Computer usage in hotel and foodservice management education

Lloyd Joseph Dennington ,  Purdue University

Abstract

During the last ten years, computer usage in the hotel and foodservice industries has shown explosive

growth. Since hotel and foodservice management (HFM) education prepares its students for industry,

the use of computers in HFM education should have also shown substantial growth.^ A review of the

literature during 1988 found no comprehensive data regarding computer usage in HFM education.

Therefore, a study was conducted using the 108 affiliated institutions of the Council on Restaurant,

Hotel, and Institutional Education in the United States to determine computer usage in HFM education.

This study utilized a questionnaire containing 33 questions covering demographics, budget, computer

integration, computer software, computer hardware, and attitudes about computer use. The response

rate was 61%.^ The major results of the study indicated: The computing budget averaged 5.4% of the

operating budget. The respondents require computer usage in 34% of the undergraduate core courses

and in 48% of the graduate core courses. Only two software applications, word processing and

spreadsheet, were used by more than 50% of the respondents with WordPerfect and Lotus 1-2-3 being

the most often mentioned packages. There was an average of 20 students per microcomputer with

66% of the machines either being IBM or IBM-compatible. The attitudes of the respondents showed

that most of the respondents do not agree that computer budgets, use of computers in the curriculum,

software availability, or hardware availability are adequate.^ This study has established a baseline of

information about HFM computer usage as of September 1, 1988. The researcher had indicated where

further research needs to be completed and has outlined some steps that should be taken if graduates

of HFM programs are to be properly educated to accept the responsibilities that employers require. ^Degree

Ph.D.Advisors

Major Professor: James D. Lehman, Purdue University.Subject Area

Business Administration, Management|Education, Curriculum and Instruction

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An Assessment of Hospitality Management Study Programmes in Greece: Industry’s Perspectives Eleftheria N. Prinianaki1TEI of Crete, GreeceAbstract:The purpose of this study was to examine and assess the relevance of hospitality management programmes to the current and future industry needs in Greece from an industry perspective. Two single session focus groups consisting of hotel general managers highlighted the need for hospitality management programmes to address industry current and future requirements. The outcome of the study, based on qualitative data, also supports the need for a virtual education/industry co-operation. Keywords: hospitality education, industry needs, hospitality curriculum

INTRODUCTION On the threshold of the third millennium, the tourism industry faces a constant changing and demanding environment where the human resources element plays a vital role. This places even g reater demands on the tourism and hospitality management programmes which train future managers. Yet, rela ted literature documents that tourism as an area of study is attested to be immature. The lack of a discipline base, agreed definitions and conceptual frameworks are but a few issues for ineffective curriculum development (Cooper et al., 1998). Hence, in the international scene, tourism-related programmes are as diverse as the industry they serve and the types of academic units they belong to, while most of them are not relevant to the needs of the real world (e.g Fayos-Sola, 1995). To compound the situation further, academe and industry have differing opinion as to why the approaches employed by educational programmes to preparing present and future generations of managers are inadequate. In Greece, the increased importance tourism and the expansion of the hotel sector, coupled with the trends and developments occurring within the industry, have generated

critical needs for w ell-rounded, well-educated and capable human resources in fields related to the...Continues for 22 more pages »

emonstrate critical and evaluative interpretation and application of theoretical IT/ e-

business concepts to a current tourism and hospitality market situation in order to

build sustainable competitive advantage.

I Introduction

Accompanying the technological revolution of the 1990s there are many new opportunities

and challenges for the tourism and hospitality industries. Since tourism, global industry

information is its life-blood and technology has become fundamental to the ability of the

industry to operate effectively and competitively. Poon (1993) suggests that the whole

system of information technologies is being rapidly diffused throughout the tourism industry

and no player will escape information technologies impacts.

The report below gives an insight into the importance of application of information

technologies and the use of Internet in tourism and hospitality industries. Two given

strategic frameworks provide the analysis of the Internet and its impact on these sectors.

This paper also aims to show how technological innovations and information systems can

be beneficial for the hotel companies, by using the example of Hilton Hotels Group.

II IMPORTANCE OF TECHNOLOGY IN TOURISM AND HOSPITALITY SECTORS

Market wisdom today suggests that hospitality companies must embrace technology to

compete against traditional competitors, as well as entrants that build their businesses with

the latest technology. In this changing environment, new models of distribution must be

designed to lead the charge. A strategic information management function should facilitate

the business mission of its enterprise through managed information, managed processes,

and managed Information Technology (IT).

