Assignment Solution on HRM in the Hotel sector Case Study

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HRM in the UK hotel sector is strongly influenced by the variability of customer demand, particularly in those establishments serving the seasonal tourism industry. The hotel sector is also heavily dependent on the external labour market as staff turnover is typically high and, therefore, a ready supply of both skilled and unskilled labour is often required to meet customer demand. This high turnover often results in problems of skills shortages in key operational areas, such as among waiting or kitchen staff. However, whilst the hotel industry context often acts to constrain managers’ choice in HRM strategy, policies and practices, evidence suggests a variety of approaches to staffing and managing the workforce. This case study contrasts the employment practices adopted in two ‘similar’ hotels operating in the same city.


The Mercury Hotel


‘The Mercury’ is a franchise establishment of a large US hotel chain. It is 4-star rated and mainly serves the commercial market, catering for business clients, including the hosting of conferences and seminars. It has almost 300 guestrooms, is located in the centre of a large UK city and directly employs over 200 members of staff. Two-thirds of employees are employed full-time on 39-hour contracts with working patterns varying from week to week. Any hours worked beyond this are paid as overtime. The remaining third of employees are part-time (up to 25 hours per week). This structure appears to provide a balance between the need for flexibility in predictably busier periods throughout the year and for cover for short-term increases in demand. Management also makes extensive use of return staff, mainly students who live in the area during term time or holiday periods, to provide a further element of labour flexibility. Such employees are seen as a ready supply of trained labour but who have no claim to minimum hours, who can be shed with limited notice and who are most willing to work unsociable hours. Further shortfalls in labour supply are met either by contracted or non- contracted casuals or by increasing permanent staff hours at short notice. Contracted casual employees are ‘on-call’ so that managers can demand that employees work ‘as and when required’,


principally being used for functions such as wedding receptions. Management seeks to minimise the potentially damaging effects on service quality by minimising the use of non-contracted casuals and ensuring that, whilst providing a degree of flexibility, most employees are a ‘known quantity’ and have received at least some training. Moreover, rather than relying solely on numerical forms of flexibility (altering staffing levels in line with demand), The Mercury attempts to meet the challenge of variable demand by training members of staff across a range of different areas – a rudimentary form of skills flexibility. The approach to staffing adopted at The Mercury appears to reflect a compromise between the need for labour flexibility and for employee stability, with management attempting not to overly manipulate employee hours simply to meet the direct needs of the organisation.


In terms of employee involvement and communication, formal departmental meetings are held weekly for staff to discuss operational aspects of the hotel. Open staff meetings are held monthly, for both permanent and casual employees, the purpose of which is twofold: first, to pass on information on the performance of the hotel; and, second, to act as a forum in which staff can ask questions directly of the general manager. Most importantly, a consultative committee, known as the ‘Employee Forum’, meets monthly and is chaired by the general manager and personnel manager. This forum is comprised of elected staff representatives from each department and allows staff to raise issues related to their working environment. It is also where recognition is passed on to staff for good service and employee representatives vote for an ‘employee of the month’.


Staff turnover is not considered a significant problem at The Mercury within the context of the industry. Management reports an annual turnover rate of approximately 35 per cent (the company target is 25 per cent). However, the HR manager claims to do a significant amount of work to reduce this figure, particularly in the recruitment process. For example, department managers receive training in interviewing techniques and ensure that candidates are made aware of the idiosyncrasies and demands of the industry. In addition, staff retention is addressed through ensuring staff development is offered to ‘capable’ employees and good performance is rewarded and recognised. Turnover is mainly attributed to mistakes made in recruitment and candidates’ misconceptions about the industry generally, specifically pay levels and working hours. This is reflected in the fact that departing staff rarely leave to work in other hotels, unless at a higher level, but tend to leave the industry.


Absenteeism at The Mercury is considered acceptable. The personnel manager at the hotel has suggested that an environment in which ‘team-working’ has evolved at the hotel and there is a degree of peer pressure discourages unnecessary absence.


Management at The Mercury considers skills shortages to be a huge problem in the industry, compounded by the highly competitive nature of the local labour market, where it is felt that for most of the year employees would be able to leave employment at one hotel and gain employment five minutes down the road’ in another. The HR manager claims that the inherent local skills shortages are not felt as keenly in this hotel as in others because its image as a ‘good employer’ is useful in attracting and retaining staff. The package of benefits available to staff is described, by management, as ‘exceptional’ and is claimed to be central in recruiting and retaining high-quality, skilled employees and in reducing problems of skills shortages, albeit within the context of moderate levels of staff turnover.


