Strategy Management

CHAPTER 1 – INTRODUCTION

Introduction to the Problem

            Attaining Hospitality businesses’ support is perhaps the most ignored facet in urban hospitality industry development. Hospitality industry development improves the quality of life for its residents, boosts the city’s vitality, and improves its economic position. Hospitality Industry remains an under-researched topic of study, as is the element of Hospitality business in developed urban areas (Hall & Page, 1999; Rogerson, 2004; Shaw & Williams, 2004; Thomas, 2004, 2000).

            Many local governments and policy makers are now relying on hospitality industry for economic regeneration and for strategic local development (Ioannides & Peterson, 2003; Law, 2002; Rogerson, 2004). According to Jurowski and Brown (2001), “When attempting to maximize the benefits for a specific community, planners should gather information about individuals who stand to gain economically from the development, those who are currently using the resource to be developed, those who are attached to their community and those with a strong environmental attitude” (p. 9). A better understanding of the level of support for hospitality industry development by small businesses is essential to hospitality industry developers, planners, and officials. This information can assist in capitalizing on those Small and Medium Scaled Hospitality businesses that support hospitality industry development through influence of public policy and provide a better understanding of non-supporters (Jurowski & Brown, 2001). Without adequate information on the Small and Medium Scaled Hospitality business sector, policymaking and planning may be impeded (Page, Forer, & Lawton, 1999).

            As in many countries, Vietnam has a large number and variety of Small and Medium Scaled Hospitality businesses that significantly contribute to the economic well-being, as well as, to the authenticity and ambiance of the city. This research uncovered the variables that influence Small and Medium Scaled Hospitality businesses’ support for or opposition to hospitality industry development in Vietnam and detailed the descriptive, behavioral, and operational differences among these stakeholder groups. From this information, a testable model was developed that identified the strength of the relationship between each of the variables and the support for Hospitality development.

Background of the Problem

            Little is known about the roles of hospitality industry, Small and Medium Scaled business, and their relationship to economic development (Page et al., 1999). According to Shaw and Williams (1994), there is an absence of studies on Small and Medium Scaled hospitality industry business, even though “the hospitality industry and leisure industry tend to be dominated by a few large businesses operating alongside a large number of Small and Medium Scaled, independent ones” (p. 100). Until the 1990’s, Small and Medium Scaled businesses were simply considered a miniature version of large firms, and differences in business objectives, management style, funding, and marketing were unnoticed (Friel, 1999).

            Furthermore, Curran and Storey (1993) stated that, “many of the major conceptual

developments in the area of research have been derived from the Small and Medium Scaled business researchers with no connection to hospitality industry” (Page et al., 1999, p. 436).

            Research on Small and Medium Scaled Hospitality businesses is needed to assist urban communities in capitalizing on new markets. Today’s educated leisure and business travelers are demanding a unique cultural experience that requires more than chain restaurant food and retail mall shopping. As the impact of globalization takes center stage, tourists are now more experienced and knowledgeable regarding language, use of transportation, and travel resources and have increasingly more discretionary dollars to spend on travel (Smeral, 1998). To experience the true flavor of a destination and the culture of the local residents, tourists seek out Small and Medium Scaled Hospitality businesses. According to Bastakis, Buhalis, and Butler (2004), Small and Medium Scaled and medium tourist enterprises “provide a very diverse range of hospitality industry products and services, facilitate rapid infusion of hospitality industry spending into local economies, while in leisure hospitality industry they usually shoulder the distinctive function of offering a local character to the increasingly homogenized hospitality industry packages” (p. 151).

These establishments are typically “off the beaten path” from tourist accommodations and large attractions but are recognized as essential ingredients in the economic well-being of a community and image of a destination (Page et. al, 1999; Simmons, 1994). Small and Medium Scaled Hospitality businesses, such as galleries, independent restaurants, theatres, art studios, bed and breakfasts, and local stores, find it difficult to compete and survive in a chain-dominated economy. However, it is this group of businesses that shapes the destination’s image, exposing tourists to the destination’s distinctiveness. Small and Medium Scaled Hospitality businesses are being ignored or overlooked in hospitality industry planning and development.

            It is imperative that tourist programming, marketing, and government efforts be

coordinated among all urban tourist businesses, particularly Small and Medium Scaled hospitality industry businesses, and large events or conventions attracting travelers to the city. Smeral (1998) noted “the quality of interactions between all these small and medium scaled enterprises – given strategies, factor and demand conditions and environmental influences- would play an important role in the competitiveness of a hospitality industry destination” (p. 374). Strategic hospitality industry planning should reflect the viewpoints and input of Small and Medium Scaled hospitality industry business owners, and policy should reflect their needs and issues. There continues to be a significant gap in the hospitality industry literature regarding public policy, community involvement, and the social impacts of hospitality industry (Thyne & Lawson, 2001).

