Importance of Service Quality - Hilton Hotel and Resorts - Case Study Example

Critical Analysis of Importance of Service Quality Name Professor Institution Course Date Critical Analysis of Importance of Service Quality Executive Summary The aim of this report is to critically evaluate the importance of Service Quality in setting service standards to meet customer expectations. The report will emphasize on hotel industry with a company in focus being Hilton Hotel and Resorts. Hilton is a multinational chain of hotels and resorts that was first established in 1919 in Texas, US (Hilton Hotels & Resorts, 2014). According Hilton Hotels & Resorts’ website (2014) the hotel has since grown to 530 outlets operating worldwide. The Hilton Hotel brand name still remains one of the leading hotel brands globally. The business places marketing focus on both leisure travel and business travel positioning itself in key city centers, airports, convention centers, and various vacation resorts around the world. Table of Contents Critical Analysis of Importance of Service Quality 2 Executive Summary 2 Table of Contents 3 1.0 Introduction 4 2.0 Overview of Hilton Hotels & Resorts 5 3.0 Dimensions of service quality and its importance 6 4.0 Understanding Customer Expectations 10 5.0 Delivering Exceptional Service Quality 12 6.0 Managing Service expectations 13 7.0 Employee Performance 14 8.0 Moment of Truth 14 9.0 Attribute and overall affect model 15 10.0 Distributing services internationally 16 11.0 Conclusion 17 12.0 Recommendations 17 12.1 Reducing cost of operation 17 12.2 Increasing profits through ancillary revenues 18 13.0 References 19 1.0 Introduction Over the years, Hotel industry has been recognized as one major driver of development in service industry (AbuKhalifeh & Mat Som 2012, p.137). Today, developed and also developing nations regarded hotel and hospitality industry as one of their major industrial elements of their economic growth. In this ever more competitive industry, maintaining customer remains a major tenet to protecting organizations long-term interest. In view of this competitive business environment, Hilton Hotels and resorts have embarked on creating strategies which differentiate their products from other market players (Hilton Hotels & Resorts 2014). Management experts believe that it can only be realized by means of providing excellent service quality. Delivery of excellent service quality is vital in capturing customers. In a nutshell, excellent service quality practice has demonstrated to result to improved customer satisfaction. Based on the information, this report will critically evaluate the importance of Service Quality in setting service standards to meet customer expectations. To achieve this objective, the paper will analyze issues such as dimensions of service quality and its importance, understanding customer expectations, delivering exceptional service quality, managing Service expectations, employee Performance, the movement of truth, attribute and overall affect model, and distributing services internationally. 2.0 Overview of Hilton Hotels & Resorts Hilton is a chain of hotels operation worldwide. Hilton Hotels was established in 1919 by Conrad Hilton in Texas, US (Hilton Hotels & Resorts 2014). Hilton top management claims the Hotel chain has since grown and had more than 530 Hilton hotels outlets operating 78 nations and across 6 continents. Hilton Hotels is considered one of the leading hotel brands globally and are franchised or managed independently by Hilton globally (Hilton Hotels & Resorts 2014). The company has its marketing focus on business and leisure travels with having its hotel located in major cities, airports, vacation resorts and convention center across the globe. Hilton Hotels & Resorts (2014) claim that the company has one of the unique customer loyalty programs called HHonors targeting its quest for a long term relationship. Hilton Hotel and Resort also has established several partnerships with both car rental and airline companies to improve its marketing concept. Some of its Hotels have the attribute of an Executive lounge for both Diamond and HHonors Gold members and customers keen to rent Executive Rooms. This service is expanded worldwide and HHonours members are able to use such package in any of its hotels worldwide (Applegate, Piccoli & Chekitan 2008, p.11). Its lounge is usually situated on the uppermost floor of its buildings. To create efficiency, the management has adopted innovative technology to improve the experience of the guests. According to Applegate, Piccoli & Chekitan (2008, p.9), today, Hilton Hotels and Resort is regarded as an international hospitality company, covering the lodging industry from comfortable full-service resorts and to extended- mid-priced hotels and stay suites. Hilton Hotels & Resorts (2014) claim that the company’s commitment to service quality is enshrined in its mission statement which states that the company endeavors to generate rewarding consumer experiences which create long-term loyalty to their brands, spread warmth of hospitality and attract business to their hotels. The statement continues to say that “ the company offer leisure and business travelers with a form of brilliant hospitality services which provides value for their money, whilst guaranteeing a positive return to shareholders, owners and motivation to employees (Hilton Hotels & Resorts 2014). 