Operations Management: A Case of Hilton and Etap
With the increased rate of globalization in business, most business managers are in turn increasingly focusing on the need to keep up with the management and financial requirements for a globalised business organization. Operations management has never been as vital as it is now with the era of globalization, and has therefore become a subject of study, research and practice. By definition, operations management is the management practice that deals with the design and management of business products, services, processes and supply chains (Cunill 2009). Within the scope of business operational management, there is the aspect of consideration of the acquisition, utilization and the development of resources that each firm needs in order to deliver its products to the market place (Chase Aquilano & Jacobs 2003). Operations management, as a business practice, requires applications of strategies aimed at realizing the overall profits for the business. Strategic issues within the scope of operations management for business organizations is inclusive of determination of size and location of the manufacturing sector, determining and deciding the structure of the servicers, the telecommunication networks and designing the technology for the supply chains. One of the major factors of operational management is the application of the five elements of OM; that is quality, cost, speed, flexibility and dependability in order to achieve specific goals in management (Cunill 2009). Hotel chains as well as individual hotels located in various parts of the world have the best example of organizations where operations management works best. Hilton hotels international and the Etap provide some of the best examples of the organizations where operations management is emphasized on, but with different approaches to the five elements of operational management.
Considering the operations management from its five elements as the guiding principles, it is possible to determine the differences and similarities in the management between Etap and Hilton hotels international.
Operations management: budget hotels (Etap) versus luxury hotels (Hilton)
In the early years of hotel industry, the conventional definition of the word hotel was that a hotel is an establishment which provides lodging to persons on payment and on short term basis. The accommodation in the time was merely a room with a bed a cupboard and other items such as a table and washstands (Cunill 2009). However, the modern description of a hotel has evolved over time, and now includes modern facilities as air conditioning, telephone connections, televisions sets, internet connectivity (wireless fidelity-Wi-Fi) and bars with snakes, drinks and other items. However, the modern classification of hotel has created a difference in the type of hotel available in a given place, based on the service provide and the price as well as specific place of location. Although these differences come in most other aspects, the factor of price is the most important one (Cunill 2009).
Currently, the two main varieties or categories of hotels are the budget hotels and the luxury hotels. Budget hotels are designed to suit the needs, tastes and financial capabilities of almost every person, and thus are cheaper. They have been and are still established to suit people who have small budgets and who thus want to spend as little amounts of money as possible. The rooms in these types of hotels have the basic facilities for the lodging such as the bed, washing equipments and in most cases there are communal toilets. They are always clean but less fancy. Most of the modern budget hotels are fitted with some other varieties considered as basic amenities rather than luxury as it was before, mainly to attract other persons (Chase Aquilano & Jacobs 2003). Such items include newspapers, some TV sets such but mostly not pay TVs and telephone connections. There are some few such hotels which offer breakfast, but most do not. The time for staying in budget hotels is limited, and normally they are charged on night basis. The rates charged in these hotels vary greatly with the geographical location.
On their part, luxury hotel are established for person who is willing to spend as much as they have planned to. They are used to lavish lifestyles. The services offered in these hotels are quite excellent, with highly trained employees who are aware of the value of the customers they handle and the value of catering and courtesy. They are built in such a way that each customer is able to find as much comfort as possible, and to avoid stress in any way. They are, in addition to the rooms and other basic amenities, fitted with such items of leisure as gyms, messaging equipments, beauty treatments and body make ups, excellent parking facilities, swimming pools, laundry bars and restaurants. These hotels charge very high prices. And some are booked online by persons located in other parts of the world. They are also placed in various places, especially which are considered very luxurious such as in major cities, game parks, costal beaches, and mountains.
Hilton hotels provide one of the best examples of luxury hotels in the world. It is an international chain of hotels and resorts formerly known as the Hilton hotels international. They are named after the founder, Conrad Hilton who bought a single hotel in Cisco Texas in 1919, and later bought or build other hotels in other parts of the world. Today, the hotels are owned and managed by the Hilton Hotels Worldwide, which owns more than 530 hotels worldwide.
On its part, Etap group of hotels represent the best example of the budget hotels in the world and per the discussion. This group of hotels was founded in the United Kingdom in the 20th century, and has continued to serve the public through its lower prices charged for all its facilities. It has several branches located in main cities in the United Kingdom, with some relatively similar prices. It is owned by the Accor Group of the United Kingdom. Currently, the group has also established hotels in the Middle East, France and has also planned to penetrate other markets in Europe, Asia and Africa.
