Gold Prince Motel: Economic Environment Management Report

Introduction

This proposal outlines a research project that will investigate the ability of Gold Prince Motel to successfully manage their economic environment. It will also look at how marketing, human resources, empowerment, resource management and yield management are applied by Gold Prince.

Therefore, the purpose of this project is to display how the concepts such as marketing, human resources, empowerment, resource management, yield management and sustainability apply to Gold Prince. Besides, the proposed project contains recommendations for management of the Gold Prince Motel concerning the main concepts related to hotel business pertaining to a small five-star motel.

Background

Hotel business can be characterised as a complex one comprising a number of different features related to the management, resources, employees and customers. As such, the work of a manager influences the quality of services provided by the hotel employees to the customers.

As suggested in the study by Silva (2005), “continuous improvement should be second nature to everyone in an organisation” (p. 24). In this respect, a manager should be aware of the causes of customers’ dissatisfaction: Proper techniques in rating the customers’ satisfaction were reported by Jones and Lockwood (2002) to select the best practices in assessing the services and outlining further actions for management.

Moreover, proficient management can result in a higher profitability rate and better services as well as high rates of room occupancy and overall rating of the hotel. It is necessary to make use of such practices as empowerment and creation of a web site for the motel in the framework of marketing measures.

Ratings and the quality of services in combination with pricing techniques contribute to the overall value of the hotel. For instance, in China the hospitality industry standards are maintained through ratings and certification issued by the government ensuring that the level of services provided corresponds to the standards required by the government and expectations of customer (Yu, 1999, p. 94).

Pricing control over the hotel industry products should be gained so that companies could influence the prices; moreover, the Internet enables companies to react to the changes in the market of hotel business adequately and in timely manner taking into account the popularity of resorts and room occupancy rates (Wood & Brotherton, 2008, p. 312). Finally, “The Internet is thus perceived as a potential electronic channel to influence prospective customers” (Yu, 1999, p. 310).

Marketing

The issues of marketing can be applied to all types of business with regard to the size and specialisation. However, the approach is different for large and small businesses due to the manner of application (Fillis, 2002; Gilmore et al., 2001; Hill, 2001). As Gilmore et al. (2001) observe that the marketing in small business is characterised as unstructured, loose, unofficial and random.

For instance, the manager of a small hotel/motel would not make plans for future marketing interventions and actions to be made unlike the large hotels that have strategies concerning the training of staff members, recruitment, development, and other important aspects. In this respect, the marketing in large companies is well-planned and includes more long-term goals to be attained (Reijonen & Laukkanen, 2010), whereas the small companies rely more on the short-term attainable goals that do not require a strategic approach (Stokes, 2000).

As reported in the article by Reijonen and Laukkanen (2010), there should be some guidelines for marketing strategies related to small enterprises because most studies are aimed at providing large companies with sufficient theoretical background concerning the marketing approaches, the best practices, and other issues.

Limitation is one of the reasons why small firms have marketing strategies that differ greatly from those of the large companies. As such, time and resources as well as training level and knowledge management issues are limited for small companies due to the insufficient capital and the overall size of the firm (Gilmore, 2001). Therefore, complicated theories and difficult process would be unsuitable in small business (Hogarth-Scott et al., 1996).

Segmentation

However, there are some fields of marketing applied to large and small companies evenly: “segmentation, customer orientation, targeting, positioning, and seeking for competitive advantage” (Reijonen & Laukkanen, 2010, p. 115). For instance, segmentation applied to small motel is considered to be really challenging because it is aimed at dividing the entire scope of potential guests into groups in accordance with certain principles and characteristics.

As claimed by Storbacka (1997), the outcomes of the segmentation as a part of marketing are to raise the business profitability. So, the process of segmentation should be applied to small hotel as an integral part of the marketing strategies.

The behavioural characteristics of the guests are considered to be the major principle according to which hotels shape their segmentation and placement strategies as well as the overall marketing aimed at increasing profitability, improving the quality, and approaching the customers in the most appropriate way.

As such, different information systems are used to collect and process information for further application (Lee and Park, 2005); the information about guests includes attitude towards colours, design of rooms, TV size and type, number of floors, and many other details that contribute to the application of effective marketing strategies by hotels.

For instance, ‘knowledge-based marketing’ is designed in order to meet the needs and expectations of customers, gain new customers, and attract customers (Shaw et al., 2001), that may use other brands. In this respect, information about guests and their purchasing habits is of great importance for hotels. As applied to customers, segmentation techniques can include some customized products and services (Park & Kim, 2003), targeted at existing and potential travellers such as special offers, discounts, and gifts.

Differentiation

Differentiated marketing activities used for improvements in the services and products the company produces can be carried out with the help of segmentation. Price and quality ratio can be considered one of the major principles of segmentation when applied to small businesses.

At the same time, social groups and preferences typical of representatives of certain social groups are another criterion for segmentation strategies implemented by small businesses. Creation of value in business is another concept that may help to differentiate the company from competitors and select the right strategies for marketing purposes.

As such, production and commerce are claimed to be the basic ways for creating value (Grant,2002), while the value of the company’s products/services directly influences the behavioural attitudes and consumption habits (Sheth et al.,1991), pricing ( Monroe, 1990) and profitability (Grant, 2002).

