QUALITY SERVICE MANAGEMENT IN TOURISM AND HOSPITALITY

“MIDTERMS”

Designing and Managing Service

The setting of the service contributes to the overall experience of a guest.

The manifestation of innovative activity through the innovation process creates the conditions
for the sectoral economic development and tourism service quality improvement. To form an
innovative mechanism and to implement innovative ideas, it is necessary to develop local
tourism systems aimed at creating new tourist resources and products to stimulate their growth
and competitiveness.

Concept of Service Design

Design is a term often related to the physical structure or model of certain products that is
aimed to provide more value, better efficiency, or enhanced performance of the goods.

The term also applies to services, procedures, management styles, and process with the same
purpose of providing value to clients and generating higher income for the organization.

As an element of a business operation, design can be a form of service, an output or product,

part of a process, an activity, culture of the organization, or a management function.

Design is often connected to the organization’s action or reaction to external stimulus, such as
changing market demands, technological innovations, and emergence of competitors.

Service Innovation and Design

The uniqueness of the tourism and hospitality industry as a service-oriented industry has made
the delivery, description, and communication of its product difficult.

The product is intangible and often co-created with the customer makes it complex, very
dynamic, and challenging.

The services provided by the hospitality industry are often subject to the description of the
product through words since the offerings cannot be touched nor examined physically.

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Some organizations with impeccable track records apply strategies and philosophies that best fit
their organization. These approaches may be cutting-edge designs and innovations that provide
impressive products and services.

Organizations tend to adopt strategic balance to product or service and delivery process.

A balance combination would ensure that the organization maintains its position from its
competitors and improves in efficiency and productivity process.

Others follow the top management approach where top brass set the direction and design effort
and for others to be committed to the objectives set.

Working together as one team is also important to encourage employees or departments to get
synchronized with the main objective of the project.

Before implementing service innovation, organizations can invest more attention in their cultural
dimension. It can enhance the collective cohesiveness, strengthen the trust between members,
and create a united professional team for enterprise service innovation activities.

Service Innovation and Design

Five Principles of Design

1. HOLISTIC
-design is focus on the customer, but the organization should not forget the idea that the
environment plays a big role or influence on how well services could be delivered. A carefully
planned design would consider how the different factors from the environment can enhance the
service process.

2. CO- CREATIVE
-aside from the environment, those who create service designs should also look and take
into account the stakeholders, in one way or another, may influence the design. Consider as well
the impacts on how the design process can be properly communicated or delivered through the
stakeholders to maximize the potential of the service design.

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3. USER-CENTERED
-service design is first and foremost created for the customers. Designs must focus on
how customers expect of the products or services will be delivered. Ultimately, designs will
be dictated on how customers will require the service.

4. SEQUENCING
-products and services most often are delivered from a combination of interrelated actions
to come out with an output which is the product or service. In order to render the best service,
proper sequencing and timely delivery should be done, which may even increase the level of
satisfaction of customers.

5. EVIDENCING
-unlike tangible products and goods which can be physically scrutinized, services should
somehow create a visual expectation of the product. This would make the service
establishment difficult to forget for it has created an impact to the customers already.

These principles serve as guide in order to elevate the experience of customers. Innovation can
always be available at any given time. Consequently, the principles we know today may be
irrelevant tomorrow.

Service Innovations may be of different types and they are based on strategies and solutions
undertaken by firms around their services rather than product.

Some types of service innovations:

1. Service Provision Innovation

-this is about the services offered by firms which are either new or improvements of existing
services. The types of this innovation include major or fundamental innovations - these are
new services to the market that were not yet offered and often create an impact to consumers.

2. Service Innovation Around Customer

-happens when the customer’s role is redefined or altered.

3. Innovation Through Solution

- firms approach the customer needs not by the traditional offering of products, but by
offering activities translating to provision of solutions, such as consulting in area of expertise,
managed services, design of travel and vacation, and outsourcing.

4. Service Innovation Through Interconnectivity

- the advancement of technology brought forth the digitization of mot electronic products.

Blueprinting Services

Blueprinting is an illustration on how services are rendered. It shows how a service design is
implemented. It is plan that displays the interaction between departments, or elements and
activities as part of one entity.

Blueprint povides a tool to disect the different components and steps in the process, how the
tasks were performed, and proof of service based on actual customer experience.