3.0 Dimensions of service quality and its importance Applegate, Piccoli & Chekitan (2008, p.16) hold that as the competition increases, Hilton Hotel managers desire to acquire loyal clients which repeatedly purchase their products or services and increase their profits. In a bid to attain such factor, they have gone ahead to design a loyalty program dubbed HHonours. However, to attain repeated purchases; they require understanding the concept of Service Quality Dimensions (Ko & Lily 2008). Numerous managers, including ones from Hilton, believes that service is simply a little aspect of the marketing mix, however, it is in fact a critical aspect of both 4P’ and 7P's of marketing. Nevertheless, what they also need to know is that every dimension in 5 Service Quality Dimensions creates a more addition to the quality and level of service that an organization provides to the consumers. It also enables services tom be unique and fulfilling. Therefore are five service quality dimension which helps meet customers’ perception including tangible, reliability, responsiveness, assurance and empathy (figure 1) (Ko & Lily 2008). Ko & Lily (2008) state that the tangible Dimension of Service Quality means the physical look of the equipment, facilities, personnel, mode of communication and general surroundings. In a nutshell, this dimension is concerned with building first impression. Hilton is one strong brand which achieved its status by means of suing its unique and state-of-the art buildings to create a first impression among its customers. Every Hilton Hotel is mounted with the company logo and name which differentiates it from competitors (Hilton Hotels & Resorts 2014). All the Hilton hotels have a spacious parking lot for visitors who would want to park their vehicles while enjoying the services of the Hotel. For instance, one of its Hilton Hotels called The Beverly Hilton is one unique and attracting structures which are described by architectures has a complete and modern facility (Hilton Hotels & Resorts 2014). Over the years, this facility has been used to host various awards. The Hollywood Foreign Press Association was attracted by the physical appearance of the hotel and has always used it to present Gloden Globe award since 1961 in International Ballroom within the hotel (Applegate, M,Piccoli & Chekitan 2008). Despite of its attractive appearance, management has conducted several innovations to uphold its competitive advantage. Applegate, Piccoli & Chekitan (2008) asserts that one of the latest renovations decreased the number of hotel rooms to 560 and mounted most of them with new Bose Wave radios, 42-inch plasma HD TVs, free Wi-Fi, Jacuzzi and other amenities. These rooms now have adequate work spaces, showing a transformation within the hotel that is long catered majorly to leisure consumers, to a facility where business clients make up 80% of the consumers (Hilton Hotels & Resorts 2014). The company also renovated International Ballroom, which normally host Golden Globe awards and other meeting spaces. This is a culmination that the management of Beverly Hilton is committed to retaining its long serving customers Hollywood Foreign Press Association. On the other hand, reliability Dimension of Service Quality implies to the consistency of the company in doing and implementing their guaranteed service, quality as agreed between the customer service manager and the client (Nguyen & Thi Mai, 2006, p.58). Reliability is also very crucial like firsthand impression, since all customers would want to recognize if the company providing service is reliable and meets the predestined prerequisites with satisfaction. The company has implemented a technology to target online clients. Similarly, the company is a multinational and client from one nation can require making early booking of Hilton Hotel in another country. In that case, online platform provides an opportunity to book for any Hilton Hotel in any part of the world (Kandampully 2007). In a situation where a consumer is impressed with company offers, they make a booking. As such, the company should remain very careful and up-to-date on what is on their website. Hilton Hotel remains as one of the most reliable Hotel in the world. This compliment has helped the facility acquire more customers across the globe every year. The management understands that reliability sells; hence they fulfill the customer promise by providing exactly as per the agreement. Consumers who have been satisfied with Hilton normally recommend it to friends and colleagues through word of mouth (Applegate, Piccoli & Chekitan 2008, p.15). Hilton Hotels & Resorts (2014) posit that the company remains realizable by fulfilling its mission statement stating “the company endeavors to generate rewarding consumer experiences which create long-term loyalty to their brands, spread warmth of hospitality and attract business to their hotels”. The responsiveness Dimension of Service Quality means readiness of the management of an organization to assist its patrons by presenting them with fast and quality service (Ko & Lily 2008). This dimension is vital in the