Sample The Relationship of Restaurant and Tourism Industries in Hong Kong Special Administrative Region Essay
Category : Relationships
The Relationship of Restaurant and Tourism Industries in Hong Kong Special Administrative Region (HUSSAR): a Re-Examination Case Study
I. INTRODUCTION
This section presents the fundamental information that serves as the background of the study. Further, the research aims and objectives are also identified.
1.1 Background of the Study
The Hong Kong Special Administrative Region (HUSSAR) holds an uncontested identity as one of the most exceptional and vibrant tourist destination in the whole world. It emanates an aura of magnificence, efficiency, and state-of-the-art competence (2002). Popularly referred by most visitors as Hong Kong, it is known for sustaining its competitive advantage especially in Asia’s hotel, restaurant as well as the entire tourism and hospitality industries (Lloyd et al, 2000; Yu, 1994). Because of abundant offers and several attractions like its world-renowned cultural heritage, Chinese cuisine and dining, entertainment, leisure, and cosmopolitan lifestyle, tourists move their way to experience Hong Kong’s splendour through such top level offers. Geographically speaking, the Hong Kong Tourism Board (HOT, 2007) locates Hong Kong in a favourable geographic location in the centre point of Asia Pacific region with a minimum five (5) hours fly reaching most of the areas worldwide. With the support of government and able infrastructures, events tourism thrives on this piece of land. Different kinds of events that consist of both commercial, social, cultural, educational in nature are present in this venue.
Meanwhile, (1997) stated that restaurants are vital since dining is essential in every culture. Perhaps, this is the underlying reason why restaurants are anywhere in the world ranging from a small village to an international cosmopolitan. There may be only a small number of restaurants in small villages, but in a fast paced cosmopolitan such as Hong Kong where one can find a different restaurant at every corner of the street, dining out in restaurants has become important for social and business occasions, or even daily routine for a lot of people. People in Hong Kong usually spend a sizeable amount of their disposable income on dining out. It is like a legacy of both the territory’s busy lifestyle and typically small homes that are not conductive to family cooking since most of the population work on an average of 4-8 hour work week. Hence, family gatherings are often held in restaurants rather than at home with professional chefs who do the cooking.
Apart from serving the local population, restaurants also serve millions of tourists from all over the world every year. The restaurant industry has always been an essential element to the success of tourism industry. As stated on the HOT Partner net (2006), the wide variety of the city’s restaurant provides the consumer every imaginable cuisine style for any budget ranging from European bistro to traditional Chinese cuisine. Not only does the city provide a lot of food choices, it also has a long list of superb dining atmosphere that presents a unique dining environment. It may be from a rotating sky scraper overlooking the famous Victoria Harbour to a table and chair set up just beside the busy pedestrian street, restaurant venues are diverse and set accordingly to the type of dining preferred by the consumer. With different combination and mixtures of classical cuisine and fusion food plus culturally inclined and contemporary architectural design, the city provides an unforgettable dining experience. Hong Kong has the reputation for quality and wide varieties of delicacies that created the title as “Gourmet Paradise” and results to attracting numerous tourists visiting the region annually.
For
the past decade, the economy faced several challenges brought about by some
occurrences
like economic hardships. According to Census and Statistics Department (2006),
the number of tourists in Southeast Asia reduced significantly during the first
half of 2003 because of the sudden onset and outbreak of the disease SIRS
(Severe Acute Respiratory Syndrome) that caused significant economic damage.
With SIRS and economic crisis, many restaurants – both small and large (e.g.
Golden Harvest and Sun Light) are forced to stop its operations. An article
published by Euro food on March 14, 2002 presented the statistical
figures on Hong Kong food sales and decrease of sales among restaurants as
compared with the previous terms (see Appendix). Despite these challenges
in the previous years, Hong Kong Monthly Digest of Statistics (2006) showed that
the region has been experiencing a continual increase in visitor volume and also
in average capita expenditure by each visitor since 2003. This report similarly
shows tourists are paying approximately 5% more annually for dining experience,
as well as other foodstuff. A large number of restaurant owners think that the
positive economy and improving tourism market have a direct and positive impact
on the whole restaurant industry.
According to Labour data from Census department (2007), the region’s economy caters to the service sector and restaurant businesses serve as a primary segment and source of economic revenue. The whole geography of the region is apparently small yet it presents a large number and assortment of restaurants in a narrow land area. The restaurant industry is a challenging and competitive sector that requires continuous quality improvement and differentiation to meet customer expectation and to strive for customer needs (Pun and Ho, 2001; Widened, 2006). While the restaurant industry is blooming and with new competitors entering every single day, extra attention to customers’ preferences and catered needs are vital in order to improve financial performance for survival. Many restaurants are trying to target multiple customer segments by diversifying their products and service as to maximize their revenue. Hoe et al (2004) as cited in Widened (2006) stated that restaurants would attract international tourists by adjusting service in particular. In relation to this, Widened (2006) affirmed the works of Baker et al (2000) by stating that some restaurants that provide written information on their menus using native languages and include foreign currency exchange services consequently makes the business environment much more competitive. According to Pun and Ho (2001), many restaurants in Hong Kong, among other industries, had been facing intense global marketing competition and had been struggling to continue their business operations.
