Issues in Operations Management: Hospitality Sector

This report delves into a key operations management (OM) issue within the hospitality industry: missed bookings and reservations. It explores the root causes of this problem, attributing them to service quality gaps as defined by the Gap Model of Service Quality, including gaps in knowledge, policy, delivery, communication, and the staff-customer relationship. The report analyzes how these gaps contribute to customer dissatisfaction, negative feedback, and potential organizational losses. To mitigate this issue, the report proposes the application of the Theory of Constraints (TOC), outlining a five-step approach to identify and address bottlenecks. This includes setting measurable goals, identifying constraints, exploiting the constraint, subordinating other processes to the constraint, and elevating the constraint. The report emphasizes the importance of understanding customer expectations, improving booking policies, enhancing communication, and proactively addressing potential issues to improve operational efficiency and customer satisfaction within the hospitality sector.

Running head: ISSUES IN OPERATIONS MANAGEMENT
ISSUES IN OPERATIONS MANAGEMENT
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1ISSUES IN OPERATIONS MANAGEMENT
Introduction
It is worthwhile to note that the term ‘operations’ within the hospitality is a collective
term used to describe the key day to day functions or regular activities and responsibilities
observed by customers and performed by the hospitality industry. These include functions like
serving of foods and beverages, housekeeping, room service and implementation of pre-
bookings. Optimum performance of operations thus contributes immensely to organizational
profits and fulfilment of customer satisfaction within the hospitality industry (Kessman,
McCauley and Ameranth 2017). ‘Operations Management’ (OM), is the act of arranging those
resources of an organization which are dedicated to the manufacturing and deliverances of
services and products to customers. With this respect, each and every organization, notably the
hospitality industry has a functional OM sector since each and every organization is engaged in
the production and deliverance of some form of services and products to its customers (Slack,
Chambers and Johnston 2010).
The following paper will thus provide an extensive and elaborate discussion on a
prevalent issue of operations management, followed by evaluation and identification of the root
causes resulting in the issue, using relevant models and terms of operations management.
Additionally, this paper will also focus upon mitigation of the issue identified, using a theory
relevant to operations management within the hospitality sector.
Issue of Operations Management
A key issue of OM within the hospitality industry which one can be familiar with is the
issue of missed bookings or reservations. Despite engagement in a thorough and comprehensive
reservation and pre-booking process, missed reservations can still occur within the hospitality

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industry when the customer delays or fails to arrive at the specific time of booking or engages in
no form of contact to inform the staff regarding his or her delay (Antonio, de Almeida and Nunes
2019). While the most immediate root cause of the problem may seem to be attributed to
customers failing to arrive or communicating their cancellation of time, the underlying causes for
this delay may be due to misperceptions of service quality, such as a misunderstood or
misperceived booking policy (António, de Almeida and Nunes 2017). The issue is further
aggravated in a major problem in the absence of a booking cancellation policy or when the
processes of grievance or complaints redressal and failure recovery within the concerned
organization is flawed or delayed. Nevertheless, if not mitigated in a time manner, the issue of
missed reservations or bookings contributes to customer frustration, loss of customer
satisfaction, conflicts, negative customer feedback, and loss of loyal customers and overall
organizational losses (Chen 2016).
Discussion
Root Causes: The Gap Model of Service Quality
For the purpose of identifying the root causes which may contribute to the OM issue of
missed reservations or bookings in the hospitality sector, the ‘Gap model of Service Quality’ of
the ‘Customer Service Gap Model’, can prove to be useful. This model provides a
comprehensive understanding of the key factors influencing the perceptions, expectations and
levels of satisfaction held by a customer (Lee et al. 2016). As per the Gap Model, loss of
customer satisfaction regarding the quality of services offered, occurs as a result of five gaps.
The Gap Model is based on the principle that organizations must identify the causative factors
underlying these five gaps and work accordingly to mitigate the distance or gap between
customer satisfaction and quality of services. When these gaps are not addressed, they are likely

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to cause frustrations in the customer which in turn contributes to a missed booking and loss of a
potential customer for the concerned hospitality organization (Huang and Hsu 2016).
Figure 1: Gap Model of Service Quality (Source: Huang and Hsu 2016)
These gaps have been highlighted below, with regards to the issue of missed bookings
and reservations within the hospitality industry:

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 Gap 1: Gap in Knowledge: This gap occurs when there is a distinction between what
the customer expects from the services provided by the organization as compared to the
services that are actually offered by the organization. With respect to the issue of missed
bookings or reservations, the root causes contributing to this gap is when the concerned
hospitality industry of hotel has failed to appropriately communicate their cancellation or
booking policy to the customer or staff, has implemented inadequate market research or
process analysis of customers’ expectations concerning bookings or has failed to
adequately to address the previous complaints and feedback of customers regarding this
issue via appropriate failure recovery mechanisms of a missed booking (Chen et al.
2016). For example: A customer may expect to be communicated the process of an
emergency cancellation or time frame of arrival to avoid a cancellation fee. Despite the
same, such policies may not be available or communicated adequately by the
organization beforehand (António 2019).
 Gap 2: Gap in Policy: This gap frequently occurs when there is a distinction between
the understanding of the OM regarding customer needs and the level or efficiency with
which that understanding has been translated or implemented within its standards and
policies. With respect to the issue of missed reservations or bookings, the root causes of
this gap and resultant OM issue is when the hotel has failed to adequately define or
update its booking and cancelation standards and policies (Njau, Mutungi and Mutinda
2017). For example: with the onset of technological advancement, a number of customers
prefer to manage their bookings and cancellation online. The issue of a missed booking
or reservation can occur if the hotel has not updated its cancellation and reservation
policies within its website or within an online travel agency (OTA) as compared to what

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it provides when the customer books via direct arrival or a telephonic conversation at the
reception (Benítez-Aurioles 2018).
 Gap 3: Gap in Delivery: This gap occurs when there is a difference between what has
been promised in the policies and standards of service delivery within an organization as
compared to the services which have been actually offered (Abdulla, Wirya and Top
2019). With respect to the issue of missed bookings and reservations, this gap
contributing to root causes of missed reservations can occur when the concerned
hospitality organization has advertised or promoted quick management of complaints or
absence of a cancellation fee, but in reality fails to meet up with these as promised. For
example, this can include: delay in producing a complaints register or enlightening the
customer at the time of cancellation that a late arrival post 48 hours will result in a
cancellation fee (Antonio, de Almeida and Nunes 2019).
 Gap 4: Gap in Communication: This gap occurs when there is a difference between the
aspects or services and products which have been advertised or promised and the type of
services which actually is delivered to the customers (Kumarasinghe, Lee and
Karunasekara 2019). With respect to the issue of missed bookings or reservations, the
root causes contributing to this issue is when the concerned hospitality organization has
advertised that bookings are always available and can easily be conducted online but
instead, end up communicating to the customer at the time of booking that there are no
vacancies and that reservations must be informed 48 hours beforehand (Saito et al. 2019).
 Gap 5: Gap between staff and customers: According to the Gap Model, this gap occurs
as a result of distinction between the expectations held by the customer and the how the
customer has actually perceived or interpreted the quality of service provided to them

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(Sunil et al. 2018). With this respect to the issue of missed reservations or bookings, the
root causes which contribute to this issue is either due to the four gaps mentioned above
or if the customer has failed to interpret or understand the services provided by the
organization correctly. A key reason contributing to the latter is when organizations fail
to assess the subjective feedback of customers regarding their booking services or fails to
clarify their booking and cancellation policies which may be perceived as ‘difficult’ or
‘complicated’ to understand by customers (Tse and Poon 2017).
Root Causes: Operations Management Terms
Thus, from the above, it can be implied that the OM issue of missed reservations or
bookings is due to a distinction observed between perceptions and expectations of service quality
held by customers and the actual services delivered by the hospitality organization. Increased gap
or lack of mitigation of this gap contributes to poor quality of operational service. Operational
service quality is characterized by the evaluation of the efficiency with which products and
services were disseminated at the point of customer service (Albayrak, Caber and Öz 2017).
With this respect, the key issues in tangible and intangible services which serve as the root
causes contributing to the issue of missed reservations or bookings are as follows:
Inadequate Quality of Tangibles
 Inadequate quality of supportive OM facilities: absence of any financial
compensation, absence of specific principles or time frames to avoid a cancellation fee,
absence of membership of loyalty discounts, failure to follow up or absence of booking
notifications communicated to the customer.

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 Lack of adequate employee appearance: employees failing to produce a cancellation
policy on time, employees failing to implement complaints redressal or failure recovery
processes on time.
 Inadequate quality of OM products and services provided: absence of a clear
reservation or booking policy, absence of a booking software, absence of reservation and
cancellation policies online or OTA websites, absence of updated reservation and
booking policies (Jang, Chen and Miao 2019).
Inadequate Assessment of Intangibles
Intangibles here refer to the subjective opinions and perceptions held by customers
concerning the booking and reservation policies of the concerned hospitality organization. It is
thus imperative for the hotel to assess or obtain subjective feedback from the customer before
and after the booking process or during check out. Lack of assessment or acquisition of such
feedback contributes to increased gap between customer expectations and booking services
offered, and resultant missed reservations or bookings (Jang, Chen and Miao 2019).
Issue Mitigation: Theory of Constraints
For the purpose of mitigating the OM issue of missed reservations and bookings, the
application of theory of constraints (TOC) can prove to be beneficial. The TOC is based on the
principle that there lies a constraint or bottleneck within the process of every organization.
Optimum levels of throughput will only be achieved not by optimization of non-constraining
factors but rather on factors that are contributing to constraints or bottlenecks within the process.
The TOC is emphasizes five comprehensive steps for the identification and mitigation of
constraints within a concerned OM process, known as the ‘Five Focusing Steps’ (Goldratt 2017).

