifying and is highly competitive – the differentiation is more and more difficult. In a service context, with the intabgility and heterogeneity, having human resources committed and feeling they are being treated fairly can lead to positive behaviors on behalf of the organization that in turn will contribute to a better global performance, reaching the desiring differentiation and loyalty. Employees are more capable of managing promptly and willingness the processes involved. With this research it was possible to prove that employees that feel they receive the right amount of rewards, that the procedures of defining these rewards and the relationship established with managers is fair, influences their connection and their feeling of duty and gratitude towards the organization. Affective commitment plays an important role in influencing extra-role behaviors that benefit the organizationa, from the employees. With the emotional connection established between organizaton and employees, altruistic behaviors can occur and benefit the first. Portuguese hospitality employees have specific characteristics that didn’t allow to prove any other relationship.

LIMITATIONS

This study has some limitations. The principal one is that this research has used data collected from a single-sitting self-report measure, so the dependent and independent variables have been informed by the same person and at the same time. This causes a bias associated with the measurement method (Campbell & Fiske, 1959). To avoid this common problem in social studies, several procedures have been carried out to minimize the effects of this problem and assess its scope. Firstly, we used validated and tested scales in other studies previously in order to eliminate a potential ambiguity of the items (Podsakoff & MacKenzie, 1993). Secondly, managers of the hotels told the participants of the study that their responses would be treated anonymously so they should answer them honestly, but some can still doubt. Thirdly, the dependent variables of the study were located after the independent ones, avoiding or minimizing the influence of consistency artifacts (Salancik & Pfeffer, 1977). According to Podsakoff and colleagues, these procedures should reduce the feeling of the participants to be evaluated, making less probably they answer based on the perception of the desires (or research aims) of the interviewer. Finally, we used the test by a factor of Harman (1967) to estimate the bias of common method variance. If there is a common variance in the data, the solution non-rotated of a exploratory factor analysis with all the variables of the study (51) reflects the existence of a single factor that explains most of the variance (Christmann, 2000). The results of this factor analysis revealed the existence of ten factors with eigenvalues greater than one, that explain 70.5% of the total variance, being the explained variance by the first factor of 25,4%. These results show that the bias associated with common method variance is a problem not too relevant in this work.

Facts to take into account for future lines of investigation are to considerer some variables as

possible moderators and conduct the same study in other regions in order to compare results.

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‘Don't think there aren’t crocodiles because the water is calm’: A study of workplace conflict narratives from the Malaysian Hotel industry

Authors: Jing Jing Lee and Lyn Glanz* Glion Institution of Higher Education Les Roches-Gruyère University of Applied Sciences,

Rue de l'Ondine 20,CH-1630 Bulle Switzerland, [email protected]*

Abstract

Who takes responsibility for dealing with conflicts that arise in the cross-cultural world of hospitality? This paper reports on a study aimed at exploring if there are cultural and style differences in the management of workplace conflicts evident in narratives of 5* hotel property employees in Malaysia. The qualitative research investigated workplace conflicts searching for evidence of cultural characteristics and conflict management styles that occurred at a dyadic level conflict process (Korsgaard, Jeong, Mahony and Pitariu 2008). A conceptual framework was built based on Rahim’s (2011) Dual Concern model and Kozan’s (1997) Three Cultural Models of conflict management. These models were then tested through narratives collected, with Hofstede’s dimensions of culture (1991) applied to distinguish cultural characteristics throughout the study.

KEY WORDS: Hospitality, Conflict Management, Culture, Malaysia, Narratives

Introduction Employees in the hospitality industry today are exposed to boundless interaction and communication with

people from different lifestyles and cultures. Within that interaction, the development, expression and resolution of conflict may vary from culture to culture (Ramirez 2010; Doucet, Jehn, Weldon, Chen, & Wang, 2009;Brew, and Cairns, 2004; Miyahara, Kim Shin & Yoon, 1998 ). This study will first investigate research into conflict in hospitality, and then look at conflict episodes, to explicit their meaning in the workplace context. It will consider the process resulting from interpersonal tension within the same team due to individual differences (Passos & Caetanol, 2005) so that dyadic interactions (Korsgaard et al, 2008) are the focus of the study. In addition, sense making (Weick, 1995) plays a significant role in the manifestation of conflict process in terms of each individual’s inference process of “naming” and “blaming” leading to negative emotions and conflict management responses (Korsgaard, et al, 2008) - considered as fundamental to conflict processes. Outcomes of conflict management - described as managers’ adoption of approach to conflict handling within the workplace setting (Lipsky & Avgar, 2010) are also considered.The study adopts a narrative approach to test evidence of the elements contained in Rahim (2002) and Kozan’s (1997) conflict management models to attempt to provide valuable information for conflict management in a multicultural working environment.

The study of conflict in hospitality literature Conflict is an acknowledged issue in the hospitality industry. Research into an industry that relies very

heavily on human capital inevitably focuses on all aspects of human interaction. The ‘right’ employee is seen as fundemental to hospitality operations, with the potential to augment the chance of success for organisations (Davidson, 2003; Karatepe et al.2009) so there is considerable research on employee turnover in hospitality (Ryan, Ghazali,and Mohsin, 2011; Tracey and Hinkin, 2008 Moncarz et al.2009;) where inter employee conflict, along with stress, often appears as an implied factor but tends to be relegated to a minor factor when related to poor working conditions and compensation antisocial work hours, poor training, and dysfunctional customer behaviours. Work has been carried out on conflict and stress arising especially in customer encounters, related to emotional labour and burnout (Kim, 2008, Dormann and Zapf, 2004, Pizam, 2004; Morris and Feldman, 1996 Krone et al 1989). Relationship conflict is said to decrease hospitality employees' satisfaction and psychological well-being. (Medina et al 2005) Some research suggests good working relationships with colleagues on the other hand, (Vieira, A. 2005) can mitigate turnover intent and have impact in delivering the brand promise (Punjaisri et al.2008). However, not all authors agree with the concept of highly efficient, well motivated teams in the hospitality industry. Both Ingram et al (1997) and Richards et al (2012) found that inter-group conflicts are endemic to teams in the hospitality industry . Richards et al propose that ‘teamwork in the hospitality industry results in a paradox for employees, who typically view teamwork as a form of control. Employees are presented with the language of teamwork, yet continue to work in a highly individualised and somewhat antagonistic environment’(Richards, Chillas, and Marks, 2012.pp237).

Grandey et al (2010) has identified differences in informal rules and norms relating to the control of displaying emotion in relation to ‘targets’ i.e customers versus co-workers that suggest co-workers may be in receipt of higher level emotion including anger (Fitness, 2000; Sloan, 2004) than customers in workplace encounters.Conflict as an element in the functioning of teams (Lichtenstein et al 2004) and in relation to the relationship with superiors has been explored. The importance of managerial support (He, Li, and Lai, 2011) in employee commitment as well as more negative managerial behaviours( Law et al 1995; Faulkner and Patiar 1997) suggest the management of conflict within organisations could be significant to the organisational health of companies. There are specific studies of the aggressive behaviors of supervisors or coworkers in the workplace, (Ben-Zur and Yagil, 2005; Grandey et al 2002), bullying (Murray-Gibbons and Gibbons, 2007) sexual harassment (Lu, and Kleiner, 2001,) and communication barriers arising from the diversity of cultures involved in a global industry (Madera 2011).

Conflict definitions, process and levels There is no all-inclusive definition about conflict (Rose, Suppiah, Uli, and Othman, 2007; Nair 2008) and

among definitions offered some have been strongly generalized, or in contrast, intentionally designed to suit specific research interests (Rahim, 2011). A well used definition of conflict is that of a process in which one party perceives that its interests are being opposed or set back by another party (Buelens, Van Den Broeck, Vanderheyden, Kreitner and Kinicki, 2006). Conflict researchers have often defined the term in reference to Pondy’s (1967) conflict episode theory which suggests the stages of conflict as being: latent conflict; perceived conflict; felt conflict; manifest conflict and conflict aftermath . In his early work, Pondy (1967) saw conflict as a transitory interruption in the life of organisations but then on reflection (1989) postulated that conflict was in fact the inherent state for organisations with co-operation being fleeting and impermanent. In research in this area, then, conflict’s role as a ‘natural’ state in organisations has underpinned research (Rahim 2011; Kozan 1997; and Bakhare 2010) both as as a potentially disruptive occurrence e.g on relationships (Lipsky & Avgar, 2010;Ford et al 1975) with dysfunctional conflict threatening organizational interests (Buelens et al., 2006) or potentially constructive e.g.in thriving group work performances (Passos & Caetano, 2005).

Bakhare (2010) classified intergroup conflict categories into three main categories, on the basis of

organisational levels being the organizational, group and individual conflicts. Subsequently, each categories were then differentiated into inter and intra subcategories, for instance, intergroup and intragroup conflicts. Korsgaard, et al (2008) model breaks up any grouping of conflicts into three specific levels, namely the individual, dyadic and team level,providing more in-depth analysis into the antecedent phenomenon at each level. Moreover, the research explores into the emergence of conflict by having the process divided into three stages of factors - inputs, behaviour, sense making process (Korsgaard et al., 2008).

Both Pondy’s (1967) and Korsgaard et al., (2008)’s models illustrate coherent and corresponding understanding of a conflict emergence process. First of all, conflicts arise with the beginning of latent conflicts, which prompts individuals or parties to participate in constructing stereotypes or emotional involvements. Acting as a review of antecedents prior to an emergence of conflict, these stages contain factors that are grouped based on Deutsch’s (1949) structural model of conflict, the task characteristics and social context, which are congruent to influencing each stage of the process. Dovetailing into this theory is the more comprehensive Inputs-behaviour-sense-making model, which groups conflicts into three levels, namely the individual, dyadic and team level (Korsgaard et al., 2008). In this model conflict participants then engage in the sense making process, where naming and blaming take place, which then leads to the emergence of conflict (Korsgaard, et al., 2008). This paper will consider conflicts that emerge between two individuals i.e dyadic level..

Conflict Management If conflicts are managed effectively, it is said to be a way to enhance work performance, which then leads to

attaining business goals (Nicolaides, 2007). If conflicts are handled ineffectively, considered dysfunctional conflict, it is then seen as having negative impacts on an organization, for example in terms of labour relations and productivity (Chan, Huang and Ng, 2007). Conflict management involves designing effective strategies to minimize the construction of dysfunctional conflicts and enhancing the construction of functional conflicts (Rahim, 2002). Rahim’s Dual Concern Model (2002) of conflict management styles has been applied by many conflict management researchers (Ahmed, Nawaz, Shaukat & Usman, 2010; Rahim and Psenicka, 2002; Desivilya & Eizen, 2005) and is promoted as a theory to manage organisational conflict (Rahim, 2002); problem solving and bargaining strategies for managing interpersonal conflict (Rahim and Psenicka, 2002) and as an intergrated framework of intra-team

conflict management patterns to investigate conflict management in work teams (Desivilya and Eizen, 2005). Kim, Wang, Kondo and Kim (2009), have also applied this model conducting similar research to study conflict management styles in East Asian countries. The model consists of the two basic dimensions: concern for self and concern for others (Rahim, 2002; Rahim, 2011). In the model Rahim (2011) has identified five interpersonal conflict management styles: 1.The Integrating or problem solving style involves collaboration between parties; 2. The Obliging or accommodating style has a strong element of self-sacrifice on the part of one party, who acts as a “conflict absorber” (Rahim 2011); 3. The Dominating or competing style, indicates a high concern for self and low concern for others; 4. The Avoiding or suppression style, indicates a low concern for both self and others and results in sidestepping conflict issues; 5. The Compromising style indicates an intermediate concern for self and others and involves give-and-take or sharing approaches to conflict management. The dependability of the model has been criticised (Sorenson, Morse and Savage 1999), for its solitary focus on instrumentality and it also a model rooted in Non-Asian, mostly Western perspectives. The Dualistic Model of Harmony (Leung, Koch and Lu, 2002) has since been established, acting as a supplement to the usual dual-concern model, elaborating on the Confucian concept of harmony which is useful for application in conflict management studies especially in Asia.

Kozan’s (1997) conflict management model introduces three conflict management cultural sub-models namely the Harmony, Confrontational and Regulative Models. Each model has different characteristics that are identified through different elements illustrated in a conflict process (Kozan, 1997). So as an example, in the behaviour element, three different manifestations are predicted depending on which of three conflict resloution styles-(harmony);confrontation and compromise(confrontation) and avoidance or forcing(regulative)- is ascendant. Eight elements are mapped against the three conflict management styles. Although Kozan’s (1997) model may be relatively outdated as compared to Rahim’s (2011) model which is still repeatedly applied in recent conflict management studies, Kozan’s (1997) still appears to be one of the most effective models for studying conflict management styles across culture, providing its comprehensiveness in uncovering each element of each conflict management type in a conflict process.

Conflict and Culture The standard dimensions used in research studies into cross cultural conflict remain Hofestede’s cultural

dimensions. According to Hofstede (1991) values and cultures are deeply interlinked to each other. His model identifies four cultural dimensions, namely power distance(PDI), individualism(IDV), masculinity(MAS) and uncertainty avoidance(UAI). In addition, a fifth dimension, long-term orientation which is based on Confucian dynamism was added later (Hofstede and Bond 1988)but it was not applied on Malaysia.

Many have considered Hofstede’s model as the most comprehensive and straightforward in its measurement of national culture (Lim, 2001). Although criticised (e.g.Jackson 2011), the dimensions have been so widely applied in relation to cross cultural studies and retain currency in current research because of their continued revision and application. As this paper concerns conflict narratives drawn from a Malaysian sample and so it is useful to consider Hofstede’s dimensions for the country despite the difficulties arising from Hofstede somewhat overlooking the subcultures that occur within nations (Bhopal & Rowley, 2005). Hofstede’s research indicates that Malaysia has the highest score of PDI. This means that in Malaysia’s organisational context, there is a high distance between members that are powerful and members that are powerless. The second highest score for Malaysia is its MAS implying more competitive and assertive values, followed by UAI. In terms of UAI which is a little lower than average, in between being the uncertainty accepting and avoiding cultures, Malaysia seem to have a balance between two. Therefore, they may be rule-oriented, emotional but but at the same time, also tolerance to opinions that differ to what they were used to, and less expected to express emotions when faced uncertainty Lastly, the model shows the lowest score among all in terms of individualism. This indicates that the Malaysian generally values peace and harmony, a relatively strong collectivist country (geert-hofstede.com 2009).

