Republic of the Philippines

CAPIZ STATE UNIVERSITY

Sigma Satellite College
Sigma, Capiz

2nd semester, A.Y. 2022-2023

Prepared by:

HYACINTH J. JARENCIO
Course Facilitator

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 Module Title: Module in THC 122 Micro Perspective in Tourism and Hospitality

Course Title: Micro Perspective in Tourism and Hospitality

Course Number: THC 122

Module Description

This course will cover the workings, operations and the integrative activities of major stakeholders in the
Tourism and Hospitality Industry. The student will also gain knowledge on managing and marketing a service-
oriented business organization. Apart from the scope and structure of travel organizations and planning of specific
business of the nature and distinctive characteristics of each sector of the entire tourism industry, focusing on
management, organization and planning of specific business strategies for the various entities in the local setting.
This will also involve the analysis of the possible impacts of external factors and trends on the different tourism
industry sectors and specific types of business. It will also look into client profiling such as travel motivations
and influences as it relates to aligning strategic and tactical solutions to the business. The course also identifies
the employment opportunities available in each sector and the corresponding qualifications for the jobs.
Learning Time: 27 hrs

Pre-requisite: None

Course/Subject Outcomes:

• Develop understanding on the nature of the tourism and hospitality industry

• Acquire knowledge on how to plan, organize and manage a service-oriented business organization
• Acquaint themselves with the different structure and components of the Tourism and Hospitality
Industry
• Learn the various career opportunities in tourism and hospitality

Before we proceed to our first topic, I would like to familiarize and request you to internalize the vision,
mission and goals for the university for it is here where we anchor all our activities and also serve as foundation
of all the services the school offers.
Capiz State University

Vision: Center of Academic Excellence Delivering Quality Service to All

Mission: Capiz State University is committed to provide advanced knowledge and innovation; develop
skills, talents and values; undertake relevant research, development and extension services;
promote entrepreneurship and environmental consciousness; and enhance industry collaboration
and linkages with partner agencies.
Goals:
• Globally competitive graduates
• Institutionalized research culture
• Responsive and sustainable extension services
• Maximized profit of viable agro-industrial business ventures
• Effective and efficient administration

Core Values: God-Centered, Excellence, Integrity, Transparency and Accountability, Dedication to Quality
Service.

Guiding Principles: Academic Freedom, Responsibility, Academic Standards

Institutional Learning Outcomes:

A CapSu Graduate is a knowledgeable, innovator, researcher, master of change a leader
entrepreneur, environmentalist and effective collaborator in their respective fields of discipline.

CHAPTER 5 MICRO PERSPECTIVE IN TOURISM AND HOSPITALITY 2

 CHAPTER 5

Chapter 5: Managing a Service Related Business

➢ Culture of Service
➢ The service encounter
➢ Moments of Truth
➢ Total Quality Management
➢ Perceived Value
➢ Service Failures
➢ Service Quality

At the end of the Chapter the students should be able to:

1. Discuss the culture of service
2. Explain co-creation in the context of the tourism and hospitality industry
3. Discuss three stages where service evaluation takes place
4. Compare and contrast the types of tourist experience
5. Explain the gaps in service quality
6. Discuss the concept of total quality management

Overview
A workplace where employees are driven to give customers the best possible service is the core definition of a
service culture. This entails going above and beyond what is necessary to satisfy the customers who are paying
for your goods and services.

Culture of Service: The Disney Culture

The challenge for tourism and hospitality stakeholders is to ensure that its customers are satisfied during the
“Service encounter”. This defined as the actual interaction between the organization and its customers who
evaluate the interaction based on the perceived benefits they received. The satisfaction rating is based on the level
of expectation vis-a-vis the actual service (or disservice) experienced.
The concept of service in tourism is best exemplified by the Walt Disney Company. Known for its strong
corporate culture, it started as a small animation studio on October 16, 1923. Founded by Walt and Roy Disney,
the company is widely acknowledged as one of world’s most diversified organization owning theme parks, hotels
and resorts, cruise ships, and entertainment networks.
Despite the magnitude and range of their product offerings, the Disney organization continues to emphasize
happiness. Not as an intangible, but something that can be experienced and seen throughout all contact with their

