Journal of Hospitality and Tourism Technology

Information technology applications and competitive advantage in hotel companies

Anil Bilgihan Fevzi Okumus Khaldoon Khal Nusair David Joon-Wuk Kwun
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IT and
Information technology competitive
applications and competitive advantage
advantage in hotel companies
139
Anil Bilgihan, Fevzi Okumus, Khaldoon Khal Nusair and
David Joon-Wuk Kwun Received 22 January 2011
Rosen College of Hospitality Management, Revised 16 March 2011
Accepted 24 March 2011
The University of Central Florida, Orlando, Florida, USA
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Abstract
Purpose This paper aims to propose a conceptual framework that illustrates how information
technology (IT) applications may lead to competitive advantage in hotel companies.
Design/methodology/approach The paper is written based on a synthesis of previous literature
in this area.
Findings Multiple areas need to be carefully evaluated in developing and implementing IT projects
so that they can lead to competitive advantage in hotel companies. There are four closely related areas
when analyzing IT decisions in hotels, which include coherence between the business strategy and IT
decision, types of IT applications, intended benefits of IT decisions, and decision-making style.
Technology sophistication, management skills, and integration of resources are key issues when
implementing IT decisions. Investments into IT applications in hotel companies can lead to superior
IT competencies and IT capabilities, which can subsequently result in lower cost, agility, innovation,
added value for customers, and better customer service. However, not all IT investments may result in
positive outcomes or their sustainability may be short lived. In addition, there can be a lag time
between making IT investment decisions and seeing their intended outcomes.
Practical implications There are multiple areas and issues that need to be considered in making
and implementing IT investment decisions if they are to contribute to the companys competitive
advantage. Hotel companies need to be selective in their IT investment decisions and look at each IT
investment from the strategic management perspective.
Originality/value This is one of the first articles in the hospitality field that offers a theoretical
framework on how IT applications can lead to competitive advantage in hotels. It also offers numerous
theoretical and practical implications. Therefore, this paper should help hotel executives and
researchers in evaluating IT projects in hotel companies.
Keywords Information technology, Competencies, Competitive advantage, Hotels, Lodging industry,
Technology, Applications, Investments
Paper type Literature review

1. Introduction
Information technology (IT) investments play a critical role in managing hotels
strategically. Efficient and timely deployment of new IT applications may offer
opportunities for enhanced guest services to meet increasing customer expectations,
improved cost control, more effective marketing strategies, and expanded opportunities
for hotels (Law and Jogaratnam, 2005; Piccoli, 2008). It is evident that IT investments will Journal of Hospitality and Tourism
increase hotels productivity, reduce their costs, and at the same time add value to Technology
Vol. 2 No. 2, 2011
the services and products offered to their customers. Therefore, investments into pp. 139-154
q Emerald Group Publishing Limited
IT applications in hotels have increased over the past decades (Armijos et al., 2002; 1757-9880
Ham et al., 2005; Piccoli, 2008). There is a need for extensive research studies that DOI 10.1108/17579881111154245
 JHTT thoroughly examine how investments in IT applications can lead to creating sustainable
2,2 competitive advantage for hotel companies. The existing literature on this topic in the
hospitality field is not yet conclusive and there have been limited conceptual and
empirical studies into this area. Having identified the gap, this study aims to discuss
how IT investments can lead to competitive advantage in hotel companies; and to
propose a theoretical framework that illustrates the links between IT applications and
140 competitive advantage.

2. IT applications and competitive advantage

As shown in Figure 1, there are multiple areas that need to be identified and evaluated
when looking at whether and how IT applications can lead to competitive advantage in
hotels. The first area is analyzing the investment of IT decisions, which is discussed
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below.

2.1 Analysis of IT decisions in hotels

There are five closely related areas when analyzing IT decisions in hotels, which are:
(1) coherence between the business strategy and IT decision;
(2) types of IT applications;
(3) intended benefits of IT decisions;
(4) financial standing of the company and available financial resources; and
(5) decision-making style.

