Businesss excellence in croatian hotel industry: results of empirical research.
Alfirevic, A.M. ; Peronja, I. ; Plazibat, I. 等
1. Introduction
Business environment of tourist enterprises has been characterized
by major changes in recent years. The reasons for the changes may be
found in the global economic crisis, an intense competition between
tourist destinations and the expected (re)structuring of the
world's income and demographics (Yeoman, 2012). In the hospitality
industry, service customization and individualized experiences will be
required by future tourists, who will be also expecting hotels to
innovate by using technology and individualize communication by using
social media, such as Facebook, Twitter, etc. (Talwar, 2012). A minimum
for meeting such high expectations require that delivery of all expected
hotel services is ensured. Therefore, assurance of hotel's quality
can be described as a requirement to survive in the contemporary
hospitality industry. A self-assessment study of different (high-quality
and medium-quality) sectors of Croatian hospitality has been conducted.
Its results are reported in this paper, in order to address the
following research question: what are the competitive strengths and
weaknesses of high-quality Croatian hotels, relevant for the world
tourist market? In addition, relative achievements of medium-quality
Croatian hotels will be identified. In this way, results of the
empirical research will be available for formulation of practical
recommendations for Croatian hospitality industry.
2. Business Excellence Models and Their Implementation in Hotel
Industry
Business excellence can be defined as an approach that allows
organizations to achieve the balanced satisfaction of stakeholders and
increase the long-term strategic success (Kanji, 2002) by using a set of
previously agreed criteria. These criteria are the basis for some of the
world's most popular models of business excellence, which include
the EFQM Excellence Model, the Malcolm Balridge National Quality Award
and the Deming prize. Their basis is to analyse connections between the
most important variables of Total Quality Management: people, business
processes and company performance (Fadic, 2008). In this way, they help
companies to practically implement sometimes sometime unclear idea of
the Total Quality Management (Bou Llusar et al, 2009) and also help
management to assure that the strategy of continuous improvement is
systematic and integrated (Oslic, 2008).
Each model also provides a standardized check-list, which needs to
be followed, as to ensure consistency and comparability of the
evaluation results among different companies (Porter & Tanner,
2004). This makes the business excellence questionnaires for
self-assessment a very appropriate tool for this research, which wishes
to examine many different hotels from two sectors of the Croatian
hospitality industry. To ensure the opportunity to compare results with
similar European studies (Sozuer, 2011) in competitive destinations
(e.g., Turkey), the EFQM (European Foundation for Quality Management)
model has been used.
EFQM model consists of nine criteria, with the first five belonging
to enablers, which include: (a) leadership, (b) employees, (c) strategy,
(d) partnerships and resources, and (e) processes, products and
services. The remaining four represent the results which include:
results for employees, results for the customers, results for society
and strategic results, measured by key indicators. The starting point of
the model is that business processes need to be effectively managed, by
employing the enablers, as to achieve the results observed from the
viewpoint of most important stakeholders: customers, employees and
society. Ultimately, the company will achieve the key results, required
for realization of its business strategy and obtaining the competitive
position in the market (EFQM, 2013).
In hotel industry, implementation of different approaches to Total
Quality Management has proved as a successful practical tool to achieve
a high level of service and business success, as especially well shown
by the Ritz Carlton hotel chain. While the American hotel chains,
including Ritz Carlton, usually choose the Malcolm Balridge model (used
for the American quality award), European hotels are often assessed
according to the EFQM model (Camison, 1996), which is the basis of the
European award for business excellence.
3. Methodology of Empirical Research
In the conducted empirical research, methodology originally
designed by EFQM was used. The population of Croatian hotels,
categorized by the official 'star rating' system, with 3 *, 4
*, or 5 *, was selected by using the list of all officially approved
hotels by Ministry of tourism of the Republic of Croatia. Hotels
categorized with 2 * are not considered appropriate for such a research,
since they do not meet many of the standards, required for
'medium-quality' hotels. Some previous papers analyse only
high-quality hotels (e.g., Souzer, 2011, who analyses only four-star
hotels). However, in this study, authors wanted to separately analyse
the 'medium-quality' (3 *) and 'high-quality' (4 *
and 5 *) hotels, which was the reason for including all of those into
the population.
