International Journal of Hospitality Management 42 (2014) 165–173

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International Journal of Hospitality Management

journal homepage: www.elsevier.com/locate/ijhosman

The impact of quality management on productivity in the hospitality

sector
Carlos Guillermo Benavides-Chicón ∗ , Bienvenido Ortega 1
Department of Applied Economics (Economic Structure), University of Malaga, C/ Ejido, 6, 29071 Malaga, Spain

a r t i c l e i n f o a b s t r a c t

JEL classification: This paper attempts to determine the relationship between quality and productivity in the hospitality
L15, J24, M54 sector. Although both variables are crucial to the competitive and value creation processes in hotels, few
Keywords:
empirical studies have explicitly analyzed the relationship between them. Thus, we estimated a produc-
Quality tion function for a hotel sample that shows how a set of determinants influences labour productivity.
Labour productivity Among these determinants we included different quality variables, defined from the point of view of
Hotels total quality. The estimation results show a direct and significant effect of quality on labour productivity.
This suggests that the implementation of total quality management (TQM) systems, or the adoption of
the TQM principles, have a positive impact on hotel labour productivity.
© 2014 Elsevier Ltd. All rights reserved.

1. Introduction
Since the late 1980s, many authors — especially those associated
with the Nordic School of Services — have studied productivity in
the service sector and have addressed the need to define a con-
cept of productivity that takes into account the distinctive features
of this sector of economic activity. This approach was followed
by Vuorinen et al., 1998, Ojasalo (1999), Parasuraman (2002), and
more recently by Djellal and Gallouj (2013), indicating that this
topic is still under discussion. During this period, the first studies
on productivity in hotels appeared (Van der Hoeven and Thurik,
1984). Several focused on measuring hotel productivity, and many
others investigated its key drivers (Brown and Dev, 1999; Kilic and
Okumus, 2005; Marchante and Ortega, 2012).
The concept of quality in business has evolved over time, lead-
ing to changes in the methods used for its management. Since
the 1980s, the concept of Total Quality Management (TQM) has
been adopted together with a strategic approach to quality in an
attempt to focus all the resources on achieving excellence. Various
quality management systems, international standards, and qual-
ity certificates are based on this approach. The implementation of
this concept has brought out the difficulty of managing quality in
the service sector. However, compared to the number of studies
∗ Corresponding author. Tel.: +34 952 13 11 83; fax: +34 952 13 66 16.
E-mail addresses: cgbch@uma.es (C.G. Benavides-Chicón), ortega@uma.es
(B. Ortega).
1
Tel.: +34 952 13 11 87; fax: +34 952 13 66 16.
on tangible goods, there are still few studies on this subject. Such
studies are driven by two main schools of thought: the North Amer-
ican school (Rosander, 1989; Horovitz, 1990; Zeithaml et al., 1990;
Berry, 1995); and the Nordic school (Grönroos, 1984; Edvardsson
and Gustavsson, 1988). Interest in quality in hotels arose in the
late 1980s — similar to the case of productivity — in response to
increasing competition in the hotel industry, which was followed
by a recession in Western economies (Stewart and Johns, 1996). The
first studies focused on quality management from a theoretical per-
spective, the implementation of specific management systems, and
the gaining of quality certification. Over time, two lines of research
emerged in the literature in this field (Hernández-Maestro et al.,
2009): studies addressing quality from the customer’s perspective
(Camisón et al., 1996; Al Khattab and Aldehayyat, 2011) and others
analysing the advantages and disadvantages of the implementation
of quality management practices and systems in hotels and their
relationship to business performance (Claver-Cortés et al., 2008;
Viada-Stenger et al., 2010).
Although the relationship between quality and productivity
has attracted some interest from a theoretical perspective, most
research has focused either on quality or productivity; studies
focusing on the relationship between the two aspects remain few,
especially empirical studies. However, in recent years, growing
interest in the study of productivity and quality in the service
sector has led to the emergence of studies that have more or less
explicitly investigated the relationship between the two variables,
based on different perspectives and with different results. The
traditional view is that quality and productivity are incompat-
ible. However, many authors have questioned this relationship,

http://dx.doi.org/10.1016/j.ijhm.2014.07.004
0278-4319/© 2014 Elsevier Ltd. All rights reserved.