Methodology

The main purpose of the research was to test conflict model elements in a sample group with a specific focus on individuals’ perceptions and meaning of specific workplace conflict situations. The study of narratives, which are known as an experience told in a sequence way (Saunders, Lewis & Thornhill, 2009) was adopted. This study looked for the presence of elements of existing Rahim (2002) and Kozan’s (1997) models in the narratives of conflict between dyads. Narratives were seen as particularly suitable as a means to capture sensemaking moments within emerging conflicts. In sensemaking, apparently random moments of revelation can quickly invalidate long held belief and behaviour as a consequence of countless variables. Weick (1995) accepts the methodological

problems this causes but suggests noticing, manipulation, interpretation and framing are all legitimate ways helping others understand the actions of people in everyday life. Referents and accounts are given when a moment in the process of evolving is ‘frozen’ (Glanz 2003) and could give insights into the naming and blaming sensemaking process described in Korsgaard, et al.’s model (2008). .

The study was carried out in Malaysia and data was collected from multicultural employees in a five-star hotel in Kuala Lumpur. Eight responses and a total of nine stories were successfully collected. Following a short (3 participants) pilot study to check interview questions for length etc, the first approach taken was to conduct interviews in electronic interviews through emails followed-up by telephone interviews. All telephone interviews and follow-up interviews were audio recorded and transcribed. Participants were asked to tell two stories of workplace conflict that they had witnessed between two other employees. Five semi-structured questions were added to help participants to describe an incident: 1)How would you describe the participants? (Personality, performance, attitude, experience…) 2.What was the conflict about and how did it arise? 3)What happened? (Emotions, actions, reactions involved…)4)How was it resolved?5)What other comments do you have about the conflict management part of your story? Please be as descriptive as possible.

In their answers participants were encouraged to use whichever of three languages that they felt most comfortable with (English, Malay or/and Chinese) and these were subsequently translated.. The narratives collected were first transcribed. Then, data were examined for culture values and conflict styles evidence. Subsequently, the cultural characteristics identified were categorized by adopting Hofstede’s (1991) cultural dimension model, and the conflict management styles were categorized by elements of Rahim’s (2011) and Kozan’s (1997) conflict management models. Considering the complexity of Kozan’s (1997) model, a matrix table was drawn up after categorization examples as shown in Table 1. Subsequently, result patterns were analyzed and further compared with Hofstede’s cultural values for interpretation and comments.

Results First cultural aspects were identified in the narratives. In terms of Power Distance Index (PDI), many stories

showed evidence of a strong PDI phenomenon within the conflict process. For instance, participant 6A was described as a person who “follows instructions given by 6B”, “conflict still ongoing, feels frustrated and being treated unfairly, yet he is still working in harmony with 6B after the conflict”. Next, in a different setting, participant 7B was narrated as “friendly with people of the same job level but not towards colleagues of the lower levels”. This shows some congruence with Hofstede’s (2009) high PDI ranking for Malaysian society (2009).

A suggestion of a strong Uncertainty Avoidance Index (UAI) was also distinguished in participant 6A and 6B. To elaborate, although it was clearly something was wrong in the working relationship between the two, Narrator 6 stresses on the point that there were no intentions of breaking the ice, voicing up for themselves or discussing the grudge in the relationship that was touched upon. Thus, both participants seem to have a low acceptance of uncertainty. Further, participant 7A also chose to resign from his duties instead of clarifying the upset relationship he had with participant 7B (Narrator 7 indicated that many people felt that 7B was not at all trying to resolve the conflict but had an intention of laying off 7A). In this case possibly 7A was trying to avoid the uncertainty of being laid off, thus “solving” the issue by resigning.

Referring back to the case of participants 6A and 6B, the masculinity (MAS) dimension was also said to have played a role in that specific conflict situation that was initially categorized as an UAI situation. Chiefly, it may be due to 6B, who takes a more assertive stance than the other. Subsequently, in terms of individualism (IDV), considering Hofstede’s perception of Malaysian being the collectivist country (geert-hofstede.com 2009), congruencies were evidenced in this research to his study, for instance both participants 6A and 7A did not want to bring up dissatisfactions during the conflict, possibly values strong ties when working in group to preserve harmony.

However, some results from the research differed from Hofstede’s cultural dimension model of Malaysia. For instance, Hofstede indicated that there is a high notion of collectivism in the Malaysian culture. Contradictorily, there was still high individualist evidence identified from participants such as 6B, 8A and 8B. 6B was said to “always work according to her own way” likewise not appreciating the tie with the group, whereas 8A and 8B working individually due to the different priorities in working styles. Responses were next analysed in relation to Rahim’s (2011) Dual Concern Model. Narrative evidence was found when analysing the conflict process at dyadic level that could be categorized into Rahim’s (2011) five conflict styles. Examples of these are given below:

A strong integrating style was identified from Participant 1A and 1B in the first story. “So what happened after that was they went into that same parameter, of what we've discussed, meeting at 2.30pm and eventually talking to each other, they eventually became very good friends, they are now working together actually, after many years…… And they are still working together today…”.

A Dominating style was then illustrated by participant 7B, when Narrator 7 describes the process as “7B gets angry and started to scold 7A in front of his staff members for more than 30 minutes and explain how stupid he was. He also threw things 7A. He did not resolve the issue went around the company gossiping about it”. Also: “It was rather a silent conflict, having things going in both participants’ mind”. This is an avoiding style evidence referred to participants 2A and 2B. In addition, “none of them voiced up after the incident about any dissatisfaction…. until the promotion of 2A to another department”. From here, a strong avoiding style was subsequently implied on participant 2A again, for her strong indication in “see no evil, hear no evil, speak no evil” by just leaving the department without any resolution to the situation (Rahim, 2011, p.28).

The Compromising style was also strongly evidenced from participants 6A and 6B when they were involved a give-and-take situation. According to Narrator 6, “In the end, they had to talk to each other anyway… to solve the problem … but it wasn’t until the very last minute… 6B talked to the client, and 6A waited for the payment”, which constituted a no-win/no-lose style (Rahim, 2011).

The evidence presented has shown strong fit of distinguishing hotel workers’ conflict management styles with Rahim’s (2011) categorization method. Despite its much generalised concept which added on its frequency of being applied in related study field (Ahmed, Nawaz, Shaukat & Usman, 2010; Rahim and Psenicka, 2002; Desivilya and Eizen, 2005) it was of interest to have found no evidence for an obliging style among the nine narratives collected. In the context of Hofstede’s cultural studies, it could be postulated that this might be due to specific characteristics of Malaysia’s collective nature.

Next storytelling responses were mapped and analyzed in relation to Kozan’s (1997) Three Cultural Models of Conflict Management. To identify any patterns in elements identified in the conflict process, the 9 collected stories were firstly mapped against the model in separate tables. The patterns distinguished were then presented in the model again and shown in the form of a matrix as illustrated in Table 1. In general, the approach in collecting storytelling narratives produced a wide range of diversity according to Kozan’s (1997) comprehensive cultural-based conflict management model. Based on storytelling evidence presented in Table 1, it shows a distinctive variance of each element’s matrix figure. Certain elements appeared more often than others. For instance, “emotion” and “behaviour” appeared highly influential in the structure of storytelling. This means that many participants who were involved in dyadic level conflict situations tend to see those elements as more influential and therefore demonstrate them, making them more identifiable. “Thoughts” and “antecedent conditions” appear to be important elements, followed by “outcome criteria”.

Surprisingly, the “nonmanagerial third party” element was found not to have appeared at all among any of the conflict process stories analysed. The element discussed among the eight narrators, but the nonmanagerial third parties discussed were merely people who they talked to, having non-conflict-management related intention such as participant 5B’s intention of “gathering opinions from other people”, and in the scenario of story 9 where peers’ roles were “bad-mouthing” or “manipulating gossips”. Ultimately, they did not allow themselves to be directly involved in the conflict, only as a “secondary role” of the story. This shows that people generally do not consider that element as an effective one to consider while managing conflict. Reflecting on Hofstede’s study, this might be due to Malaysia as a country high in UAI, in which they may restrict or avoid non-managerial intervention to be involved in the situation since they prioritize the avoidance of uncertainties.

Moreover, in terms of conflict management style pattern’s distribution across the matrix, “emotions” were discussed rather equally in Harmony and Confrontational styles. In contrast, “outcome criteria” shows most prevalence in its strong discussion in Harmony conflict management style. Although there remains a mixture of components from other Confrontational and Regulative styles, the Harmony style still predominated the general matrix pattern.

PARTICIPANTS’ CONFLICT MANAGEMENT PATTERNS Story 1 Story 2 Story 3 Story 4 Story 5 Story 6 Story 7 Story 8 Story 9

Conflict Process Elements 1A 1B 2A 2B 3A 3B 4A 4B 5A 5B 6A 6B 7A 7B 8A 8B 9A 9B

Antecedent conditions C H C C C R C C - - R R - - C C C C

Thoughts C C Ch C C - C - H R H C H C - - C C

Emotions C H H C C C H C C C/R H C/R H C/R C C C C

Behaviour C hC H H C R C R H R H R H R C C C C

Outcome criteria C/R H HC - H - H - H H H H - - H H cH cH

Non-managerial third parties - - - - - - - - - - - - - - - - - -

Managerial Intervention H H H H C - - - H H - - - - H H C C

Third-party emphasis C C H H C - H - C C - - - - C C C C

MAJORITY (Conflict Management Style)

C H H C-H C R H C H R H R H C-R C C C C

Table.1. Response matrix based on Kozan’s (1997) model

7

Similarly, “managerial intervention” displayed a steong showing of Harmony style conflict management. Although this element was not identified in some of the stories, it is worth the discussion together with “outcome criteria” as it complies substantially with Hofstede’s indication of Malaysia being a collectivist country.

“Third party emphasis” element was also highlighted the Confrontational model. In this case, an individual emphasis third party intervention in conflicts as a reasonable and fair approach in solving conflicts. This is also congruent to Hofstede’s perception of due to a high PDI in Malaysia, where it was further demonstrated by referring to stories 8 and 9 which consists of the Chinese, Indian and Malay Malaysian culture. In this case, it also fits into Weick’s (1997) study in terms of the “social” sense making property, where senesmaking relies on reference to others, either real or imagined.

Conclusion The main purpose of the study was to explore if there are cultural and style differences in the management of

workplace conflicts through the exploration of narratives of Hotel employees in Malaysia. Four objectives were created to achieve the aim of the study. First of all, the first objective was to investigate into intragroup conflict process at dyadic level through narratives of workplace conflicts. Then, the second and third objectives were to identify evidence of cultural characteristics and conflict management style within a dyadic level conflict process. And lastly, to test Rahim (2011) and Kozan’s (1997) conflict management style models by seeking evidence of the models in workplace narratives.

The first objective has found out that the narratives of workplace conflicts did contribute to the investigation into intragroup conflict process at dyadic level. Evidence was found all four cultural dimensions of Hofstede’s cultural dimension model (2009). The exploration of the dimensions appear to indicate that within a conflict process, hotel employees in Malaysia tend to display cultural characteristics that are highly related to the concept of power distance and uncertainty avoidance.

Ultimately, both Rahim (2011) and Kozan (1997)’s model were reviewed in evidence of model elements that are able to crucially distinguish conflict management style of an individual. Thus, it was found that for the applied model of Rahim’s (2011), four out of five conflict management styles were found evidenced from the series of analysis on narratives collected. However, dominating and compromising styles were found most prevalent to the study. This is because both styles were evidenced from the population closest to the selected samples for the study. Given the findings also show fit with Hofstede’s suggested cultural dimensions, it appears that Malaysians display conflict handling style that fits with known cultural characteristics.

In regard to Kozan’s (1997) cultural-based conflict management model, evidence was found that of all elements in the conflict process were managed to be identified from the narratives collected. Findings found that “emotions” and “behaviour” elements were found most prevalent while identifying one’s conflict management style. There were also interesting findings, for example a main exception in the last reported element, “nonmanagerial third parties”. Among the nine stories collected from a diverse population which even have crossed the study scope to other nationalities, there were no individuals who considered that particular element in a conflict process to assist in managing conflict.

To conclude, this study’s approach has indicated an extensive overview of conflict process, conflict management and the cultural indications on how a conflict management style was “allocated” to an individual. Although this sample size is not large enough to make recommendations on industry practice, in general, it may be said that any individuals working in the multicultural hotel working environment should never overlook the importance of culture associated with an individual’s conflict management style.As mentioned, this research was conducted with a relatively small sample to study on cross cultural conflict. Therefore, future researchers should consider and extended size of sample for a better grasp of a specific culture to be analyzed in a more in-depth basis. A larger study over a longer timeframe could also provide a wider range of workplace conflicts to be collected, creating a more extensive view of workplace conflict stories to be more deeply examined.

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Employing Migrant Workers in the Hospitality Sector – a Strategy for Gaining Competitive Advantage?

