ifkad articles

Organizational culture and green management: innovative way ahead in hotel industry

Petr Scholz, Jan Voráček

Knowledge based economy forces companies to reconsider strategic impact of different components of internal capital on their performance. Traditional extensive value drivers, based mainly on structural capital, are gradually extended with more intensive utilization of relational and human-resources oriented alternatives also in hospitality industry. Although hotels are considered as labour intensive companies with higher proportion of low-skilled jobs, many of them have already recognized value-adding potential of organizational knowledge and intellectual capital. They implement these innovative features especially through the development of partnerships with loyal customers and systematic introduction of innovative managerial practices. Applying the elements of environmental management and sustainable development principles are characteristic trends in accommodation services. We can find them particularly in large hotel chains but accommodation facilities with small capacity are also interested in this green way. These accommodation facilities are aware that the importance of environmental protection is necessary; moreover they use this concept as a useful marketing tool for distinguishing from other accommodation facilities. The current approach to hotel management is mostly revenue-oriented, i.e. strives to generate profit from temporally and locationally specific combinations of internal, technical and social capabilities, including, e.g. market segmentation, pricing, capacity allocation, aligned incentives, organizational structure or vocational training. Accordingly, present managers maximize metrics like occupancy (OCC), average daily rate (ADR), revenue per available room (RevPAR), revenue per available customer (RevPAC), gross operating profit per available room (GOPPAR) and many others. Consequently, our research was to identify perspective and feasible combinations of the existing revenue-driven methods with still more pervasive features of knowledge-based management and green management in hotel industry. We believe that the key path to success is in even closer, i.e. daily personal orientation on customers, specifically on their satisfaction in both functional and emotional dimensions. So far, hotel managers use mainly simple analytic and planning tools, which cannot cover the practical complexity of surrounding market and internal processes. In comparison with purely revenue-based principles, advanced managerial practices, considering also qualitative and human-related matters require additional viewpoints. We enhanced the hospitality domain with introduction of dynamic hypotheses – feasible explanations of temporal behaviour of complex structures. With the resultant interactive system dynamics (SD) model, we designed and tested several scenarios, comparing the purely revenue-oriented hotel management with its customers-oriented and organizational knowledge-supported enhancement.

IN: Proceedings IFKAD 2015 – Culture, Innovation and Entrepreneurship: Connecting the Knowledge Dots
PP: 1109-1121