There were 432 hotels, out of which 148 were included in the
research, with the capacity exceeding 150 accommodation units. It is
believed that hotels with fewer accommodation units and employees do not
have the capacity to develop the measurement system and the quality
management mechanisms, which would provide only formal opportunities for
application of the EFQM's business excellence model. The total of
55 questionnaires were returned, which provides an adequate response
rate of 37.2%. Out of the total number of hotels in the sample the
survey included 23 hotels rated with 3 *, 27 hotels rated with 4 * and 5
hotels rated with 5 *.
For the purpose of this study, the full EFQM's questionnaire
for self-assessment (with approximately 90 items) was used. It was only
translated into Croatian and some terms, specific for the hotel
industry, were slightly adopted. All measurements on the scales with
five degrees are described in detail by Camison (1996). They range from
E (some marginal good results and anecdotal evidence) to A (strong
positive results over the long term, which are well documented). Each of
the measurements can be converted into the points (A-100, B-75, C-50,
D-25, E-0). For each of the EFQM criteria, the mean value for all items
is calculated.
4. Results of Empirical Research
Since the detailed evaluation of the surveyed hotels' business
excellence would not fit the prescribed length of the paper, we discuss
only the cumulative findings, while detailed results can be obtained
from the authors. Related to the leadership criterion of the EFQM's
business excellence model, the largest share of respondents believes
there is adequate evidence of personal involvement of management in
identifying and communicating hotel's mission and its
organizational culture in all the hotel's departments, which
includes values related to quality achievement. The highest level of
achieved excellence in surveyed hotels (as high as 50.9%) is related to
involvement of management in creating partnerships, both in contact with
guests and business partners, as well as the wider community. The most
important problem is seen in the management's ability to make good
and timely decisions. By using the weighted arithmetic mean, ratings for
all areas of evaluation of the leadership criterion were calculated, as
well as the overall leadership score. Overall scores for this EFQM
criterion are shown in Table 1, together with the total number of
respondents (N), standard deviation and standard errors.
As related to the EFQM's criterion of strategy, there are
evidences of adequate excellence levels in all departments of the
surveyed hotels. The most significant problem is perceived in terms of
the harmonization of individual and team goals with the strategic goals
of the hotel, which is associated with the assumption that employees do
not have enough opportunities to engage themselves in business
improvement. Another potential problem is identified in gathering
information about the needs of clients and business partners, as well as
in the lack of comparison with the competitors. We also calculated the
cumulative scores for the strategy criterion by using the weighted
arithmetic mean (see Table 2).
We further analyzed the achievements in the field of human resource
management, as described by the EFQM employee criterion. We found that
the surveyed hotels create adequate formal plans for managing human
resources. In addition, formal activities and procedures are established
for assessing the work performance of employees and rewarding them. At
the other hand, involvement of employees in evaluation of operating
efficiency and work process improvement, as well as communication with
employees and evaluating their suggestions, are identified as weaknesses
of surveyed hotels. table 3 presents the score for the EFQM employee
criterion, calculated by using the weighted mean value of the obtained
distribution of frequencies.
Although there is a difference between the medium-quality hotels
(with 3 *) and the high-quality ones (with 4 * and 5 *) for previously
analyzed enabler criteria, this difference is rather high in the area of
the human resource management. Therefore, it can be concluded that
high-quality hotels tend to include employees more in assessing work
efficiency and work process improvement and/or inform and appreciate
employees' suggestions more.
In the area related to the resources and partnerships enabler
criterion, the majority of the surveyed hotels relatively efficiently
manage their assets and develop partnerships, while the ratings are
slightly lower for using new technologies, ensuring efficient allocation
of financial resources and, to some extent, ensuring accurate and
reliable information for decision making. There is, once again, a
relatively high difference in business excellence scores between hotels
of different categorizations (see Table 4).
As related to EFQM's business processes, products and services
criterion, it was found that the largest proportion of surveyed hotels
adequately manages their business processes and monitors satisfaction
and expectations of their guests. However, this is followed by the lower
level of achievement in implementing comprehensive expectations and
needs of customers. likewise, performance indicators of business
processes and their results are insufficiently developed, including the
comparison with the results of the competition, in order to understand
own strengths and weaknesses. These findings may indicate that the
surveyed hotels are not analyzing their environment in the adequate
manner and that their marketing activities are not based on relevant
market data. Table 5 shows the scores for this EFQM criterion, including
a high difference between hotels of different categorization.