Operations management within the hotels
The element of quality: Hilton versus Etap
In operations management, the element of quality is believed gto be the most important aspect as far as customers are concerned. For the last twenty years, companies all over the world have embarked on providing quality of goods and service to their customers in order to ensure there is the aspect of customer attraction, retention and satisfaction. The external effect of excellent quality within the operations of any company is that which the customers to the company consumer the products or services and have little or nothing to complain about, rather they have a feeling of satisfaction. If this applies, then it means that the customers will consider returning to the same company, whether in its location or in its branches located elsewhere, for the good service provided. This makes the company to gain a lot in retention of the customers over and over again, the customers are also likely to turn up with their friend or relatives, or influence others to go for the good services at the company. The company will thus gain more in terms of revenue. The operation quality has another different but equally important aspect. In conformance, if quality should be high in the operational processes and other activities, then it is expected that very few mistakes will be made. This implies that the cost is greatly reduced, while dependability increases and the response increase significantly. If an operation is developed such that it continually corrects the mistakes within the company, then it is difficult to respond to the customers requests. Quality means that customers require error free products and services provided by the company, and if this is not the case, then there is very slight possibility that a customer will return to the very same company (Lysons & Gillingham 2002).
In the case of the two hotels, there are several cases which could be pointed as major differences between t Hilton International and Etap. In terms of quality, it is quite evidence to say that Hilton provides the best services to its customers worldwide. This is especially so if one considers the fact that the facilities offered are tailored towards leisure in addition to basic amenities, while in Etap, the services are basically the amenities. In addition, Hilton international has the ability to make its customers return to the very same hotel, whether in America, Africa, Europe, Asia or any other place in the world, given that it is well established in all the continents. However, Etap seems to be superior in terms of the quality offered in relationship to the amount of money it charges (Heizer & Render, 2003). While it is true and a fact that Etap has les to offer in terms of luxury, it is also a fact that Hilton has little it can use as customer attraction in terms of the budget. The quality of food and lodging services offered by Etap is quite high, and in most cases they are far above the lower threshold that they authorities require of hotels. In addition, some service a which Hilton charge high amounts for are offered in Etap butt at every low prices. For instance, Hilton hotels, like other related hotels, charge the customers very high for the wireless fidelity, while Etap has now embarked on providing these services to their customers, saying that the internet connection is just as necessary to the people as the telephone connection. Etap is currently categorizing internet connectivity to basic needs, and thus offering them under considerable prices (Lysons & Gillingham 2002). This seems to be a very sure mistake that Hilton is making, especially when the inside factor of the elements is considered. Thinking that quality of the products is only provided under very high process, Hilton hotel continue to charge very high prices for services which are nowadays becoming a basic necessity as far as technology is concerned, while the budget Hotels like Etap have tried to compete with the Luxury hotels on such grounds. In this case, customers may consider going for quality under low and considerable prices rather than the very same quality of products and service under extremely high prices. It is therefore a kind of weaknesses the operational management reveals in both of these hotel types (Heizer & Render, 2003).
The speed of response
The speed of response is an element of operational management that implies the time frame between an external or internal customer who is requesting for the services or products and the time they get them in their disposal. This element has also some internal and external affects associated with it. The external affect is crucial because it helps the company to respond to the customers’ requests. It is normally viewed positively by the customers who are more likely to return to the business for the same service or products (Bennett 2009). When the service is fast, it is more likely that the company will charge a higher price than for a service offered in a slower manner.
The internal affect of this element of speed is more oriented with cost reduction than the customer’s request. The speed reduces cost of inventories and risks (Heizer & Render, 2003). In hotel industries, processing of customers though the registration and booking of rooms and other services will increase the speed of customer service, and it is a human characteristic of preferring quick services to slow ones, even if the tine limit is enough (Lysons & Gillingham 2002). Faster throughput of information and services find the company more and more customers, most of which are returned and regular customers to the company, having been attracted by the high speed of customer response. Fast throughput of customer response is affects dependability, because when customers hang around in the hotel system for long period of time, then there are more chances of them getting lost as they seek for service from other hotels (Heizer & Render, 2003).
This element is quite distinguishable on the modes of operations between the two hotels, Hilton and Etap. Hilton international has been one of the leading hotel chains in the world in terms of customers’ services, and which were the first to employ online customer services such as booking and clearing of bills, and thus charged the highest prices characteristic of any pioneer in any one field. While the hotel chain still charges high prices to cover this transaction and to go on with its tradition (Bennett 2009). Other competitors, especially in the category of Budget hotels, have realized the need to have these services within the framework of the management. These low priced hotels have this been up to date in terms of their booking services, while still providing cheaper prices compared to their luxury counterparts. This mean that although the Hilton hotels are more advanced in term s of online booking, customers may opt for cheap prices charged for the same variety of serves (Bennett 2009).