Competitive advantage is one of the principles common for large and small businesses as a part of marketing strategies; it can be gained through value-creating (Huber et al., 2001), as well as brand loyalty (Lam et al., 2004). Understanding the value of the hotel and its services is essential for a manager as he/she is responsible for implementing marketing techniques that are aimed at increasing the value thus helping to gain competitive advantage.

Perception of a product/service by customer in terms of value is related to the analysis of the value by customer with regard to the direct benefits. As such, the study by Reijonen and Laukkanen (2010) focuses on the necessity of differentiating the value and making differences for different customers.

In other words, a hotel manager should not take the approach of offering everything to every guest because some exclusive offerings should be aimed at creating value. For instance, if a service is offered to all customers, it becomes a distinctive feature of the company or one of its brands while offered to certain category of customers, a service may create value that would increase the competitive advantage of the company.

Information about markets and customers is the major aspect on which the further planning should be based because a company cannot decide what services/products to offer without knowing anything about the customers’ needs and competitive advantage of the rivals.

A narrow segment of population is usually targeted by small companies that have limited resources and are not able to meet the needs of all categories due to lack of resources (Reijonen & Laukkanen, 2010). Differentiated marketing activities can be applied to small businesses though there is little evidence of their effectiveness.

Internal Marketing

Small businesses have other marketing strategies than large companies because they have limited resources and should apply what they have to improve their performance. In this respect, internal marketing is one of the greatest strategic approaches that can be implemented to enhance positive effects of external marketing strategies such as segmentation and differentiated activities.

For instance, as suggested by Burkitt and Zealley (2006), employee and customer retention is one of the positive effects of internal marketing because employees become aware of the necessity of changes and cooperate with managerial on all levels while customers perceive changes and rate the services accordingly.

One of the areas where internal marketing techniques can be really effective is the small five-star hotel or motel. As such, it is necessary to outline the major areas and aspects to which the internal marketing techniques can be applied to a small five-star hotel.

Employees and their role in the company should be considered while implementing internal marketing activities. Knowledge and active involvement of the workforce in service delivery improves the firm’s brand (Ahmed and Rafiq, 2004) while the training and open access to information necessary for work improve the employees’ performance and empower them for completion of more challenging tasks.

Besides, small firms have a low employee retention percentage and this may hamper internal marketing since new staff will have to be trained as they come in to replace others that have left (Ahmed and Rafiq, 2004). As a contrast, large firms, are better placed at using internal marketing due to their large staff (Ahmed et al., 2003), large clientele base, and their more permanent staff (Ballantyne, 2003).

So, different interventions should be introduced to improve the relationships between the employees, employees and managerial, employees and customers, enhance the understanding of strategies and necessity of changes by employees, which may lead to active cooperation. Both SMEs and large firms can benefit from internal marketing by educating and training their staff on the firm’s culture (Ahmed et al., 2003), structure, products, and services (Ballantyne, 2003).

The goals should be set and attained to improve the services and maintenance of a small five-star hotel/motel. It is necessary to understand the potential customers and their needs and try to satisfy their needs at an affordable price. In other words, use of resources should be optimized in order to reach the desired effect (Rafiq & Ahmed, 2003).

As suggested in the study by Jakle, Sculle, & Rogers (2002), cleanliness and price are the main factors in accordance to which people use motels (p. 9). However, another approach should be taken into account while using a small five-star motel/hotel. The emphasis is on the rating and on the size of the place.

As the procedure of internal marketing is aimed at aligning, motivating, and empowering employees at all managerial levels to deliver a quality customer experience (Ballantyne, 2003), it is necessary to bring the issue of employees and training as well as empowering first.

Services and their quality are sure to be better in businesses where employees clearly understand the outcomes of their actions and realise the importance of being polite when required. This will influence how external customers perceive the firm (Ballantyne, 2003; Rafiq and Ahmed, 2000). For instance, if a person books a room in a small five-star hotel/motel, he/she wants a clean tidy room, polite staff, and everything for what the customer is ready to pay.

Human resources

The term human resources describe financial, lawful, clerical, technical and management employees, regardless of their skill level (Penrose, 1995). The capabilities and abilities of any hotelier/owner who affects hotel performance are referred to human resources (Inmyxai & Takahashi,2009).These resources consist of human abilities and behaviours that have been built into the business over time through training, skills, experience and knowledge (Grant, 2002).

Improving these human abilities relies on the desire of staff to gain knowledge and to become skilled at the activities of the firm (Inmyxai & Takahashi, 2009). The education and training of the hotelier/owner is a vital part of human resources in a small five star hotel.

Education

Education is defined as a “process of teaching, training and learning, especially in schools or college, to improve knowledge and develop skills” (Wehmeire et al., p. 488). The success of education is correlated with educated hotelier/ owner because the education contributes to build the absorptive capacity of hotelier/owner (Inmyxai & Takahashi, 2009).

As stated by Yusuf (1995), the level of training and education of the hotelier/owner is the key to success of a small business, which establishes the hotel’s ability to maintain itself in a complex environment and stay profitable. Furthermore, as noted by Schutjens and Wever (2000) a reasonable education gained by the hotelier/owner solves complicated issues within the business.

Both knowledge and qualifications psychologically contribute to the hotelier confidence (Inmyxai & Takahashi, 2009). Two researchers agree that the abilities and skills of managers are linked with their business success (Casson, 1982; Inmyxai & Takahashi, 2009).

