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A study of hotel informationtechnology applications

Rob LawSchool of Hotel and Tourism Management, The Hong Kong Polytechnic

University, Hong Kong, People’s Republic of China, and

Giri Jogaratnam Hotel and Restaurant Management, Eastern Michigan University, Ypsilanti,

Michigan, USA

Abstract

Purpose – Information technology (IT) applications in the hotel industry have largely been devotedto the handling of the routine operational problems that crop up while running a hotel. Previously, the

hotel industry has been criticised as reluctant to make full use of IT. This paper reports and analysesthe findings of a recent survey on IT applications in Hong Kong hotels.

Design/methodology/approach – Through personal interviews with 21 managers of hotelelectronic data processing/management information systems (EDP/MIS) in 2003, different technicaland behavioural aspects of IT were examined.

Findings – Compared with a similar study performed in 1997, the empirical findings in 2003 showedthat IT was used not merely to replace the existing paper system but also to improve customerservices and to enhance operational effectiveness. Unfortunately, the empirical findings also indicatedthat hotel decision makers did not seem to realise the importance of IT for the purpose of developingbusiness strategies and, therefore, IT was generally not used in hotels for high-level businessdecision-making.

Research limitations/implications – A limitation of this study was the fairly low participationrate of hotel managers.

Practical implications – The study does offer useful insights for hoteliers to realistically analysethe potential benefits of IT applications to their business.

Originality/value – This paper will contribute to help raise the awareness of IT involvement at alllevels of hotel business processes, and facilitate hoteliers to proactively incorporate IT into their effortsto remain competitive in the industry.

Keywords Hotels, Information, Technology led strategy, Hong Kong

Paper type General review

Introduction and literature reviewThe traditional hotel industry has placed great emphasis on the provision of qualityservice to guests. With the increasing demand for intensive information from

customers and hotel practitioners, hotels have adopted computer-based IT facilities toimprove operational efficiency, reduce costs, and enhance service quality (Camison,2000; Cobanoglu et al., 2001; Siguaw and Enz, 1999; van Hoof et al., 1996). With the useof IT in their businesses, hotel managers expect that their profit margins and financialreturns will increase. According to Watkins (1995), IT starts and ends with customers

The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at

www.emeraldinsight.com/researchregister www.emeraldinsight.com/0959-6119.htm

This project was supported by a research grant funded by the Hong Kong PolytechnicUniversity under contract number G-T568.

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International Journal of Contemporary HospitalityManagementVol. 17 No. 2, 2005pp. 170-180q Emerald Group Publishing Limited0959-6119DOI 10.1108/09596110510582369

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in a hotel. The investment in IT thus benefits the hotel if it enables customers to have abetter experience and the hotel staff to work more efficiently to better assist customers.Likewise, Olsen and Connolly (2000) argued that the use of IT can place knowledge andinformation at the core of a hospitality organisation’s competitive profile.

In general, the hotel industry can be regarded as information intensive. Davis andDavidson (1991) claim that with IT reshaping the basic structure of the industry andsociety, in addition to consumers’ need for more accurate and timely information, thepace of technology diffusion in hotels will increase at an unprecedented rate. Similarly,Cho and Olsen (1998) stressed that IT can transform the nature of products, processes,companies, industries and competitions in the hospitality industry. Frew (2000a, b)further emphasised that technology will bring about a major revolution in thehospitality industry.

The rapid growth of the tourism industry in Hong Kong in the 1990s and early2000s stimulated the rapid development of the local hotel industry. In the periodfrom 1992 to 2001, Hong Kong had been able to attain an average hotel occupancyrate of over 80 per cent; whereas the corresponding figure for worldwide hotelswas less than 70 per cent (HKTB, 2002). To efficiently manage the severalhundred rooms in each hotel at an international standard of service, hotelmanagers need updated management know-how and the latest IT systems.

