Determinants for productivity improvement in hotel business the case of danang, vietnam

Based on previous researches that are related to productivity improvement, a model is adapted to test the direct and indirect impact of waste reduction, process management, innovation, t

VIETNAM NATIONAL UNIVERSITY, HANOI

VIETNAM JAPAN UNIVERSITY

TRAN TRONG VU LONG

DETERMINANTS FOR PRODUCTIVITY IMPROVEMENT IN HOTEL BUSINESS: THE CASE OF DANANG, VIETNAM

MASTER’S THESIS

VIETNAM NATIONAL UNIVERSITY, HANOI

VIETNAM JAPAN UNIVERSITY

TRAN TRONG VU LONG

DETERMINANTS FOR PRODUCTIVITY IMPROVEMENT IN HOTEL BUSINESS: THE CASE OF DANANG, VIETNAM

MAJOR: BUSINESS ADMINISTRATION

ACKNOWLEDGEMENT

First and foremost, I would like to express my sincere thanks to my parents, my sister Tran Phuong Ly who always support me in any situation regardless of successful ones or difficult ones

Moreover, the successful completion of this thesis might never be possible in time without the help of some persons whose inspiration and suggestion made it happen I want to thank my supervisor, Assoc Prof Phan Chi Anh and Assoc Prof Kodo Yokozawa, the supervision, support, and advice that they gave truly help the progression and smoothness of the program

Thirdly, I would also like to give my gratefulness to faculty members and faculty staff of the Program of Business Administration in particular and the Vietnam Japan University and Yokohama National University in general Without these sources of support and encouragement, I would never be able to fully complete my study as a whole and this thesis specifically

Last but not least, my genuine appreciation goes to all of my dear friends who give me enormous support and references Their unprecedented, countless, and undoubtedly helpful contributions have been a solid stepping-stone to all of my accomplishments

Sincerely,

Tran Trong Vu Long

ABSTRACT

Hotel industry in Vietnam has been explored and dramatically developed before the COVID-19 pandemic However, the hotel industry in Vietnam still has been existed obstacles and problems As a result, the hotel industry in Vietnam has lower productivity compared with other countries in South East Asia The current situation leads to the necessity of improving productivity in the hotel industry This research focuses on the determinants that influence productivity improvement in the hotel business in Danang, Vietnam, a famous tourist destination in Vietnam The data for this study was gathered using a pencil – paper – survey with the responses of 120 hotel managers or manager's representatives in Danang city Based on previous researches that are related to productivity improvement, a model is adapted to test the direct and indirect impact of waste reduction, process management, innovation, technology application, customer focus, employee satisfaction, customer satisfaction on productivity improvement Data were analyzed using linear regression and path analysis with the support of statistical software (free trial version of SPSS 16 and AMOS 24) The findings suggest that only Waste Reduction, Process Management, Innovation, and Employee Satisfaction have an impact on the dependent variable – Productivity Improvement Regarding practical implications, this study proposes several recommendations to improve productivity which helps to improve hotel competition and advantages

Keywords: Hotel industry, productivity, productivity improvement

TABLE OF CONTENT

LIST OF TABLE i

LIST OF FIGURE ii

LIST OF ABBREVIATION iii

CHAPTER 1: INTRODUCTION 1

1.1 Background and necessity of the research 1

1.1.1 Why improving productivity is important in Vietnam context? 1

1.1.2 Why productivity improvement in hotel industry of Vietnam is necessary? 2

1.1.3 Research about productivity improvement in hotel business 3

1.2 Aims of research 4

1.2.1 Common purposes 4

1.2.2 Specific purposes 4

1.3 Research questions 5

1.4 Research scope 5

1.5 Process and methodology 5

1.5.1 The research process 5

1.5.2 Methodology 5

CHAPTER 2: LITERATURE REVIEW 7

2.1 Concepts of productivity 7

2.1.1 Productivity concepts and definitions 7

2.1.2 Productivity measurement 8

2.1.3 Productivity and determinants in manufacturing 10

2.2 The difference between productivity in manufacturing sector and service sector 12

2.3 Productivity in hotel sector 13

2.3.1 Productivity concept in the hotel sector 13

2.3.2 Productivity measures in the hotel sector 14

2.3.3 Determinants for productivity in the hotel sector 15

2.4 Productivity improvement 16

2.4.1 Productivity improvement in hotel sector 16

2.4.2 Determinant for productivity improvement in hotel sector 17

2.6 Hypothesis development 25

2.6.1 Waste reduction and productivity improvement 27

2.6.2 Process management and productivity improvement 28

2.6.3 Innovation and productivity improvement 29

2.6.4 Technology application and productivity improvement 30

2.6.5 Customer focus and productivity improvement 30

2.6.6 Employee satisfaction and productivity improvement 31

2.6.7 Customer satisfaction and productivity improvement 31

2.7 Final proposed research model 33

CHAPTER 3: RESEARCH METHODOLOGY 34

3.1 Sampling and data collection 34

3.1.1 Sample of research 34

3.1.2 Questionnaire design 34

3.1.3 Data collection 35

3.2 Analyzing data plan 39

3.2.1 Scale evaluation 39

3.2.2 Factor analysis 40

3.2.3 Correlation analysis 40

3.2.4 Regression analysis 40

3.2.5 Path analysis 41

CHAPTER 4: DATA ANALYSIS 42

4.1 Data description 42

4.2 Measurement test 42

4.2.1 Reliability test 42

4.2.2 Validity Test 43

4.3 Hypothesis testing 45

4.3.1 Correlation analysis 46

4.3.2 Regression analysis 47

4.3.3 Path Analysis 49

CHAPTER 5: RESULT DISCUSSION 52

5.1 Result discussion and implications 52

5.1.1 Result discussions 52

5.1.2 Research implications 55 5.2 Limitations and future research 56

Reference 58

LIST OF TABLE

Table 2.1: Summary of empirical study about determinants for

productivity improvement in service sector……… 19

Table 3.1: Measuring items for survey……… 36

Table 4.1: Characteristics of the research sample……… 42

Table 4.2: Reliability test……… 43

Table 4.3: Factor analytical results: eigenvalue value (% variance)… 44

Table 4.4: Pearson's Correlation Coefficient……… 46

Table 4.5: Regression analysis results……… 48

Table 4.6: Decompositions of Path Analysis……… 50

Table 4.7: Model Fit Summary……… 50

Table 4.8: Hypothesis tested results……… 51

LIST OF FIGURE

Figure 1.1: Productivity of Vietnam and some other countries

Figure 2.1: Proposed research model……… 33

LIST OF ABBREVIATION

APO: Asian Productivity Organization

GDP: Gross domestic product

OECD: Organization for Economic Co-operation and Development

CHAPTER 1: INTRODUCTION

1.1 Background and necessity of the research

1.1.1 Why improving productivity is important in Vietnam context?

Productivity is one of the most significant contributing aspects to the competitiveness

of any firm and each country in the context of rising international integration Thanks

to increasing productivity, the number of physical products and services of society increases Increasing social productivity is the decisive factor to improve national competitiveness, contributing to expanding international relations and cooperation, promoting integration, etc (Te & Dong, 2013) Productivity enhancement is important

to all developing countries, including Vietnam Because it means rapid and sustainable development, getting out of middle income, and catching up with other countries in the region

