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Major variables in the corporate structure of hotel groups
Int. J. Hospitality Management Printed in Great Britain
Vol. 7 No. 2, pp. 117-130,
02794319/88 $3.00 + 0.00 Pergamon Press plc
1988
Major variables in the corporate structure of hotel groups Paul Slattery Kleinwort Grieveson Securiries Ltd., P. 0. Box 560, 20 Fenchurch Street, London EC3P 3DB, U.K.
and Andrew
Clark
Hotel and Cater&g Research Centre, Huddersfield Polytechnic, Huddersjield, Yorks, U.K.
As hotel chains emerge and grow they naturally evolve a corporate structure. This exists outside of the individul hotels within a group and in organisation charts appears above them in terms of managerialseniority. Corporatestructures arespecific to chains and are notpart of the traditional battery of hotelkeeping skills. Hotel chains, howerter, are growing apace and as concentration of the industry grows so corporate structures grotv. Here we provide an analysis of them. Key words:
corporate structure
hotel groups
portfolio of hotels
technolop)
and size
Introduction Corporate structure is identified as a part of the hotel group system which is separate from the portfolio of hotels. Drawing on approaches to organisation structure principally the Aston Studies (Pugh et al., 1968) a factorial approach to evaluating corporate structure and prime contextual variables was developed. The starting point for the study is to identify the functional jobs which comprise the corporate structure from which we go on to examine major contextual variables (Pugh et al., 1969) and their impact on the corporate structures of hotel groups (Clark, 1987). The 16 groups included in the sample were the largest hotel chains in the U.K., as held on the Hotel Groups’ Database at the Hotel and Catering Research Centre, Huddersfield Polytechnic.
Corporate structure: an overview The corporate structure is defined as one of three elements in an hotel group seen as a system (Fig. 1). The corporate structure is distinct in that the people and activities involved are not concerned with the primary day-to-day hotel activities of renting bedrooms and selling 117
Paul Slatter);
and Andrew Clark
I Fig. 1.
meals and drinks. In addition, they are identified as being outside structure of hotels, often being loosely referred to as head office. The activities that are performed within the corporate organisation
of the organisation are of three types.
(a) Jobs which are within the hotel and catering tradition. These are an extension of line or operations management jobs in hotels, e.g. Food and Beverage Advisor. Operations Director or Executive Housekeeper. (b) Jobs which are of a business orientation. These are concerned with the general business functions and processes which occur in all businesses, e.g. accounting, finance, personnel and marketing. (c) Jobs which are of an ancillary and support nature. These jobs are outside the mainstream activities linked to the business of hotels which are not of the other two categories. They are specialisms which can be provided by outside agencies or which are normally undifferentiated parts of other activities. e.g. promotions and public relations. In all, 23 corporate activities were identified. The activities represented departments distinguished by the organisations as departments. Thus, whilst promotions or public
Table 1. Typology
of corporate
Hotel and catering tradition
activities
Business orientation
Operationsor line management
Accounting and finance Marketing and sales
Food and beverage (catering) management Housekeeping
Personnel
(Central) reservations
and training
Ancillary and support functions Architectureand property Buildings and maintenance Computing
Audit and control
Public relations
(Wages, salaries and payroll) (Research and planning)
Technical
Stores and supplies Security Purchasing,fire and safety Engineering and maintenance
services
Leisure linked promotions
Reception/telephone/cleaner
119
Variables in the corporate structure of hotel groups
Table 2. Corporate
activities
from 76 hotel groups
None Corporate
activity
Accounting and finance Marketing and sales Operationsand line management Personnelandtraining Central reservations Audit and control Purchasing Archite~tureand property Wages, salaries and payroll Buildings and maintenance Food and beverage (catering) Computing Engineering and maintenance Technical services Leisure(linked) Stores and supplies Public relations Research and planning Security Promotions Fire and safety Housekeeping
Departments 1
Job(s) 2
apparent 3
Total occurrence 4
16 14 12 14 1 3 8 3 0 3 2 0 0 3 0 2 1 1 0 1 0 0
0 2 4 1 12 9 3 8 9 4 4 6 6 1 4 7 2 2 2 0 1 1
0 0 0 I+ 3 4 5 5 7 9 10 10 10 12 12 13 13 13 14 15 15 15
16 16 16 15 13 12 11 11 9 7 6 6 6 4 4 3 3 3 2 1 1 1
(0)
(141
(2)
(741
Key: 1 Number of organizations with corporate activity which occurred as a department, 2 Number of organisations which had the corporate activity as the level of jobs but not departments. 3 Number of organisations which had no jobs or departments identified with the corporate activity. 4 = (1) and (2). * Compensatory mechanisms present.
relations normally fell within tne marketing and sales function they were separate in at least one case and therefore identified as a corporate activity. In addition, a separate activity was listed when one or more groups included that activity in a different department from the norm. Hence wages and salaries were differentiated as in one group for which the personnel and training department was responsible whereas the normal was for it to be part of the accounting and finance activity. The 23 corporate activities are listed in Table 1 by type and Table 2 by frequency of occurrence within the sample.
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Paui Starrrry
and Andrew Clark
r Table 3. Breakdown
of corporate
activities
by proportion
of corporate
personnel
Sample Tmean
Sample high
Sample low
33.9% 24.8% 6.5% 65.5%
48.4% 47.2% 71.6% 82.7%
10.2% 6.3% 1.6% 40.9%
Accounting andfinance Marketing and sales Personnel and training All three
The scale and range of activities differed amongst the sample. At the extremes. one hotel group contained as few as six activities while another included 18. Within each corporate activity the number of employees ranged from a one person executive housekeeper in one group to a marketing and sales department of 917 empIoyees in another. HoLvever, three activities stood out from the rest. These three activities were not in the hotel and catering tradition but were business orientated. They were accounting and finance, marketing and sales, and personnel and training and between them they accounted for about two-thirds of corporate personnel in the average corporate structure. The proportions of these functions is shown in Table 3. These three are defined as key corporate processes. Corporate structure: observations
and implications
One important implication of this analysis is for the careers of managers whose jobs are within the hotel and catering tradition. From a total of 1,691 personnel in the sample, only 170 fell ivithin the hotel and catering tradition and 70% of those were reservations staff, Hence. it is clear that there are few corporate jobs for hotel and catering professionals, their careers remain within the hotels. The managers from within hotels who wish to move to corporate management need predominantly to specialise in finance, marketing or personnel. In these fields the hotel and catering peopIe are competing with specialists qualified in these general areas applying their knowledge and techniques to the hotel industry. With the continued development of hotel and catering graduates it will be interesting to note their progression as compared to the specialist in the corporate activity from general industry who moves into the hotel industry. At present the trend favours the latter, as the hotel and catering graduates in the U.K. are comparatively few and still comparatively young. These issues reflect a view expressed by executives of one large company that hotel and catering careers are on the line. Hence, rather than see the corporate structure as a superordinate body. a head office to which one aspires, the corporate organisation functions as a controlling, co-ordinating, servicing and advisory body of specialists. Context of corporate structure: an overview The Aston Studies (Pugh et nl., 1969) identified the following contextual variables of organisations: size, technology, dependence, location, origin and history, ownership and control and charter and purpose. They produced a factorial study covering all of these, however two are focused on here as major variables for hotel groups.