166 C.G. Benavides-Chicón, B. Ortega / International Journal of Hospitality Management 42 (2014) 165–173

proposing a modern vision that takes into account the customer’s framework used to investigate the relationship between quality
perspective. Thus, researchers consider the two variables as being and productivity in services, and specifically in hotels, is pre-
positively related, and assume that quality has a direct effect sented. Subsequently, we describe the database and construction
on productivity (Gummesson, 1992; Parasuraman, 2002, 2010; of the empirical variables used to estimate the proposed model.
Kontoghiorghes, 2003; Hope, 2007). In fact, an integrative or dual Following the econometric assessment of the model, we discuss
perspective is considered necessary (Hernández-Maestro et al., our findings and the limitations of the study.
2009; Parasuraman, 2010), whereby perceived quality depends
on objective quality and consumer expectations. Consequently,
from the standpoint of managing both productivity and quality, 2. Review of the literature
traditionally addressed in isolation, integrated management is
also considered a necessity (Vuorinen et al., 1998; Parasuraman, Few studies have specifically addressed the relationship
2002; Kontoghiorghes, 2003). TQM is seen as the most useful between quality and productivity in hotels. However, some rel-
tool in this approach, although some authors have proposed their evant studies exist that address quality from a managerial point
own management systems that are based on similar philosophies of view or that analyze the influence of quality on business per-
(Young and Colosi, 1993; Mohanty, 1998). formance, which has sometimes been quantified using different
Thus, taking into account the foregoing, we use a strategic measures of productivity.
approach based on the concept of TQM to investigate the relation- In the first case, a positive association between TQM and produc-
ship between quality and productivity. This analysis is also justified tivity was identified in theoretical studies, such as those by Vrtiprah
by the fact that various public administrative bodies have strongly and Ban (2000) and Avelini Holjevac and Vrtodušić Hrgović (2012).
invested efforts in promoting improvements in quality in hotels Both studies include measures of productivity in the Croatian hos-
in Spain. These activities have often been developed under pro- pitality industry in order to justify the relevance of productivity
grammes designed to increase the competitiveness of the sector, management in hotels; they also analyze the factors which influ-
ensure the survival of companies that form the sector, and main- ence productivity and suggest strategies for increasing it. Among
tain or steadily increase the sector’s contribution to the economy these factors, product and service quality play a significant role, and
over time. this association is best illustrated by the concept and goal of TQM
Furthermore, opportunities may exist for increasing productiv- (Avelini Holjevac and Vrtodušić Hrgović, 2012). Thus, they conclude
ity levels in the hospitality sector in Spain. In this sense, Table 1 that quality management systems have a positive effect on produc-
presents data on labour productivity levels (measured as the aver- tivity, based on the results of a descriptive analysis that compares
age value added generated by each person employed) for EU labour productivity in ISO 9001 certified and non-certified Croatian
member states in 2006. These states represent 85.7% of the total hotels.
employment of EU-27 in that year. Labour productivity in Spain In the second case, a positive association was observed between
was D 20,000 for the entire hotel and restaurant sector. This figure quality and management aspects or performance variables from
is very similar to the one reported for Italy (D 19,700) and very close both the management’s and consumer’s points of view (Skalpe
to the figure reported for the UK (D 21,600). However, there is an and Sandvik, 2002; Claver et al., 2006; Claver-Cortés et al., 2008;
important gap in productivity between Spain and leading countries Tarí et al., 2010), although the conclusions presented by these
such as France and Austria in the hospitality industry. Moreover, authors differed. These studies include capital productivity meas-
labour productivity decreased in real terms in Spain up to 2008, ures among the economic performance variables, using the number
mainly due to a large increase in employment during the latter half of available rooms as a measure of input. Skalpe and Sandvik
of the 1990s (Ortega and Benavides Chicón, 2013). (2002) studied the economics of quality in the hospitality sector
In fact, the increase in productivity in Spain in 2009 is a conse- and demonstrated that quality requires economic resources and
quence of job destruction and an increased unemployment rate in has positive effects on the economic performance of hotels. They
the context of the current recession. Thus, these data suggest that assessed the consumer’s perception of quality based on quality
there is a high potential for improvement in productivity in the ratings from 40,000 customers and concluded that quality has a
hospitality sector in Spain if the output per worker is compared to significant impact on revenues per room available. Claver et al.
