Information Technology & Tourism, Vol. 4 pp. 41–64 1098-3058/01 $20.00 + .00Printed in the USA. All rights reserved. Copyright © 2001 Cognizant Comm. Corp.

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41

Address correspondence to Tsipi Heart, Department of Hotel and Tourism and Management, School of Management, Ben-GurionUniversity of the Negev, Beer-Sheva 84105, Israel. Tel: 972-52-513633, 972-7-6900119; Fax: 972-7-6900580; E-mail:theart@netvision.net.il

INFORMATION TECHNOLOGY IN THE HOSPITALITY INDUSTRY:

THE ISRAELI SCENE AND BEYOND

TSIPI HEART, NAVA PLISKIN, EDNA SCHECHTMAN, and ARIE REICHEL

Ben-Gurion University of the Negev, Beer-Sheva, Israel

A survey of information technology (IT) in Israeli hotels revealed medium level of IT satisfaction anda lack of an integrated application suite for this industry, similar to the situation globally. This has ledthe authors to question whether hotels have the IT infrastructure needed for eBusiness and eCommerce.The survey identified two Israeli software vendors that, since 1999, have acted as Application ServiceProviders (ASP), renting applications to hotels and restaurants. Elsewhere in the world, however,hospitality ASP initiatives have been less developed. Because Israeli IT is relatively advanced, it isproposed that once renting IT is shown to be more affordable and manageable than buying IT, a trendtoward ASPs might extend beyond the Israeli hospitality scene and facilitate the robust IT base neededfor competing in the global economy.

Application services provider (ASP) eBusiness eCommerceEnterprise resource planning (ERP) Hospitality industry Information technology (IT)

man resource management, and office automation.Surveys of IT utilization in the hospitality industrypoint to a medium level of satisfaction with existingsystems due to little or no integration among the vari-ous functional modules, which are usually purchasedfrom different vendors (Van Hoof, Hubert, Verbeeten,& Combrink, 1997). This complicates data warehous-ing and leaves decision-makers in the industry lag-ging behind in adoption of automated forecasting toolsand decision support systems (Marek, 1997).

The problem of fragmented functional informa-tion systems is not unique to the hospitality indus-

Introduction

The hospitality industry began to utilize informa-tion technology (IT) more than three decades ago(Berchiolly, 1997; Hensdill, 1998), well before manyother industries. Since then, hotel guest-centric “front-office” applications have dealt directly with guestneeds, including reservations, reception, cashier,point-of-sale (POS), housekeeping, and sales of foodand beverages. Hotel “back-office” applications, onthe other hand, have dealt with such functions as fi-nance and accounting, inventory, procurement, hu-

42 HEART ET AL.

try. Enterprise resource planning (ERP) systems, oran integrated collection of functional applications,such as finance, logistics, sales, marketing and hu-man resources, sharing a common database man-agement system and a uniform user interface, havebeen designed to overcome fragmentation (Capron& Kuiper, 1998; Davenport, 1998; Hecht, 1997). Tobegin with, ERP systems were sold to manufactur-ing organizations. Gradually, service organizationshave joined the ERP customer community. Becausedifferent industries have different needs, ERP ven-dors offer a variety of industry-specific ERP ver-sions. Thus, for example, an ERP version for theelectronics industry would be different from an ERPversion for the chemical industry, and both wouldbe different from ERP versions for service-orientedindustries such as banking or higher education.

Interestingly, all leading ERP vendors do not of-fer hospitality-specific ERP versions [see the homepages of SAP (www.sap.com), Oracle(www.oracle.com), and Baan www.baan.nl)]. In thepast, when they were targeting large organizationsonly, their absence from the hospitality industrycould have been attributed to the fact that the major-ity of hotels and restaurants are small and mediumsize enterprises (SMEs). Currently, however, ERPvendors are selling “light” ERP packages to SMEs(Mayer, 1997; Michel, 1997; Weil, 1997; see alsowww.sap.com).

The hospitality industry is one of the fastest grow-ing industries worldwide. In the US alone, accord-ing to the US Department of Commerce, the num-ber of non-American tourists increased by 23% from39.4 million in 1990 to 48.5 million in 1999, whilerevenues from these tourists grew by 64% from $58.3billion in 1990 to $95.6 billion in 1999. It is gener-ally understood, however, that without advanced ITinfrastructures any industry’s ability to compete glo-bally could be jeopardized and threatened. The lim-ited satisfaction with IT in the hospitality industry(Van Hoof et al., 1997) and the lack of ERP ver-sions have lead the authors to question whether ho-tels are equipped with the appropriate IT infrastruc-tures required for eBusiness and eCommercecompetition in global markets.

To find out whether the hospitality industry isready for eBusiness and eCommerce in terms of itsIT environment, an IT survey was conducted in Is-raeli hotels. The ability to generalize beyond the Is-

raeli scene in this article stems from two reasons.First and foremost, the Israeli IT industry is knownfor being relatively advanced. High-tech pioneeringis fast becoming an Israeli cultural attribute, and ITis being implemented even by “low-tech” industries.Second, as a holy place for the three big monotheis-tic religions and as a bridge between three conti-nents, Israel is considered a potentially attractivelocation for tourists. According to the Israeli Cen-tral Bureau of Statistics (www.ibs.gov.il), the num-ber of hotel guests grew by 48%, from 4.2 millionin 1990 to 6.2 million in 1999, in spite of the politi-cal instability in the region. The tourism growth po-tential, along with the IT orientation, positions theIsraeli hospitality industry as a model for IT assimi-lation.

This article thus surveys and analyzes IT utiliza-tion, satisfaction, and innovations in the Israeli hos-pitality industry. Specifically, we look into: Whichvendors offer hospitality IT applications? What ap-plications are offered? Do these applications servethe needs of decision-makers in the industry? Whatis the level of spending on hospitality IT? Do Israelihotels buy or rent IT applications?

The next section reviews the literature, the meth-odology used in this study, and the study’s results,with statistical tables underlying the results appear-ing in the Appendix, for the sake of brevity. In thediscussion part of the next section, we contrast twosurvey findings. First, that the current state of ITin the Israeli hospitality industry is similar to thesituation around the world. Second, that two ven-dors, Silverbyte and Net-Pos, have been actingsince 1999 as application service providers (ASP)that rent applications to restaurants and hotels. It isnoteworthy that hospitality ASP initiatives outsideof Israel seem less developed. Thus, as elsewherein the world, the survey does indicate that the hos-pitality industry in Israel is not well positioned forthe eBusiness and eCommerce arenas. Yet, hospi-tality ASP pioneers in Israel seem to be more ex-perienced than their counterparts elsewhere in theworld in the new ASP approach, which is not yetwidely offered to the hospitality industry by glo-bal vendors.

In conclusion, we acknowledge that the ASP con-cept might still be immature, especially in hospital-ity. Moreover, we stress that the verdict is not outand that whether or not renting IT is more afford-

IT IN ISRAELI HOSPITALITY INDUSTRY 43

able and more manageable, for hospitality enter-prises, than buying IT has yet to be demonstrated.Once this is done, however, and given the Israelileadership in IT, the lesson to be learned perhapsfrom the Israeli IT hospitality vendors, who areembracing the new rental model, is that a trend to-ward ASPs might extend beyond the Israeli hospi-tality scene and enable the robust IT base neededfor competing through eBusiness and eCommercein the global economy.

The Study

Literature Review

A room management application was installed atthe New York Hilton in 1963 (Sayles, 1963) and aproperty management system was installed at theWaikiki Sheraton in 1970. The hospitality industrywas thus as early as the 1960s and 1970s in adopt-ing operational information systems.