Skills and knowledge gained by the hotelier/owner improve their ability to predict and make decisions under uncertain conditions. As indicated by Steffy and Maurer (1988) any change in the performance of the person in this position will generate a change in sales value, which may affect the profitability of the hotel.

Training

According to Steiner and Solem’s (1988) study, there is no relationship between managers’ level of education and the business success. This infers that the education and knowledge gained in schools and universities is not effective enough to enable a person to improve the performance of a hotel. However, an hotelier/manager may be required to attend training (Inmyxai & Takahashi, 2009) related to complicated hotel activities.

Training within and outside of the hotel can develop a manager’s capabilities and competence, while at the same time accomplishing the hotel’s aims. The power of training would result in an increase the productivity of the organization (Hall, 1993).

This is reinforced by the statement that “business learning should not be seen as a “luxury”; instead, it is how companies establish a foundation for their future” (Inmyxai & Takahashi, 2009, p. 163). Handy (1989) agrees that the success of a firm relies on “learning organization”. In the end, providing excellent training for managers could create client loyalty, which would definitely increase profitability (Schechter, 1994).

Empowerment

Different hotels try to improve their services and introduce new strategies that would make the level of services higher and help to gain customers’ loyalty. In this respect, empowerment is one of the management strategy tools that are usually used to enable employees make decisions in the front line.

At the same time, empowerment is said to be one of the main obstacles for the ‘command-control process’ (Somers, 1997, p. 32). However, empowerment is considered to be a positive tool that improves the performance of employees and satisfaction of customers.

The aspect where the employee should be empowered and the method to influence the situation are the key concerns in case the managers what to empower employees (Lashley, 2001, p. 135), especially if this is related to a small five-star hotel/motel where all employees got used to acting in accordance with specific instructions. In other words, a small five-star hotel/motel should be approached in a bit different way that a large hotel because of the employees and their role in its maintenance

. For instance, to manage something in a small hotel, it is not necessary to engage all levels of management whereas in large hotels it turns out to be inevitable. Empowerment can be understood differently in different countries with regard to the level of development of the hotel industry and tourism as well as perception of the hotel by customers being one of the most highly-motivating and encouraging factors in this case.

As claimed by Imai (1986), “In Japan, empowerment is characterised as being process-oriented rather than result oriented management” (as cited in Sofield, 2003, p. 96). Empowerment in the hotel sector, as stated by Jones and Davies (1991), is “basically about pushing responsibility and decision making down the organization to those employees closest to the customer” (p. 213 as cited in Sofield, 2003, p. 96).

In other words, many authors perceive empowerment as a means for a manger to get rid of some portion of responsibility whereas it simply encourages frontline employees for more initiative in decision-making. Group empowerment is another useful tool in management that enables a manger to control employees that are free to make decisions in accordance with the situational necessity.

“…autonomous groups do require an organisational culture where hierarchy, status, and control are set aside in favour of results, trust, and empowerment” (Pizam, 2005, p. 293). In this respect, hierarchy and corporate culture become important element of empowerment because employees should strictly realize what the optimal decision in every type of situation is.

According to Nykiel (2007), “empowerment can be defined as the redistribution of power, enabling employees to perform their jobs more efficiently and effectively” (p. 255). Though employees in a small five-star hotel/motel do not experience the same pressure of control and competition as in Ritz-Carlton Hotel as reported by Bruce (2007, p. 99), they should strive for perfection and reach the excellence in terms of the quality of services and responsiveness.

As the rating of the hotel is high, the employees should contribute to its high quality services by performing rather effectively as well. Lower-level managers are often aligned with the ordinary employees in terms of the level of responsibilities and freedoms for autonomous decision-making.

As suggested by Garrison, Noreen, and Brewer (2009), more power should be given to lower-level managers (p. 540) or, as in the current situation, to the employees in a small five-star hotel/motel. In this respect, one of the great advantages of the decentralized decision-making would be a closer contact with the customers and a more adequate response to their needs and requirements.

Quick response can be reached with the help of empowerment which can also become a reason for a more strict control and monitoring of employees’ activities. Many studies support the idea of positive effect of empowerment (Malhotra, 1997; Talwar, 2006) whereas O’Fallon and Rutherford (2010) claim that the hotels cannot be centralised or decentralised in terms of the decision making activities of managers and employees as they are rather tending to have more decisions made according to the approval of a manger or without it (autonomously) (p. 74).

Centralised or decentralised decisions should be positive for customers; at the same time, management strategies such as empowerment should be aimed at employees encouraging them to better perform their daily activities (Goldsmith, 2003, p. 268). “…decentralised decision making spreads authority widely throughout the organization” (Malhotra, 1997, p. 148).

Initiative of employees in the process of solving problems can be really effective (Peters & Pikkemaat, 2006, p. 122). According to Corgel, Sturman, and Verma (2011), one of the benefits of decentralized decision-making approach is an opportunity for “the conservation of [your] headquarters’ resources” (p. 431).

Skills and capabilities remain an integral part of management as well as training is absolutely necessary to encourage employees make decisions autonomously. Andrews (2009) states that competency is an integral part of the industry of services (p. 144); moreover, it is necessary to remember that every employee should be competent in the issues related to customers because it may be needed to meet the requests of customers at the front line without involving higher-level mangers. As such, empowerment can be effective in case it is introduced in the right way.

