Abstract
Goal and objectives of the dissertation
Goal
To explore the economics of quality management through a financial analysis of the resources that influence hotel performance.
This treatise was stimulated by an exploration into the economics of quality management through a financial analysis of the resources, both inputs and outputs, that influence hotel performance. In doing so, this dissertation provided a pragmatic examination of quality management and performance measurement through an interdisciplinary of services marketing and management, tourism economics, and financial management. The goal and objectives of this dissertationare underpinned by three significant research gaps. The first gap in knowledge relates to the economics of hotel quality logic (Skalpe & Sandvik, 2002)and by examining the multifaceted relationship between quality management, productivity, and profitability in the hotel industry (Altin et al., 2018; Gummesson, 2014).
The second research gap was motivated by the inconclusive debate around a systems approach to quality management in hospitality and by being able to measure the actual implementation and awareness of formalised quality management systems by the hotel trade(Farrington et al., 2018; Heras-Saizarbitoria et al., 2015). Finally, the third research gap was determined by the impact of quality management, in monetary terms, on hotel performance. This gap was influenced by how the elusiveness of service quality as a theoretical concept can present real challenges to the methods employed for determining the empirical monetary impact of quality management on hotel performance (Lai et al., 2018).
Objectives
1.To identify the key theoretical constructs for exploring the economics of quality management in the hotel industry.
2.To investigate hotel managers’ perceptions and implementation of formalised quality management systems and practices.
3.To explore the techniques of service productivity analysis and profit sensitivity analysis (PSA) as a systematic means in measuring the effect of quality management on a hotel’s net income.
4.To develop a holistic model which conceptualises the economics of quality management in the hotel industry.
Methodology
This research employed a pragmatic perspective and adopted a sequential two-phase mixed methods research design (Creswell & Plano Clark, 2018). Research Phase 1 involved a survey methodology dominated by a quantitative data collection and analysis. An online self-administered questionnaire was employed in Phase 1 to examine hotel managers’ perceptions of formalised quality management systems (QMSs) and practices within the Irish hotel industry.
Research Phase 2 consisted of a case study methodology to explore the techniques of service productivity analysis (Grönroos & Ojasalo, 2004)and profit sensitivity analysis (PSA) (Kotas & Wanhill, 1981)as a systematic means in measuring the effect of quality management on a hotel’s net income. An Irish four-star hotel formed the basis of the case study approach adopted in Research Phase 2. The chosen data collection methods in Phase 2 included archival records and a continuous unstructured interview (Saunders & Lewis, 2018). This study’s two-phase research design was embedded within the Preliminary Research Phase of the literature review and the concluding discussion of the thesis findings. The mixed methods research approach employed in this study, especially the chosen methods that
Reardon(2022)/ European Journal of Tourism Research31, 31183formed part of the sequential two-phase research design, generated answers to the four objectives and also aided the development of a holistic understanding of the economics of quality management in the hotel industry.
Results
A key contribution of this study is the development and re-conceptualisation of the economics of quality logic (Skalpe & Sandvik, 2002), in the hotel industry. In so doing, this study’s findings depict the complex and often contradictory nature of how quality management is perceived by tourism and hospitality firms. The most significant findings of this study contribute to knowledge in four key areas. First, the findings identified the key theoretical constructs for exploring the economics of quality management in the hotel industry. Second, hotel managers’ perceptions and implementation of formalised QMSs and practices were investigated revealing negative connotations of a systems approach to quality management by the hotel trade. Third, the techniques utilised in the single-case analysis of Hotel X illustrated how to measure the impact of a hotel’s quality management efforts on net income. However, the findings also highlighted the challenges of quantifying non-financial metrics of performance.
The final key outcome of this study centres on the development of a holistic model conceptualising the economics of quality management in the hotel industry. The key outputs of this model, such as the theoretical framework, the interdisciplinary research approach, and the conceptualisation of the economics of quality logic in hospitality, illuminate how the initial conceptual framework has been modified, and most importantly, what new knowledge has been integrated based on the empirical findings.
Theoretical conclusions
In exploring and conceptualising the economics of quality management, this study adds specifically to the body of knowledge around; a) the complex constructs of quality management and performance measurement, b) the perceptions and implementation of a systems approach to quality management, and c) quantifying the key facets of quality management on hotel operations. In addition to these key contributions to the literature, this doctoral research also builds on and adds new knowledge through the interdisciplinary lens of services marketing and management, tourism economics and financial management in exploring the economics of quality management in the hotel industry.
This study’s theoretical framework creates a valuable basis for establishing the key resources of a hotel’s quality management efforts before measuring the financial impact of these quality resources on a firm’s operation. Hence, this study’s theoretical framework, within the overall integrated model of the economics of quality management, fills a gap by providing a means for empirically exploring the interrelationship between quality management, productivity, and profitability, via an analysis of the inputs and outputs of key quality resources utilised by hotels.
Practical application of the dissertation
This study makes several significant contributions to practice and management because of the inference transferability and analytical generalisation of the statistical procedures employed in the single-case analysis of Hotel X. This is pertinent in terms of the measures employed to determine the financial impact of quality-related resources on firm performance. This study illuminated how the hotel industry’s high operating leverage which naturally results in sensitivities to variations in demand can challenge a hotel’s quality efforts. Singal (2015) attributes this to the industry’s unique structural characteristics, such as competition, risk, leverage, and capital intensity, in addition to the labour intensity of a hotel’s workforce and the low switching costs for consumers. The empirical work drew similar conclusions by revealing the market-orientated/revenue-driven approach of the single-case analysis because of its high fixed cost structure. However, this approach reflected positively on the hotel’s quality efforts as opposed to assuming a cost only orientated style of management.
The implications drawn from the self-administered questionnaire findings provide several practical implications for management considering the negative perceptions identified of a systems approach to quality management in hospitality. This study concludes that traditional approaches to formalisedQMSs and practices in hotel companies do not reflect the relative importance of non-financial gauges, especially those related to quality management. This knowledge has also wider implications on global service operations and tourism policymakers in planning strategic quality initiatives.