Furthermore, Vietnam Government Office (2019), illustrated that Vietnam's labor productivity growth rate reached 6% in 2018, and increase 5.77% from 2016 to 2018 Additionally, the labor productivity of Vietnam in 2018 equals 4.521 USD/labor Moreover, in the report of APO (2019), Vietnam's per-worker labor productivity level, calculated by GDP per worker, is equal to 9.300 USD/worker (GDP at constant basic prices per worker in 2017, using 2011 PPP, the reference year 2017) However, to compare with other countries in South East Asia, Vietnam’s productivity in USD is still lower than others (See in Figure 1.1)

Figure 1.1: Productivity of Vietnam and some other countries in 2018 (Source: Vietnam

Government Office, 2019)

1.1.2 Why productivity improvement in hotel industry of Vietnam is necessary?

The hotel business plays an essential role in the country's long-term development goals, contributing to the aforementioned outcomes However, the productivity of Vietnam is at a very low level compared to Southeast Asia in particular and Asia in general Vietnam's tourist productivity, in particular, is significantly lower than that of other Southeast Asian countries (only 40% of Thailand and 45% of Malaysia) The labor productivity/worker in the tourism industry in 2017 only reached 77 million VND (about 3,400 USD) (Hoang et al., 2019)

Besides, in Vietnam Tourism Annual Report 2019, the Vietnam National Administration of Tourism calculated that the In 2019, the average room occupancy was 52 percent, which was somewhat lower than the previous year (54 percent ) The decline might be due to a bigger rise in supply relative to rising demand, as well as a shorter duration of stay Localities where tourist accommodations have grown rapidly, like as Da Nang, have seen a drop in hotel occupancy, which has fallen below 50% in certain cases

Moreover, the COVID-19 pandemic caused a lot of upheaval in the Vietnamese hotel market Hotels, tour providers, and travel agencies were all significantly damaged during this time, according to CBRE (2020) When break-even couldn't be achieved,

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several hotels resorted to reduce staff working hours, lay off employees, and finally close the hotel temporarily According to Vietnam National Administration on Tourism (VNAT) estimates, CBRE informed that Vietnam's tourism suffered a loss of

$5.9-$7.7 billion in the month of February – April 2020

As a result, exploring and understanding what determinants of productivity improvement in the hotel business are very important and imperative because an increase in productivity can help hotels gain more advantage and competitive in the market

1.1.3 Research about productivity improvement in hotel business

In the world, there has been a variety of research about factors' impact on productivity Some studies discovered the influence of scientific, technological development, human capital, production management, and policies on labor productivity (Dong & Shi, 2019) Some studies also figured out that environmental management and labor productivity have a negative relationship, meanwhile, quality management has a favorable effect on labor productivity (Frondel et al., 2018; Ma et al., 2020) However, the majority of the research focuses on the factors that influence productivity in the manufacturing and construction sectors (Alaghbari et al., 2017; Munyai et al., 2017; Chaturvedi et al., 2018; Wong et al., 2020) or the impact of leadership style on labor productivity (Zehir & Narcikara, 2016; Yan, 2018; Olanrewaju et al., 2020)

Additionally, in the tourism sector, research about factors impact on productivity improvement not as much as the manufacturing and construction sector The majority

of the study is concerned with the influence of market segment, leadership style, and management style (Joppe & Li, 2014; Witt et al., 2010) The other research considered the impact of employee and employer relationship or workforce flexibility on labor productivity (Mill, 2008; Simpao, 2018)

In Vietnam, meanwhile, recent research has concentrated on the influence of factors on labor productivity or how to evaluate labor productivity in the construction industry (Te & Dong, 2013; Huynh & Le, 2016) In the tourism and hospitality field, studies focused on how to measure and calculated service productivity (Hoang et al., 2019; Loan et al., 2009)

Thus, research on what factors influence productivity in the tourist sector is now required for the development of the hospitality and tourist business In order to be able

to pinpoint exactly what are the determinants of productivity improvement in the hospitality sector, it is very important to select survey samples and survey subjects However, due to time and geographical constraints, the thesis could not survey hotels

in many cities Therefore, the author has selected hotels in Da Nang city of Vietnam as the research sample The reason is that Da Nang city owns a series of titles: the most livable city in Vietnam, the top 10 most attractive destinations in Asia, the top 10 emerging destinations of the world… Therefore, Da Nang city becomes an attractive destination, attracting millions of tourists every year That means hotels in Da Nang city are very diverse in terms of ownership type, star class, number of years of operation, and so on As a result, hotels in Da Nang city can guarantee the representativeness of the sample

Based on the research gap in Vietnam and in the world, as well as from the practical needs of improving labor productivity in Vietnamese, the author chooses the topic:

“DETERMINANTS FOR PRODUCTIVITY IMPROVEMENT IN HOTEL BUSINESS: THE CASE OF DANANG, VIETNAM” as thesis research

1.2 Aims of research

1.2.1 Common purposes

With the title “DETERMINANTS FOR PRODUCTIVITY IMPROVEMENT IN HOTEL BUSINESS: THE CASE OF DANANG, VIETNAM”, the purpose of this research is to determine the influence of the variables: Waster reduction, Process management, Innovation, Technology application, and Customer focus as well as the mediating role of employee satisfaction; customer satisfaction on productivity improvement in the hotel sector Based on the findings of the analysis, author will propose several solutions to improve productivity, which allow competitiveness improvement

1 2.2 Specific purposes

• To review the previous researches about productivity in the hotel sector

• To examine the direct and indirect impact of factors (Waster reduction, Process management, Innovation, Technology application, Customer focus, Employee satisfaction; and Customer satisfaction) on productivity improvement in the hotel sector

• To propose solutions to improve the productivity of the hotel sector

1.3 Research questions

• What factors related (both direct and indirect effect) to hotel productivity

improvement?

• How the factors have a direct and indirect impact on productivity improvement

in the case of Danang's hotels?

