Effect of Technology in the Restaurant and Lodging Industry

CHAPTER ONE:  OVERVIEW OF THE STUDY

Introduction

The restaurant and lodging industry has been continually affected by the fluctuating conditions of the economy (Gustavo, 2013). Additionally, consumer behavior patterns have changed for several reasons and because of this, hoteliers and restaurateurs will need to examine several different vehicles that will enable them to eat up the competition.  Technology has continued to change and this has prompted the restaurant and lodging industry to strive toward implementing the varying advances in an effort to build consumer loyalty and continued service quality. While the consumer need has always been a focal point of the restaurant and lodging industry, with the advancements in technology that have taken place over the last decade, it has become an even larger instrumental task in gaining both competitive advantage and loyalty among consumers (Koutroumanis, 2011). 

The restaurant and lodging industry is continually challenged by the evolving technology and that larger chains are competing for employees, information, and locations (Garver, 2002). As a result of this challenge, this has forced the industry to mine as much information as possible about the external factors that affect them. By extracting this information via the process of data mining, the industry can achieve a consumer-centered focus and in turn, improve the future of the industry (Piccoli, Spalding & Ives, 2001). 

Statement of the Problem

With the ever-evolving world of technology, the restaurant and lodging industry has to continually keep abreast of the changes. This essentially means understanding the varying ways in which they can engage their customers through digital strategy. The scope of technology, however, is a broad one and this, in turn, presents challenges for the industry in zeroing in on what needs updating and what can be integrated to run the industry smoother. 

While the use of technology has changed the way the world operates in terms of business, it has undeniably caused a ripple effect in the way that restaurant and lodging companies and corporations handle their business processes (Koutroumanis, 2011).  The consequence of technology to the restaurant and lodging industry is that the industry has been slow to keep up with the countless ways in which they can utilize it. Companies and corporations within the industry need to understand how certain types of technology can improve efficiency and effectiveness of their brand, since they may be falling behind in this area (Cobanoglu, Ayoun & Connolly, 2013). Until this occurs, the restaurant and lodging industry will continue to fall behind in the advancements in technology that they could be taking full advantage of.

Scope of Study

The restaurant and lodging industry is immense and multi-layered. As such, technology or more so, social media affords the industry a significant opportunity to have greater customer service and to further develop the growth of the overall industry itself. Hotels and restaurants can effectively and efficiently build their technological notoriety by optimizing their websites with keywords that attract customers to their sites, creating mobile applications for ease of access by the consumer, and instituting a social media strategy via Facebook, Instagram, Pinterest, Twitter and others. Technology, then presents a wide ranging spectrum of ideas that both hotels and restaurants can employ to ultimately engage consumers as much as possible.

Thus, the significant impact of technology provides a considerable amount of opportunities for the restaurant and lodging industry and because of this, its relevance is crucial to the overall understanding of the operations because technology has a wide-ranging application to virtual service models, service support, sanitation, food preparation, safety, security and of course, social media. Moreover, by the industry instituting or rather upgrading their technological prowess, it will benefit as an enterprise through considerable process efficiency and revenue. 

The study specifically assessed social media, smartphones, and other forms of technology and their assistance or hindrance to the restaurant and lodging industry. This study further shed light on the improvements that technology will have on the restaurant and lodging industry. Additionally, this study delineated the current practices of technology within the industry and what is currently working and what is not. Finally, this study attempted to diagnose whether hotels or restaurants, or both, benefit more from technology and how these respective entities can institute that into customer engagement and overall branding.

Research Question

Do the restaurant and lodging industries effectively utilize technology? Additional questions may arise over the course of this study pertaining specifically to certain types of technology and perhaps how these have been instituted so far, their current and future impact. 

This study solidified the effect of technology on the restaurant and lodging industry. In other words, by the restaurant and lodging industry becoming more technologically savvy, it stands to benefit tremendously from said efforts through a myriad of different components. Consumer desires can be furthered as can customer service. The overall development of the various restaurant and lodging brands will achieve better consumer engagement, loyalty and satisfaction as a whole. Several hotels and restaurants are studied in excess to ensure that the research question can be answered. 

Definition of Key Terms

Over the course of this study, several key terms are used that are indicative of technology including data mining, globalization, integration, mobile application, social media, forecasting and the term, technology. These terms emphatically express the improvements that can be significantly made in accordance with the industry. The following definitions are provided for this study.

Data mining: According to Merriam Webster (2013), the practice of searching through large amounts of computerized data to find useful patterns or trends.

Forecasting: To calculate or predict (some future event or condition) usually as a result of study and analysis of available pertinent data (Merriam Webster, 2013).

Globalization: The development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets (Merriam Webster, 2013). 

Integration: The combining and coordinating of separate parts or elements into a unified whole (Merriam Webster, 2013).

Mobile application: A software application that runs in a smartphone, tablet or other portable device (PC Magazine, 2013).

Social media: The online forms of communicating that any individual can employ, which include blogs, microblogs such as Twitter and social networking sites such as Facebook (PC Magazine, 2013). 

Technology: A manner of accomplishing a task especially using technical processes, methods, or knowledge (Merriam Webster, 2013). 

Summary

Koutroumanis (2011) noted that companies and corporations discover a whole host of ideas when they analyze an environment. Hoteliers and restaurateurs should be aware of the various markers that alter and shift an industry. The restaurant and lodging industry must examine the varying societal and technological trends so they know and understand how best to employ their relevance in accordance with these trends. Advances in technology focus on product, procedure and service development and innovation and this can notably affect the industry as a whole. The ability of industry professionals to recognize this is vital to their future in the industry (p.72-74). 