It is expected that there should be coherence between the business strategy and
functional strategies of a hotel company (Okumus, 2003; Okumus et al., 2010). Managers
should therefore justify and illustrate how their IT investments will support the
hotel companys overall business strategy or the hotel units competitive strategies.
Otherwise, such IT proposals/projects may not be fully supported by the hotels owners
and the management team. Siguaw et al. (2000) indicate that hotels are likely to focus on
a select set of technology initiatives that are tied to a specific strategy. Within low
value-added lodging segments (i.e. budget, economy, and midscale), hotels are likely to
pursue ITs that increase operating efficiency; whereas within high value-added lodging

Low cost

Speed

IT
capabilities Value
added
Implementaion of Competitive
Analysis of IT
IT applications advantage
decisions
IT Creating dynamic Agility
Coherence between the business strategy and IT decision Technology sophistication competencies capabilities
Types of IT applications Management skills
Intended benefits of IT decisions Resource integration
Financial standing/available resources Integration of IT with other systems Innovation
Figure 1. Decision making style
IT and competitive
Customer
advantage service
 sectors (i.e. upscale and luxury), hotels are likely to initiate technological improvements IT and
that increase the quality of service delivery to the guest, the key is to defining business competitive
strategy and choose IT investments accordingly.
The second area is determining the type of IT applications that the hotel company advantage
will invest in. Hotels may invest in IT applications purely for front of the house, back
of the house or both. Some IT applications may be used by customers, managers, and
employees whereas some IT applications may be for special functional areas such as 141
human resources management, finance and accounting, and sales and marketing. For
example, customers not only want IT applications faster, but they also want better value
and higher quality. Customers are well informed, empowered, and capable of using
self-service IT capabilities. Thus, hotel companies are now forced to use IT to reinvent
their operations and maximize customer value; self-check-in kiosks are examples of
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such matter. The shifting business paradigm needs hotels to be more customer oriented,
responsive, flexible, quick, innovative, and collaborative. For instance, in 2008, Sheraton
Hotels & Resorts and Microsoft introduced a new hotel guest experience with Microsoft
Surface, which was Microsofts first commercial surface computer. Surface units are
placed in the lobbies of select Sheraton hotels aiming to offer an experience that would
bring interaction, connectivity, and a social setting to the lobby, providing guests
with an entirely new way to explore local highlights and enhance their hotel stay
(Microsoft, 2008).
Customers may also have different IT needs and expectations. For instance,
business travelers may expect hotels and airlines to provide online check-in. On the other
hand, leisure travelers may request more in-room entertainment amenities. Meeting
and incentive travelers may require specific IT applications for their meetings and
conventions. Put it simply, each customer segment may need and request different types
of IT applications (Victorino et al., 2005). According to a recent AHLA (2008) survey,
hoteliers perceptions indicate that the most important technologies to customers are
Wi-Fi hotspots, in-room entertainment systems, and kiosks for airline check-in/boarding
passes, respectively. Berezina and Cobanoglu (2010) reveal that the most important
in-room technologies for male travelers are express check-in/check-out, high-speed
internet access, and easily accessible electrical outlets, whereas easily accessible
electrical outlets, guest control panel, and high-speed internet access were identified as
the most important in-room technologies for female travelers, respectively.
Hospitality-linked ITs can be broadly categorized under back-office operations and
front-office requirements. Back-office technologies include software solutions for
inventory management, financial reporting, menu management, security management,
green technologies, labor management, data management, etc. Front-office technologies
mainly revolve around the point of sale and property management system (PMS).
Ham et al. (2005) divide IT applications of the lodging operations into four categories:
front-office applications, back-office applications, restaurant and banquet management
systems, and guest-related interface applications. Figure 2 shows the examples of
different types of IT applications in hotels. Figure 3 shows the hotel technologies in
chronicle order.
The third and equally important area is identifying the cost of the IT project and its
intended outcomes from it. Certainly, cost of each IT project and its projected return
on investment are carefully assessed. The major factors driving technological
implementations in hotels are increased transaction volumes through consolidations,
 JHTT Front office applications Back office applications
2,2 Reservation system Personnel
Check-in/check out Purchasing module
Room status and housekeeping Accounting modules
management Inventory module
In-house guest information functions Sales and catering
Guest accounting modules Generating financial reports and
142 updating statistics

