Developing an environmental scanning process in the hotel sector

Developing an environmental scanning process in the

hotel sector

Jorge Costa

Professor, Fernando Pessoa University, Portugal

Richard Teare

Granada Professor, International Management Centres Association, UK

Introduction

The development of the hotel sector in

Portugal has been scarcely documented with

little literature published, and that which is

available, mostly reporting on the occupancy

rates and revenues of hotels in the country.

More recently, however, due to the

increasing competition of other tourist

destinations and the bargaining power of

tour operators, Portuguese hoteliers became

aware of the need to take a more rigorous

managerial approach to their business

(Cavaco, 1993). This, coupled with an

awareness campaign developed by the

government and supported by European

funds, led to the identification of the main

challenges facing the Portuguese hotel sector:

to improve quality, product and market

diversification; to increase productivity and

reduce costs; to define specific marketing

policies and to improve management

structures (Relvas, 1993; Martins, 1993).

These challenges contributed to an

additional pressure on hoteliers to re-think

their approach to strategy development

which traditionally had been highly reactive

and informal (Martins, 1993).

This reactive and informal approach,

however, cannot be seen as exclusive to the

Portuguese hotel sector as research has

revealed (Olsen et al., 1992, 1994; West and

Olsen, 1989). In fact, according to these

authors, the identification and analysis of

trends in the business environment, which

should be used to plan the development of

strategies, are most of the times scanned

informally. On the other hand, the

formalisation of strategies is not a

generalised procedure amongst

organisations (Mintzberg, 1992, 1994). In

reality, as Mintzberg has identified in his

research, strategies can be formally

developed (intended strategies), or

``incrementally developed in the course of

action'' (realized strategies).

Based on the importance of trends

identification and analysis for strategic

planning and decision making, and on the

processes of strategy development, this

article explores and assesses the relevance

and structure of a formal environmental

scanning process to be adopted by hotel

chains, the barriers to this process and

possible actions to overcome them. Despite

the fact that previous studies suggested that

organisations would benefit from a formal

approach to environmental scanning,

findings also demonstrate that these

activities amongst hospitality organisations

are mostly informal in nature (Olsen, 1994).

In trying to understand the reasons behind

the existing scanning activities and the

impact of the strategy-making approach

practised by hospitality organisations

(intended or realized), respondents' views on

the characteristics of an ideal formal

environmental scanning process, its

relevance, possible barriers to such process

and solutions to overcome them were

researched and analysed. The data were

analysed using a cognitive mapping

approach to display and explore existing

situations and ideal solutions according to

their perspectives. As the core contribution

of this analysis a series of output

propositions were developed and used to

support a descriptive model of a formal

environmental scanning process.

Background

Strategic planning and environmental

scanning

There is no generally accepted definition of

strategic planning and different authors use

different terms to define the same concept

(Stoner and Freeman, 1986). In defining

strategic planning as ``the development of

long range plans for the effective

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[ 156 ]

International Journal of

Contemporary Hospitality

Management

12/3 [2000] 156±169

# MCB University Press

[ISSN 0959-6119]

Keywords

Environment scanning,

Strategic planning, Hotels,

Cognitive mapping

Abstract

Investigates the environmental

scanning activities of hotel chains

operating in Portugal. Attitudes

towards environmental scanning

by companies where strategy was

formalised through a formal writ￾ten strategic plan (Intenders) and

those companies where strategy

was informally developed through

a ``vision'' or ``informal plan''

(Realizers) were compared. Face

to face interviews were conducted

with board level executives to

identify and assess the relevance

of a formal environmental scan￾ning process, the characteristics

of such a process, barriers to its

development and ways to over￾come them. A cognitive mapping

technique was used in the analysis

of respondents' perceptions to￾wards the development of such a

process, with the maps showing

more similarities than differences

between the comparison groups,

thus highlighting the importance

of this process for both intenders

and realizes.