Baggio (2004) analyzed the need for the restaurant and lodging industry to improve their technological prowess and incorporate new ways of providing opportunities for both the consumer and the overall development of the business (p.109). Social media is a very broad concept, yet, while it is a broad concept, it offers significant influence to understanding the factors that influence consumer behavior including information acquisition, needs and recognition, attitudes and opinions, purchasing behavior, evaluation and post purchasing communication (Mangold & Faulds, 2009). More importantly, companies and corporations in all sectors of the economy are aligning their marketing strategy to the concept because of the rich depth of information that can be gleaned from it. It has become a prominent advertising and sales tool and an effective measure of investigating how well an industry is performing.

Assenov et al. (2012) identified the 21st century has been notably impacted by social media. Trends in marketing have changed as a result of the concept as consumers can now communicate with other consumers, and businesses for that matter via this technology. Where previously, consumers had to leave for example suggestion cards, fill out questionnaires and surveys, they can now fully execute their reasoning on the particular business through platforms such as Facebook and Twitter. Consumers are now seeing social media as the best resource for information about products and services as a result of this. Whether it is information about visiting a country that they obtain through Trip Advisor, or coupons for chicken wings at Numero Uno pizza that they obtain through Groupon, social media has tapped into the power of communication (2012, p.325-326). While social media has been the focus of most, if not all sectors, the restaurant and lodging industry has struggled to integrate the ever-changing aspects of it.

The question has often been asked by many restaurant and lodging industry professionals as to where social media lies on the spectrum of the industry and what platforms of social media will work best in the industry. While these questions fully have been asked, they have not fully been explored or researched. Therefore, the purpose of this study was to examine these questions and how they factor into the effect of technology in both restaurants and lodging. Examination of each of the top platforms will be necessary to see which will in essence work best for the industry. Each specific social media platform has both strengths and weaknesses, and as a result of this study, the restaurant and lodging industry will hopefully ascertain which is best to execute in an effort to withstand the changing dynamics of the technological landscape. 

Moreover, the question of which industry within the restaurant and lodging sectors benefits more from social media will be examined. While reasoning suggests both types of restaurant and lodging: hotels and restaurants benefit, is that a valid rationale to have. What data can be mined about that question? What types of information (i.e. articles from scholarly journals, magazines and newspapers) can be looked at and viewed to know whether the reasoning is the result of the expansive nature of social media or if there is validity to that notion.

CHAPTER TWO:  LITERATURE REVIEW

Many research journals and articles were utilized in writing this review, and all were accessed using the Internet. In particular, sources such as Google Scholar, EBSCO, Sage, Questia, and university libraries accessible online were utilized. The search terms used correspond to the keywords and relevant topics discussed in the previous chapter. It is important to note the fact that a sufficient amount of reputable research information related to the impact of technology on the restaurant and lodging industry was easily accessible online. These article contributions can help academics and executives understand the impact of technology on the restaurant and lodging industry while providing an immediate example of the benefit of technology and the internet as a communication platform. The availability of this integral information through technological platforms should not be overlooked.

Technology in the Restaurant and Lodging Industry—an Overview

Organizations typically take advantage of any opportunity available to make sure they remain competitive. Therefore, in the context of the restaurant and lodging industry, there is likewise a need to be aware of existing tools and current trends in the field of technology so they can formulate a winning business plan. The industry is unique in many ways including the way that trends in technology and social interaction impact the services provided. The literature is clear that lodging and restaurants do well to act upon current attitudes, demographics, and technology (Oparanma, et al., 2009; Harrison, 2003). Even a cursory glance at the literature reveals the move toward incorporating social media into the restaurant and lodging industry, especially the rapidly expanding field of social networking (Luebke, 2010). The use of social media is not restricted to one demographic group, as it is adopted by the older Baby Boomers as well as the young Millennials. As Luebke observed, lodging and restaurant customers do not hesitate to post comments about their most recent experiences—both positive and negative—on blogs or other similar websites. This is information that is valuable to industry executives, as long as they pay attention to it and act upon the messages (Luebke, 2010).

Indeed, restaurants and lodging have significantly been impacted by use of technology in their operations in numerous ways (Koutroumanis, 2011). Improved technology increases point of sale convenience and order taking, allowing companies to increase profit margins by decreasing administrative time investment. For example, hand held tablets allow waiters to input orders, review ingredients, and accept credit card payments at a fraction of the time it would take to write it down and take the information to the register (Koutroumanis, 2011). This operational efficiency saves restaurants time, allowing them to serve more customers in a day.  

A specific mobile technology allows patrons to order and pay for their food without speaking with a waiter at all, which significantly improves the customer experience by decreasing wait time and potential order errors (Spence & Piqueras-Fiszman, 2013). The time and manpower it takes to man the phone to answer questions and secure reservations can also be decreased by incorporating online reservations on restaurant websites. This provides a quick and easy process to reserve seating and eliminates the need for a person to address reservation and seating requests. The convenience of reservations in this manner is often integrated into company websites or mobile applications that can be downloaded and used for increased convenience. Interactive wine and table menus can also be used to eliminate the need for waiters to take orders, putting the control and power into customer hands (Spence & Piqueras-Fiszman, 2013). 