Dr Hania Janta* School of Hospitality and Tourism Management

Faculty of Business, Economics and Law University of Surrey, Guildford GU2 7XH, UK

Email: [email protected] (*Corresponding author)

Dr Peter Lugosi

Oxford School of Hospitality Management, Faculty of Business Oxford Brookes, University, Gipsy Lane, Oxford OX3 0BP

Email: [email protected]

Dr Lorraine Brown School of Tourism, Bournemouth University,

Fern Barrow, Poole, Dorset BH12 5BB Email: [email protected]

Prof. Adele Ladkin School of Tourism, Bournemouth University,

Fern Barrow, Poole, Dorset BH12 5BB Email: [email protected]

In 2004, Great Britain became a destination for many Central and Eastern European nationals, who are a supply of labour for a number of low-paid sectors including hospitality. While foreign workers are seen as a source of competitive advantage – enhancing creativity, companies’ image and contributing to knowledge transfer while cutting costs, they also raise issues that are fundamental to hospitality and beyond. Their host language fluency and cultural backgrounds not only impact on customers’ satisfaction, but they also open critical debates about social inclusion and exclusion. In this study, we use qualitative findings to understand migrants’ views on their contributions to the sector. We examine issues surrounding work ethic, aesthetic labour and knowledge – elements that contribute to competitive advantage. Keywords: Migrant Workers, Work Ethic, Skills

HOSPITALITY AND LANGUAGE1

Leanne Schreurs, MA Lecturer of Spanish

Saxion Hospitality Business School Kerklaan 21, 7301 GC Apeldoorn, The Netherlands

[email protected]

ABSTRACT Social sustainability within the hospitality industry is perhaps most evidently manifested in the

communication between host and guest. It is therefore surprising that the sociolinguistic approach of hospitality has been underexposed to date. The current research introduces a sociolinguistic model of hospitality, offering a starting point for future hospitality research. The model specifies how hospitality in a social relationship can be achieved by means of linguistic expressions. A social relationship is defined in terms of the factors power, distance, respect and solidarity. The particular configuration in terms of these factors determines which linguistic expressions are to be used in order to achieve the desired grade of politeness, which, in turn, determines the extent to which hospitality is experienced.

Key Words: grade of politeness, hospitality, linguistic expressions, modern foreign language education.

INTRODUCTION Saxion Hospitality Business School set out to study the concept of hospitality from different

perspectives. Herewith, the central question is: “What is hospitality?”. The currently proposed PhD project aims to formulate an answer to this question from a sociolinguistic point of view. More specifically, hospitality will be studied on the basis of linguistic expressions.

Among the most distinguished linguistic expressions are the forms of address, such as the personal pronoun ‘you’. Schreurs (2006) studied the Colombian literature of the early 20th century, and discovered eight different forms of address which were found to be related to politeness. To formally model this apparent association between forms of address and politeness, Schreurs and De Jonge (in prep) introduced a ‘grade of politeness system’. Herewith, the grade of politeness expressed in a social relationship is thought to be related to the factors power, distance, respect and solidarity. The desired grade of politeness determines the choice for a specific form of address. In the proposed PhD project, this process is linked to hospitality. Specifically, the project aims to explain how linguistic expressions between host and guest influence the experience of hospitality.

The remainder of this paper is divided into four parts. First, the relevance of the PhD project for both the hospitality industry and the modern foreign language education is elaborated upon. Second, the proposed sociolinguistic model of hospitality and its theoretical underpinnings are introduced. Third, the research questions and methodology of the PhD project proposal are presented. Fourth, and finally, the implications of the model for hospitality research and the hospitality industry are discussed.

BACKGROUND OF THE PHD PROJECT

Problem Definition Over the past decades, corporate social responsibility has become an important topic within the

hospitality industry. Herewith, a strong emphasis is placed on ecological sustainability: a thrifty way to handle resources, such as energy, water and raw materials. However, social sustainability - to carefully deal with people - is also an important part of corporate social responsibility, yet has received considerably less attention. Social sustainability within the hospitality industry is perhaps most evidently manifested in the communication between

1This short paper is based on a PhD project proposal entitled “Hospitality and language. Linguistic expressions of hospitality in Spanish and English.” The proposal is written for the Hospitality Business School of Saxion University of Applied Sciences in cooperation with the University of Groningen. Both institutions are located in The Netherlands.

host and guest. It is to expect that the more the guest will experience hospitality by language, the more successful the entrepreneur in hospitality industry will be. It is therefore surprising that, to date, the sociolinguistic approach of hospitality has been underexposed.

The sociolinguistic approach of hospitality also offers an opportunity for the education of future hospitality professionals. The hospitality industry is pre-eminently a sector that is strongly determined by linguistic and cultural diversity. In addition, it is to be expect that diversity will play an increasing role due to increasing internationalization and migration (Hooghe, Trappers, Meuleman & Reeskens, 2008). Consequently, in order to successfully prepare future hospitality professionals for the field, an important task of hospitality educators is to teach students linguistic and cultural skills and knowledge.

On the whole, in the actual modern foreign language education, priority is given to teach grammar and to increase students’ vocabulary. However, for future hospitality professionals to be successful, learning the semantic meaning of formulas of politeness in the modern foreign language is not sufficient. The following example illustrates this:

In a study of semantic and pragmatic equivalents of formulas of politeness in Spanish and French (Sevilla Muñoz & Sevilla Muñoz, 2005), French-speaking students were asked about the peculiarities of Spanish. It turned out that the Spanish say gracias (thank you) in relatively less situations than the French use the equivalent merci. Back in France, after a long-term stay in Spain, the French students used merci with less frequency than before their stay in Spain. A similar investigation with Spanish students confirmed the contrary, namely, during a long-term stay in France their use of merci increased.

This example clearly illustrates that, in order to successfully educate students for their position as hospitality professional, it is not sufficient to teach students solely the meaning of words in a modern foreign language (cf. merci = gracias). To use the modern foreign language in a proper way, students must, in addition, be aware of the influence context has on the meaning of a word.

The languages under investigation are Spanish of Spain and English of Great Britain. These are the forms of Spanish and English that are most commonly taught in European higher education institutions. In Spanish, different forms of address are utilized which may be related to communicative strategies of hospitality. This differentiation is not present in the English language. If it is true that Spanish has different forms of address that are not used in the English language, it might be that English uses other strategies to express hospitality. The PhD project tries to find out whether this is indeed the case, and if so, which alternative communicative strategies are employed. Objective

The objectives of the PhD project are fourfold. First, the research attempts to give meaning to the

concept of hospitality from a different, linguistic point of view. Second, the research aims at providing insight into the relationship between language and the experience of hospitality. Third, the research intends to use the acquired knowledge to optimize modern foreign language education. Fourth, the research strives to contribute to the optimization of the experience of hospitality within the hospitality industry.

THEORETICAL BACKGROUND

A Sociolinguistic Model of Hospitality To accomplish the abovementioned objectives, a sound theoretical basis must be provided. Figure 1

introduces a sociolinguistic model of hospitality. This model might offer a starting point for future hospitality research. The model aims to specify how hospitality in a social relationship can be achieved by means of linguistic expressions.

The combination of the characteristics of the speaker (e.g. social class, gender and age) and those of the receiver is thought to determine to what extent their relationship is characterized by power (Brown & Gilman, 1960), distance (Brown & Levinson, 1987), respect (Schreurs & De Jonge, in prep) and solidarity (Brown & Gilman, 1960). The particular configuration of these factors determines which specific grade of politeness is desired, and therefore also which linguistic expressions are most appropriate2. This necessary fit between a social relationship and its linguistic expressions is displayed in figure 1 as a balance. As an example, within the social relationship between guest and employee of a hotel reception in Spain, it might be most appropriate to use the

2Linguistic expressions refer to the appearance of a linguistic aspect, such as forms and terms of address (e.g. you, proper names, Mr., Mrs.), particles, intervals and turns, as well as prosodic aspects such as pitch, velocity of speech, stress and loudness.

formal form of address usted. However, in the interaction between the same employee and his colleagues, the informal form of address tú is considered to be more appropriate.

Figure 1. A Sociolinguistic Model of Hospitality.

As can be seen from the central place of grade of politeness in figure 1, this concept will play a key role

within the PhD project. By relating the factors power, distance, respect and solidarity to politeness, politeness seems to be part of the’ hostility-kindness dimension’. To be more specific, politeness partly overlaps hostility and kindness (see figure 2). Depending on the context, grade of politeness can lean towards either hostility or kindness. For example, when the social relationship is marked by power, politeness leans more towards hostility than to kindness. When the social relationship is marked by, for example, solidarity, politeness leans more towards kindness than towards hostility. The experience of hospitality is supposed to be optimal when the linguistic expressions used within a social relationship correspond with the relationship, resulting in an optimal grade of politeness (cf. leaning towards hostility or towards kindness). Further investigation will test the validity of this assumption.

Figure 2. Politeness related to Hostility and Kindness. Literature

Theories about politeness will be used (e.g. Brown & Levinson, 1987 and Watts, 2003) as well as

theories about power and solidarity (e.g. Brown & Gilman, 1960). Besides, literature about sociolinguistic variation and change (e.g. Trudgill, 2002 and Labov, 1994-2010) and the semiotic from sign to text approach of Tobin(1990) plays a role in the PhD research. But also literature about communication and human behavior (e.g. Diver, 1974 and 1995 and Diver, Huffman & Davis, 2012) and about speaker intentions is used to solve the research problem. With relation to the English part it refers to the cooperative principle and the four maxims of Grice (1975, 1989) and Leech (1983), with relation to the Spanish part to Haverkate (1984).

Social relationship

Optimal grade of politeness

Linguistic expressions

Hospitality

Receiver

Power Distance Respect Solida rity

Power Distance RespectSolida rity

Speaker

Hostility Kindness

Politeness

RESEARCH QUESTIONS AND METHODOLOGY The discipline of sociolinguistics studies the relation between language, culture and society. This is

done with different research methods. Within the current PhD research, corpus research, experimental research and typology research are used in order to answer the following questions.

1. How is hospitality expressed by linguistic expressions?

1a. How does this work in Spanish? 1b. How does this work in English? 1c. What are the similarities and differences between these two languages? To formulate an answer to the first main question, the distribution of linguistic expressions of

hospitality will be investigated by text analysis. This quantitative analysis will be done with the help of a Spanish and English speaking corpus3. In linguistics a corpus is a collection of linguistic expressions, for example written or spoken texts. The present corpora are available on-line and offer the opportunity to do a specific search for words and their meanings and contexts. The linguistic expressions will be investigated in written theater performances out of the period 1980-1990.

2. How do linguistic expressions influence the experience of hospitality?

2a. How does this work in Spanish? 2b. How does this work in English? 2c. What are the similarities and differences between these two languages?

To formulate an answer to the second main question, the causality between linguistic expressions and the experience of hospitality will be tested. Experiments will be set up in which subjects are placed in a scenario and are addressed with different linguistic expressions. Afterwards, by means of a questionnaire, the experienced hospitality of the subjects in the different conditions will be measured. Finally, a typology research comparing Spanish and English will provide for an overview of the linguistic expressions of hospitality used in both languages.

3. What is the most appropriate method to pass on knowledge of the PhD research to modern foreign language

education and the hospitality industry? To formulate an answer to the third main question, a didactic analysis of methods of passing on

intercultural understanding will be performed. This will include a literature review in the field of didactics of Spanish and English.

DISCUSSION

Implications for Hospitality Research The academic relevance of the PhD research is twofold. First, the concept of hospitality is investigated

on the basis of linguistic expressions. To date, linguistic expressions are understudied in hospitality research. Second, the research relates theoretical insights with empirical evidence of characteristics of communicative strategies in Spanish and English. In this way, it contributes to an intercultural understanding of hospitality.

Implications for the Hospitality Industry

The relevance of the PhD research for the field is also twofold. First, it gives an advice to higher

education institutions how to integrate the gained insights concerning linguistic expressions of hospitality in the modern foreign language education. The hospitality industry will benefit indirectly as graduates take knowledge of the field. Second, the field benefits directly as an etiquette of language will be written which is not available to date.

3Respectively Corpus de Referencia del Español Actual, see http://corpus.rae.es/creanet.html, and British National Corpus, see http://www.natcorp.ox.ac.uk/

Hospitality industry can also benefit from the gained insights by making their employees aware of the effect of language on hospitality, for example, by means of a training. Finally, the implementation or adaptation of a communication protocol of, for example, the reception of a hotel, can be realized.

REFERENCES

Brown, R. & Gilman, A. (1960). The pronouns of power and solidarity (3rd ed.). In: T.A. Sebeok, (Ed.). Style in Language (pp. 253-276). Cambridge, MA: Massachusetts Institute of Technology.

Brown, P. & Levinson, S.C. (1987). Politeness: Some Universals in Language Usage (18th ed.). Cambridge: University Press.

Diver, W. (1974). Substance and value in linguistic analysis. Semiotext(e), 1, 13-30. Diver W. (1995). Theory. In: E. Contini-Morava & B. Goldberg, (Eds.). Meaning as Explanation: Advances in

Sign-Based Linguistics. Berlijn: Mouton de Gruyter. Diver, W., Huffman, A. & Davis, J. (2012). Language: Communication and Human Behaviour: the Linguistic

Essays of William Diver. Leiden: Brill. Grice, H.P. (1975). Logic and conversation. In: P. Cole & J. Morgan, (Eds.). Syntax and Semantics, 3: Speech

Acts (pp. 41–58). New York: Academic Press. Grice, H.P. (1989). Studies in the Way of Words (SWW). Cambridge MA: Harvard University Press. Haverkate, H. (1984). Speech Acts, Speakers and Hearers: Reference and Referential Strategies in Spanish.

Amsterdam/Philadelphia: John Benjamins Publishing Company. Hooghe, M., Trappers, A., Meuleman, B. & Reeskens, T. (2008). Migration to European countries: A structural

explanation of patterns, 1980–2004. International Migration Review, 42 (2), 476-504. doi:10.1111/j.1747-7379.2008.00132.x

Labov, W. (1994-2010). Principles of Linguistic Change. Oxford: Blackwell. Leech, G. (1983). Principles of Pragmatics. London: Longmans. Schreurs, L. (2006). Las formas de tratamiento en la obra de Tomás Carrasquilla (1858-1940). Estudio sobre el

español colombiano antioqueño. (unpublished manuscript, to consult via: http://www.frederieke.com/scriptie.pdf).

Schreurs, L. & De Jonge, R. (in prep). Las formas de tratamiento en el siglo XVIII: Estudio sobre el español colombiano antioqueño.

Sevilla Muñoz, J. & Sevilla Muñoz, M. (2005). La equivalencia semántica y pragmática de las fórmulas de cortesía. Found on 23rd of November 2011 on the internet: http://cvc.cervantes.es/trujaman/anteriores/febrero_05/01022005.htm

Tobin, Y. (1990). Semiotics and Linguistics. London/New York: Longman. Trudgill, P. (2002). Sociolinguistic Variation and Change. Washington: Georgetown University Press. Watts, R.J. (2003). Politeness. Key Topics in Sociolinguistics. Cambridge: University Press.