1.4 Research scope

The study was conducted for hotels in Danang city Information was collected from reports, handbooks, etc., and collected data through surveys between May 2020 and

September 2020

1.5 Process and methodology

1.5.1 The research process

According to the review of some previous studies, this research has adopted those research to build the research model After that, primary data was collected from Danang’s hotels Then, these data are analyzed by SPSS 16 and AMOS 24 (free trial version) software The secondary data about labor productivity in the service sector of Vietnam would be collected from the report and so on

1.5.2 Methodology

1.5.2.1 Data collection method

The primary data, information will be gathered via a pencil-and-paper survey This survey's questions will all be graded on a 5-point Likert scale The secondary data will contribute to the formation of background information Those data will be collected

from policies, reports, and so on

1.5.2.2 Data analysis method

Data is coded, screened, and analyzed on the statistical software as following steps:

• Cronbach’s Alpha coefficient

Part 2: Content and results

Chap 1: Literature review Chap 2: Research methodology

Chap 3: Analysis Chap 4: Finding and conclusion

Part 3: Appendix and Reference

CHAPTER 2: LITERATURE REVIEW

2.1 Concepts of productivity

2.1.1 Productivity concepts and definitions

Productivity, according to Tangen (2005), can be characterized in a variety of ways.Tangen’s research also emphasized that this is a wide phrase whose meaning is dependent on its context Furthermore, Alaghbari et al (2017) conclude that researchers should have different conceptions of productivity due to variations in approach methods It gives rise to a plethora of productivity concepts (Oglesby et al., 2002; Lema, 1995) The research of Tangen (2005) and Alaghbari et al (2017) reviewed some of the definitions of productivity as below:

• Peles (1987) defined productivity as "operation performance," whereas Handa and Adballa (1989) defined productivity as the ratio of outputs of commodities and/or services to inputs of fundamental resources

• Productivity is the most efficient use of resources; the act of creating more items from the same resource boosts productivity Alternatively, to create the same amount of output using fewer resources (Bernolak, 1997)

• Furthermore, Arditi and Mochtar (2000) advocated calculating productivity as total outputs in dollars divided by total inputs in dollars

• Productivity is defined as the efficiency with which components of production, labor, and capital create value (Bheda et al., 2003)

Productivity is also one of the most intriguing research and study subjects As a result, there have been several definitions of productivity Productivity, according to Te and Dong (2013), is a measure of the efficiency of a given application of labor in the production process, characterized by a comparison of an output indicator (production result) with the work required to create it Some academics, on the other hand, feel that productivity is one of the complexity factors As a result, labor inputs and outputs should be mentioned in productivity definitions According to Quyen (2014) productivity is split into two categories: individual productivity and societal productivity (1) Individual productivity is also described as an individual worker's

productivity as measured by the ratio of completed output to time spent working to accomplish those goods (2) The average GDP per employee working in the year is used to determine social productivity, which is a criterion of the system of national statistical indicators Societal productivity is the degree of productivity of all resources

in a company or society as a whole Thus, social productivity may be defined as the working efficiency of a country's whole labor force

Among the many definitions of productivity, the most widely used and popular definition is the ratio of output and input The ratio of output (goods and services) divided by inputs (resources needed to produce output, such as labor or capital) is commonly used to describe productivity (Heizer & Render, 2014) Productivity is understood as the relationship between the outcome of the outputs with the used inputs, denoted by the formula: Productivity = Output / Input (OECD, 2001; APO, 2019) APO (2019) also indicated that two major components must be included in the inputs There are labor and capital, such as buildings, plants, or machinery Furthermore, intermediary inputs like components, materials, or energy are referred to

as inputs in some particular cases

Finally, a variety of meanings of productivity have come to the same conclusion or identified productivity as a ratio of outputs to the combinations of inputs used to produce those outputs (Gidwani & Dangayach, 2017)

2.1.2 Productivity measurement

Measuring company productivity is the capacity of an organization to completely utilize its resources in order to achieve customer satisfaction This is accomplished through providing products and services that meet the expectations of customers in the present market Nonetheless, productivity is an important component in determining

an organization's business performance

APO (2019) illustrated the following way to measure inputs and outputs of productivity Firstly, APO (2019) demonstrated two metrics of popularity outputs (1)

Gross output measurement (based on the value of goods or services produced): utilizing the prices of finished outputs (2) Value-added metric (based on the value of

gross output generated minus all expenditure items): utilizing the value added by

producers to acquired products Second, in terms of input measurement, there are three

main kinds of measurement mentioned: (1) Labor: the number of hours worked by all

people, directly and indirectly, involved in the production of the goods and services

being measured (2) Capital: a term used to describe the flow of services from the available capital pool (3) Intermediates: the total worth of all intermediates utilized,

deflated to eliminate the impacts of price inflation

These types of inputs and outputs lead to four available ways to measure productivity

• Labor productivity = Outputs/(Labor inputs)

• Capital productivity = Outputs/(Capital inputs)

• Intermediate productivity = Outputs/(Intermediate Inputs)

• MFP = Outputs/(Combined labor, capital, intermediates)

APO (2019) also showed the other ways to measure productivity They are (1) Worker Labor Productivity: This is a measure of labor productivity expressed as a ratio of GDP per worker in US dollars (2) Per-Hour Labor Productivity: This is the amount of time worked per hour (3) Total Factor Productivity: GDP per unit of

Per-combined inputs

On the other hand, Quyen (2014) proposed the main following ways to measure productivity

• Productivity calculated by-product: W = Q/T

W: labor productivity of one labor

Q: The total number of output calculated by product

T: The total number of worked labor

• Productivity calculated by value: W = Q/T

W: Productivity

Q = value-added or revenue and T = a total number of employees or total number of times (days, hours,…)

• Productivity calculated by worked time: t = T/Q

t: the number of labor resources used for product (in units of time)

T: worked time used

Q: the number of product

However, in terms of the service sector, especially the hospitality sector, the qualities and characteristics of services have constrained productivity measurement The intangible nature of hospitality services, in particular, implies that objectively defining and measuring the service outputs delivered is challenging The assessment of hospitality inputs and outputs is additionally complicated by the fact that hospitality services are produced and consumed at the same time, as well as their perishability and heterogeneity The number of inputs and outputs, as well as their measurement units, influence the complexity of the connection between them In reality, there are several methods for comparing inputs and outcomes Ratio analysis is the most often utilized

in the hospitality industry (Sigala, 2004)

In terms of productivity metrics in the hotel sector, Mill (2008) stated that productivity indicators often focus on labor effectiveness based on the ratio of outputs and inputs Mill proposes the following methods for measuring productivity in the hotel industry: (1) Payroll ratio; (2) Sales per employee; (3) Sales per hour; and (4) Sales per employee-hour Hotel productivity was studied by Shaheen et al (2018) as staff productivity According to Shaheen's study, employee productivity is defined as the capacity to assist meet customer demand Other financial measures, like revenue, sales, and added value, might have intriguing elements of employee productivity