that in leading countries in Europe. (2006) studied the reasons for the adoption and certification of
This article is structured as follows: First, we present a review quality systems and their impact on performance, based on the
of the relevant literature on the subject. Then, the theoretical perceptions of two hotel managers in Spain. The results show that,
among the variables considered, certification has a relatively high
impact on productivity (5 out of 7 points). Claver-Cortés et al. (2008)
Table 1
analyzed the relationship between TQM, managerial factors, and
Labour productivity level and growth in the hospitality sector in EU countries (value
added divided by the number of persons employed).
performance in a sample of Spanish hotels. Among the perfor-
mance measures considered, they included gross operative profit
Levelsa Annual growth, in per centb per available room and day (GOPPAR). They concluded that hotels
(103 D /employee)
2006 2006 2007 2008 2009 that show higher commitment to TQM reach higher levels of GOP-
PAR. However, a more recent study (Tarí et al., 2010) did not find a
France 31.2 0.5 −0.6 n/a n/a
Sweden 26.5 −2.5 1.4 1.6 −4.3 positive relation between commitment to TQM and GOPPAR, either
Austria 26.3 0.4 −2.3 2.2 −0.8 separately or in combination with environmental commitment.
United Kingdom 21.6 5.2 2.2 0.5 n/a Finally, some studies have examined the factors that influence
Spain 20.0 −1.7 −0.6 −0.3 1.4 productivity in the hospitality sector. Some of them identified qual-
Italy 19.7 2.7 −0.5 1.5 −0.5
ity as a relevant factor (Sasse and Harwood-Richardson, 1996;
Netherlands 19.2 0.1 −1.2 1.9 −6.9
Germany 17.7 −0.7 3.9 0.5 −5.2 Brown and Dev, 2000; Kilic and Okumus, 2005). The studies by
Greece 11.4 −2.4 −3.6 2.7 8.6 Sasse and Harwood-Richardson (1996) and by Kilic and Okumus
Poland 11.1 7.6 −2 −0.5 n/a (2005) were both based on interviews with hotel managers with the
Czech Republic 7.9 21 −2.5 3.1 n/a
aim of identifying the factors influencing productivity. However,
Sources: (a) Eurostat (2009). (b) OECD. these studies were not based on a specific definition or measure-
ment of productivity. According to Sasse and Harwood-Richardson
 C.G. Benavides-Chicón, B. Ortega / International Journal of Hospitality Management 42 (2014) 165–173
(1996), the HCTC study attempted to identify the factors that could
have the greatest impact on productivity. To do so, a list of factors
was drawn up, based on exploratory interviews with hotel man-
agers, academics, and industrialists, and a review of the literature.
Kilic and Okumus (2005) provided a ranking of the factors influenc-
ing productivity in hotels in Northern Cyprus. Their research was
based on a review of the literature in order to design a question-
naire. This questionnaire was tested on several managers in order to
add or eliminate factors influencing productivity. They affirm that
an improvement in quality would drive an immediate rise in pro-
ductivity. However, they question causality between both variables
and their relation with other determinant factors, such as training
and motivation.
Brown and Dev (2000), however, used an explicit theoretical
framework and a specific measure of productivity. They consid-
ered that this measure might reflect the ratio of a firm’s outputs
to its inputs: the more output a firm can produce from a given set
of inputs, the more productive it is. From this perspective, they
attempted to gain insight into how managers could improve the
productivity of their hotels by examining productivity through the
use of an empirical production function and addressing the con-
cepts of economic outputs, economic inputs, and strategic and
organizational inputs. The output measure was a dollar measure of
the value added by the hotel. Labour was measured in terms of the
establishment’s total number of employees (number of its full-time
employees plus half the number of its part-time employees). Cap-
ital measures included the number of rooms available for sale and
transaction-specific assets (i.e. intangible assets that are devoted to
a specific exchange relationship), measured on six 7-point Likert-
type items. In their study, these are assets invested on behalf of the
hotel that are only applicable to the hotel’s relationship with the
chain.
In summary, a review of the literature shows that there is a lack
of empirical research on the relationship between quality and pro-
ductivity in the hospitality sector. In this context, the aim of this
paper was to fill this gap by using a methodological approach sim-
ilar to that employed by Brown and Dev (2000). With this aim, a
specific quantitative measure of labour productivity was defined
and a number of production functions were estimated to investi-
gate the impact of quality measures on hotel labour productivity.