Assessing Effects of Acculturation on Service Failure Responses: Insights from Australian-Chinese Consumers

Karin Weber* Associate Professor

School of Hotel & Tourism Management Hong Kong Polytechnic University

Hong Kong SAR, China E-mail:[email protected]

Beverley Sparks

Professor Griffith Business School

Griffith University, PMB 50, GCMC, 9726, QLD Australia

Cathy Hsu Professor

School of Hotel & Tourism Management Hong Kong Polytechnic University

Hong Kong SAR, China

* Corresponding Author

Abstract Drawing on acculturation theory, the purpose of this study was to identify differences in perceptions of and responses to service failures among Chinese consumers who have lived for extended periods in a Western culture, and in the process have adopted different acculturation strategies. Utilizing an experimental design, data was collected from 600 ethnic Chinese who resided in two major cities in Australia. Their perceptions of a service failure were ascertained, with particular consideration of the impact of the location of the service failure (Australia versus Mainland China) and the occasion (family versus business) Results indicate significant differences among respondents, depending on the extent of their acculturation., that need to be considered by service providers targeting multi-cultural customers. Keywords: Acculturation, Chinese consumers, service failure

A Better Hospitality Industry in the United Arab Emirates: Nationalisation in Rotana Hotels

Olga Kampaxi, Dr Lecturer

Cesar Ritz Colleges Englisch-Gruss Strasse 43

CH 3902 Switzerland

[email protected]

ABSTRACT

With a strong emphasis on Nationalisation in the private sector from the United Arab Emirates Government, Rotana Hotels launched the Duroob Programme, to attract more GCC Nationals. With the Emirate population being a minority in their own country (Al-Ali, 2008) and every sector government or private competing for the best, a challenging task was at hand. The Emiratis for various reasons ranging from social, cultural, working conditions are not attracted to join the hospitality sector. Emiratisation percentages achieved by the hotel industry in 2006 as reported by The National Human Resource Development & Employment Authority (TANMIA, 2007) have achieved less than 1% in relation to their manning. Despite an internal quota, Rotana was still struggling to meet the target of two per cent. This paper explores the Nationalisation journey of Rotana Hotels, lessons learnt, and ways to overcome the challenges.

Key words: Emiratisation, Hospitality, Nationalisation, Employment Practices, Retention, Rotana Group

A STUDY OF EMOTIONAL LABOUR OF FAST FOOD EMPLOYEES

Dr. Hazrina Ghazali* Lecturer

University PUTRA Malaysia Serdang, Selangor, Malaysia

[email protected]

Nurhasmilaalisa Abdul Halim Tutor

University PUTRA Malaysia Serdang, Selangor, Malaysia [email protected]

and

Yap Sing Yee

Student University PUTRA Malaysia Serdang, Selangor, Malaysia

[email protected]

Abstract

This study aims to investigate the level of agreement on emotional labour strategies that include standard scripts, dress code and acting. A survey questionnaire used to underpin this study and 170 respondents participated in this study. Data were analysed by using SPSS and findings found that the use of standard scripts, dress code and acting had from moderate to high level of agreement on employees’ emotion. Results also found that standard scripts helped employees to better understand about customers and improve their social skills. Fast food employees agreed that dress code enable them to be more sociable and lead more strengths than weakness. Results also revealed that acting assisted fast food employees to satisfy the customer requirements. Key Words: Emotional labour; Standard scripts; Dress codes; Acting; Fast food industry; Kuala Lumpur

INTRODUCTION

Emotional labour is relatively a new concept that has only been given attention in recent years. Fundamentally, emotional labour is the responsibility of service staff in managing their emotions, feelings and behaviours in workplace (Diefendorff & Richard, 2003). They were expected to be an actor in order to convey the positive emotions, such as friendliness and kindliness to enhance customer loyalty and experiences (Ashkanasy, Hartel & Daus, 2002; Hochschild, 1979; Kim, 2008). The frontline workers who engaged in emotional labours are required to handle the feelings of their customers and themselves (Hochschild, 1983). For example, they are required to presenting smiles, creating eye contacts and performing real caring to customers’ demands. Nevertheless, they should not always display their actually emotions and feelings whereas they have to reveal the emotions that more benefits to the establishment and less consider their true feeling (Hochschild, 1983; Groth, Hennig-Thurau and Walsh, 2009). This study arises because majority of the researches were in done in other countries especially in Western countries. In Malaysia, researches on ‘emotional labour’ has not yet widely explored. The most helpful piece was done by Motaghi-Pisheh and Harianto (2011). They carried out research about emotional labour of employee hotel in Penang, Malaysia and found that surface acting was the primary factor of various kinds of workplace violence. On the other hand, this current research aimed to investigate the influences of emotional labour strategies, such as standard scripts, dress code and acting on emotion management of fast food employees. Accordingly, the specific study objectives were ; a) to determine the relationship of employing the standard scripts towards emotion management of fast food employee ; b) to identify the relationship of dress codes towards emotion regulation of fast food employee and to distinguish the relationship of acting towards emotion adjustment of fast food employee.

LITERATURE REVIEW

Standard Scripts

One of the alternatives to monitor employees who have higher interactions with customers is by introducing a general guideline like scripts. Scripts have been widely applied in service industry (Hubbert, Sehorn and Brown, 1995; Schank and Albelson 1997; Volden and Johnston, 1999). Nottenburg and Shoben (1980) explained that scripts of restaurants anywhere in the world are almost identical, yet the primary distinction was the technique to manage the scripts. For example, major script norms of employees in fast food restaurant were greetings guests at the entrance and counter, taking order, offering and suggesting menu, accepting payment, preparing food and expressing thank to customers (Hsu and Chiang, 2010). Script referred to a generalized episode that was effective for producing a stereotypical situation (Schank and Abelson, 1997). On the other hand, it can be viewed as the sequence of actions which an individual should performed for ensuring the certain event to take place (Alberson, 1981; Pryor and Merluzzi, 1985). Dress Codes

Dress code of an organization can be exemplified as uniform wear by employees when they are

performing duties. Associational uniforms are not only encompass the dress like shirts, blouses, skirts and pants but also included artifact, such as name card, ornaments and smock linen over garment (Rafaeli and Pratt, 1993). Frequently, dress code integrates the process of transferring the enormous vary of indescribable meanings through nonverbal cues (Damhorst, 1990). Thus, it is an effective instrument to convey an individual’s characteristics, personality, emotions, and behaviours to others (Stone, 1962). In view of that, Solomon (1987) acknowledged that the investments of institutions in the aspect of worker’s attires are approximately achieving billions of dollars every year. Dress code is the most noticeable feature of an establishment (Ludicke, 1990). It portrayed the image of the establishment and also improved the organization overall presentation (Nelson and Bowen, 2000). They futher elaborated that code of dress played the significant role in process of constructing brand identity of an establishment. It was a powerful tool to convey the organization concepts and values to customers. Similarly, suitable uniform enables the employees to be more sociable and easier to carry out their duty (Laptisky and Smith, 1981; Lennon and Miller, 1984). Acting

Act can be defined as an action of role playing to pretend the expression of certain behaviour

(Hyperdictionary, 2009). In other words, acting can be illustrated as sacrifice of truthfully convey their true self (Stomer and Devine, 2008). Principally, Hochschild (1983) recognized that employees perform emotional labour practice through two techniques including surface acting and deep acting. Surface acting is emphasises on the external behaviours which including the imitating the ideal emotions through verbal and nonverbal cues while the inner feelings remain constant. In detail, surface acting requires staffs carefully to present the emotions that not actually being felt. It incorporates the process of faking and exaggerating the external attitudes and behaviours without modifying inner feelings. Therefore, there are contradictions between their reveal behaviour and felt emotions. This scenario has taken place because of the actions of management to restrain the display emotions of employees by rules. Furthermore, deep acting is stresses on the inner feelings when employees strive hard to regulate their actual emotions and behaviours (Hochschild, 1983). Deep acting integrates the suppression of inner feelings and also careful consideration of their felt emotions (Beal et al, 2006; Motaghi-Pisheh and Harianto, 2011).

METHODOLOGY

This study employed a quantitative approach and respondents were selected by a convenience sampling. Prior to data collection process, permission was obtained from the managers on duty and respondents were given a full explanation about the research and confirmed the information gathered was solely for the purpose of the study. A total of 200 questionnaires were distributed to employees who were currently worked at selected fast food outlets which located in the shopping mall within Klang Valley. A 170 usable responses were returned for analysis accounted for 85 percent response rate. The development of the survey questionnaire was based on study done by Seymour (2000). The questionnaire consisted of four parts. Part A of the questionnaire included questions on the usage of standard scripts and Part B was to identify the relationship of

dress codes toward employee’s emotion. In Part C, questions asked on the aspect of acting or authenticity. Lastly, Part D included questions on employee’s personal information. Respondents were requested to specify their level of agreement based on the 5-point Likert scale in the questionnaires where ‘1’ equals to ‘strongly disagree’ and ‘5’ equals to ‘strongly agree’.

FINDINGS

The sample includes a higher number of males (56.5 percent) than female employees (43.5 percent). Majority of respondents were between 21 years old to 29 years old (64.7 percent) and followed by those aged below than 20 years old (28.2 percent). The analyses of survey were done using Statistical Package for Social Science (SPSS) version 19. Findings found that the use of standard scripts, dress code and acting had from moderate to high level of agreement on employees’ emotion. Descriptive results found that standard scripts helped employees to better understand about customers as well as improve their social skills. The result showed that standard scripts improved interpersonal skills of employees and further assisted them to be aware of customers’ requirements in order to convey the high quality services. Similarly, fast food employees agreed that dress code enable them to be more sociable and subsequently lead more strengths than weakness. Result of this study are consistent with the perceptions of Laptisky and Smith (1981) as well as Lennon and Miller (1984) that employees are able to build up more friendliness and pleasurable companionship with customers through proper dress codes. Finally, result also revealed that acting assisted fast food employees to satisfy the customer requirements. The details of the results are shown in Table 1.

Table 1 Mean Score and Standard Deviation of Respondents

Dimension Items Mean Standard Deviation

Standard scripts Provide me better understanding about the customers’ behaviors

4.09 0.752

Improve my social skills 4.09 0.827 Decrease my ability to communicate with the customers

3.48 1.116

Dress codes Enable me to be more sociable 4.1 0.71 Construct a sense of self concept 3.78 0.853

Acting Develop the mutual understanding between customers and me

3.99 0.73

Assist me to satisfy the customer requirements

3.99 0.75

Enable me to provide personalized services

3.99 0.726

Cause me lose my own personality 3.59 1.030 Note: 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, 5 = strongly agree

CONCLUSIONS The concept of ‘emotional labour’ has not received very much attention yet in Malaysian fast food

industry. From a managerial perceptive, this study shed light by providing information on ‘emotional labour’ and managing employee emotions. Firstly, higher agreement levels on practical functions of emotional labour strategies indicated that standard scripts, dress codes and acting should be practised to enhance the service quality and customer satisfactions. Secondly, effective recruitment system is the essential procedure to select right job candidates who suite with the professions. Ang et al, (2010) recommended that one of the dominant techniques is to request the job applicants to undergo personality test or emotional intelligence test during interview process. Higher ranking of emotional intelligent indicates that they are performing deep acting (McShane and Von Glinow, 2010). Thus, they have higher capability to cope with their inner feelings and display behaviours. On the other hand, higher grading of personality test will signify that they have strong affirmative characteristics and affectivity (Chu, 2002). Kim (2008) drawn that managements should hire individuals who possess higher extraversion but lack in neuroticism because they have adopted deep acting and able offer more sincere and faithfulness services. In short, management can evaluate the actual behaviours and attitudes along with the ability to manage their emotions via personality and emotional intelligence tests. Apart from that, leaders should be educated to direct their employees’ emotions, empower their subordinates, manage customer complaints and offer responses to customers via proper modes (Chu, 2002). In fast food industry context, managers should always understand and recognize emotional dedication of employees through proper

compensation or reward. For instance, Ang et al. (2010) declared that salary and wages of employees should be always based on their painstaking efforts. Likewise, incentives and promotional opportunities should be proposed to employees who have outstanding performances. As this study is believed to be the first such study in the Malaysian fast food context, the findings, it is hoped will help the managers at the head offices to plan crucial strategies in managing their employees and ultimately help the employee not only to improve their job performance but also deliver quality service to customers. The results from this study potentially may be used to help fast food employees to better manage their emotion when deals with customers.

REFERENCES

Abelson, R. P. (1981). Psychological status of the script concept. American Psychologist, 36(7), 715-729. Ang, M. C. H., Supinah, R., Japang, M., & Nasah, C. R. J. (2010). Service with a smile: A human resources

perspective of emotional labor. Retrieved July 19, 2011, from http://eprints.ums.edu.my/2834/1/ar0000000050.pdf

Ashkanasy, N. M., Hartel, C. E. J., & Daus, C. S. (2002). Diversity and emotion: The new frontiers in

organizational behavior research. Journal of Management, 28(3), 307-338. Beal, D. J., Trougakos, J. P., Weiss, H. M., & Green, S. G. (2006). Episodic processes in emotional labor:

Perceptions of affective delivery and regulation strategies. Journal of Applied Psychology, 91(5), 1053-1065.

Bitner, M. J. (1995). Building service relationships: It’s all about promises. Journal of the Academy of

Marketing Science, 23(4), 246-251. Chu, P. C. (1997). Actors and scripts: Object-oriented simulation of enterprise systems. Journal of Systems and

Software, 37(3), 187-199. Damhorst, M. L. (1990). In search of a common thread: Classification of information communicated through

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two paradigms. Oraganization Studies, 10(4), 503-530. Diefendorff, J. M., & Richard, E. M. (2003). Antecedents and consequences of emotional display rule

perceptions. Journal of Applied Psychology, 88(2), 284-294. Gross, E., & Stone, G. P. (1964). Embarrassment and the analysis of role requirements. American Journal of

Sociology, 70(1), 1-15. Hsu, T. H., & Chiang, C. Y. (2010). Script comparisons during service encounters in fast-food chains. Tourism Hubbert, A. R., Sehorn, A. G., & Brown, S. W. (1995). Service expectation: The customer versus the provider.