2.1.3 Productivity and determinants in manufacturing

2.1.3.1 Productivity in manufacturing sector

When researching labor productivity in the Masonry Walls project, Santos et al (2020) defined productivity as the efficiency in changing inputs in outputs that combine with the process's objective On the other side, Dixit and Sharma (2020) proposed that productivity in the construction project is ratio of work's performance or set of outputs divided by inputs for produced outputs Dixit and Sharma also noted, in the construction industry, outputs are weight, volume or area, etc.; inputs are labor, material, or machine

Productivity is the rate where outputs (goods and services) are produced or operated from the inputs used in the production process In APO's definition of productivity, inputs must include two main components There are labor and capital, for example, buildings, plants, or machinery (APO, 2019) Besides, in some special scenarios,

intermediate inputs such as components, materials, or energy are referred to as inputs

On the other hand, in the report of OECD (2001), they also demonstrated that productivity is often expressed as a ratio of a volume measure of output to a volume measure of input used

2.1.3.2 Determinants of productivity in manufacturing

Productivity is a complicated phenomenon that can be described and evaluated in a variety of ways As a result, conditions affecting labor production have been checked and diversified Other methods of determining these variables are likely to exist in each industry (Ma et al., 2020) Several factors influence productivity in general, including the pace of technological and scientific growth, the combination of human resources, industrial structure, supply management, and policies (Dong & Shi, 2019) Productivity, on the other hand, is influenced by a variety of influences in each industry

In terms of the manufacturing sector, Munyai et al (2017) suggested three main

groups of factors that impact on productivity They are (1) physical capital factors (labor, material, machine, location, layout, and finance); (2) technological capital factors (tangible asset; intangible asset); (3) management (planning, organizing, leading, and control) Meanwhile, Fedulova et al (2019) found out that factors of changes in labor productivity are classified into five categories: (1) material and technical factors (2) organizational factors; (3) regional economic factors; (4) social factors; (5) structural factors

Sanchez and Benito-Hernandez (2013) mentioned another specific factor, which impacts on labor productivity of micro and small manufacturing companies in Spain It

is effect of CSR policies on labor productivity According to the findings of the study, social responsibility leads to an improvement in labor productivity in the near run The increment is based on internal factors (process, production, promotion of innovation, and employees care); however, the impact of CSR policies on labor productivity based

on external factors (relationship with stakeholder, environment) did not confirm

In the construction sector, factors, which impact on labor productivity, focused on

diverse research and studies In research of Alaghbari et al (2017), factors that impact

on labor productivity categorized into 4 groups: (1) labor, (2) management, (3) technical and technological, and (4) external Among them, technical and technological factors have the greatest influence on worker productivity

Meanwhile, Nguyen and Nguyen (2018) discovered that the following sets of variables influenced worker productivity on a construction site: (1) Labor, (2) Organization & Management, (3) Motivation, (4) Working time, (5) Labor tools, (6) Working conditions (7) Safety, (8) Project, (9) Natural environment, (10) Social-economic The result is supported by the research of Tam (2019)

2.2 The difference between productivity in manufacturing sector and service sector

When divided by occupation, productivity is also perceived differently between manufacturing and service industries Manufacturing productivity is assessed more easily than productivity in the services industry Service sector productivity analysis is relatively more difficult compared to manufacturing It can be said that the productivity analysis of the service industry is relatively more difficult than that of the manufacturing industry because of the characteristics of the intangible output as well

as the many approaches to the problem

First, there is a fundamental difference when comparing service productivity and manufacturing productivity In the study of Biege et al (2013), services include such characteristics as intangibility, heterogeneity, inseparability, and perishability; making the application of the calculation method of manufacturing productivity in the service lead to low productivity and inaccurate representation The reason is that the product

or service includes the tangible part and the invisible As for intangibility, the customer's reception of the service and its consumption is simultaneous and disappears immediately; Service experience is different from time to time, influenced by human and environmental factors On the other hand, Gallego et al (2015) highlighted that the lack of research about productivity in service can be explained by its nature The final product is ethereal and interactive The absence of materiality of the service offering is referred to as "intangibility" As a result, determining the service output and distinguishing the output from the inputs for service production becomes complicated

The second feature when calculating is that the service productivity approach is diverse, multidimensional, and difficult to focus on as a whole With physical products, the estimation of output is usually not too complicated when the criterion is the number of products that are easy to define and specific, and for services, it is evaluated quite flexibly As a result, the productivity measurement in the manufacturing sector is quite different from productivity measurement in the services sector

According to Nguyen (2020), accurate measurement of productivity is crucial for the management and monitoring of tourism activities, especially in Vietnam However, like other service industries, the calculation of productivity in tourism is also more difficult than in the manufacturing industry in general because of the characteristics of products and services as well as the way input costs are determined and outputs According to Mill (2008), service industry productivity growth has lagged behind that

of manufacturing industries This is particularly true in the hotel business This is due

to a variety of factors Many of the successful operations management strategies used

in the manufacturing industry have not been embraced by hotels (Witt & Witt, 1989) Therefore, in order to assess the current status and come up with solutions to improve productivity for Vietnam's tourism industry, it is really necessary to research and analyze to come up with an evaluation model

2.3 Productivity in hotel sector

2.3.1 Productivity concept in the hotel sector

Productivity is a fascinating and complicated phenomenon in the economy as a whole

As a result, increasing productivity is a difficult but necessary task for hotel and hospitality management According to De Jorge and Suarez (2013), in the hotel industry, assumed productivity is a comparison of how successfully services process transfer input to produce outputs versus the ideal potential for running it

On the other hand, Hwang and Chang (2003) used the general term inputs/outputs to define productivity in hotels in Taiwan However, their inputs/outputs measures included total guest room, number of floors for food and beverage (F & B), the

expense of operating, revenue from F & B, and other sources Besides, Sigala (2004) discovered productivity in both rooms hotel division and F & B She found that productivity in rooms division was determined by the inputs of the number of rooms, payroll of front-office, expenses from administration, and general or demand variability, come up with the outputs of room rate on average, number of room nights, and non-rooms revenue Shaheen et al (2018) looked at hotel productivity as staff productivity Employee productivity is described in Shaheen's analysis as the ability to help satisfy consumer demand Other financial metrics such as revenue, sales, and added value can have properties that are interesting aspects of employee productivity Previously, Houldsworth and Jirasinghe (2006) aimed at the ratio of managers’ physical and piece of work of one or more employees called productivity

In conclusion, in the context of this thesis, the definition for productivity in the hotel sector defined as “the ratio of an input (or inputs) to an output (or outputs)” (Mill,