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Steps in Blueprinting Services:
1. Prepare a diagrammatic format
2. Recognize possible decision points and conflict zones
3. Set standards in terms of allowable adjustments acceptable
4. Provide evidence
5. Analyze the impact of the pieces of evidence.

Selected Methods and Tools for Service Process

1. Affinity Diagram - an analytical tool to gather and organize information from a

significant amount of mixed data source from researches, insights, concepts, diagrams,
brainstorm ideas, and designs. This method is employed to sort a bundle information
into groups or based on their relationships.
2. Brainstorming - a method to generate ideas from a group of people to solve a design
problem.
3. Character Profiles - these supplement the understanding and appreciation of designers
by providing patterns or trends about service users.
4. Contextual Interview - refers to interview conducted in the natural environment where
the service occurs. This type of interview yields highly accurate and detailed information
because this method observes and probes the behaviorr of the service user.
5. User Journey Map - is a diagram that uses illustrations, photographs, and/or quotes
telling about the journey of the user through a service.
6. Cultural Probes - these are also referred to as a User Diary. It provides a way of
gathering information about people and their activities and insights about the daily life
of communities.
7. Documentaries - these are tools used to provide information at the initial stages of the
design process. This method is a visual representation of human emotions and
expressions captured through film.
8. Empathy Probes - these are a tool for design that considers what the users are thinking
and feeling more than what they are doing and saying.
9. Ethnographic User Research - is a tool used to support a deeper understanding of the
design issues for service designers.
10. Experience Prototype -It is a simulation of service to test new service ideas or design
for specific physical touchpoints.
11. Focus Group - is a setting of deliberately selected people who are participants of
discussion about a particular topic which intends to bring out their perceptions and
feedback to design ideas.
12. Immersion (Workshop) - it is also known as emphatic or role-playing.
13. Observation - is a method that can be used to identify problems when users are
interacting with a product.
14. Personas - these refer to fictional characters created as archetypes, not stereotypes, to
represent types of users that avail of the services or products of companies.
15. Prototyping - this tool is used to examine the behavior and performance of a fresh
design before it goes to production.
16. Scenarios - these refer to the creation of a hypothetical story to visualize how user will
utilize a service in order to generate design.
17. Service Prototype - is a simulation tool to test the service design through observation of
the interaction between the user and the prototype of the service set in the place,
situation, and condition where the service truly exist.
18. Shadowing - the researcher acts as an observer only and does not interfere with the
participant in any circumstances.
19. Stakeholder Map - is a tool that shows a visual presentation of an organization’s staff,
sponsors, investors, board, partner organizations, or customers.

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Kinds of Prototyping:
✓ sketches and designs - are used to illustrate the ideas for discussion and analysis
✓ storyboarding - this is a presentation of cases or prototype scenario using a series of
drawings or pictures to visualize a sequence of events
✓ building blocks prototype - beyondthe idea of having fun with building blocks as a toy,
the versatility and ability to stimulate creativeness has made this toy a valuable tool in
prototyping.
✓ role-play - refers to acting out service situations where users interact with products or
services
✓ physical models - for design service that may require physical representation, moc-ups
can be created for testing.
✓ user-driven prototype - this method uses a unique approach in coming up with a service
design.

Service Setting

The term Service Setting is defined as the physical environment or background in which service
is rendered.

It is in the design of the service environment where the brand or the distinct image of an
organization should be concentrated and expressed consistently.

Plays an important role in today’s competitive marketplace since it can communicate the
exceptional and enviable characteristics of an organization.

Types of Service Setting

Service setting is differentiated based on:

[Link] Particpants - concerned with whom the service setting would affect. Its emphasis is to
differentiate who is exposed to the design setting and is most likely influenced by the design. It is
called Self-service. Customers of this organization perform most of the transactions and
activities.

2. Level of Intricacy of Service Involved - It is called Remote Service organization wherein

there are no customer involved in the service setting In between the two types are the
organizations where both the customer and service employees are present, called Interpersonal
Services.

In between the two types are the organizations where both the customer and service employees
are present, called Interpersonal Services.

Redesigning Service Processes

Indications that service should be redesigned are as follows:

✓ The volume of exchanges in communication between customer and service units is
heavy.
✓ Growing number of customer complaints about irrelevant and unnecessary procedures.
✓ Exceptions are increasing.
✓ Proliferation of review and rechecking steps among new features or activities.