Technology and Marketing

The service industry experienced several setbacks over the past few years. For example, Brandau (2009) asserted that economic conditions have negatively impacted the industry because of increased unemployment levels and recession. However, technology can be used as an avenue for strategic planning that helps the lodging industry cater to their target market and understand how to best compete in the industry. Technological advances are necessary in order to build and maintain competitive edge resulting from high service quality and strong guest loyalty (Magnini, Honeycutt & Hodge, 2003). Studies showed that, while up to 70 percent of service sector business stems from repeat customers, 52 percent of restaurant owners felt they were unable to adequately establish a system of customer loyalty (Sanson, 2004). Such discrepancies reflect the gap between service industries and their ability to maintain profit and consistency. 

Technology can help address this gap by gathering pertinent consumer information and applying it to their marketing plan and advertising outlets that will capture the attention and dollars of consumers. Piccoli, Spalding, and Ives (2001) asserted that organizations need to structure the way they think based on how customers think and act. The best way to do this is to incorporate market research technology into service systems in order to monitor and evaluate consumer behavior. Large amounts of compiled data can be “cleaned” and streamlined to provide a glimpse into consumer perspective, habits, and decisions (Piccoli et al., 2001). This information can then be used to improve programs and target specific advertising to concentrated customer segments. Relevant information can also be incorporated into a company’s long term acquisition strategy as a way to maintain consistency and profits.  

Data Mining

One way the restaurant and lodging industry uses technology to understand its consumer base and increase competitiveness is data mining. Whereas information was previously gathered through direct surveys or questioning, data mining is the extraction of implicit, useful data from websites and other online databases. Data mining technology is used to help service companies generate and obtain relevant data that will be helpful to marketing within the travel, lodging and restaurant industries (Wu, Law & Jiang, 2010). The information captured through data mining can be from clients and potential customers, or even from competitor operations. In order to maximize the practical usefulness and incorporation of the information retrieved from data mining, Wu and colleagues noted that web scraping and data extracting are applied to help establish trends and patterns. These data trends can then be used to simulate and predict future surges or decreases in patronage, allowing lodging and restaurant directors to make informed decisions related to prices, marketing, and advertising. 

Data mining makes use of technologies known as machine learning and visualization (Low et al., 2012), as well as statistical methodologies (Mishra, Padhy & Panigrahi, 2012). In effect, data mining extracts information, and then reduces redundancy and complexity in order to produce a streamlined output on which practical decisions can be made. Data mining technology can be applied in multiple approaches in order to support and enhance service sector patronage. The first approach is considered generic and influence-based. In this approach, granular and complex data is scanned in order to evaluate influences between sets of data (Mishra et al., 2012). 

Complex and larger data sets are grouped together in another approach, in order to identify points of data that can form a set or group (Mishra et al., 2012). With this application, technology is used to distinguish between association hierarchies and produce explanations for underlying conditions or logical rules that apply to a specific group. This technology is especially helpful when it is used to evaluate the behaviors of restaurant and lodging patrons (Li, Law, Vu & Rong, 2013). Data mining allows directors to understand multiple levels of groups in order to streamline marketing to appeal to those multiple levels. While viewing a wide compilation of information would be overwhelming to individuals, technology’s ability to mine and classify the data helps break up the data into manageable pieces. 

Time-delay Data Mining 

It collects data for the purpose of harvesting it at a later date (Mishra et al., 2012). This is helpful to service sector directors because it provides a go-to body of data that can be researched based on specific needs. Instead of stating the need and then finding information to evaluate, the information is already available and can be manipulated in multiple formats to meet specific inquiries. As travel times are highly seasonal, lodging industry executives may not have time to commission data mining research (Mishra et al., 2012). Thus, the availability of the data allows quick analysis and evaluation without wasting additional time to obtain it. The time-delay data mining allows for this process, and helps to decrease review time so that executives can make decisions more quickly, significantly contributing to a competitive advantage. 

Restaurant executives also benefit from time-delay data mining because it allows them to review previously compiled data based on a specific inquiry, rather than spending the time to gather data for that specific purpose. Restaurants fluctuate between seasonal traffic, and high and low levels throughout the month (Jiang, Liu, Xiao & Yu, 2012). Although it is not real time, time-delay data mining allows service industries to use data that is not specifically allocated to a certain research question over and over. This process helps to save time and money on consumer research, allowing companies to apply the funds to other technologies that support customer loyalty.

Trends-based Data Mining 

It uses large, complex data sets which have been user-defined. Using this technology, the system is able to report on any changes of the overall data set over time (Li et al., 2013). Trends-based data mining is helpful to restaurant and lodging industries because it helps to define, compare and contrast seasonal patronage as well as forecast sales. By means of this technology, service sector managers can effectively prepare for trends in order to maintain adequate service. Also, Li and associates noted its ability to spur them to increase or lower prices using predictive data mining which offers simulations and forecasts.

As a result of these data mining options, service sectors such as restaurant and lodging industries are able to understand and analyze supply and demand as well as make informed business decisions. This technology offers marketers and service sector executives a general idea about what customers care about so that they can cater their offerings to their target market.

Forecasting

Another technology-based tool utilized by the restaurant and lodging industry is forecasting. This process incorporates a variety of methods, such as artificial intelligence, econometrics, and statistics, to provide the user with a predictive analysis of future trends in the industry as a whole or the individual company specifically (Song & Li, 2008; Weatherford & Kimes, 2003). The literature clearly advised, however, that most social forecasting methods have limitations since they rely on historic data to make a forecast of future activity. What happened in the past related to a restaurant or lodging (good or bad) may not accurately predict what will happen in the future. Since that is the case, Song and Li (2008) advised paying close attention to unique events or economic downturns which would skew the data and distort a forecast model.