2008, p.270) Inputs are the resources needed to produce and delivery services and include the expenditure of direct raw material expenses (Sigala, 2004), number of employees (Sigala, 2004); capital (Johnson & Ball, 2006) Meanwhile, outputs are the outcome of the hotel business and include hotel sales and profits (Brown & Dev, 1999); market share (Barros, 2006); competitiveness in the market (De Jorge & Suarez, 2013)

2.3.2 Productivity measures in the hotel sector

In a tourism productivity study, Blake (2006) shows three common measures of tourism productivity (1) output per worker, in this way single computations can be made reducing the value that each worker brings to the company; (2) Second, the output per hour of labor; the advantage of this approach is that it will not be affected the number of hours worked overtime in a period and the results include both part-time work and unused time paid to an employee (3) Third, using Total Factor Productivity (TFP), measure the output per input unit

It can be said that the analysis of tourism service industry productivity is relatively more difficult than that of manufacturing due to its intangible output characteristics and multiple approaches to the problem (Hoang et al., 2019) Simpao's (2018) analysis

backs up this theory She showed that labor efficiency can be measured using a variety

of models and methods However, because the hospitality business is qualitative in nature, assessing outputs in the form of hotel facilities is difficult Inchausti-Sintes et

al (2020) showed that outputs per staff are the most important metric of efficiency in the hospitality industry However, the author confirmed that this metric can deceive and misinterpret a region's efficiency (Coelli et al., 2005)

2.3.3 Determinants for productivity in the hotel sector

For many years, the hospitality industry recorded as the fastest development sector and contributed lots of economic growth So, as a result, there are number of research about what factors impact on productivity, one main motivation dimensions of improvement of hospitality sectors According to Brown and Dev (1999), business segment, leadership, and management style all influence productivity growth Brown and Dev's findings are backed up by Joppe and Li's (2014) study, as well as Witt's (2010) Moreover, skills and human capital, physical capital, a competitive environment, technology and innovation are highlighted as the key roles of productivity (Blake, 2006) Finally, in De Jorge and Suarez (2013) study, these four main determinants of that impact on the level of productivity of hotel are (1) Factor outside the company (for example market competitors); (2) Company characteristic (size, types, investment or localization); (3) Business dynamic; and (4) Public or private property

Mill (2008) proposed four determinants that enhance labor efficiency in the hotel industry Better workspace architecture, the implementation of improved job procedures, more flexible staff scheduling, and organizational flexibility are all things that can be changed Some researchers explored the influence on labor productivity of labor capabilities, the relationship between employers and employment or promotion and incentives (Simpao, 2018)

Park et al (2016) used a different approach to show how internal and external influences affect competitiveness (Sigala, 2004) Internal factors that have the most impact on productivity are the number of workers (Hu & Cai, 2004), working hours, labor flexibility (Kappa, Nitschke, & Schappert, 1997), human resource practices

(Kilic & Okumus, 2005), and labor costs (Sigala, 2004) Additionally, Inchausti-Sintes

et al (2020) also confirmed that seasonality has a negative impact on going down of productivity in tourism (Basu et al., 2006; Smeral, 2003)

2.4 Productivity improvement

2.4.1 Productivity improvement in hotel sector

Improvement of productivity entails not only doing things better, but also doing the right things better (Prokopenko, 1987) Productivity improvement, on the other hand,

is a shift operation To increase productivity, managers must be able to handle transformation, which includes encouraging, causing, and creating change People and manpower structures, beliefs and values, expertise and education, technologies and facilities, goods and markets are all part of it (Prokopenko, 1987; Heizer & Render, 2014)

Improving productivity is essential in every enterprise to improve results (Geum et al., 2011) Productivity is often found to be linked to recommendations for improving productivity obtained by strategic planning (Gold, 1985; Geum et al., 2011) Because productivity management is profoundly rooted in the notion of mass production, most productivity research focuses on manufacturing rather than operations (Filiatrault, Harvey & Chebat, 1996; Johnston & Jones, 2004; Rutkauskas & Paulaviciene, 2005) Despite the fact that the service function has developed from an afterthought to a vital component of the customer experience, few studies have focused on service productivity, particularly service productivity improvement

Improving productivity is critical for meeting a hotel's goals and increasing its effectiveness and performance (Heap, 1992; Reynolds, 2003) Hotel productivity, on the other hand, is widely noted to be lower than that of other firms (Johns & Wheeler, 1991; Kilic & Okumus, 2005) This is due to the hotel industry's distinctive characteristics, which include high construction and fixed costs, labor-intensive architecture, the difficulties of integrating mechanization, and variable demand (Lee-Ross & Ingold, 1994; McKinsey, 1998; Witt & Witt, 1989) Goel (2017) recommended productivity enhancement should not be only the responsibility of one department or area, but rather be a conscious effort made by all employees

Monga (2003) (Research and Programme Officer of the Asian Productivity Organization) proposed that customer focus, quality, innovation, engagement, human resource development, labor-management collaboration, better working conditions, and other factors will help the organization get on the "high road" to productivity and competitiveness improvement

2.4.2 Determinant for productivity improvement in hotel sector

Productivity is a complicated subject, and there are no widely agreed methodologies for studying it in hotels Environmental and quality management are linked to worker productivity, according to certain experts Ma et al (2020) concluded that environmental management has a detrimental influence on worker productivity The result is supported by some previous research results (Lannelonguel et al., 2017; Frondel et al., 2018) Quality management has a favorable impact on labor productivity The result also supports and confirms the result of previous research (Chapman & Khleef, 2002; Heras et al., 2011, and Fonseca, 2015b)

Terziovski (2006) found that using many quality management systems concurrently has a significant and positive influence on quality improvement and customer loyalty Kilic and Okumus (2005) investigated the factors that influence hotel productivity in Northern Cyprus According to their findings, hotel staff recruiting, preparation, meeting guest needs, and service efficiency are the most important productivity drivers, while disasters, infrastructure, promotion, and forecasting are rated low

Higon et al (2010) anticipated that the following elements have a significant impact

on the retail sector's productivity performance: Competition and the composition effect; Planning regulation; Information and communication; Knowledge transfer; HRM; Employee skills On the other hand, De Jorge and Suarez (2013) figured out that the Capacity to implement best-practice technologies in hotel operation management allows the most successful hotels to boost efficiency and push production limits (technical change) The result is backed up by research of Goel et al (2017); the research found out that there are 7 main factors that impact on enhancing labor productivity (Focus, Leadership style, Organization style, Planning, Adaptability, Control and reward, Entrepreneurial culture)

In addition, Monga (2003), proposed a model of productivity and efficiency which make sense of productivity improvement and productivity improvement based on 4 pillars: Customer-oriented organization development; Continuous improvement and technological innovation; Organization of effective production management; Reduce waste in the production process and service delivery