Among the top offers of Hong Kong in terms of tourism is its authentic Chinese cuisine. It is identified that Hong Kong is among the world’s largest centres of great Chinese food. Generally, most references describe Hong Kong cuisine as a combination of eastern and western traditions and style. Its cuisine offerings, from most standard to most expensive and composite arrangements of international gourmet, are broad and this gives the region titles such as Gourmet Paradise and World’s Fair of Food (2001). For the HOT (2007), Hong Kong is a “world of exquisite, mouth-watering dining options.” This is because of good Chinese restaurants situated all over the region that focus in one or more specialization such as or Chinese Vegetarian. In terms of global restaurants, Hong Kong as an international city offers a variety of eastern and western restaurants where fine dining or casual family-style meals are served, day and night.
It has been established in most literatures that Hong Kong’s restaurant industry is among the prime features in tourism. Research studies that are focused on tourism marketing and management do not fail to notice the vital role of restaurants or Hong Kong food industry in the hospitality business and economy in general. With this fact, the purpose of this study is to re-examine the restaurant industry market and relationship with the tourism industry in Hong Kong Special Administrative Region (HUSSAR). The processes and fundamental of the approach will be detailed along with a discussion in the following sections.
1.2 Aims and Objectives
Aim
This study generally aims to re-examine the restaurant industry and its relationship with the tourism industry in Hong Kong Special Administrative Region (HUSSAR).
Objectives
· To investigate how the restaurant industry contributes to the tourism industry in HUSSAR.
· To identify and assess the differences in selection and service quality attributes between local consumers and tourists.
· To find out if dining experience has an impact on tourists’ level of satisfaction during their visit.
· To examine if dining experience is an important factor for tourists visiting HUSSAR.
II. LITERATURE REVIEW
This section deals with the overview of key concepts used and research studies conducted in relation to the subject. By embarking on such pursuit, the research may be guided accordingly by initially discovering where the research is coming from, what and how much have been studied regarding the topic, and what it is yet to tackle. Besides providing background to the study, this chapter provides the necessary backbone and support in order for the research to stand credible. The references used on this segment are product of broad researching and information retrieval.
2.1 Restaurant industry in HUSSAR
HUSSAR Census and Statistics Department (2007) reports the region’s population has been increasing steadily with an annual growth rate of 0.4% in the past years. With the number of residents reaching approximately 6.9 million in 2006, Hong Kong is considered to be one of the most densely populated cities in the world. The economy of region is also known to be one of the freest and dynamic in the world in which its per capita Gross Domestic Product (GDP) is similar to other developed countries. With the emergence of SIRS in 2003, the economy suffered, yet after this crisis, Hong Kong’s real GDP continuously expand due to booming exports, outstanding and vibrant inbound tourism programmes, and strong contribution of consumer expenditures. The continuous growth in the local economy and the improving tourism market and hospitality industry are leading to a positive impact on the restaurant business.
The number of restaurants is increasing constantly with thousands of restaurants offering a full range of food varieties and services. According to Census and Statistics Department Reports (2005, 2006), the restaurant industry is subcategorized into three categories namely Chinese restaurants; Restaurants other than Chinese restaurants; and Fast food shops. In comparing the period of 2004-2006, the total number of restaurants has been increasing by approximately 10% in all categories, or about 1000 new restaurants opening every year. Figure.2 shows the number of restaurants in Hong Kong as documented by Employment and Vacancies Statistics Report (2006).
Source: Census and Statistics Department (2006, pp. 15-16)
In a study conducted by LAN and Khan (1995) catering to Hong Kong’s fast-food industry. They recognized the rapid growth of fast-food chains as well as the various challenges that directly and indirectly affect business operations such as intense competition to the point of saturation, price and rent increase, employment deficiency, and political uncertainty. Furthermore, international fast-food chains present a wide selection of core products (i.e. hamburger, chicken, or pizza). Their marketing strategies are mainly focused on image building through insistent marketing communications efforts that add as extra operational burden. In comparison to the local fast-food businesses, LAN and Khan concluded that Chinese-style fast-food chains are concentrated on product-orientation and development of great offers. The expanding coverage of fast-food chains is classified according to types. The authors identified that international fast-food chains expand through franchising while domestic fast-food establishments like those in Hong Kong expands through private (such as family) ownership.