Resources management

Boutique hotels are small luxurious hotels of high quality where a customer can receive services of the same level as in a large luxurious hotel though this may be not as expensive as in a large one. As such, “the smaller, more intimate boutique hotels are overtaking the major chains in popularity” (Donald, 2007, p. 45). In this respect, a small five-star hotel is a component of hospitality industry that can be applied to every country and every environment in terms of the price, quality, and demand.

Resource management is a part of the day-to-day activities in every hotel which enables managers and employee to do their job effectively without being concerned with a number of other related problems that should be solved by representatives of other departments.

A small five-star hotel can be considered appropriate for hospitality industry as it does not require significant resources. As stated by Medlik and Ingram (2000), “small business faces particular problems in competition with large firms in most industries, and small hotel business is no exception” (p. 48).

As such, resource management is one of the most appropriate ways to solve the problems in a small five-star hotel which may occur due to lack of resources and limits in competency and skills of employees. “Small hotels typically lack resources and advanced management and marketing skills…” (Clarke & Chen, 2007, p. 81)

Purchasing

Purchasing can be considered as a part of resource management because cost-efficient purchasing enables a manager to save costs and control the distribution of costs spent by different departments. The interactions between the departments within a hotel play a crucial role in effective management and performance. As such, provisions should be made in accordance with an agreed scheme.

For instance, Feinstein and Stefanelli (2007) suggest the following purchasing pattern where a purchasing director is in charge of the purchasing department while four individuals are responsible for specific purchasing areas such as food, beverage, equipment and supplies, and a storeroom manager in charge of the storage of different items (p. 127).

Duties of a purchasing department include many issues that concern all other departments and the overall process of management. As such, it is necessary to consider the following procedures in the framework of purchasing management:

• Interviewing salespeople;
• Suggestions for savings;
• Receiving and placing orders from other departments;
• Records of expenditures;
• Check up the received goods;
• Contracts for the purchase;
• Account checks;
• Price and quality ratio (Henkin, 2006, p. 66).

There are other activities that should be considered but those mentioned above are the key procedures. As Singh (2000) claims, “purchasing can influence both the profit side through cost reduction and the asset side through total asset reduction” (p. 207). In other words, the process of purchasing should be well-planned because it affects other areas of hotel management leading to reduction of costs and assets.

At the same time, savings are possible through purchasing department as information about the goods used by different departments within a hotel and consideration of prices and quality may help to find alternative variants with a more appropriate quality and cost ratio. Thefts and frauds can be considered an integral part of the purchasing activity in a hotel because items can be purchased when not required or at a higher cost than a hotel can afford.

According to O’Fallon and Rutherford (2010), ‘financial and operational control’ (p. 372) in a hotel is carried out with the help of purchasing as many operations cannot be performed without the information about necessary purchases and spent costs; in addition, financial control is based on what was purchased and why it is necessary. In this respect, most part of the purchasing management is concerned with the issues of importance of purchases and ways to optimise the process and make it more cost- and time-efficient.

Housekeeping

Another important part of the resource management is housekeeping which is a core activity of a hotel that ensures cleanliness and comfort for guests and guarantees that a hotel is maintained at a level not lower than before. Jones (2007) illustrates such problem related to housekeeping as room thefts (p. 314) because such an event may potentially influence the rating and overall reputation of a hotel making it less desired and of low quality.

However, housekeeping activities do not only include cleaning the hotel rooms, bringing clean towels, and maintaining the rooms in terms of supplies. One of the greatest advantages of a small hotel, in this respect, is the number of employees necessary to maintain a hotel with regard to the resource management and competencies of employees in terms of housekeeping activities and their understanding of the importance of various activities as a part of effective management.

Competencies of housekeeping employees should be discussed because qualified personnel is capable of delivering services required by guests whereas inability of employees to satisfy customers’ needs can be negatively reflected in the rating of a hotel. Special importance should be given to a small five-star hotel-motel where employees should be perceived as a family that performs duties of hotel personnel.

In other words, competencies and behaviours as well as grooming and hygiene, basic etiquettes, orderliness, teamwork, attitude, self-discipline, courtesy, ‘intrapreneurship’, continuous education, customer orientation, physical fitness, and eye for detail are outlined to be the key aspects to consider for every employee engaged into housekeeping activities in a small five-star hotel (Andrews, 2007, pp. 143-150).

In this respect, skills of employees should be analysed and corresponding training should be conducted in order to improve their level. Responsibilities of a housekeeping manager are numerous including the basic ones clear for every person that knows at least something about the hotel activities and inventories of the items belonging to a hotel. As suggested by Banerjee and Chakravarti (2007), periodic reports and maintenance records are also claimed to be the activities for which a housekeeping manager is responsible (pp. 61-62).

As provided by DIANE Publishing Company (1994), housekeeping is included into a list of obligatory programmes in hotel management (p. 47). As a rule, housekeeping US Department of Labor, and Bureau of Labor Statistics (2004) report that in 2002 “Self-employed managers — primarily owners of small hotels and motels — held about 50 percent of these jobs” (p. 54).

Claiming that a small five-star hotel/motel may be effectively maintained by its owners who also work in it managing the key activities and signing contracts with subcontractors to perform different types of activities that cannot be carried out by the owners. As such, housekeeping management can be really effective for a small five-star hotel/motel in case when the owner is a self-hired manager who controls and organizes the process effectively.