• Develop an organizational focus on the customer: according to Monga,

designing, producing, and supplying goods and/or services to consumers when and where they want them at a reasonable price is what productivity is all about A detailed understanding and analysis of consumer needs and expectations - what they value, how they will use a product, disposal practices, purchase decisions, and other information - will aid in the development of a strategic corporate strategy to optimize customer value

• Continuous improvement and technological innovation: Technology and

innovation are two other important factors that lead to increased productivity Recent advancements and the major impact of information technology on company processes and human progress are proof of what technology can accomplish Employees should be interested in recognizing excess and new abilities, as well as in the development of retraining and redeployment schemes

• Process management: Process management's main goal is to take a holistic

view of the process and align the entire chain of operations to achieve the desired result (customer satisfaction) as quickly as possible Process management creates a mechanism for cross-functional collaboration It aims to accomplish what is most important to customers' needs and develops innovative ways to meet those needs through the use of information technology It ensures that the chain of activities across functions is handled and strengthened from a customer standpoint, as well as maintaining departmental cohesion

• Reduce waste in the service delivery: Anything that does not add value to the

consumer is considered waste The high cost of conducting an operation or purchasing a product does not always imply high worth Bad construction, inappropriate technology, incorrect material selection, carelessness, improper

work practices, poor management procedures, and a lack of regard for waste are all potential sources of waste

2.5 Research Gap and Research Questions

Based on the major literature reviewed above, the summary of major research focused

on the determinants of productivity improvement is presented below (See Table 2.1)

Table 2.1: Summary of empirical study about determinants for

productivity improvement in service sector

No Study Sample and data Methodology Main determinants

1 Kilic &

Okumus

(2005)

Middle and senior managers

of 4 and 5 star hotels of Cyprus

ANOVA test • Staff recruitment

• Staff training

• Meeting guest expectations

• Training

• Employing university graduates

• Knowledge transfer; HRM; Employee skill

4 Geum

et al (2011)

At the Seoul Medical Centre,

120 patients were chosen random

FMEA-based portfolio approach

• Innovation

5 Ojokuku et

al (2012)

20 banks in Negeria

Regression analysis

• Transformational leadership

No Study Sample and data Methodology Main determinants

7 De Jorge

and Suarez

(2013)

Used the Amadeus database and the Spain Hotels Guide as a sample

Total factor productivity index of Malmquist (1953)

• The company’s characteristics (Eg company size, type

of organization, etc.)

• Deviations in business dynamics (Eg degree of technological innovation)

• Public or private property

8

Benavides-Chicón et al

(2014)

232 hotels with three or more stars

Analyze Douglas function

Cobb-• Application total quality management (TQM) systems

• Adoption of the TQM principles

9 Joppe and Li

(2014)

OECD member and nonmember countries

N.A • Physical capital;

Human capital; labor and technology

• Business management (HRM, marketing, OB) have impact on

productivity

10 Singh

(2015)

413 employee in Indian banking sector

Regression analysis and analysis moderating effect

• Transactional leadership

11 Abba et al

(2016)

285 participants from who are academic staff

Regression analysis

• Transformational leadership

12 Zehir and

Narcikara

(2016)

693 respondents from service private sectors

Regression analysis

• Authentic leadership style

13 Park et al

(2016)

43 medium sized hotels in the

UK

Descriptive and inferential statistical, OLS estimation

• Demand variation

• Numerical, functional and zero-contract hour flexible labor management

No Study Sample and data Methodology Main determinants

14 Bouranta et

al

(2017)

153 top-and middle-level hotel-quality managers

EFA, and linear regression analyses

• TQM improves business

performance internally (higher productivity)

15 Lee et al

(2017)

252 frontline employees and customers of a bank in Ho Chi Minh City, Vietnam

Factors analysis;

Reliability analysis

• Employee engagement

• Self-efficacy

16 Regis et al

(2018)

36,000 firms from 97 countries from four regions

• R&D expenditures

• New products seem

to have no effect on productivity

18 Yan (2018) N.A Mathematical

model

• Innovative leadership

19 Garcia-Pozo

et al (2018)

4266 Spanish companies in service sector

Crepon, Duguet and Mairesse (CDM) structural model

• Reducing the environmental impact

beverage departments

Stochastic frontier analysis (SFA)

• Management related factors

on the internal determinants of productivity

Literature review • Human resource

management

• Top management

• Process management

No Study Sample and data Methodology Main determinants

22 Adeinat and

Kassim

(2019)

572 survey questionnaires from 200 shops

in Saudi Arabia

Structural equation modelling (SEM)

• Employee internal service quality

• Employee satisfaction

regressions analysis

• Leadership styles (participatory and charismatic)

Source: Developed by the author The study of what factors influence productivity and how to improve productivity has gotten a lot of attention Numerous studies, on the other hand, have concentrated on the link between human resource practices and productivity or improve productivity Research by Kilic and Okumus (2005) indicated that staff recruitment, training, satisfy guest expectations are the main productivity factors in the hotel The result is backed

up by the research of Kim (2010) The research of Kim (2010) stated that training and university graduates are hired are determinants of technical efficiency and total factor productivity in the Malaysian hotels' context On the other hand, some research studied the important role of human resources in improving productivity, especially the critical role of human capital (Joppe & Li, 2014; Brown et al., 2009) or skill of employee and knowledge transfer (Higon, 2010) or employee engagement and self-efficacy (Lee et al., 2017) While Ruales Guzman et al (2019), after reviewed 150 papers from 1997 to

2017 and other studied about productivity’s determinants, finding revealed that human resources management is one of the main productivity’s determinants

On the other hand, numerous studies indicated that service quality plays as a determinant of productivity and productivity improvement The research of Benavides-Chicón (2014) suggested that total quality management (TQM) and the application of principles of TQM have impact on the hotels’ productivity Bouranta et al (2017) research backs up for the findings Bouranta's research found that TQM characteristics are antecedents of hotel business success and improved productivity in the context of the Greek hotel sector Finally, Ruales Guzman et al (2019) indicated that quality management is connected to productivity, and the conceptions of QM activities were

connected to 89 percent of the internal determinants of productivity, suggesting that

QM is a productivity determining factor

The linkage between leadership and productivity is also focused on by several previous literature Goel et al (2017) proposed that leadership style plays as the main factor for enhancing labor productivity Furthermore, many different types of leadership styles have been shown to have an influence on service sector productivity such as participatory and charismatic (Olanrewaju, 2020), transformational leadership (Ojokuku et al., 2012; Al-Baradie, 2014; Singh, 2015; Abba et al., 2016), innovation leadership (Yan, 2018), authentic leadership (Zehir & Narcikara, 2016)

