Investigating Service Quality Issues in Chinese Luxury Hotels

This report delves into the service quality challenges faced by luxury hotels in China, focusing on factors that hinder guest satisfaction and competitiveness. The research investigates the impact of the rapid expansion of the hotel industry, the demand for skilled talent, and the influence of management guidelines on service delivery. The study examines how service quality is defined and explores the role of management in implementing tools to optimize service standards. The report includes a literature review on service quality and the growth of the hotel industry in China, as well as a methodology section outlining the research approach, data collection methods, and ethical considerations. The research questions address the definition of service quality, the impact of industry expansion, the factors behind service quality issues, the influence of talent demand, the role of management, and the key changes needed to improve service quality. The report aims to analyze and evaluate service quality issues in the context of the luxury hotel industry in China, considering the country's economic transition and the demand for tourism.

Running head: MANAGEMENT
Service Quality Issues of Luxury Hotels in China
Name of the Student:
Name of the University:
Author Note:

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Abstract
The focus of this research study lies in identification of the issues that hinders the service
quality in the luxury hotel industry of China thereby creating an impact on the guest satisfaction.
This study puts across an overview that delivering effective service quality is not only important
for attracting newer customers but is essential for managers in implementing effective policies in
relation to the service quality for the enhancement of customer satisfaction and loyalty. The
paper portrays there are various factors that are responsible for hindering the service quality in
the Chinese luxury hotels. Negligence towards paying required attention to various attributes of
the hotel industry results in negative evaluation. The research also tried to portray how it is the
quality of service that is cited as the means for the improvement of the various aspects of the
business. This particular research study provides a closer look into issues faced in attainment of
quality standard service in the luxury hotels of China. The research also mentions the
significance of the service quality in deriving enhanced satisfaction of the customers. The
research shows how the service quality is hindered by the rapid expansion of hotels in China
demand for talent and the influence of the guidelines and tools implemented by the management.

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Table of Contents
Chapter 1: Introduction....................................................................................................................3
1.1 Background of the Research..................................................................................................3
1.2 Problem Statement:................................................................................................................4
1.3 Research Questions:...............................................................................................................5
1.4 Research Aim and Objective:................................................................................................6
Chapter 2: Literature Review...........................................................................................................7
2.1 Service Quality and Service Standards..................................................................................7
2.2 Expansion of the Hotel Industry in China..............................................................................8
2.3 Major Stages in the Growth of China’s Hotel Industry.........................................................8
2.4 Key Factors that Act as issues in Delivery of Standard Service Quality in Luxury Hotels of
China............................................................................................................................................9
2.5 Employee Commitment to Service......................................................................................10
2.6 Service Recovery.................................................................................................................11
2.7 Service Quality as Competitive Advantage.........................................................................12
2.8 Gaps in Literature.................................................................................................................13
Chapter 3: Methodology................................................................................................................14
3.1 Introduction:.........................................................................................................................14
3.2 Research Philosophy............................................................................................................14
3.3 Research Approach:.............................................................................................................14

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3.4 Research Design...................................................................................................................15
3.5 Method of Data Collection:..................................................................................................15
3.5.1 Quantitative data:..........................................................................................................16
3.5.2 Primary Data Collection:...............................................................................................16
3.6 Sampling and Sample Size:..................................................................................................17
3.7 Data Analysis Plan:..........................................................................................................17
3.8 Ethical Consideration:..........................................................................................................17
Conclusion.....................................................................................................................................18
References:....................................................................................................................................18

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Chapter 1: Introduction
1.1 Background of the Research
This applies to nuances and complexities of the travel and tourism industry of China that
have been the outcome of the various unpredictable economic, social and the political factors
converging during the time of greater change (Case 2013). China, the world’s most populous
country opened up the doors to the international tourism in the year 1978 and grew the industry
from the communist root in becoming one of the major players in the arena of global tourism. As
far as the growth in industry is concerned, there has been a steady and rapid rise in the
international travelers to the country in the last two decades. As per the reports of China National
Tourism Administration (CNTA), there are close to over 91.6 million tourists visiting the
Chinese Province in the year 2003 (Airey and Chong 2010).
It was during the year 1980 and 1990, that foreign investment has been encouraged in the
hotel industry by the Chinese government that also allowed the international hotel companies in
developing and meeting the international standards (Gu, Ryan and Yu 2012). By the end of 1997,
the country had close to 2724 hotels with a star rating which included 57 have been five star
luxury hotels and close to 157 four star hotels. However, by the year 2000, the country boasted
of close to 7358 hotels for its overseas tourist that included 129 luxury hotels and 441 four star
hotels (de Beer 2016). There was a sudden influx of the foreign visitors that created a demand for
the lodging industry of China that has still been underdeveloped. Thus, development of hotel
remained a priority between 1981 and 1985 and in the last few years, has initiated tremendous
efforts for creating sufficient hotel renovation and construction. Chinese governments were