The global hospitality industry seems to attractnumerous vendors. As many as 71 vendors adver-tised IT applications in the June 1999 edition ofHotels magazine and 250 vendors have participatedin Eurhotec 2000 in Wien and in HITEC 2000 inDallas. According to a FORTE publication (FORTEHotel Division, 1997), not one system can be cur-rently recommended to members of internationalhotel chain. Instead, a variety of up to 19 differentsystems are being used. In a survey of 237 top man-agers of hotel chains, independent hotels, and hotelmarketing departments in the US (Van Hoof et al.,1997), respondents rated the quality of their infor-mation systems as a little over 3 on a scale of 1 (verybad) to 5 (excellent). Most of them indicated thattheir systems were outdated, inefficient, and un-friendly.

In a comprehensive survey conducted in 1995among 3000 US hotels (Van Hoof, Collins, &Combrink, 1995), almost all respondents (95.3%)reported IT usage, mainly front-office applications,an impressive increase compared with less than 10%of respondents in a similar 1980 survey (Chervenak,Keane and Co., 1980). Less than half of the respon-dents (40%) rated IT importance to operation of theirhotels as high or very high and most (81%) said thatthey would prefer to invest in technology that “di-rectly improves guest satisfaction,” a result similar tofindings of a 1990 survey (Coulton, 1990). Many

executives in the hospitality industry do agree that ITplays an important role in hotel operations, some evenstating that utilization of IT is critical: “there’s nodenying or avoiding it, automation has become thearbiter of success in the industry. Without it, failure isjust a matter of time” (Hensdill, 1998, p. 51). Yet,only 41% of total responding managers considerthemselves as IT oriented or highly IT oriented, while51% mentioned medium, low, or very low level of ITorientation. Although most global vendors have re-cently announced new Windows-based applications,it is not uncommon to “see many of the new Win-dows based property management systems experienc-ing growing pains” (http://www.aremissoft.com/in-vestors/pressrel.asp?pr=11161).

Worcester (1997) found that the main drawbackof hospitality information systems was lack of ac-curate and timely information caused by the need torekey information from various reports, instead ofhaving access to integrated information managed inone consolidated database. According to Hensdill(1998), experts believe that in terms of IT the hospi-tality industry is about 2 years behind other indus-tries. An explanation for this might be related to arecent finding that the average level of IT invest-ment in the industry was 1–2% of total sales in hotelchains and even less in independent hotels (Hensdill1998). Compared with the 7.1% found to be the av-erage across all industries, by a Meta-Group survey(Rubin, 1998), the hospitality industry thus fallsbehind other industries in IT investment levels. Ac-cording to Hensdill (1998), some executives in thehospitality industry agree that, for hotels to stay com-petitive in the era of eBusiness and eCommerce, ITinvestment would have to increase in order to im-prove their IT infrastructures.

The need to cope with advanced IT infrastructureis not unique to hospitality. Other industries are facedwith the necessity to increase investments in IT pur-chasing and maintenance. These realities of the glo-bal economy, along with the decrease in the cost ofcommunications and the increase in the reliabilityof communications, have led IT vendors and usersto consider applications rental from ASPs that offerremote application hosting. Heinlein (2000) esti-mates that over 1000 ASPs are trying to get them-selves established, offering their client organizationsto save the initial purchasing cost of hardware andsoftware by remotely accessing, via leased lines or

44 HEART ET AL.

the Internet, hosted leased applications, while usingrelatively cheap “thin” network devices. The Yan-kee Group (“Executive Summary,” 1999) forecastsan ASP market size of above $14 billion by 2004.

One of the largest global vendors of hospitalityapplications, Micros-Fidelio, announced in March2000 a joint venture with one of the largest ASP ven-dors in the US, USInternetworking, which would beavailable in 2001 (Micros-Fidelio web site: http://www.fidelio.com/press_room/press_releases/usinet.asp). Centrafuse is another vendor function-ing in ASP mode in hospitality, hosting only an ac-counting application (http://www.centrafuse.com/).Aremissoft, which has recently purchased EltraxHospitality to become the second largest vendor ofhospitality applications, is vaguely suggesting anASP service as number seven out of eight suggestedservices to the industry (http://www.aremissoft.com/investors/pressrel.asp?pr=11161). Not surprisingly,applications for the hospitality industry are not atall in the Web sites of Oracle, which is one of thelargest global ASPs.

Methodology

Research for this article was conducted in twophases: preliminary and comprehensive. The pre-liminary phase included a vendor survey and struc-tured interviews in hotels. For the vendor survey, alist of all the suppliers of applications to Israeli ho-tels was compiled based on personal knowledge ofthe researchers, brochures distributed in hospitalityconventions, and advertisements. Interviewers vis-ited each vendor, after learning about the businessfrom the company’s Web site or from other publica-tions, and learned about the vendor’s position in thehospitality industry, products offered, means of prod-uct delivery (buying or renting), market share, andfuture plans. The structured interviews were carriedout by teams of students studying toward an aca-demic degree in Hospitality Management. The stu-dent teams visited 70 hotels and interviewed man-agers using a preliminary questionnaire about ITutilization in each hotel, including server and clienthardware, operating systems, networks, applications,and level of integration between the applications.Lessons learned from using the questionnaire of thepreliminary phase were the basis for the final ques-tionnaire of the comprehensive phase. For both ques-

tionnaires, applications were categorized accordingto Table 1.

The questionnaire used in the comprehensive phasewas developed based on experience gained in the pre-liminary phase. Thus, questions about server hard-ware or operating systems and about executive ordecision support applications, for which it was im-possible to get answers in the structured interviews,were omitted from the final questionnaire. Theseomissions affect how the results are reported in thenext subsection: answers to questions excluded fromthe final questionnaire are reported under the prelimi-nary phase while applications used by the hotels, cov-ered by both preliminary and final questionnaires, arereported under the comprehensive phase.

The final questionnaire, where applicable, utilizeda Lickert scale of 1 (totally disagree) to 7 (totallyagree), to simplify evaluation and assessment tasks,as done in previous IT surveys (Sethi & King, 1994;Smith, Rabski, & Kasavana, 1996). It consisted of aheader and six parts: in the header part of the ques-tionnaire, the respondents were asked to fill in de-mographic details, without revealing the hotel name.The 21 variables derived from the questionnaire’sheader and other six parts are listed in Table A1 ofthe Appendix.

Table 1

Application Categorization

Front officeReservationsFront desk

ReceptionCashiering

Point-of-saleSpa managementBanquetingGuest service centerGlobal reservations

Back officeAccounting & finance

AccountingBudgetingAssets

LogisticsInventory (general; food & beverages)ProcurementMaintenance

Human resourcesTime & attendanceHuman resource database

Sales & marketing

IT IN ISRAELI HOSPITALITY INDUSTRY 45

Part 1 requested information about the applica-tions installed at the respondent’s hotel and aboutthe level of satisfaction from each application, us-ing the statement: “The application performs to ourfull satisfaction and we recommend it.” For func-tions that did not use computer applications, respon-dents were asked about the need for function auto-mation, using the statement: “Automation of thisfunction is required.” The 70 hotels of the first phasereceived a modified version of Part 1. It listed thespecific applications at their hotels, as recorded bythe student teams during the structured interviews.Respondents were asked to confirm or update thelist as well as to respond to the satisfaction and ne-cessity questions. Part 2 referred to the level of inte-gration among applications installed at the hotel, inresponse to the statement: “The applications installedat our hotel are integrated and manual keying of in-formation from one system to another is hardly everrequired.” Part 3 referred to the annual maintenanceexpense, which includes spending on hardware, net-work, and software maintenance. Part 4 focused onthe quality of the information derived from the ap-plications for decision support, or the quality ofmanagerial information using the statement: “Ap-plications installed at the hotel supply the requiredinformation on-time, supporting hotel managementin decision-making processes.” In Part 5 respondentswere asked to indicate the percentage of annual in-vestment in IT from total sales revenue in 1995–1999.Part 6 included an open question, allowing respon-dents to convey their thoughts and wishes regardingIT in their hotel.