121
Variables in the corporate structure of hotel groups
Since the corporate structure is by definition part of the same hotel group system as the portfolio of hotels, the portfolio is seen as the major contextual influence on it. Without the portfolio there is no rationale for the presence of the corporate structure and without a corporate structure there could be no hotel group just a collection of individual hotels with no corporate focus. Thus corporate structures of hotel groups will be affected by contextual features of the portfolios of hotels, The two variables highlighted here are the size and technology of the portfolios. Size of the portfolio is useful at two levels. Firstly, it can be related to the overall size of the corporate structure. Secondly, portfolio size can be linked to the scale of the provision of key corporate personnel. Technology highlights that hotel groups vary in the complexity of their portfolios in terms of the size and grade of individual hotels and shows how this affects corporate structuring. These two major variables are demonstrated factorially.
Portfolio size as a contextual variable There are many available measures of organisation size. In this analysis four measures of portfolio size are used: number of hotels, number of bedrooms, number of hotel employees and hotel group revenue. Each measure has strengths and weaknesses as staffing arrangements and revenue levels of hotels vary with the grade of establishment. Also, the size of hotels varies along with the mix of accommodation or food and beverage revenue. In the sample of 16 groups. the comparisons of these measures are shown in Table 4, tvhere the ranking for each group and for each measure is indicated.
Table 4. Comparison
Hotel group A B C D E F G H I J K L M N 0 P
of size measures
Size rank by number of hotels 1 2 3 4 5 6 7 8 9 10 11 12 13 14= 14= 16
Size rank by numberof bedrooms
Size rank by numberof employees
Size rank by hotel group revenue
1 2 5 3 6 9 4 7 14 8 12 10 15 13 16 11
1 2 4 8 12 9 3 7 11 5 6 14 15 13 16 10
1 2 5 7 13 11 3 6 14 IO 8 12 16 9 15 4
1”__ (a)
Paul Slattery
Size of the portfolio
ad
corporate
and Andrew
Clark
si:e
The inter-relationship of the systems model and the context to structure links suggests that as the size of the portfolio increases so the size of the corporate structure will also. Taking the number of corporate employees as the measure of corporate size. four ratios can be generated by combining the corporate size with the portfolio measures. These statistics are shown in Table 5 in ascending order. The two sets of figures for each variable were also subject to correlation analysis.
Tab/e 5. Size ratios of hotel groups
Sample
in the sample
Hotels per corporate employee 1
Bedrooms per corporate employee 2
iiotel employees percorporate employee 3
Revenue per corporate employee 4
0.08 0.14 0.15 0.19 0.20 0.25 0.35 0.40 0.44 0.47 0.51 0.61 0.74 0.76 1.72 2.94
16.3 24.3 25.9 27.4 29.9 32.2 32.6 32.8 37.6 40.5 45.7 55.0 55.8 70.5 132.6 138.5
13.7 20.8 22.8 23.0 24.0 24.7 26.3 27.1 28.0 28.0 30.9 32.6 40.0 63.2 109.7 *
280.0 299.0 341.2 341.3 360.4 390.1 403.9 408.8 454.8 495.6 531.9 570.1 624.4 683.9 1356.3 *
0.32
45.9
30.1
454
0.42
35.2
27.1
409
Tmean Sample median
1 2 3 4 *
Note: each ratio is listed in ascending order. Key: Number of hotels + number of corporate employees. Number of bedrooms + number of corporate employees. Hotel group employees + number of corporate employees. Hotel group revenue + number of corporate employees (fOO0). One case excluded as data was not available.
Variables
The correlations number number number revenue
of of of of
between
in the corporate
the size measures
structure
123
of hotel groups
were:
hotels and number of corporate employees R = 0.653 bedrooms and number of corporate employees R = 0.905 hotel employees and number of corporate employees R = 0.958 hotels and number of corporate employees R = 0.971.
These correlations indicate that the trends cannot reasonably be explained by chance, as for a sample of 15 the critical value at the 5% confidence level is about 0.5. The hotel ratio has the weakest predictive value because the average size of the hotels in each group varied within the sample from 43 to 383 bedrooms per hotel. However, at this level the statistics show that the portfolio measures can be used as predictors of corporate size. (b) Size of the portfolio ard sire of the key corporate processes At a different level the portfolio size measures can be used in combination with the key corporate processes in order to predict the size of the various corporate departments. Drawing on a principle of direct supervision, corporate workload figures are generated by dividing the appropriate portfolio measure by the respective corporate measure. The workload figures are not linked to performance here, however if a ratio is high or low it is valid to ask if the process is being effectively operated. Because the different corporate processes deal with different aspects of the business the processes statistics were combined with appropriate portfolio measures. Hence the following workload ratios were devised: accounting
and finance
marketing
and sales
personnel
and training
= hotel group revenue per corporate accounting and finance employee = number of bedrooms per corporate marketing and sales employee = number of hotel employees per corporate personnel and training employee.
The statistics for each of these workload figures are shown in Table 6 in ascending Correlation analysis of the components of the ratios produced the following: corporate corporate corporate
accounting and revenue marketing and bedrooms personnel and employees
These correlations
order.
R = 0.985 R = 0.918 R = 0.950.
are also well above the critical value of 0.5.