In the second part of this study, we analyze the performance of
surveyed hotels, which represents the result of achieving business
excellence. We start the analysis by considering the results for the
customers. The results show that customer satisfaction management and
other important features of customer relationship management are
implemented by surveyed hotels. The majority of respondents (50.9%)
could serve as a benchmark in the field of determining the guests'
satisfaction. At the other hand, surveyed hotels have problems with
monitoring the achieved results in the field of guest satisfaction and
their loyalty and comparing them to the competitors. In addition, the
research results are not effectively used in improving the hotel
products and services. The relatively unsatisfactory results are also
obtained in observing results for certain groups and types of guests,
indicating the need to improve the use of market information throughout
the hotel organizations.
Table 6 provides the average scores for this EFQM criterion,
compared between average and highly categorized hotels. once again,
there seems to be a large difference between two groups of observed
hotels.
Results for employees seem to be the weakest area of business
excellence achievement, since the proportion of hotels with the highest
reported level of achievement does not exceed 20%.
For all elements evaluated within this criterion, there is a fairly
large proportion of hotels reporting relatively low levels of
achievement, which is particularly evident in measuring and comparing
employees' satisfaction with the results of the competition, as
well as in collecting and processing feedback from the internal and
external environment. Scores for the entire criterion are shown in Table
7.
Regarding results for the society, there is only limited evidence
of the successful realization of social responsibility and reputation in
the community. In addition, comparison with competitors in social
responsibility is not developed, while slightly better results are
achieved in the field of ecologically sustainable business. once again,
it should be noted that, in general, the results in the field of
socially responsible hotel results are inadequate. Table 8 presents the
scores for this criterion and shows that hotels rated with 4 and 5 more
successfully achieve social accountability and better manage reputation
in the community than those rated with 3*.
Finally, EFQM's key results criterion is analyzed,
demonstrating how the surveyed hotels implement their business
strategies. The majority of respondents believe there is evidence of the
existence of key results in all their departments. However, there are
also considerable amounts of respondents reporting the lack of any
evidence of key results, as well as those reporting only some evidence
of comparability of achieved financial and non-financial key results
with the competition. least evidence of achieving business excellence in
this area is related to understanding the contribution of individual
processes to key results and comparability of the results of
administrative activities to competitors. These results point to
problems of measurement and comparison of the key business areas with
competitors, as well as to the problems in the work of administration
and its effectiveness. overall scores for this criterion, given in Table
9, once again, indicate relatively large differences between the two
groups of hotels.
The reported results show that, for each criterion of the EFQM
business excellence model, there is a difference in scores between
differently categorized hotels. nevertheless, the absolute differences
of the mean values for each evaluation criterion do not provide enough
evidence to conclude whether these score differences are statistically
significant. Therefore, t-test has been performed for each of the EFQM
criteria, with results reported in Table 10.
Results show statistically significant differences in business
excellence implementation scores between average and highly rated hotels
(i.e. those rated with 3 * vs. those rated with 4 * and 5 *), which
confirms that the official hotel categorization corresponds with the
implementation of business excellence, measured by the EFQM model. These
significant differences (with the significance level of 1%) between mean
values of the EFQM scores are reported for the enabler criteria of
leadership, strategy, employees, processes, products and services, as
well as the key results criterion. Differences are observed for the
criteria of results for customers and results for society, with the
significance level of 5%. The areas without reported significant
differences are the enabler criterion of providing resources and
partnerships and the criterion of achieving results for employees, with
no statistically significant advantage of high-quality hotels over
medium-quality ones. Hotel managers should obviously pay more attention
to these areas if they are to achieve a higher level of business
excellence. In addition, the obtained research results can serve as a
guide to the managers of average rated hotels, as to which areas should
be improved, if a higher level of business excellence is to be achieved.
8. Conclusion
Previous research in Spain and Turkey has confirmed that the EFQM
business excellence model can be successfully applied in hospitality
industry. Some previous research has also been conducted by Zilie
(2012), who used the own model to analyse the business excellence of
high-quality segment of croatian hotels (without their comparison to the
medium-quality segment). This model consisted of several criteria,
including: (a) hotel offering/value for customer, (b) leadership, (c)
human resource development, (d) process and resource management, (e)
overall hotel performance, (f) social responsibility of the hotel and
(g) continuous improvement. By using the measurement scale with values
from 1 to 5, Zilie (2012) found scores, ranging from 4.48 (the lowest
score--for social responsibility) to 4.81 (the highest score--for
leadership). Variance for all these criteria was below 20%.
It can be concluded that the previous research reports much higher
results and much lower reliability for the croatian hotel industry than
the results reported by this survey. The reason might be found in
differences of models used for analysis, or in the differences in
methodology and the choice of population and sample of the empirical
research. Nevertheless, future research needs to address both
application of the EFQM model of business excellence, as well as of
other relevant models, as to verify the practical implications of this
study.