Restaurant and banquet Guest-related interface

management systems applications
Menu management system Call accounting system
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Sales analysis Electronic locking system

Beverage control system Energy management systems
Guest-operated devices (e.g., in-room
entertainment)
Figure 2. Auxiliary guest services (e.g., voice mail)
Examples of different IT
applications in hotels
Source: Developed by the authors based on their literature review

Hotel technologoies

Hotel system interfaces allow other

APEX standards for meeting planners
hospitality related systems to "talk" to
XML data maps
the property management system (PMS),
Westin hotels EDI
1964 Pan American airline developed PANAMAC, Airlines expanded their systems Call accountiong
introduces "Hoteltype" POS
the industries first reservation system to allow travel agents
Coded key cards
to book hotel rooms.
Voice mail systems
Color TV in guestrooms

06
1947

20
64
19 0's
te 7 80's
La

19 90's
19
19

65 77
47

Allowed for hotels to connect to each other

Off-site application, internet acccess
Greater exposure (web sites)
Teletype machines enable 1965 holiday inn introduces "Holidex" The microcomputer was introduced Interface between TV and PMS 200
19

0's
72

instantaneous confirmations the world's first computerized Allowed for the development of Remote check-in/check-out
of reservations reservation system hotel application
Properly management systems (PMS)

Figure 3.
More amenities in guestroom
Hotel technology chronicle Hotel technologies The first models of telephone systems

complex-reporting requirement, and international communication needs.

IT investments can assist hotel companies to initiate new products and services
proficiently. They may provide benefits such as improved operational efficiency,
cost reduction, decision support in the areas of planning and business strategies,
and enhancement of brand image, product quality, and customer loyalty (Cash and
Konsynski, 1985; Cash et al., 1988; Ives and Learmonth, 1984; Keen, 1991; McFarlan,
1984; Porter and Millar, 1985).
Literature on IT investment has addressed market measures (Guilding and Pike,
1990), lead and lag (Hu and Plant, 2001), stock market reaction, and market valuation of
the firm. IT investments using accounting measures, such as return on assets, return
on investment, and return on sales, have been examined, demonstrating mixed results
relative to positive correlations with IT investment (Sircar et al., 1998; Strassman,
1997). Sriram and Krishman (2003) support the view that the stock market considers
 investments in IT as a significant and value-increasing activity for the average firm. IT and
This is also consistent with Brynjolfsson and Yangs (1998) findings. Likewise, competitive
Farrell et al. (2003) focus on IT expenditures and the many factors that firms struggle
with when determining proper spending levels and strategies. They concluded that advantage
companies tend to spend on IT inefficiently. Firms are susceptible to under-invest in
some areas, particularly in weak-financial periods, missing opportunities to increase
productivity, reduce costs, offer greater customer service, or achieve competitive 143
advantage. Conversely, firms usually overspend in financially strong periods;
frequently buying into hype that promised huge returns on investments in trendy
hardware/software solutions, sometimes just copying their competitors often resulting
in disappointment and disillusionment. It is not the IT itself that can lead to the
competitive advantage, but rather, how that IT project is selected, implemented and
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used, what it provides to the company, and what IT can present in the future that
makes a difference in competitive advantage. For example, Farrell et al. (2003) state
that, with the intention of leveraging IT effectively, firms cannot easily limit IT
spending and spur management to cut down the technology budgets at any cost.
The fourth area is the financial standing of the company and availability of
resources for IT projects. For example, deployment of an IT project may be highly
needed and many executives and managers would fully agree with it. However, if the
hotel companys financial standing is not strong enough and the company does not
have financial resources due to internal or external reasons, the IT project may not be
feasible (Anckar and Walden, 2001; Khemthong and Roberts, 2006). Accordingly, it can
be stated that the hotel companys current financial situation is crucial in determining
the type and the scale of IT decisions.
Finally, when making IT decisions, it is suggested that participation and input from
different management levels and functional areas should be sought. This is because
such participation may provide constructive feedback and input into this process does
not only lead to gaining support from different management levels and functional
areas but also secure resources for IT projects. Lack of participation and input from
other functional areas can lead to resistance to the project from different management
levels and functional areas (Barson et al., 2000; Okumus, 2003).