Yield management

Yield management is another important characteristic of hotel management applied to a small five-star hotel/motel because it enables the manager to optimise all activities and processes. Kumar (2010) claims that yield management and revenue management are the same (p. 82). Ingold, Yeoman, and McMahon-Beattie (2000) state that ‘small hotels seek to match their markets and product offerings” (p. 163).

Besides, they “tend to approach their markets less formally and more intuitively from their detailed, close contact with their guests and their requirements” (p. 163). As such, yield management can be used effectively in a small hotel offering particular services that may influence the price and revenue received from a room or align the revenue received from a hotel in general in particular period of time.

“To practice yield management effectively, a business must be able to measure demand and respond to it in a timely and dynamic fashion” (Ingold, Yeoman, & McMahon-Beattie, 2000, p. 163). In addition, yield management techniques can be effectively used in a hotel and other fields related to hospitality industry. For instance, Sfodera (2006) reports about the positive impact of variable pricing on customers in hotels and restaurants as a part of yield management (pp. 56-63).

Shy (2008) suggests different attractive offerings for customers as a part of yield management. As such, this type of management includes a number of methods aimed at attracting guests and introducing measures to gain more from rooms or compensate some losses.

Room rate and occupancy

Room rate is one of the important issues of hotel management, especially when considering a small five-star hotel/motel with a self-employed manager who is also the owner of this place. Special attention should be given to the problem of price in cases when the room is rated high whereas the level of services does not correspond to the price required.

Moutinho (2000) claims that “the problem for hotel management is that the demand for discounted rooms tends to precede the demand for higher rated rooms” (p. 206). In this respect, the key aspect that should be taken into account when dealing with a small hotel with regard to yield management is that the desire of a manager to gain as much as possible may turn to give just the opposite results.

As suggested by Bardi (2010), “one of the goals of revenue management is to sell all available rooms at the highest rate (rack rate)” (p. 182). However, it is necessary to remember that some rooms may appear to be in high demand and the price for those should be aimed at compensating the losses from rooms that are not occupied due to inappropriate pricing.

Jagels and Ralston (2006) suggest the following formula for counting the yield in case of hotel rooms and other issues related to hospitality industry:

“Yield=Actual sales revenue/Potential sales revenue x 100” (p. 282).

In addition, “Potential sales revenue is defined as the room sales that would be generated if 100%occupancy was achieved and each room was sold at its maximum rack rate” (Jagels & Ralston, 2006, p. 283). In this respect, yield can be reached in case of 100% occupancy which can be reached only in exceptional cases or in a spot-of-booking season.

At the same time, Reid and Bojanic (2009) claim that real hotels provide their guests with a variety of rooms with different rack rates when customers may select the room which is more appropriate for them in terms of price, services, and overall factors. As such, the job of every yield manager in a small five-star hotel is to indicate the customers’ ability to pay more for the rooms of the same quality as others though considering some specific situations.

Different price incentives are considered to be an effective tool of practicing yield management in hotels. For instance, O’Fallon and Rutherford (2010) report that possible incentives may be offered to customers in different situations such as “customers who reside outside the local area receive complementary hotel rooms or transportation, while drive-in customers receive food, entertainment, or cash incentives” (Nickell, 2002 as cited in O’Fallon and Rutherford, 2010, p. 420).

In this respect, the occupancy may be one of the indicators of effective yield management techniques whereas room rates may be changed in accordance with the favourable situation for changes that can help to receive maximum revenue.

The internet

Khosrow-Pour (2002) emphasises the importance of the internet for a hotel. The concept of the internet should be definitely analysed in terms of its use for a small five-star hotel/motel because it enables the manager to provide the employees and guest with communication tools.

There are many benefits of the internet connections for the hospitality industry as it enables the employees to communicate their messages through the intranet as well as search for creative decisions that may be applied to difficult and challenging situations within a hotel. As such, Khosrow-Pour (2002) conducted a research that evaluates the internet for a hotel in terms of potential benefits and outcomes of its use for a manager, employees, guests, and overall rating of a hotel.

For instance, internet can be used as a communication tool; “the small-size hotel manager rated that the increasing sales/reservations, the improvements in customer service and the savings in cost/time, as the most important benefits to [this] hotel” (Khosrow-Pour, 2002, p. 210). At the same time, a manager in the research also enumerated the drawbacks of the internet connection for a small-size hotel including “maintenance and site-update costs, and unauthorised staff use and wasted time…, security and confidentiality, and training/lack of knowledge/ignorance” (Khosrow-Pour, 2002, p. 210).

The wide use of the internet connections as an incentive for customers can be treated as one of the most popular measures to attract customers. For instance, different cafes and fast food restaurants provide their guests with an opportunity to use their laptops and the local internet connections in case they order something to eat or drink.

Pearson (2005) dwells on the wide use of the internet in hotels as a way to attract tourists because this issue became an integral part of our live. Besides, some people cannot leave their projects at work and have to supervise and control the process whereas the internet is a convenient way of communication.

In addition, Müller (2011) analysed the way internet influences the effectiveness of the hospitality industry and overall effectiveness of different hotels with regard to their size, the level of services, the competency of personnel, and other factors that can be related to the use of the internet or may be perceived as separate parts of the hotel management activities.