Service process redesign is about increasing productivity and improving service quality. The
focus of the redesign process is to reduce the quality of service failures, to shorten the
completion process, to enhance productivity, and to heighten customer satisfaction

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Some of the actions undertaken in redesigning service process:
✓ Review the existing service design
✓ Removal of unnecessary steps
✓ Eliminating the bottlenecks
✓ Shifting from service design to self-service.

Balancing Demand and Productive Capacity for Quality Service

To better understand the dynamics of balancing demand and capacity, it will facilitate learning if
we recall basic definition or at least have a grasp of the concept of demand, capacity, and
productivity. In the study of basic economics, we learned that demand represents the amount of
and of certain products or goods for the consumption of individuals or markets. Parallel to this,
in the tourism and hospitality industry, demand is the volume of services required by clients or
customers at any certain period of time.

Supply represents the amount of goods or products available for consumption in the market. For
the service industry,the supply side is synonomous to capacity. Since organizations produce
services rather than tangible goods, we ofter refer to the output as capacity

Capacity refers to the ability of organizations to provide or render services among their
customers. It often relies on the amount of inputs in order to produce services which can either
sustain the requirements or fall short. Inputs nromally come in different forms, such as labor,
time, space, and others.

Factors that Affect Demand and Capacity

a. Excess in Demand. The demand for services far surpass the maximum available capacity. The
situation often leads to denying services to excess customer and losing the opportunity to gain
profit.

b. Demand Exceeds Optimum Capacity. Quality of experience in this situation is deteriorating.

Customers can still be accommodated, but the place already feels crowded. There is
dissatisfaction of the services rendered.

c. Balanced Demand and Supply at Optimuum Capacity. This condition reflects the ideal
situation for both the organization and the customers. The facility is in full capacity

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but is not strained; employees are busy but not overworked. The customers receive good service
on time and no delays.

Managing Demand

Managing demand has always been one of the primary considerations of service organizations to
maximize productivity.
a. Predictable Cycles.
These refer to the periodic increase and decrease of demand levels at specific time which
may transpire at different intervals: daily (may happen by hour); weekly (may happen by
day); monthly) may happen by day or week); and/or yearly (may happen based on
months or seasons). In cases where predictable cycles are detected, the reaons they occur
should be identified.

b. Random Demand Fluctuations

Contrary to the first condition, sometimes, demand appears to be random. Theres is no
predictable cycle that could be derived. Even so, the cause of demand can still be
identified. A good example is the weather conditions of an area. Other random and
unpredictable conditions that may affect demand include health-related incidents; natural
disasters; or even acts of war and terrorism.

c. Demand Patterns by Market Segment

A service organization that has thorough knowledge about its customers may be able to
come up with a strategy to cater more appropriately to its customers. With the anlysis of
the profile of an organization’s customer, it may be able to identify patterns of demand
whether it’s predictable or random. The organization would then be able to design a
service specific to the market segment.

Managers should be aware that applying an effective demand planning process may contribute to
a reduction in the level of disruptions caused by operational risks.

Basic Approaches to Management of Demand:

a. Take no action and leave demand to find its own levels.

b. Reduce demand during peak periods.
c. Increase demand during low periods
d. Inventory demand using a queuing system.
d. Inventory demand using a reservation system.

These approaches are points that guide an organization to improve its strategies to maximize
[Link] may react positively or adversely depending on how well an organization
manages to implement these approaches. Naturally, customers react based on the convenience it
brings to them. With the presence of competitors, customers may also be able to find other
service organizations that are more resposive.

Molding Demand Patterns through Marketing Mix Elements

Organizations often approach management of demand based on what fits their style and
resources.(4 Ps: Product, Place, Price and Promotion)

1. Use Price and Nonmonetary Costs to Manage Demand. The use of pricing is one of the most
utilized ways of balancing supply and demand. Pricing strategy is stronger when the services
are price sensitive. Changes is price may influence the decision of customers to either delay
or

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advance the timing of their purchase. Nonmonetary costs involve customer decisions as to
choosing convenience and preferences in availing services.

2. Change Product Element. These are service organizations that offer products that even any
amount of price discounts would translate to having business. To encourage customer
demand, a new service product needs to be introduced. The objective is to encourage the
same set of customers, to find new other market segments, or to cater to both.

3. Modify the Place and Time of delivery. For services that are continuously offered at specified
time and place, service organizations can capitalize to market needs by adjusting the time and
place of deliver Y.

a. Varies the times when the service is available.

b. Offer the service to customers at a new location - visibility is the key to the success of
some businesses.