Contextual variable size: observations
and implications
All of the statistics represent normative relationships and can produce predictive indicators on that basis. Hence they do not detail what is done or how it is done and the ratios in Tables 4 and 5 show that there are different responses. However, that said, the correlations suggest that causal models can be produced linking portfolio measures of size both at the level of the whole corporate structure and key processes. These relationships have implications particularly relevant in times of change. The ratios provide a means of
124
Paul Slattery and Andrew Clark
Table 6. Workload
Sample
Tmean
Sample median Correlations
ratios of corporate
processes
Accounting and finance (f) 1
Marketing and sales (bedrooms) 2
Personnel and training (employees) 3
777,100 877,600 1,019,300 1,092,900 1,I 27,300 1,145,200 1,288,900 1,330,100 1,393,800 1,405,000 1,493,900 1,510,700 1,625,900 2,450,300 2,800,OOO *
55 82 85 97 100 105 134 135 139 171 210 244 460 488 597 2,216
179 242 300 313 370 406 417 430 433 450 460 493 563 948 7,020 *
1,366,OOO
218
448
1,330,000
137
429
0.985
0.918
0.950
Key: 1 Accounting and finance: group revenue +- corporate accounting and finance employees. 2 Marketing and sales: numberof bedrooms + corporate marketing and sales employees. 3 Personnel and training: hotel employees + corporate personnel and training employees.
measuring the impact of developments in either the corporate structure or the portfolio, and as such are representations of the inter-relationships of the two parts. This means that change in one part such as the acquisition or disposal of hotels can be linked to the corporate structure in order that compensatory changes can be introduced. Depending upon the nature of change the workload ratios can be used to target thresholds where, for example, a corporate department uould be considered to be at the limit of productivity. Thus, when single hotels are purchased intermittently the affect on the workload would be very different to proportionately significant acquisitions such as the Ladbroke takeover of
Variables in the corporate structure of hotel
groups
13
Comfort Hotels International. or the Norfolk Capital Hotels acquisition of Celebrated Country Hotels. The ratios need to be viewed in each individual group in the context sf the link between the two parts of the hotel group such that the type of corporate control achieved and the level of hotel involvement or self-support is included in any analysis. However, the basic statement can be made that given a change in size of a portfolio of X proportions, the statistics from this sample provide the basis of the changes required in the corporate structure in order to retain the normative balance. Conversely with the systemic interdependence of the hotel group, corporate capacity to cope with portfolio change can be planned whereby the corporate structure could be put in place before any portfolio change took place. These considerations are tempered however by the fact that size is but one contextual variable and that it must be considered in conjunction with others such as technology to which we now turn.
Portfolio technology as a contextual variable Various conceptions of technology exist. Hotels Lvithin hotel group portfolios vary in terms of their grade and size. It is to be expected that different mixes of hotels place different constraints and requirements upon the corporate structure. As the complexity of the portfolio increases, so the complexity of the corporate structure should also in order to retain a comparable level of control. The variations in the types and sizes of hotels can be expressed in terms of a measure of technology which can compare individual units and groups. Hotel technology is not just the hardware of the kitchens, restaurants, bedrooms and bars but includes every aspect of the facilities, products and services and the means of production that are available in the hotels. Following Slattery (1976) it can be said that hotels of a higher grade, such as a five star hotel compared to a three star hotel, are technologically more complex. To this it can be added that of two comparably graded hotels the larger would be expected to show a higher level of technological complexity since the range and complexity of facilities and services and the basis of production changes.
Technology
of the portfolio
In order to measure the technology of an hotel the size of each is combined with its grade. Since the Automobile Association annually provide the most extensive U.K. grading scheme this was used. The formula for the technology score of an hotel is: (‘AA’ grade + 1) x (number of bedrooms) e.g. Tower Thistle Hotel = 4*, 826 bedrooms Technology score = (4 + 1) X 826 = 4,130. This fundamental measure does not account for location or usage factors, however it provides a suitable base for these other details to be added as necessary.
1’6
Paul Slattsry and Andrew Clark
From the basic individual
hotel score three measures
can be derived:
total technology score of the portfolio; average hotel technology score; portfolio complexity indes. The total technology scores and the average hotel technology scores are shown in Table 7. Each is descriptively useful as it facilitates comparisons of groups demonstrating. for example, the significant variance between the estreme cases which showed, at the low end, an average hotel score of 119 points to one with 1.992 points. Overall within the sample the average hotel had a score of 409 points (or approximately 100 x 3* bedrooms). These figures can be used in examining the types of hotel in portfolios. however since they are average statistics they hide complexity which. for example. could make up the sample average of 409 points by tno hotels of 100 and 41s or equally t\vo hotels scoring 100 and 71s. Therefore, the technology complexity index was developed lvhich compares the range of the hotel scores in the portfolios to the sample average hotel score. The sample average is used as an industry indicator of complexity. Alternatively one could use the groups own
Table 7. Technology
scores for hotel groups
Average Hotel group A B C D E F G H
I J K L M N 0 P
1 2 3 4
Total technology 1 1,494 3,067 5,260 5,376 8,006 9,968 10,250 11,954 13,272 15,495 15,990 17,998 21,297 22,181 28,720 86,585
hotel technology 2
Portfolio high
149 341 376 158 320 237 1,139 1,992 309 470 432 327 426 569 167 453
350 560 1,600 460 835 1,250 1,455 2,925 1,768 2,065 1,750 1,265 2,804 4,130 4,215 4,550
low 3 35 159 50 36 48 26 750 560 70 57 30 50 17 40 12 18
Technology complexity index 4 0.77 0.98 3.79 1.04 1.92 2.99 1.72 5.78 4.28 4.91 4.21 2.97 6.81 10.00 10.28 11.08
Key: Total technology = sum of each hotel score, i.e. C [(‘AA’ + 1) x (rooms)]. = 1 + number of hotels for each group. High = highest score in each portfolio; low = lowest. (High - low) + (sample average hotel score).
Variahizs in the corporate structure of hotel
127
groups
average in order to measure the internal complesity. This uould be particularly relevant nhere groups had hotels which were either comparatively large or small in relation to the sample average. The technology complexity index is calculated as follows: (highest hotel technology score) - (lowest hotel technology score) sample average hotel technology score The complexity index is also shown in Table 7 with the groups listed in terms of the lowest to highest total technology scores. The complexity index can be divided into three types which reflect the nature of the portfolio: (a) Relatively homogeneous. i.e. less than 2.0: (b) Intermediate complexity. i.e. 2.0-6.5; (c) Relatively heterogeneous, i.e. greater than 6.5. Using this typology the groups in the sample at the time of the research (198315) fell into the categories shown in Table 8.
Table 8. Typology of sample by technological complexity Homogeneous Anchor Hotels Prince of Wales Hatels NorfolkCapital Hotels Holiday Inns (CHIC) Stakis Hotels
intermediate Rank Hotels Comfort Hotels lnternat~onal Mount Charlotte Hotels (1984) Ladbroke Hotels Queens Moat House Hotels Embassy Hotels Swallow Hotels
Heterogeneous Trusthouse Forte Hotels Best Western Thistle Hotels Mount Charlotte Hotels (1985)
The index shows that portfolios of larger hotels such as Holiday Inns (CHIC) average size 228 bedrooms, need not be considered a complex group because of their homogeneity and that Queens Moat Houses, with 55 hotels at the time, scored just 2.97 showing that a relatively large number of units need not imply complexity. However, reference to Table 7 indicates that generally as the total technology score increases (highly correlated to number of bedrooms; 0.993) then the technological complexity tends to increase.
