DESIGN OF TOURISM AND

HOSPITALITY SERVICES
LESSON
OPERATIONS MANAGEMENT IN THE TOURISM AND
HOSPITALITY INDUSTRY
2

 LEARNING OBJECTIVES

At the end of the chapter, the learner should be

able to
• describe how time-based competition is
implemented by Production/Operations
Management (P/OM
• describe customer participation in the design and
production of service
• describe customer interaction in process desig
• identify recent advances in service technolog
• discuss the four R's of sustainability
:

• Quality means, serving in a manner which suits to the tourist within

the limits of the industry. It also refers to the quality provided to the
people who have visited an individuals' place. The best of the services
provided by the operations team is called quality.
• Delivering quality service is one of the major challenges facing
hospitality managers in the opening years of the millennium. It is be
an essential condition for success in the emerging, keenly
competitive, global hospitality markets. While the future importance of
delivering quality hospitality, service is easy to discern and to agree
on, doing so presents some difficult and intriguing management
issues.
• Since the delivery of hospitality service always involves people, these
issues center on the management of people, and in particular on the
interactions between guests and staff, interactions that are called
service encounters. In the eyes of our guests, our hospitality businesses
will succeed or fail depending on the cumulative impact of the service
encounters in which they have participated.
• The service sector took TQM from the manufacturing sector, and adapted it
to the characteristics of the tourism and hotel industry. Based on the
manufacturing sectors example and achieved good results, the service
sector adopted the business rule that productivity, quality and profit
constitute a single whole. This represented the motive for the
improvement and development of quality tourism services. Quality
becomes a decisive factor of efficiency and competitiveness on the
turbulent tourism market.
 • Tourists/guests, in general, consumers do not tolerate mistakes
anymore. They require quality for money. This has forced tourist
agencies, hotels and other participants of the tourism offer, to
introduce quality control, standards and the system TQM. USA is
at the forefront, and in Europe, Sweden and Switzerland.
American international hotel chains were the first to implement
TQL and TQM, very good results were achieved. Such systems
of quality control are less used by small tourist agencies and
smaller hotels

• In a going concern, services are developed to meet customers'

needs and only if there appears be a market, either now or in the
future, can a service be justifiably produced

• Good service design satisfies customers, communicates the

purpose of the service to its market and brings financial rewards
to the business. The objective of good design, whether of
products or services, is to satisfy customers by meeting their
actual and anticipated needs and expectations. This, in tum,
enhances the competitiveness of the organization. Service
design, therefore, can be seen as the starting and ending with
the customer. So, the design activity has one overriding
objective: to provide services and processes which will satisfy
the operation's customers.
.

 GOODS AND SERVICES

SELECTION

Service Strategy Options Support Competitive Advantag

• A world of options exists in the selection, definition, and design of
services again based on differentiation by offering a distinctly unique
and high-quality services; low-cost strategy, by designing a service
that can be produced with a minimum and rapid response, executing
the fastest and shortest time to get a service to market before
customer tastes change and to do so with the latest technology and
innovations
• Service decisions are fundamental to an organization's strategy and
have major implications throughout the operations functions
• While 90% of businesses which are growing rapidly say design is
integral to or significant to them, only 26% of static companies say
the same
• using design can help to reduce costs by making processes more
efficient and cutting materials costs. It can reduce the time to market
for new services
• Also, almost 70% of companies which see design as integral have
developed new services in the last three years, compared with only
a third of businesses overall
• Companies judged to be effective users of design had financial
performances 200% better than average.
;

 • Remember that not all new services are created in response to

a clear and articulated customer need While this is usually the
case, especially for services that are similar to (but presumably
better than) their predecessors, more radical innovations are
often brought about by the innovation itself creating demand.
Customers don't usually know that they need something
radical. For example, in the late 1970s people were not asking
for microprocessors, they did not even know what they were.

GENERATING NEW SERVICE

• Because service die; because services must be weeded out
and replaced; because firms generate most of their revenue
and profit from new services, service selection, definition, and
design take place on a continuing basis. Knowing how to
successfully find and develop new service is a requirement.

 N E W S E RV I C E O P P O R T U N I T I E S 


One technique to generate new service ideas is brainstorming,

technique in which a diverse group of people share, without criticism,
ideas on a particular topic. The goal is to generate an open discussion
that will yield creative ideas about possible products and product
improvements
• Understanding the customer is the premier issue in new-service
development The operations manager must be "tuned in" to the
market and particularly these lead users (companies,
organizations, or individuals that are well ahead of market trends
and have the needs that go far beyond those of average users)
• Economic change brings increasing levels of affluence (prosperity)
in the long run but economic cycles and price changes in the short
run. In the long run, for instance, more and more people can afford
better services, but in the short run, a recession may weaken the
demand for these
• Sociological and demographic change may appear in such factors
as decreasing family size. This trend alters the size preference for
homes, apartments, and automobiles.
• Technological change makes possible
• Political/legal change brings about new trade agreements, tariffs,
and government contract requirements
• Other changes may be brought about through market practice,
professional standards, suppliers, and distributors.
.