The growing number of restaurant in the city can be equated to more choices for tourists, competition, and economic revenue. However, there is a constant challenge for the restaurant industry to maintain an acceptable and satisfactory level of quality service to the consumers – both locals and travellers.
2.2 Service quality and restaurant selection attributes in Hong Kong
Meters et al (2006) indicated that quality is an increasingly important factor that differentiates between competitors in service industries. Unlike tangible goods, many services cannot be simply assessed for quality particularly in the case of restaurant industry where consumers cannot even evaluate the quality of the services until after they consumed it. Sparkbrook and Horner (2006) interpreted Fox all and Goldsmith (1994) and suggested that consumer perception behaviour is a chain of stages:
- Growth in perception of a want or need
- Pre-purchase planning and decision-making
- The actual purchase act
- Post-purchase behaviour, which satisfaction may lead to repeat buying, and vice versa.
Oakland and Shoal (1996) defined quality as meeting the requirements of the customers, they also argued that improving the quality of services is more difficult than improving the quality of products because of the difference between the two of them. For instance, an unsatisfactory product can be changed or repaired. However, an unsatisfactory service is something that cannot be undone, so it is vital to deliver a satisfactory service. The study also indicated that customers’ satisfaction are based on their personal expectations for what their service experience will be, if the service performance does not meet individual customer needs, the customer will not desire or require the service. Meters et al (2006) explained that service quality is often defined as the satisfaction of expectations, where expectations are biased and the changes that consumers perceive will affect the level of satisfaction.
The National Restaurant Association (1994) declared that modern consumers are more sophisticated and possess high level of product/service knowledge, which in turn result to being demanding for quality products and superior restaurant services and prone to complaining poor customer service standards. Steen amp (1989) believes that high level of customer retention is equivalent to high quality and satisfaction that will lead to loyalty. This is supported by John and James as they claim that generation of loyalty comes from quality. Customers are likely to come back to patronize the same product within the restaurant because they feel happy and satisfied with the quality of service. In this instance, these customers will become the source of long-term revenue that will support the financial resources of the restaurant.
Koo et al (1999) indicated that the key to a successful business in today’s market is to be able to meet the consumer’s need. To not only survive but to do extremely well, restaurant has to understand what attract the customer in their dining experience and go beyond their expectation. Some restaurants maintain some specific groups of customer’s loyalty by serving the food and providing the service the groups favour. (1997) stated that restaurant owners knows their competition very well, if their restaurant’s approach do not match any regular sets of diners’ need, they will either change their approach or simply sell their business to someone else. Such changes are usually a complete makeover, from food style to interior décor. Because the competition is so fierce, owners often keep their future strategies very secret, afraid that competitions will steal their ideas. As well as the restaurateurs know their competition, they seem to have a lack of knowledge of their customers’ need and expectations. Because of this unawareness of the customers, business strategies made by owners are usually based entirely on past experience, instead of a much more reliable market research; thus results of such change in business approach are rarely predictable (Koo et al, 1999)
Both local and foreign diners usually have a wide range of choices, and they will subconsciously rule out difference choices and make a final decision as to where to eat depending on various reasons. (1997) showed that previous studies findings by Lewis (1981) and Aunty (1992) have shown that the subconscious selection has a few common criteria that the diner will evaluate through. Attributes such as menu variety, price, atmosphere, and convenience factors are all common attributes, but the most important factor in the decision making is the food quality of the restaurant, while the restaurant type is the second most important factor. Nevertheless, dining occasion, atmosphere, prestige, location and cost of food also appeared to be the decisive determinant in the final restaurant selection process. When the consumers narrow down to a few restaurants of the same type, studies have shown that the image, cost and the environment of the restaurant become a critical criteria. However, different age group and income segments will certainly affect the criteria of the selection and form specific customer base (, 1997). Figure 3 shows the overall importance percentage ranking variables during the restaurant selection process.
Figure 3
Overall importance percentage ranking variables
Overall importance
Choice variables percentage ranking variables
Quality of food 82
Type of food 63
Cost of food 62
New experience 55
Location 51
Menu item variety 43
Speed of service 41
Ambience factors 24
Comfort level 19
Cleanliness 15
Prestige 9
Competent waiting staff 7
Prompt handling of complaint's) 7
Friendliness of waiting staff 3
Source: (1997)
2.3 Customer satisfaction
Earlier studies affirmed that meeting customers’ actual expectations are exceeding such is a successful aspect for restaurants. Rust et al (1996) suggested that customer satisfaction is always influenced by consumer expectations. They found a set of “anticipation” that reflected what might, could, will, should, or better not happen as shown in Figure 4, while will expectation is the “average level of quality that is predicted based on all known information”. Anticipation is what the consumer feels like he or she deserves from the transaction, where ideal is what would happen under the best circumstances and is same with excellence, minimally acceptable level is at the level of mere satisfaction. The worst possible is the worst outcome that can be imagined.