4. Promotion and Education. Organizations can always use multimedia to inform its clients
about its operations, innovations, and changes through advertising, publicity, or sales
promotion. A strong communication effort may help in managing demand even if the other
elements of the marketing mix are constant.

Managing Capacity

Among many organizations across different industries, service capacity is fixed. Fixed capacity
can be due to different factors depending on the type of service that an organization provides.
Factors:
1. Time
2. Labor
3. Equipment
4. Facilities
5. or Combination of these

Among several service organizations, the primary constraint on service production is Time.
For service organizations that employ a number of employees, Labor can be the primary capacity
constraint. Service organizations that are dependent on their machineries to render service may
consider the capabilities of those machineries as their limitations.

Optimal Capacity would mean that the resources of a service organization are fully utilized but
not overused. And more importantly, customers still receive quality and prompt service.

Maximum Capacity, on the other hand, refers to conditions where the total limit of service is
fully utilized. The maximum use of capacity may result in excessive waiting by customers,
leading to customer dissatisfaction.

Human Factor Capacity, which includes people’s time or labor, is more flexible and harder to
specify as compared to facilities and equipment.

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Strategies in Modifying Demand to Match Existing Capacity

This general strategy aims to reduce excess customers beyond the capacity of the organization
during peak times to influence them to use the service during off-peak times instead.
1. Communication with Customers
2. Modify Timing ad Location of Service Delivery
3. Offer Incentives for Off-peak Usage
4. Set Priorities
5. Charge Full Price

Strategies in Adjusting Capacity to Meet Demand

1. Increase Capacity Temporarily

✓ Use Part-Time Employees
✓ Extend People, Facilities, and Equipment Temporarily
✓ Cross-train Employees
✓ Oursource Activities
✓ Rent or Share Facilities and Equipment

2. Adjust Use of Resources “Chase Demand.”

✓ Schedule downtime during Periods of Low Demand
✓ Perform Maintenance and Renovations
✓ Schedule Vacations and Employee Training Strategically
✓ Modify or Move Facilities and Equipment
✓ Encourage Customers to Perform Self-Service
✓ Ask Customers to Share
✓ Create Flexible Capacity

Increase Demand to Match Capacity

Approaches:
• Educate Customers
• Convert How the Facility is Used
• Modify the Service Offering
• Differentiate on Price

Productive Service Capacity

Productive Capacity denotes resources or assets that organizations utilize to manufacture goods
and to render services.

Equipment is an important element of capacity since it is used during the process of rendering
service. Equipment are vital components in the delivery of services among organizations.

Facilities are resources that pertain to handling of customers and provisions to store or process
goods and services.

Infrastructure refers to public and private structures essential to deliver quality service to
customers.

Labor refers to human elements that manipulate the process and deliver the goods and services
required by the customers.

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Yield Management

Yield Management is also known as revenue management. Organizations use this method to find
the best combination among price, customers, and capacity used.

Mathematical presentation:
Yield =Actual Revenue / Potential Revenue
where:
Actual Revenue = Actual Capacity Used x Average Actual Price
Potential Revenue = Total Capacity x Maximum Price

Yield is basically a measure of the extent to which an organization’s resources (time, labor,
equipment, or facilities) are achieving their full (revenue-generating) potential.

Yield Management may seem to be the best tool to match demand and supply. But it has its share
of risks, which are the following:
✓ Loss of Competitive Focus
✓ Customer Alienation
✓ Overbooking
✓ Incompatible Incentive and Reward Systems
✓ Inappropriate Organization of the Yield Management Function

Waiting Lines and Queuing Systems

Waiting is a phenomenon that happens everywhere. Also known as Queue.

It may happen whenever a system to process a transaction is exceeded by the number of influx of
dealings. Queues are manifestation of surplus of requirements over the capacity to transact.

Strategies to Deal with Queueing Issues:

✓ Audit Operational Process
✓ Institute a Reservation Process
✓ Differentiate Waiting Customers
• Importance of the Customer
• Urgency of the Job
• Duration of the Service Transaction
• Payment of a Premium Price
✓ Make Waiting More Pleasurable
• revalidating the queueing system design
• fitting the queueing system according to market segments
• managing customer’s behavior
• installing a reservation system
• redesigning service process to shorten transaction time.