The most important implication is that the official categorization
is related to the implementation of business excellence, which means
that all efforts related to improvement of service quality and hotel
offering can be placed in a common framework and explained in terms of
total quality management.
All high-quality hotels have significantly better scores than the
medium-quality ones, except for the EFQM criteria of providing resources
and partnerships, as well as achieving results for employees. These two
criteria of business excellence should be the targets for better
implementation in all croatian hotels, with high-quality (4 * and 5 *)
ones being aware that their leadership in quality can be endangered by
excessive cutting of costs (which is shown by inefficient allocation of
financial resources). Another group of problems could be related to
putting their partnerships with suppliers and distributions in danger by
not paying their financial obligations on time, or using other
inappropriate approaches.
other reasons for low scores in this criterion, which have been
identified in the empirical research, are related to the inefficient use
of technology and not succeeding in providing adequate information for
decision making. It is very difficult to make decisions and implement
continuous improvement without adequate data.
The medium-quality (3 *) hotels are not very successful in managing
their employees, which is clearly visible from their low score of 51,08.
Specific problems can be found in including employees into the
assessment of work efficiency, informing employees about business issues
and listening to their suggestions. Quality can be achieved only if
employees are included into all aspects of improving the business and if
they feel that their suggestions are implemented and appreciated by
management, which is not the case in many croatian hotels.
The last area which should be improved is the social responsibility
of the analysed hotels, especially in medium-quality (3 *) hotels, with
the low score of 58,9. The specific problems to be solved include
comparison with competitors, providing help to the local community and
better management of hotel's reputation.
9. References
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978-3-642-27403-9, Berlin-Heidelberg Yeoman, I. (2012). A
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Zilie, I. (2012). Poslovna izvrsnost u visokokategoriziranim
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Authors' data: Univ. spec. oec. Alfirevic, A[na] M[arija]*;
Univ. spec. oec. Peronja, I[van] **, Dr. sc. Plazibat, I[vana] ***, *
University of Applied Sciences Sibenik, Trg Andrije Hebranga 11, 22000
Sibenik, Croatia & Department of Professsional Studies, University
of Split (external lecturer), Croatia ** Department of Professsional
Studies, University of Split, Kopilica 5, 21000 Split, Croatia **
Department of Professsional Studies, University of Split, Kopilica 5,
21000 Split, Croatia, anamarija.pilic@yahoo.com,
ivan.peronja@oss.unist.hr, ivana.plazibat@oss.unist.hr
This Publication has to be referred as: Alfirevic, A[na] M[arija];
Peronja, I[van] & Plazibat, I[vana] (2013) Business Excellence in
Croatian Hotel Industry: Results of Empirical Research, Chapter 38 in
DAAAM International Scientific Book 2013, pp. 655-664, B. Katalinic
& Z. Tekic (Eds.), Published by DAAAM International, ISBN
978-3-901509-94-0, ISSN 1726-9687, Vienna, Austria
DOI: 10.2507/daaam.scibook.2013.38
Tab. 1. Scores for the EFQM's leadership criterion
Hotel Category N Mean Stand. Stand.
Value Deviation Error
EFQM leadership Hotels Rated 23 71,0870 15,29680 3,18960
score With 3 *
Hotels Rated 32 84,3750 12,68413 2,24226
With 4 And 5 *
Tab. 2. Scores for the EFQM's strategy criterion
Hotel category N Mean Stand. Stand.
value deviation error
EFQM Hotels rated 23 63,6413 18,58225 3,87467
strategy with 3 *
score Hotels rated 32 79,0625 13,10242 2,31620
with 4 and 5 *
Tab. 3. Scores for the EFQM's employee criterion
Hotel category N Mean Stand. Stand.
value deviation error
EFQM Hotels rated 23 51,0870 21,84431 4,55485
employee with 3 *
score Hotels rated 32 72,1875 23,68944 4,18774
with 4 and 5 *
Tab. 4. Scores for the EFQM's resources and partnership criterion
Hotel category N Mean Stand. Stand.
value deviation error
EFQM Hotels rated 23 67,8261 19,35471 4,03574
resources and
partnerships with 3 *
score Hotels rated 32 80,9375 14,88870 2,63198
with 4
and 5 *
Tab. 5. Scores for the EFQM's business processes, products and
services criterion
Hotel category N Mean Stand. Stand.