2.2 Implementation of IT applications

There are four key areas in implementing IT projects, which are:
(1) technology sophistication (Burca et al., 2006; Sigala et al., 2004);
(2) management skills (Teece and Pisano, 1994; Yuan et al., 2003);
(3) integration of resources (Sigala et al., 2004); and
(4) integration of IT projects with other systems (Dong et al., 2009).

The link between IT sophistication and company performance has received some
attention in the literature over the years. Burca et al. (2005) advocate that in order to
call a firm technologically sophisticated, a company should possess a robust
scientific-technical base; new technology should quickly make existing technologies
obsolete and new IT applications should create new demand or revolutionize markets
and demands. Burca et al. (2006) investigate the relationship between service practices,
service performance, business performance, and IT sophistication. Their study pointed
 JHTT out that IT sophistication moderates the services practice-service performance
2,2 relationship. Supporting this, Okumus (2001) illustrates how two large hotel companies
had to rely on external IT companies in developing and implementing their specific
projects since both hotel groups lacked IT sophistication.
Possessing management skills are the second key area when developing and
implementing IT decisions. Literature supports that managerial capabilities influence
144 the way technology is developed, deployed, and used in organizations (Teece and
Pisano, 1994; Yuan et al., 2003). According to Mata et al. (1995), managerial skills
include managements ability to conceive of, develop, and exploit IT applications to
support and enhance other business functions. IT management skills include:
.
The ability of IT managers to understand and appreciate the business needs of
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other functional managers, suppliers, and customers.

. The ability to work with these functional managers, suppliers, and customers to
develop appropriate IT applications.
.
The ability to coordinate IT activities in ways that support other functional
managers, suppliers, and customers.
.
The ability to anticipate the future IT needs of functional managers, suppliers,
and customers (Mata et al., 1995).

