HOLIDAY INN CASE STUDY: Room Service

Holiday Inn - owned by InterContinental Hotels Group, the world's second largest group by room numbers - recently posted its worst half-year figures, down by a third, with pre-tax profits down from US$99m to US$68m for the six months ended March 2020. According to its chief executive Richard North: "It's difficult to imagine a worse trading environment."

Despite many Customer Satisfaction surveys showing Holiday Inn enjoying high 90s ratings, the hotel was still seeing a downward trend in sales and room occupancy. A comforting situation was that all hotels in the industry were experiencing low occupancy levels. Bearing all this in mind, Holiday Inn had considered doing a service quality evaluation in order to discover service gaps and create a service culture. The Service Triangle and the ServQual models were used to assist management in positioning the hotel in order to improve sales and customer loyalty and retention.

In addition to the surveys, Holiday Inn had done a sales promotion where during the campaign period, in every Holiday Inn hotel bedroom, guests would find an envelope under their pillow. Every day, one person would win US$1,000, with other prizes ranging from a free night's stay to a bottle of wine.

The success of the campaign hinged upon two factors - the assurance that everyone who opened an envelope went away with something, and that all the thousands of Holiday Inn staff were behind the campaign.

On the former, the managing director , Leonardo Griffiths noted that "There's a lot of cynicism in the market, especially among this audience," says Griffiths. "The last thing they want is to be encouraged to do something out of the ordinary and not get anything from it." He further noted that many promotions were considered as sham and just a bait and switch or total deception.

"The success of the campaign also centred on the staff being motivated and behind it," adds Ruth Negus, InterContinental's business marketing executive. "From housekeeping to desk staff, everyone was involved, which is why the internal briefings explaining it were so important."

Direct mail carried the strapline 'Find US$1,000 under your pillow and suddenly you're not so sleepy and encouraged recipients to book a room by phone or internet. Radio and press ads in national weekday and Sunday papers, were also used.

QUESTIONS

1. Discuss how the Service Marketing Triangle can be used to improve staff and customer satisfaction and retention. (10 marks)

2. Describe the dimensions of ServQual and state how the dimensions can be used to assess service quality at the Holiday Inn. (15 marks)

3 a. State three factors that could affect the level of ethical behaviour at the Holiday Inn. (4 marks)

3 b. Outline three (3) strategies that Holiday Inn can use to manage ethical behaviour at the

Holiday Inn Hotel. (11 marks)