value deviation error
EFQM Hotels rated 23 61,2500 20,66714 4,30940
business with 3 *
processes, Hotels rated 32 80,7813 18,49627 3,26971
products with 4 and 5 *
and
services
score
Tab. 6. Scores for the for the EFQM's results for
customers criterion
Hotel category N Mean Stand. Stand.
value deviation error
EFQM results Hotels rated 23 63,1988 19,89755 4,14893
for customers with 3 *
score
Hotels rated 32 79,6429 17,05430 3,01480
with 4 and 5 *
Tab. 7. Scores for the for the EFQM's results for employees
criterion
Hotel category N Mean Stand. Stand.
value deviation error
EFQM results Hotels rated 23 45,2174 21,87144 4,56051
for employees with 3 *
score
Hotels rated 32 64,7266 29,35760 5,18974
with 4 and 5 *
Tab. 8. Scores for the for the EFQM's results for
society criterion
Hotel category N Mean Stand. Stand.
value deviation error
EFQM results Hotels rated 23 58,9130 23,44997 4,88966
for society with 3 *
score
Hotels rated 32 71,4453 20,17841 3,56707
with 4 and 5 *
Tab. 9. Scores for the for the EFQM's key results criterion
Hotel category N Mean Stand. Stand.
value deviation error
EFQM key Hotels rated 23 60,8696 21,22409 4,42553
results with 3 *
score
Hotels rated 32 79,0551 14,60179 2,58126
with 4 and 5 *
Tab. 10. Differences in EFQM scores between average and
highly rated hotels
Levene's test t-test for
for equality differences of
of variances group mean
values
F Sig. t df
LEADERSHIP Assumption of ,491 ,487 -3,515 53
the same variance
No assumption of -3,408 41,862
the same variance
STRATEGY Assumption of ,805 ,374 -3,613 53
the same variance
No assumption of -3,416 37,164
the same variance
EMPLOYEES Assumption of ,228 ,635 -3,365 53
the same variance
No assumption of -3,410 49,707
the same variance
RESOURCES AND Assumption of the 2,627 ,111 -2,840 53
PARTNERSHIP same variance
No assumption of -2,721 39,609
the same variance
BUSINESS Assumption of the ,444 ,508 -3,678 53
PROCESSES, same variance
PRODUCTS AND
SERVICES No assumption of -3,611 44,221
the same variance
RESULTS FOR Assumption of the ,571 ,453 -3,289 53
CUSTOMERS same variance
No assumption of -3,206 42,882
the same variance
RESULTS FOR Assumption of 1,365 ,248 -2,692 53
EMPLOYEES the same variance
No assumption of -2,824 52,907
the same variance
RESULTS FOR Assumption of the ,525 ,472 -2,123 53
SOCIETY same variance
No assumption of -2,071 43,004
the same variance
KEY RESULTS Assumption of the 6,010 ,018 -3,768 53
same variance
No assumption of -3,550 36,516
the same variance
t-test for differences of group
mean values
Sig. Mean diff. Stderr.
diff.
LEADERSHIP Assumption of ,001 ** -13,28804 3,78027
the same variance
No assumption of ,001 -13,28804 3,89888
the same variance
STRATEGY Assumption of ,001 ** -15,42120 4,26786
the same variance
No assumption of ,002 -15,42120 4,51418
the same variance
EMPLOYEES Assumption of ,001 ** -21,10054 6,27141
the same variance
No assumption of ,001 -21,10054 6,18740
the same variance
RESOURCES AND Assumption of the ,006 -13,11141 4,61618
PARTNERSHIP same variance
No assumption of ,010 -13,11141 4,81814
the same variance
BUSINESS Assumption of the ,001 ** -19,53125 5,31062
PROCESSES, same variance
PRODUCTS AND
SERVICES No assumption of ,001 -19,53125 5,40943
the same variance
RESULTS FOR Assumption of the ,002 ** -16,44410 4,99936
CUSTOMERS same variance
No assumption of ,003 -16,44410 5,12861
the same variance
RESULTS FOR Assumption of ,009 -19,50917 7,24636
EMPLOYEES the same variance
No assumption of ,007 -19,50917 6,90881
the same variance
RESULTS FOR Assumption of the ,038 * -12,53227 5,90377
SOCIETY same variance
No assumption of ,044 -12,53227 6,05250
the same variance
KEY RESULTS Assumption of the ,000 -18,18549 4,82621
same variance
No assumption of ,001 ** -18,18549 5,12330
the same variance