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85(3), 551-575. Hochschild, A. R. (1983). The managed heart: Commercialisation of human feeling. Berkeley, CA: University

of California Press. Hyperdictionary. (2009). Act. Retrieved June 25, 2011, from

http://www.hyperdictionary.com/search.aspx?define=act Kim, H. J. (2008). Hotel service providers’ emotional labor: The antecedents and effects on burnout.

International Journal of Hospitality Management, 27(2), 151-161.

Lapitsky, M., & Smith, C. M. (1981). Impact of clothing on impressions of personal characteristics and writing ability. Home Economic Research Journal, 9(4), 327-355.

Leidner, R. (1993). Fast food, fast talk: Service work and the routinization of everyday life. Berkeley, CA:

University of California Press. Lennon, S. J., & Miller, F. G. (1984). Salience of physical appearance in impression formation. Home

Economics Research Journal, 13(2), 95-104. Ludicke, S. C. (1990). 90s uniforms project image to guests. Lodging, 4, 77-78. Nelson, K., & Bowen, J. (2000). The effect of employee uniforms on employee satisfaction. The Cornell Hotel

and Restaurant Administration Quarterly, 41(2), 86-95. Schank, R. C., & Abelson, R. P. (1997). Scripts, plans, goals and understanding: An inquiry into human

knowledge structures. Hillsdale, NJ: Lawrence Erlbaum Associates. Seymour, D. (2000). Emotional labor: A comparison between fast food and traditional service work.

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interactionist approach (pp. 86-118). New York: Houghton Mifflin. Stormer, F., & Devine, K. (2008). Acting at work: Facades of conformity in academia. Journal of Management

Inquiry, 17(2), 112-134. Solomon, M. R. (1987). Standard issue. Psychology Today, 21(12), 30-31. Pryor, J. B., & Merluzzi, T. V. (1985). The role of expertise in processing social interaction scripts. Journal of

Experimental Social Psychology, 21(4), 362-379. McShane, S. L., & Von Glinow, M. A. (2010). Organizational behavior: Emerging knowledge and practice for

the real world (5th ed.). Boston: McGraw-Hill. Motaghi-Pisheh, M. H., & Harianto. (2011). Investigating the occurrence of workplace aggression of front-line

staff of hotel industries in Penang Island by assigning emotional labour as predictor. Retrieved June 23, 2011, from www.eurojournals.com/IBBA_10_15.pdf

Nottenburg, G., & Shoben, E. J. (1980). Scripts as linear orders. Journal of Experimental Social Psychology,

16(4), 329-347. Rafaeli, A. (1993). Dress and behavior of customer contact employee: A framework for analysis. Advances in

Service Marketing and Management, 2, 175-211. Volden, J., & Johnston, J. (1999). Cognitive scripts in autistic children and adolescents. Journal of Autism and

Development Disorder, 29(3), 203-211.

HOSPITALITY EMPLOYEE WELL-BEING:

INSIGHT FROM A LUXURY HOTEL IN THAILAND

Ewa M. Mottier* Les Roches-Gruyère University of Applied Sciences/Les Roches International School of

Hotel Management, 3975 Bluche, Crans-Montana, Switzerland, [email protected]

Robert A. Lewis Les Roches-Gruyère University of Applied Sciences/Les Roches International School of

Hotel Management, 3975 Bluche, Crans-Montana, Switzerland, [email protected]

ABSTRACT

This study aims to evaluate the experiences of hotel employees at the Mandarin Oriental Bangkok and to show how the new employee centre called the ‘O-Zone’ contributes to employees’ well-being. Questionnaires, containing attitude scales and opened-ended questions, measured the perceptions of employees. The study suggests that the creation of the O-Zone employee centre increased positive opinions of employee facilities. The results of this research also reveal that the O-Zone positively influenced employees’ motivation. This contributes to a deeper understanding of hotel employees’ satisfaction and motivation in the Thai context.

Keywords: employee well-being, luxury hotel employees, Thailand

INTRODUCTION

Sparks et al. (2001) suggest that the use of technology, globalization, organizational restructuring and work scheduling transform the nature of work in many organizations. Vanhala and Tuomi (2003) argue that personal satisfaction constitutes an important factor of employee well-being. This study aims to investigate employees’ perceived satisfaction and motivation at the Mandarin Oriental Bangkok before and after the opening of the new employee centre, called the ‘O-Zone’. The O-Zone is a centre on the 2nd floor of the hotel’s River Wing dedicated to employees. It groups together recreation and relaxation areas together with the traditional elements of hotel employee needs, such as changing areas and uniforms.

LITERATURE REVIEW

Human resources management in the hospitality industry faces challenges in employee hiring and retention (Breiter et al., 2002). Organisations try to attract and retain the best employees by offering enhanced working conditions. According to Vanhala and Tuomi (2006), human resources practices, such as recognition or continuous improvement, are positively related to employee satisfaction (cf. Taris and Schreurs, 2009). Employees’ well-being is dependent on organization support (Eisenberg et al., 1986 cited in Kim et al. 2009). Organisational support emphasises the recognition of employees who outperform (Scott, 1994). Susskind et al. (2000) found that organizational support perceived by employees influenced job satisfaction. Kim et al. (2009) also demonstrated the positive relationship between organisational support and job satisfaction. Organisational practice perceived by employees and their well-being are strongly related (Schultz et al., 1995, Kalliath et al. 2000 cited in Vanhala and Tuomi, 2006). According to Vanhala and Tuomi (2003), employee well-being is related to the working environment and organisational climate. The positive association between satisfaction in the workplace and job satisfaction is also echoed by So Young (2006).

Panmunin’s (1993) research about employees’ job satisfaction in the Thai hotel industry shows that

hospitality employees are satisfied with their job. One of the reasons for their satisfaction is a good working environment offered by hotel companies in Thailand. Churint’s (2010) study investigated hotel employee retention in Thailand. However, the order of importance is inverted for operational level employees.

Attracting and retaining employees is one of the challenges faced by human resources management in

the hospitality industry (Breiter et al, 2002). Kovach (1987), based on a longitudinal study amongst workers, developed ten motivational factors. Among them, working conditions are important. Working conditions experienced by participants in the Poulston study (2009) indicate that their motivation would be inhibited because of dissatisfaction with their working conditions. Maroudas et al. (2008) studied employees’ motivation in the luxury hotel industry. Therefore, employees are motivated when they are supported by management (Parfyonova, 2009). DiPietro’s (2007) study shows that creating a positive work environment helps improve overall motivation. Maneenetr (2010) studied employee motivation and working behaviour in the tourism business in Thailand.

The above literature review reveals the following research questions (which were investigated within

the context of the Mandarin Oriental Bangkok): - How do employees at the Mandarin Oriental Bangkok perceive satisfaction from the O-Zone? - How do employees at the Mandarin Oriental Bangkok perceive effects of the O-Zone on employee

motivation?

METHODOLOGY

This study is based on an exploratory case study approach (Yin, 2009). The new employee centre opened in November 2010 and contains all elements of a hotel. The O-Zone is divided into ten distinctive areas: Sell, Fashion, His, Hers, Health, Café 48, Talent, Mind, Dream and Relax. Research questions were investigated through the interpretation of replies retrieved in questionnaires.

Access to the study was approved by the general manager of the Mandarin Oriental hotel Bangkok.

The hotel had already implemented the O-Zone when access was given for this study. This study therefore measures employees’ perceptions of their experiences (before and after) of the O-Zone at one point in time. Data collected for this research is based on self-administered questionnaires, distributed by researchers through

the head of human resources at the Mandarin Oriental Hotel Bangkok in September 2011. The contents of questionnaires were based on scales and open-ended questions. 164 employees volunteered to participate in the study. Their replies were anonymous.

The first part of the questionnaire included demographic questions: gender, nationality, job position,

length of employment and frequency of the use the new employee facilities. The second part of the questionnaire contained questions related to the O-Zone, staffs satisfaction and motivation. The questionnaire was developed on a series of measures based on scales (Sekaran, 2000) and opened-ended questions. The study proposed the use of summated rating scales: a set of opinions were considered to be of approximate equal value. The summated rating scale used in questionnaires included a range of replies from: ‘5 = very positive’ to ‘1 = very negative’.

Quantitative data were analysed with SPSS version 19. Descriptive statistics were used to portray the

respondents’ demographic profiles. For each Likert scale–based question, formulae were inserted into SPSS to calculate frequency percentage and descriptive statistics. Likert scale findings were evaluated according to skewness, based on mean and mode. For qualitative data, Excel spreadsheets were used to transcribe data. The use of qualitative data, in the form of quotes, provided Meaning Units, or, MUs. According to Giorgi (1994), MUs represent groups of text, not necessarily full sentences that give meaning. This is supported by Seale (1999) and Silverman (2003). To maintain confidentiality, paper copies of questionnaires and a USB memory stick with electronic versions of data, were stored in a locked cupboard in the researchers’ university.

PRELIMINARY FINDINGS

The following section illustrates the results from respondents’ opinions of employee facilities ‘before’ and ‘after’ the implementation of the O-Zone (Table 1). Questions measuring the employee satisfaction were transformed into statements. More than two-thirds of respondents were not satisfied of employees’ facilities before the implementation of the O-Zone. The positive perception of employees’ previous facilities is confirmed by 57 of respondents. The opinions of employee facilities in Mandarin Oriental Bangkok dramatically change after the opening of the ‘O-Zone’. More than nine out of ten respondents have a positive perception of employee facilities after the implementation of the O-Zone.

Table 1: Likert scale findings in term of perceptions of employee facilities ‘before’ and ‘after’ the implementation of the O-Zone

Opinion of employee facilities

‘before’ the creation of the O-Zone Opinion of employee facilities

‘after’ the creation of the O-Zone Frequency Percent Frequency Percent

Not answered 8 4.9 3 1.8 Very negative 10 6.1 3 1.8 Negative 26 15.9 3 1.8 No impact 63 38.4 4 2.4 Positive 44 26.8 63 38.4 Very positive 13 7.9 88 53.7 Total number of employees 164 100 164 100 Mean 3.00 4.35 Std. Error of Mean 0.094 0.077 Mode 3 5 Skewness -0.628 -2.483 Std. Error of Skewness 0.19 0.19

The O-Zone’s impact on employee motivation

The following section illustrates results in terms of how respondents’ opinions of the O-Zone affect employee motivation (Table 2). The O-Zone’s impact on employee motivation was explored by the question: “Does the O-Zone experience impact on the employee motivation?”. Respondents’ answers were coded to two degree of agreement: ‘1 = No’ and ‘2 = Yes’ opinions. This was complemented by qualitative replies.

Table 2: Likert scale findings in term of perceptions of the O-Zone experience impact on the employee

motivation

Does the O-Zone experience impact on the employee motivation? Frequency Percent

Not answered 72 43.9 No 12 7.3 Yes 80 48.8 Total number of employees 164 100

Nearly half of respondents consider that the O-Zone had a positive impact on their motivation. Only 12 respondents feel that the O-Zone had no impact on employee motivation. Qualitative comments revealed deeper insight into these perceptions. Typical answers include: With the good feeling & experiences obtained from the O-Zone, it helps to increase my motivation to a certain extend (anonymous participant). It is a sort of refuge and oasis for employees to spend their spare time over or to have a pause during their stressful moment while away from home therefore, definitely it has a massive impact on staff motivation and their self-esteem (anonymous participant).

In addition, the ‘Wall of Fame’, an art installation in the O-Zone area, has forty eight plaster handprints showcases employees who have worked at Mandarin Oriental Bangkok for the longest number of years.

‘Wall of Fame’ is very creative idea of saluting long years’ service colleagues and at same time encouraging them and promoting the unique legendary "Oriental" culture (anonymous participant).

The results above are supported by previous studies (DiPietro, 2007; Poulston 2009) which show that creating a positive work environment helps to improve motivation.

CONCLUSION

This investigation is supported by studies in the literature that reveal that hotel employees’ satisfaction and motivation are important. The O-Zone, opened at 2010 in the Mandarin Oriental Bangkok, creates a new benchmark in the luxury hotel industry in terms of promoting employee well-being. Variables (satisfaction and motivation) investigated in this study reveal that the implementation of the O-Zone increased positive opinions of employee facilities at the hotel. This research contributes to a better understanding of hotel employees’ satisfaction and motivation in the Thai context.

This study not only provides insight into employees’ experiences in a Thai luxury hotel context, but

also reveals further implications for the luxury hotel industry. This suggests that work relationships, which traditionally place emphasis on granting employee benefits according to hierarchical level, are inconsistent with views from the O-Zone initiative, which aims to provide higher levels of benefits for front-line employees. Moreover, and in a similar vein, this suggests that organisations such as the Mandarin Oriental Bangkok have created the O-Zone as an additional employment feature to attract and retain the best employees. This study reveals that by exploring employees’ experiences (in terms of their perceived satisfaction and motivation from benefits) can help us better understand how to position benefits for employees in the luxury hotel sector.

REFERENCES

Breiter, D., Tesone, D. V., Van Leeuwen, D., & Rue, V. (2002). An Analysis of Hotel Employees' Motivation Using Kovach's Ten Factor Model. Journal Of Human Resources In Hospitality & Tourism, 1(4), 63.

Churintr, P. (2010). Perceived Organizational Culture, Stress, and Job Satisfaction Affecting on Hotel Employee

Retention: a Comparison Study between Management and Operational Employees. Employment Relations Record, 10(2), 64-74.

DiPietro, R. B., & Condly, S. J. (2007). Employee Turnover in the Hospitality Industry: An Analysis Based on

the CANE Model of Motivation. Journal Of Human Resources In Hospitality & Tourism, 6(1), 1-22. Giorgi, A. (1994). A Phenomenological Perspective on Certain Qualitative Research Method. Journal of

Phenomenological Research, Vol. 25, No.2, pp.190-220. Kim H.J, Tavitiyaman P. & Kim W.G., (2009). Behaviors: the Mediating Role of Job Satisfaction, Journal of

Hospitality & Tourism Research. Kovach, K. A. (1987). What Motivates Employees? Workers and Supervisors Give Different Answers. Business

Horizons, 30(5), 58. Maneenetr, T. (2010). Motivation And Working Behavior In Frontier Tourism Business Of Thailand-Laos.