sense that all customers often feel valued if provided with the best quality of service at the company. Hilton Hotels belong to service industry; hence its performance depends on customer service representatives. The company has a customer service department which is heavily funded to provide training to employees. In that way, the company employees are informed of customer expectations and how to meet them. Gržinić (2007, p.85) Willingness to serve has helped in capturing and retaining customers. Today, Hilton has a large customer base globally due to considering this dimension. The assurance Dimension of Service Quality implies the customer’s conviction and trust on employees and whether they are skilled enough to satisfy his or her need (Gržinić 2007, p.89). If a consumer is not contented with the staff, there is the likelihood that he will not come back to purchase a company’s product but may end up at competitor’s company. Hilton Hotels & Resorts (2014) claims that to reduce chance of losing customers to a competitor, Hilton Management hires qualified employees to demonstrate professionalism and willingness to serve its customers. According to Zeithaml, Bitner & Gremler (2006), the empathy is Dimension implying to how an organization heeds and provides individualized interest to their clients so as to make the consumers feeling more special and valued. This dimension usually combines reliability, responsiveness and assurance dimensions to a high level, although they cannot be weighed against one another. If a client believes they received a quality attention and good individual treatment, chances are that he or she will return to purchase more products. Over the years, Hilton Hotels recognize their customers as kings and provide them with specialized treatment to ensure they come again (Applegate, Piccoli & Chekitan 2008, p.14). For instance, as their regular customer, Hilton Hotel management has had to renovate International Ballroom, which normally host Golden Globe awards to show empathy to the Hollywood Foreign Press Association. Figure 1: Dimensions of service quality Source: (Ko, H & Lily 2008) 4.0 Understanding Customer Expectations Andaleeb & Conway (2006, p.7) contends that service quality encompasses satisfying and surpassing the customer expectations. Understanding this concept is critical for creating an efficient marketing strategy. Hilton has therefore advised to review what they offer before creating an efficient marketing which matches their provisions. In brief, advertisements should match products and services Hilton Hotel offers. It is quite interesting to note that the company ads on website, magazines, billboards, and televisions reflection the exact products (Hilton Hotels & Resorts 2014). Expectation also does not necessarily means products, but also competency and willingness of the customer service representatives to serve customers. When Hilton uses “we provide’ they create an expectation that every employee from gate keepers, booking officers to customer service representatives have a particular way of behavior, language and way of answering questions which creates a positive long relationship. If the product and service expectation are met, the company is able to create loyal customers, which they can depend on even during economic difficulties. Management experts also argue that understanding visitors’ expectations will assist Hilton managers recognize what to enhance or whether the quality of service has been fulfilled or surpassed. This would offer the rationale to help hotel managers in narrowing the gap the guests have felt between their expectations and the real service the hotel has provided. Kotler & Keller (2006) provide that ‘the initial issue concerning customer expectations is handling the reality that customers ought to recognize in advance what types of services the organization can offer or might suggest for them. This proves that designing a suitable expectation is critical for Hilton Hotel so as to stay away from customers holding many expectations which they cannot fulfill. Again renovation of Beverly Hilton provides the example of the met expectation. The Hollywood Foreign Press Association has held Golden Globe awards since 1961; the Hotel management cannot assume that the population of the attendance would remain the same. Similarly, the expectation of the host is to see the hotel understanding their need of expansion and meeting it. Renovation of the International Ballroom to meeting the growing population is a culmination that the Hilton management understands the expectation of the customers and meets them promptly. Getting wrong on customers’ expectation has a very experience on a company. Lacle (2013) claims that getting wrong expectation implies that the company will continue losing its customers to a competitor who gets it right, hence not being able to gain advantage in a competitive market. This is to mean that Hilton must meet the expectation so the customers or lose them to Four Seasons. Also getting it wrong also implies using money, resources and time on factors which do not matter to clients. 