The Luna Hotel


‘The Luna’ is located approximately 1 mile from The Mercury and is part of a large UK hotel chain. It has 201 rooms, is also 4-star-rated and employs 128 members of staff. The hotel was subject to a takeover six months ago and is in a period of transition, not least in the way in which HRM is conducted. Again, two-thirds of the workforce is full-time, but the current management is seeking to significantly reduce this figure, having claimed the hotel is overstaffed with permanent employees. It plans not to replace leavers in certain departments or to replace them by offering workers flexible contracts; a willingness is expressed to rely heavily on casuals and agency staff to plug gaps in the workforce. Even permanent employees are now employed on significantly less favourable terms than prior to the takeover. Management claims that this provides ‘working-time flexibility’ for both employer and employee. The number of hours and shift patterns are adjusted and planned for on a weekly basis according to business levels, with either party able to request more or less hours in a given period. No attempt has been made to train employees across a range of tasks to provide greater skills flexibility, nor is there any intention to do so given the stated desire to kept training costs to a minimum.


Employee communication at The Luna is predominantly one-way. The general manager’s briefings are held for all staff every quarter to inform them about organisational and establishment strategy and managerial decisions. Managerial meetings and communication between heads of department and employees is limited to one-to-one meetings as and when required, instigated by either party, usually to deal with grievance or disciplinary issues. There is no dedicated structure or schedule to these intra-departmental meetings, although some departments impose some formality by holding 5-minute ‘chats’ between departmental heads and staff every month. Other departmental managers prefer employees to approach heads of department to raise issues. These one-to-one meetings appear to be the only means of upward communication. There is no other provision for employee consultation, suggestion or participation in decision-making. It appears that even the general manager’s briefing is merely a communicative device with little provision for employee feedback.


The hotel has experienced high levels of labour turnover since the takeover, some of which is likely to be as a result of the upheaval caused. Regardless, labour turnover is reported to be both problematic and beneficial at The Luna, depending on the staff involved. On the one hand, employee turnover is considered undesirable because of the costs involved in recruiting new members of staff, especially skilled workers such as chefs and maintenance workers. On the other hand, however, employee turnover is considered a source of employment flexibility and ‘natural wastage’ of staff, and viewed as positive, especially where poor performing staff are concerned. The general manager claims that the large labour market in which the hotel operates means that staff are readily available, albeit often lacking the required skills. Management cope with this apparent skills shortage by minimising a reliance on particular skills or providing rudimentary training. The high level of staff turnover often requires management to adopt expedient approaches to filling vacancies, even in important frontline operational (for example, waiting and front-of-house) or skilled areas of work. As the HR and training manager suggested, ‘When someone leaves just like that … you’re in a hole and you have to get someone in, then you can’t afford to wait a week or so for references to come through, when you’ve got a job to fill. You take a chance’.




Using the case study material on ‘Approaches to HRM in the hotel sector’ as a starting point, you are required to:


1. Undertake a STEEPLE analysis concerning both the ‘Mercury’ and ‘Luna’ hotels. Assume that their geographical position is in GLASGOW, Scotland.


a. To what extent does the external environment of the two hotels, present opportunities or constraints in terms of their choice of HR strategy and approach to HRM? Draw on your own broader research on challenges for HRM in the hospitality sector.


b. Undertake a SWOT analysis for each hotel against their choice of HR strategy evident from the case study. You should also consider the impact from the likely internal formal organisational systems/structure in your SWOT analysis.


2. Utilising a ‘best-fit’ model of HRM, critically assess both hotels’ approaches to HR strategy.


3. Do you have any recommendations concerning a more appropriate HR model for creating value within the Mercury and Luna hotels? Justify you suggestions. You could again draw on evidence from elsewhere in the hospitality sector or other evidence.


Please note: there is no ‘one best way’ to prepare this critical presentation. You simply need to decide upon your approach and argument, but you must also defend it with evidence, while also making clear links to the context, STEEPLE and SWOT analyses constructed for your own chosen organisations.


Additonal resources to support the presentation


Hoque, K. (1999) ‘New approaches to HRM in the UK hotel industry’, Human Resource Management Journal, 9, 2, 64–76.


Knox, A. and Walsh, J. (2005) ‘Organisational flexibility and HRM in the hotel industry: evidence from Australia’, Human Resource Management Journal, 15, 1, 57-75.


Nickson, D. (2013) Human Resource Management for The Hospitality and Tourism Industries, London: Routledge, 2nd edition, chapter 1.


Presibitero, A. (2017) ‘How do changes in human resource management practices influence employee engagement’, Journal of Human Resources in Hospitality and Tourism, 16, 1, 56-70.


Wilton, N. (2006) ‘Strategic choice and organisational context in HRM in the UK hotel sector’


People 1st are the workforce development organisation for the hospitality and tourism industry

in the UK and have lots of useful resources on their website at:


For the Scottish and Glasgow contexts you can find some useful discussion in the following documents:


Skills Development Scotland (2016) Skills Investment Plan for Scotland’s Tourism Sector, available at:


Skills Development Scotland (2017) Regional Skills Assessment Glasgow Region, available at


Skills Development Scotland (2017) Regional Skills Assessment Glasgow City, available at


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