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customers. Cast members, as Disney employees are called, play a key role in ensuring the customers are happy,
treating them as a invited guests.
Guestology, a term originated by Bruel Laval of The Walt Disney Company, means that “all the organization
employees must treat customers like guest and manage the organization from the guest’s point of view. All the
while, remembering that it is a business, and an eye must be kept on the bottom line to ensure that services can
continue to be provided in the future “(Ford, Sturman and Heaton, 2012,p.5).
The Disney Courtesy is a method used to instill the required behavior, norms, and values that include safety,
courtesy, show efficiency. Taught at the Disney University , the concept focuses on “ employees who are part of
fantasy and are present to create happiness” (Harvard Business Review, 2018). The philosophy driving its culture
is a “comprehensive approach to employee relations”. The company believes that management needs to treat its
employees the way they treat their customers (SHRM, 2014). As one of its founders, Walt Disney once said, “you
can create, design and build the most wonderful place in the world, but it requires people to make the dream a
reality” (Harvard Business Review, 2018).

To include expected norms, Cast Members undergo an eight –hour orientation program. First half of the program
focuses on Disney history, Walt Disney’s philosophy and the standards of guest service. New hires are advised
on where they best fit within the organization. To reinforce the lessons learned, they are published on internal
communication. The second part includes a tour of the park “From a design and guest service standpoint” These
are discussion on customers and general office policies. What makes the training more interesting is that these
are taught by outstanding employees in full customer (Theme Park Tourist, 2014). Training does not end there,
but continues ahead of the curve- where employees are trained before they even need it.
The Service Encounter
The term service encounter is often to “refer to the person- to- person interaction or series of interaction
between the customer and the person delivering the service. Although both parties are usually people, the many
situations or interactions between organization and guest which are now automated-the automatic teller
machine, check-in kiosk, and online transaction being familiar examples-may also be considered” (Ford,
Sturman and Heaton,2012,p.37).
An encounter is the period of time during which the organization and the guest interact. The length of a typical
service encounter will vary from one service provider or organizational type of another.
Service encounters or interactions, and especially certain moments within them, are obviously of crucial
importance to the guests’ of service quality. They can make or break the entire guest experience.

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Moments of Truth
This is very similar to the concept of a customer’s journey which is used to monitor and evaluate tourist behavior
based on multiple touch points. Moments of truth are key instance of contact between a tourist and a representative
of the enterprise. These can be experiences with the brand, personnel, product or service of a tourist-related
organization wherein the customers get an opportunity to form an impression. These critical encounters occur in
three stages: pre-purchase, purchase and post-purchase (Lemon and Verhoef, 2016). It is also during these stages
where product and service evaluation occur. (Kandampully,Mok and sparks,2001).
Pre-Purchase
This includes all aspects related to interaction between a visitor and an organization before purchase. This is
characterized by behaviors such as need, search, awareness, and interest in product or service . This is the stage
where customers are selecting among alternatives and substitutes (Kandampully, Mok and sparks,2001).
Purchase
This covers actions related to the actual purchase including, but not limited to the final selection of a product, the
mode of payment, as well the attitude of the staff and the environment where the sale takes place (Lemon and
Verhoef, 2016,p.76). At this stage, consumers are comparing their expectations versus their actual experiences.
Post- Purchase
This refers to interaction that happen after the sale. This is an important phase that can lead to either customers
loyalty or dissatisfaction with the product or service. Here consumers are comparing their experience with the
expectations they formed at the pre-purchase and purchase stages.
Specific incidents across the purchase spectrum can affect a visitor’s experience. These become even more critical
given that tourist have the tendency to view service products as one composite item. For example, a delay in one’s
flight can require a chance or plans which can snowball into an uncomfortable trip.

The Tourist Experience

Pine and Glimore (1999) started that organization need create memorable experiences to remain competitive. But
guest satisfaction can be defined in multiple ways and is influenced by several factors posing challenges on how
to best stage experience.
For instance, Hawskins & Nikolova (2005) argued that the final tourism product is an amalgam of inputs and
processes created along a value chain and is designed for sale in a fragmented market where visitors can be
segmented based on demographics, lifestyles, motivations and interest, among other factors. On the other hand,
kotler et al.(2016) emphasized characteristics of intangibility, perish ability, variability, and simultaneous
consumption that can disrupts service delivery.
The tourist experience is also influence by individual motivations and preferences; shared experience ; knowledge
of the destination and its attractions; as well as non-controllable issues such as the weather, traffic, and intermittent
internet connection (Jennings and Weiler, 2006; Noe, et al,2010; Marguire, 2015; Sharpley and Stone, 2011).
The number of stakeholders involved in a tourism activity can likewise directly or indirectly influence the travel
experience Jenning & Weiler (2006). These include, but are not limited to, host communities, local government
agencies, tour operators, and front line employees with whom a tourist interaction with. In each encounter, guest
go through a range of emotions which can influence how the experience is evaluated (Marguire, 2015).
Finally, tourist satisfaction level’s are also directly influence by efforts put in by organization. Despite these
challenges, organizations can benefit dorm improve tourism engagement using big date (Kunz, et al. 2017). The
opportunities for collaboration, financial growth; and competitive advantage (Kavoura and Katsoni , 2013 ; kunz,
et al. 2017)

