A Comparative Study of 20 Hotels in Budapest
December 1993-April 1994
The study diagnoses a segment of the Hungarian hospitality industry. The purpose of this diagnosis is to present the current position of quality management in the hospitality industry, and to show where immediate improvement is possible and necessary.
20 three-, four- and five-star hotels in the central districts of Budapest were examined from a quality management point of view. The investigation covered the fields of customer satisfaction, competition, public relations; services, choice of market position, leadership and communication; strategy, structure and cooperation. All these factors were analyzed concerning not only service, but also pre-service and extra service . Each hotel was examined in terms of quality equilibrium, the equilibrium between customer needs and the supplier's action to satisfy customer needs.
The presumption of the author was that most of the hotels would show excellent results. Since the hotel industry is confronted with constant changes and many employees are in daily contact with the customer, this expectation seemed justifiable. The findings of the study, however, show that very few hotels can maintain a quality equilibrium.
There were three major problems revealed at the hotels examined:
(1) Current pricing tactics are irreconcilable with the constraint to improve quality.
(2) Insufficient communication of new ideas impairs ability to change.
(3) Customers are not informed properly and many potential customers are not even reached.
These problems indicate that principles of quality management are not deeply rooted in the corporate culture of these hotels. Besides, the economic environment does not promote progress in that direction. One of the major drawbacks is the concentration of power at, or even above, the level of the top management of hotels.
The implication of the results is that steps taken on the path towards a quality equilibrium would enable the hospitality industry to more successfully fulfill a facilitating role in the Hungarian economy. One approach already present in Budapest is clear instructions and strict management. Another successful approach, however, might be empowerment, the delegation of power downwards.
1. We started with an overview of the tourism market and it was already obvious at that point that tourists should be encouraged to spend more in Hungary.
2. Contrasting this to the data obtained, it can be stated that the average duration of stay should be increased.
3. To increase the duration of stay, the current philosophy of selling rooms has to be transformed into selling packages of services.
4. Managers should realize that the cheapest way to access potential customers is looking for them in Budapest.
5. Packages have to include extras that meet customers needs. All the 20 managers had stories of extreme customer wishes. These stories should be analyzed to forecast potential needs.
6. Information from customers should not be allowed to get stuck in the organization. Vertical communication has to be more flexible to let employees initiate changes. Horizontal communication has to be enhanced through cross-training and workshops.
7. Front-office employees usually form a real team. They should be the model for building teams throughout the organization.
8. Decreasing demand might cause cash-flow problems. More cost effective methods, the principles of lean management have to be implemented.
9. Lowering prices can be an appropriate method but is has to be systematic. Yield management should be introduced instead of ad hoc bargaining.
10. To implement these steps, well-trained work force is indispensable. Hotels cannot employ college graduates for entry jobs because of the increasing cost of labor in Hungary. The solution can be on-the-job training in not only languages and professional skills but also quality management.
11. Last but not least, appropriate quality control systems are necessary. Quality requirements should not be kept unchanged. They should be aimed at a constant adjustment process so as to meet customer needs.
The above recommendations cannot be fulfilled without active coordination from the part of the Hungarian government, the National Tourist Board, and the Hungarian Hotel Association. Changes will probably start at the hotels already in foreign ownership. The ones still in state ownership should not wait for them to take the first step.
It was mentioned in the introduction that the tourism sector could contribute to the growth of the Hungarian economy. It means invisible exports and, through the multiplier effect, it can create more jobs for other industries too.
Tourism is an industry of peace, and so is the hotel industry. After the end of the war in Yugoslavia and the recession in Western Europe, there are vast opportunities. We must exploit this.