Prior studies have indicated that hotels do not always intend to take the lead inimplementing a new kind of technology (Cho and Olsen, 1998; Sheldon, 1997).Such a slow response, according to Gamble (1988), causes the hospitality industryto lag behind other industries in IT applications. This, in turn, may cause ahotel to have a low degree of accrued benefits in terms of changes in the hotel’scompetitive position. Furthermore, most hotel decision makers did not receivetraining in IT; for this reason, their technical knowledge is fairly limited (Borsenik,1993). The low IT knowledge of these hotel managers inevitably causes them to be

reluctant or even resistant to accept new technologies because they fear that thesetechnologies might affect their role of providing personalised services to hotelguests. Connolly et al. (1998) stated that, due to their low IT competence, manyhotel managers are skeptical about the value of investing in IT. Additionally, Lawand Lau (2000) commented that the low technical competence of hotel managersand the large scale of IT-assisted hotel operations mean that the hotel industrywill remain at a high risk of having IT problems.

In 1997, a survey of hotel IT applications was performed in Hong Kong (Law andAu, 1998). In that survey, 48 hotel EDP managers of the 83 members of the Hong KongHotels Association voluntarily participated in the study and were interviewed aboutgeneral IT use in their hotels. Research findings in 1997 showed that hotels in HongKong generally used IT to assist in daily operations. The study, however, also revealed

that hotel IT applications were non-innovative and lagged behind in terms of technological applications compared to other business fields. In particular, hotelmanagers generally talked about service quality, marketing strategy and cost control.By contrast, computer networks, operating systems and programming environmentsappeared in the conversations of technical IT professionals. In other words, there hadbeen very little mutually understandable communication between non-technical hotelmanagers and technical IT professionals, making hotels unable to fully utilise theirIT facilities.

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Since IT developments have changed rapidly in recent years, it is beneficial toreinvestigate the latest IT applications to the hotel industry. As a longitudinalexamination of hotel IT applications, this paper uses a descriptive approach to reporton a study overviewing the latest IT uses in Hong Kong hotels. This paper is expected

to benefit hospitality practitioners in several ways. First, it makes an attempt to raisethe awareness of IT to hotel managers at large. This is achieved by sharinginformation on primary data collected from the hotel industry in Hong Kong, acosmopolitan city with many world-class hotels. Next, this paper provides a morerealistic analysis of the potential benefits of IT applications to the hotel industry.Hoteliers can then plan their business strategies on IT development in their hotels.Lastly, the paper advocates the importance of IT in the hotel industry and stresses theneed for hotel managers to be IT competent in order to take full advantage of technology. The paper should, therefore, be of value to hotel managers and studentsof hotel management.

MethodologyThis research used an in-depth interview approach. Hotel managers in EDP/MISdepartments were interviewed to seek their views on two dimensions of IT applicationsin their hotel properties. These dimensions included technical and behavioural aspects.The questions used in the interviews largely followed a study that was performed in1997 to investigate hotel IT applications in Hong Kong (Law and Au, 1998). Thesequestions basically cover the essential areas of IT facilities and related issues inhospitality business applications (Shelly et al., 2002; Kasavana and Cahill, 1997).

In this study, the population consisted of all of the members of the Hong Kong HotelsAssociation. All EDP/MIS managers of the member hotels listed in the most recent editionof the Hong Kong Hotels Directory (HKHA, 2003) were contacted for personal interviews.A total of 21 hotels participated in the study, representing a 27 per cent response rate.This

response rate is lower than the matching figure of the study performed in 1997, duringwhich 48 EDP managers out of the 83 hotels agreed to participate. In view of the heavyworkload of EDP/MIS managers and the time involvement in the personal interview, theresponse rate in 2003 can still be considered as reasonable. The personal interviews anddata collection were completed in March 2003.

Findings Profiles of the respondents and their hotelsIn this study, data were collected on the qualifications of the interviewees andbackground of their hotels. Table I summarises the demographic profiles of theinterviewees and their hotels. This section mainly discusses the findings in 2003, butthe corresponding figures for the 1997 study are also listed for reference.