Broadly, current applications of computer technology in the hospitality and tourism

industries can be grouped into three main areas, operational, guest services and

management information. The overall functionality of these applications is similar across a

range of different hospitality organisations though the technology used to support them may

vary. Large, city-centre hotels, for instance, tend to use minicomputers for their property

management system (PMS) work. Microcomputers are employed elsewhere.

The diffusion of the system of information technologies in tourism will increase the

efficiency, quality and flexibility with which travel services are supplied. It has already led to

the generation of new services, such as online brochures and interactive videotext.

Technology has the greatest impact on the marketing and distribution of travel but leaves

relatively untouched the human-intensive areas of guest-host relations and supplier-

consumer relationships. Information technologies applied to the tourism system will

increase the efficiency and quality of services provided and leads to new combinations of

tourism services. All this could not be achieved without changing the manifest human high

touch content of travel. It is the systematic use of the system of information technologies by

all tourism suppliers, together with its profound impact on the travel industry, which creates

the foundation for a new tourism best practice and a total system of wealth creation.

Information and communication technology can be used not only for operational purposes,

but also for tactical and strategic management. This empowers tourism and hospitality

enterprises to communicate directly and more efficiently with prospective customers and

suppliers as well as to achieve competitive advantage.

One of the most established ways to analyze and develop complex systems (such as e-

business) is to organize them in a meaningful structure. The four Ps model provided in

Appendix A fully addresses the Internet product in relation to the shifting consumer

expectations.

III IMPACT OF INTERNET ON TOURISM AND HOSPITALITY INDUSTRIES: STRATEGIC

FRAMEWORKS

With the advent of the Internet, marketers have access to the technology to customize

products and communicate directly with smaller target markets. The Internet is now firmly

established as a marketing tool. It serves as an integral part of the marketing mix, serving

as a digital distribution channel as well as an electronic storefront.

Consumers in the Internet medium are more than just passive recipients in the marketing

process. The Internet is an interactive medium as opposed to traditional marketing which

usually allows only one-way communication from marketer to consumer

1.0 PEST ANALYSIS

1.1 POLITICAL / LEGAL

Government policies can have a dramatic effect on the Internet and its potential

development, by introducing new policies and limitations. The privacy and security issues

are also very significant. Therefore, Internet providers have to consider ethical matters and

the usage of personal data stored within the networks. For the full commercial potential of

electronic commerce and Internet to be exploited by the tourism industry and its consumers,

several issues have to be considered, which include an increase of security of

transmissions, copyright issues, reduction of user confusion and dissatisfaction,

establishment of pricing structures for distribution of information and reservations and

enhancement of the standardisation of information and reservation procedures. Credibility

and accountability of the information needs to be secured and equal access for smaller and

larger partners should be developed.

Tourism organizations deploying IT and Internet for competitive advantage can also face

legal risks due to possible violation of anti-trust laws and violation of privacy. Policies and

procedures should be created to promote the understanding of potential legal risks. This

understanding will encourage organizations to obtain help from legal experts to design

controls to subdue such risks.

Other political changes, for instance increasing unemployment, competition laws and

planning policies, would only have an impact on tourism and hospitality organizations if they

are using technological advances and Internet distribution channels.

1.2 ECONOMIC

The Internet is not severely sensitive to the economic cycles. However, it is considered that

the tourism or hotel sales from the Internet will be much affected by economic changes in

those countries, from which the customers are booking or reserving the product. These

include changes in economic growth, interest rates, inflation or currency fluctuations that

can eliminate tourism organisation’s cost advantage and can have an adverse affect on the

margins.

1.3 SOCIAL / CULTURAL

Demographic changes and changes in customers’ attitudes towards new technology and

Internet, in particular, will have a direct impact on Internet and hospitality and tourism

industries respectfully. Nowadays customers are becoming more skilled and advanced in

the use of technology. The social system dimension must include the larger social and

political processes through which the interests of the different social groups interact with

one another and with the technology.

1.4 TECHNOLOGICAL

The computerised networks and electronic distribution systems developed in the 1970s led

to dramatic structural changes within the tourism industry. According to Klein and Quelch

(1996) A CRS is essentially a database that enables a tourism organisation to manage its

inventory and improve accessibility to information within and between its partners. Airlines

pioneered the CRS technology in the 1980s, by expanding geographical coverage and

integrating horizontally and vertically to embrace the entire range of intermediaries and

principals. Individual product suppliers became aware that systems integration, and the

subsequent creation of a “shop window” that allowed products to be displayed and

purchased anywhere in the world, would be a crucial determining factor in the

competitiveness and profitability of operations. As a result, the vast, new all-encompassing

GDSs matured from their original development as airline CRSs. GDSs are one of the major

drivers of information technologies in tourism and hospitality industries, as well as being the

backbone of these industries. GDSs are the single most important facilitator of the

globalisation of ITs.