The lodging industry realizes the value of forecasting the number of rooms needed over a period of time (despite the stated weaknesses in modeling), since occupancy rates are critical for lodging management (see, e.g., Yang, Pan & Song, 2013). A study conducted by Yang and associates focused on three U.S. lodging chains with the goal of developing a new forecast model that could overcome potential shortcomings. They were able to adapt two separate models (autoregression and high-order polynomial) as well as a hybrid model that combined both. In effect, Yang et al. developed a new method of forecasting that improved accuracy by not relying on any single model. 

Hubbard (2011) also discussed recent research related to aspects of forecasting based on online data in an attempt to understand and predict economic behavior. This process, called online pulse data, is used by retailers, including those in the restaurant and lodging industry, to identify the purchasing history and interests of consumers. The primary methods of collected data in this way involve either compiling detailed queries from search engines or tracking posts on social media websites (such as Facebook, Twitter, Pinterest, etc.). Likely the most widely known example of this tool is Google Trends which provides search data that can be viewed by the public (including management at restaurants or lodging) (Carneiro & Mylonakis, 2009).

In summary, forecasting, especially models that utilize social media tools, are highly valuable for the restaurant and lodging industry since they provide something previously unavailable: the ability to collect real-time data on the behavior and opinions of potential consumers (Yang et al., 2013). Moreover, these newer tools allow forecasters to avoid complete reliance on historical data to predict future trends. Rather, it is now possible to identify what the public wants and needs by means of tracking their comments and opinions via social media.  

Social Media and Society

Social media continues to be widely popular with the general public and that popularity now extends to the use of smartphones. The technology available on the latest smartphones includes an ability to receive notifications from nearby places of interest, such as restaurants (Smart Card Alliance, 2007; Tavilla, 2012). This technology allows consumers to receive targeted information of interest which allows them to be much more selective then was possible in the past (Pope, et al., 2011). As Tavilla (2012) indicated, surveys repeatedly confirm the fact that this technology is extremely popular, including its application for making payments using a smartphone.  

The literature also indicated that Millennials, who make up over one quarter of the U.S. population, prefer using technology in the course of their daily activities, including purchasing choices (Pope, et al., 2011). Additionally, it is apparent from a review of research that many people are moving toward mobile banking, which indicates a potential for accepting additional mobile payment technology (Tavilla, 2012). While older consumers are adopting these technologies, it is clear younger consumers—especially Millennials—are in the forefront of the various ways that social media can be adapted for service or product purchase (Hayashi, 2012).

Social Media and the Hospitality Industry

While it appears that social media and the technology that allows mobile commerce are increasingly popular, the literature does not show a corresponding increase in adoption of this technology across the board in the restaurant and lodging industry, as seen in the Choice Hotels business analysis (Garther Group, 2009; Zmijewska et al., 2007). Indeed, the available information indicates a gap between the potential for use of these tools—including mobile payments and similar applications—and widespread use (Zmijewska et al., 2004). In the restaurant and lodging industry, part of this hesitation could relate to a fear of using the technology, perhaps due to concerns over privacy or unnecessary monitoring of personal activity (Schierz et al., 2010). Much of the literature reveals a very slow movement toward technology acceptance in spite of the underlying characteristics of social network users (Shin, 2010; Pope, et al., 2011).

On the other hand, the potential benefits to the restaurant and lodging industry are clear. While social media can provide direct and helpful information related to data mining, a significant factor is that it allows companies within the service industry to directly communicate through posts and images. This increased interaction and visibility comes at a comparatively low cost in relation to traditional marketing tools (Gundecha & Liu, 2012). Social media technology allows companies in the service industry to effectively extend their reach. They can listen to customer reviews and complaints directly as well as express their gratitude and correct perceptions. 

Social media is not limited to outlet sites like Facebook and Twitter; interactive blogs are also a form of social media and can be effective marketing avenues if managed appropriately. Interactive blog sites that encourage users to leave comments and suggestions help companies in the service industry to understand and manage customer perception (Gundecha & Liu, 2012). Many consumers feel more comfortable airing their grievances anonymously online rather than dealing with a manager or executive face to face. Online blogs allow executives to monitor how customers view their brand so that they can effectively manage it and attempt to meet expectations. This is particularly important in the restaurant and lodging industry because food and lodging is presented as an inherently pleasurable experience. Customers want to feel welcome and appreciated wherever they spend their finances. However, the pressure to please is higher in the guest service sector (Gundecha & Liu, 2012). 

Social media has significantly impacted the ability for companies within the restaurant and lodging industry to promote services and reach customers and potential guests. The direct “company to consumer” and “consumer to company” communication available as a result of social media is helpful in identifying consumer motivations, managing consumer expectations, addressing concerns, and also acquiring relevant data (Khan, 2012). Social media and other forms of web-based technology offer strategic and targeted marketing strategies within the restaurant and lodging industry. Web and social media marketing has revolutionized how companies in the service industry operate by creating accountability, enhancing speed and service immediacy, and providing a platform to farm data related to consumer behavior (Roberts, 2012).   