Gold Prince Motel: An Analysis

Marketing

The findings indicate that the segmentation is not applied by Gold Prince Motel because the motel manager believes that the idea of dividing the customers into groups and creating separate marketing product for every traveller would be unsuitable for small motels. Storbacka (1997) argues that the outcomes of the segmentation as an element of marketing are to increase the business profitability.

Therefore, the process of segmentation should be applied to small hotel as an integral part of the marketing strategies. In addition, the Gold Prince Motel is ranked as a five-star motel, so the motel management must satisfy the customer’s need. The Gold Prince Motel management were found that they endeavour to create value by differentiation that helps them to attract their guests and to enhance their profit.

The result is consistent with previous researches, for instance, Sheth et al. (1991) states that the value of the company’s products/services directly influences the behavioural attitudes and consumption habits, and profitability (Grant, 2002). Furthermore, the motel manager stresses the importance of differentiation, especially in areas full of competitors, such as our motel.

As mentioned that competitive advantage is one of the principles common for large and small businesses as a part of marketing strategies; it can be gained through value-creating (Huber et al., 2001), as well as creating loyalty and satisfaction (Lam et al., 2004). The hotelier of Gold Prince agrees with Reijonen and Laukkanen (2010) that a hotel manager should not take the approach of offering everything to every guest because some exclusive offerings should be aimed at creating value.

The results explored that the internal marketing is an integral part of marketing in Gold Prince Motel. The motel manager stated that the continuation of the motel based on the customer and the continuation of customers relies on the staff. Therefore, we as administration must meet the needs and wishes of the staff that will ultimately result in customer satisfaction.

The sense of this lies in the administration’s willingness to maintain its staff and customers. A manger informs the employees about the importance of certain interventions in the hotel structure and innovations in services provided; as a result, employees strive to provide the services of better quality to customers; as such, customers perceive the hotel better and can rate it higher due to the management approach applied (Burkitt and Zealley, 2006).

Employee retention in smaller hotels is reported to be lower than in large ones causing hampering of internal marketing (Ahmed and Rafiq, 2004). Nevertheless, the Gold Prince Motel retains much of its staff for a long time because most of them are recruited from another country, such as India, Bangladesh and Egypt, and they receive high salaries compared to their countries.

The consequence of employee satisfaction was the percentage of staff turnover decreased. Overall, the techniques of internal marketing are reasonably applied by the Gold Prince Motel management except the technique of training. As suggested by Ahmed et al. (2003) that both small business and large firms can gain benefits from internal marketing by teaching and training their employee on the company’s culture, and services (Ballantyne, 2003).

Human resources

As Yusuf (1995) states, education level of the hoteliers/owner contributes greatly to the quality of environment a small hotel creates and maintains in the framework of the small business resulting in stable profitability (Yusuf, 1995). Moreover, decision-making and problem-solving processes may be facilitated in case an hotelier/owner gained profound education in hotel industry field (Schutjens and Wever, 2000).

The manager of Gold Prince has a bachelor’s degree in Marketing and he has also diploma in hospitality. The manager agrees with Steiner and Solem (1988) that there is no relationship between the educated managers and the business success. The motel manager explained that the factor of experience may largely contribute to the success of motel. However, confidence of hotelier should be strengthened with the help of knowledge and experience gained in practice (Inmyxai & Takahashi, 2009).

Results revealed that there is a clear absence in the process of attending training courses whether training could be within the motel or outside the motel by the general manager of Gold Prince Motel. As reported by Inmyxai & Takahashi (2009), training may positively contribute to the experience gained by hotelier/employee as well as be reflected favourably in the hotel’s maintenance.

Hall (1993) suggests that increased productivity can be the result of the power of training. “Business learning should not be seen as a ‘luxury’” (Inmyxai & Takahashi, 2009, p. 163); on the contrary, learning enables companies to build future perspectives. Handy (1989) emphasises the role of learning for the future development of an organisation. Finally, gaining customers’ loyalty is another reason for applying learning techniques in hotel business empowering employees to provide high-quality services (Schechter, 1994).

Empowerment

As stated by Jones and Davies (1991), empowerment applied to hotel industry is “basically about pushing responsibility and decision making down the organization to those employees closest to the customer” (p. 213 as cited in Sofield, 2003, p. 96). Decision-making and problem-solving processes have been brought down to the employees that are closest to the customers to enable them respond to the requests adequately and immediately (Cacioppe, 1998).

As indicated by Bowen and Lawler (1995), empowerment of employees leads to satisfaction gained by customers from high-quality services provided. However, results showed that there is lack of absolute trust between the director-general and his staff, which resulted in the disappearance of empowerment process.

The manager justified that the lack of trust due to their employees are from different nationalities and have different cultures. In addition, he believes that authorization must be limited to managers that may help the motel to control all processes. Smores (1997) study is consistent with the manager opinion which indicates that the authorization is one of the major drawbacks for ‘command-control processes.

Lack of empowerment may result in inadequate problem-solving, inefficient management of resources and other consequences when employees are not involved in activities that would positively reflect in the hotel’s resource management and customers’ loyalty (Lockyer, 2007, p. 110). As claimed by Albrecht and Zemke (1985), customer retention can be increased through empowerment of employees including capability of solving the problems immediately.

