Services industry is a typical industry. Its way of operation is different from any traditional manufacturing sector. Many managers try to manage a service industry like a product company and fail. For the successful running of a service company like the Grand Hotel Townsville, it is important to understand the concepts of service operations management. The main three founding concepts of services management are service package, characteristics of services and nature of services. Service package defines the resources and its capabilities. Characteristics of the services define the input and service interaction. Nature of service defines the differentiation and segmentation of the service within the service industry. The Grand hotel Townsville follows the key concepts of services in different but successful way.
Services sector is different from the manufacturing sector in many ways. Although the two share some common business practices, but the basic concepts and operations are different. The service industry is mainly defined by its input and handling of resources. Services can be broadly divided into two sections called the service package and the nature of service. Service package defines different types of service offerings, bundling of services, supporting facility, information, explicit service and implicit service. On the other hand, nature of services comprises many characteristics like customer participation in the service process, simultaneity, perishability, intangibility, heterogeneity, and non-ownership services. The Grand Hotel Townsville in Queensland, Australia is one of the best hotels in the northern Queensland. It has a great service offering. This paper will discuss how the service offerings of the Grand Hotel Townsville follow the service management theory proposed by Fitzsimmons and Fitzsimmons.
The Service Package
The service package consists of a bundle of goods and services with information provided in an environment (Fitzsimmons and Fitzsimmons, 2011). The five features that characterize the service package are very much there in the service offerings of Grand Hotel Townsville.
The physical resources of the Grand Hotel Townsville consist of modern, well-furnished and sophisticated rooms and apartments. Keeping the comfort and convenience of the customers in mind, the hotel offers a variety of rooms and one and two bedroom apartment accommodation facilities (GHT #1, 2014).
Facilitating goods refer to the materials purchased or consumed by the customers. In the Grand Hotel Townsville, customers can avail the facilitating goods like ironing board and iron, complimentary newspaper, in room safes, complimentary tea and coffee facilities, fully stocked mini bar, large desk or work station and all the necessary goods provided for the customers' comfort.
Information refers to the data collected from the customer or the service provider to enable efficient customized service (Fitzsimmons and Fitzsimmons, 2011). In the case of the Grand Hotel Townsville, customers furnish their personal information and the number of rooms and the facilities they need while booking an apartment. The hotel, on the other hand, gives detailed information regarding their service offerings, how to arrive at the hotel by car and by airport and also about the attractions of Townsville so that the customers can have a great time exploring them.
Explicit service includes the essential features of the service and the benefits readily observable by the senses (Fitzsimmons and Fitzsimmons, 2011). The Grand Hotel Townsville offers an array of such services including venues for corporate meetings, fully-equipped fitness center, nearby restaurant and dining options, wi-fi and broadband service, daily laundry and dry cleaning service and a number of TV channels and in-house movies on demand (GHT #2, 2014). The one bedroom apartment of the hotel provides the customers with a king sized bed, large built-in wardrobe and fully equipped apartment kitchenette. The two bedroom apartment of the hotel has two king sized beds and double sofa bed, two balconies, two bathrooms, plentiful storage area and fully-furnished kitchenette (GHT #1, 2014).
Implicit service refers to the extrinsic features of the service and psychological benefits perceived by the customers (Fitzsimmons and Fitzsimmons, 2011). In the Grand Hotel Townsville, the implicit services include helpful and pleasant customer care executives, complimentary off-street and onsite undercover secure parking facility, 24 hour room service, doctor on call 24/7, babysitting service, wake up calls and message service, in-room shopping list and phone light for hearing impaired (GHT #2, 2014). Also as the hotel is situated directly on the Palmer Street, a dining hub of North Queensland, that is also perceived as an indirect service to the customers.
Characteristics of Services
The Service industry is separate from the normal manufacturing industry. In most of the industries, the inputs and resources are easily identifiable, but there is no such input in the service industry. In fact, the customers can be thought of as the input, and the employees facilitating the customers are the resources (Fitzsimmons and Fitzsimmons, 2011). For the Grand Hotel Townsville, customers coming to stay at the hotel are the inputs whereas the hotel staffs, restaurant staff and room service are the resources. The Grand Hotel Townsville offers an array of services through its resources. It offers 24/7 room service and laundry service suitable for catering to the needs of the business customers. The pool, spa, restaurant and concierge resources are suitable for family oriented customers (input). Nice room service, customized room decoration and privacy serve well for the honeymoon couples.
Customer Participation in the Service Process
For the manufacturing industry, customer participation in the service process is not expected as the customers do not need to see what transpires in the manufacturing shop floor. However, for the service industry, a customer takes part in the whole service process (Fitzsimmons and Fitzsimmons, 2011). For example, a typical Grand Hotel Townsville customer will go through all the steps of the service process like greetings at the front desk, quality of the food served and even the color of the rooms. Therefore, it is extremely important to maintain the resources in a way that they not only perform up to the satisfaction of the customers but also function as a distinguish factor from the competitors. For example, Grand Hotel has a restaurant service unmatched by any other hotel in the region (GHT #1, 2014). If Grand Hotel can promote itself efficiently, then more and more people will avail the services offered by its resource (restaurant), and it will be able to improve the satisfaction level of the customers.
