Influence of Social Media on Profitability of Hospitality Organisations

Introduction

The 21st century has been dubbed as an information age (Bell and Blanchfower, 2011) and internet in general, and social media in particular are playing an instrumental role in facilitating the spread of information throughout the globe at a rapid speed. Moreover, increasing levels of interactivity of social media platforms is further contributing to the level of their popularity, and nowadays social media has been effectively adopted by many businesses along a wide range of industries as a highly effective marketing and communication platform.

At the same time, the level of use of social media varies between various industries, as well as, individual organisations within a particular industry, and while some organisations are beginning to realise substantial opportunities offered by social media, others are already utilising these opportunities to a full extent.

This essay contains a critical evaluation of the influence of social media on the popularity of a tourism destination. The essay starts with discussions about increasing influence of social media on consumer behaviour. This is followed by critical analyses of potential benefits of social media to hospitality organisations. Moreover, issues related to negative impacts of social media on the performance of hospitality organisations are also addressed in this essay. Essay is concluded by providing a set of recommendations to strategic and marketing managers of hospitality organisations in terms of benefiting from opportunities offered by social media to a maximum extent.

Influence of social media

Increasing influence of social media on consumer behaviour in service sector

Social media can be defined as “websites and applications that enable users to create and share or to participate in social networking” (Oxford Dictionaries, 2013) and social media has had immense impact on personal and professional lives of many people around the globe at various levels.

Types of social media include personal and corporate blogs, social networking sites, photo and video sharing, chatroom, forums, RSS and others. Advantages of social media compared to other sources of information and means of communication include its affordability, visibility, and in some instances the possibility to edit the information even after it has been published (Treem and Leonardi, 2012).

Social media has been dubbed as an eco of collective intelligence (Chandraserkar, 2010) and its Boone and Kurtz (2013) observe positive correlation between the value of social media and the level of its use. In other words, popular social media platforms such as Twitter, Facebook and YouTube have become valuable and influential social media platform due to the fact that these platforms are used hundreds of millions of people on a daily basis.

Services can be defined as “intangible products consisting of acts or deeds directed towards people or their possessions” (Ferrell, 2012, p.11). Major differences between services and manufactured products relate to “intangibility, perishability, heterogeneity and simultaneous production and consumption” (Davis, 2009, p.11). Due to these differences quality perceptions of services tend to be more subjective and prone to the influence of opinions of other people compared to quality perception of manufactured products. Accordingly, it can be argued that the influence of social media might be greater on service sector such as hospitality services, than the level of influence on manufacturing companies.

Moreover, important dimensions of services in hospitality sector include tangible aspects, reliability, responsiveness, assurance and empathy (Loudon et al., 2010). Components of tangible dimension of hospitality services include physical state of facilities and equipments, whereas reliability dimension is closely associated with the levels of dependability and accuracy of value promise. Responsiveness dimension of services offered by hospitality organisations, on the other hand, relate to the level of willingness and enthusiasm of members of staff to respond customer needs in a timely and efficient manner.

Each of these dimensions and their components are evaluated by customers of hospitality organisations in an individual manner, and relevant opinions might be shared on various social media platforms.

Increased level of accessibility and ease of usability of social media can be specified as factors that have contributed to the level of their influence on various aspects of daily life for many people.  At the same time, it is true that some social media platforms are banned in certain countries mainly for political reasons. For example, Facebook is not accessible from most parts of China and YouTube is banned in Pakistan, but such instances are few and they do not compromise global influence of social media to a significant extent.

The value of social media is even greater for small niche, because niche social media platforms are usually built and maintained by specific group of individuals that share a common interest in personal and/or professional levels.

An important unique aspect of social media relates to the fact that unlike other forms of media, in social media users can become authors with no requirements of experience or qualifications. This aspect of social media has a positive impact on the level of its popularity and in some occasions experiences of users of services shared on social media platforms may outweigh service official service reviews published by professional writers in terms of impacting decisions of perspective service users.