The cover letter from the researchers was mailedalong with the final questionnaire to all 303 hotelsregistered with the Israeli Hotel Association. It ex-plained the objectives and importance of the studyand was slightly modified for the 70 hotels that par-ticipated in the preliminary phase, thanking themfor their cooperation and asking for more help. Ofthe 303 questionnaires sent, 60 responses were re-ceived. This response rate of nearly 20% is higherthan the response rate of 9% to 17%, which wasobtained in previous hospitality surveys (Hensdill,1998; Reid & Sandler, 1992; Van Hoof et al., 1995,1997). Of the 70 preliminary participants, 23 alsoresponded to the comprehensive survey. The re-sponse rate of nearly 33% is relatively high, per-haps because the visits by student teams in the pre-

liminary phase created more commitment thanwould otherwise be expected. Among the other 239hotels, 6 envelopes were returned to the sender dueto a wrong address and 37 responses were received,a response rate of 16% (Table A2 of the Appen-dix).

The Mann-Whitney tests for the medians of thevariables for Parts 1 to 5 of the final questionnaireconfirmed that the 23 Phase 1 hotels and the 37 Phase2 hotels represented the same population, enablinganalysis as one group of 60 respondents. Out of the60 respondents, two mentioned that their hotels werenot automated, which left 58 automated hotels, anautomation rate of 97%. One of the respondents re-turned the questionnaire, without responding, be-cause the hotel was closed for renovation and wasscheduled to reopen with new information systems.This left 57 responses, a net response rate of 19%.Fifty-one percent of the respondents were manag-ers, 21% were comptrollers, and 7% were IT man-agers. All documentation omitted from this articledue to length limitations—the preliminary and finalquestionnaires, survey cover letter, and completestatistical analyses—is available from the authorsupon request.

Results of the Preliminary Phase

Vendor Survey.The vendor survey revealed thattwo Israeli software vendors, Rotstein andSilverbyte, supply front-office applications to 55%of the hotels. Having introduced their first versionsabout a decade ago, both vendors are encouragingcustomers to upgrade to recently developed newWindows-based applications. One of the two ven-dors, Rotstein, first entered the hospitality industrywith back-office systems, starting with accounting,continuing with procurement and inventory manage-ment, and finally adding front-office applications.Two American vendors, Sulcus and Fidelio, offerfront-office applications, which are installed in 34%of the hotels, and can be interfaced to back-officeapplications from Israeli vendors, because the back-office systems recommended by them have not beenlocalized. A few other small companies offer nichefront-office applications, accounting for 11% of themarket. Thus, front-office choices for Israeli hospi-tality industry are quite limited, none of which of-fers a fully integrated solution (see Figs. 1 and 2).

46 HEART ET AL.

Only a handful of Israeli back-office vendors havefound the hospitality industry attractive enough andadapted their systems to meet specific hospitalityrequirements. Five vendors account for 82% of themarket, out of which four offer accounting applica-tions for other industries as well, and only one hasdeveloped a package dedicated for the hotel specialrequirements. The situation is slightly different forinventory and procurement applications. Seven ven-dors have their applications installed in 84% of thehotels, with the largest market share of only 19%held by one vendor.

Only Rotstein and Silverbyte are offering an ap-plication suite for hotels, consisting of front- andback-office applications. Even though one IBM AS/400 platform and the same development tools wereused by Rotstein to develop the suite applications,in the absence of shared database, information re-dundancy has been a problem (e.g., travel agentfiles in front office and back office are separate andinterfaced via a transformation table). Silverbyte’sapplication suite is a combination of its own front-office applications with POS and back-office ap-plications from strategic business partners, Net-Posfor POS and Eshbel for the back-office applica-tions. Silverbyte has developed online interface forthe front-office applications, including the POS,and an offline batch interface between front andback office (e.g., POS and stock control or guestaccounting and hotel general ledger), yet withouta shared common database. Both vendors thus arestill not offering a fully integrated solution for ho-tels.

Interestingly, in addition to selling of client/serverapplications to hotels and restaurants, Silverbyte and

Net-Pos have been offering since 1999, somewhatearlier than hospitality IT vendors elsewhere, an ap-plication rental service. Renters connect to applica-tions hosted on the vendor’s servers, via leased linesor the Internet, saving heavy initial investments inhardware and software, monthly personnel costs forIT professionals, and the burden of installing, main-taining, and upgrading of hardware and software.

At this point in time, to establish themselves inthe ASP arena, the fees that both vendors charge theirrenting customers are rather low and hardly profit-able. However, on the face of it, it looks as if therental option is more affordable to their customersthan the buying option. The “thin” client worksta-tions needed under the rental option, for example,cost half as much as the “heavy” client required un-der the buying option. A restaurant that chooses tobuy a traditional client/server network with five us-ers, for instance, will have to pay for one file server,five workstations, a network, and the POS applica-tion, a total initial cost of $27,000. There would alsobe a monthly maintenance expense of about $1,400.By renting the same application, the cost of the fileserver and the application would be eliminated alto-gether and the initial investment for “thinner” clientworkstations and the network would amount to$4,700. Due to savings on IT personnel and serviceagreements, no longer required to keep the IT infra-structure up and running under the rental mode, themonthly rental fee and other expenses would beabout $270. The rental option is also more manage-able, especially where 24-hour-a-day, 7-days-a-weekservice is mandatory.

Figure 1. Structured interviews: Reservations/front-deskapplications vendors.

Figure 2. Structured interviews: Accounting applicationsvendors.

IT IN ISRAELI HOSPITALITY INDUSTRY 47

Structured Interviews.Structured interviews wereconducted in 70 hotels, comprising 23% of the ho-tels and 40% of rooms in Israel. The hotels havebeen categorized as small sized (up to 100 rooms),medium sized (101–250), and large sized (above250), according to a categorization scheme employedelsewhere (Hensdill, 1998). The 70 hotels were scat-tered all over the country and all hotel sizes and types(e.g., resort hotels or business hotels, independenthotels or chain members) were represented, as indi-cated in Figures 3 and 4 and in Tables A3 and A4 ofthe Appendix.

The structured interviews revealed many appli-cations and multiple platforms, where in one hoteldifferent applications run on more than one fileserver with more than one operating system. Thenumber of installed servers and operating systemsreflects the complexity of IT implementation andmaintenance, because it is more complex to handleand integrate applications residing on different fileservers under different operating systems. A total of115 file servers were installed in the 70 hotels, with51% operating more than one file server. Forty-ninepercent, mainly small and medium size hotels, op-erated one server, 40% operated two servers, 10%of the hotels interviewed had three, and one hotelhad four (!) servers, with three different operatingsystems (see Table A5 of the Appendix). All preva-lent PC-based operating systems were installed inthe hotels, as can be seen in Figure 5.

Table 2, depicting the number of front- and back-office applications from different vendors, demon-strates that the more intensely automated hotels pur-chase applications from more vendors. Thisimposes a heavy interfacing burden because thehigher number of different vendors the worse isfragmentation.

Results of the Comprehensive Survey

As can be seen in Tables A6 and A7 of the Ap-pendix, the demographic details of the comprehen-sive survey are consistent with those of the prelimi-nary survey. However, it is noteworthy that 28% ofthe responding hotels were large, 47% were medium,and 25% were small (see Fig. 6) as opposed to thealmost equal distribution in the preliminary phase.Most of the responding hotels (54%) were businesshotels, 39% were resort hotels, and the rest werecountry hotels. Fifty-nine percent of the hotels werelocated in the center of Israel, 9% in the North, andthe rest in the South. Seventy-four percent of theresponding hotels belonged to chains, yet only 25%were Israeli chains (see Fig. 7). Responding hotelswere distributed in nine different locations, with themajority (44%) from Tel-Aviv (28%) and Jerusalem(16%).

The survey has revealed a 97% IT usage amongthe responding hotels, higher than the 87% found inthe US and the 77% in Europe and Far East (Hensdill,

Figure 3. Structured interviews: Distribution by hotel size.

Figure 4. Structured interviews: Distribution by businessaffiliation.