Given the results of the above-mentioned studies, it can be hypoth-
esized that there is a significant and positive effect of quality (TQM)
on labour productivity.
3. Methods
3.1. Theoretical model
Our starting point in the analysis is that quality management
would be an expansive strategy that allows hotels to obtain an
increase in output greater than the output related to labour input,
thus improving labour productivity. For this reason, to analyze the
effect that quality has on hotel productivity, we specified a Cobb-
Douglas production function in which we assume that technology
is common to all establishments in the sample. This can be repre-
sented by the following expression:
Y = A · (K ˛ · Lˇ )
where Y is the amount of output, K is the capital input, L is the
labour input, and A is a technological parameter. The parameters
to be estimated, ˛ and ˇ, represent the elasticities of output (Y) in
relation to capital (K) and labour (L), respectively. This equation has
to be linearized in order to estimate it using ordinary least squares
167
(OLS), thus taking logarithms on both sides of the equation, the
following expression can be written:
ln Y = ln A + ˛ ln K + ˇ ln L (2)
However, to analyze the effect of quality on productivity, we
have to include the variable or variables related to quality in expres-
sion (2). To do this, following the methodology proposed by Görg
et al. (2008), we assume that quality has a direct impact on out-
put in hotels, leading to a change in the technological parameter
(A). As mentioned, we approach quality from a strategic point of
view based on the concept of TQM. So, the impact of quality on the
technological parameter is based on the hypothesis that TQM and
continuous improvement help to optimize the production process,
leading to greater efficiency. We thus assume that quality, theo-
retically denoted as Q, leads to an expansion in the output of the
hotels, which we represent by the following expression:
ln A(Q ) =  + ϕQ (3)
where  is a constant and ϕ is the coefficient of the variable Q.
Substituting with (3) in (2), subtracting lnL on both sides of the
equation, and adding a vector representing the other variables that
can affect productivity (X) and a random disturbance term, we
obtain the equation to be estimated in terms of labour productivity:
ln Y − ln L =  + ϕQ + ˛ ln K + (ˇ − 1) ln L + X + ε (4)
In Eq. (4), the dependent variable, ln Y − ln L = ln (Y/L), is the nat-
ural logarithm of labour productivity, measured as the quotient
between output (Y) and labour input (L). In addition to the measure
of the hotel’s physical capital (K) and labour (L), based on previous
studies, we include an additional set of variables (X) to control for
differences in organized activities and in the markets where the
hotel operates. These variables relate to the age of the hotel, hotel
category, location, and whether the hotel belongs to a chain.
Given the above equation, which in theory serves as the basis for
the estimation, the null hypothesis that we test is H0 : ϕ > 0. That is, if
the coefficient of the quality variable Q is significantly greater than
zero, then that variable has a positive effect on labour productivity.
To obtain this estimate, we must first explain which variables are
included and how they are constructed and measured.
3.2. Description of the database
The full database used in this study was created by the Quality,
Productivity and Competitiveness in the Hospitality Industry for
Andalusia project [PO7/SEJ-02889]. It includes representative data
for a sample of 232 hotels with three or more stars providing a
total of 64,036 hotel rooms. According to the Turespaña (2008),
there were a total of 818 hotel establishments with 3 or more stars
in southern Spain in 2008. Therefore, the sample includes 28.36%
of the establishments in the region, representing a confidence level
of 94.55%. The database containing information from the question-
naires was created in 2010. The fieldwork required to complete this
database was conducted in 2011. Secondary sources were also used,
specifically, the SABI (Iberian Balance-Sheets Analysis System)
database (http://www.informa.es/en/soluciones-financieras/sabi),
the annual accounts filed by firms in the Mercantile Reg-
istry (http://www.rmc.es/Home.aspx?lang=en), sectorial
data from the Spanish National Institute of Statistics (INE:
(1) http://www.ine.es/en/inebmenu/mnu hosteleria en.htm), and the
Turespaña Official Hotel Guide 2008. The establishments’ websites
were also consulted.