The pattern of use of social media by customers of tourism and hospitality organisations can be divided into three stages: pre-trip, during the trip and after-trip use of social media (Fotis, 2013). Customer experiences during each of these stages can be reflected on social media with implications on brand image of relevant service providers in the manners explained below.

Pre-trip use of social media by customers in tourism and hospitality sector involves researching various options of tourism destinations by searching for reviews and other relevant information in social media. Once decision has been made about a specific tourism destination, exploration of social media may continue by customers to evaluate various accommodation options in selected destination.

During the trip use of social media by customers usually involves posting status updates through words, pictures and videos in social networking websites during the process of consumption of tourism and hospitality services. Social networking sites such as Facebook, Twitter, and YouTube can be specified as the most popular social media platforms to be used during the trip by customers of tourism and hospitality organisations.

After-trip use of social media, on the other hand, relate to sharing evaluations and reviews of specific services and organisations on personal blogs, social networking sites and other media platforms.

It is important to note that the manner of the use of social media by customers at all three stages do have implications on performances of tourism and hospitality organisations. This impact can be positive, as well as, negative depending on consumer experiences and a range of other factors discussed further below in greater details.

 

Potential benefits of social media to hospitality organisations

Social media offers benefits to hospitality organisations in various levels. These benefits can be divided into three large categories: marketing, communication, and networking.

Social media platforms provide hospitality organisations with the opportunities of engaging in marketing practices in a cost effective manner. This practice is also known as viral marketing, and apart from cost efficiency the advantages of viral marketing include its global reach in a short duration of time. Moreover, higher level of effectiveness of social media advertising compared to offline media advertising relates to ‘word-of-mouth’ impact.

In simple terms, this impact can be explained in a way that consumers tend to believe the experiences of people who have purchased a particular product or service to a greater extent then claims and promises made on offline media advertisements.

In essence, viral marketing involves the marketing message to be shared within a social network by its members. Certain hospitality organisations have been able to boost their brand awareness to a significant extent with positive effects to the bottom line i.e. profits with their unique approach to viral marketing.

For example, a viral video entitled ‘TJ Elevator Fan: Elevated Hamptonality’ has been developed by marketing team of Hampton Hotels and it features a teenager named TJ who has cerebral palsy and loves elevator rides. In the three-minute video TJ is taken by employees of Hampton Hotel in Ashville, North Carolina to enjoy elevator ride and this video is associated with positive emotions. This viral video has been viewed more than 1.7 million times during a year and its immense positive implications on Hampton Hotels brand image can not be disputed.

Mobile marketing, known as “marketing messages transmitted via wireless technology” (Boone and Kurtz, 2013, p.21) is another social media-related opportunity that can be used by hospitality organisations for revenue maximisation. This approach involves viral messages to be distributed through mobile phones and its popularity have been consistently increasing for the past several years.

Facilitation of communication with organisational stakeholders is another benefit offered by social media and this benefit should not be underestimated. Stakeholders are “individuals with interests, rights, or ownership in an organisation and its activities” (Werner et al., 2012, p.4) and maintenance of effective communication in a regular basis with organisational stakeholders is a critical success factor for hospitality organisations.

Affordability of social media as a means of communication can be specified as one of its main advantages. Hospitality organisations of all sizes can set up and use blogs on official websites, set up and maintain accounts in popular social networking sites and make an effective use of Twitter with minimum expenses. Nevertheless, these channels can be effectively utilised in order to achieve and maintain strategic relationship with stakeholder groups.

A wide range of ‘open-source’ systems, known as ‘wikis’’ as a component of social media can serve as a communication platform for employees of hospitality organisations, as well as, being an effective source of up-to-date knowledge to be used to improve the level of efficiency of various organisational processes.

Facilitation of communication by hospitality organisations with the use of social media is also marked with high levels of persistence (Treem and Leonardi, 2012). This argument can be justified by referring to entries in social media being indexed by search engines, presence of links to past contents in various blogs, presence of catalogue of photos and videos in social networking sites etc.