Figure 5. Structured interviews: Operating systems distribu-tion.

48 HEART ET AL.

1998). Even hotels as small as 30 rooms mentionedautomation of reservations and front desk, with mostof them also having an accounting system installed.

Prevalence, Satisfaction, and Necessity.Responses to Part 1 of the final questionnaire per-taining to application prevalence are depicted inTables A8–A10 of the Appendix. Of all front-officeapplications, the most prevalent were reservations,front desk, and POS. A chi-square test for goodnessof fit showed that the distribution of reservations/front desk, spa, and global reservations applicationsis not significantly different than the distribution ofthe hotels by size in the population (p > 0.05), sug-

gesting that the prevalence of these applications isnot significantly affected by the hotel size. Resultsfor POS, guest service center, and banqueting sys-tems were marginal (p = 0.061, 0.074, 0.061, respec-tively) suggesting, perhaps, somewhat lower preva-lence of these applications for smaller hotels.According to a chi-square test for goodness of fit,the back-office applications of budgeting, generalinventory, procurement, and food and beverage in-ventory were more prevalent in larger hotels than insmaller hotels. The asset management applicationwas excluded from analysis and from further dis-cussion because only one hotel had it installed. The

Figure 6. Comprehensive survey: Distribution by hotel size.Figure 7. Comprehensive survey: Distribution by businessaffiliation.

Table 2

Applications by Number of Vendors

No. of HotelsWith No No. of No. of No. of No. of No. of

No. of Automation Hotels Hotels Hotels Hotels HotelsInstalled of This With One With Two With Three With Four With Five Total No. (%)Applications Function Vendor Vendors Vendors Vendors Vendors of Hotels

Front-office applications0 0 — — — — — 01 — 15 — — — — 15 (21%)2 — 17 8 — — — 25 (36%)3 — 1 13 4 — — 18 (26%)4 — — 4 2 5 — 11 (16%)5 — — — — — 1 1 (1%)Subtotal 33 25 6 5 1 70 (100%)

Back-office applications (logistics)0 19 0 — — — — 19 (27%)1 — 7 — — — — 7 (10%)2 — 4 — — — — 4 (6%)3 — 23 6 — — — 29 (41%)4 — 1 8 2 — — 11 (16%)

Subtotal 19 35 14 2 0 0 70 (100%)

IT IN ISRAELI HOSPITALITY INDUSTRY 49

number of hotels with human resource managementor sales and marketing applications was negligible,making these two applications among the least preva-lent in the Israeli hospitality industry, unlike the situ-ation in other industries. Office automation andInternet applications were relatively prevalent in oursample, not only in large hotels, but also and evenmore so in smaller hotels. As only a handful of ap-plications were more prevalent in larger hotels thanin small hotels, a Spearman rank correlation, con-ducted between the number of installed applicationsand the number of hotel rooms, to measure whetherlarger hotels tended to automate more functions thansmaller hotels (Tables A11, A12, and A13 in theAppendix), was found positive and statistically sig-nificant (p < 0.05).

The level of satisfaction responses to Part 1 of thefinal questionnaire are depicted in Tables A14 andA15 of the Appendix. Most applications were ratedas satisfactory, 4 to 5 on a 1 to 7 scale, with evenhigher satisfaction for office automation and Internetapplications. A Kruskal-Wallis test, which checkedfor differences in the median satisfaction score ac-cording to hotel size, showed no significant differ-ences for most of the applications, except for guestservice center and global reservations, and marginalp value (0.06) for accounting and procurement. Thecorrelation between the level of satisfaction and thevendors of prevalent reservations and front desk,POS, and accounting applications did not show sig-nificant results, yet the Spearman rank correlationshowed a positive correlation between the level ofsatisfaction and percent of annual occupancy for1998 for small hotels, and a negative correlationbetween the level of satisfaction and the number ofhotel rooms in large hotels (see Tables A11–A13 inthe Appendix).

Necessity responses to Part 1 of the final question-naire, on a scale of 1 to 7, are depicted in Tables A16–A18 of the Appendix. Caution is advised, however,regarding these results because only 59% of respon-dents responded and only partially so. Among the 49%of the hotels without a guest service center, necessityaveraged 3.75. Among the 44% of the hotels withouta banqueting application, necessity averaged 3.56.Among the 58% of the hotels without a procurementapplication, necessity averaged 4.67. Highest neces-sity was expressed for Web access (6.44) and e-mail(6.00), by the 38% and 50% without each.

Level of Integration.The average level of appli-cation integration according to responses for Part 2of the final questionnaire was 4.4 on a scale of 1 to7 (see Table A19 in the Appendix). A Kruskal-Wallistest did not show a significant difference in the me-dian integration rate according to hotel size. In or-der to test whether the level of integration dependedon the number of applications installed, the hotelpopulation was categorized into those with less than8 applications, those with 8 to 10 applications, andhotels with more than 10 applications. A Kruskal-Wallis test did not show a significant difference inthe median integration rate according to the threenumber-of-applications categories, a result that wasnot sensitive to the definition of categories. TheSpearman rank correlation revealed a positive cor-relation between the level of integration and the qual-ity of managerial information and annual mainte-nance expense, as well as a negative correlationbetween the level of integration and the number ofhotel rooms for large hotels (see Tables A11–A13 inthe Appendix).

Annual Maintenance Expense.Responses to Part3 of the final questionnaire revealed that while most(79%) small hotels spent less than $12,000 annu-ally on IT maintenance, 55% of the medium sizehotels spent $12,000 and more and 44% of the largehotels spent more than $24,000 (see Table A20 inthe Appendix). As would be expected, a chi-squaretest for association showed a significant dependencebetween IT maintenance spending and hotel size,with larger hotels spending more on IT maintenance,χ2(4) = 25.108, p < 0.0001. This finding was alsoconfirmed by the positive correlation between theannual maintenance expense and the number of ho-tel rooms. Interestingly, this variable was also posi-tively correlated to the level of integration. In bothsmall and large hotels, the correlation between an-nual maintenance expense and the 1998 occupancypercentage was positive, but in large hotels a nega-tive correlation was found between the annual main-tenance expense and the level of satisfaction (seeTables A11–A13 in the Appendix).

Quality of Managerial Information.When re-spondents were asked in Part 4 of the final question-naire whether they agree that applications installedat the hotel supply the required information on time,supporting hotel management in decision-making

50 HEART ET AL.

processes, 95% responded and the average responsewas 4.85 on a 1 to 7 scale (see Table A21 in theAppendix). A Kruskal-Wallis test did not show a sig-nificant difference between the medians accordingto hotel size, number of applications installed, andvendors of reservations/reception systems or ac-counting system. The quality of managerial infor-mation was positively correlated to the level of inte-gration, and negatively correlated to the 1998occupancy percentage. For small hotels, the qualityof managerial information was positively correlatedto the number of installed applications (see TablesA11–A13 in the Appendix).

Annual IT Investment.Most respondents pre-ferred not to respond when asked about the percent-age of annual investment in IT from total sales rev-enue, and thus there were many missing values forthis question, especially for the years 1995 to 1998.For 1999, based on the 25 responses (44%) that werereceived, the average annual investment in IT wasaround 2.6%, up from 1% in preceding years, per-haps due to year 2000 spending.

Open Remarks.Only 28% of the respondentsincluded comments in response to the open ques-tion, yet 50% of the remarks referred to the lack ofintegration among applications. Caution is advised,however, with respect to these findings, becausesome of the respondents who rated application inte-gration to be greater than 4, in Part 2 of the ques-tionnaire, did complain about lack of integration inresponse to the open question, in Part 6. A numberof respondents wished for more flexible and user-friendly reports. Others thought that if their IT envi-ronment included a report generator, their ability toretrieve information would be improved. Both theseremarks might imply dissatisfaction with the qual-ity of decision support information derived from thesystems, in contrast to the findings of Part 4 of thefinal questionnaire above. Only four comments re-lated to the Internet, all wishing to connect the res-ervations applications to an interactive Web site.