Without management skills, the full potential of IT for a firm cannot be realized.
Compared to technical skills, managerial IT skills require a longer time to develop.
Arguably, managerial skills are innate skills and simply not teachable (Bruhn et al.,
2010). For example, it was noted that managements understanding of IT projects and
their potential contribution to the companys performance was important for American
Airlines ability to develop the SABRE system (Copeland and McKenney, 1988).
Integrating resources is another important area to consider in developing and
implementing IT projects. The foundation of resource integration points out the
maximization of competitive advantage of a firm through combining and utilizing
valuable resources. That is, firms are viewed as attempting to find the optimal resource
boundary through which the value of their resources is better realized than through
other resource combinations (Das and Teng, 2000). The resource-based strategic
necessity hypothesis claims that IT creates advantage by leveraging or exploiting
existing human and business resources (Clemons and Row, 1991). Literature also
supports that sophisticated IT users do not outperform less sophisticated users,
however, the ones that combined IT with critical complementary human and business
resources did gain performance advantages (Powell and Dent-Micallef, 1997). Sigala et al.
(2004) reveal that hotels that had more sophisticated technologies and combined these
technologies with their other resources achieved higher productivity scores than
those using technologies for automation only. Additionally, IT projects need to be
integrated with other projects and systems to ensure that they are user friendly, reliable,
secure, responsive, flexible, easy to maintain, accurate, and measurable.
Information systems integration is a critical issue for hotels since the industry is
data driven. Owing to the significance of sharing customer information from across
departments and properties, integrated IT systems are required to enable employees to
exchange and share knowledge. IT integration is all about interoperability, which refers
to the ability of diverse software and hardware systems to manage and communicate
 electronic product and project data smoothly. Furthermore, efficiency and effectiveness IT and
could be the end-results of IT integration. For instance, RFID minibars that are competitive
connected to the PMSs could provide instant reports, inform the room service when a
room is out of a specific kind of beverage, and also it could post charges to guests folio. advantage
Another example is energy management systems that are connected to the PMS that
front-desk agents could remotely set the temperatures once a guest checks-in or
checks-out. 145
IT-driven concepts, like supply chain management, enterprise application integration,
knowledge management, customer relationship management (CRM), and enterprise
resource planning, are having remarkable impacts on firms (Cachon and Fischer, 2000;
Ghosh, 1998; Kim and Mauborgne, 1999; Lumpkin et al., 2002). For example, the study by
Olsen and Connolly (2000) suggests that the premise of information age is that firms in
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the future will build their success on how much they know about their customer, how
they will provide them with information about their products and services, and how they
will profitably distribute those products and services in an information environment.
CRM is a great example of getting to know customers better.

2.3 Developing IT capabilities and IT competencies to create competitive advantage

Deployment of IT applications can help organizations create IT capabilities and IT
competencies (Bhatt and Grover, 2005; Vogel, 2005). IT capabilities mainly focus on
internal efficiency and reducing cost and they may lead to transforming key business
processes and practices into IT capabilities that significantly streamline and integrate
the value chain, eliminate or reduce redundant or non-valued processes. On the other
hand, IT competencies have an external focus and represent the collective learning
of an IT organization (Vogel, 2005). Key IT competencies include flexible internet
infrastructure, business to customer (B2C), business to business (B2B), customer
self-service, IT value added to products, IT value added to services, and IT innovation.
Vogel (2005) conducts a study with IT executive respondents from 2002 to 2003 CIO
100 award winners of CIO magazine and reveals that IT competencies and IT
capabilities significantly affect competitive advantage of a firm.
One may question what competitive advantage is and how companies can create
competitive advantage. There are three different views on creating competitive
advantage, which are the positioning view, the resource-based view, and dynamic
capabilities view. The positioning view relies on Porters (1985) views. According to
Porter, companies should choose one of the three competitive positions in the market
place if they want to achieve and maintain competitive advantage. The first position is
cost leadership where a firm aims to achieve competitive advantage by achieving
a cost leadership position in the market. The differentiation position implies that a
company must offer something unique and rare. The focus strategy has two options:
focus differentiation and focus cost leadership. The former one aims to achieve
differentiation by offering a superior and unique product or service to a niche segment.
The focus cost leadership strategy aims to achieve cost leadership position by targeting
a niche segment in a specific geographical area. Porter suggests that only one of these
three generic strategies should be followed rather than trying to follow all or two of them
simultaneously.
According to the resource-based view, it is essential to look at the companys
resources when evaluating competitive advantage of a company (Barney, 1991;
 JHTT Grant, 1996). In this view, if resources and capabilities to create competitive advantage,
2,2 they should be valuable, rare, inimitable, and unsubstitutable. In terms of value,
resources should contribute to the performance of an organization or a destination
whereas being rare refers to being owned by very few companies or destinations.
In addition, it is suggested that those resources and competencies should not be easily
imitated and substituted by competitors. In order to create and maintain competitive
146 advantage, possessing such resources and competencies is not sufficient alone.
Sustainable competitive advantage is achieved by developing distinctive competencies
and offering unique positive experiences.
The dynamic capabilities view builds both on the positioning view and the
resource-based views. This view suggests that companies should have the capacity to
renew competencies to achieve congruence with the changing business environment,
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innovative, fast, and timely responses are required and critical (Teece et al., 1997).
Dynamic capabilities are defined as a firms ability to integrate, build, and reconfigure
internal and external competences to address rapidly changing environments
(Teece et al., 1997, p. 516). Thus, the dynamic capabilities view suggests that companies
have to develop dynamic capabilities to be able to offer superior products and services in
the fastest and efficient way in response to the developments and changes in the market
place.
Each of the above three views competitive advantage provides specific propositions
regarding the creation and maintenance of competitive advantage. However, there is one
commonality among these views, which is that in order to create competitive advantage;
companies should find a way to differentiate themselves from their competitors.
This can be achieved either through positioning your company (the positioning view),
offering unique products and services (resource-based view), or creating unique
and complementary dynamic and timely capabilities to respond to fast changing market
conditions (the dynamic capabilities view).
Supporting the aforementioned discussions, the interdisciplinary literature reviews
(Barney, 1991; Bharadwaj et al., 1993; Eisenhardt and Brown, 1998; Helfat and Peteraf,
2003; Rindova and Kotha, 2001; Sanchez, 1993; Stalk et al., 1992; Teece and Pisano, 1994;
Teece et al., 1997; Vogel, 2005) suggest that IT investments can lead to developing IT
capabilities and dynamic IT competencies, which can lead to achieving the following
six closely interrelated outcomes:
(1) low cost;
(2) value added;
(3) speed;
(4) agility;
(5) innovation; and
(6) customer service.