Social media can offer additional benefits for hospitality organisations as a networking instrument with external parties in a mutually beneficial manner (Moutinho, 2011). Such a networking with the participation of organisations in hospitality sector may aim to find solution to challenges imposed to hospitality sector as a whole. These challenges are many and include damage to tourism and hospitality sector due to the threat of international terrorism, negative impacts of economic recession in North America and Europe, addressing ever-increasing customer expectations and others.

Social media can serve as a communication and collaboration platform for private and public hospitality organisations in order to find solution to challenges facing the industry as mentioned above. However, the potential of social media as a networking platform is not yet fully recognised by hospitality organisations, and a research conducted as an integral part of completing this essay did not find any noteworthy collaboration in this sector.

Negative impacts of social media on the performance of hospitality organisations

Along with advantages discussed above, social media may also have detrimental effects on financial performances of hospitality organisations. Circulation of news about negative consumer experiences on blogs, social networking websites and other social media platforms and damage of such news on brand image is a major disadvantage of social media for hospitality organisations

A case study involving DoubleTree Club Hotel can be mentioned to illustrate negative impacts of social media on brand image of a hospitality organisation. A PowerPoint presentation entitled ‘Yours is a Very Bad Hotel’ has been completed by two business professionals Tom Farmer and Shane Atchison who were dissatisfied with their experience with DoubleTree Club Hotel in Houston, US because they could not be provided with rooms despite a guaranteed reservation through a credit card.

The presentation has been prepared for the general manager of the hotel and it presents inadequacies of DoubleTree members of staff in dealing with the problem in a detailed and humorous manner. It is important to stress that although this presentation has been first uploaded more than a decade ago in 2001, it is still attracting occasional discussions on social media platforms, and therefore its damage to DoubleTree brand is continuing.

Waste of employee time due to excessive browsing of social media marks another disadvantage of social media for hospitality organisations and organisations in other sectors (Witcher and Chau, 2010). According to findings of a recent survey conducted by Safetica, employee monitoring software provider as much as 37 per cent of employees in the UK access social media sites for recreation purposes during work hours. This figure can be interpreted as a massive waste of investments on human resources with obvious negative implications on the levels of profitability.

The damage of the use of social media in workplace in tourism and hospitality sector is even greater when the media is used to share inappropriate behaviour and misconduct at the workplace (Kozak and Baloglu, 2011) as it has been the case with a global airline company Cathay Pacific in 2011. Specifically, photos of an intimate act between a flight attendant and pilot in work settings during work hours have been shared by the former to cause an embarrassment and substantial damage to the brand image of Cathay Pacific.

The incident has even forced Cathay Pacific marketing management to review its campaign slogan of ‘the team who go the extra mile to make you feel special’ in order to avoid humorous association of the slogan with this specific incident (The Telegraph, 2011).

Issues related to data leakage due to staff gossiping though social media also need to be mentioned in this context. Data leakage may relate to details of future marketing campaigns, pricing strategy of the business, amounts of spending on celebrity endorsements or any other valuable information that might be used by competitors in hospitality industry to gain unfair competitive advantage.

Recommendations for managers of hospitality organisations in relation to social media

On the basis of discussions of advantages and challenges associated with social media provided above a set of recommendations can be offered to managers of hospitality organisations. These recommendations consist of making an effective use of social media for marketing purposes, developing original and memorable viral marketing campaigns, introducing social media policy at workplace, and constantly improving value perception associated with services and each of these points are explained below in greater details.

Social media in its various forms such as blogs, social networking sites, photo and video sharing, chatroom, forums, RSS and others need to be used by marketing management of hospitality organisations in an integrated manner in order to  effectively spread the marketing message of value offer proposition.

Moreover, great opportunities offered by viral marketing need to be fully appreciated and acted upon by managers of hospitality organisations. To be more specific, marketing managers are recommended to develop viral videos

The level of effectiveness of viral marketing videos can be increased if they succeed in appealing to positive human emotions such as happiness, excitement, and empathy. Ideally, viral marketing videos need to be prepared with active involvement of external parties with extensive knowledge and qualifications of producing video clips.