Discussion

The survey has shown that the Israeli hospitalityindustry is highly computerized, as 97% percent ofthe hotels have automated at least their front-officefunctionality, including hotels with fewer than 50

rooms. Compared with the 87% found in the 1998survey in the US and the 77% found globally(Hensdill, 1998), the Israeli hospitality industry ismore intensely computerized, as would have beenexpected considering the intensity of high-tech andIT in Israel.

Despite this high level of automation, the hospi-tality industry in Israel seems less attractive thanother industries to IT vendors, as suggested by therelatively small number of vendors, compared withthe number of vendors catering to industries otherthan hospitality.

The most prevalent front-office applications arereservations and front-desk automation and the mostprevalent back-office application is accounting. Res-ervations and front-desk applications were as preva-lent in small hotels as in larger ones, as well as ac-counting and time & attendance, yet only largerhotels tended to fully automate other back-officefunctions, such as procurement and inventory han-dling. The POS application was more prevalent inlarger hotels than in smaller ones, probably due tothe costly special purpose touch-screen hardwarerequired in most of the widely prevalent applica-tions. Yet, the Spearman rank correlation clearlyshowed that larger hotels install more applicationsthan smaller ones. This strong positive correlationindicates that although most applications are pricedper number of hotel rooms or per user, smaller ho-tels are reluctant to automate many functions. Con-sequently, they may find it difficult to compete inthe newly developing volatile market.

Unlike other industries, the least prevalent appli-cations were sales & marketing and human resourcesmanagement. These two applications are consideredstrategic in most industries and especially essentialfor eBusiness and eCommerce. This is especially truefor the sales & marketing application, which is acrucial tool for the ability to compete in a volatilemarket and was embraced long ago by other ser-vice-oriented industries, such as retail and finance.

While average IT satisfaction was rated betweenmedium and high, larger hotels seemed less satis-fied with their current IT position than other hotels.The survey clearly indicated that in spite of a higherlevel of spending on IT maintenance, more comput-erized hotels were disappointed with the currentlyinstalled applications. The Friedman test, whichmarginally implied a lower level of satisfaction in

IT IN ISRAELI HOSPITALITY INDUSTRY 51

large hotels than in medium and small ones, wasconfirmed here, as a negative correlation was foundbetween number of rooms and the level of satisfac-tion for large hotels. A negative correlation was alsofound for large hotels between the number of roomsand the level of integration, which is related to pre-vious findings, namely that larger hotels spend moreand expect higher value from their IT, yet are some-how disappointed with the actual results. This situa-tion suggests that large hotels might be more reluc-tant than in the past to venture into newly emergingIT due to their disappointment from the currentlyinstalled applications.

One possible explanation for the IT disappoint-ment, especially in larger hotels, can be found in thepreliminary stage of this study, according to whichhotels must cope with complex IT, especially whenmore than one file server is installed with differentoperating systems. The low number of applicationvendors for hospitality in Israel might be anotherreason for the disappointment with currently in-stalled applications. The relatively small number ofvendors and applications cannot be attributed to lan-guage, because the interface to all front-office ap-plications is in English and back-office applicationsare either localized or locally developed. Althoughone may argue that the small market size (only about300 hotels and 42,000 hotel rooms) might keep manyglobal vendors out of the Israeli hospitality market,their presence in other industries suggests otherwise.A better explanation could be that the relatively lowerwillingness to invest in IT discourages IT vendorsfrom developing advanced technologies for the hos-pitality market.

The two most highly needed front-office applica-tions were guest service center and banqueting. Pro-curement was the most needed back-office applica-tion. The highest level of necessity was depicted foroffice automation and Internet access. Yet, due tothe large number of missing values in this part, nofurther discussion is conducted on the necessity ofhospitality applications in the Israeli hospitality in-dustry.

Before discussing the lack of application integra-tion in the hospitality industry, it is noteworthy thatthe absence of ERP packages customized for hospi-tality purposes has been found in Israel. This alsoseems to be the situation in the hospitality industryaround the globe.

Against this background, it was quite surprisingthat overall integration in the Israeli survey averaged4.4 on a scale of 1 to 7. Yet, it is likely that respon-dents either did not understand the question or foundit difficult to report lower levels. Yet, in open re-marks (Part 6 of the comprehensive questionnaire),integration was the problem most frequently men-tioned by respondents. This was confirmed by thenegative correlation found between the number ofinstalled applications and the level of integration inlarge hotels. The correlation tests have also indicatedthat the higher the level of integration in the hotel,higher is the annual maintenance expense, andhigher is the quality of managerial information. Thepositive correlation between the quality of manage-rial information and the number of installed appli-cations in small hotels as well as the level of inte-gration indicates perhaps that the respondents wereaware of the value of integrated IT. An interestingnegative correlation between the quality of mana-gerial information and the average occupancy per-centage in 1998 might indicate that, for better guestservice, respondents value quality information morein successful highly occupied hotels.

Israeli hotels, on average, spend between $12,000and $24,000 on annual maintenance expense, whichincludes software support and upgrading, hardwaresupport, and training. The Spearman rank correla-tion has clearly indicated that the larger hotels tendto spend more than small hotels. This finding isfurther strengthened by the positive correlations be-tween the number of hotel rooms and the numberof installed applications. In the absence of a fullyintegrated database application, which will auto-mate most of the hotel functionality, hotels areforced to purchase applications from various ven-dors. These applications often run on different plat-forms, with different operating systems. This situ-ation imposes both operational and economicalburden on the hotels, mainly the more automatedlarger ones, and is reflected in the positive correla-tion found between the annual maintenance ex-pense and the number of hotel rooms, as well asthe level of integration. Thus, smaller hotels, whichcannot afford the ongoing maintenance burden,might loose the opportunity to benefit fromeCommerce, which is so beneficial to small enter-prises, but must rely on robust organizational ITutilization.

52 HEART ET AL.

Without an integrated product that can be pur-chased by the hotels to automate principal front- andback-office hotel functions and without a sharedcommon database, hotels install applications fromnumerous vendors, face interfacing problems, andtheir access to high-quality information for decisionsupport is rather limited. The diversity of applica-tions, from many different vendors, increases main-tenance complexity and expense, and might be thecause for the negative correlation found in largehotels between the annual maintenance expense andthe level of satisfaction. It might also shed light onwhy smaller hotels refrain from automating moreoperational functions and why lower overall satis-faction was expressed by larger hotels, whose ex-pectations from IT are high given their higher ITspending.

Much like their counterparts around the world,hotels in Israel tend to invest 1% to 2% of annualsales revenue in IT. This relatively low level of spend-ing, compared with the 7.1% average investmentlevel in other industries (Rubin, 1998), might be oneof the reasons that ERP vendors stay out of the hos-pitality market. The survey has not shown differ-ences between the average IT investment of small,medium, and large hotels, which means that smalland medium hotels will have to invest more relativeto their annual revenue in order to automate morefunctions.

Putting together all findings of the survey sug-gests that the hospitality industry needs to find a wayto make IT more affordable and more manageableand that ASPs might emerge as the means towardsthis end.

Conclusion

The importance of Israel as a desired tourist at-traction and the prospects of increased tourism inthe region, combined with the statistical results foundin this survey, which are consistent with surveysconducted in the US (Hensdill, 1998; Van Hoof etal., 1995, 1997), lend support for the initial presump-tion of this article that the nature of the hospitalityindustry in Israel, as well as its attitudes towards IT,resembles the situation elsewhere in the world.Therefore, generalization beyond the Israeli scenewould be valid. Moreover, given the Israeli leader-ship in IT and high-tech and the preference of some

IT vendors to use the Israeli market as a pilot fornew concepts, taking advantage of Israeli IT aware-ness and innovation, it also seems valid to specifi-cally look for guidance from Israeli IT vendors andlearn from innovative models that they have to offerto the hospitality industry.