5.0 Delivering Exceptional Service Quality In the current business arena, global competition has increased tremendously in the market hence intensifying competition in the market. The situation has spackled dynamic development in hospitality sector, hence influencing growth in different outlets like the hotels, leisure and travel, and restaurant (Power & Barrows 2006). The presence of several hotels has created many options which customers can choose. Therefore, to be the best option for customers, delivering exceptional service quality is mandatory to companies. However, delivering of exceptional quality service remains one most complex task which majority of contemporary organizations undergoes (Johnson & Sirikit 2002, p.696). This is because companies try to have unique attributes and services, thereby making it hard to evaluate. Customers look very keenly while comparing service to different quality this is where Hilton has benefited, because of their different touch in delivering customer service quality. The company has invested heavily on resources such as unique and state-of-the-art building, qualified human capital, technology, equipment and other amenities making it easy to offer excellent services over the years (Hilton Hotels & Resorts 2014). These resources are replaced or updated to march the current situations. The company has most qualified and experienced employees who are trained every year to meet current customer needs. Hilton rooms fitted with luxurious beds, large television sets, internet, and other entertainment gadgets which differ in terms of package. For more than 80 years, Hilton hotels and resorts have delivered unmatched and quality service and accommodation to leisure and business travelers. Applegate, Piccoli & Chekitan (2008) contend that in 2002, Hilton introduced “customer really matters program” which was aimed at delivering exceptional service quality. Examples of superior service quality at Hilton Hotel comprise personalized service, complaints desks, hotlines and good communication channels though online platform. 6.0 Managing Service expectations Customer services are a long-term relationship which must be managed properly for competitive purposes. Gržinić (2007, p.92) customer remains a very important asset sustain the company in every competitive market. Just like in any situation, customers normally form certain expectations before purchasing. Communication forms the greatest element of expectation management. It is amazing to note that it is the company that creates expectation through marketing. As a form of communication, companies like Hilton Hotel use marketing to arouse an emotion and attitude their services. Before, a marketing campaign is designed, companies normally have researched about the customer needs, and the real marketing is just a way of telling consumers that the company can actually make product that satisfy your needs. They even go ahead to state that they can serve it to you in an excellent way. Customers therefore expect similar product and service as promised. Hilton therefore, uses communication channels such as emails, website, telephone calls to inform their customers of offers, new packages and any changes (Applegate, Piccoli & Chekitan2008). In the recent times, Hilton has adopted Four Quadrant Customer Expectation Management Model to increase efficiency in managing customer service expectations (Andaleeb & Conway 2006). Using the elements of this model the company has created policies which states the number of days a service should be delivered. For instance, if customer posses a question, it should be handled immediately or in a span of two days. 7.0 Employee Performance Employee performance is of a great importance to achieving customer satisfaction. The employee’s performance in determined by various factors such education, knowledge, skills, experience and motivation (Cardy 2004). Currently, the service sector is considered as the largest sector in economy in every country of the world. Hotel industry belongs to this demanding industry, hence employees performance forms a foundation for success. According to the assurance dimension of service quality, customers expect a company to have skilled employees who customers can trust and have confidence (Little & Dean 2006, p.466). As such, Hilton has continuously conducted a professionalized recruitment to acquire the best talents in the job market. Having the best, qualified and experienced employees has improved their position as the market leader in hotel industry. The company has continued to improve its employee’s performance through training. 8.0 Moment of Truth In a presently progressively service-driven market and increase of many providers for the product and service, the moments of truth have turned out to a vital reality of customer relationship which hospitality managers require to take into account (MSG 2014). These “moment” are crucial since they determine the perception of customer and their reaction to a product. The statement “moment of truth” is described as a situation in which the consumer and the firm meet one another to give the consumer a chance to either create or adjust an intuition concerning the company (MSG, 2014). Normally, moments of truth hold a positive or negative effect on how a company’ relates with its customers. This happens mostly with service and hospitality providers because of selling intangibles through creation of customer expectations. Applegate, Piccoli & Chekitan (2008) claim that, in the case of Hilton Hotel, they try to differentiate their services from those of competitors by creating such services in the minds of a consumer by means of marketing before meeting the expectations during the moment of truth. Hilton creates positive moment of truth by managing customer expectations. In that way, they are able to surpass expectations of the customers. 