Low cost refers to providing products/services at the lowest costs (Huo, 1998;
Siguaw et al., 2000). It can help a hotel company offering services at a lower cost ratio.
For instance, Vintage Inns installed an enterprise system that would allow the hotel to
sell benefits to guests and combine the separate guest histories from their four
properties into one database in order to increase booking efficiency. The system
allowed the hotel to manage the properties centrally and reservation staff had
 the ability to book rooms for any property from any of our hotels. Staff only needed IT and
to learn one product, one screen, and one process, moreover, they can see where guests competitive
have stayed in the past, track the experience they had with them. The system has
increased the staff efficiency by 15 percent and improved data accuracy by at least advantage
50 percent with the elimination of re-keying guest information between systems,
furthermore, the system decreased the training time of the employees significantly.
Another example is that Morrissey Hospitality installed yield management system at 147
two of its luxury properties. Two months after installation RevPAR increased
significantly and according to Smith Travel Research, their occupancy beat their
competitors by 30 percent (Hotel Online, 2003). Lately, the new trend green
technologies also yields to cost savings in hotels by cutting down on operating costs
(Compton, 2010).
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Value added refers to offering products and services, which are highly desirable and
have distinct features/functionalities. Creative and innovative use of technology that
enhances the value of offered services will be the means by which hotels differentiate
themselves from their competitors (Lee et al., 2003). IT could be a primary catalyst
that helps hotels innovate their service offers and add value to what they offer their
internal and external customers. For example, guest-room technologies, such as
electronic, ordering system, TV check-out, and electronic and video entertainment
services can be value-adding services. IT has not only improved in-room services, but
has also increased choices in entertainment. City center hotels, whose clientele are
primarily business travelers, are more likely to equip their rooms with advanced in-room
technologies as opposed to hotels in more remote or resort locations.
Speed refers to systems and processes that offer faster and superior services and
products. For instance, hotels can increase the speed of housekeeping departments with
guestroom status indicators. Once a guest asks for his/her room to be cleaned, he/she can
choose within the room and a message will be delivered to the hotel staff. Guests can also
use self-check-out through their television to facilitate and speed the check-out process.
Back-office IT solutions provide numerous ways to speed up various departments;
Hyatt Hotels & Resorts announced a migration to Microsofts cloud-based Business
Productivity Online Suite to provide unique e-mail addresses for 17,000 tethered
employees, and purchased licenses to provide e-mail to an additional 40,000 deskless
associates. This cloud computing initiative provided significant functionality in HR
systems such as providing employee schedules via e-mail (Lorden, 2010). RFID minibars
that report inventory immediately are another example that could increase the speed of
folio posting in hotels.
Agility refers to the ability to manage change faster than competitors. IT-driven
agility could be achieved via decision support systems (DSS) in hotels. Business
intelligence (BI) is one of the latest developments of DSS. It offers imperative tools for
analyzing and presenting data to hotel managers such as trend analysis so they can make
more informed decisions. Hotels store massive amount of operational data, generated
by daily transactions, in operational databases. These databases contain detailed
information whereas managers need aggregate, summary information in decision
the making process (Rus and Toader, 2009). By utilizing BI, the data from separate
source systems are loaded into a data warehouse through a process of extraction,
transformation, and loading. The data are then transformed in useful information and
knowledge that enables agility in hotels.
 JHTT Innovation refers to the continuous flow of new products and services, which are
2,2 valued by the customer. Managers are seeking to incorporate IT innovations as a mean
of attaining competitive advantage, specifically through improved guest services,
increased employee productivity, and enhanced revenue generation (Siguaw et al.,
2000). For instance, technological innovations designed to improve employee
productivity included voicemail, and interactive guides that allow automation of