Moreover, there is a few research of scholars study about the relationship of innovation, or technology application on productivity or productivity improvement Such as the research of Geum et al (2011) indicated that innovation is an important factor when service organizations try to boost or increase their productivity On the other hand, R&D activities raise innovation production and then increase productivity (Garcia-Pozo et al., 2018; Geum et al., 2011)

Besides, the impact of customer focus or process management did not deeply research

by previous studies Normally, customer focus or process management are considered

as a component of TQM when scholars research about the relationship between TQM and productivity (Benavides-Chicón, 2014; Ruales Guzman, 2019) Like customer focus or process management considered as a construct of TQM when scholars research their relationship with productivity improvement, waste reduction normally considered as a construct of lean services when studying about its relationship with hotel productivity (Vlachos & Bogdanovic, 2013; Al-Aomar & Hussain, 2019; Hussain et al., 2019; Goshime et al., 2019)

Furthermore, employee satisfaction not still has the attention of researchers in recent years when research its relationship with productivity More study just focuses on the employee loyalty and productivity (Elegido, 2013; Frempong et al., 2018) Only a few studies have looked at the link between satisfaction of employee and productivity in the service industry According to Adeinat and Kassim (2019), the quality of internal

employee service enhances employee satisfaction, which supports employee loyalty and productivity The findings back up Yee et al (2011) study

In conclusion, prior research on the drivers of productivity or productivity improvement has gotten a lot of attention Several studies studied about the relationship of human resources practices and productivity (Kilic & Okumus, 2005; Kim, 2010; Higon et al., 2010; Lee et al., 2017; Joppe & Li, 2014; Ruales Guzman et al., 2019) or the impact of leadership style on productivity improvement (Goel et al., 2017; Olanrewaju, 2020; Ojokuku et al., 2012; Al-Baradie, 2014; Singh, 2015; Abba

et al., 2016; Yan, 2018; Zehir & Narcikara, 2016) or the effect of quality on productivity (Benavides-Chicón, 2014; Bouranta et al., 2017)

Meanwhile, based on Monga’s model about productivity and efficiency, other factors can have an impact on productivity improvement Especially, in terms of the service sector as well as the hotel sector, the factor about waste reduction, customer focus, process management, innovation, technology application, and the satisfaction of the employee, customers (which are proposed in the Monga model) might have the significant effect on productivity improvement However, there is not any study that examined deeply the role of these factors in the productivity improvement in the hotel context Therefore, this thesis, after investigating major factors influencing on productivity or productivity improvement in the hotel industry will focus on exploring and test the relationship of waste reduction, customer focus, process management, innovation, technology application, the satisfaction of customer and employee on productivity improvement in the hotel industry To state the relationship and try to test

it by data analytics, the thesis will answer the below research questions:

• How waste reduction, customer focus, process management, innovation, technology application, employee satisfaction, and customer satisfaction influence on productivity improvement in the hotel industry?

• Do the factors (waste reduction, customer focus, process management, innovation, technology application, employee satisfaction, and customer satisfaction) have a direct or indirect effect on productivity improvement in the hotel industry?

2.6 Hypothesis development

To measure productivity and productivity improvement in the hotel sector, several studies have been conducted They were mostly focused on the following measurement scales

• Firstly, several studies examined the link between human resource practices and productivity or productivity improvement According to Kilic and Okumus (2005), the primary productivity determinants in hotels are employee recruiting, training, and meeting guest expectations Kim's study backs up this conclusion (2010) Some studies looked into the vital importance of human capital (Joppe

& Li, 2014; Brown et al., 2009), employee skill and knowledge transfer (Higon, 2010), or employee engagement and self-efficacy (Joppe & Li, 2014; Brown et al., 2009; Lee et al., 2017)

• Second, the relevance of service quality in improving productivity is widely acknowledged in the literature According to Benavides-Chicón (2014), total quality management (TQM) and the use of TQM principles have a favorable impact on hotel labor productivity The results of Bouranta et al (2017)'s study revealed that TQM components are predictors of increased productivity and hotel business success in the Greek hotel industry

• The relationship between leadership style and productivity improvement also attracted the attention of the previous literature Various style of leadership proposed as an important determinant of productivity or productivity improvement such as participatory and charismatic (Olanrewaju, 2020), transformational leadership (Ojokuku et al., 2012; Al-Baradie, 2014; Singh, 2015; Abba et al., 2016), innovation leadership (Yan, 2018), authentic leadership (Zehir & Narcikara, 2016)

On the one hand, in the context of the hotel sector, customer happiness has emerged as

a key issue for enterprises and organizations seeking to enhance and improve productivity (Minh et al., 2015) However, there have been relatively few studies that look at the link between customer satisfaction and productivity in the hotel industry (Enaworu et al., 2018;Rew et al., 2020) In contrast, the majority of research focuses

on the link between customer loyalty and productivity, or on the link between customer satisfaction and service quality (Gurau & Ranchod, 2002; Dinh et al., 2011;

Vu, 2012; Minh et al., 2015)

On the other hand, Monga (2003) creates a sense of productivity improvement based

on four pillars: customer focus organization, apply technology and innovation, effective process management, and reduction of waste in service processes Employee satisfaction, in particular, is at the heart of these four pillars This is a recommendation for developing a model that would increase overall productivity However, a few research are looking at the relationship between these parameters and hotel productivity such as analyzing the relationship of innovation, or technology application on productivity (Garcia-Pozo et al., 2018; Geum et al., 2011); examining the effect of customer focus or process management as the constructs of TQM on productivity (Benavides-Chicón, 2014; Ruales Guzman, 2019) Moreover, When it comes to researching the link between employee satisfaction and productivity, academics have not been paying close attention in recent years More research is concentrating on employee loyalty and productivity (Elegido, 2013; Frempong et al., 2018)

Furthermore, various research have been undertaken in Vietnam to investigate the elements that impact manufacturing productivity (Te & Dong, 2013; Huynh & Le, 2016; Tam, 2019) However, research on the factors of productivity in the services industry, particularly the hotel industry, is scarce

To address this need and building upon the literature review and research gap Based

on Monga's (2003) research model, the thesis hypothesizes that waste reduction, process management, innovation, technology application, customer focus, employee satisfaction, and customer satisfaction all affect productivity improvement

Productivity improvement (PI) is proposed as the major dependent variable in this

research context Productivity is defined as “the ratio of an input (or inputs) to an output (or outputs)” (Mill, 2008, p.270) (Inputs include the expenditure of direct raw

material expenses; the number of employees as cited in the literature review Outputs include hotel sales and profits; market share; competitiveness in the market as cited in

the literature review) Then, productivity improvement will be the result of a change in the input-output ratio