Developments in GDSs were complemented by the introduction and expansion in the mid-

1990s of the Internet. (Peters, 1997) This development facilitated an unprecedented

opportunity for distribution of multimedia information and interactivity between principals and

consumers. This is especially so given the Internet’s interlinking structure which enables the

provision and packaging of themed information, products and services. The information on

the Internet, however, is chaotic and loosely structured, mainly due to its immaturity and the

lack of any type of standardisation.

It is anticipated that eventually GDSs will take advantage of the openness of the World

Wide Web (WWW) and develop suitable interfaces for consumers and the industry. Sabre

has already launched Travelocity, an electronic travel agency, while other GDSs have

announced similar actions or cooperations with travel providers on the Internet. These

include Worldspan with Expedia and Amadeus with the Internet Travel Network.

IT and the Internet have transformed distribution of the tourism product to form an electronic

market-place where access to information is instantly achievable. Principals and consumers

continue to experience unprecedented interactivity. The dramatic ongoing development of

the Internet has resulted in the re-engineering of the entire production and distribution

process for tourism products. As a consequence of this technological explosion, the

packaging of tourism is becoming much more individualistic, leading inevitably to a certain

degree of channel disintermediation, a process that will offer new opportunities and threats

to all tourism partners.

2.0 PORTER’S FIVE FORCES ANALYSIS

2.1 THREAT OF NEW ENTRANTS

New entrants tend to bring new capacity, the desire to gain market share and substantial

resources. The seriousness of the threat of entry depends on the barriers present and on

the reaction from the existing providers. The Internet as a distribution source has relatively

high entry barriers, constraining all new comers.

Lashley and Rowson (2005) suggest that recent IT developments, offer new opportunities

for tour operators. For instance, several tour operators distribute electronic brochures and

booking forms through the Internet directly to consumers. This approach provides a number

of important benefits to tour operators. This includes concentration on niche markets by

offering customised packages and an ability for tour operators to update brochures

regularly. It also significantly reduces the costs of incentives, bonuses and educational trips

for travel agencies.

Government’s policies for reducing buyers’ power and pricing wars can limit entry to this

distribution sector with such controls as license requirements and limits on access to

technical tools.

2.2 BARGAINING POWER OF SUPPLIERS

In respect of tourism providers, the Internet provides an infrastructure for the global

distribution and inexpensive delivery of tourism-related multimedia information. It also

empowers the consumer though the provision of tailor-made products which meet their

individual needs, so bridging the gap between the consumer and destination/supply in a

flexible and interactive way. The Internet allows organizations to skip over parts of the value

chain. A more successful strategy would be to enter into joint ventures or expand a

supplier’s website to offer competitors’ products.

2.3 BARGAINING POWER OF CUSTOMERS

The Internet as a channel of distribution has become one of the most successful channels

used by consumers to research travel options, compare prices and make reservations for

airline tickets, hotel rooms and car rental. Therefore, the provision of online travel services

is the single most successful business-to-consumer (B2C) segment on the Internet.

Collins, Buhalis and Peters (2003) state that the overall percentage of hotel rooms booked

online grows tremendously each year and will be increased by 20 per cent in 2005.

Moreover, the Internet is also having a profound effect on the internal and external

operating procedures within the hospitality industry (Cheng and Piccoli, 2002)

The Internet helps to access new customers on a global basis and enables to streamline

operating procedures. Integrating daily operations such as sales, marketing and distribution

as well as aggregating demand to drive down prices on the procurement side are some of

the major benefits of the Internet. The majority of large tourism and hotel organizations are

currently present in the global distribution systems (GDSs). GDSs serve more than 50,000

travel agents world-wide (Collins, Buhalis and Peters, 2003). The Internet is one of the

mains distribution channels, which enable tourism and hospitality companies to overcome

their challenge of being globally represented.

2.4 THREAT OF SUBSTITUTE PRODUCTS OF SERVICES

Travel agencies are the main substitute to the Internet sales, when it comes to buying hotel

bedrooms or tourism packages. Direct advertising and other sources of media also serve as

a promotional or informative mean, which can be used instead of the Internet. With the

Internet it is possible to gain permission to discuss the products, as opposed to interruption

marketing, such as television commercials.

2.5 BARGAINING POWER OF COMPETITORS

The competitive environment of Internet and its impact on the hospitality and tourism

industries is widely recognized as being complex, dynamic, and highly segmented.