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Four Types of Tourism Experience

According to law, Leung and Buhalls (2009), there are four major classification of tourism experience:
Conventional tourism experience, co- creation tourism experience, technology tourism experience, and fully
technology- enhanced tourism experience.
1. CONVENTINAL TOURISM EXPERIENCE
Company-centric approach creating pre-fabricated experience delivering it to a mainly passive tourist
consumer. Accordingly, the consumer’s level of involvement, interaction, and participation in the creation
and production of the experience is relatively low and only occurs at the final consumption stage of the
experience. Technology does not constitute a part in the experience (p.551).
2. CO-CREATION TOURISM EXPERIENCE
Co-creation tourism experience can be considered as experience that are not only passively staged but
rather actively shaped and created by the tourist consumer in conjunction with the company. With out
implements ICTs, co-creation is restricted to interactions and engagement in the real world and offline
spaces (p,551).
3. TECHNOLOGY TOURISM EXPERIENCE
This is determined by a high level of technology use, which due to the low level of consumer involvement
remains predominantly company-centric. Technologies are adopted for the company-internal facilitation
of delivering tourism experiences. Accordingly, the associated level of value is moderate due to lack of
involvement and possibilities of active co-creation of experiences on the part of the tourist (p, 551).
4. FULLY TECHNOLOGY-ENHANCED TOURISM EXPERIENCE
The ultimate goal is to create experiences that maximize the potential offered by both elements of co-
creation and technology . This experience can be considered as the most differentiated and valuable type
of contemporary experience (p.551).
Co-creating the Tourism Experience
Prahalad & Ramaswamy (2004) introduced the concept of value co-creation referring to mutual benefits
than can be derived by consumer and the organization. The customer creates value when he is able to
actively by participate in designing his experience. Co-creation has been defined as “joint activities by
parties involved in direct interactions, aiming at contributing to the value that emerges for one or both
parties” (Gronroos 2012, p.1520).
For example , personalization through self-assisted airport terminals empower passengers to design their
own experience that match their expectations (Barich, et. Al, 2015). These databases provide infinite
combinations of information to different markers segment who co-create the travel product. In another
example, Disney introduced the “Fastpass” and the “Magicband” to maximize the potentials of technology
to enhance guest experience. The former provides a virtual queuing system to reduce waiting time, while
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 the latter enables experience customization while simultaneously alerting staff to more opportunities to
assist guest (Hardawar, 2014). These developments create tourism example that have become tangible,
multi-sensory, and co-created anchored on technology (Nuehhofer, 2013). As a result of co-creation , the
company can generate real-time feedback, target niche markets, create new products, improve branding,
and increase reveneus (Piligrimiene, et al, 2015).

As co-creators of the service experience examples, guests can “actively participants is the production and delivery
of the tourism or hospitality product “ (Ford, sturnman, and Heaton, 2017, p.272). Co-production “Requires the
consumers to be physically present to receive the service, while being ask to provide information that is used in
turn to deliver the service more effectively” (Yen et al, 2004).

Here are more examples of co-creation in actions:

➢ McDonald’s placed self- service kiosks where customers can pick and choose their meals, they then pay
for their orders at the counter. And instead of waiting for the cashier to assemble their orders from the
kitchen, customers are given numbers representing their order. A large screen alerts customers on orders
that are being prepared and those that are ready to be served.
➢ An airline passenger can pre-book her choice of seat using her mobile phone. She can also print out her
own boarding pass at the airport.
➢ Agoda, Trip Asvisor Expedia, and other online reservation aggregators provide a database of travel
options based on price, location, rating features, and amenities.