EDP/MIS managers were fairly well educated. Forty-five per cent of therespondents held university degrees and more than half of the respondents(52 per cent) had received a formal education in technical computer science or inengineering disciplines. This indicates that the academic qualifications of EDP/MISmanagers were relevant to their jobs. Compared to the figures in 1997, EDP/MISmanagers nowadays are better educated and receive more related academic training.Besides, EDP/MIS managers have all had many years of industrial work experience,with 50 per cent having worked in the industry for at least ten years.

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1997 ( n ¼ 48)Percentage of total


Respondents’ educational background

Highest academic qualificationSecondary school or below 39 35Diploma 29 20Degree 32 45

MajorComputer science/Engineering 38 52Management/BusinessAdministration/Accounting 33 14Others 29 33

Respondents’ years of experience in an IT/IS department , 1 year 3 01-3 years 25 04-6 years 18 20

7-9 years 15 30$ 10 years 40 50 Number of hotel staff Full-time staff # 100 2 16

101-200 22 0201-400 22 42401-600 22 26601-800 20 16$ 801 13 0

Part-time staff # 100 100 83

101-200 0 17 Number of EDP/MIS staff

Full-time staff 0 7 51 39 142 41 763 13 5

Part-time staff 0 97 801 3 20

Average annual budget for an EDP/MIS department #$10,000 3 0$ 10,001-300,000 53 15$ 300,001-600,000 0 77$ 600,001-900,000 7 0$ 900,001-1,200,000 20 8$$ 1,200,001 17 0

Estimated costs of maintenance for hotel systems#$10,000 3 0$10,001-300,000 63 50$300,001-600,000 29 44$ 600,001-900,000 0 6$900,001-1,200,000 5 0

Table I.Hotels’, and respondents’

profile


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Hong Kong hotels are generally large in scale, with more than 100 rooms in eachproperty and, for this reason, these hotels require hundreds of employees to provide ahigh standard of service to their guests. In this study, 84 per cent of the hotels had morethan 200 full-time employees. However, it is somewhat interesting to note that,

probably due to the cost saving factor, hotels tended to hire more part-time employees.In 2003, 17 per cent of the participating hotels had more than 100 part-time staff members. Additionally, most hotels (76 per cent) had two full-time employees whowere responsible for IT development and implementation. However, a majority of thehotels (80 per cent) did not have any part-time EDP/MIS staff. Each year, mostEDP/MIS departments (77 per cent) were usually allocated HK$300,001-HK$600,000(US$1 ¼ HK$7.8) by the hotels. Moreover, 50 and 44 per cent of the hotels had set asidea further HK$10,001-HK$300,000 and HK$300,001-HK$600,000, respectively, tomaintain their computer systems.

Technical aspects

MS Windows was still the most popular operating system used in hotels. This waslargely due to the superb operating capability and portability of Windows on personalcomputers. Also, since local area networks (LAN) were commonly used in businessenvironments, the network operating system Novell Netware was used by 62 per centof hotels. Other frequently used operating systems include UNIX (48 per cent), AS/400(29 per cent) and RS/6000 (14 per cent) for property management systems. Table II liststhe findings of the survey on technical IT applications in hotels.

As revealed in Table II, MS Office (76 per cent) was the most popular applicationsoftware system used in hotels. A natural outcome of the wide adoption of MS Office asthe integrated generic software was the driving out of non-integrated generic softwaresuch as WordPerfect and Lotus in 2003. FIDELIO, which ranked third in 1997, becamethe second most commonly used application software in 2003 (38 per cent). HIS, once a

very popular hotel property management system, was third on the list, with onlyone-third of hotels using it in 2003. The shift in the use of property managementsystems from HIS to FIDELIO was likely due to the latter’s flexibility and relativelylow maintenance costs. Naturally, such a shift in application software caused adecrease in the use of mini computers such as AS/400 and S/36. In addition, all of thesurveyed hotels used various generations of Pentium personal computers (PCs), with amajority of them using P3. This contradicts the findings in 1997, during whichnon-Pentium PCs were still widely used, even though Pentium PCs were available.This finding shows that hotels in Hong Kong, while not the most high-tech oriented,were not lagging far behind in terms of the adoption of computer hardware. Since therecent generation of Pentium PCs can accommodate advanced graphical software,Apple Macintosh computers, which 31 per cent of hotels were still using in 1997, were