Multiple business industries and sectors benefit from online marketing and social media (Khan, 2012). Much of the restaurant and lodging industry has come to depend on social media to promote its services, to a large platform of potential customers and guests. As a result, social media provides a significant value in the restaurant and lodging sector by expanding marketing reach and positively contributing to bottom line profits (Khan, 2012). 

Social Media is not a homogenous marketing avenue, but it does provide a foundation for web-based marketing within the restaurant and lodging industry (Roberts, 2012). Social media’s unique features in the digital marketing space create intense marketing opportunities which help to drive significant revenue dollars for companies in the service industry (Roberts, 2012). By allowing businesses to gather consumer information and employ targeted strategies through multiple large platform applications, social media effectively improves multi-level marketing applications on a large scale. In order to remain competitive in the lodging and restaurant industry, it is recommended that companies use strategic social media campaigns to create and maintain high brand visibility in order to establish customer loyalty and facilitate business growth and profits (Roberts, 2012).   

Customer Loyalty

Customer loyalty is increased when executives understand the needs and wants of consumers, allowing them to structure offerings around them. When customers feel that their needs and wants are considered, and that companies have gone out of their way to be hospitable, they tend to be more loyal (Gomez, Arranz & Cillan, 2012). Anything that positively impacts a guest’s experience has the potential to increase customer loyalty. Technology allows those in the service and restaurant and lodging industry to personalize offerings and cater to customers in a way that makes them feel special. 

While the guest experience is a significant part of using technology to enhance customer loyalty, company communication after the experience is almost equally important to facilitating loyalty (Gomez et al., 2012). Email marketing can effectively be used to follow up with customers to thank them for their patronage. This is an old fashioned process that can be done over the phone. However emails allow companies to reach a larger range of people in a shorter amount of time. The process of the follow up allows the company to show appreciation and provide an outlet for feedback. Customers appreciate this process because it makes them feel that their option is important and makes a difference in how companies will manage in the future (Gomez et al., 2012). Incorporating email lists into communication technology within the restaurant and lodging industries also allows companies to send intermittent discounts or preferred customer perks that can spur repeated client patronage. 

Client loyalty cards have also improved with technology. Restaurants and lodging can offer client loyalty cards that can be swiped for discounts or perks (Gomez et al., 2012). Customers feel invested in companies where they have earned some type of reward, making them more loyal to them. In addition, integration of technology means that information data about the customer, such as personal preferences or prior requests can be automatically reviewed and considered when the customer swipes their customer loyalty card. Even when a customer is dealing with a new employee, or someone they have never met before, the employee can treat the customer according to their preferences by reviewing the data that is presented. 

This especially makes customers feel appreciated and catered to (Gomez et al., 2012). It cuts down on redundancy and frustration of the customer having to make repeated request to multiple individuals. It also makes customers feel like appreciated individuals, rather than just an everyday client. This type of personalized service is not available on a large scale basis without technology integration. 

Technology allows companies to gain significant amounts of information on a client in order to make their dining or lodging experience an exceptional one. It allows them to go above and beyond the minimum standards to cater to the interests and preferences of individuals (Kaptelinin & Bannon, 2012). The data set can keep track of special dates, such as birthdays, anniversaries, and graduations, signaling an automatic email or discount offering. Phone calls and physical mail can even be used in conjunction with this tracking technology to speak with customers directly or send out cards and congratulatory offerings automatically. As a result of this knowledge and its application in personalization, technology has a positive impact on restaurant and lodging industries because of its ability to develop and maintain customer loyalty. In addition, as repeat patronage is necessary for companies in the restaurant and lodging industry to remain profitable, increased customer loyalty through technology is viewed as a significant necessity to sustainability (Kaptelinin & Bannon, 2012).

Social Media and the Lodging Sector

Cornell University completed a study of the impact of social media in the lodging industry which suggested that social media has provided a positive impact (Anderson, 2012). Online sites such as TripAdvisor allow customers to provide reviews and share their experiences. In fact, TripAdvisor is a dominant source for restaurant and lodging and lodging reviews, boasting of over 75 million views and over 32 million users (Anderson, 2012). The study found that if a lodging establishment increased its rating by one point (using a five point scale) it could increase prices by over 11 percent and still maintain its occupancy and market share (Anderson, 2012).

Increases in social media and travel site reviews align with increases in lodging patronage (Anderson, 2012). Travel sites are a form of social media because it allows for consumer interaction through postings and ratings. As travel sites essentially extended the reach of word of mouth of satisfied and dissatisfied customers, it has significantly impacted the lodging industry. Poor reviews online can cause potential customers to choose a different lodging option. In addition, positive reviews can increase clientele and profits. Customers trust the experiences of other customers much more than they trust promises in company sponsored advertising, making online travel site technology essential to the success of the lodging industry. Just a one percent increase in positive reviews leads to significant increases in both occupancy and revenue (Anderson, 2012). These numbers and percentages highlight the impact of travel site technology and its effect on the lodging industry. The numerical return in investment in the lodging industry may be more apparent than in the restaurant industry because links and online booking behavior can be captured. It is essential that companies in the lodging industry monitor social media and online travel sites in order to maintain their brand image.

