Factors influencing the development of a competitive strategy in individual hotel enterprises

Abstract

The content of this thesis presents the results of a study into the factors influencing the development of a competitive strategy in individual hotel enterprises. It starts by exploring some of the major challenges confronting managers of individual hotel enterprises as they fight to remain competitive in a diverse and volatile business environment. Increased competition has pressured hotel firms to re-evaluate their existing structures, often redesign them to procure both a competitive advantage and simultaneously, reduce operational costs. However, one of the effects of this action has resulted in a reduction of the amount of strategic support, individual hotel enterprise managers can rely on. Thereby, implying that the role of a hotel manager is changing, and increasingly including both an operational and strategic orientation. If this is the case, and hotel managers are becoming increasingly strategically focused, is competitive strategy now being developed by hotel managers at the operational level of the firm?

The literature review begins by investigating how hospitality firms develop a competitive advantage in the industry. Out of the Literature review, four broad propositions were developed, they argued that: (1) the competitive strategy selected by a hotel enterprise's management is influenced and supported by a series of independent variables. These variables include such factors as the hotel's operating arrangements, its location, the managers perceptions of the task environment and the degree of sophistication adopted in the planning process; (2) the uniqueness of the local task environment influences the scope of alternative viable competitive postures open to managers of individual hotel enterprises; (3) a range of organisational factors influence a hotel manager's role in developing and sustaining a competitive advantage for their respective individual hotel enterprises; and (4) increased strategic responsibility requires hotel managers to become more pro active in collecting business intelligence through environmental scanning. Using these propositions, the theoretical body of knowledge surrounding each of the four strategic propositions was explored and discussed.

Factors that were identified as possibly having a key function in influencing the development of a competitive strategy at the hotel level were used to formulate the research hypotheses. The empirical component of this thesis reports the results of a survey into the strategic activities of hotel managers operating within New Zealand. Of the 300 questionnaires distributed, 148 copies were returned completed and contributed to the study. The responses were subjected to a multi-stage analysis to identify if a unique set of strategic profiles existed at the hotel enterprise level. To identify the types of competitive strategies adopted by hotel managers, the first stage of the data analysis involved subjecting part of the information collected to a factor analysis. This information was then used to develop a preliminary framework that described the characteristics of each of the five competitive strategy types. Subsequent to the development of the strategic typology, a series of tests were undertaken to determine what effects if any, did the hotel's location, its operating arrangements, managerial control and the management's perceptions of the environment have upon the choice of a competitive strategy. The major findings from this research were that:

• Competitive activity at the hotel enterprise level can be explained using a unique pattern of five competitive profiles, each having a unique set of strategic characteristics. • A hotel's operating arrangements have no significant effect over the choice of competitive strategy. • A hotel's location had no significant effect over the choice of competitive strategy. • Some evidence was found to support the idea that alternative strategies required to be supported by significantly different managerial perceptions of the environment. • No significant difference was found in the degree of control managers had over the strategic activities of their hotels, irrespective of the strategies pursued. • Hotel managers appear to have control over the development of their enterprises competitive strategy. • There was evidence to support the view that alternative strategies required to be supported by significantly different types of planning tools and techniques.

Finally, the conclusions and implications of the study's findings are discussed in the light of their limitations, and a number of avenues for future research are suggested.