International Business & Economics Research Journal, 9(4), 105-112. Maroudas, L., Kyriakidou, O., & Vacharis, A. (2008). Employees' motivation in the luxury hotel industry: the

perceived effectiveness of human-resource practices. Managing Leisure, 13(3/4), 258-271. Panmunin, W. (1993). Whats happening to thai hospitality? Cornell Hospitality Quarterly, 34(3), 60-60. Parfyonova, N. (2009). Employee motivation, performance and well-being: The role of managerial support for

autonomy, competence and relatedness needs. Proquest Dissertations And Theses. Poulston, J. M. (2009). Working Conditions in Hospitality: Employees' Views of the Dissatisfactory Hygiene

Factors. Journal Of Quality Assurance In Hospitality & Tourism, 10(1), 23-43. Sekaran, U. (2000). Research Methods for Business. John Wiley and Sons, New York. Scott, S. (1994). Determinants of innovative behavior: A path model of individual innovation in the workplace.

Academy of Management Journal, 37(3). Seale, C. (1999). The Quality of Qualitative Research. Sage, London. Silverman, D. (2003). Doing Qualitative Research. A Practical Handbook. Sage, London. So Young, L. (2006). Expectations of employees toward the workplace and environmental satisfaction.

Facilities, 24(9/10). Sparks, K., Faragher, B., & Cooper, C. L. (2001). Well-being and occupational health in the 21st century

workplace. Journal of Occupational and Organizational Psychology, 74, 489-509. Susskind, A. M., Borchgrevink, C. P., Kacmar, K., & Brymer, R. A. (2000). Customer Service Employees'

Behavioral Intentions And Attitudes: An Examination Of Construct Validity And A Path Model. International Journal of Hospitality Management, 19(1), 53.

Taris, T. W., & Schreurs, P. G. (2009). Well-being and organizational performance: An organizational-level test

of the happy-productive worker hypothesis. Work & Stress, 23(2), 120-136. Yin, R. (2009). Case Study Research: Design and Methods. Sage, London. Vanhala, S., & Tuomi, K.. (2006). HRM, Company Performance and Employee Well-being. Management

Revue, 17 (3). 241-255. Vanhala, S., & Tuomi, K. (2003). Individual, Organizational and Work-Related Determinants of Employee

Well-Being. EBS Review, (17), 70-81.

The low level of organisational social capital in hotels – a New Zealand case study

Anthony Brien, DR* Lincoln University, P O Box 84 Lincoln, New Zealand

[email protected]

Nicholas Thomas, DR DePaul University, Chicago, United States

[email protected]

Ananda Hussein, Mr Lincoln University, P O Box 84 Lincoln, New Zealand

[email protected]

ABSTRACT

Hotels, like other organisations seek increased productivity, however, achieving this can be more challenging for service sectors organisations than those in manufacturing due to the significant use of human capital.

Developing and maintaining a positive level of Organisational Social Capital (OSC) is said to be a productivity enhancement strategy, however, for a hotel to use OSC as a tool for increased productivity it must first measure its OSC level. This research presents the New Zealand hotel industry’s OSC level, the initial stage within a longitudinal study to understand how OSC impacts productivity. A total of 509 employees from thirty-one hotels participated in this research.

KEY WORDS

Organisation Social Capital, Hotels, New Zealand

INTRODUCTION

The service-intensive nature of the hotel industry presents challenges regard productivity enhancement as it is subject to the Baumol Effect (Baumol, 1967) which suggests there is a limit to how (physically) productive service employees can be. To their credit, hotels already use employee productivity enhancement tools such as technology, leadership, innovation, training, etc. however, one less known employee-productivity-enhancer is that of the organisation’s ‘social capital’.

This paper reports the findings of the first stage of a longitudinal research project within the New

Zealand hotel industry; the measurement of employees’ perceptions of their hotels (Organisational) Social Capital (OSC).The research problem that the longitudinal research project sets out to investigate is: Does a hotel’s intangible human capital elements, such as its social capital, impact productivity? The theoretical foundation for this research is drawn from Coleman (1988) who suggests that the level of an organisations social capital may affect productivity, that is, the higher the OSC level the more opportunity for increased productivity and vice-versa. While the researchers intuitively support Coleman’s views, this research sets out to over time test Coleman’s hypothesis in the service sector, in this instance, the hotel industry of New Zealand.

Coleman’s (1988) theoretical base is supported in that the concept of OSC has its roots in the macro

concept of Social Capital (SC) (Cohen, 1988; Putnam, 2000; Requena, 2003; Svendsen & Sorensen, 2006) which is said to encompass the elements of participation, networks, reciprocity and trust. Funnelling from SC to OSC the literature suggests that OSC consists, to varying degrees, of the variables: commitment, communication, influence, trust and social relations (Bolino, Turnley, & Bloodgood, 2002; Carmeli, Ben-Hador, Waldman, & Rupp, 2009; Helliwell & Huang, 2010; Requena, 2003). This research adds to the general knowledge of OSC while particularly focusing on the service sector and provides a benchmark to which future research can be compared.

The New Zealand hotel industry is relatively small in terms of the number of hotels; therefore, the

researchers were able to undertake a whole-of-country employee OSC perception study; such a study had not

been undertaken before albeit in-house employee-satisfaction surveys are common practice in the hotel industry. In 2011, the researchers set out to measure employees’ perceptions of their hotels OSC via a questionnaire (discussed later), with the results being reported back to hotels. Given the results, hotels could celebrate the success of high OSC variables scores, or take any necessary action to enhance lower scoring OSC variables. This study is continuing in 2012 and will provide two sets of comparable OSC data which hotels can consider what, if any, changes in their OSC has impacted productivity. Our reporting at this time is of the first OSC measurement results to enlighten the reader as to the position in New Zealand and provide the hotel industry with information as to where OSC improvements can be made, that may, in time lead to increased productivity.

As stated above, this paper reports on measuring the New Zealand’s hotel industry OSC via a

questionnaire that is fundamentally drawn from employee perceptions. In the absence of any aligned research these results present a disturbing picture. When measuring the OSC variables of commitment, communication, influence and trust on a Likert Scale of 1-5, where 1 represents a very low level of OSC and 5 a very high level of OSC, the mean OSC level of the New Zealand hotel industry is 3.52. The fifth OSC variable, Social Relations, were not measured on a Likert Scale, but reviewing this variable’s results it is noted that only 84.4% of responds felt they were part of a hotel community and less than 50% looked forward to working with their colleagues. In summary, this suggests that employees do not consider they work in a high or very high OSC environment, yet we accept the reverse that they do not consider it to be a low or very low OSC environment. However, the results suggest that there is room to increase the OSC level which may potentially increase productivity.

METHODOLOGY

To measure OSC in hotels a questionnaire with the following sections was developed: twelve questions related to commitment – using Porter & Smith’s (1970) Organisational Commitment Questionnaire, nine questions related to communication – using Mount & Black’s (1999) Communication Satisfaction Questionnaire, fourteen trust based questions - using Tzafiri & Dolan’s (2004) Trust Questionnaire, twelve questions related to influence – using Yukl’s (2008) Influence Behavioural Questionnaire, and six questions related to social capital drawn from Putman’s (2000) Families and Work Institute Survey. Sample items from these sections are listed in Appendix 1. The first four sections required participants to record responses to questions using a Likert Scale where 1 indicated Strongly Disagree through to 5 indicating Strongly Agree. The final section was scored in Likert form, but with varying scales. Biographical data was also gathered.

In September 2011, 112 hotels (all members of the New Zealand Hotel Council of which the majority

of hotels belong), were invited to participate in this benchmarking exercise. Those wishing to participate advised how many employees (both full and part-time) were engaged and were subsequently supplied with that number of questionnaires in individual unsealed envelops. Envelopes contained a research briefing sheet and were either handed out by supervisors and / or made available in staffrooms. Envelops were addressed to the researchers and postage paid, the reason being to ensure participants had control over their completed questionnaire by sending them direct to the researchers and not via the hotel, and there bring no cost to participate. Participants were given four weeks to complete and return the questionnaire.

While questionnaires were coded to identify which hotel they came from participants were asked not to

put their name on the questionnaire, thus guaranteeing anonymity and hopefully increasing participation in the research. Data was loaded in SPSS for subsequent analysis.

RESULTS

Thirty-one hotels (27.6% of all hotels invited) agreed to make the OSC questionnaire available to every staff member. Two international hotel chains choose not to participate, one citing company policy to not participate in external research, the second felt that the OSC questionnaire was similar to their in-house employee-engagement questionnaire and that therefore did not wish to participate. While the longitudinal research project investigates possible linkages between OSC and productivity, no analysis of such linkages is drawn in this paper; rather we report the initial findings – the present, general perception of OSC in New Zealand hotels.

With the exception of Social Relations, all other OSC (variables) sections of the questionnaire were subjected to Cronbach Alpha reliability testing with the following results: Commitment Alpha 0.860, Communication Alpha 0.882, Trust Alpha 0.891, and Influence Alpha 0.685. While the first three sections fall within the ‘good’ range of reliability for statistical purposes, that is, above 0.70, Influence falls within the

tolerable range for psychological constructs. Table 1 presents the OSC variables mean scores and the OSC variables.

Table 1 OSC Variable Mean Scores

OSC Variable Mean Scores Commitment Communication Influence Trust

All Participants (n=509) 3.5202 3.5795 3.5134 3.4656

Table 2 presents the themes drawn from the highest three scoring questions (summarised as a percentage of agree or strongly agree,) and the (highest) lowest three scoring questions (summarised as a percentage disagree or strongly disagree) in each of the above OSC variables.

Table 2 OSC Variable Themes

OSC Variable High scoring themes (Highest) Low scoring themes Commitment Willing to put in a great deal

of effort (88%), care about the future of the hotel (72%), strong loyalty (68%)

Happy to work for another hotel (53%), particularly if their present role changed (51%), not much to gain by staying with that hotel (23%)

Communication Encouraged to communicate (78%), receive feedback about changes (65%) and can make suggestions (61%)

Lack of communication about how they are doing in their job (20%), communication between people lacks a community feel (18%), uncomfortable about making suggestions (18%)

Influence Working with highly motived people (72%), following policy (72%), unnecessary orders (65%)

Not influenced by rewards (34%), or reciprocal work support by colleagues (30%) but feel pressured due to lack of planning (25%)

Trust Employees can be trusted (77%), colleagues will help each other (72%) and employees would not do anything to hurt the hotel (71%)

Employees trust the majority of their colleagues (56%), colleagues will not take advantage of others (41%), and employees will not breach trust to get ahead (20%)

Social Relations reports on employee interaction with 85% of people feeling they belong to a hotel community but only 47% answering ‘yes’ to looking forward to being with the people they work with, and the same percentage stating ‘sometimes’. Interaction with work colleagues ‘outside work’ never happens for 41% of respondents, once or twice a week for 52% with 7% socialising three or more times a week. Within the once or twice category the most socially interactive work areas are rooms division operational employees (32%) followed by food and beverage employees (27%); less socially interactive are those holding managerial positions in rooms division (9%), food and beverage (11%) and administration (16%). Across all work areas females are the most socially interactive and in terms of age – the 21-25 year olds are very interactive.

Analysis using ANOVA suggest no impact between the OSC variables of Commitment, Communication, Influence and Trust and the biographical data of age, gender, qualifications, hotel star rating, and employment status, country of birth or length of service. There is, however, a statistically significant impact between work area and the variables of commitment (p= 0.004), communication (p= 0.000) and trust (p=0.005), influence, however, is recorded as p= 0.187. Finally, when considering the above four OSC variables against where in New Zealand the hotel is located there is a statistically significant impact: commitment (p= 0.001), communication (p= 0.030), trust (p = 0.000) while influence reports as being p= 0.300.

CONCLUSION

New Zealand’s major hotel accommodation sector is small in comparison to other countries and while it is unfortunate that various chains chose not to participate the results presented here provide a strong

representation of the overall New Zealand hotel OSC level. The developed questionnaire appears to be a robust instrument to use in measuring OSC and while it is accepted that there is no comparable research either within New Zealand or internationally, the mid-range results, that is ‘3’ on a scale of 1-5 of the first four variables, is not a good news story for the hotel industry; indeed no means scores in any of the OSC variable made it into the ‘agree’ or ‘strongly agree’ category.

Having noted the bad news in the above paragraph, Table 2 presents the good news, but overall is impacted by the significant number of participants reporting neither agree nor disagree or disagree/strongly disagree in the various OSC variables. That said, this signals where strategies need to be put in place to enhance areas. Trust is said to be fundamental to the variables of commitment, communication and influence and takes time to build, however, it is noted that this is the lowest mean scoring variable – this suggest a challenge for the industry. Trust continues to rank the lowest variable within each of the separate star ratings and within this, five star hotels has the lowest level of trust.

Social Relations results presents concerns and what could be considered ‘usual’ results. The vast majority of employees feel they are part of a hotel community, but of concern is that nearly 50% of employees only sometimes looking forward to working with their colleagues. While the latter response, however, possibly understandable as every employee has ‘off’ days with colleagues – this is possibly a breeding-ground for discontentment and may link to the overall low OSC mean and areas of trust. There is perhaps no surprise that it is the young employees who are much more socially interactive. For hotels, the challenge would appear to be to move the usual results ‘factors’ to merge with the looking forward to working with colleagues, doing so may the lift other OSC variables.

From a practical point of view, knowing what OSC variables impact with biographical factors could be helpful when considering instigating OSC enhancement strategies or attracting and retaining employees. Overarching ANOVA analysis of the data set suggests that with the exception of social relations, the only statistically significant impact is that of work area and commitment, communication and trust, with the same impact in terms of zone (where in New Zealand the hotel is located). With respect to the latter, trust is stronger in the South Island where there is a much less diverse culture and much smaller hotels/population. The impact in work area is mainly with the OSC variable of communication and differs across all areas.

The researchers continue to analyse the dataset to pull more details results that will be of benefit to the hotel industry in practical terms and continue their reporting back to the industry.