Production and consumption happen simultaneously in the service industry. Waiting time is equivalent to inventory here. A long waiting time for service affects the industry badly (Fitzsimmons and Fitzsimmons, 2011). For the Grand Hotel Townsville, most of the operations including hotel booking, front desk operations, and internet facility at room are consumed immediately. The hotel needs to ensure that the quality of those services is maintained as that cannot be monitored before delivery. The hotel needs to balance facility utilization, service capacity and idle time to reduce the waiting time.
Products are perishable, but they have some shelf life. For services, the shelf life is zero. For example, if a hotel room in the Grand Hotel Townsville goes unoccupied for a day, then that service opportunity is lost immediately after the day passes. As perishability is immediate for services, it is a challenge for the management to keep the utilization high (Fitzsimmons and Fitzsimmons, 2011). The Grand Hotel Townsville sees peaks and valleys in its customer reservations. However, that means that during the off-season, the hotel loses money as it cannot eliminate resources like the restaurant, assets and employees. However, to make it less dependent on seasonality, the Grand Hotel Townsville targets all types of customers including family and business customers (GHT #2, 2014).
Services are intangible and therefore, not patentable. In the service industry, companies try to cash in on a popular idea as quickly as possible before it gets copied by the competitors (Fitzsimmons and Fitzsimmons, 2011). An innovative idea can create a brand name that differentiates a service offering from another. The Grand Hotel Townsville not only has established itself as a fine hotel but also has established itself as one of the leading hotel-restaurant brands. It uses this brand image to lure more customers.
In the services, the expectation level of each customer varies from another. Also, the resources providing the service may differentiate the quality of the delivery of services (Fitzsimmons and Fitzsimmons, 2011). This creates a problem of heterogeneity in the service industry. The Grand Hotel Townsville reduces this problem of heterogeneity by rigorously training its staff before they face the real customers so that the variation of service from the provider side is minimized. On the other hand, the hotel also encourages online booking, online placing of order in order to minimize the human customer interaction for the processes. This helps in focusing on the other processes and improving customized service.
Non-Ownership of Services
Usually, after a person buys a product from the market, he owns the product. However, in services, the customer never owns the product (Fitzsimmons and Fitzsimmons, 2011). He only pays for using a product or property for a limited period of use. In the Grand Hotel Townsville, customers pay to use the hotel rooms for a limited period of time. However, this non-ownership creates problem for the managers. First of all, after one customer leaves the hotel, the manager needs to find another customer to increase the utilization of the hotel room. He also needs to reduce the turnaround time of the resources.
Nature of Services
Nature of service can be broadly divided into 4-5 different categories. Nature of service defines the tangibility and intangibility of service to people and property (Fitzsimmons and Fitzsimmons, 2011). For example, in the Grand Hotel Townsville, the interaction between hotel room and a customer is tangible, but the same between the front desk service and the customer care services over phone is intangible.
Relationship with customers is a very critical thing in the service industry. As the customers directly interact with the service provider, creating a lasting impression on the customers can create loyal customers for the service provider (Fitzsimmons and Fitzsimmons, 2011). For example, a great greetings, hotel experience and restaurant experience in the Grand Hotel Townsville can help create a loyal customer for the hotel.
Services are customized as per the needs of the customer. Depending on the type of service, delivery and the relationship between a customer and the service provider, the nature of service can be divided into four categories (Fitzsimmons and Fitzsimmons, 2011). The Grand Hotel Townsville provides hotel service in the form of discrete transaction with no formal relationship between the customers and the service provider. However, the hotel has a loyalty program to create ‘membership’ relationship with its customers (GHT #3, 2014).
The method of service delivery has many dimensions. For example, in some cases customers have high faith on the service provider, and they may expect customized services. However, for the Grand Hotel Townsville, the customer, because of the good brand name of the hotel, thinks that the service quality will be good. Also, most of the customers expect less customization.
Service is a completely different concept from manufacturing. Product is a tangible thing and service is an idea or a concept. It is impossible to use the same methodology used for manufacturing into the service industry directly. Services vary in terms of characteristics, facility and operations and nature of operations. The Grand Hotel Townsville has some distinct service characteristics distinguishing itself from its competitors. It has a very robust facility to ensure that the resources are of high standard, and the services delivered are of supreme quality. Finally, the nature of service for the hotel offers some unique value proposition for its customers which helps its productivity and capacity utilization.
Fitzsimmons, J. A., & Fitzsimmons, M. J. (2011). The nature of services. In Service management: operations, strategy, information technology (7th ed.) (pp. 17-36). Boston: McGraw-Hill.
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