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Figure
2: Theory of
Constraints (Source: Goldratt 2017)
Thus, with respect to mitigation of the OM issue of missed or cancelled reservations or
bookings, the following TOC steps are to be considered:
1. Identification of Measurable Goals: One of the first steps in mitigating the issue of
missed reservations or bookings is to engage in the identification of a goal which is
realistic or measurable. This measurable goal with respect to the hospitality industry is
the throughout or the sales, services or products targeted to be generated or delivered to

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the customer (Goldratt 2017). Thus, in the cause of missed bookings and reservations, the
measurable goal can be identified to be, for example, ‘to reduce the number of missed
bookings by 10% within the next 12 months’ or ‘to increase the retention of loyal
customers during booking by 10% within the next 12 months’. Identification of a goal
which is measurable will not only pave the way for the identification of the constraint or
bottleneck but will also assist in informing the organization regarding its progress in
mitigating the constraint (Scaglione, Johnson and Favre 2017).
2. Identification of the Bottleneck: Following the identification of the measurable goal,
the next step as per the TOC is to identify the key bottleneck which is causing a
constraint in the process of booking or retention of customers (Goldratt 2017). The
identified bottleneck can be external in nature, such as customers arriving at a delayed
time or internal in nature, such as absence of an adequate cancellation or well defined
booking or failure recovery policy within the organization. Identification of the
concerned bottleneck is of utmost importance since without addressing the same, the
issue of missed bookings will not be resolved via improvements of non-constraints alone
(Scaglione, Johnson and Favre 2017).
3. Exploitation of the Bottleneck: As per this step of the TOC, organizations must
consider steps in which the identified bottleneck can be exploited or put to the maximum
use for generation of profits. To identify the best process of exploiting the bottleneck of
delayed customer arrival times or inadequate booking/cancellation policies, organizations
as per the TOC must engage in the ‘Thinking Process’. The thinking process, with respect
to the bottleneck of delayed customer arrival times or inadequate booking/cancellation
policies, organizations must concentrate or which internal or external bottleneck is to be

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changed, the form in which it should be changed to and the strategies required to
implement that change (Goldratt 2017). Thus, with respect to the TOC thinking process,
the bottleneck of delayed customer arrival times can be exploited to strategies like:
continuously generating reminder notifications or calling the customer or placing
discount policies for customers arriving on time. Additionally, the bottleneck of
inadequate booking/cancellation policies can be exploited by strategies like:
communicating to customers on a 72 hour or 1 week grace time after which the a
cancellation fee may be deposited, obtaining a cancellation compensation fee during the
time of booking which can be returned to the customer upon timely arrival and upgrading
comprehensible booking and cancellation policies across OTA and company’s own
website or social media platforms (Guillet, Mattila and Gao 2019).
4. Subordination of the Bottleneck: The next step as per the TOC is to exploit all other
processes which may be associated with the bottleneck for the purpose of its optimization
(Goldratt 2017). With respect to the bottleneck of delayed customer arrival contributing
to missed bookings, subordination can include delaying further new bookings till the
customer has confirmed or crossed the grace period of arrival to avoid overbooking.
Likewise, the bottleneck of inadequate policies contributed to missed bookings can be
subordinated by obtaining feedback from customers to avoid underlying constraints of
misinterpretation of policies by customers (Möhring, Keller and Schmidt 2019).
5. Elevation of the Bottleneck: The next step as per the TOC is to elevate or increase the
capacity of the identified constraint or bottleneck (Goldratt 2017). With respect to the
bottleneck of delayed customer arrivals, elevation can involve a rewards scheme where
customers arriving on time can be rewarded with a discount or some complementary

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service. Elevation of the bottleneck of misunderstood or inadequate booking policies can
involve, development of a timely failure recovery process or a complementary guest
room for the customer to reside overnight till a new room can be managed next day (He
et al. 2018).
6. Repetition of the Process: Constraints and bottlenecks are always varying and may not
be limited to just one factor. Thus, it is imperative for the hospitality organization to
continuous evaluate the booking process for identification and mitigation of new
constraints contributing to missed bookings (Goldratt 2017; He et al. 2018).
Conclusion
Thus, this paper provides a comprehensive and detailed insight into the root causes
contributing to the OM issue of missed cancellations and bookings within an organization, with
the help of models and theories appropriate to the field of OM. Thus, with respect to the Gap
Model of Service Quality, the concerned hospitality organization must not limit the root cause of
this issue to merely late customer arrival but must also address the key differences in service
quality and customer perceptions which may also contribute to this problem. These can include,
but not limited to, failure to address customer experiences, inadequate communication of
promised policies and absence of updated or timely cancellation policies and failure recovery
processes. To conclude, the issue of the missed reservations and booking can be mitigated via
assessment of bottlenecks or gaps in service quality and working towards efficiency utilization of
the identified bottlenecks.

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