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Source: Rust et al. (1996, p. 231)
Rust et al (1996) also argued that customers’ expectations are strongly affected by their experience. For instance, if the customer did not satisfy and had a bad experience, then the will expectation will decline. On the other hand, if the customer had a good experience and was satisfied, the will expectation will rise. It is also stated that customers’ expectations can be affected by various factors such as advertisements and word of mouth.
Eke and Woods (1999) had a study about what customers really want, how that affects what service to deliver, satisfaction and perceived quality. The definition for satisfaction is something that based on customers’ predictive expectations, a comparison of event which measures the perception of what happened in a product and service and was compared with what the consumer thought would have happened. Hence, satisfaction is an evaluation of how well the consumers predicted the products and services they received and if it meets their expectations. The perceived quality is based on ideal expectations, which is a comparison of the consumer’s perception of an event to their ideal expectations. In order words, customer expectations for a particular purchase may be correct, but the quality of that purchase may not be as good as what they would consider to be ideal. The study emphasized that satisfaction and perceived quality are completely different. They measure a comparison with predictive expectations and ideal expectations respectively and should be distinguished between the two. Meters et al (2003) argued that there is evidence showing that high quality and profitability are relative to each other, saying that customers who had a good purchase experience in the past are more likely to spend again in the future.
(1997) demonstrated that restaurants need to pay more attention to foreign consumers’ expectations and perception as there’s variation in different cultural experiences. Better understanding of the cultural variance in restaurant industry has to be emphasized to adapt their traditions and culture. Services and products should reflect and accommodate different expectations of consumers in different cultures in order to maximize revenue.
The following sector will bring out the methodology which is used to investigate and analyze the restaurant industry and its correlation with the tourism industry in Hong Kong Special Administrative Region (HUSSAR).
KEY POINTS
The Hong Kong restaurant industry is comprised of international food chains and locally owned establishments.
There are many things that make Hong Kong cuisine unique namely: the manner of presentation; touch of tradition; variety of flavours; new trends; dose of creativity; and others. Because the restaurant industry serves a total of 17 million people, there is a need to have competitive menu.
Today, companies within and outside the food and beverage industry particularly restaurants are striving to deliver not only their products and services but also high or even world class quality and satisfaction that will lead to increased customer loyalty and market share. The significance of customer satisfaction and its relationship with service quality, occupancy rate and profitability has long been exhorted by both management experts and researchers in the tourism field ( 1994; 1996). Customer satisfaction and service quality in the restaurant business have been precipitated by the need to position organizations competitively in the marketplace. The positioning in the Hong Kong’s restaurant industry propelled marketing managers to build brand image for their brand names in order to create brand loyalty among its customers. However, in line with this propelled brand-building initiative, organizations must address on many issues in order to create brand loyalty among its customers and improve its position.
Organizations and companies in the industry sell to very large customers/buyers. Likewise, the industry also displays an apparent practicality for customers/buyers to switch from one choice to another. Moreover, the products offered by restaurants in the industry are essentially interchangeable and indistinguishable. The restaurant industry shows that the cost of the product and service represents a relatively large percentage of the buyer’s and customer’s total cost. Nonetheless, the customers could if desired backward-integrate specifically by acquiring a group in the industry to which Tao Heung is included.
The restaurant industry in Hong Kong is promising. With the current changes in the lifestyle of people and the contributions of technological advancements, the industry growth rate could be deemed in its progression stage. The major industry trend is the emerging culture of international demand for authentic foreign foods that will cater to the needs of the consumers. Also, the food industry is an integral part of the tourism business especially in Hong Kong. Consequently, consumers are more knowledgeable and demanding on what product to purchase. The critical success factors (Cafés) of the industry are its ability to serve the needs of the clients as based on the changing lifestyles, consumer behavior, and marketing strategy. Also, the idea of continuous innovations is considered as the most important CSV.
References
Appendices
Appendix
Hong Kong Food Industry Report in 2001
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Hong Kong restaurant receipts fell 2.5% to HK$56.4 or 8.78bn (Euro) last year. The reason on this depreciation is attributed to the diners’ lost appetite for expensive meals and cut back on spending due to the worsening economy during the period.
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Specifically, the report of the Census and Statistic department stated that receipts from bars were reduced to 8.4% in value while the Chinese restaurants went down to 3.4 % average.
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Fast food outlets as well as non-Chinese restaurants both accounted 1.2% decrease in value.
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The last quarter of 2001 recorded 4.9% year-on-year total restaurant receipts depreciation or amounting to HK$14bn.
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A prediction from leaders of HK’s food and drinks industry also affirmed that another 1000 restaurants will close in 2002 as downturn resulted further into unrestricted expenditure.
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A sharp recession in trade among HK’s mainstream dim sum restaurants and teahouses is also reported.
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