Contextual variable technology: observations and implications Total technology was correlated to the size of the corporate structure with a value of 0.917 which was marginally better than the number of bedrooms (0.907). Hence the technology score could be used to predict the scale of corporate requirements. However, more important is the use of the typology of complexity and the corporate implications drawing on the different types of hotels within a portfolio to structure that portfolio and analyse it. The more homogeneous the portfolio the simpler the corporate control processes would be as the level of variation amongst the hotel operations was lower. This reaches the
123
Paul Slattery and Andrew Clark
extreme of having all like sized and graded hotels (a pure brand) vvhich would score zero. The significance is that of two groups of comparable size but differing complexity the least complex would require fewer corporate resources to maintain the same level of corporate control. Conversely with a comparably sized corporate structure the homogeneous portfolios could achieve a higher level of corporate control. The homogeneity reinforces this latter point in that as the hotels become more alike. so the areas for comparison and the need to maintain comparable services and facilities for the market place increase. Thus homogeneity eases the problems inherent in bespoke control yet also provides opportunities for additional standards, procedures and specialisms in the corporate structure. This formulation is not only useful at the general portfolio level but can also be used to identify potential for divisionalisation within large portfolios. It may be the case. for example. that the inter-relations between a flagship hotel in London or iManchester and the rest of a generally provincial hotel group are different because the hotel operations are so much different. Thus, Swallow Hotels with the London Swallow International and Embassy Hotels with the Picadilly Hotel in Manchester could operate these hotels with different forms and levels of corporate supervision from the rest of the portfolio. The technology complexity model also suggests that neither grade nor size ought to be considered independently as principles of divisionalisation. The logic that links the more pervasive forms of corporate control to the homogeneous portfoIio has the corollary of a heterogeneous portfolio being less conducive to corporate control. The extreme case would be where the corporate function is to service the requests and needs of the hotels by providing expertise and resources not otherwise available to individual hotels. These potential variations in the inter-relations between the two parts of the group have a key role to play in the type of people and potential careers that operate in the hotels. The homogeneous portfolio with the all penasive corporate influence needs hotel employees to follow the rules and fill the squares in the organisation structure. The heterogeneous portfolio with looser corporate control and fewer rules. regulations and standard procedures requires a management of comparative entrepreneurship as compared to a bureaucratic requirement in the highly structured and standardised operations.
Contextual variables outside of size and technology Size and technology have been the subject of study in organisation structure as individually all-determining variables (Meyer, 1972). In this instance. they have been demonstrated as being indicative of the corporate requirement on a factorial basis. However, the factorial study misses much detail that its attractive decisiveness hides. Thus. whilst the size and technology variables have been shown to have major and general influences, other contextual variables play intervening roles. Location and dependence (i.e. suppliers and competition, etc.) are two such factors in the hotel industry. History and origin are also determinant in some cases, an example of which illustrates how the origin can affect current corporate structure. Two cases make this point. Queens Moat Houses has grown at such a rate from a vast diversity of other group hotels that there is not enough time to fully assimilate new acquisitions into any form of extensive corporate culture. The result is that a few but direct controls are used to link the hotels to the corporate structure whibt
Variables in the corporate structure of hotei groups
129
most of the hotel’s functions are performed by the unit employees. Corporate advice is proferred on request and outside agencies service some functions in order that the corporate structure retains maximum flexibility with minimum resources. The second example demonstrates history and origin in that the three brewery owned hotel groups, Thistle Hotels, Swallow Hotels and Embassy Hoteis had explicitly titled liquor stocktakers or stock controllers reflecting their parental controllers and their initial formation from the tied states of pubs. These contextual details reflect the individual nature of the concerns regarding the corporate structuring where in reality corporate strategies vary and the use of comparable resources varies. Yet this does not detract from the fact that size and technology as outlined here can be seen to provide general rules for the structuring of corporate organisations, although any one group would not be expected to match an average profile.
Conclusions The jobs in corporate structures of hotel groups are mainly orientated towards general business and do not emphasise the hotel and catering tradition. As a result, careers for hotel and catering people stop at hotel level with the exception of a few Operations or Area Directors. The alternative is to specialise in one of the three key processes: accounting and finance, marketing and sales or personnel and training. This can resuit in a ‘career in the line’ view that sees the corporate organisation as a staffing part of the group concerned with control and strategic planning for the operations. Portfolio size and portfolio technology are indicative of corporate size. In addition, portfolio size is related to the key corporate processes. As a result of these normative factorial relations, hotel group change can be evaluated, anaIysed and operationalised in ways which permit the maintenance of equilibrium of the hotel group system. These measures relate also to the fact that the jobs in hotels are different in kind to the corporate jobs. Hence, as the level of corporate presence and activity falls off so the business acumen of the hotel management and staff needs to be compensatory and thus greater. The complexity of a portfolio is contingent upon the relations between it and the corporate activities. This model of complexity provides a means by which the hotel group can be evaluated. It also provides a model in which usage and location factors can be integrated to facilitate analysis and explanations whilst other contextual features such as ownership or history can also be added.
References Automobile Association (annually). Guide to Hotels and Restaurants in Great Britain. Burns, T. and Stalker, G. (1968) The Management of innovation. Tavistock, London. Child, J. (1972) Organisation structure and strategies of control: a replication of the Aston studies. Aston Studies Quarterly 17, 163-177. Child, J. and Mansfield, R. (1972) Technology, size and organisation structure. Sociology 6, 369-393.
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Paul Slatrcry
and Andrew
Clark
Clark, A. W. (1957) A comparative analysis of corporate structures of hotel groups in the U.K. M.Phil. Thesis. Huddersfield Polytechnic. Kimberley. J. R. (1976) Organisational size and the structuralist perspective: a review. critique and proposal. &ton &dies Quarterly 21. 571-597. Meyer, hf. W. (1972) Size and structure of organisations: a causal analysis. Am, Sm. Rev. 87, Pugh, D. S. etni. (1965) Dimensions of organisation structure. rlsron Studies Qmzrreri~ 13,65-106. Pugh, D. S. etnl. (1969) The context of organisation structure. rlsrorr Sr~dies Qmzrreri~ 17,91-111. Slattery, P. (1976) The hotel as an organisation. hl.Sc. Dissertation. University of Strathclyde. 1Voodward. J. (1968) Jlmmgement am! Trchology. Problems in Itdustry, .l’o. 3. HRISO.
About the Authors Paul Slattery is Research Manager for Hotel, Catering and Leisure Industries for Kleinwort Grieveson Securities, The Stockbrokers. Previously he was responsible for research in Hotel and Catering hlanagement at the Hotel and Catering Research Centre. Hudderstield Polytechnic, where the work for this article was undertaken.
Andrew Clark gained his first degree
in Hotel and Catering Administration from Huddersfield Polytechnic. He has subsequently worked in the Hotet and Catering Research Centre on a number of projects. In June 19S7, he was awarded an M.PhiI. for his work for the study which forms the basis of this article.