On the other hand, process management, innovation, technology application, customer focus, employee satisfaction, and customer satisfaction are proposed as independent variables

• Waste reduction (WR) is defined as eliminating or reduce “anything that does not provide value to the customer” (Monga, 2003, p.50)

• Process management (PM) was conceived as “the application of strategies and tools to a process in order to increase its efficiency, maintain gains, and ensure its consistency in meeting consumer needs” (Anh et al., 2011, p.24)

• Innovation (In) is defined as “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations” (Eurostat & OECD, 2005, p 46)

• Technology applications (TA) is defined as the stage of deciding whether or not

to utilize technology by an individual or an organization (Van et al., 2018)

• Customer focus (CF) is defined as “organizations’ concerns with their (past, present, and future) customers’ needs, wants, and expectations and their strong commitment to understand and satisfy them in a proactive manner for long-term growth” (Bartley et al., 2007, p.489)

• Employee satisfaction (ES) is “the terminology used to describe whether employees are happy, contented and fulfilling their desires and needs at work” (Sageer et al., 2012, p.32)

• Customer satisfaction (CS) conceived as “the feeling of pleasure that a customer experiences after receiving services that meet or exceed the expectations of the customers” (Liat et al., 2014, p.317)

2.6.1 Waste reduction and productivity improvement

Waste reduction may be eliminated and waste reduced in the case of hotel supply chains (Vlachos & Bogdanovic, 2013) Hotel waste consists of both visible (water, oil, and so on) and intangible wastes (errors, delays, etc.).Vlachos and Bogdanovic (2013)

discovered that, despite its tight linkages to enhanced lean implementation and productivity improvement, this key aspect of waste reduction in the hotel supply chain has received little attention According to related literature (Rauch et al., 2016; Bonaccorsi et al., 2011; Suarez, 2013), in the hotel business, lean concepts and practices (with waste reduction as a major aspect) are still in their infancy, and only a tiny amount of study has been conducted to study and assess their implementation (Shah & Gnagi, 2017; Thomas et al., 2017)

Besides, impact on productivity improvement, employees must be reminded of the benefits of eliminating waste, such as reduced waste time, so that they associate satisfaction with lean (Leite, Bateman & Radnor, 2020) Moreover, as a consequence

of sensible resource use, all wastes, including non-value-adding procedures, will be eliminated; resource utilization will be maximized; the product will be supplied on time; product quality will be boosted via creativity, which will raise employees' skills (Goshime et al., 2019) Hence, the two first proposed hypothesis of this thesis are:

H1: Employee Satisfaction is directly related to Waste Reduction

H2: Productivity Improvement is indirectly related to Waste Reduction

2.6.2 Process management and productivity improvement

Eskildsen and Dahlgaard (2000) stated that process management has a direct impact on the employee outcomes that includes employee satisfaction with their job Alvarez-Garcia et al (2015) showed that the factors considered as antecedents of employee satisfaction, namely process management and continuous improvement, are also endorsed On the other hand, Amin et al (2017) discovered that seven soft TQM approaches (including process management) had a substantial impact on improving staff satisfaction and hotel performance

Moreover, in the research of Ruales Guzman et al (2019) process management was found to be one of the most important constructs of QM activities in terms of productivity Additionally, the research’s result of Alinejad and Anvari (2018) showed that in practical terms, process management can be an effective tool for productivity and innovation if the various degrees of process design, control, and development is

tailored to suit the collaboration and competition force From the points of view, the following hypothesis is generated:

H3: Employee Satisfaction is directly related to Process management

H4: Productivity Improvement is indirectly related to Process management

2.6.3 Innovation and productivity improvement

Previous research has identified the importance of personnel in service innovation efforts (De Brentani, 1991; Ottenbacher et al., 2005; Storey & Easingwood, 1998), but given the highly customized service provided in the hospitality field, attention to it is still restricted (Ottenbacher et al., 2005)

There has been little research into the relationship between innovation and satisfaction

of customer in the hotel industry (Wikhamn, 2019) Except for a few studies that examine the association between innovation and non-financial success (Storey & Easingwood, 1998; Tsai, 2017), current research examines the link between innovation and finance and efficiency metrics such as potential revenue and company value Hotels come up with new ideas to deal with the changing landscape A hotel's life depends on a steady stream of customers Hotels naturally consider how their clients would react to innovation A major issue is that the adjustments have no detrimental influence on consumer satisfaction (Wikhamn, 2019)

According to Monga (2003), innovation is a factor that contributes significantly to improving productivity Still, service innovation stems largely from a company-wide creative approach (Agarwal et al., 2003; Cheng & Krumwiede, 2012) Innovative methods in the service industry include designing methods that actively include customers in the process of delivering a service and quickly discovering customer feedback on the service (Hollebeek & Andreassen, 2007) Both productivity and service quality will be improved with such solutions (Rew et al., 2020) The following hypotheses are presented based on the literature:

H5: Employee Satisfaction is directly related to Innovation

H6: Customer Satisfaction is directly related to Innovation

H7: Productivity Improvement is directly related to Innovation

H8: Productivity Improvement is indirectly related to Innovation

2.6.4 Technology application and productivity improvement

No study has looked at the direct link between consumer technology preparation and happiness with luxury hotels, according to Pham et al (2018)'s research in Vietnam, a recently growing nation with significant economic triumphs McKecnie, Ganguli, and Roy (2011) discovered that technology-based business efficiency is greatly linked to customer satisfaction and loyalty Car et al (2019) showed that To sell their goods and services, an increasing number of tourism destinations and hotels are turning to new technology and solutions Technology has a big impact on hotel visitor happiness Cobanoglu et al (2011) measure and track visitor satisfction with existing technology-based facilities, as well as to see how much of an impact they have on overall satisfaction

In recent years, service providers have made significant investments in the advancement of information technologies in order to maximize job performance, sustainability, and the long-term viability of managers’ decisions (Kim et al., 2008) Hotels have employed information technology to boost employee productivity and client loyalty in this way (Ham et al., 2005) Similarly, customer loyalty, global market share, staff productivity, and operation standardization are all improved as a result of

IT, and running costs are reduced (Leung & Law, 2013; Lin, 2016; Cai et al., 2019; Melián-Alzola et al., 2020)

H9: Customer Satisfaction is directly relates to Technology application

H10: Productivity Improvement is indirectly relates to Technology application

2.6.5 Customer focus and productivity improvement

A detailed understanding and interpretation of consumer needs and expectations will assist in the development of a strategic corporate strategy to optimize customer satisfaction (Monga, 2003) In the research of Ooi et al (2011) customer satisfaction and service efficiency were shown to be directly connected to customer focus When research TQM dimensions influence on customer satisfaction, Anil and Satish (2017),