Statement of the Problem

The problem was to construct a testable model by investigating the dimensions of

Small and Medium Scaled Hospitality businesses and explore if these characteristics impact support of hospitality industry development in Vietnam. Each Small and Medium Scaled hospitality industry business was examined in terms of the type of the business activity, type of business ownership, motivation of business ownership, financial success, projected growth, business geographical location, its customer base, and business’ level of community Involvement. The importance of the study was that support for hospitality industry development leads to increased hospitality industry activities and inevitably increased economic benefit to the community. Successful planning and management of hospitality industry development benefits a community’s residents, businesses, and visitors. Building community loyalty to attract more tourists into the community is imperative to the success of any initiative or grass-roots project (Chen, 2000).

Purpose of the Study

The purpose of this study was to identify the Small and Medium Scaled hospitality industry business factors that explain and predict support for hospitality industry development in a community. The objectives of this research are stated in the following two research questions:

1. To what extent can the variation of support for hospitality industry development (dependent variable) be explained by the set of independent variables: type of the business activity, type of business ownership, motivation of business ownership, financial success, projected growth, business geographical location, its customer base, and business’ level of community involvement?

2. What is the best linear combination of independent variables to predict support of

hospitality industry development in this sample?

Hypotheses

The following eight null hypotheses were tested in this project:

H1: There are no significant relationships between Small and Medium Scaled hospitality industry businesses’ involvement (membership in professional, civic, religious, charitable or volunteer organizations) and support of hospitality industry development.

H2: There are no significant relationships between Small and Medium Scaled Hospitality business’ motivation (such as lifestyle, enjoyment, retirement, and business investment) and support of hospitality industry development.

H3: There are no significant relationships between Small and Medium Scaled Hospitality business’ projected growth and support of hospitality industry development.

H4: There are no significant relationships between Small and Medium Scaled hospitality industry businesses’ financial success and support of hospitality industry development.

H5: There are no significant relationships between Small and Medium Scaled Hospitality business’ clientele base and support of hospitality industry development.

H6: There are no significant relationships between Small and Medium Scaled hospitality industry business’ activity type and support of hospitality industry development.

H7: There are no significant relationships between Small and Medium Scaled hospitality industry business’ type of ownership and support of hospitality industry development.

H8: There are no significant relationships between Small and Medium Scaled hospitality industry business’ location and support of hospitality industry development.

Justification for the Study

Hospitality industry has become an important and essential element of urban area economics and can significantly contribute to a city’s revitalization or recovery (Haywood & Muller, 1988). According to the World Travel and Hospitality industry Council (WTTC, 2004), in 2004 alone travel and hospitality industry contributed 11.3% of the world’s gross domestic products (GDP), or US$6201.5 billion, and accounted for 221 million jobs, or 8.3% of the world’s total employment. Sirgy and Su (2000) noted hospitality industry had grown into the “largest industry surpassing automobiles, steel, electronics and agriculture” (p. 342).

            The World Travel and Hospitality industry Council’s Hospitality industry Highlights Edition 2004, reported that international hospitality industry arrivals have grown from 451 million in 1990 to 691 million in 2003. Receipts from international hospitality industry exchanges reached US$523 billion in 2003, making it one of the largest categories of international trade. The WTTC forecasted there will be 1.6 billion international tourists worldwide by 2020, spending over US$2 trillion dollars (WTO, 2005, Facts & Figures section). Specifically, it is estimated that between 35 and 70% of international tourists are now cultural tourists (Antolovic, 1999; McKercher & DuCros, 2003; Richards, 1996).

            Hospitality industry has become an important part of global economics and hospitality industry research is being centered on direct, indirect, and total effects of visitor spending, which affects jobs, regional output, and taxes (McHone & Rungeling, 2000). The economic impact of hospitality industry is driving researchers to explore several aspects of this industry, including consumer satisfaction, travel behavior, hospitality opportunities, leisure measurement, and recreation interests (Kozak & Rimmington, 2000).

            Balancing hospitality industry development and maintaining a quality urban environment that meets the needs of local businesses and residents has become a major challenge. Achieving community support for hospitality industry requires an understanding of how attitudes are formed and what factors influence their perspective on hospitality industry advancement (Jurowski & Brown, 2001; Jurowski, Uysal & Williams, 1997). Additionally, sound planning should produce a plan designed to identify and control the hospitality industry carrying capacity of the city.

            Frangialli (2002), Milman, King, and Pizam (1993), Smith and Krannich (1998), and Zwick (1991) noted with increased hospitality industry, communities struggle with congestion, loss of open space, price increases, disruption of social structure, changes in local values, loss or endangerment of local traditions and ceremonies, problems with community organization, threats to biodiversity, demand on water and energy resources, overcrowding at cultural sites and monuments, exploitation of workers, and organized sex hospitality industry. Yamashita (1997) stated, “It is simply impossible to stop the spread of hospitality industry activity in the modern age of mass hospitality industry, so the question is not how to stop or avoid it but is one of how one may minimize the harm to, and destruction of, native society; and how one may derive a beneficial effect from hospitality industry, not only in economic but also in cultural terms as well” (pg. 219).