Vol. 7 No. 2, pp. 117-130,
02794319/88 $3.00 + 0.00 Pergamon Press plc
1988
Major variables in the corporate structure of hotel groups Paul Slattery Kleinwort Grieveson Securiries Ltd., P. 0. Box 560, 20 Fenchurch Street, London EC3P 3DB, U.K.
and Andrew
Clark
Hotel and Cater&g Research Centre, Huddersfield Polytechnic, Huddersjield, Yorks, U.K.
As hotel chains emerge and grow they naturally evolve a corporate structure. This exists outside of the individul hotels within a group and in organisation charts appears above them in terms of managerialseniority. Corporatestructures arespecific to chains and are notpart of the traditional battery of hotelkeeping skills. Hotel chains, howerter, are growing apace and as concentration of the industry grows so corporate structures grotv. Here we provide an analysis of them. Key words:
corporate structure
hotel groups
portfolio of hotels
technolop)
and size
Introduction Corporate structure is identified as a part of the hotel group system which is separate from the portfolio of hotels. Drawing on approaches to organisation structure principally the Aston Studies (Pugh et al., 1968) a factorial approach to evaluating corporate structure and prime contextual variables was developed. The starting point for the study is to identify the functional jobs which comprise the corporate structure from which we go on to examine major contextual variables (Pugh et al., 1969) and their impact on the corporate structures of hotel groups (Clark, 1987). The 16 groups included in the sample were the largest hotel chains in the U.K., as held on the Hotel Groups’ Database at the Hotel and Catering Research Centre, Huddersfield Polytechnic.
Corporate structure: an overview The corporate structure is defined as one of three elements in an hotel group seen as a system (Fig. 1). The corporate structure is distinct in that the people and activities involved are not concerned with the primary day-to-day hotel activities of renting bedrooms and selling 117
Paul Slatter);
and Andrew Clark
I Fig. 1.
meals and drinks. In addition, they are identified as being outside structure of hotels, often being loosely referred to as head office. The activities that are performed within the corporate organisation
of the organisation are of three types.
(a) Jobs which are within the hotel and catering tradition. These are an extension of line or operations management jobs in hotels, e.g. Food and Beverage Advisor. Operations Director or Executive Housekeeper. (b) Jobs which are of a business orientation. These are concerned with the general business functions and processes which occur in all businesses, e.g. accounting, finance, personnel and marketing. (c) Jobs which are of an ancillary and support nature. These jobs are outside the mainstream activities linked to the business of hotels which are not of the other two categories. They are specialisms which can be provided by outside agencies or which are normally undifferentiated parts of other activities. e.g. promotions and public relations. In all, 23 corporate activities were identified. The activities represented departments distinguished by the organisations as departments. Thus, whilst promotions or public
Table 1. Typology
of corporate
Hotel and catering tradition
activities
Business orientation
Operationsor line management
Accounting and finance Marketing and sales
Food and beverage (catering) management Housekeeping
Personnel
(Central) reservations
and training
Ancillary and support functions Architectureand property Buildings and maintenance Computing
Audit and control
Public relations
(Wages, salaries and payroll) (Research and planning)
Technical
Stores and supplies Security Purchasing,fire and safety Engineering and maintenance
services
Leisure linked promotions
Reception/telephone/cleaner
119
Variables in the corporate structure of hotel groups
Table 2. Corporate
activities
from 76 hotel groups
None Corporate
activity
Accounting and finance Marketing and sales Operationsand line management Personnelandtraining Central reservations Audit and control Purchasing Archite~tureand property Wages, salaries and payroll Buildings and maintenance Food and beverage (catering) Computing Engineering and maintenance Technical services Leisure(linked) Stores and supplies Public relations Research and planning Security Promotions Fire and safety Housekeeping
Departments 1
Job(s) 2
apparent 3
Total occurrence 4
16 14 12 14 1 3 8 3 0 3 2 0 0 3 0 2 1 1 0 1 0 0
0 2 4 1 12 9 3 8 9 4 4 6 6 1 4 7 2 2 2 0 1 1
0 0 0 I+ 3 4 5 5 7 9 10 10 10 12 12 13 13 13 14 15 15 15
16 16 16 15 13 12 11 11 9 7 6 6 6 4 4 3 3 3 2 1 1 1
(0)
(141
(2)
(741
Key: 1 Number of organizations with corporate activity which occurred as a department, 2 Number of organisations which had the corporate activity as the level of jobs but not departments. 3 Number of organisations which had no jobs or departments identified with the corporate activity. 4 = (1) and (2). * Compensatory mechanisms present.
relations normally fell within tne marketing and sales function they were separate in at least one case and therefore identified as a corporate activity. In addition, a separate activity was listed when one or more groups included that activity in a different department from the norm. Hence wages and salaries were differentiated as in one group for which the personnel and training department was responsible whereas the normal was for it to be part of the accounting and finance activity. The 23 corporate activities are listed in Table 1 by type and Table 2 by frequency of occurrence within the sample.
1’0
Paui Starrrry
and Andrew Clark
r Table 3. Breakdown
of corporate
activities
by proportion
of corporate
personnel
Sample Tmean
Sample high
Sample low
33.9% 24.8% 6.5% 65.5%
48.4% 47.2% 71.6% 82.7%
10.2% 6.3% 1.6% 40.9%
Accounting andfinance Marketing and sales Personnel and training All three
The scale and range of activities differed amongst the sample. At the extremes. one hotel group contained as few as six activities while another included 18. Within each corporate activity the number of employees ranged from a one person executive housekeeper in one group to a marketing and sales department of 917 empIoyees in another. HoLvever, three activities stood out from the rest. These three activities were not in the hotel and catering tradition but were business orientated. They were accounting and finance, marketing and sales, and personnel and training and between them they accounted for about two-thirds of corporate personnel in the average corporate structure. The proportions of these functions is shown in Table 3. These three are defined as key corporate processes. Corporate structure: observations
and implications
One important implication of this analysis is for the careers of managers whose jobs are within the hotel and catering tradition. From a total of 1,691 personnel in the sample, only 170 fell ivithin the hotel and catering tradition and 70% of those were reservations staff, Hence. it is clear that there are few corporate jobs for hotel and catering professionals, their careers remain within the hotels. The managers from within hotels who wish to move to corporate management need predominantly to specialise in finance, marketing or personnel. In these fields the hotel and catering peopIe are competing with specialists qualified in these general areas applying their knowledge and techniques to the hotel industry. With the continued development of hotel and catering graduates it will be interesting to note their progression as compared to the specialist in the corporate activity from general industry who moves into the hotel industry. At present the trend favours the latter, as the hotel and catering graduates in the U.K. are comparatively few and still comparatively young. These issues reflect a view expressed by executives of one large company that hotel and catering careers are on the line. Hence, rather than see the corporate structure as a superordinate body. a head office to which one aspires, the corporate organisation functions as a controlling, co-ordinating, servicing and advisory body of specialists. Context of corporate structure: an overview The Aston Studies (Pugh et nl., 1969) identified the following contextual variables of organisations: size, technology, dependence, location, origin and history, ownership and control and charter and purpose. They produced a factorial study covering all of these, however two are focused on here as major variables for hotel groups.