The results reported in this paper contribute to the literature in terms of understanding OSC in the hotel

industry, an area that has received little attention and is thus not well understood. The longitudinal approach that this research is taking in its investigation of links between OSC and productivity will also contribute significantly to future literature.

INVITATION TO PARTICIPATE IN THIS ON GOING RESEARCH

The authors of this research wish to expand the base of participants to that of other countries so that international comparisons can be made between OSC levels. Interested research wishing to be involved should contact the authors.

APPENDIX 1 Sample questions from the OSC Questionnaire

Commitment: I am willing to put in a great deal of effort beyond that normally expected in order to help this hotel be successful I would do almost any job asked of me in order to keep working for this hotel

Communication: The communication I receive about all sorts of things in this hotel is about right – not too much or too little There is lots of communication between my colleagues (not job related or from management)

Influence: I am influenced to do something when I know it is hotel policy People offer to do something for me in exchange for me doing something for them

Trust: My colleagues will keep the promises they make My colleagues actions and behaviours are not consistent

Social Relations: How many of these close friends are people you work with in this hotel? Do you look forward to being with the people you work with at this hotel each day?

REFERENCES

Baumol, W. (1967). Macroeconomics of unbalanced growth: the anatomy of urban crisis. American Economic Review, 57(3), 415-426.

Bolino, M. C., Turnley, W. H., & Bloodgood, J. M. (2002). Citizenship Behavior and the Creation of Social Capital in Organizations. The Academy of Management Review, 27(4), 505-522.

Carmeli, A., Ben-Hador, B., Waldman, D. A., & Rupp, D. E. (2009). How Leaders Cultivate Social Capital and Nurture Employee Vigor: Implications for Job Performance. Journal of Applied Psychology, 94(6), 1553-1561.

Cohen, E. (1988). Traditions in the qualitative sociology of tourism. Annals of Tourism Research, 15(1), 29-46. Coleman, J. S. (1988). Social Capital in the Creation of Human Capital. American Journal of Sociology,

94(S95-S120). Helliwell, J. F., & Huang, H. F. (2010). How's the job? well-being and social capital in the workplace. Industrial

& Labor Relations Review, 63(2), 205-227. Mount, D., & Back, K.-J. (1999). A Factor-Analytic Study of Communication Satisfaction in the Lodging

Industry. Journal of Hospitality and Tourism Research, 23(4), 401-418. Porter, & Smith. (1970). Organisational Commitment Questionnaire. Retrieved from

www.regent.edu/acad/global/.../Example%20Measure%20Paper.doc Putnam, R. (2000). Families and Work Institute Survey: Families and Work Institute. Requena, F. (2003). Social capital, satisfaction and quality of life in the workplace. Social Indicators Research,

61(3), 331. Svendsen, G., & Sorensen, J. (2006). The socioeconomic power of social capital: A double test of Putnam's

civic society argument. International Journal of Sociology and Social Policy, 26(9/10), 411-429. Tzafrir, S., & Dolan, S. (2004). "Trust Me: a scale for measuring manager-employee trust". Management

Research, 32(3), 115-132. Yukl, G., Seifert, C., & Chavez, C. (2008). Validation of the extended Influence Behavior Questionnaire. The

Leadership Quarterly, 19, 609-621.

Hospitality business: exploring a new research agenda

Brenda Groen* Saxion University of Applied Sciences

Deventer, the Netherlands [email protected]

Xander Lub

Saxion University of Applied Sciences Deventer, the Netherlands

[email protected]

Ruth Pijls Saxion University of Applied Sciences

Deventer, the Netherlands [email protected]

René Rijnders

Dutch Board of Hotel & Catering Industry Woerden, the Netherlands

[email protected]

Abstract This paper contributes to the dialogue about the definition of hospitality. A dialogue in which the range and boundaries of hospitality are discussed, at the conceptual level but also in fieldwork, inside and outside the traditional hospitality industry. It is a fact that the hospitality industry consists of a large variety of venues. Also, that hospitality is not an exclusive characteristic of the hospitality industry. As long as there is no consensus on what 'hospitality' is, each scientific work on hospitality needs to explicitly show what definition it uses. Our main question is: What definitions are being used in conceptual and research papers on hospitality? We have analyzed all 178 entries for 'definition of hospitality' (web search scholar.google.com), as well as 5 years of IJHM, IJCHM. Furthermore, we have searched for articles on hospitality and guest/host in the Journal of Service Management and in Facilities. Conceptual texts discuss the definition(s) of hospitality by presenting an overview of the (well-known) authors. To name a few: Brotherton, Hepple, Lashley, Jones, King, Nailon, Reuland, Selwyn, Slattery, and the philosophers Derrida, Ritzer and Telfer. For a review of hospitality definitions see e.g. Brotherton and Wood, (2007), Ottenbacher et al. (2009). We will show that conceptual papers on hospitality that discuss it's definition cover a wide range of definitions but do not necessarily take a position. Furthermore, we will discuss to what extent these definitions are explicitly based on primary research. Research papers, which report primarily quantitative research, tend not to explicitly state the definition of hospitality underlying the data collection. Furthermore, qualitative research on hospitality seems underexposed. Based on the definitions extracted from the literature review, we conclude that hospitality is a social exchange process that may (or may not, depending on the context) involve the offering of products and services such as food and refreshments, and accommodation. This relates to a physical/sensory perspective. Hospitality requires implicit and explicit rules for behaviour for both host and guest, a psychological and also an ethical perspective. Hospitality is also about entertainment and experience, again a psychological aspect. We then turned to literature about hospitality or the guest/host relationship in other disciplines, that offer similar products and services, and we will show how looking over the hedge into facility management and health care enriches the research of and discussion on hospitality. Regarding the rules for behaviour, we turned to (human) ethology, and discuss its contribution to the discussion of hospitality. Knowing how to behave, either as host or guest, is essential for a successful exchange process, and we will show examples of cooperative behaviour in the animal kingdom that are not unlike hospitality behaviour.

A CASE STUDY OF MANAGEMENT NEGLIGENCE RESULTING IN WORKPLACE VIOLENCE

Stuart L. Feigenbaum* Hotelschool The Hague

The Hague, The Netherlands [email protected]

Suzanne Murrmann, Ph.D.

Virginia Polytechnic Institute and State University Blacksburg, Virginia, United States

[email protected]

Abstract

“OXFORD, Mississippi - A federal jury has returned a $20 million verdict against Tupelo's Captain D's restaurant in a lawsuit on behalf of a Northeast Mississippi teenager paralyzed from the shoulders down in a fall in 2000.”

While tragic, this byline does not even begin to tell the complete story. The teenager, Michael Foradori was a 15 year old boy who was just going for a light meal with some friends, and a ride home. What ensued was an altercation, an attack by employees of the restaurant, leading to a fight, ending with Michael being hit from behind, sending him over a 5 foot embankment. The last thing Michael remembered was waking up in a hospital in Memphis Tennessee, close to 100 miles from where he lost consciousness. Michael’s injuries were so bad he was discovered by paramedics in a ravine with a broken back, blood pouring from behind his head, and his spinal cord completely severed at the C5 vertebrae making him a quadriplegic for life.

How could something like this happen? What caused this tragic incident? How could this tragedy have been prevented? What responsibility does a restaurateur have regarding the safety of his guests? What is the definition of a customer? If an employee is no longer on duty, does the employee’s supervisor still maintain any degree of control?

These are but a few of the questions that were raised during this trial and brought to students of hospitality human resource management in this article. Current teaching in Human Resource management revolves around recruitment, selection, development, job design, and so forth. While there is no argument on the necessity to learn these concepts, they may not be going far enough to prepare the future manager for situations that may have been unimaginable just a few years ago.

Even now, with outbreaks of violence occurring frequently, in some of the least likely places like schools, retail shops, and other services, what standard of care might be expected by the customer? Are hotel schools adequately preparing leaders for the situations of the future?

The methodological approach is that of participant observation, as the primary author of this case study was the expert witness for the plaintiff, Michael Foradori. Based upon the actual court case, research conducted in preparation for trial, depositions and transcripts, the authors vividly present the facts, the history, and all the details, so that it may be used in hospitality classrooms in the multiple areas of Human Resource management, Hospitality Law, Restaurant Management, Emergency Preparedness, Customer Service, and General Standard of Care.

Key Words: Human Resource Management, Standard of Care, Workplace Violence, Hospitality Law, Training.

We conclude that hospitality (research) will benefit from an increased use of definitions and scientific rigor, more qualitative research, especially into the psychological aspects, and multidisciplinary research. This will lead to fresh insights in hospitality, an extended (but shared) territory for hospitality research; and last but not least crossovers between disciplines which might lead to new entrepreneurial challenges. Key Words: literature review, definition of hospitality, social exchange, facility management, health care, ethology

References Brotherton, B. & Wood, R.C. (2008). The nature and meanings of “Hospitality”. In: Brotherton, B. & Wood, R.C. (Eds.) The Sage Handbook of Hospitality Management (pp. 37-61).London, UK: Sage Ottenbacher, M., Harrington, R., & Parsa, H. G. (2009). Defining the hospitality discipline: A discussion of pedagogical and research implications. Journal of Hospitality and Tourism Research, 33(3), 263-283.

Study of professional education in the field of tourism in Latvia

Margarita Platace, Mg.Ped. MBA Lecturer

Agita Donina*, MBA Lecturer

School of Business Administration Turiba, Faculty of International Tourism Graudu 68, Riga, LV-1058, Latvia,

[email protected] [email protected]

Abstract Key words – tourism industry, quality of professional education, professional qualification, professions in tourism In the period of time between May 2011 and February 2012 Latvian State Development Agency together with several cooperation partners carried out a project, which was worked out within the framework of the European Social Fund activity Development of a sectoral qualifications system and increasing the efficiency and quality of vocational education. Various sectors in Latvia, including the tourism industry were studied within the framework of the Project and educators of Turiba University participated as experts. The research results will be used to enhance Professional tourism education programme in accordance to the needs of the sector. The tourism research dataset consisted of 3442 enterprises or 40% of enterprises registered in that sector including accommodation and catering service enterprises, travel agencies, tour operators and other travel service related enterprises. The industry experts pointed out that there is a potential for the development of the tourism industry in Latvia. However, it has to be taken into account that the potential foreign and local tourists will be more demanding in future with regards to professional service quality, the level of which greatly depends on the performance of tourism professionals. Results show that 70% of employees in tourism industry are within the age group up to 45 years, the average salary is approximately 427 EUR; moreover the salary is low compared to the level of education. Despite the low salaries the tendency of tourism industry employees’ turnover is rather low and does not exceed 10%.

92% of employers rate professional skills of sales and communication with guests as most important criteria. Demonstration of good working skills and foreign language knowledge were also marked as important, while the presence of educational document or certificate is not considered to be of primary importance. The evaluation of the knowledge and skills of the young employees who have graduated from professional schools during the last three years shows that in many cases the professional knowledge was evaluated as average or low, pointing to the fact that the education provided by the professional educational establishment does not meet the requirements of the industry. There are 75 educational establishments in Latvia where 38 travel industry related professions can be obtained- higher educational establishments, colleges, and professional tourism and hospitality schools among them. However education acquired at an educational establishment is evaluated at rather low rate; it shows the discrepancy between the quality of knowledge provided by the educational establishments and industry requirements The industry description provided comprehensive information characterising the whole tourism industry and can be used by employers, educators and professional education students to gain additional information regarding the connection between the tourism sector and the education sector. The wide range of informative materials will help form an adequate industry professional qualification structure as it is the basis for working out and updating the profession standards and designing a professional education programme on module based approach.

EDUCATING THE NEW GENERATION OF GLOBAL MANAGERS: Testing Cultural Intelligence for Business Study Abroad Participants

A.J. Singh (Ph.D.) The School of Hospitality Business

Eli Broad College of Business Michigan State University

East Lansing, Michigan USA

Telephone: (517) 353-9211 E-mail: [email protected]

Chunyan Peng

Ph.D. Candidate Department of Management

Eli Broad College of Business Michigan State University

East Lansing, Michigan USA

Telephone: (517) 432-3512 [email protected]

Linn Van Dyne (Ph.D.)

Professor Department of Management

Eli Broad College of Business Michigan State University

East Lansing, Michigan USA

Telephone: (517) 432-3512 [email protected]

ABSTRACT With the pervasiveness of multinational corporations in today’s global economy, the need for competent managers with a global mindset to manage enterprises, people and functions across cultures will inevitably increase. The challenge for College of Business study abroad programs is to meet this need by structuring study abroad programs to increase the student’s capability to function effectively in situations characterized by cultural diversity. Key words: Cultural Intelligence, Study Abroad, Global competency, Global Leadership, Cultural adaptation, Global effectiveness.

INTRODUCTION

Context and Background

Forty years ago, at a time when the concept was still foreign, Marshall McLuhan popularized the idea that the world had become a “global village” (McLuhan, 1964). Today, the term is no longer alien, to the extent that many believe that the Globalization of Markets and Production has reached a “tipping point,” in which the world economy has moved away from self-contained entities to an interdependent global economic system. Most recently, Thomas L. Friedman effectively helped the business world visualize the implications of this phenomenon, in his bestselling book, “The World is Flat”(Friedman, 2005). Whereas, McLuhan’s transformational technology was the Television, Friedman highlights the internet and other “flatteners” as drivers of globalization. The globalization phenomenon, he argues, is resulting in the leveling of the global competitive playing field and has “empowered individuals to collaborate and compete globally.” The accompanying structural shift resulting from these forces has critical implications for the new generation of managers and the business of educating managers.

Definition of the Global Manager

Operating in this global playing field is a breed of managers called “Global Managers” or “Transnational Managers.” These managers are usually assigned to a position with cross border responsibilities, are flexible and open minded, with a broad understanding of international business and ability to work across cultural and functional boundaries. They perceive global competition as an opportunity and are able to balance the simultaneous demands of global integrations and national responsiveness (Bartlett & Ghoshal, 1989; 1992; Pucik, 1991). It is commonly agreed that there is no “universal global manager” that fits the broad definition of a global manager. However, Bartlett and Ghoshal state that there are “groups of specialists - typically business managers, country managers, and functional managers – who all must share a transnational perspective. Coordinating the activities of these three specialists is a corporate manager (Bartlett and Ghoshal, 1992).