Before the extensive reach of social media and travel site technology, customers who were dissatisfied may have told a few friends of their experiences; now they have the potential to reach millions of people searching for rooms and lodging service. As a result of this, the lodging industry has been forced to be more accountable for their quality of service and rooms. This technology is helpful to both consumers and lodging (Pan, Wu & Song, 2012). Consumers are able to view prices and reviews in order to determine which lodging option fits best. On the other hand, lodging executives get a clear view of what they may need to work on to improve their rating. They can continuously review feedback to determine whether a specific employee is the problem, or whether company policy needs to be adjusted. This technology makes it easier for guests to complain or praise the lodging establishment (Pan et al., 2012). Instead of writing letters to corporate headquarters, consumers can simply vent their frustrations or satisfaction on social media and travel sites quickly. As a result, this impacts the lodging industry by spurring accountability, and consistency in quality service and rooms.

According to McCarthy, Stock and Verma (2010), travelers may be divided into two basic categories: business and pleasure travelers. The differences between these two are significant for the industry, since each group typically makes decisions on where to stay based on very different criteria. Specifically, one study that included nearly 3,000 travelers (pleasure and business) concluded that 40 percent of business travelers book lodging based solely on the direction of their company. Conversely, pleasure travelers use a much broader list of reasons for selecting a particular lodging option, and much of this is derived from interaction with social media (McCarthy et al., 2010). 

Another advantage of social media addressed by McCarthy et al. (2010) was the ability of lodging management to use it for marketing with very little financial output required. As a result, the potential return on investment (ROI) for hotels is significantly higher than almost any other method of marketing, other than word-of-mouth, which costs nothing. Primary benefits for lodging management from the use of marketing via social media include the ability to interact with current and potential clients as well as increased visibility and name recognition (McCarthy et al., 2010). Search engines, such as Google, take into consideration social network presence which implies a significant potential for wider visibility if a lodging option is able to be mentioned and discussed on social media platforms. Furthermore, higher Google ranking insures that a potential customer is more likely to view a lodging option since few Internet users will scroll past the first page or two of results. 

Social Media and the Restaurant Sector

Similar to its use in the lodging sector, social media is also being leveraged by the restaurant industry which realizes the important role it plays in modern culture. In fact, Lobel (2010) noted that restaurant owners and managers are increasingly turning to social media as a critical tool for promoting their offerings. In a review of topics included in most conversations on social media, Pan reported that three subjects were, by far, the most discussed: “Restaurants, Beverages, and Consumer Technology” (2012). In fact, that same research indicated “restaurants” being the topic of conversation on social media approximately one third of the time, with the three leading restaurant topics each being discussed by well over two million users (Pan, 2012). 

After obtaining data like emails and phone numbers, many restaurants attempt to reach customers with text ads that offer discounts and perks (Szkolar, 2013). Customers can opt out of receiving texts, but have incentives to maintain on the text list because of the special offers and promotions they will have access to. Text technology for advertising can be more effective than emails because individuals often receive significant amounts of email per day, making it difficult to stand out. Contextual coupons are also a significant technological wave of the future. This technology enables advertisements or discounts to be sent based on a customer’s location or specific activity (Szkolar, 2013). This has the potential to significantly influence purchase behaviors and increase spur- of the moment purchase decisions. These targeted ads could rely on the time of day, and GPS location of the user. While this could be significant for managers and customers, not everyone will appreciate being tracked for commercial and consumerist purchases.

Some restaurants have even incorporated thumb print recognition into its waiter systems. With a quick swipe of the thumb, waiters can be logged into their accounts, allowing them to see their orders and sales (Szkolar, 2013). As waiters often handle money and credit cards, this thumb print identification system also helps monitor and mitigate potential theft. Changes made in the system have a digital finger print that is tied to one person, creating increased accountability and security.

Data mining technology is also used to capture point of sale and customer information in order to review processes and trends. This allows executives to analyze what areas can be improved upon and develop new best practices that can save time and money. This can be incorporated with Six Sigma project management, creating a data set for executives to review in order to cut out waste and streamline processes. The Cheesecake Factory, for example, is currently working with IBM to create a data analysis system that will mine information from multiple restaurants in an attempt to improve customer service (Szkolar, 2013). By looking at the data as a whole data set, it can be analyzed to determine what changes can be made to improve customer service and operations.

Technology continues to offer tools for improved quality and productivity in the restaurant industry (Pantelidis, 2009). Current applications for technology can even be integrated into ovens and other cooking equipment to report on temperatures and humidity. Additionally, there is available technology which helps maintain consistency in health and safety regulations by ensuring temperature and sanitation standards are met (Pantelidis, 2009). 

Various types of technology are used in hiring and pay management, but also allow restaurant executives to track employee performance. Evaluation reports that detail expectations and help staff understand goals and standards (Pantelidis, 2009). This technology also enables staff performance to be quantified and broken down. For example, point of sale systems can provide numerical data about how many customers an employee serves within a given amount of time, as well as how long it took to service a table and how much in tips or revenue was received (Pantelidis, 2009). This information can be used to train an employee as well as motivate them and the team. Technology in this context provides an objective assessment of how employees are performing, allowing them to work harder or take pride in their accomplishments. Quantification can also decrease evaluation bias that may result from personality conflict because it provides a factual report of the employees’ impact on the business. This can help employees feel respected as their work will speak for itself.  

The Impact of Consumer Reviews

One of the most popular and fastest growing websites for consumer reviews of restaurants is based in San Francisco and called Yelp. Anderson and Magruder (2011) conducted research to determine if positive ratings on Yelp translated into increased business for popular San Francisco restaurants. Based on their study, which included 328 restaurants, the authors concluded that a rating increase on Yelp of just one half-star increased the number of restaurant reservations by nearly 20 percent (primarily for weekend nights). Furthermore, Anderson and Magruder calculated that restaurants able to increase customer count by a minimum of six percent per week benefitted from an increased gross profit exceeding $800 (2011). Such an increase represents a potential of more than $41,000 annually per restaurant. 