Advantages of Co- creation

1. Ford, Sturman, and Heaton (2012,pp.237-276) enumerates the benefits and issues arising from co-
productions:
2. It reduces employee costs
3. It allows management to re-assign personnel to more critical tasks
4. It eliminates the need for additional staff, especially for buffet meals
5. It helps manage the guest expectations
6. It helps save time for guest

Disadvantages of Co-creation
1. It increases safety risks for both organized and guest.
2. It requires additional training for staff who need to be extra attentive to the guests but can irritate some
guests who are familiar with the experience
3. It increases costs for the purchase, installation and management of sophisticated technology that is
accessible across all types of gadgets
4. It can increase costs of maintaining equipment

With the availability, portability, and accessibility of the internet, mobile devices, and information and
communication technologies (ICTs), tourists are empowered to actively participate in the design, creation, and
evaluation of products and services (Nuehofer, et al. 2013) effectively shifting business models from company-
centric to consumers-centric. For example, travel search engines, hotels price comparison websites, and flight
booking portals enable tourist to create their own itineraries, and select their preferred hotel amenities at the price
they are willing to pay (Del Vecchio,et al 2014).

Neuhofer (2016) stated that “co-production and co-creation primarily focus on the individual’s involvement in
and value of the service or experience creation. Technology has contributed to transforming the level of customer
involvement in product and service development and the integration of consumers as a key resource in
contemporary innovation processes”

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Total Quality Management (TQM)

According to Chestier (2016), “total quality management is not only about external customers, it is also about
internal customers (p. 9). This is best illustrated in the philosophy espoused by Deming that “employees have to
feel secure, be trained so that they can do the work properly, and be encourage so that the organization can develop
and grow” (p, 10). These are often referred to as Deming’s 14 quality principles that can achieve excellent quality
through continuous improvement (Rogers, 1996, pp. 15-24).

• Create constantly of purpose toward the improvement of product and service.

• Management must take the leadership role in promoting change.
• Top dependence on inspection to achieve quality. Build quality into the product in the beginning.
• Move to a single supplier for any one item. Create long-term relationship with suppliers
• Improve constantly the system of production and service and thus decrease costs. Institute training on the
job.
• Institute leadership. The aim of supervision should be to help people and machines do a better job.
• Drive out fear, so that everyone may work effectively.
• Break down barrier between departments, promote team building as people from different departments
work together to solve problems and improve quality.
• Eliminate work quotas: substitute leadership.
• Remove barriers that rob managers, engineers, and the hourly worker of their right to pride of
workmanship.
• Institute a vigorous program of education and self- improvement
• Put everyone in the company to work to accomplish the transformation.

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Perceived Value
Zeithaml (1988) proposed the concept of perceived value which is defined as “the consumers overall assessment
of the utility of a product based on perceptions on what is received and what is given (p,14). He further identified
for different meaning of value. Value is low price, value is whatever one wants in a product, value is the quality
that the organization gives (Turban, King Mckay, Marshall, Lee, and Vieland (2008, p.64).

Service Failure
Ford, Sturman and Heaton (2012) enumerates four types of service failures that can affect operating (p, 440-443).

1. Service Product Failures

These are problems related to the actual product or the service systems malfunctioning air con unit in a
hotel room, dirty towels, or out of stock items.
2. Failures to Meet Customers’ Requests
This refer to specific tourist request that were not provided such as wheelchair assistance in the airport, a
not-salt meal in a fine-dining restaurant, or a non- smoking room for a guest.
3. Failure caused by Employee Action or Inaction
These can include any inappropriate behavior such as rudeness, unavailability to respond to calls, or
incorrect meal orders. Such behavior may be unintentional but the effect on guests is still dissatisfaction.
4. Failures caused by Other Guests, Natural Phenomena, or any Circumstance beyond the Control of
the Organization
Guest expect the any random events should be fixed by management. For example, during a seige at a
five-star hotel, hotel personnel ensured that all guests were accommodate a nearby facility to keep them
safe. Although this can be considered as a force manure which is outside the liability of the hotel,
management found a way to assist their guests.

Service Quality
What is Service Quality?
Service quality is a measure of how an organization understands its users' needs and fulfills their expectations.
Understanding how to improve the service quality of your product is the key step to growth for any organization.
Measuring and improving service quality is a valuable art.