simply discarded in 2003.In terms of IT equipment and services that were available to guests, hotels in 2003

were generally able to provide a full range of facilities that had been only partiallyavailable in 1997. Examples of the facilities that were available in all hotels includecomputers, e-mail, fax, internet access and printers. It should also be noted that allhotels had set-up home pages on the internet in 2003, while the corresponding figure in1997 was only 50 per cent. Lastly, 71 per cent hotels had a connection to the centralreservation systems (CRS) in 2003.

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Behavioural aspectsHotel employees generally picked up their IT skills through on-the-job training (95 percent). About half of the hotels (57 per cent) also provided course-based IT training totheir staff. The constraints or difficulties in organising training sessions, as revealedby the interviewees, were mainly resources, budget constraints (33 per cent) and timeconstraints (14 per cent). Hotel managers also revealed that formal IT training to staff has been insufficient. They, however, blamed the high turnover rate in hotels, wheremost training happens on the job. As a result, skills were passed over from oneemployee to another in an unstructured manner, which easily led to inconsistentstandards of IT utilisation. In particular, the interviewees commented that managerialstaff needed to be trained to appreciate the strategic and tactical value of IT.

Table III lists the findings of the survey on behavioural IT aspects in hotels.Moreover, in 2003, only 43 per cent of hotels indicated that their guests werepositive about the provision of technologies, whereas the equivalent figure in 1997 was70 per cent. Guests in most hotels (90 per cent) expressed the view that the provision of technologies was sufficient or very sufficient. For particular technologies that can beused to improve service quality, other than internet connections which 29 per cent of the hotels had agreed were useful, there did not appear to be a specific technologywhich most hotels found useful. In other words, with the probable exception of theinternet, hotel managers did not believe that using a specific technology can helpimprove service quality. Lastly, 38 per cent of the hotel managers suggested that theirhotels need to upgrade their IT equipment, and 29 per cent recommended that the PCsin their hotels should be linked. Compared to the findings in 1997, hotels in 2003 leaned

towards connecting their PCs instead of simply asking for an equipment upgrade.Such a change is probably due to the growing popularity of PC networking, and thusthe optimisation of resource sharing.

DiscussionShelly et al. (2002) stated that because strategy is put together based upon thefundamental building blocks of information, a successful business frameworkshould consist of IT as an essential component in the strategic planning process.

1997 ( n¼48)Percentage of total


Hotels have a homepage on the internet 50 100Cost of initial set up#$20,000 60 25$20,001-50,000 30 50$$50,001 10 25Homepage set-up by

Group/Chain 57 45Outsourcing 36 30Hotel’s IT/IS department 7 25

Hotels have a connection to the central reservation system (CRS) 66 71

Note: aApplication software/systems that were used in only one hotel are not included in this tableTable II.

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hierarchy as defined by Gamble (1988). That is, hotel decision makers do not seem torealise the importance of IT for the purpose of developing business strategies.Therefore, in most cases, IT is not treated as part of the strategic planning process. Thesmall size of EDP/MIS departments in hotels and their role in the hotel management

structure truly reflects this unfortunate situation. On the whole, EDP/MIS managersare largely disconnected from senior management positions. They therefore have nodirect involvement in important decision-making of the hotel. IT budgeting andaccounting are handled on an annual basis subject to the approval of the financialcontroller, who is usually the immediate supervisor of an EDP/MIS manager.