An additional study along similar lines was undertaken by Michael Luca (2011), in association with the Harvard School of Business. His study also sought to determine a connection between consumer reviews posted on social media sites like Twitter and subsequent performance of specific restaurants. This study targeted restaurants and social media reviews in Seattle, based on a combination of data from 2003-2009 collected from Yelp restaurant reviews and the Washington State Department of Revenue for restaurants (Luca, 2011). The conclusion was very similar to that of Anderson and Magruder (2011) inasmuch as Luca found a causal relationship between positive reviews on Yelp and increased restaurant revenues during the period included in the study (2011).

Luca’s (2011) results, combined with the conclusions of Anderson and Magruder (2011) provide motivation for the restaurant and lodging industry to pay closer attention to comments on social media, especially those related to quality or service reviews. These data confirm that positive comments translate into increased customer count which, in turn, is readily converted into increased profits and business success. Since Yelp is just one of many similar sites that provide consumers with the ability to provide feedback, it is incumbent on restaurant managers and lodging managers (who can avail themselves of similar sites targeting lodging) to closely monitor these social networks. Not only is it beneficial to recognize a positive trend in comments, but negative comments can also be identified in order to address the issues before these negatively impact the company (Luca, 2011).  

Strategic Technology Applications and Competitive Advantage

The identified technological advancements play a significant role in establishing a competitive advantage in the restaurant and lodging industry. The technological advances allow for improved operational efficiency and have both direct and indirect applications for customer service and customer centric processes. In managing a sustainable and strategic competitive advantage, managers must critically evaluate and make the most of innovations in technology (David, 2011). The role of technology in the restaurant and lodging industry has provided a foundation for “best practices” that companies in the industry must review and apply in order to maintain profitability. 

Miller and Cardinal (1994) performed a study that showed firms engaging in strategic planning had higher levels of performance. Of course, it is not enough to simply purchase and use the latest technology. Every application must have a strategic purpose that leads to the satisfaction of the end consumer. Continuous change and improvement must be a lifestyle and operational foundation in order to successfully use technology to manage customer service, marketing and operations. 

David (2011) asserted that strategy formulation, implementation and evaluation are necessary components to process in order to effectively manage technology and competitive advantage. Strategy formulation requires managers to review the mission, vision and objectives of the company and integrate those into an external and internal analysis of technology use. This will allow managers to understand where they fit in their technological offerings and determine if their current state matches the underlying vision of the company (David, 2011). 

Implementation allows for allocation of financial resources as well as human resources to organize how processes will flow with technology integration. Lastly, strategy evaluation allows managers to identify technological and profit benchmark as well as feedback mechanisms for continuous review and monitoring. This three phase process (David, 2011) allows companies in the restaurant and lodging industry to understand internal capabilities and external challenges in order to meet consumer demand using targeted technologies. In order to obtain competitive advantage, it is essential to manage strategic review of technology and its purpose in the business. Technologies that are implemented without a specific purpose can create redundancy and confusion, leading to decreased employee efficiency and customer satisfaction. When restaurants and lodging management considers using innovative technology, its strategic purpose and ability to contribute to  competitive advantage should be heavily reviewed and forecasted before purchases are made. If this is not done, technological integrations will become a financial burden without providing profitable benefits (David, 2011). 

Applicable Theories

Several possible theories may be used to explain why individuals or companies either decide to utilize new technology or refuse to do so. One of the most widely accepted, especially in regards to the role played by consumers, is called the Technology Acceptance Theory (TAT) or the Technology Acceptance Model (TAM) (Davis, 1989). While typically used to analyze a consumer’s view of technology, in the context of this study this theory may be applied to those in the restaurant and lodging industry who make decisions regarding which methods to use in marketing their respective business. In effect, the same processes which motivate or discourage a consumer from adopting a new technology are similarly applicable to lodging or restaurant management. The TAM is able to quantify the reasons for acceptance or avoidance of new technology (Davis, 1989). In addition, this model will also allow members of the restaurant and lodging industry to understand and predict the behavior of customers, especially in connection with increased use of social media (Pavlou, 2003; Said, 2011; Wang et al., 2011; Zhang et al., 2008). 

One additional theory is also considered applicable here: the Theory of Planned Behavior. This theory is also used to explain why some technology is accepted and other forms of technology are not (Hung et al., 2006). One element of this theory—Perceived Behavioral Control (PBC)—is defined as “perception of ease or difficulty of performing the behaviour of interest” (Azjen, 1991, p. 183). In effect, behavior (such as adoption of a new technology) is determined by the perception of that new technology (e.g., how it may benefit or hinder one’s actions). In many cases, the accepted norms of society will determine the level of acceptance, so in the case of the current study the widespread acceptance of social media would tend to make its acceptance much more likely, based on the Theory of Planned Behavior (Yeoh & Koronios, 2010). Finally, this theory is also beneficial for senior management when considering factors that may influence the success (or failure) of adoption of a new policy or strategy, including the use of technology—such as social media.  