Resources management

As found that Gold Prince Motel has manager who is in charge of the purchasing department. Besides, the manager doesn’t have particular procedures for purchasing. Furniture and equipment, for example, the motel deals with specific suppliers, who supply the motel on credit. However, director-general usually views and signs all the invoices issued by the purchasing department.

Feinstein and Stefanelli (2007) advocate the effectiveness of the purchasing pattern where the responsibilities of purchasing different categories of goods are divided between four individuals their activities are supervised by the purchasing director (p. 127). The process of purchasing should be thoroughly planned in order to spend resources adequately; “purchasing can influence both the profit side through cost reduction and the asset side through total asset reduction” (Singh, 2000, p. 207).

Inadequate management of resources may lead to unnecessary goods purchased under the label of planned goods or at a price higher than a motel can afford. O’Fallon and Rutherford (2010) suggest ‘financial and operational control’ (p. 372) to be carried out in a hotel in the framework of purchasing activities performed under supervision of other departments and with their help to ensure that all items planned for purchasing are in under the budget.

“The main responsibilities of the house-keeping department lie in the need to ‘provide clean and serviced bedrooms on a daily basis to the agreed standards’,” as indicated in the study by Rawstron (1999, p. 114 cited in Frapin-Beauge, Verginis & Wood, 2008, p. 394).

The general manager of Gold Prince Motel emphasised the importance of housekeeping in the motel which plays a major role in satisfying the guests’ needs. He stated that there are two key factors helping the management to evaluate the efforts made by housekeeping workers in accordance with specific standards. The first essential factor is a weekly report that must be made by the Department of housekeeping.

The box of complaints that is especially created to collect guests’ grievances is to be another element of evaluating the constant day-to-day effort. Room thefts became a problem related to hotel industry where housekeeping plays a crucial role in hotel management (Jones, 2007, p. 314). Periodic reports and maintenance records can be effective is controlling the activities in a hotel (Banerjee and Chakravarti, 2007, pp. 61-62).

Housekeeping activity is an integral part of hotel management (DIANE Publishing Company, 1994, p. 47). Rating of a hotel may suffer in case the employees are not able to deliver services of required quality to customers whereas high level of services related to competences in housekeeping can positively contribute to the overall rating.

Results revealed that the motel recruited housekeeping workers who have high expertise in their field, ranging from 10 to 12 years. As suggested by Andrews (2007), grooming, hygiene, basic etiquettes, orderliness, teamwork, attitude, self-discipline, courtesy, and ‘intrapreneurship’ as well as such features as continuous education, customer orientation, physical fitness, and eye for detail are important for an employee in the housekeeping department in a small five-star hotel (pp. 143-150).

Yield management

As mentioned by Zeithaml and Bitner (1996) there is a weak relationship between pricing the rooms and understanding the client perceptions of price. According to Lockyer (2007) there are three complicated factors that would face service industry: “Hotel guests find it difficult to reference the price of service; guests believe hotel quality is indicated by price; the hotel service product contains many parts which are not always reflected in the price”.

Contrasted to the previous insight, Reid and Bojanic (2009) believe that every customer can find certain services in a hotel of high level that would satisfy their needs in terms of quality of services, their variety and price at which they are delivered. However, the hotel manager said that they do not have the pricing options because the Public Authority for Tourism and Antiquities in Saudi Arabia is responsible for pricing rooms according to specific criteria.

General Authority for Tourism and Antiquities in Saudi Arabia stated that the pricing policy of the facilities of hotels and other residential units in the Saudi is linked to comprehensive evaluation for all facilities of hotels and other residential units and services provided according to specific standards (the prices of hotels, 2010).

Therefore, through these measurements, the Saudi Ministry of Tourism sets the appropriate price for these services as a maximum that the hotel management cannot exceed it. It is interesting to note that the hotel management is obliged to put the room price that is specified by the Ministry on inside the room.

According to the results of the research by Khosrow-Pour (2002), the importance of the internet is very high for a hotel including its benefits for employees, managers, and customers. As such, communication tool is the most widely-spread function of the internet in the hotel industry.

“The small-size hotel manager rated that the increasing sales/reservations, the improvements in customer service and the savings in cost/time, as the most important benefits to [this] hotel” (Khosrow-Pour, 2002, p. 210). Unfortunately, the Gold Prince Motel doesn’t have a Web site that may increase the amount of reservations. The manager of motel justified that the motel is based on domestic tourism and a large segment of Saudi adults would not know to use the Internet as in other countries.

In general, we have a plan to create a new site at the motel and the motel management are going to contract with a company that will be responsible for the development and follow-up for the motel Web site periodically. However, “In December 2000 there were ca. 200 000 Internet users in Saudi Arabia.

By 2005 the number of Internet users in KSA had grown to 2,54 million, making the growth 1170 % and KSA one of the fastest growing Internet markets” (The Internet World Stats 2006 as cited in Internet Saudi Arabia 2006 ). The Internet World Stats (2010) showed that the number of Internet users in Saudi Arabia increased dramatically to nearly 10 million in 2010.

On other hand, the motels management provides the Internet service in all facilities of the motels without fee. In addition, guests can access the Internet from their laptops in the motel’s coffee shop. Tourists-attraction is another function of the internet which proves to be effective worldwide (Pearson, 2005).

