The impact of modern management methods on hotel operational performance

31 Tourism Review, Vol 62, No 2/2007

G. Golembski: The Impact of Modern Management Methods on Hotel Operational Performance

Relatively recent socio-economic changes

in Poland and the introduction of market

economy have had a significant impact on

the local hospitality industry in terms of

supply and quality of hotel services. In the

period 1990 – 2004 the number of bed￾places offered by hotels in Poland increased

from 50 thousand to 150 thousand (Wern￾er, 2004). At the same time the Polish hos￾pitality market witnessed an expansion of

international hotel chains into the local

market, including American brands such as

Mariott, Radisson and Sheraton, Austrian

Vienna International Hotels, British Trust￾house Forte, and French Accor.

Foreign hotel investments in Poland

have had a significant impact on the regu￾latory framework, design and construction

of hotels, standard of services and facilities,

quality standardisation and supervision,

marketing, and reservation systems ( S.

Merski, C. Witkowski, 2004).

International hotel chains enter the

market either by constructing their own fa￾cilities or by taking over existing hotels. The

most spectacular takeover on the Polish

market took place in 1998, when the French

operator Accor acquired a 40 % share in

twenty hotels (mostly 3 or 4 star) belonging

to the Polish hospitality enterprise “Orbis

SA”. When hotels join an international

brand there is an almost immediate need for

implementing structural changes within the

old facilities since the existing profiles and

standards do not match the vision and in￾terests of the new management. The greater

this divergence the more urgent becomes

the need for radical changes restoring the re￾quired equilibrium.

Polish hotels taken over by Accor were

at that time in need of radical structural

overhaul because of facilities depreciation,

chronic overemployment, cost overruns

(personal, administrative, supplies), and

substandard operating incomes.

A fast growth of hotel chains and bene￾fits afforded by the economy of scale lead

the major brands to actions aimed at gain￾ing competitive advantage over their rivals.

This consists in taking actions that will

eventually produce profits greater than the

industry average and will consequently in￾crease their market share. Among such ac￾tions are improvements in the existing ho￾tel management systems aimed at achiev￾ing better productivity.

Management is construed as a decision

making process aimed at increasing the pro￾ductivity of company resources and effective￾ness of company processes (Pene, 2001), and

can be expressed through the four basic func￾tions: planning, organising, leading (moti￾vating), and controlling (Stoner, 1992). Ac￾cording to Drucker, management is primari￾ly concerned with people since its goal is a

better working time utilisation. To measure

this factor, management needs an extensive

system of performance indicators and an ef￾ficient flow of information (Drucker, 2001).

The present article attempts to quanti￾fy the effects of changes in the management

systems. The aim is to analyse these effects

since the year 2000 to the present date, and

by taking the current trends as a point of

reference, draw conclusions for the future.

These conclusions can become a basis for

changes not only in management systems

but also in financial planning. Financial

Prof. Grzegorz Golembski,

The Poznan University of Economics

E-Mail: [email protected]

Expansion of large international hotel chains into the Polish hospitality market has radically changed hotel

management practices in Poland. The article investigates the impact of these changes on hotels’ econom￾ic performance. This impact is assessed by monitoring changes in the break-even point, the percentage

share of variable costs in sales, margins of safety, operating leverage, and other indicators reflecting eco￾nomic effects of applied management methods. The research results indicate that cost reduction resulting

from the introduction of new management methods must in the future be replaced by measures aimed at

stimulating revenue growth.

The Impact of Modern Management Methods on

Hotel Operational Performance

GRZEGORZ GOLEMBSKI

Abstract

1 Introduction

Tourism Review 2/07 07.09.2007 13:35 Uhr Seite 31