528    Total Quality Management

Star ratings from one to five are used to assess the standard of quality. AAA diamond rating
criteria are broad guidelines for rating hotels. Diamond ratings from one to five are used to
assess the standard of quality.
•  Parasuraman, Berry and Zeithaml offer nine lessons essential for improving service qual-
ity across service industries—listening, reliability, basic service, service design recovery,
fair play, teamwork, employee research and servant leadership.
•  The pre-requisites for achieving service quality are visionary leadership, setting high per-
formance standards, management commitment and support, preparing the employees,
systems for addressing customer complaints and systems for monitoring service quality.

Key Terms
K
Basic Service  525 Reliability 514
Customer Satisfaction Survey  516 Report Card  517
Diamond Rating  524 Reputation 513
Employee Feedback  517 Servant Leadership  525
Employee Research  525 Service Design Recovery  528
Fair Play  525 Service Shop  510
Features 513 Star Rating  523
Focus Groups  517 SERPVAL 522
Internet 517 Service 513
Listening 525 Service Factory  510
Mass Service  511 SERVQUAL 518
Performance 513 Toll-free Telephone Numbers  516
Price 513 Teamwork 525
Professional Service  507 Warranty 513

Case Study

Hotel Valuation Services (HVS)

Hotel Valuation Services (HVS) was founded in 1980 by Steve Rushmore. It is the world’s lead-
ing consulting and services organization focused on the hotel, restaurant, shared ownership,
gaming and leisure industries. Rushmore began his career as a consultant in the hospitality divi-
sion of a prominent New York City real estate firm. He quickly realised that a limited body of
knowledge was available to assess the value of hotels. He founded HVS to fill this perceived gap.
The HVS method of providing an economic study and appraisal for hotels and motels
immediately became the industry standard. HVS is focused on the hotel, restaurant,
timeshare, gaming and leisure industries. The company has more than 300 consultants
offering specialized services through its ­network of 25 offices worldwide.
Studies conducted by HVS indicate that 2010 is going to be a challenging year for the
Indian hospitality industry.

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 TQM in Services   529

Challenges for the Hospitality Sector

The tourism industry is highly susceptible to changes in the macro-environment. The avia-
tion and hospitality sectors are among the first to get affected by an adverse environment and
also the last to recuperate.
The main challenges faced by the hospitality sector in India include lack of infrastructure
and facilities, lack of human resources and training, the hotel rating system not being at par
with international standards, intense competition from global players and multiplicity of taxes.

HVS Recommendations
HVS has made the following recommendation in order to address the challenges faced by the
hotel industry:
•  Grant hotels industry status across India
•  Include tourism as a subject in the Concurrent List of the Constitution of India
•  Grant hotels infrastructure status under Sec 80-IA of IT Act
•  Impose a single uniform luxury tax, based on the actual room tariff only, across all Indian
states
•  Impose uniform tax rates on rooms, food and beverages, and liquor across the country
•  Give incentives, in the form of tax breaks, to re-invested capital in the hotel industry
•  Extend the benefits of Sec 80-ID to other parts of India
•  Develop a more scientific rating system to truly benchmark hotel quality

Hotel Rating Process

Various approaches are used across the globe to classify hotels. The most common
approaches ­followed are:
Registration: This involves a basic level listing of properties that meet agreed minimum
standards.
Classification: Hotels are classified into various categories based on the amenities offered.
All establishments have to follow certain minimum standards.
Grading: Hotels are graded according to the quality of services delivered to customers.
Assessment of this nature is highly complex and time consuming.

Hotel Rating System in India

India has been using the “Classification” system with mixed results for over four decades.
HVS ­recommends that the present rating system in India should be upgraded to the “Grad-
ing” system to enable it to employ a more discretionary approach to the process. Hotels,
motels and other lodging in India are inspected and categorized according to their products
and services by the Hotel and Restaurant Approval and Classification Committee (HRACC),
a body instituted by the Ministry of Tourism. However, the checklist used by HRACC has
some serious shortcomings. The minimum standards are too weak and lenient. Hotels that
do not adhere to minimum standards are penalized. However, benefits are not offered to
hotels that offer services above the minimum standards. The checklist focuses on physical
infrastructure alone and is not very effective in assessing the quality of services.
The present system needs a complete overhaul in order to remain relevant in the dynamic
market scenario. Safety and hygiene should be the first parameters in the classification process.
The government should focus on the safety and hygiene parameters than on the commercial

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 530    Total Quality Management

aspects of classification. The HRACC classification should be revamped so that it provides a

more accurate indication of a hotel’s quality and services.
Source: Adapted from www.expresshospitality.com, accessed May 2010.

For Discussion
1. What are the challenges facing the Indian hospitality industry?
2. What is HVS? What are the recommendations of HVS mentioned in this case study?
3. What are the limitations of the present hotel rating system in India?
4. If you are hired as the consultant, what measures do you suggest to improve the present
hotel rating system in India?

Short-answer Questions

  1. Define service quality.

  2. Mention the four categories of service quality.
  3. Differentiate between service systems and manufacturing systems.
  4. Name any five tools used for determining customer expectations.
  5. Why are SERVQUAL instruments used?
  6. Name the four pillars of schools of quality.
  7. Name five generic dimensions of the SERVQUAL model.
  8. Why are SERPVAL instruments used?
  9. Which are the three dimensions of the SERPVAL model?
10. Which are the two types of quality ratings used in the hotel industry?
11. How to improve service quality.
12. What are the pre-requisites for achieving service quality?

Match the Following

a. SERVQUAL Satisfaction of customer expectations

b. SERPVAL Identifies five gaps
c.  Star rating Measuring service personal values
d.  AAA Diamond rating Instituted by the department of tourism
e.  Service quality Classified into five diamonds

Discussion Questions

1. Differentiate between manufacturing and service industry.

2. What is service quality? What are the internal and external measures of service quality?
3. Explain the significance of the service industry in the emerging economy.

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