Service excellence has been increasingly identified as a key in differentiating service products and building a
competitive advantage in tourism. Today, it is more critical to provide service excellence due to intense
competition and increasingly demanding customers.
According to Hudson and Hudson (2017), “70% of customers will use the same company again and 50% will
recommend products and service if they receive excellence customers service. In the hospitality sector, consumers
are willing to pay 11% more for great service, higher than other sectors” (p, 53).

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Model of Service Quality

The Model of Service Quality introduced by Parasurnaman, Zeithnaml and Berryl in 1995.
This has been extensively for “strategies to deliver service quality, integrate customer focus across services
organization to provide a strong foundation for service excellence as a competitive strategy” (Hong et al, 2015).

According to this model, the perceived service is defined as the “difference between customer’s expectations and
perceptions which eventually depends on the size and direction of the four gaps concerning the delivery of service
quality on the service organizations side “(Hong et al, 2015). These are best illustrated by four different service
gaps which have an inverse relationship to customers satisfaction. This means that the higher the gap, the lower
the customers satisfaction.

GAP #1: NOT KNOWING WHAT CUSTOMER EXPECTS

This refers to the gap between the guest’s expected service vis-a-vis the perceptions of management. This may
be caused by the lack of marketing research orientation, inadequate communication with senior management, or
the hierarchy between managements level.

GAP #2: WRONG SERVICE QUALITY STANDARDS

This occurs when what management perceives as customer expectations do not match service quality perceptions.
This may due to inadequate management commitment to service quality. Inadequate task standardization the
absence of or goal setting.
GAP #3: SERVICE PERFORMANCE GAP
This happens when management’s perceptions of customers’ expectations influence the external communication
to customers. This can occur when employees do no clearly understand their roles, or when there is an
inappropriate system of rewards and incentives or when employees are not empowered.
GAP #4: WHEN PROMISES DO NOT MATCH DELIVERY
This occurs when are discrepancies between external communication for customers in relation to the service
provide. This can due to inadequate horizontal communication employees and/or tendency to over; promise but
under-deliver.

Measuring Service Quality

Ford, Sturman and Heaton (2012) discussed that strategy staff, and system are the keys to a successful
organization. Strategy refers to the plan and action programs designed to achieve the objectives, mission, and
vision of the company. Effective and efficient personnel are critical in the delivery of value for client’s, visitors,
and customers. Systems encompass both manual and technology-driven policies and guidelines for further
enhance guest satisfaction. All these must work in alignment with core values, mission, vision, and objectives
of the company.

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To help ensure quality standards, Several techniques can be employed, Ford, sturman and Heaton (2017)
recommends job performance standards, managerial observations of the delivery process, employee assessment
of guest experiences, service guarantees, and feedback mechanisms such as interview, focus groups, and surveys
(pp,, 408-4141).

Parasuraman, Zeithaml and Berry (1988) presented SERVQUAL which measures five dimensions of service:
tangibility, reliability, responsiveness, assurance, and empathy. Kadampully, Mok and spark (2001)
recommended measuring profitability using benchmarks and blueprinting that assess service quality as well as
profitability, marketing effectiveness, and productivity.
The key objective of providing excellent service is to retain satisfied customers who can become advocates for
the company. Researches show that is it more expensive to lure back dissatisfied customers than to keep attracting
new ones. Loyal and satisfied customers bring in more business through positive word-of-mouth advertising.

What is SERVQUAL?
SERVQUAL (also known as RATER) is a model designed to capture consumer expectations and perceptions of
a service in five dimensions believed to represent published service quality. for the first time in 1988 by a group
of academic researchers, including A. Parasuraman, Valarie Zeithaml and Leonard L. Berry. Since this time,
SERVQUAL has gradually been widely used in research and service quality surveys. The elements that make up
SERVQUAL (RATER) include:

R = Reliability: The level of reliability, or the ability to meet the goals and service commitments that the business
makes.
A= Assurance: The level of assurance, or the expertise & experience of those directly involved in providing the
service.
T = Tangibles: Presence, including elements presented to customers such as facilities, personnel, means of
communication...
E = Empathy: Professional ethics, expressed through the dedication, enthusiasm, service attitude, service style,
responsible attitude... of the participants in the service provision process.
R = Responsiveness: Responsiveness, reflected in the response speed of service providers to customer requests
and inquiries.

Enterprises can design a questionnaire based on the SERVQUAL (RATER) model for surveys to control and
measure their service quality in the most accurate way.
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