121
Variables in the corporate structure of hotel groups
Since the corporate structure is by definition part of the same hotel group system as the portfolio of hotels, the portfolio is seen as the major contextual influence on it. Without the portfolio there is no rationale for the presence of the corporate structure and without a corporate structure there could be no hotel group just a collection of individual hotels with no corporate focus. Thus corporate structures of hotel groups will be affected by contextual features of the portfolios of hotels, The two variables highlighted here are the size and technology of the portfolios. Size of the portfolio is useful at two levels. Firstly, it can be related to the overall size of the corporate structure. Secondly, portfolio size can be linked to the scale of the provision of key corporate personnel. Technology highlights that hotel groups vary in the complexity of their portfolios in terms of the size and grade of individual hotels and shows how this affects corporate structuring. These two major variables are demonstrated factorially.
Portfolio size as a contextual variable There are many available measures of organisation size. In this analysis four measures of portfolio size are used: number of hotels, number of bedrooms, number of hotel employees and hotel group revenue. Each measure has strengths and weaknesses as staffing arrangements and revenue levels of hotels vary with the grade of establishment. Also, the size of hotels varies along with the mix of accommodation or food and beverage revenue. In the sample of 16 groups. the comparisons of these measures are shown in Table 4, tvhere the ranking for each group and for each measure is indicated.
Table 4. Comparison
Hotel group A B C D E F G H I J K L M N 0 P
of size measures
Size rank by number of hotels 1 2 3 4 5 6 7 8 9 10 11 12 13 14= 14= 16
Size rank by numberof bedrooms
Size rank by numberof employees
Size rank by hotel group revenue
1 2 5 3 6 9 4 7 14 8 12 10 15 13 16 11
1 2 4 8 12 9 3 7 11 5 6 14 15 13 16 10
1 2 5 7 13 11 3 6 14 IO 8 12 16 9 15 4
1”__ (a)
Paul Slattery
Size of the portfolio
ad
corporate
and Andrew
Clark
si:e
The inter-relationship of the systems model and the context to structure links suggests that as the size of the portfolio increases so the size of the corporate structure will also. Taking the number of corporate employees as the measure of corporate size. four ratios can be generated by combining the corporate size with the portfolio measures. These statistics are shown in Table 5 in ascending order. The two sets of figures for each variable were also subject to correlation analysis.
Tab/e 5. Size ratios of hotel groups
Sample
in the sample
Hotels per corporate employee 1
Bedrooms per corporate employee 2
iiotel employees percorporate employee 3
Revenue per corporate employee 4
0.08 0.14 0.15 0.19 0.20 0.25 0.35 0.40 0.44 0.47 0.51 0.61 0.74 0.76 1.72 2.94
16.3 24.3 25.9 27.4 29.9 32.2 32.6 32.8 37.6 40.5 45.7 55.0 55.8 70.5 132.6 138.5
13.7 20.8 22.8 23.0 24.0 24.7 26.3 27.1 28.0 28.0 30.9 32.6 40.0 63.2 109.7 *
280.0 299.0 341.2 341.3 360.4 390.1 403.9 408.8 454.8 495.6 531.9 570.1 624.4 683.9 1356.3 *
0.32
45.9
30.1
454
0.42
35.2
27.1
409
Tmean Sample median
1 2 3 4 *
Note: each ratio is listed in ascending order. Key: Number of hotels + number of corporate employees. Number of bedrooms + number of corporate employees. Hotel group employees + number of corporate employees. Hotel group revenue + number of corporate employees (fOO0). One case excluded as data was not available.
Variables
The correlations number number number revenue
of of of of
between
in the corporate
the size measures
structure
123
of hotel groups
were:
hotels and number of corporate employees R = 0.653 bedrooms and number of corporate employees R = 0.905 hotel employees and number of corporate employees R = 0.958 hotels and number of corporate employees R = 0.971.
These correlations indicate that the trends cannot reasonably be explained by chance, as for a sample of 15 the critical value at the 5% confidence level is about 0.5. The hotel ratio has the weakest predictive value because the average size of the hotels in each group varied within the sample from 43 to 383 bedrooms per hotel. However, at this level the statistics show that the portfolio measures can be used as predictors of corporate size. (b) Size of the portfolio ard sire of the key corporate processes At a different level the portfolio size measures can be used in combination with the key corporate processes in order to predict the size of the various corporate departments. Drawing on a principle of direct supervision, corporate workload figures are generated by dividing the appropriate portfolio measure by the respective corporate measure. The workload figures are not linked to performance here, however if a ratio is high or low it is valid to ask if the process is being effectively operated. Because the different corporate processes deal with different aspects of the business the processes statistics were combined with appropriate portfolio measures. Hence the following workload ratios were devised: accounting
and finance
marketing
and sales
personnel
and training
= hotel group revenue per corporate accounting and finance employee = number of bedrooms per corporate marketing and sales employee = number of hotel employees per corporate personnel and training employee.
The statistics for each of these workload figures are shown in Table 6 in ascending Correlation analysis of the components of the ratios produced the following: corporate corporate corporate
accounting and revenue marketing and bedrooms personnel and employees
These correlations
order.
R = 0.985 R = 0.918 R = 0.950.
are also well above the critical value of 0.5.
Contextual variable size: observations
and implications
All of the statistics represent normative relationships and can produce predictive indicators on that basis. Hence they do not detail what is done or how it is done and the ratios in Tables 4 and 5 show that there are different responses. However, that said, the correlations suggest that causal models can be produced linking portfolio measures of size both at the level of the whole corporate structure and key processes. These relationships have implications particularly relevant in times of change. The ratios provide a means of
124
Paul Slattery and Andrew Clark
Table 6. Workload
Sample
Tmean
Sample median Correlations
ratios of corporate
processes
Accounting and finance (f) 1
Marketing and sales (bedrooms) 2
Personnel and training (employees) 3
777,100 877,600 1,019,300 1,092,900 1,I 27,300 1,145,200 1,288,900 1,330,100 1,393,800 1,405,000 1,493,900 1,510,700 1,625,900 2,450,300 2,800,OOO *
55 82 85 97 100 105 134 135 139 171 210 244 460 488 597 2,216
179 242 300 313 370 406 417 430 433 450 460 493 563 948 7,020 *
1,366,OOO
218
448
1,330,000
137
429
0.985
0.918
0.950
Key: 1 Accounting and finance: group revenue +- corporate accounting and finance employees. 2 Marketing and sales: numberof bedrooms + corporate marketing and sales employees. 3 Personnel and training: hotel employees + corporate personnel and training employees.