Increasingly hotel chains are competing directly with one another in the same locations.

This is a notable change for an industry reliant on specific locations to limit the threat of

competition. All major hotel chains are currently entering the Internet market of sales and

communications. As organizations are dependent on their environments for resources, they

will attempt to manage their dependency by developing and maintaining strategies. Hotel

groups are being forced to follow other sectors by implementing marketing strategies, often

based on product differentiation, growth in new markets, high value for money, or emerging

brands. Such strategies are formulated and implemented within the context of

environmental uncertainty and require an understanding of industry structure and

environmental change.

IV EFFECTIVE IMPLEMENTATION OF IT/IS TO HILTON HOTELS GROUP

Whichever major city you find yourself in; you have a big chance to come across a Hilton

Hotel. Hilton International Group is a leading global hotel brand and the Company, with an

expanding portfolio of hotels, mainly Hilton Brand (own the rights to the trademark),

Scandic, Conrad and Vernon Hotels. The company operates 380 hotels worldwide and is

represented in 66 countries. Its 80,000 strong workforce looks after an average of 8 million

guests every year. (Annual Report, 2003).

The ability of computers to store, process, manipulate and distribute information has greatly

improved the efficiency of Hilton hotels. By releasing staff time from the ordinary paper-

pushing functions within the hotel, computers can greatly enhance the opportunities for staff

utilisation in the quality of service that hotels offer their guests can be greatly improved.

TECHNOLOGY USAGE IN HILTON HOTELS

Hilton International use computers in their core-information processing centres of marketing

and distribution, front-office, back-office and food and beverage control. Information

technologies are diffusing in eight key areas of hotel operations:

1. marketing, distribution, reservations and sales;

2. telecommunications;

3. guest accounting;

4. room management;

5. back office;

6. food and beverage control;

7. energy management; and

8. safety and security.

Product distribution is a critically important function of Hilton International. Information

technologies, such as computerised reservations systems and video brochures, assist

hotels in marketing and distributing their bed-nights. For Hilton, the employment of

information technologies to link together their front-office, back-office and off and beverage

departments may be necessary for the efficient and cost-effective delivery of their services.

However, it will not be sufficient to guarantee the sale of hotel bed-nights. Without links to

international marketing and distribution networks, hotel bed-nights cannot be sold.

Reservations are a key to the sale of hotel bed-nights. Reservation systems, depending on

the software and sophistication, contain information and generate various reports on rooms

availability, cancellations, etc. In addition, the database can generate forecasts on expected

arrivals, departures and rooms sold. Information contained in, and generated by, hotel

reservation systems is an invaluable source of marketing information and can generate

mailing lists, client profiles and preferences. It can also monitor hotel performance through

the development and processing of guest questionnaires. Reservation systems also allow

hotels to carry out travel-agency and tour-operator analyses in order to determine which

agencies and operators consistently generate business for the hotels.

There are two principal areas in which information technologies are helping hotels to

improve their communications in their internal inter-departmental communications and in

their external links with agents, suppliers, reservation systems and data networks. The

internal inter-departmental links of the hotel are facilitated by computers and

communications technologies, which serve to integrate the front-office, back office and

food-beverage operations. This is facilitated through computer-to-computer

communications. Cooper and et al. (1999) believe that the external hotel communication

links are necessary between hotel and head office, between hotels and their national

environment, such as stock market information.

Communications technologies used by Hilton International include digital telephone

systems, teleconferencing, satellite broadcasting, videotext and audiovisual information

tools, image communication and various communication networks for reservations and

communications.

Telephone systems used at Hilton Hotels have been substantially improved to incorporate

features such as call accounting systems. Automatic call-accounting systems now help to

transform their telephone calls into important profit centres of the hotels. As marketing

technique, for instance, hotels can offer long-distance telephone calls at discount rates to

their guests and still find it profitable. (Cooper and et al., 1999; Lockwood and Medlik, 2001)

Room-management systems can give updated information on room occupancy and status

and they assist in scheduling housekeeper duties for maximum efficiency. Rooming lists,

arrivals, stay-overs, extended stays, departures and room preferences can all be handled

by room-management systems.

Electronic data interchange (EDI) is an open and essentially cooperative technological

infrastructure. While it is possible to gain short-term competitive advantage from embracing

EDI ahead of competing organisations, it is now generally accepted that there is no scope

within the inter-organisational system for the kinds of barriers to competition suggested by

the work of Porter and other. (Porter, 1980).