Hotels in Hong Kong, and very likely in other regions, are not fully utilising ITfacilities to their fullest capability. Such an underutilisation occurred in processingspeed, storage space and hardware connectivity. Previous studies have stated thathotels in the UK were not making full use of IT capacity (Main, 2002) and that the levelof IT commitment was insignificant in hotels in Singapore (Leong, 2001). In addition,they found that hotels rarely used state-of-the-art hardware or software technology.The fact that hotels lagged behind in technology applications, compared to otherservice industries such as business and financial management, was largely due to thenature of customer services (Sheldon, 1997).

Hotel managers are now generally under pressure to increase profitability with thesame or fewer resources. An approach to ease such pressure is to integrate ITextensively into the business environment to reduce costs and improve efficiency. It iswell known that effective IT applications require the knowledge and professionalism of both the managers and the operating staff (Go et al., 1994). A challenge now faced bymost, if not all, hotels is the existence of a large gap in the management hierarchy,especially between the senior hotel directors and junior hotel staff in relation to ITutilisation. The existence of such a gap is likely due to a lack of enthusiasm on the partof senior hotel decision makers in utilising IT, while the junior hotel managers or

operators are in favour of utilisation.

ConclusionsThe international hotel industry has been, and will be, facing a technology-basedrevolution. High profile and “high-tech” services have become a requirement fordemanding and sophisticated hotel guests. A new challenge for hotel managers in the21st century is how to integrate the new, complex and varied services and IT systemsinto their existing business operations.

As previously stated, the emphasis in most Hong Kong hotel IT applications isprimarily on administrative and operational functions. In other words, IT is stilllargely being considered as a tool or simply an image instead of as an importantconstituent in the strategic planning process of a hotel. Sadly, the non-strategic

incorporation of IT into hotel management hinders full IT utilisation. This, in turn,may result in the loss of competitive power in regional and worldwide hotel markets.

Most hotels do not seem to be in favour of adopting advanced software technologiessuch as Artificial Intelligence-based systems in assisting with either their dailybusiness operations or long-term strategising. Such a dearth in state-of-the-art ITfacilities could be due to the transactional nature of the hotel business. Since providingquality customer services always remains the highest priority, hotel managers simplydo not attempt to strive for high-tech applications as do engineering and military

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managers. In short, a reliable IT environment rather than high-end IT facilities isviewed as necessary in the hotel industry.

Recommendations for practitionersIt is important for hoteliers to proactively incorporate IT into their efforts to improveservice quality. An ongoing improvement of IT knowledge for all hotel employees canhelp achieve this goal. An overall upgrade in IT proficiency can then be assured in thehotel environment. In addition, hotels should remain in close contact with the ITindustry. Such close contact is necessary to keep hoteliers updated on the latestIT developments. Hotel managers can then integrate the appropriate IT facilities intotheir businesses. This, in turn, will enable hotels to remain competitive in the industry.

After all, IT capabilities are limited more by the hotel management’s attitude,training, skill, ambition and financial situation rather than by the technical limitationsof hardware and software systems. Besides, most, if not all, professional bodiesrelating to the hotel sector do not seem to be taking an active role in promoting the

strategic use of IT. This matches with the finding of a prior study performed in the UK(Main, 1995). In view of the lack of strategic promotion of IT in the hotel industry,EDP/MIS managers, therefore, urgently need to play a more aggressive role inbridging the gap between the technical experts/equipment and the non-technical hotelmanagers. To achieve this goal, hotel EDP/MIS departments should go beyond simplyhandling data processing in an electronic environment as they have done in the past.To ensure the smooth operation of IT facilities, hotel EDP/MIS managers shouldactively participate in vendor/supplier contacts and software/hardware evaluations.At the same time, they should provide professional advice to department managers onIT capabilities and inform technical computing professionals about the importance of business goals. In this approach, data processing, while still an essential part of thehotel industry, becomes only a small portion of the information processing activities.

Hence, if opportunities emerge, EDP/MIS managers should participate more at alllevels of business decision-making. Seeing that information is crucial to themanagement of all types of organisations, IT can contribute more than technicalapplications and can be part of the management approach emphasising qualityservices in the hotel business.

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