measuring the impact of developments in either the corporate structure or the portfolio, and as such are representations of the inter-relationships of the two parts. This means that change in one part such as the acquisition or disposal of hotels can be linked to the corporate structure in order that compensatory changes can be introduced. Depending upon the nature of change the workload ratios can be used to target thresholds where, for example, a corporate department uould be considered to be at the limit of productivity. Thus, when single hotels are purchased intermittently the affect on the workload would be very different to proportionately significant acquisitions such as the Ladbroke takeover of
Variables in the corporate structure of hotel
groups
13
Comfort Hotels International. or the Norfolk Capital Hotels acquisition of Celebrated Country Hotels. The ratios need to be viewed in each individual group in the context sf the link between the two parts of the hotel group such that the type of corporate control achieved and the level of hotel involvement or self-support is included in any analysis. However, the basic statement can be made that given a change in size of a portfolio of X proportions, the statistics from this sample provide the basis of the changes required in the corporate structure in order to retain the normative balance. Conversely with the systemic interdependence of the hotel group, corporate capacity to cope with portfolio change can be planned whereby the corporate structure could be put in place before any portfolio change took place. These considerations are tempered however by the fact that size is but one contextual variable and that it must be considered in conjunction with others such as technology to which we now turn.
Portfolio technology as a contextual variable Various conceptions of technology exist. Hotels Lvithin hotel group portfolios vary in terms of their grade and size. It is to be expected that different mixes of hotels place different constraints and requirements upon the corporate structure. As the complexity of the portfolio increases, so the complexity of the corporate structure should also in order to retain a comparable level of control. The variations in the types and sizes of hotels can be expressed in terms of a measure of technology which can compare individual units and groups. Hotel technology is not just the hardware of the kitchens, restaurants, bedrooms and bars but includes every aspect of the facilities, products and services and the means of production that are available in the hotels. Following Slattery (1976) it can be said that hotels of a higher grade, such as a five star hotel compared to a three star hotel, are technologically more complex. To this it can be added that of two comparably graded hotels the larger would be expected to show a higher level of technological complexity since the range and complexity of facilities and services and the basis of production changes.
Technology
of the portfolio
In order to measure the technology of an hotel the size of each is combined with its grade. Since the Automobile Association annually provide the most extensive U.K. grading scheme this was used. The formula for the technology score of an hotel is: (‘AA’ grade + 1) x (number of bedrooms) e.g. Tower Thistle Hotel = 4*, 826 bedrooms Technology score = (4 + 1) X 826 = 4,130. This fundamental measure does not account for location or usage factors, however it provides a suitable base for these other details to be added as necessary.
1’6
Paul Slattsry and Andrew Clark
From the basic individual
hotel score three measures
can be derived:
total technology score of the portfolio; average hotel technology score; portfolio complexity indes. The total technology scores and the average hotel technology scores are shown in Table 7. Each is descriptively useful as it facilitates comparisons of groups demonstrating. for example, the significant variance between the estreme cases which showed, at the low end, an average hotel score of 119 points to one with 1.992 points. Overall within the sample the average hotel had a score of 409 points (or approximately 100 x 3* bedrooms). These figures can be used in examining the types of hotel in portfolios. however since they are average statistics they hide complexity which. for example. could make up the sample average of 409 points by tno hotels of 100 and 41s or equally t\vo hotels scoring 100 and 71s. Therefore, the technology complexity index was developed lvhich compares the range of the hotel scores in the portfolios to the sample average hotel score. The sample average is used as an industry indicator of complexity. Alternatively one could use the groups own
Table 7. Technology
scores for hotel groups
Average Hotel group A B C D E F G H
I J K L M N 0 P
1 2 3 4
Total technology 1 1,494 3,067 5,260 5,376 8,006 9,968 10,250 11,954 13,272 15,495 15,990 17,998 21,297 22,181 28,720 86,585
hotel technology 2
Portfolio high
149 341 376 158 320 237 1,139 1,992 309 470 432 327 426 569 167 453
350 560 1,600 460 835 1,250 1,455 2,925 1,768 2,065 1,750 1,265 2,804 4,130 4,215 4,550
low 3 35 159 50 36 48 26 750 560 70 57 30 50 17 40 12 18
Technology complexity index 4 0.77 0.98 3.79 1.04 1.92 2.99 1.72 5.78 4.28 4.91 4.21 2.97 6.81 10.00 10.28 11.08
Key: Total technology = sum of each hotel score, i.e. C [(‘AA’ + 1) x (rooms)]. = 1 + number of hotels for each group. High = highest score in each portfolio; low = lowest. (High - low) + (sample average hotel score).
Variahizs in the corporate structure of hotel
127
groups
average in order to measure the internal complesity. This uould be particularly relevant nhere groups had hotels which were either comparatively large or small in relation to the sample average. The technology complexity index is calculated as follows: (highest hotel technology score) - (lowest hotel technology score) sample average hotel technology score The complexity index is also shown in Table 7 with the groups listed in terms of the lowest to highest total technology scores. The complexity index can be divided into three types which reflect the nature of the portfolio: (a) Relatively homogeneous. i.e. less than 2.0: (b) Intermediate complexity. i.e. 2.0-6.5; (c) Relatively heterogeneous, i.e. greater than 6.5. Using this typology the groups in the sample at the time of the research (198315) fell into the categories shown in Table 8.
Table 8. Typology of sample by technological complexity Homogeneous Anchor Hotels Prince of Wales Hatels NorfolkCapital Hotels Holiday Inns (CHIC) Stakis Hotels
intermediate Rank Hotels Comfort Hotels lnternat~onal Mount Charlotte Hotels (1984) Ladbroke Hotels Queens Moat House Hotels Embassy Hotels Swallow Hotels
Heterogeneous Trusthouse Forte Hotels Best Western Thistle Hotels Mount Charlotte Hotels (1985)
The index shows that portfolios of larger hotels such as Holiday Inns (CHIC) average size 228 bedrooms, need not be considered a complex group because of their homogeneity and that Queens Moat Houses, with 55 hotels at the time, scored just 2.97 showing that a relatively large number of units need not imply complexity. However, reference to Table 7 indicates that generally as the total technology score increases (highly correlated to number of bedrooms; 0.993) then the technological complexity tends to increase.