Global IT vendors for the hospitality industry,such as Micros-Fidelio and Aremissoft, have an-nounced only recently new rental options but noneso far has gained as much experience as their Israelicounterparts. Silverbyte, for instance, has rented re-motely hosted applications to a chain of seven ho-tels since 1999, using “thin” clients at the hotels. Inthe absence of a reasonably priced, user-friendly,comprehensive system for hospitality that automatesoperational front-office, back-office, office automa-tion, and Internet functions, with reliable and timelyquerying and reporting, it may very well be that Is-raeli ASP action within the hospitality industry mayprove to be a pioneering one.

Clearly, renting applications to organizations foran annual or monthly fee is not really new. In theearly days of computing, when most organizationscould not afford to own IT hardware and software,they connected dumb terminals located within theirpremises to hardware owned by service bureaus, thuseliminating the need to purchase and manage ex-pensive and complex hardware and software. Theservice bureau model worked well until the cost andcomplexity of hardware and software went down toa point where organizations of all sizes found bothhardware and software affordable and manageable.Currently, however, application rental seems to beback perhaps because the costs and complexity ofIT infrastructures have increased due to demands ofeBusiness and eCommerce.

For the ASP model to succeed, it must becomeattractive again, in terms of cost as well as benefit.On the cost side, hotels would be attracted to ASPsand find them affordable if the cost propositionwould be better in terms of fixed and variable coststhan under the traditional way of buying hardwareand software. Cost figures revealed in this study seemencouraging but caution must be exercised given thenovelty of the approach and the vendors’ willing-ness to postpone profitability as they penetrate themarket. On the benefit side, hotels would expectASPs to offer more manageable state-of-the-art tech-nology solutions, including integrated modular ap-

IT IN ISRAELI HOSPITALITY INDUSTRY 53

plication suites, covering fully front- and back-of-fice functions, that are always up and running. Fu-ture research might look into alternative ASP mod-els for hotels, in general, and for small and mediumones, in particular.

The drawbacks of the current study are mainlydue to the limited number of responses, missing val-ues, and possible bias of the scales. Additional re-search might help overcome such limitations. In afollow-up study, the second comprehensive phasemight be followed by visits with the respondents forpersonal interviews to reveal hidden attitudes. Suchinterviews might also detect a dependency betweenthe role a respondent played in choosing the currentsystems and the level of satisfaction, assuming thatmanagers will be more favorable towards systemschosen by them than towards systems chosen byothers.

Despite this study’s limitations, the similarity ofthe results to the situation described elsewhere at-tests the validity of the findings and suggests thegeneralizability beyond the Israeli case. The novelASP concept, in particular, ought to interest practi-tioners and researchers alike because it might behighly suitable for the hospitality industry. Hotels(especially small and medium ones) might find theASP rental approach more affordable and moremanageable than traditional buying of IT infrastruc-ture. ASPs are expected to help hotels overcome thedifficulties in IT utilization encountered in Israel andelsewhere, thus allowing them to become better po-sitioned for competing through eBusiness andeCommerce in the new global economy.

Acknowledgments

This study has been supported by a grant fromthe Israeli Ministry of Tourism. The students at theSchool of management at Ben-Gurion University ofthe Negev, in the Department of Hotel & TourismManagement, should be acknowledged for conduct-ing structured interviews with managers of 70 ho-tels, which participated in the preliminary phase ofthis study. Special thanks to the Israeli Hotel Asso-ciation, for supplying a detailed list of the hotels,including address and the manager’s name, whichenabled us to mail the letter and questionnaire ofthe comprehensive phase to the hotel manager per-sonally.

Biographical Notes

Tsipi Heart is a Ph.D. student at the School of Managementof Ben-Gurion University of the Negev in Israel. She ac-quired her M.B.A. from Tel-Aviv University. After servingas CIO at a local hotel chain and an international hotel chainoperating a number of hotels in Israel, Ms. Heart has workedas a consultant on IT implementation and usage in the hospi-tality industry. Previous papers of hers have been presentedin the 11th Industrial Engineering & Management Confer-ence in Israel (May 2000, Israel) and in the InternationalConference on Advances in Infrastructure for ElectronicBusiness, Science and Education on the Internet (August2000, Italy).

Nava Pliskin is an Associate Professor at the Department ofIndustrial Engineering and Management of Ben-Gurion Uni-versity. Previously, she was a Thomas Henry Carroll FordFoundation Visiting Associate Professor at the Harvard Busi-ness School and a Visiting Faculty Member at Suffolk Uni-versity, Babson College, and Boston University. She acquiredher Ph.D. and S.M. degrees from Harvard University. Herresearch, focused on longitudinal analysis of InformationTechnology impacts at the global, national, organizational,and individual levels, has been published in such journals asInformation & Management, Database, Information & Soft-ware Technology, IEEE Transactions on Engineering Man-agement, ACM Transactions on Information Systems, TheInformation Society, Communications of the ACM, Informa-tion Technology & People, Business Horizons, The Austra-lian Journal of Information Systems, The Asia Pacific Jour-nal of Human Resources, The Computer Journal, Journal ofEngineering Valuation and Cost Analysis, and InternationalJournal of Information Management.

Edna Schechtman is a senior lecturer at the Department ofIndustrial Engineering and Management of Ben-Gurion Uni-versity. Previously, she was a visiting faculty member at theMathematics department of the University of Texas at Aus-tin, and at the department of Statistics at Texas A&M Uni-versity. She acquired her Ph.D. (in Statistics) from Ohio StateUniversity. Edna Schechtman is an applied statistician, whohas collaborated with researchers from various disciplines,such as statistics, medicine, zoology, transportation, econom-ics, and psychology. Her research was published in such jour-nals as Animal Behavior, Neurology, Accident Analysis andPrevention, Economics Letters, The American Statistician,Biometrika, and Communications in Statistics.

Arie Reichel is Professor of management, chairman andfounder of the department of Hotel and Tourism Manage-ment, and associate dean for Academic Affairs, the Schoolof Management at Ben Gurion University. Arie earned hisPh.D. in business administration at the University of Massa-

54 HEART ET AL.

chusetts in Amherst. He taught at the department of Man-agement at the Stern School of NYU, before returning toIsrael. His research topics include comparative managementand ethics, comparative strategy, and tourism and hospital-ity management. He served on the national committee forplanning human resource training and development needsfor the Israel tourism industry. Recently, he has taught inFrance, Jordan, and the Palestinian Authority.

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IT IN ISRAELI HOSPITALITY INDUSTRY 55

Appendix

Questionnaire Variable List

Phase I and Phase II Respondent Distribution

Table A1

Comprehensive Survey: Questionnaire Variables

Section of Questionnaire Variable Number Variable Name Scale

Header demographics 1 Number of rooms Numerical2 Hotel business type City, resort, country3 Geographical position North, mid, south4 Business affiliation Independent, chain5 Chain management Israeli, international6 Average occupancy percent 1998 Percent7 Average occupancy percent 1999 Percent8 Role of respondent Open9 Number of months respondent is Numerical

on the jobPart 1: Application prevalence, necessity, 10 Number of installed applications Numerical

and satisfaction 12 Level of satisfaction Lickert scale (1–7)13 Level of necessity Lickert scale (1–7)

Part 2: Level of integration 14 Level of integration Lickert scale (1–7)Part 3: Annual maintenance expense 15 Annual maintenance expense Up to $12000, $12001–24000,

above 24000Part 4: Quality of managerial information 16 Quality of managerial information Lickert scale (1–7)Part 5: Annual investment in IT 17–21 Annual investment in IT relative Percent

to annual sales (1995, 1996,1997, 1998, 1999)