In addition to the functional aspect of this managerial job, the new generation of global managers needs to possess a vital frame of reference known as: The Global Mindset. The notion is not new and was referenced by Socrates over 2000 years ago when he said; “I am not an Athenian or a Greek but a citizen of the world.” These famous words which define the global mindset are more relevant today than ever before.

The Role of Study Abroad in Educating the New Generation of Global Managers

With the pervasiveness of multinational corporations in today’s global economy, the need for competent managers with a global mindset to manage enterprises, people, and functions across cultures is increasing. The challenge for College of Business study abroad programs is to meet this need by identifying the appropriate knowledge, skills, and abilities required for managers to succeed in this environment and to design study abroad programs so they help participants enhance their intercultural capabilities. These new programs, with specific educational objectives, will benefit industry, students, and the College of Business study abroad programs. The industry will gain by getting future employees who are better prepared to be effective global business managers. Students will benefit from a richer experiences with higher employment potential. Study abroad programs will gain a new set of metrics for assessing effectiveness of study abroad that go beyond simply measuring the number of students who participate in study abroad.

PURPOSE

The purpose of the research was to design a study abroad program that incorporated intercultural experiential learning activities as well as multi-rater feedback on participant’s Cultural Intelligence (CQ) capabilities before and after study abroad. This allowed us to compare CQ scores with the world-wide norms, compare CQ scores based on gender and ethnicity, and finally, using pre-post survey comparisons determine if the study abroad program changed CQ scores of participants. Students traveled to India, China, and Japan to study hospitality and general business in these countries.

BRIEF OVERVIEW OF THE LITERATURE ON CULTURAL INTELLIGENCE

Although an understanding of the importance of intercultural skills has been acknowledged in the literature for many years (Benson, 1978), cultural intelligence (CQ), defined as the capability to function effectively in culturally diverse settings is a relatively new construct which was introduced by Earley and Ang in 2003. Cultural intelligence is based on Sternberg and Detterman’s (1986) integration of the various views of intelligence as represented by four complementary capabilities: metacognitive, cognitive, motivational, and behavioral. CQ is unique because it focuses on capabilities with special relevance to intercultural contexts. The significance of CQ is demonstrated by the rapid and ongoing advances in our understanding of the conceptualization of CQ (Ang & Van Dyne, 2008b; Ng, Van Dyne, & Ang, 2009a), measurement of CQ (e.g. Ang, Van Dyne, Koh, Ng, Templer, Tay, & Chandrasekar, 2007; Van Dyne, Ang, Ng, Rockstuhl, Tan, & Koh, 2012), nomological network of CQ (Ang, Van Dyne, & Koh, 2006; Ang, Van Dyne, & Tan, 2011; Kim, & Van Dyne, 2012; Ng, Van Dyne, & Ang 2012; Rockstuhl, Seiler, Ang, Van Dyne, & Annen, 2011; Templar, Tay, & Chandrasekar, 2006), and practical application of CQ (Livermore, 2006, 2010; Ng, Van Dyne, & Ang, 2009b; Van Dyne, Ang, & Livermore, 2010).

The four dimensions of CQ include metacognitive CQ (strategy), cognitive CQ (knowledge),

motivational CQ (drive), and behavioral CQ (action). Meta-cognitive CQ reflects the processes individuals use to plan, apply, and adjust their cultural knowledge. Those with high metacognitive CQ are able to anticipate what will happen in cross-cultural situations and adjust their mental models when their expectations are inaccurate. Cognitive CQ reflects the general knowledge about how cultures are similar and how they are different. Those with high cognitive CQ have rich cognitive structures that provide them with deep understanding how culture shapes attitudes, cognitions, affect, and behavior. Motivational CQ reflects the magnitude of energy applied toward learning about and functioning in cross-cultural situations. Those with high motivational CQ genuinely enjoy culturally diverse experiences, recognize the benefits they can gain from intercultural encounters, and have the confidence to be effective in culturally diverse settings. Finally, behavioral CQ reflects the ability a person has to exhibit appropriate verbal and non-verbal actions when interacting with people from different cultures. Those with high behavioral CQ show flexibility in their actions in response to cultural characteristics of the situation.

Of primary relevance to the research we report in this paper is the fact CQ represents a malleable set of capabilities (Ang & Van Dyne, 2008a) that can be enhanced by education, training, and experience (Van Dyne, Ang, & Koh, 2008), such as study abroad. In sum, the CQ steam of research is particularly attractive for extending models of strategic leadership and focusing on ways to develop the next generation of global managers.

RESEARCH METHOD

Respondent Profile

Participants in this study included 93 undergraduate students at Michigan State University who enrolled in four study abroad programs to Asian destinations during 2007-2009. To encourage participation, we provided CQ feedback reports both before and after the study abroad experience. Each program included pre-departure sessions, approximately five weeks outside the United States, and post-

return guided reflection. Table 1 summarizes the distribution of respondents across the different study abroad programs. As shown in Exhibit 1, the 2007 China program was primarily female (16% male) while the 2007 India program was more balanced (45% male). In 2008, the China program was 70% male and in 2009, the China-Japan program was 40% male. In terms of ethnicity, participants in these programs were primarily white (see Exhibit 2). As a state university it is not surprising that participant were mainly from Michigan (see Exhibit 3). Yet, over time, there was a steady trend with increasing numbers of participants originally from countries other than the United States.

Overall, the sample was 43% female, and the majority was White (72%), with 20% Asian, and 8%

other. Average age was 21 years (range: 19 - 29 years). Sixty-five percent were from Michigan, 20% from other U.S. States, and 15% from countries outside the U.S.. Seventeen percent had lived in a foreign country, and 82% had travelled to one or more countries outside of their home nation.

Study Procedures

We adopted a Pretest-Posttest experiential design to allow examination of changes in CQ as a result of the program. At Time 1, a few weeks prior to departure, participants completed an on-line survey on their CQ across the four dimensions. Student prepared personal development plans based their T1 CQ feedback and documented ways they would use their CQ strengths and specific actions they would take to strengthen weaker capabilities. At Time 2, shortly after completion of the program, participants completed a second web-based survey which contained questions on their CQ and their experiences during the time abroad. At T1, friends and family provided observer ratings of CQ. At T1 and T2, participant CQ was rated by other study abroad participants. Using three different sources of data provides a more comprehensive perspective on CQ capabilities. Finally, after completion of the program, participants wrote a personal reflection paper where they described what they learned and how they would continue to use and enhance their global leadership capabilities. All three programs used the Pretest-Posttest design, but one program (2008 China) did not include T1 peer ratings. Thus, some analyses use a smaller sample for comparing the differences in CQ scores across time (see Table 4). These results should be interpreted with caution.

Table 1

Distribution of Respondents

PROGRAM FREQUENCY PERCENT China-2007 25 26.9 India-2007 20 21.5 China-2008 25 26.9

China-Japan-2009 23 24.7 Total 93 100.0

Exhibit 1 Gender Distribution of the Participants at MSU Study Abroad Program

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Exhibit 2 Ethnicity of the Participants at MSU Study Abroad Program

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Exhibit 3 Description of Home States of the Participants at MSU Study Abroad Program

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RESULTS

ANOVA Test of Differences in Cultural Intelligence based on Gender and Ethnicity

We tested the four factors of CQ for differences as a function of gender and ethnicity using ANOVA. Exhibits 4 and 5 summarize these results.

CQ Strategy represents cultural metacognitive capabilities. This is characterized by a person’s ability to make sense of culturally diverse experiences and includes a self-awareness of one’s own cultural knowledge, planning and strategizing before a cultural encounter, and checking assumptions and adjusting mental maps when actual experiences differ from expectations. As illustrated in the exhibits and tables below, the average score for metacognitive CQ was 5.49, with female participant’s marginally lower average than male but no significant differences across gender or ethnicity. CQ Knowledge represents knowledge about how cultures are similar or different. The average score for cognitive CQ was 4.12, the lowest score across the four dimensions. Analysis showed significant differences across gender – such that women had lower scores than men (3.90 vs. 4.42), and also showed that white students scored lower than those in other ethnicity groups. CQ Motivation represents a person’s interest and confidence in functioning effectively in culturally diverse settings. The average score for motivational CQ was 5.91, the highest score across the four dimensions. Men had higher average scores than women, and black participants had the highest motivation scores (6.42), but these differences across gender and ethnicity were not statistically significant. CQ Behavior represents a person’s ability to adapt verbal and non-verbal behavior to fit diverse cultural contexts. The average score for behavioral CQ was 5.03. Thus, it was higher than the average score for CQ knowledge but lower than the average scores for CQ strategy and CQ Drive. Men had slightly higher scores for behavioral CQ than women (5.19 vs.4.91), but this difference was statistically significant. Asians scored the higher in behavioral CQ (5.47) than those in other ethnicity groups and Black students scored lower on behavioral CQ than their White and Asian counterparts.

Exhibit 4 Descriptive Statistics and ANOVA Test for CQ Scores between Gender Groups

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4.42

6.00

5.195.29

5.44

3.90

5.84

4.915.02

5.49

4.12

5.91

5.035.14

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Strategy Knowledge Motivation Behavior General CQ

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F (ANOVA) .41 4.36** 1.00 2.21 3.45* p-value .52 .04 .32 .14 .07

Note. *** p <.01, ** p <.05, * p <.10 indicate significant differences at the significance level of .01, .05, and .10, respectively.

Exhibit 5 Descriptive Statistics and ANOVA Test for CQ scores across Ethnicity Groups

5.40

3.86

5.88

4.97 5.03

5.75

4.86

6.42

4.08

5.28

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4.86

5.93

5.47 5.505.69

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F (ANOVA) .89 4.24*** .46 3.18** 2.35* p-value .45 .01 .71 .03 .08

Note. *** p <.01, ** p <.05, * p <.10 indicate significant differences at the significance level of .01, .05, and .10, respectively.

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Participant’s CQ Scores compared to the World Wide Norms and Prior Research

We compared participant CQ scores with the CQ world-wide norms. Average study abroad participant scores were higher than the norms (by 13-31%). This is not surprising because those who choose to participate in study abroad are typically more interested and more open to the positive aspects of cultural differences. In general, the results indicate that the overall CQ scores (based on prior research) are fairly low, with the lowest being knowledge CQ.

In addition, we compared CQ scores for the study abroad students with the CQ scores of undergraduates, as reported in prior research (Ang et al., 2007). Again, study abroad participant scores were higher (by 13% to 17%). Exhibit 6 summarizes the student score comparisons.

A practical application of this analysis was that each participant on the study abroad program was

provided (prior to their trip) with their personal score, which they were asked to compare to the worldwide norm. This allowed them to proactively focus on areas of weakness and use that information to develop their CQ capabilities on that dimension while on the study abroad program.

Exhibit 6 Comparison of Participants’ CQ scores with Prior Research

Analyzing Cultural Intelligence Before and After Study Abroad

Our research design included T1 and T2 self-ratings of CQ and ratings provided by external observers (friends/family) as well as other study abroad participants. This allowed us to test for possible differences in CQ scores at the beginning of the program (T1) compared to after completion of the program (T2).

Results of the pre-post test are presented in Table 1 and show that participating in the program

increased student perceptions of their own cultural intelligence on all four dimensions (meta cognitive, cognitive, motivational and behavioral) by 11% to 32%, with the highest increase in cognitive CQ.

Results also show the importance of obtaining peer ratings from other program participants. This

is because other program participants have multiple opportunities to interact with and observe focal participants during study abroad and thus have rich exposure to their CQ capabilities. Partner ratings of CQ increased 7% to 15%, with the lowest increase in cognitive CQ. Finally, external observer (friends/family) ratings at T2 demonstrated a 9% increase in behavioral CQ.

TABLE 1

DISCUSSION AND IMPLICATIONS OF THE RESEARCH

The results of the research have immediate and long term implications. The most obvious immediate benefit was the value of the personal feedback reports participants received with their CQ scores and the personal development plans they developed for how they would use and enhance their CQ capabilities. Thus, they gained direct self-awareness of how they saw their own CQ capabilities relative to the world-wide norms scores. This helped them work on specific CQ capabilities during the study abroad program, gave them tangible evidence of how they changed as a function of the program, and guided them in ways to use their CQ strengths after the program.

As future business leaders who will potentially operate across national borders and who will definitely have to function in cultural diverse settings, awareness of CQ capabilities is increasingly important for overall effectiveness. Comparison of pre and post CQ scores provides strong evidence that the study abroad program helped them enhance their CQ capabilities. Finally, the personal development plans they developed at the end of the program should help them apply their CQ strengths on an ongoing basis in the work and personal lives.

Table 1

Cultural Intelligence Before and After Study Abroad

Self-Report * Observer-Report * Observer-Report **

(friends, family, + study abroad partners) (study abroad partners only)

T1 – T2 % change T1 – T2 % change T1 – T2 % change

Metacognitive CQ 4.83 - 5.74 +19% 5.76-5.74 no significant difference 4.99-5.76 +15% Cognitive CQ 3.92 - 5.18 +32% 5.12-4.91 no significant difference 4.70-5.03 +7% Motivational CQ 5.60 - 6.23 +11% 6.11-5.89 no significant difference 5.29-5.85 +11% Behavioral CQ 4.48 - 5.32 +19% 4.85 - 5.28 +9% 4.89-5.58 +14% * n = 76 (T1 n = 82; T1 and T2 n = 76). ** n = 48 (subsample of observers who participated in study abroad)

Based on these results we recommend that organizers and facilitators of study abroad programs include assessment and feedback of pre- and post- CQ scores as a standard part of their programs. This will help structure study abroad experiences so that students focus on how their capabilities compare with the world-wide norms and then use this information to further enhance their CQ capabilities.

For additional information on cultural intelligence, see http:/www.culturalq.com

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HOSPITALITY STUDENTS’ PERCEPTIONS OF DIGITAL TOOLS FOR LEARNING AND SUSTAINABLE DEVELOPMENT

Alisha Ali

Sheffield Hallam University, Sheffield, UK Email: [email protected]

Hilary Catherine Murphy Ecole hôtelière de Lausanne, Switzerland

Email: [email protected]

Sanjay Nadkarni Emirates Academy, UAE