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confronted with scarcity of room and this has stimulated heavy investment in hotels. In spite of
such developments, it has been found that the luxury hotels standard of service has been below
the international standards.
This particular research plan tries to provide an in depth insight into the service quality
issues prevalent in most of the luxury hotels of China with a focus on the Mandarin Oriental
Hotel Group.
1.2 Problem Statement:
Service Quality represents a key factor in the hospitality industry for not only gaining the
customer satisfaction but also attaining a sustainable competitive advantage within the
competitive marketplace (N. Torres and Kline 2013). Hence, service quality is able to provide
the hospitality industry with a higher opportunity of creating a competitive differentiation for an
organization (Amin et al. 2013). Therefore, it represents not only a core concept but a critical
success factor for the hospitality industry. However, certain indentified issues that poses
challenges to the service quality includes poor ability of language and communication skills,
unreliable systems of reservations, poor level of sanitation and lack of property maintenance.
Besides, the lack of understanding of an international standard of service by service workers in
China also results in quality issues. It has also been found that China closed its doors towards the
West for a substantial amount of time hence standard of living have remained different from the
western societies. This has also resulted in a discrepancy in the service quality between the
foreign tourist and the service workers.

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Successful hotels like the Mandarin Oriental Hotel Group (MOHG), is however expected
to put across quality service to customers which would also enable it in gaining competitive
advantage. Nevertheless, customers have remained dissatisfied with the quality service provided
by the luxury hotels of China. The problem lies in the challenges faced which are not only
difficult to overcome but hinders service quality and poses a hindrance to the maximization of
the guest satisfaction.
However, the primary practice that really works in this case is strategy. It is important
to not only maintain but devise a clear strategy. This is because a properly devised strategy
would allow the hotel industry in overcoming the issues related to service quality (Manuel
Martínez-López and Vargas-Sánchez 2013). It is hardly a matter of concern as to who decides
the strategic direction whether it is the consultant, CEO or the executive team since the critical
aspect lies in achieving excellence in the strategy. This also involves communicating it to the
employees, customers and the shareholders so that they can contribute their part in deriving the
ultimate aim.
1.3 Research Questions:
The research thus revolves around the following questions:
1. What defines service quality and its delivery process?
2. How the rapid expansion of hotel industry in China did had an impact on the service quality?
3. What are factors behind the issues in the delivery of service quality in Luxury hotels of China?

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4. How the growth in hotel expansions and its demand for the talent influences the service
quality in the Luxury hotels?
5. What is the role of management in implementing tools that defines service quality?
6. What are the key changes that need to be implemented to optimizing the service quality of the
luxury hotel?
1.4 Research Aim and Objective:
The aim and objective of research lie in analyzing and evaluating the service quality
issues in context of the luxury hotels in China based on the demand for the tourism and
upcoming hotel and the hotel chain development of China and in consideration of the present
economic period of transition for identification of the issues relating to the service quality and its
delivery process.

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Chapter 2: Literature Review
2.1 Service Quality and Service Standards
According to Ayeh and Chen (2013), the perceptions of guests vary in regard to service
quality. Similarly, the perceived satisfaction of the guest also experiences wide variance. There
are two different variables that change the perception of the customers. This includes service
standards and the customer expectations (King, So and Grace 2013). Difference between service
standard and expectations acts as key indicator in determination of the service quality. Thus,
service quality is determined by the guest of the hotel. However, the expectations of the service
will hugely influence the resulting satisfaction level. In addition it is also important for the hotel
to understand the expectations of guests. As far as the Chinese hospitality is concerned,
understanding expectations of the Chinese and the international guests is critical for providing
quality service. It is also important to understand the culture of the international guest while
delivering performance in service industry (Lovelock and Patterson 2015). Expectations of
service is measured based on the three levels which includes expected, essential service and the
optional service.
Nevertheless, some of the identified factors of quality that are vital for the consumers in
judging quality include (Zaibaf, Taherikia and Fakharian 2013):
 Responsiveness and reliability
 Courtesy, credibility and competence
 Access, security and communication