Different Types of Queues

✓ Single-line, sequential stages
✓ Parallel lines to multiple servers
✓ Single line to multiple servers
✓ Designated lines
✓ Take a number.
✓ Waiting list
• Party size seating
• VIP seating
• Call-ahead seating
• Large party reservations

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Psychology of Waiting Time

Conditions:
✓ Unoccupied Time Feels Longer than Occupied Time
✓ Preprocess Waits Feel Longer than In-Process Waits
✓ Anxiety Makes Wait Seem Longer
✓ Unexplained Waits are Longer than Explained Waits
✓ Unfair Waits are Longer that Equitable Waits
✓ The More Valuable the Service, the Longer the Customer Will Wait
✓ Solo Waits Feel Longer than Group Waits
✓ Physically Uncomfortable Waits Feel Longer than Comfortable Waits

Co-creation of Quality Service

The common concept of service-oriented business transactions involve the firm on one end
providing the resources and workforce to deliver the services and, on the other end, the customer
availing and receiving the promised service. With the new and innovative concepts introduced by
organizations to remain relevant, customers are given active participation in creating and
rendering the service to the satisfaction of the clients. It is more important to focus on what
content is more valuable and attractive for tourists or customers than to create a high volume of
information. This chapter dwells on the concepts of value co-creation and service delivery.

Customer’s Role in Value Co-creation

Customer involvement in service innovation provides benefits for firms through the co-creation
of value.

Customers, although unaware, play an important role in value co-creation and service delivery.

Value Co-creation is loosely defined as a collaboration between an organization and its

customers to deliver or create a service that would be acceptable to customers.

When customers feel empowered, passionate and a sense of ownership of the offering, they are
willing to contribute extensively for the benefit of the firm and the broader service system.

The customer’s role in the co-creation of value should not be frowned upon or viewed as an
opportunity for organizations to take advantage in terms of reducing costs of operation.

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The customer’s role is viewed as partnership wherein the insights relayed by the clients become
valuable inputs in improving the services.

3 Major Roles Played by Customers in Service Co-creation and Delivery:

1. Customers as Extended Employees

Among service-oriented organizations, customers are a significant part of the organization’s
ability to deliver service.

2. Customers as Proponents to Quality Service

The primary objective of customers is to have their needs met by the service organizations.
These services would be realized based on the satisfaction and expected results required by
customers no less.

3. Customers as Competitors
If the customers realize that they can perform the required service whether partially or
entirely, then the service provider may not be needed at all. In this way, the customer
performs the tasks on his/her own and let’s go of the service provider.

Self-service Technology (SST)

Self-service technology is an innovation in providing service outputs created exclusively by

customers without interaction or engagement with employees of service organizations.

Self-service technology is defined as “technological interfaces that enable customers to produce a

service independent of direct service employee involvement”.

Through the introduction technology-based self-service channels, customers have become

“active participants” rather than a “passive audience” in service delivery.

Advantages and Disadvantages of Using SSTs

Advantages:
✓ Convenience
✓ Control
✓ Less Cost
✓ Efficiency
Disadvantages:
✓ Machine Failure/Breakdown
✓ Poor Design/Not User-friendly
✓ Limited Options

Guest Involvement and Customer Participation

The design and scope of customer participation in delivering the service affect the organization’s
productivity, the quality of service it renders, level of customer satisfaction, and competitiveness
against its rivals.

Hence, the objective of customer participation is to enhance the organization’s productivity and
increase the level of customer satisfaction and encourage efficient use of the system by
customers.

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Determine the Role of the Customer

Service-oriented organizations should identify the level of participation of customers during the
formulation of strategies.

Different types of services may require different levels of customer participation.

The most common task performed by customers is to provide information or resources formerly
performed by employees.

Find, Inform, and Reward the Right Customers

Strategies to Reward the Right Customers:

✓ The organization must be able to attract the right customers to fill the roles through
promotions and marketing.
✓ Customers need to be informed or educated so that they perform their roles properly.
✓ Customers would perform tasks effectively and actively if they are rewarded for their
efforts.

Manage the Customer Segments

Service organizations cater to different market segments. These segments have different types of
needs and characters. These differences may either complement or contradict each other which
would lead to customer dissatisfaction.

Compatibility Management is the process of managing the encounters or interactions and space
requirements of several market segments in order to maintain customer satisfaction and avoid
customer flight.

Note: Not one strategy may apply to all types of customers. The success of each would depend
on how the customers would be able to appreciate the value of the service rendered to them.

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