Large hotel chains, as Hilton Hotels Group, have considerably more ability to control the

way in which they implement EDI. Cooper (1989) points that EDI’s ability to support inter-

organisational processes forming part of a multi-organisational value chain as part of

business process redesign. Many companies tend to view EDI merely as a way of

transmitting formatted data across organisational boundaries.

The integration of computers and communication technologies allows hotels to control their

internal operations and external operations from a single integrated management system.

(Kandampully and Duddy, 1999; Allen and Fjermestad, 2001) This comprehensive system

of information management can become a very powerful toll for wealth creation for the hotel

industry. With a comprehensive system in place all levels of management are supposed to

be involved in it and to depend on it to inform most decision-making.

V Conclusion

It is beneficial for a hotel chain to integrate appropriate new IT into their entire operation. It

is generally accepted that IT and Internet should be treated as strategic tools than tactical

issues, and as concerns of general management. Senior management of the hotel chain

must drive the process which determines the extent and direction of business re-

engineering and take responsibility for the implementation of the plan.

Additionally, technology cannot be considered as acting alone. It is a product of society; it is

also part of a larger environment in which other forces are at work. We rely on information

itself, not necessarily its facilitating mechanisms, to assist decision making and guide

actions. It is important to be knowledge base, so that to find a use of information.

Internet provides unprecedented and affordable opportunities for the global representation

and marketing for both large and small tourism suppliers and for hotel operators as Hilton

Hotels Group.

APPENDIX A

MARKETING MIX ANALYSIS

Product

A product is anything that can be offered to a market for attention, acquisition, use, or

consumption that might satisfy a want or need. In an e-commerce marketing strategy it is

important to remember that information is now its own viable product. The Internet can

serve as a platform for new product innovations. Companies can use the direct access to

consumers to collect information that will help them better develop products to meet the

consumers’ needs. For international hotel chains this can provide adaptations and

customizations for local markets or create niche products. Companies can also leverage

their reach to consumers to sell advertising during transactions.

Collected Internet information would provide hotels with the ability to spot entirely new

markets. By developing an online customer base and ensure that its products are offered on

sites that have all the products consumers want. Information has become its own product

on the Internet. The Internet serves as a platform for new product innovations.

Place

For most companies the place aspects of the marketing mix involve marketing channels.

Marketing channels can be defined as interdependent organizations involved in the process

of making a product or service available for use or consumption. Due to the size of its

marketplace, the Internet will have the most profound effect on place in the marketing mix.

E-commerce puts the purchase decision anywhere a connection to the Internet exists.

It is critical to quickly develop a large customer base in e-commerce. Bersnstein and Awe

(1999) claim that customer loyalty must be first gained in the context dimension. The first

mover advantage is very important because Internet standards could make the competitive

advantages of a particular context difficult to sustain. By their very nature, standards will

allow organizations to duplicate the design and features of competitors’ Web sites.

Price

Price is the only element of the marketing mix to generate revenues. Internet pricing

decisions will be just as important as they traditionally have been. The Internet will lead to

increased price competition and the standardization of prices. Klein and Quelch (1996) point

out two counteracting effects of the Internet on price. First, a supplier can use the

technology to discriminate pricing between consumers, for example, in different countries.

However, if they do not take precautions the consumers may be able to quickly find out

about the price discrimination and object to it.

Organizations will have to employ new pricing models when selling over the Internet. The

ability of technology to offer services at a cheaper cost would make it difficult to determine

the appropriate price for a consumer. Voicemail, for example, is solely an information-based

service, which provides the consumers with a replacement for the traditional answering

machine. Any hotel chains should be prepared to respond to increased price pressures on

the Internet and high level of competition.

Promotion

Promotion encompasses all the various ways an organization undertakes to communicate

its products’ merits and to persuade target customers to buy from them. Advertising,

research, sales, promotions, coupon distribution, and customer support can all be done on

the Internet. The Internet provides a low cost way to hospitality companies to build a direct

link with the consumer. Incumbents can use their traditional sources of consumer

information (e.g. product testing, focus groups) in addition to the information that is easily

collected from e-commerce sites (e.g. sales information, customer demographics).

Driver (1999) claims that the use of the Internet by airlines to communicate information is

becoming prevalent. This relates both to hard information, in the form of schedules and the

availability of fare information, and to the softer areas of more general company information.

Web presence is itself significant but the design of the site even more important. From a

consumer perspective it must be relevant and useful, with easy navigation features so that

the time spent on a visit is fruitful. Moreover, the site should invite revisiting for there is a

critical difference in the initial motivation to visit and to contact again.

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