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 Knowing and understanding the consumers
 Tangibility
For the international hotel brand like Mandarin Oriental, Marriott, Hilton, Starwood and
Hyatt service quality holds tremendous importance along with maintaining continuity of its
service across all the hotels (El-Said 2013). Business travelers mostly remain loyal towards a
hotel brand. This is because whenever a guest has greater satisfaction in the business hotel of
Tokyo then the guest develops higher expectations for the same brand in China. Thus, the hotel
companies of China have put across service standards applicable to all the hotels they manage
across the world. The brand standards in China served as the benchmark of the service quality
for the hotel industry of China.
2.2 Expansion of the Hotel Industry in China
Tourism made its inception in Republic of China during the year 1978. It is since then
that the domestic and international tourism stimulated growth of hotel industry within China. In
the year 2000, the hotel industry of China significantly grew to a level of 10,481(Shi et al. 2016).
In fact, the hotel industry of China developed after the introduction of open door policy in the
year 1978. China transitioned from centrally planned politically dominated economy towards
market economy.
2.3 Major Stages in the Growth of China’s Hotel Industry
Before the year 1978, the accommodation facilities of the international standards were
not only fewer in number but also of poor quality and hence were not able to satisfy the greater
demands of sudden influx of the overseas tourist in China after its implementation of open door

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policy. According to Li and Li (2013), in the year 1978, there have been only 137 hotels having
15,539 rooms which in a matter of 10 years increased to 1496 hotels having close to 220, 165
rooms. The period between 1978 and 1989 served as the decennium of the dramatic change in
the hotel industry of China.
According to Pine, Lam and Zhang (2013), the hotels did not provide service as per the
western standards and the serious level of under capacity due to the influx of the guest resulted in
intervention of the Chinese Government for increasing the size of hotel industry. Additional
efforts were put in hotel renovation and construction for the anticipation on greater demand of
the hotel beds by rising number of tourists. The period between 1978 to1986, although marked
growth but portrayed a lack of the service quality of the international standards. On realizing it,
Chinese government invested closer to RMB 6 billion in hotels during 1986 and1991. The
investment not only contributed to considerable improvement and growth but also restructured
the hotel industry thereby encouraging external investment and entry of the international hotel
brands.
In the year 1992, China widened the open door and the economic reform policy which
resulted in increased business activities and increase in the international tourists that stimulated
the investment in hotel industry in the third world countries. However, by joining in World Trade
Organization (WTO) in the year 2001, the hotel industry of China opened its door to the
international hotel companies (Zhang et al. 2013). Today, almost all international hotel chain has
its market focus in China.

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2.4 Key Factors that Act as issues in Delivery of Standard Service Quality in Luxury Hotels
of China
These included:
Complexity of Ownership: The hotel industry grew at a rapid rate in China. The number
of hotels grew from 137 to close to over 10,000 hotels in a matter of twenty years from 1978.
However, this development has been considered small compared to the other countries. China is
believed to have composite mode of ownership and is influenced by the political scenarios unlike
most of the countries operating in environment of market economy (Lo 2013). This implies
issues in management and ownership ultimately affecting the quality of service.
Mixture of Domestic and International Guest in Hotels: In China there is a
demarcation between the hotels for the domestic use and the hotels for the international use (Hsu
2014). This implies that the quality and type of products and service available is different in the
two groups of hotels. The scenario underwent a change with domestic market getting
increasingly matured. Various hotels in the cities of Shanghai and Beijing apply most of the
business to the domestic guests. Development of new hotel group indicates whether the hotel
companies either exist in both or either of the domestic or international market.
China’s Business and Political Environment: According to Gu and Lu (2014), China
has changing political and variable environment for business. Bigger differences are found with
the hotels operating in the Western countries and those operating in China. Besides, a controlled
central economy with bureaucratic owners had an impact on the service quality.
Economic Profile of China: The country does not have an infrastructure or profile
similar to Europe and the North America. China should however try to keep pace with the