The results obtained for the final sample available for the
estimations (173 hotels) show that the mean level of labour pro-
ductivity (calculated as the quotient between the GVA and number
of full-time equivalent employees) in 2008 was 33,554 Euros per
168 C.G. Benavides-Chicón, B. Ortega / International Journal of Hospitality Management 42 (2014) 165–173
employee (see Table 3). According to the “Annual Services Sur-
vey” produced by the National Institute of Statistics (INE), the GVA
per worker in Spanish hotels with more than 5 employees in 2008
was 35,811 Euros. Moreover, the “Hotel Occupancy Survey”, which
includes regional data produced by the Spanish National Institute of
Statistics (INE), indicates that there was an average of 39.5 work-
ers per establishment in the region and that the share of hotels
according to their level of services was as follows: 3-star 51.6%,
4-star 43.0%, and 5-star 5.4%. According to the final sample, there
was an average of 46.5 workers per establishment (see Table 3) and
42.2% of hotels in the sample were classified as 3-star, 52.6% as 4-
star, and 5.2% as 5-star. Thus, these figures indicate that there is a
reasonable degree of consistency between the sample employed in
this study and the official statistical sources available for the hotel
sector in Spain. Furthermore, the sub-sample of chain-hotels in the
final sample includes 106 establishments belonging to 42 different
chains or groups (around 21% of the chain-hotels in the region). The
major chains operating in Spain are included in this sub-sample.
3.3. Empirical variables used
The measure of output used to calculate hotel productivity was
gross value added (GVA). This measure has a number of advan-
tages over alternative measures, such as sales revenue, as it takes
into account the cost of the factors and the use of intermediate
inputs. Moreover, the use of a monetary measure of output has
several advantages, such as ease of use, as well as the potential to
quantify both the heterogeneity of the service and its intangible
elements (Ojasalo, 1999). It was calculated by adding the employ-
ees’ salaries and the gross operating surplus (net operating surplus
minus depreciation) for each establishment.
Regarding capital input, we used the size of the establishment,
measured by the number of available rooms (AVR), as a proxy for
capital investment. It is reasonable to assume that the greater the
number of hotel rooms the greater the capital investment in terms
of furniture and fittings, equipment, and infrastructure. Moreover,
the use of this measure is widespread in the literature, as shown
in the work of Brown and Dev (1999, 2000) or Claver-Cortés et al.
(2008). Labour input was measured by the total number of full-
time equivalent employees (FTEE) in 2008. This figure is calculated
assuming that a part-time worker is equivalent to half a full-time
worker.1 Therefore, the productivity data (LPROD) — that is, the
dependent variable of the model — is obtained by dividing the GVA
by the FTEE. Labour productivity is a suitable measure of produc-
tivity in the hotel sector as this is considered a labour intensive
industry, as shown in the specialist literature (Hu and Cai, 2004;
Jones and Siag, 2009; Marchante and Ortega, 2012). Thus, improv-
ing labour productivity is key to output expansion strategies.
The equation to be estimated also includes a vector for the
control variables that represents the effect of the main charac-
teristics of the establishment on labour productivity. Specifically,
following Marchante and Ortega (2012), three dummy variables
have been included to represent the effect of belonging to a chain
1
While recognizing that FTEE is not the best way to measure labour input, data
availability prevents us from employing other more accurate measures of labour
input. It is also important to note that calculating labour volumes using this method
is not uncommon in the hospitality literature; it has been used, for example, by
Brown and Dev (1999, 2000) and Hu and Cai (2004). In general, FTEE can be cal-
culated by dividing the total hours actually worked by the average annual hours
actually worked in a full-time job, considering a “normal” full-time working year or
taking contractual hours as an indication. In our case, given that we do not have data
on hours worked, we assumed that each part-time employee represented one-half
of a full-time employee in order to address the problem of the non-equivalence of
full- and part-time employees. As Brown and Dev (1999) put it: “This is not unrea-
sonable, we believe, as some part-time employees work nearly as much as full-time
employees while others merely work a handful of hours per week”.
of establishments (CHA), the location of the establishment (LOC,
which takes the value one if it is located in the capital of a province),
and its category (CATEG, which takes the value one if the hotel has
three stars). A variable has also been included to control for the
effect of the age of the property (AGE), measured in years.
The quality variables included were constructed using the EFQM
Excellence Model, designed by the European Foundation for Qual-
ity Management (EFQM). This model provides organizations with
the tools needed to implement the TQM paradigm (the approach
followed in this paper), is able to overcome the problems and short-
comings encountered in other quality management systems, and
can integrate other management systems (environmental, occu-
pational health and safety, etc.) that have emerged in recent years.