Müller (2011) emphasises the importance of the internet for daily activities when a customer can use this service in a small five-star motel at affordable price. As a result, the overall rating of the hotel increases because the internet is one of the essential offers every contemporary sector of the hospitality business should provide.

The Gold Prince Motel is the small five-star motel which lacks empowerment and the basic management strategies that should increase the profitability of the hotel and rate of customer and employee retention. As such, it is necessary to outline the basic strengths of the motel as it has a rather high rating and high employee retention rate.

The employees mostly come from other countries where salaries in the same sector are lower than in the Gold Prince Motel thus making them stay and develop their skills. However, training opportunities are limited here to the gaining experience through the practice. As employees come from other countries, they should be trained at least in terms of cultural competence not to make improper decisions.

The main housekeeping activities are appropriate though the procedure of control is limited in the Gold Prince Motel to the box of complaints and a weekly report. In this respect, this may be changed to some personal suggestions from employees and surveys of customers concerning their satisfaction.

As segmentation and differentiation strategies are not applied in the Gold Prince Motel, it is important to take these concepts into account in spite of the manager being sure that the motel serves for local guests only. Thus, a Web site created and maintained properly may be used to increase the number of online reservations; besides, people may learn more about services provided and decide if that fits them.

Recommendations

Segmentation, differentiation, and yield management are factors that may influence the customers’ perception of a hotel, its services, overall rating, leading to retention and customers’ loyalty. As suggested by Cahill (1997), customers have their own factors according to which they select a hotel or any other issue related to the hospitality industry pertaining to guided tours, hotels, pensions, restaurants, swimming-pools, and anything that may add comfort to their vacation (pp. 3-13).

In this respect, the Gold Prince Motel should conduct a research to identify the target audience and their preferences and expectations even if the manager thinks that this is a local motel with local guests. Bowie and Buttle (2004) claim that differentiated marketing strategies may be of great use for a hotel while planning to provide certain range of services.

As such, the management of the Gold Prince Motel should be aimed at identifying the target audience and their needs and expectations if they want to retain their clientele and gain customer loyalty further. To differentiate the Gold Prince Motel from other items pertaining to the hospitality industry, it is necessary to identify its strengths and weaknesses and improve the situation in case certain areas do not meet standards established for this level of the hotel.

Hsu and Powers (2001) outline some areas of yield management which is claimed to be critical for the Gold Prince Motel as well as for most hotels of different levels and sizes. As such, forecasting, training, and evaluation seem to be of crucial importance and should be applied to the Gold Prince Motel (Hsu and Powers, 2001, pp. 261-262).

In other words, training as a part of the yield management strategies should be provided to employees in order to align them to the cultural peculiarities and empower to make decisions that would increase the level of customers’ perception. Timing and pricing strategies applied in the framework of resource management can also be helpful for the Gold Prince Motel (Adams, 2006, pp. 131-132) creating the difference between short- and medium-term goals to be reached by the hotel.

Timing and pricing strategies applied in the framework of resource management can also be helpful for the Gold Prince Motel (Adams, 2006, pp. 131-132) creating the difference between short- and medium-term goals to be reached by the hotel. Another integral part of the hotel management is the medium-term planning (Evans, Campbell & Stonehouse, 2003, pp. 13-14).

The issue of eco-tourism is discussed in the study by Jayawardena (2002) who suggests the idea of staff training for particular areas of tourism such as eco-tourism as the staff members should be aware of the basic principles and follow the elementary rules and conservation values.

However, training should be definitely applied to the Gold Prince Motel to ensure that all employees understand their duties and are ready to work as a team as well as autonomously, if needed. As suggested by Shaw et al. (2001), differentiation and segmentation should be brought to the hotel in order to make it distinct from others in the market and knowing the clientele to be able to meet their needs.

Conclusion

Employees should remember about the importance of empowerment as well as the manager of the Gold Prince Motel to ensure that every employee knows his/her duties and responsibilities. Moreover, control may be more strict adding unplanned checks to the box of complaints and weekly reports as parts of the housekeeping management.

The resource management should work effectively and in cooperation with other departments including the purchasing department to make the process of purchasing more effective and more cost-efficient. At the same time, the motel should create a specific list of purchasing activities according to the list of procedures suggested in the study by Henkin (2006).

Hogan (2000) suggests that empowerment on the individual level may be more effective than on any other level. As such, empowerment strategies applied to the Gold Prince Motel may help the manager to ensure that employees understand their role in delivering services to customers thus influencing the rating of the hotel and attracting more clients. Moreover, an employee that perfectly understands his/her duties and customers’ needs may effectively satisfy those needs (Pizam, 2005).

“Take control and make decisions” are claimed to be the main principles of empowerment (Joynt & Warner, 2002, p. 65) while the manager of the Gold Prince Motel may leave the idea of empowerment without consideration hampering the process of the hotel development.

The importance of the web site for a hotel is great due to the number of stakeholders that may potentially benefit from creation of the website. Though one of the main functions of the internet is the communication tool, it can also be used to analyse the strategies applied by competitors and positive innovations implemented in the hospitality market.

The role of the Web site for a hotel is emphasised by Frew (2005) in terms of the benefits for a manger, employees, and customers. In this respect, the Gold Prince Motel should consider the potential benefits of creation of the web site to influence the number of reservations, the awareness of customers about the services delivered in the hotel, possible options in case the rate of the room occupancy is higher than expected.

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