Table A2

Response Rate of the Addressed Hotels

Number of Number of Net NumberHotels Letters of Hotels Number of Response

Stage Addressed Returned Addressed Responses Rate

1 70 0 70 23 33%2 239 6 233 37 16%Total 303 6 297 60 20%

Table A3

Structured Interviews: Distribution by Location

Geographical NumberLocation City of Hotels Percent

North Haifa 6 9%Midwest Natanya 4 6%

Hertzeliya 2 3%Tel-Aviv 13 19%

Mideast Jerusalem 13 19%Dead-Sea 11 16%

South Eilat 8 11%Missing values 13 19%Total 70 100%

Table A4

Structured Interviews: Distribution by Type of Business

Type of Business Number of Hotels Percent

Business 27 38%Resort 30 43%Country 13 19%Total 70 100%

56 HEART ET AL.

Prevalence of Applications

Table A5

Structured Interviews: Number of File Servers by HotelSize

One Two Three FourHotel Size Server Servers Servers Servers

Small 17 5Medium 10 11 1Large 7 12 6 1Total 34 28 7 1Percent 49% 40% 10% 1%

Table A6

Comprehensive Survey: Distribution by Location

Geographical NumberLocation City of Hotels Percent

North Tiberias 3 5.2%Zichron Yaakov 2 3.5%

Midwest Natanya 2 3.5%Hertzeliya 2 3.5%Tel-Aviv 16 28%Bat-Yam 2 3.5%

Mideast Jerusalem 9 16%Dead-Sea 3 5.2%

South Eilat 6 10.5%Others 9 16%Missing values 3 5.2%Total 57 100%

Table A7

Comprehensive Survey: Distribution by Type of Business

Type of Business Number of Hotels Percent

Business 31 54%Resort 22 39%Country 4 7%Total 57 100%

Table A8

Comprehensive Survey: Prevalence of Front-Office Applications

Application Type

Reservations Guest Service GlobalHotel Size Responses & Front Desk Point-of-Sale SPA Center Banqueting Reservations

Small (14 hotels, 25%) N 14 3 — — — 4% of hotel size 100% 21% — — — 29%

% of total responses 25% 8% — — — 21%Medium (27 hotels, 47%) N 27 19 3 10 9 6

% of hotel size 100% 70% 11% 37% 33% 22%% of total responses 47% 53% 43% 62% 56% 32%

Large (16 hotels, 28%) N 16 14 4 6 7 9% of hotel size 100% 88% 25% 38% 44% 36%

% of total responses 28% 39% 57% 38% 44% 47%Total (57 hotesl, 100%) N 57 36 7 16 16 19

% of total responses 100% 63% 12% 28% 28% 33%p-value (goodness of fit) Calculated from the 1 0.061* 0.145 0.074* 0.061* 0.164

total number ofapplications of

each type

*Statistically significant (marginal, in this case, as p ~ 0.05).

IT IN ISRAELI HOSPITALITY INDUSTRY 57

Tab

le A

9

Com

preh

ensi

ve S

urve

y: P

reva

lenc

e of

Bac

k-O

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App

lica

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Ap

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t I

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nd

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Ma

rke

ting

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all (

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5%)

N1

12

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23

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12

% o

f ho

tel s

ize

79

%1

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4%

14

%2

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%%

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16

%1

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18

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N2

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01

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16

17

52

33

6%

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e9

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espo

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8%

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53

%3

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55

%La

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(16

hote

ls,

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)N

15

14

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51

31

55

13

53

% o

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ize

94

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81

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31

%8

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—4

5%

42

%4

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%3

0%

56

%2

7%

Tota

l (57

hot

els,

100

%)

N5

22

61

33

31

35

10

43

91

1%

of

tota

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es9

1%

46

%2

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54

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(goo

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ted

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0.8

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59

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fea

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ype

*Sta

tistic

ally

sig

nific

ant

(p<

0.05

).

58 HEART ET AL.

Significant Correlations

Splitting the sample according to hotel size made a difference at the small and large ends. Only correlations different fromthe overall sample are listed in Tables A12 and A13.

Table A10

Comprehensive Survey: Prevalence of Office Automation and Internet Applications

Application Type

Office InternetHotel Size Responses Automation E-Mail Browser

Small (14 hotels, 25%) N 2 9 10% of hotel size 14% 64% 71%

% of total responses 10% 27% 30%Medium (27 hotels, 47%) N 10 13 15

% of hotel size 37% 48% 56%% of total responses 48% 39% 45%

Large (16 hotels, 28%) N 9 11 8% of hotel size 56% 69% 50%

% of total responses 43% 33% 24%Total (57 hotels, 100%) N 21 33 33

% of total responses 37% 58% 58%p-value (goodness of fit) Calculated from the 0.168 0.648 0.726

total number ofapplications of

each type

Table A11

Significant Correlations: Overall Sample

Quality ofLevel of Annual Managerial Number of Installed

Occupancy 98 Integration Maintenance Expense Information Applications

Number of rooms — — 0.7285 — 0.6032(p = 0.0001, n = 50) (p = 0.0001, n = 57)

Occupancy 98 — — — –0.2783 —(p = 0.0863, n = 39)

Level of integration — 0.2925 0.2909 —(p = 0.0436, n = 48) (p = 0.0383, n = 51)

Annual maintenance expense — — 0.4981(p = 0.0002, n = 50)

Quality of managerial information — —Number of installed applications —

IT IN ISRAELI HOSPITALITY INDUSTRY 59

Table A12

Significant Correlations: Large Hotels

Quality ofAnnual Managerial Number of Installed

Level of Satisfaction Maintenance Expense Information Applications

Occupancy 98 0.7591 0.7513 — —(p = 0.0289, n = 8) (p = 0.0316, n = 8)

Level of satisfaction — — — —Annual maintenance expense — — —Quality of managerial information — 0.4709

(p = 0.0892, n = 14)Number of installed applications —

Table A13

Significant Correlations: Large Hotels

AnnualOccupancy 98 Level of Satisfaction Maintenance Expense Level of Integration

Number of rooms 0.7426 –0.5273 — –0.6814(p = 0.0088, n = 11) (p = 0.0358, n = 11) (p = 0.0073, n = 14)

Occupancy 98 — — 0.8473 —(p = 0.0039, n = 9)

Level of satisfaction — –0.6919 —(p = 0.0183, n = 11)

Annual maintenance expense — —Level of integration —

Table A14

Level of Satisfaction: Front-Office Applications

Application Type

GuestService Global

Hotel Size Responses Reservations Front Desk Point-of-Sale SPA Center Banqueting Reservations

Small (14 hotels, 25%) N 14 14 3 — — — 5Average 5.07 5.00 4.67 — — — 4.20Median 5.00 5.00 4.00 — — — 4.00

% of hotel size 100% 100% 21% 0% 0% 0% 21%Medium (27 hotels, 47%) N 27 27 19 4 10 8 6

Average 5.15 5.30 5.00 4.00 5.40 5.38 5.83Median 5.00 5.00 5.00 4.00 6.00 5.50 6.50

% of hotel size 100% 100% 70% 15% 37% 30% 22%Large (16 hotels, 28%) N 16 16 14 4 6 6 9

Average 4.56 4.56 5.50 5.25 4.67 4.50 4.67Median 4.50 4.50 6.00 5.00 5.00 5.00 5.00

% of hotel size 100% 100% 88% 25% 38% 38% 56%Total (57 hotels, 100%) N 57 57 36 8 16 14 20

Average 4.96 5.02 5.17 4.63 5.13 5.00 4.90Median 5.00 5.00 5.50 4.50 5.00 5.00 5.00

% of total responses 100% 100% 63% 14% 28% 25% 35%Kruskal-Wallis (median) p-value 0.418 0.319 0.715 0.157 0.016 0.533 0.017

Level of Satisfaction

60 HEART ET AL.

Tabl

e A

15

Leve

l of

Sat

isfa

ctio

n: B

ack-

Offi

ce A

pplic

atio

ns

App

licat

ion

Type

F&

BT

ime

&H

um

an

Sa

les

&H

otel

Siz

eR

espo

nse

sA

cco

un

ting

Bu

dg

etin

gIn

ven

tory

Pro

cure

me

nt

Inve

nto

ryM

ain

ten

an

ceA

tte

nd

an

ceR

eso

urc

es

Ma

rke

ting

Sm

all (

14 h

otel

s, 2

5%)