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overseas development of hotels otherwise the international hotels would dominate the market
thereby impacting the service quality.
2.5 Employee Commitment to Service
The service providers should involve all the staffs in each of the departments for
providing standard quality of service. Everyone within the organization must work in
coordination towards a common goal in delivery of the quality service. The staff should be able
to comprehend significance of providing the quality service. They should respect and understand
the essential roles that the different departments play in delivering quality service. According to
Zhao et al. (2016), the Chinese employees in the hotels lack positive motivation in work that
results in certain pressure in providing standard quality service. This impacts the customer
satisfaction. Various Chinese hotels fail in empowering the employees in becoming the effective
providers of service. Most employees fail to be hospitable, pro active and confident which are
also vital in providing quality service. Management plays an effective role in delivering quality
service.
The role of the management lies in guiding the entire organization towards the
achievement of the quality service. Leadership and successful guidance are the main values of
the managers in setting the stage for the quality service (Jeston 2014). The role of the hotel
management lies in the ability of motivating, training, hiring and rewarding the service oriented
employees. In fact the key to quality service lies in hiring the appropriate employees. In China,
the human resources department finds difficulty in motivating and attracting the quality
candidates (Renwick, Redman and Maguire 2013).

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2.6 Service Recovery
Service recovery is found to return the guest to a higher state of satisfaction. If the service
recovery is not performed properly then a guest could be dissatisfied. The hotels should know
that the complaints have various natures (Liat et al. 2017). A complaint is considered as
emotional outburst and is considered a problem that needed to be solved for recovering the
service process. Since, the compliant is an emotional outburst so the employee should deal it
with emotions. According to the brand standards of luxury hotels there are five crucial steps that
need to be taken for resolving a compliant.
The steps include (Karatepe 2014):
1. Attention: This involves showing the guest that the hotel authorities are active listeners which
gives the guest a feeling and willingness to resolve a problem.
2. Apologize: This portrays that the complaint has been appreciated
3. Acquire: Through this the hotel authorities should try to establish the actual needs of the
guests and determine the purpose of compliant. Therefore, it is vital to determine whether the
guest is in need for an apology, recognition or refund.
4. Action: Taking action for resolving the issues
5. Aftermath: This indicates aftermath of the hotel authorities in following up on the promised
action.
2.7 Service Quality as Competitive Advantage
Service quality is used as the competitive advantage (Molina-Azorín et al. 2015). Firms
have learned in creating superior levels of service that cannot be duplicated easily. Mandarin

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Oriental Group of Hotel serves as good example whose motto lie in delivering international
standards of service quality. These luxury hotels represent a benchmark of higher expectations in
the service quality. Therefore, building a competitive advantage through using service is not an
easier option. This is because services are different from the products since they are not tangible,
visible and storable. According to Ali and Amin (2014), the Chinese people do not appreciate the
service completely as they are not being able to visualize it. A Chinese on being asked about the
best hotel in the city usually directs to towards the most impressive and the biggest hotels in city.
Service does not represent a physical item which can be measured and is still considered as
performance. A customer or guest remains involved in the service process and the services
performed in absence of the guest are neither valued nor seen. Besides, since the humans deliver
services to the other humans therefore automation finds rare usage. Hence, training the staff as a
part of the delivery service has become higher priority for the hotels. Nevertheless, the
management should maintain higher level of awareness for the service failures.
.
2.8 Gaps in Literature
Based on earlier studies, service quality refers to a level to which the service is able to
fulfill expectations and needs of the customers or the overall customer impression in regard to
weakness or excellence of the service. Hence, service quality is what customers possess the
willingness in paying. Thus, service quality is considered as the gap between the expected and
the perceived service in real terms.

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Chapter 3: Methodology
3.1 Introduction:
Research Methodology has been designated by researcher for obtaining effective results.
Identification of the research approaches has enabled the researcher in attaining specific path
towards the actuality and authenticity of the research. Besides, the research methodology has
enabled the researcher in gaining the effective opportunities thereby increasing the authenticity
of results.
3.2 Research Philosophy
Research philosophy helps the researcher in the identification of fundamental nature of
research by using research paradigm. There are four different kinds of research philosophy which
includes positivism, interpretivism, realism and pragmatism.
The present study aims at dissecting the issues related to the service quality in the luxury
hotels of China. Thus, here, the researcher makes an attempt of analyzing the issues faced by the
hotel authorities in implementing standard service quality with special focus on the luxury hotels
of China. Therefore, the researcher would apply the philosophy of positivism since it depended
on existence of reality through the use of proven scientific techniques (Mokrzycki 2013).
3.3 Research Approach:
Research approach is one of the crucial steps in the conduction of the research study for
arriving at a desired outcome of research. There are basically two kinds of research approaches,
inductive and deductive approach. Inductive approach enables researcher in framing a newer set
of models and theories after mentioning the research outcome. On the other hand, deductive