Disadvantages of Technology

The impact of technology on the restaurant and lodging industry is not without drawbacks (Pedersen, 2012). It can be expensive to install and maintain. It is necessary for executives to prepare a cost-benefit analysis in order to determine what range of technology the company can afford and how much it will contribute to an increase in patronage and repeat business. It is also helpful to determine how much the acquired data will be helpful in marketing and advertising when making technological investment decisions. Calculating potential return on investment can help lodging executives make sound technological investment decisions that will increase patronage and not be an unbearable financial burden (Koutroumanis, 2011). Increased dependence on technology also poses a potential problem because there are often few back up options available should a system failure occur. While most systems have generators should the power be compromised, failure within the technology system itself may create expensive repair costs and take significant time and effort to address.

Moreover, no matter how secure systems may be, there is always a chance that hackers can breach security features and firewalls. As restaurant and lodging systems store sensitive identification and payment information, as well as addresses and phone numbers, it is crucial to maintain the security and protection of this data (Koutroumanis, 2011). Regrettably, most technological storage systems cannot always be protected, resulting in a significant drawback to the use of technology in restaurant and lodging industries. Also, Payment Card Industry (PCI) compliance is necessary for restaurant and lodging companies to maintain stability and credibility in the market (Perini, 2011). Compliance to this standard helps to increase cardholder data controls and reduce exposure of sensitive information to mitigate credit card fraud and identity theft. The standard requires service companies who process significant amounts of consumer payment data to build and maintain a secure network, protect cardholder data and maintain a vulnerability management program. They are also required to implement strong access control measures, regularly monitor and test networks, as well as maintain and educate employees about the information security policy. While being PCI compliant does not guarantee security, it can provide a minimum baseline for protection, helping companies to do all they can to secure customer information (Perini, 2011).   

While security cameras do help to mitigate crime and catch thieves and other offenders, they can also be used by offenders (such as past guests or dishonest employees) to spy on unsuspecting guests. Especially in lodging, hidden camera technology can be integrated into clocks, smoke alarms, and even wall holes to illegally record innocent guests and invade personal privacy (Zajic, 2013). This drawback has a significantly negative impact on the lodging industry because it uses technology to degrade, rather than improve the guest experience. Companies can complete period checks of covert video cameras and other equipment by hiring professionals to inspect the premises. While maintenance and management may be able to spot them, professional inspection will help to provide peace of mind for guests. 

On a much broader scale, it is also claimed that the convenience of technology facilitates laziness and spurs a disconnection from personal relationships (Koutroumanis, 2011). Even social media applications, which promote the ability to keep in touch, support online relationships and learning about each other online rather than in person. While being lazy at a vacation or when relaxing at a restaurant is understandable, being less interactive with the real world may not be. Heavy use of technology has also been linked to stress, mental disorders, sleeping disorders, and depression, according to the University of Gothenburg (Pedersen, 2012). Companies in the restaurant and lodging and service industry would do well to find a balance that makes guest experience and stay convenient, without limiting their ability to interact with humanity.

Technology may also negatively affect job security and employment rates. Growing technology replaces traditional service jobs and can leave employees without work. In addition, not everyone will adapt to the new technology (Koutroumanis, 2011). It may frustrate guests if they need to speak with a representative and only technical applications are immediately available. As much of the appeal of restaurants and lodging is a friendly face and atmosphere, companies in the restaurant and lodging industries must find a balance between using technology and real humans to interact with customers. 

CHAPTER THREE:  METHODOLOGY

The use of a meta-analysis, which included the review of previous studies that were based on both qualitative and quantitative elements, was considered one effective methodology to answer the two research questions proposed for this study:

1. Do the restaurant and lodging industries effectively utilize technology?

2. Do the restaurant and lodging industries believe technology is an effective tool for promoting and improving business?

Additionally, two case studies were included—one based on the Carlson Rezidor Hotel Group (specifically, Hotel Missoni Kuwait), with a focus on how that luxury hotel uses technology to provide guest services and promote its benefits to a broader audience, and the other focused on the Irish lodging industry’s use of security-related technology. 

The purpose of this study was to determine whether or not the restaurant and lodging industries are currently examining and utilizing the varying societal and technological trends so they understand how best to maximize their relevance in accordance with these trends. Advances in technology focus on the development of products, procedures, services and innovation and this can notably affect these industries as a whole. Therefore, this study was designed to determine the extent to which the restaurant and lodging industries are taking advantage of these technologies. This study adopted the following hypothesis: Members of the restaurant and lodging industry that take advantage of technology experience a higher level of success than those who do not.

The use of a meta-analysis for collection of data for this research, including studies utilizing both qualitative and quantitative methods, was considered the most logical choice of method. It was important to include quantitative studies, since one suggested limitation of using strictly qualitative data, and one of the reasons why studies based on quantitative research were included in this meta-analysis, is that generalization of findings may create issues, according to Cohen, et al. (2007). Since qualitative studies are exclusive to a specific time and place, their results are often not able to be duplicated. The use of previous studies utilizing both qualitative and quantitative methods was considered appropriate since the latter methods may include the statistical data gathered from a survey and the former may include simple analysis of written notes taken during interviews. The inclusion of both methods for this meta-analysis does not imply a weakness in either qualitative or quantitative methods, but rather was selected in order to maximize the potential of obtaining results that are both verifiable as well as repeatable (Creswell, 2009). Studies utilizing a quantitative method were also included to add to the accuracy and the depth of data collected. Qualitative methods can be seen as a generic term for a number of non-quantitative methods (see e.g. Merriam, 1998). The goal from the outset was to select a fairly equal number of previous studies from both the quantitative and qualitative methodology standpoint to include in the meta-analysis.

(Full document and reference list omitted for preview. Available via download)