High staying cost and unbalance of hotel room supply due to the policy oriented to luxury and upscale hotels is one problem of Korean hotel industry. And the shortage of lodging facilities compared to forecasted-increasing domestic travellers' demand ...
High staying cost and unbalance of hotel room supply due to the policy oriented to luxury and upscale hotels is one problem of Korean hotel industry. And the shortage of lodging facilities compared to forecasted-increasing domestic travellers' demand is another problem. This study is to present the implications and policy criteria for the activation of Korean mid-price & budget hotels to solve these problems through ways of literature study and questionnaire survey for the managers working at mid-price & budget hotels.
The detailed purposes of this study are as follows. First is to discover the strategies for strengthening competitiveness influencing management performance of mid-price & budget hotels. Second is to classify those hotels by management strategy type and analyse the differences of strategies for strengthening competitiveness by management strategy types. Third is also to certify the differences of strategies for strengthening competitiveness by hotel features, that is, chained or not, hotel grade and hotel location.
The questionnaire survey from March 20 to April 10, 2007 for 115 managers who are working at 18 hotels among 56 first and second grade hotels in Seoul which are regarded as mid-price & budget hotels in Korea, discovered the below findings .
First, mid-price & budget hotels were classified by 4 management strategy types , that is, diversified management strategy type, marketing/cost management strategy type, service management strategy type and passive management strategy type. These 4 types showed the differences by the hotel features.
Second, chained-management factor, one of the strategies for strengthening competitiveness, had positive influences on financial performance, whereas utilization of information system factor had negative influences on financial performance. And also chained-management had positive influences on employee satisfaction, whereas chained-management and additional service enlargement had positive influences on guest satisfaction.
Third, diversified type showed high mean value, in adverse, passive type presented low mean value concerned with every strategy for strengthening competitiveness. Especially, chained-management was thought important first in diversified type, second in marketing/cost type, third in service type and last in passive type.
Fourth, chained hotels showed higher mean values than no chained hotels concerned with chain management and utilization of information system, meanwhile, south hotels presented higher mean values than north hotels concerning with additional service enlargement. In case of hotel grade, there was no difference.
On the base of these findings, the following implications were brought about.
First, chained hotels and north hotels are assumed to be leading mid-price & budget hotels in Seoul and it is desirable to scrutinize these hotels' management strategies when benchmark and/or activation policy for mid-price & budget hotels are taken.
Second, chained-management which contains using famous hotel brand, franchising and management contract, strategic alliances such as co-marketing and outsourcing and strong relationship with travel agencies etc. can be very important instrument for strengthening competitiveness of mid-price & budget hotels. And negative effects of utilizing information system on management performances seems to mean that the input to building and operating IS was much more than the output from them.
Third, judging from the aspect that 'chain' basically means strategic alliance with world-class hotels in many areas like marketing, service, cost and business rationalization, the fact that diversified type hotels consider chained-management factor important for competitiveness could be thought natural. So the diversified type which pursues many kinds of strategies aggresively can be strategic model type for mid-price & budget hotels in Korea.
In short, in order to adapt the new environment and survive in the speedy
change age mid-price & budget hotels in Korea must strengthen competitiveness influencing management performances. This study verified that 'chained-management', one of the strategies for strengthening competitiveness, had positive influences on financial performance and non-financial performance. So it is concluded that 'chained-management' is a strategically important issue for mid-price & budget hotels and 'chain management' can be a milestone for government support policy or profit modelling of mid-price & budget hotel in Korea.