            Hospitality industry development is playing a critical role in service sector economies (Copp & Ivy, 2001). The economy of Vietnam is heavily based on service-oriented businesses catering to the hospitality market. The city has focused its hospitality industry marketing and promotion efforts on the MICE market (meeting, incentives, conferences and expositions) and sports hospitality industry. Vietnam is widely recognized throughout the world as one of the premier destinations for amateur sport competition, and has hosted such events as the SEA Games 22.

Delimitations

The study was delimited in scope by the following:

1. Only those Small and Medium Scaled tourist businesses within the six cultural districts of Vietnam, were administered the survey. Small and Medium Scaled businesses outside the cultural districts were not mailed a survey.

2. A Small and Medium Scaled Hospitality business was defined by number of employees and annual revenue. Surveys collected for businesses not meeting the criteria were discarded.

3. The study was administered in June and July of 2011.

4. The study was conducted by paper pencil survey. A trained research team visited

the businesses meeting the criteria and requested the Small and Medium Scaled business owners’ participation.

5. The study was conducted during a hospitality industry transition time in Vietnam. The

survey was administered following significant recent events in the city, including the

approval of Vietnamese Torism Association.

Limitations

The study was limited in scope by the following:

1. The instrument was administered only to Vietnam Small and Medium Scaled hospitality industry businesses as identified by the Vietnam Travel Association and General Department of Tourism.

2. The truthfulness and accuracy of the selected participant responses to the survey items were considered.

3. The ability of the selected participants at each business to understand and accurately interpret the survey items was considered.

4. The degree to which the identification of the various Small and Medium Scaled hospitality industry businesses was accurate in capturing the full range and scope of the population under investigation.

Assumptions

The study was based on the following assumptions:

1. The selected subjects were truthful and accurate in their responses.

2. Participants understood and accurately interpreted the survey.

3. The group of selected Small and Medium Scaled hospitality industry businesses was comprised of a diverse range of hospitality industry enterprises in Vietnam.

4. The survey instrument was appropriate for use within the framework of this particular study.

5. The items comprising the survey instrument captured a diverse array of Small and Medium Scaled Hospitality industry business factors across the array of hospitality industry businesses in Vietnam.

Definition of Terms

The basic terminology used in the study was defined as follows:

City Infrastructure: Facilities, equipment, and installations needed for basic functioning in the daily lives of the residents, including utilities, transportation, health services, etc. (Richie & Goeldner, 1994).

City Superstructure: Facilities, equipment, and installations needed to meet the needs of visitors, including hotels, catering facilities, markets, etc. (Richie & Goeldner, 1994).

Cultural Hospitality industry: The movement of persons for essentially cultural motivations including tours, performing arts, travel to festivals, visits to sites and monuments satisfying the human need for diversity, new knowledge, and exciting experiences (World Tourism Organization, 1985 as cited in McKercher & du Cros, 2003).

            Hospitality Industry Business: Business with less than 40 full-time employees, very small and medium market share, annual revenue less than $250,000, or limited infrastructure and assets. A Small and Medium Scaled hospitality industry business consisted of establishments in the following categories:

(a) art galleries or studios, (b) restaurants, (c) historic attractions, (d) museums, (e)

perform/visual art center, (f) unique gift/souvenir shop, and (g) accommodations.

Stakeholder: Any person or organization who is vested in or has a passion for an

interest; includes external and internal participants such as media, artists, government

officials, local business owners, etc. (Goldblatt & Nelson, 2001).

Strategic Hospitality Industry Planning: The creation of a plan of action for a hospitality industry area’s foreseeable future and the implementation of those actions (Gunn, 2002).

Hospitality industry: Hospitality industry is “a hybrid of meaning, interpretations, sites, and experiences…..everything from leisure, learning activity that generates interest and

purpose to a social process with economic, social, cultural, and environmental impacts”

(Ryan, 2000, p. 119).

Hospitality Industry Development: Hospitality Industry Development is essentially hospitality industry marketing. The elements of the marketing activities include recruiting, as well as the creation of products that entice visitors to linger and seek leisure activities that will part them from their money (Glover, 1998).

Tourist or traveler: A person who is a non-resident traveling over 50 miles for any purpose; meetings, shopping, events, visiting relatives, etc. (Masberg, 1998).

Urban Hospitality Industry: Travel to areas of high population density where cultural, artistic and recreational activities are offered. Travelers residing in the city’s hotels and motels distinguish themselves from residents (Richie & Goeldner, 1994).

Urban Hospitality Industry Product: Tourist elements which include historic buildings,

attractions, art galleries, museums, sporting events, theaters, and urban landscapes

(Jansen-Verbeke, 1986).