It is critically important for managers of hospitality organisations to understand that once the viral video is uploaded on YouTube or other social media platform they would not have any control over the outcome and there would be no chance for revisions. Therefore, marketing managers of hospitality organisations need to ‘get it right’ the first time, and they need to ensure that viral videos would not be misinterpreted due to cross-cultural differences.

As it has been discussed above, the use of social media by employees and managers of hospitality organisations are associated with the challenges of waste of paid time due to excessive browsing of social media and data leakage due to staff gossiping though social media. This problem is dealt with by some organisations through blocking access to social media platforms with the use of relevant software and programs.

However, this approach might not be fully applicable to organisations in hospitality sector, because marketing team might need to have access to social media in order to analyse customer reviews of services, assess consumer perceptions of their value offer and conduct other aspects of their duties.

Therefore, management of hospitality organisations are recommended to be dealing with these issues proactively by introducing a social media policy. The social media policy needs to contain clear and unambiguous regulations about the extent and patterns of use of social media in the workplace.

Requirements and regulations clarified in social media policy may include providing a disclaimer that status updates and posts of employees represent their own viewpoint and do not communicate official position of the hospitality organisation, and employees may not use organisational logo or brand identity along with their posts and status updates on social media.

Moreover, access to official social media pages of the organisation need to be reserved only to highly qualified members of senior marketing team and employees who would like to write about the company on their personal pages on social networking sites need to gain approval from management prior to publication.

Although these recommendations about the design of social media policy may appear as overly excessive, their implementation is desirable by management of hospitality organisations in order to safeguard the image of the company.

Development and maintenance of an effective organisational culture plays an important role in the pattern of usage of social media in organisation in the same way it does to a wide range of other organisational processes and practices. Accordingly, managers of hospitality organisations are recommended to integrate appropriate use of social media by employees within the organisational culture.

It has to be stressed that hospitality organisations can achieve maximum potential impact of social media to their brand image and revenues only through constantly improving value perception of their products and services. In other words, implementation of all other recommendations explained above regarding the use of social media are not going to contribute to the profitability of hospitality organisations of there are fundamental problems associated with the quality of service in the first place.

By the same token, even if recommendations related to the use of social media by hospitality organisations provided above are not implemented an organisation is going to benefit from social media to a certain extent given their services are perceived as a good value for money by customers.

From this perspective, it can be argued that improvement of customer experiences and increasing the extent and level of customer value perception of services is the most important task hospitality organisations need to achieve in order to gain maximum positive impact of the social media.

Conclusions

Emergence of social media as global means of communication and recreation, and a source of information has created a range of opportunities for businesses in hospitality sector and other industries. Managers of hospitality organisations need to understand that usage of social media for the purposes of marketing, communication and networking is not longer optional, i.e. managers may neglect social media at the expense of their market share and long-term growth. This is because nowadays increasing numbers of hospitality organisations are including social media engagement to sources of their competitive advantage and this specific advantage is difficult to compete against with any other marketing method.

There are various forms of social media such as personal and corporate blogs, social networking sites, photo and video sharing, chatroom, forums, RSS and others and engagement in each of these platforms by hospitality organisations need to be facilitated by taking into account their advantages and disadvantages.

Engagement is social media needs to be done on the basis of understanding and addressing potential challenges associated with social media. This essay specifies social media challenges as circulation of news about negative consumer experiences in social media platforms, waste of employee time due to excessive browsing of social media, and data leakage due to staff gossiping though social media channels.

Challenges associated with the use of social media need to be addressed by managers of hospitality organisations in a pro-active way. Recommendations offered for managers of hospitality organisations in this regard include making an effective use of social media for marketing purposes, developing original and memorable viral marketing campaigns, introducing social media policy at workplace, and constantly improving value perception associated with services. Improvement of service quality needs to cover all dimensions of service provision include its tangible aspects, reliability, responsiveness, assurance and empathy in a separate manner.

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