148 the service delivery system, thus reducing the guest-communications workload of the
front office and concierge staff and allowing time for a greater focus on other guest
services. In order to achieve innovation through an IT project, hotel managers should
continually seek new technologies. X-Room, short for Experimental Guestroom,
is located in a Marriott hotel and includes innovative technologies that are valued by
the guest such as a Nintendo Wii gaming console (Coleman, 2008). Hotels could also
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generate revenues with such innovative technologies by charging the guest for the
used amenities or services. GUESTROOM 20X is another example that demonstrates
innovative technologies for hoteliers. The room represents HFTPs vision as the
information source for the lodging industry by exhibiting how future guestrooms can
mix high-tech touches with a soft-touch delivery to make a guests stay the ultimate
experience. The room includes innovations from high-definition artwork that changes
to match a guests mood to the more practical self-cleaning shower (HITEC, 2010).
Customer service refers to a superior responsiveness to customer needs. For example,
Marriotts reservation system manages the booking of more than 355,000 hotel rooms
globally. This system delivers Marriott a priceless opportunity to gather information
about the characteristics, habits, and preferences of their guests. As a matter of fact, the
12 million customer profiles stored in Marriotts frequent-lodger program establish the
largest such database in the lodging industry (Lee et al., 2003). This information allows
Marriott to cross-reference the personal profiles of customers with product preferences.
By doing this, Marriott is able to target incentives and promotions with unprecedented
precision and offers distinctive customer service. Trump SoHo implemented Cisco
solutions for the hotel network, pervasive wireless access, and unified communications
in order to provide highly personalized guest experience (Business Technology
Partners, 2010). Hotel employees wear a wireless IP voice badge that operates over the
same Cisco Unified Communications system used for typical voice calls. When the
bellhop asks the guests name at the door, the check-in staff hears so that a moment later
they can greet the guest by name. When guests arrive in their room, the color display
on the IP phone shows a personalized welcome message. Furthermore, guests can use
the IP phones touchscreen for voicemail, weather by zip code, airport information,
and e-mail. Employees can also use the in-room phones in order to confirm that a room is
ready for the next guest. The room attendant enters a code on the phone, which updates
the PMS. Finding out right away that a room is ready helps the hotel to accommodate
guests who would like to check-in early thus improving customer service.
The above six areas are closely related as one positive outcome in one area may
positively impact others. In fact, IT can increase staff efficiency by providing the
ability to communicate and collaborate from anywhere on the property and empower
staff members to create personalized guest experiences. For instance, an employee who
directs a guest to the spa can alert the spa that the guest is on their way and greet them
by name, thus improving the guests overall experience.
 BI solutions are beneficial time management tools and allow managers to make IT and
necessary adjustments at any time as information becomes more readily available. competitive
BI tools will help hotel managers access instant reports instead of waiting until the end
of the period. They can optimize usage and schedule resources, adjust labor schedules advantage
and supply orders, maximize the hotels profitability, increase customer profitability,
and RevPAR. Managers can also pinpoint and give priority to the most profitable
guests by knowing and predicting guest trends, profitability, and preferences. 149
2.4 Lag time
Response lag time is defined as the time it takes competitors to respond in a way that
erodes a firms competitive advantage, and represents the delay in competitive response
(Piccoli, 2008). Technology investments pay dividends over time, and the lag time
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between technology expenditures and payback can be lengthy (David et al., 1996). It may
take some time for employees to be efficient with and become accustomed to the new
technology. Response lag perspective suggests that competitive imitation occurs in
stages (MacMillan, 1998, 1989). As previously stated, following the dynamic competences
view, ability to develop timely dynamic competences fast leads to competitive advantage.
Therefore, shorting this lag time is crucial in developing and implementing IT projects.