Contextual variable technology: observations and implications Total technology was correlated to the size of the corporate structure with a value of 0.917 which was marginally better than the number of bedrooms (0.907). Hence the technology score could be used to predict the scale of corporate requirements. However, more important is the use of the typology of complexity and the corporate implications drawing on the different types of hotels within a portfolio to structure that portfolio and analyse it. The more homogeneous the portfolio the simpler the corporate control processes would be as the level of variation amongst the hotel operations was lower. This reaches the
123
Paul Slattery and Andrew Clark
extreme of having all like sized and graded hotels (a pure brand) vvhich would score zero. The significance is that of two groups of comparable size but differing complexity the least complex would require fewer corporate resources to maintain the same level of corporate control. Conversely with a comparably sized corporate structure the homogeneous portfolios could achieve a higher level of corporate control. The homogeneity reinforces this latter point in that as the hotels become more alike. so the areas for comparison and the need to maintain comparable services and facilities for the market place increase. Thus homogeneity eases the problems inherent in bespoke control yet also provides opportunities for additional standards, procedures and specialisms in the corporate structure. This formulation is not only useful at the general portfolio level but can also be used to identify potential for divisionalisation within large portfolios. It may be the case. for example. that the inter-relations between a flagship hotel in London or iManchester and the rest of a generally provincial hotel group are different because the hotel operations are so much different. Thus, Swallow Hotels with the London Swallow International and Embassy Hotels with the Picadilly Hotel in Manchester could operate these hotels with different forms and levels of corporate supervision from the rest of the portfolio. The technology complexity model also suggests that neither grade nor size ought to be considered independently as principles of divisionalisation. The logic that links the more pervasive forms of corporate control to the homogeneous portfoIio has the corollary of a heterogeneous portfolio being less conducive to corporate control. The extreme case would be where the corporate function is to service the requests and needs of the hotels by providing expertise and resources not otherwise available to individual hotels. These potential variations in the inter-relations between the two parts of the group have a key role to play in the type of people and potential careers that operate in the hotels. The homogeneous portfolio with the all penasive corporate influence needs hotel employees to follow the rules and fill the squares in the organisation structure. The heterogeneous portfolio with looser corporate control and fewer rules. regulations and standard procedures requires a management of comparative entrepreneurship as compared to a bureaucratic requirement in the highly structured and standardised operations.
Contextual variables outside of size and technology Size and technology have been the subject of study in organisation structure as individually all-determining variables (Meyer, 1972). In this instance. they have been demonstrated as being indicative of the corporate requirement on a factorial basis. However, the factorial study misses much detail that its attractive decisiveness hides. Thus. whilst the size and technology variables have been shown to have major and general influences, other contextual variables play intervening roles. Location and dependence (i.e. suppliers and competition, etc.) are two such factors in the hotel industry. History and origin are also determinant in some cases, an example of which illustrates how the origin can affect current corporate structure. Two cases make this point. Queens Moat Houses has grown at such a rate from a vast diversity of other group hotels that there is not enough time to fully assimilate new acquisitions into any form of extensive corporate culture. The result is that a few but direct controls are used to link the hotels to the corporate structure whibt
Variables in the corporate structure of hotei groups
129
most of the hotel’s functions are performed by the unit employees. Corporate advice is proferred on request and outside agencies service some functions in order that the corporate structure retains maximum flexibility with minimum resources. The second example demonstrates history and origin in that the three brewery owned hotel groups, Thistle Hotels, Swallow Hotels and Embassy Hoteis had explicitly titled liquor stocktakers or stock controllers reflecting their parental controllers and their initial formation from the tied states of pubs. These contextual details reflect the individual nature of the concerns regarding the corporate structuring where in reality corporate strategies vary and the use of comparable resources varies. Yet this does not detract from the fact that size and technology as outlined here can be seen to provide general rules for the structuring of corporate organisations, although any one group would not be expected to match an average profile.
Conclusions The jobs in corporate structures of hotel groups are mainly orientated towards general business and do not emphasise the hotel and catering tradition. As a result, careers for hotel and catering people stop at hotel level with the exception of a few Operations or Area Directors. The alternative is to specialise in one of the three key processes: accounting and finance, marketing and sales or personnel and training. This can resuit in a ‘career in the line’ view that sees the corporate organisation as a staffing part of the group concerned with control and strategic planning for the operations. Portfolio size and portfolio technology are indicative of corporate size. In addition, portfolio size is related to the key corporate processes. As a result of these normative factorial relations, hotel group change can be evaluated, anaIysed and operationalised in ways which permit the maintenance of equilibrium of the hotel group system. These measures relate also to the fact that the jobs in hotels are different in kind to the corporate jobs. Hence, as the level of corporate presence and activity falls off so the business acumen of the hotel management and staff needs to be compensatory and thus greater. The complexity of a portfolio is contingent upon the relations between it and the corporate activities. This model of complexity provides a means by which the hotel group can be evaluated. It also provides a model in which usage and location factors can be integrated to facilitate analysis and explanations whilst other contextual features such as ownership or history can also be added.
References Automobile Association (annually). Guide to Hotels and Restaurants in Great Britain. Burns, T. and Stalker, G. (1968) The Management of innovation. Tavistock, London. Child, J. (1972) Organisation structure and strategies of control: a replication of the Aston studies. Aston Studies Quarterly 17, 163-177. Child, J. and Mansfield, R. (1972) Technology, size and organisation structure. Sociology 6, 369-393.
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Paul Slatrcry
and Andrew
Clark
Clark, A. W. (1957) A comparative analysis of corporate structures of hotel groups in the U.K. M.Phil. Thesis. Huddersfield Polytechnic. Kimberley. J. R. (1976) Organisational size and the structuralist perspective: a review. critique and proposal. &ton &dies Quarterly 21. 571-597. Meyer, hf. W. (1972) Size and structure of organisations: a causal analysis. Am, Sm. Rev. 87, Pugh, D. S. etni. (1965) Dimensions of organisation structure. rlsron Studies Qmzrreri~ 13,65-106. Pugh, D. S. etnl. (1969) The context of organisation structure. rlsrorr Sr~dies Qmzrreri~ 17,91-111. Slattery, P. (1976) The hotel as an organisation. hl.Sc. Dissertation. University of Strathclyde. 1Voodward. J. (1968) Jlmmgement am! Trchology. Problems in Itdustry, .l’o. 3. HRISO.
About the Authors Paul Slattery is Research Manager for Hotel, Catering and Leisure Industries for Kleinwort Grieveson Securities, The Stockbrokers. Previously he was responsible for research in Hotel and Catering hlanagement at the Hotel and Catering Research Centre. Hudderstield Polytechnic, where the work for this article was undertaken.
Andrew Clark gained his first degree
in Hotel and Catering Administration from Huddersfield Polytechnic. He has subsequently worked in the Hotet and Catering Research Centre on a number of projects. In June 19S7, he was awarded an M.PhiI. for his work for the study which forms the basis of this article.