 I M P O R TA N C E O F N E W S E RV I C E S 


• Despite constant efforts to introduce viable new

services, many new services do not succeed.
Service selection, definition, and design occur
frequently, perhaps hundreds of times for each
financially successful service. Operations managers
and their organizations must be able to accept risk
and tolerate failure. They must accommodate a high
volume of new service ideas while maintaining the
activities to which they are already committed.
• The biggest risk in research lies in the high mortality
rate of research projects. Yet, since everyone knows
that research payoffs are hazardous and few
projects pay off, one might ask why do almost all
companies of any size carry on research. Aside from
having to research in order to compete, it is still true
that some of the successes pay for themselves
several times over. In general, and in total, research
pays off.
• Furthermore, if a company does not do research,
then income taxes Will take nearly 50% of its profit
dollars, so tax savings pay for almost 50% or more
of research costs. The question is not, “Is research
worth its costs?" but "Is research worth half of its
cost?"
 SERVICE DEVELOPMENT


SERVICE DEVELOPMENT SYSTEM

• An effective service strategy links service decision with cash flows,
market dynamics, service life cycle, and the organization's activities. A
firm must have the cash flows for service development, understand the
changes constantly taking place in the marketplace, and have the
necessary talents and resources available.
Sources of ideas
A. Marketing people see the need for something their customers want.
B. Production people see opportunities to improve methods and
processes.
C. Everyone in an organization is a potential source of ideas.
1. Quality circles, to stimulate ideas
D. Outside the company, as from its customers, or the public, or from
sources within the firm not directly responsible for new service ideas like
its employees.
In spite of what has just been said, however, a great deal of innovation
comes from researchers.
 S TAG ES IN DEVELOPING A
MARKETABL E SE RVICE


A Initiation of an idea.
B Gathering of necessary data on the marketability of the service
C Screening of the gathered data by the preliminary service review
committee consisting of specialists from the sales, administration,
production, and design departments.
D Determination of the immediate and ultimate marketing objectives of
the service after thorough scrutiny.
E Development of the service with the combined efforts of the market
research, service development, and service design.
F Checking of the service development results and pre-testing for
marketability.
G Organizing the initiation of the service.
H Field test of the service on its marketability.
I Review of the design based on test results and from the point of view
of economic considerations. This work has to be done by the service
design and development departments in complete collaboration with the
other departments.
J. Standardization of the service criteria and the method of providing the
service.

 SERVICE DESIGN

• Designing services is challenging because they often have unique

characteristics. One reason productivity improvements in services are so low is
because both the design and delivery of service products include customer
interaction. When the customer participates in the design process, the service
supplier may have a menu of services from which the customer selects options. At this
point, the customer may even participate in the design of the service.
• However, like goods, a large part of the cost and quality of service is defined at the
design stage. Also as with goods, a number of techniques can both reduce costs and
enhance the product.
A One technique is to design the product so that customization is delayed as
late in the process as possible.
B To modularize the product so that customization takes the form of changing
modules.
C Another approach to the design of services is to divide into small parts and
identify those parts that lend themselves to automation or reduced
customer interaction. EX Airlines are moving to ticket-less service.
D Because of the high customer interaction in many service industries, a
fourth technique is to focus design on the so-called moment of truth when
the relationship between the provider and the customer is crucial. At that
moment, the customer's satisfaction with the service is defined. The
moment of truth is the moment that exemplifies, enhances, or detracts
from the customer's expectations like cannot reach the provider via phone
because it is always busy; always on hold; etc. detracts from the
customer's expectations like cannot reach the provider via phone
because it is always busy; always on hold; etc.

 SUSTAINABILITY

• Managers may find it helpful to think in terms of the four R's as they address
sustainability. These are (1) the resources used in the production process; (2)
the recycling of production materials and product/service components; (3) the
regulations that apply; and (4) the firm's reputation. All four areas provide
impetus for managers to perform well as they develop and refine service
processes.
• Resources. Operations is often the primary user of the firm's resources. This
puts special pressure on using human, financial, and material resources in a
sustainable way.
• Recycle. As managers seek sustainability, they should realize that there are only
three things can be done with waste: burn it, bury it, or reuse it.
• Regulation. Laws and regulations are affecting transportation, waste and noise
are proliferating and can be as much of a challenge as reducing resource use.
• Reputation. The marketplace may reward leadership in sustainability.
Imaginative, well-led firms are finding opportunities to build sustainable
production processes that conserve resources, recycle, meet regulatory
requirements, and foster a positive reputation.