Measurement of the strategy construct in the lodging industry, and the strategy-performance relationship

Abstract

Performance improvement is at the heart of all strategic management. Thus, the principal objectives of this study were to develop an industry-specific instrument to measure lodging strategy, identify a set of strategic dimensions underlying such strategy, and relate performance differences among lodging units to varying strategic dimensions emphasized by such units. The study adopted the individual hotel as the unit of analysis, and realized strategy was measured as opposed to the intended. Five hundred and seventy nine hotels, which are part of the franchise systems of two industry-leading chains contributed information for this research. Following a comparative approach to the measurement of the strategy construct, this study developed a lOS-item lodging industry-specific strategy measurement scale, capturing a comprehensive set of strategic characteristics from the business strategy (porter, 1980) and service management (Gronroos, 1990; Zeithaml, Parasuraman, and Berry, 1990) literatures. Through factor analysis, a parsimonious set of seven strategic dimensions, Service Quality Leadership, Technological Leadership, Push, Cost Control, Pull, Group Channels, and Cross-Training, underlying this lOS-item scale was delineated. Using Yield Per Room, Market Share Index, and Return on Sales as the performance measures, the study indicated that strategies followed by high and low performing hotels were different. The empirical evidence showed that, in general, the Push, Service Quality Leadership, and Technological Leadership strategic dimensions tended to be associated with high performance. The evidence also indicated that strategies emphasized by high and low performing hotels differed by the four control variables studied: Location, (Service) Segment, (Ownership-Management) Affiliation, and Size. Additionally, similar differences were also obtained when the hotels studied were classified by the performance measure most used by them to evaluate themselves, and the age of the properties. Preliminary indications were also obtained to confirm the existence of a strategic time lag effect. The results from this study should be valuable not only for extending hospitality strategy research, but also for their normative implications.