N1

12

22

4—

61

3A

vera

ge

5.0

04

.50

5.5

05

.50

5.5

0—

5.6

76

.00

6.3

3M

ed

ian

6.0

04

.50

5.5

05

.50

5.5

0—

5.5

06

.00

6.0

0%

of

hote

l siz

e7

9%

14

%1

4%

14

%2

9%

0%

43

%7

%2

1%

Med

ium

(27

hot

els,

47%

)N

26

10

16

16

16

52

33

5A

vera

ge

5.6

95

.60

4.6

95

.25

4.9

45

.00

5.5

25

.67

4.8

0M

ed

ian

6.0

05

.50

5.0

05

.50

5.0

05

.00

6.0

06

.00

5.0

0%

of

hote

l siz

e9

6%

37

%5

9%

59

%5

9%

19

%8

5%

11

%1

9%

Larg

e (1

6 ho

tels

, 28

%)

N1

41

31

41

21

35

12

43

Ave

rag

e4

.64

4.9

24

.36

4.0

04

.38

4.6

05

.42

5.2

53

.67

Me

dia

n5

.00

5.0

04

.50

4.0

05

.00

4.0

05

.50

5.5

04

.00

% o

f ho

tel s

ize

88

%8

1%

88

%7

5%

81

%3

1%

75

%2

5%

19

%To

tal (

57 h

otel

s, 1

00%

)N

51

25

32

30

33

10

41

81

1A

vera

ge

5.2

55

.16

4.5

94

.77

4.7

94

.80

5.5

15

.50

4.9

1M

ed

ian

5.0

05

.00

5.0

05

.00

5.0

04

.50

6.0

06

.00

5.0

0%

of

tota

l res

pons

es8

9%

44

%5

6%

53

%5

8%

18

%7

2%

14

%1

9%

Kru

skal

-Wal

lis (

med

ian)

p-va

lue

0.0

68

0.6

18

0.4

75

0.0

60

0.3

51

0.5

27

0.3

07

—0

.07

9

IT IN ISRAELI HOSPITALITY INDUSTRY 61

Table A16

Level of Necessity: Front-Office Applications

Application Type

Guest Service GlobalHotel Size Responses Point-of-Sale SPA Center Banqueting Reservations

Small (14 hotels, 25%) Not using application 11 14 14 14 10Responses (N) 3 5 6 6 4

Average 2.33 2.20 2.83 3.67 3.00% of hotels not using application 27% 36% 43% 43% 40%

Medium (27 hotels, 47%) Not using application 8 24 17 18 21Responses (N) 2 8 11 10 5

Average 6.50 2.13 3.82 3.00 3.20% of hotels not using application 25% 33% 65% 56% 24%

Large (16 hotels, 28%) Not using application 2 12 10 9 7Responses (N) — 3 3 2 2

Average — 3.67 5.33 6.00 4.50% of hotels not using application 0% 25% 30% 22% 29%

Total (57 hotels, 100%) Not using application 21 50 41 41 38Responses (N) 5 16 20 18 11

Average 4.00 2.44 3.75 3.56 3.36% of hotels not using application 24% 32% 49% 44% 29%

Level of Necessity

62 HEART ET AL.

Tab

le A

17

Leve

l of

Nec

essi

ty:

Bac

k-O

ffice

App

licat

ions

App

licat

ion

Type

Ass

et

Tim

e &

Hu

ma

nS

ale

s &

Hot

el S

ize

Re

spo

nse

sB

ud

ge

tM

an

ag

em

en

tIn

ven

tory

Pro

cure

me

nt

Ma

inte

na

nce

Att

en

da

nce

Re

sou

rce

sM

ark

etin

g

Sm

all (

14 h

otel

s, 1

5%)

Not

usi

ng a

pplic

atio

n1

21

41

21

21

47

13

12

Res

pons

es (N

)4

15

56

15

3A

vera

ge

6.0

05

.00

4.4

04

.20

2.3

37

.00

4.0

04

.00

% o

f ho

tels

not

usi

ng a

pplic

atio

n3

3%

7%

42

%4

2%

43

%1

4%

38

%2

5%

Med

ium

(27

hot

els,

47%

)N

ot u

sing

app

licat

ion

17

26

11

11

22

24

24

21

Res

pons

es (N

)6

35

91

11

97

Ave

rag

e3

.33

1.0

04

.00

4.7

84

.73

4.0

04

.44

3.0

0%

of

hote

ls n

ot u

sing

app

licat

ion

35

%1

2%

45

%8

2%

50

%4

%3

8%

33

%La

rge

(16

hote

ls,

28%

)N

ot u

sing

app

licat

ion

21

61

31

13

11

13

Res

pons

es (N

)2

21

16

—5

6A

vera

ge

3.5

03

.50

7.0

06

.00

4.6

7—

5.6

05

.00

% o

f ho

tels

not

usi

ng a

pplic

atio

n1

00

%1

3%

10

0%

33

%5

5%

0%

45

%4

6%

Tota

l (57

hot

els,

100

%)

Not

usi

ng a

pplic

atio

n3

15

62

42

64

73

44

84

6R

espo

nses

(N)

12

61

11

52

32

19

16

Ave

rag

e4

.25

2.5

04

.45

4.6

74

.09

5.5

04

.63

3.9

4%

of

hote

ls n

ot u

sing

app

licat

ion

39

%1

1%

46

%5

8%

49

%6

%4

0%

35

%

IT IN ISRAELI HOSPITALITY INDUSTRY 63

Table A18

Level of Necessity: Office Applications

Application Type

Hotel Size Responses Office Automation E-Mail Internet Browser

Small (14 hotels, 25%) Not using application 12 5 4Responses (N) 2 3 2

Average 4.50 6.67 7.00% of hotels not using application 17% 60% 50%

Medium (27 hotels, 47%) Not using application 17 14 12Responses (N) 8 7 5

Average 4.13 5.71 6.20% of hotels not using application 47% 50% 42%

Large (16 hotels, 28%) Not using application 7 5 8Responses (N) 1 2 2

Average 5.00 6.00 6.50% of hotels not using application 14% 40% 25%

Total (57 hotels, 100%) Not using application 36 24 24Responses (N) 11 12 9

Average 4.27 6.00 6.44% of hotels not using application 31% 50% 38%

Table A19

Level of Integration by Hotel Size

Level ofHotel Size Responses Integration

Small (14 hotels, 15%) N 11Average 3.91

% of hotel size 79%Medium (27 hotels, 47%) N 26

Average 4.50% of hotel size 96%

Large (16 hotels, 28%) N 14Average 4.71

% of hotel size 88%Total (57 hotels, 100%) N 51

Average 4.43% of hotel size 89%

Kruskal-Wallis p-value 0.544

Table A20

Annual Maintenance Expense by Hotel Size

Annual Maintenance Expense ($)

Hotel Size <12,000 12,000–24,000 >24,000

Small (14 hotels)N 11 2 —% 79% 14% 0%

Medium (27 hotels)N 11 7 8% 41% 26% 29%

Large (16 hotels)N 1 3 7% 6% 19% 44%

Total (57 hotels)N 23 12 15% 40% 21% 26%

Level of Integration Annual Maintenance Expense

64 HEART ET AL.

Table A21

Quality of Managerial Information

Quality ofManagerial

Hotel Size Responses Information

Small (14 hotels, 25%) N 14Average 4.64

% of hotel size 100%Medium (27 hotels, 47%) N 26

Average 4.85% of hotel size 96%

Large (16 hotels, 28%) N 14Average 5.07

% of hotel size 88%Total (57 hotels, 100%) N 54

Average 4.85% of hotel size 95%

Kruskal-Wallis p-value 0.874

Quality of Managerial Information