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approach focuses on the scrutiny of the available theories and models through seeking aid from
gathered data.
The present research however focuses on the evaluation of the service quality issues in
the luxury hotels of China and so a deductive approach would be applied for conducting the
research(Yilmaz 2013). The primary reason being the plans for conducting quantitative analysis
for reaching the research outcomes that involves evaluation of the responses from respondents.
3.4 Research Design
There are three different types of research designs that include exploratory research
design, explanatory research design and the descriptive research design.
The present research focused on the analysis of the issues related to the delivery of
service quality in the luxury Chinese hotels through exploring problems in the hotel industry of
China that would help in tracking the path of determining the desired goal. The present research
also contains description of factors that leads to the service quality issues. In addition, the
researcher also focuses on the development of key changes that would help in the optimization of
the service quality. Hence, the researcher would apply a descriptive research design since it
would aid the researcher in exploring and defining the problems and issues confronting research
study(De Vaus and de Vaus 2013).
3.5 Method of Data Collection:
Data is generally categorized into the primary and the secondary data. The secondary data
is mostly collected from secondary sources that include the journals, books and the website that
aids in understanding historic presentation and speculative conditions. Primary data is collected

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from human responses and is authentic compared to secondary data. The primary data is
however classified into qualitative and quantitative data. This particular study focuses on the
quantitative data
3.5.1 Quantitative data:
Quantitative data refers to fragment of information that would be evaluated for the
deduction of information in respect to research results. The quantitative data mostly provides
information on subject of inclination of the human perception that concerned specific
information related to study. Hence, it calls for the need of bigger sample for the purpose of
evaluation. For this particular study, hotel employees would be selected as respondents for
analysis of the problem related to quality assurance departments.
3.5.2 Primary Data Collection:
Here, the researcher would gather the primary data by surveying the issues that the luxury
hotels of China face in delivering quality service. To conduct the study, the researcher would
arrange a questionnaire consisting of both the open ended and the close ended questions.
According to Taticchi, Tonelli and Cagnazzo (2010), survey seemed to be one of the suitable
choices for gathering quantitative data since it would enable gathering of considering data from a
larger sample. However, for the present study, the survey questionnaire would be developed
based on the research objects that allowed gathering of the relevant information. The researcher
would request the respondents for filling the questionnaire through using social media platform.
The distribution of the questionnaire would also be distributed through sending e-mails to
respondents. The respondents would be given a specific time period for filling the questionnaire.

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3.6 Sampling and Sample Size:
Simple random sampling would be used for conducting the survey with professionals
since it puts across equal opportunities for all the respondents selected in survey. Hence,
quantitative data would be obtained with the help of random sampling from larger sample. It has
found that the quantitative analysis requires bigger size of the sample for obtaining and analyzing
the responses. Hence, 100 employees would be selected for the analysis of the response.
3.7 Data Analysis Plan:
The collected data would be evaluated through different analytical techniques. Jonker and
Pennink(2013) stated that the effective selection of the analytical techniques is crucial for the
achievement of the pertinent and proper conclusion. In addition, it helps in the maintenance of
transparency and the interpretation of the composed data. The quantitative data would be
represented with the help of graphs and tables for the simplification of the process of
interpretation of gathered data. Besides, excel application would be used for converting opinion
of respondents into percentage for estimating the trends into the insight of the respondents.
3.8 Ethical Consideration:
As far as the ethics are concerned, the researcher would try to follow a proper ethics code
in the performance of the task in the methods of data collection undertaken. The researcher
would also try and avoid any delicate questions that might restrict the respondent from taking
part. Besides, the identity of the respondents would be kept a secret and the research statement
should not be used for any business purpose.

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Conclusion
On a concluding note, it can be said that both hospitality and the tourism sector had been
experiencing shift toward the service economy that is enhanced by the economic and the social
changes. This includes increased specialization and internationalization of services along with
the activities of the multinational corporations. The development of the information technologies
have been leading to the flexibilities of a great operation. The hope also lies in the service
industries in increasing the employment opportunities. This implies that the service will play a
significant role in futuristic development of the hospitality industry. The development of service
industry enables the Human Resource Department to deal with the vital challenge. However, in
terms of the recruitment it is vital for sourcing the quality candidates having positive attitudes
and exposure. However, in providing the quality service, employees who developed an idea of
the international service standards have been considered indispensible. Further, it should be
noted that the hotel must retain the employee via all possible means.

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