3. Conclusions and recommendations

This paper has proposed a framework to illustrate how IT applications may lead to
competitive advantage in hotel companies. Based on the above discussions, a number
of conclusions and recommendations can be proposed. As shown in Figure 1, there are
multiple phases and areas to be identified and evaluated when looking at how IT
applications can lead to competitive advantage in hotels. The first area is analyzing
investment of IT decisions. There are five closely related issues when analyzing IT
decisions in hotels, which are coherence between the business strategy and IT decision,
types of IT applications, cost and intended benefits of IT projects, financial standing of
the company, and decision-making style. In order to achieve IT-induced competitive
advantage, it is advised that hospitality managers consider the above issues very
closely. The second area/stage is the deployment of IT projects in which hotel
companies need to consider technology sophistication, management skills, integration
of resources, and integration of IT projects with other systems.
IT investments can help hotel companies develop IT capabilities and IT
competencies which lead to achieving the following closely interrelated outcomes:
low cost, added value, speed, agility, and customer service. The final issue to be
considered in deployment of IT projects is that they pay dividends over time, and the
lag time between IT investments and payback can be lengthy. To conclude, this paper
review suggests that IT capabilities and IT competencies can help hotel companies
achieve competitive advantage. However, it is worth noting that it is not the IT
applications that offer the competitive advantage to a hotel company, but rather, how
IT applications are developed, implemented, integrated with other areas and systems
help hotel companies to develop dynamic capabilities to achieve competitive
advantage.
This article contributes to the hospitality field by offering a theoretical framework
on how IT applications can lead to competitive advantage in hotels. It should assist
hotel executives and researchers in evaluating IT projects in hotel companies.
 JHTT The framework developed in this study can be used as a guide or checklist to analyze
2,2 and evaluate forthcoming and current IT initiatives by critically looking specific
tasks and requirements to be undertaken and considered under each phase of the IT
project and also whether the proposed IT projects will deliver those intended outcomes.
The proposed framework can help practicing managers to map out how to prioritize IT
spending and resource commitments and whether and how the project can support the
150 company in achieving competitive advantage. In terms of future research, we further
suggest that following the framework developed in this paper, a semi-structured
interview schedule can be developed and data can be collected from hotel executives,
hotel managers, and hotel chief IT officers. Furthermore, the framework can assist
hospitality scholars in developing and testing a survey empirically by developing
specific statements related to each area of the proposed framework. Empirical findings
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from such interviews and surveys can provide additional insights into how IT projects
can lead to competitive advantage in hotel companies.

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154 Corresponding author

Anil Bilgihan can be contacted at: anil@knights.ucf.edu
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