This implies to be on time in terms of providing customers services. Customers long to receive their products and services on time to meet their demands (Lysons & Gillingham 2002). This element also has two factors, the external and internal affects. The external dependability is regarded a good thing by the customers to any business organization (Bennett 2009). Customers become very irritated if the goods and service they require are later than when they had expected them or when they had been promised by the business organization. The internal affect of dependability has its major effect on the cost of the service or product offered to the customers. Highly dependable systems within an organization help increase the speed of performance (Bennett 2009).
In case of the hotels, dependability is almost equal, and what matters is the prestige of the hotel rather than the quality of the product. Hilton group of hotels normally provide their customers with on time services, from booking to food and catering, entertainment and other services (Bennett 2009). In these hostels, the external affect of dependability is quite high, but under very high prices owing to the value and the cost of developing the affect and making it work. Budget hotels, although they may not be able to meet the requirement of customers who are regular customers to luxury hotels, provide competition to these high class hotels in that they offer their customers the very same services as those offered in the luxury hotels as far as the timing of services are concerned (Bennett 2009). For example, customers nowadays are making their booking either online or on the spot at the entrance of these hotels, just as it is the case in luxury hotels. Although their services may sometimes be slow owing to the large number of customers they handle, the prices they charge for the delivery of services are quite competitive to those offered by their luxury counterparts (Lysons & Gillingham 2002). The cost affect is also quite significant as far as the difference sand similarities of the two hotel varieties are considered. For instance, the rate at which both of these companies make their services available to the customers have little variance, only that sometimes luxury hotels like Hilton employ some of the most qualified personnel in the world in terms of catering, while Budget hotels like Etap may go for qualified personnel yes, but who may provide less prestige for the public opinion. However, the personnel may perform in almost the very same manner. In such cases, all what matters is not quality, but prestige. Prestige, in this case, is costly than the service itself (Heizer & Render, 2003).
Flexibility means to be able to change some aspects of operation in business in some way. There are several categories of flexibility element such as the service/product flexibility, market mix flexibility, volume flexibility and delivery flexibility (Bennett 2009). The affects of flexibility as element operations are twofold, and determines the factor that has to be adjusted to meet the market requirement for the product or service. The external affect of this flexibility allow an operation to fit its services and products to its customers in some manner. Market mix flexibility allows the operation to produce a wide variety of goods and services for sale to the customers from which they can choose from (Heizer & Render, 2003)
. The product or services mix allows the company to develop new products and services in which new ideas and methods have been incorporated when developing them. These ideas may have originated from the customers themselves as they make suggestions or specifications of the products or service they need from the company (Bennett 2009). Flexibility in terms of volume and delivery means that the operation has to adjust to its own output level as well as the delivery procedures so that it comes up with any unexpected changes on the amounts and volume the products and services that the customers may request, when they need them or where they require these products or services. There are also some internal affects that are associated with the performance objective. Flexibility speeds up the response of the company to the customers demands; it saves time and helps in maintaining dependability (Cunill 2009).
In hotel industry, there is a factor of flexibility that the companies involved adhere to if they want to attract and retain customers. Service flexibility, volume flexibility, as well as the delivery flexibility, all have some significance in the operational management in hotels. The difference between the two kinds of hotels, the budget and the luxury hotels, occurs when one considers the direction to which the flexibility takes place (Bennett 2009). It appears that budget hotels are more flexible in all the four aspects because they are always striving to increase the number of customer’s thorough attractive service in addition to their ever attractive prices (Heizer & Render, 2003). Luxury hotels like Hilton, on their side seems to be less flexible since their prices are well established, they have long term customers and who require little adjustments of prices. The volume of the product and service is normally the element that frequently adapts to changes within these hotels (Bennett 2009). For instance, they strive to provide their customers with the most recent or up to date luxury technology in their rooms or in house within the hotel facilities. While this is true, budget hotels like Etap strive to provide the customers with the best affordable prices rather than services.
The cost of hotel service varies according to the prestige and the variety of services the hotel provides. The cost structure for the two different yet related forms of business organizations vary greatly due to prestige and variety of products and service offered for sale to the customers. The other four elements of operational management described above work to contribute to the reduced cost, on their internal affects. This is a the major area of concern that business, especially those in budget hotel industry like Etap, have been utilizing to reduce cost and at the same time increase the number of customers and ultimately increase their profitability (Heizer & Render, 2003).
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