9.0 Attribute and overall affect model Several models on service have been created to determine perceptions of a customer of service quality. In that process, Dabholkar (1996, p.36) also came up with two different models which managers can use to analyze service quality. These models are founded on attribute against overall affect strategy for service companies providing technology oriented self-service alternatives. Attribute model is often founded on what customers would anticipate from such alternative (Broderick & Vachirapornpuk 2002). In this approach, customer apply cognitive approach to arrive at decisions, where they would apply a compensatory method to assess characteristics related to technology oriented self service selection so as to create service quality expectation (Dabholkar 1996, p.36). On the other hand, overall affect model is founded on the feeling of a customer in the application of technology. Fisher & Nair (2009, p.12) argue this model is anchored on the efficient strategy to the decision making in which customer employ general predispositions to create a self-service quality expectation for the technology-oriented self-service choice. Andaleeb & Conway (2006, p.7) affirm that in both models, service quality expected influences intent to apply technology-oriented self-service alternative. Hilton understands influence of technology in making decisions and had highly sophisticated but user friendly technology in the form of website, online booking platform and social media to influences customer choice to their business. 10.0 Distributing services internationally Competition in markets has increased greatly, making business managers to look for new markets for their products (Ford, Sturman & Heaton 2011). Today, there are nearly all categories of products in the market. This leaves the consumer to have the alternatives of selecting what he or she wants. This has created pressure on service companies like Hilton to improve not only their products, but also services in order to meet the changing expectation. Hilton expansion of its service to 530 hotels across 78 countries culminates its commitment to international distribution of its services (Hilton Hotels & Resorts 2014). International service distribution has many challenges such in terms of politic, economic and social issues (Friday et al 2012, p.52). In some situation, countries try to favor the local hotels for internal economic growth. Cultural diversity is a very big stumbling block to success. Hilton has been able overcome such challenges by means of hiring multi-cultural employees, use of modern technologies and its outstanding reputation as a quality service hotel (Applegate, Piccoli & Chekitan 2008, p.5). 11.0 Conclusion Generally, this report demonstrates a critical finding in importance of Service Quality in importance of Service Quality. In that process, it discussed the significance of five service quality dimensions and understanding Customer Expectations among others. The reports have also discovered that service organizations will only realize a great repute for quality service when they always fulfill or surpass client service expectations. The paper has demonstrated how focus on the service quality factors is critical since the service quality dimensions and models play a vital role in the growth and performance of Hilton Hotel and general services industry. It is therefore conclude that service manager must ensure that their market strategies reflect what they offer so as to prevent a situation where customer’s expectation is too high than what they provide. 12.0 Recommendations 12.1 Reducing cost of operation In the recent years, the company has incurred a high cost of operations due to increasing fuel prices, less demand in the tourism sector and several employees hence high wage bills. As such, the company must reduce the cost of operation while maintaining service quality. In that way, the company must target economic customers with new packages so as to increase its profits. 12.2 Increasing profits through ancillary revenues Hilton’s profits have declined greatly, making the management look for ways to cot operation cost. While at it, they can use ancillary revenue to increase profits. The company can come up creative ways, such as cashless transactions; in customer use credit cards to book while increasing prices when cash transaction is conducted. 13.0 References Applegate, L, M, Piccoli, G & Chekitan, D 2008, Hilton Hotels: Brand Differentiation through Customer Relationship Management, Harvard Business School, pp.1-18. Andaleeb, S.S & Conway, C 2006, Customer satisfaction in the restaurant industry: An examination of the transaction-specific model, Journal of Services Marketing, Vol. 20, No.1, pp.3-11. 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