These characteristics make it an ideal model for TQM. This has been
validated empirically by Bou-Llusar et al. (2009), who concluded
that the EFQM Excellence Model reproduces TQM and a firm could
implement TQM by adopting the EFQM Framework. For this reason,
the quality variables used in the estimates were constructed based
on its components (see EFQM, 2010), similar to the methodology
followed by Patiar et al. (2012).
Specifically, our aim was to establish to what extent the
enablers of the EFQM model influence hotel productivity, as these
enablers determine whether excellence is achieved in organiza-
tional performance. Following a multi-item approach, a variable
was constructed for each of the five elements or criteria that
form the enablers (leadership, people, strategy, partnerships and
resources, and processes, products and services). That is, each of
the variables created is composed of a set of 36 items contained
in the questionnaire and formulated taking into account the sub-
criteria into which the five enablers of the model are divided (see
Table A.1). Some of these items are dichotomous and others are
based on a seven-point Likert scale (where 1 represents the lowest
level of achievement and 7 the highest). The values of the con-
structs in the case of dummy variables are obtained by calculating
the means of the scores of all the items that compose them. In the
case of Likert items, we first normalize the Likert scale in order
to express all the items on a scale from 0 to 1. This transforma-
tion makes it easy to determine the mean value of the constructs
and provides a single measure of the combined mean value of the
dichotomous and Likert items on a scale from 0 to 1 for each estab-
lishment.
Since we are using multi-item scales, their reliability and valid-
ity have to be measured. The internal consistency of a set of two or
more indicators of a construct is a widely used measure of reliability
and is justified in that the individual items or indicators of the scale
should be measuring the same constructs and therefore should be
fully correlated (Hair et al., 1998). The measure most often used to
measure internal consistency is Cronbach’s alpha coefficient, which
takes values between 0 and 1. In general, researchers set the lowest
acceptable limit of the coefficient at 0.7 (Hair et al., 1998). Observa-
tions of the inter-element correlation matrixes showed that there
were two items with particularly low correlations. These were less
than 0.30 (the minimum acceptable value according to Hair et al.,
1998) for all their values. After eliminating these two items, Cron-
bach’s alpha values increased to within acceptable limits for both
constructs, similar to the remaining constructs. Table 2 shows the
results of the reliability analysis as measured by Cronbach’s alpha.
Finally, an additional variable was constructed that included all
of the enablers in order to analyze their effect on labour produc-
tivity in hotels. This variable, global quality (Q), was obtained by
calculating the mean value of the five constructs described — which
correspond to each of the five criteria that form the enablers of the
EFQM Model, whose weights are the same in the 2010 version of
the Model.
Table 3 shows the descriptive statistics for the variables used in
the estimation of the production function. Starting with the initial
 C.G. Benavides-Chicón, B. Ortega / International Journal of Hospitality Management 42 (2014) 165–173
Table 2
Reliability of the items of the construct.
Construct Cronbach’s Items No. Hotelsa
Alpha
Leadership (LEAD) 0.700 5 155
People (PEOP) 0.706 3 171
Strategy (STR) 0.703 5 159
Partnerships and resources 0.702 4 168
(P&R)
Processes, products and 0.878 19 100
services (PRO)
a
Number of hotels that gave a full response to all the items in the construct.
database, which consisted of 232 hotel establishments, we elim-
inated 59 hotels for which no data were available for any of the
variables included in the estimates or outliers of the dependent
variable. Following this procedure, the sample used for the esti-
mation consisted of 173 hotels.2 However, the composition of the
sample used for estimation is very similar to the original sample,
according to the location and the main characteristics of the hotels,
and is consistent with the main official data available for the sector,
as shown in Section 3.2.
As mentioned, the replies to the items used to construct the
quality variables are expressed on a scale from 0 to 1. That is, the
establishment that has the highest score on a particular item is
given a value of 1, indicating the highest level of excellence within
the sample. Similarly, the establishment with the lowest score on a
particular item is given a value of 0, indicating the lowest level of
excellence within the sample. The values of the constructs are inter-
preted in a similar way, and thus the mean values of the items
indicate the degree to which excellence or the objectives have
been achieved. Thus, a maximum value of a construct (1) indi-
cates that there is at least one establishment that has achieved
the highest level of excellence in all items that make up the vari-
able, whereas a minimum value of 0 indicates that there is at
least one establishment with a score equal to 0 in all cases. In
Table 3, we can observe that, regarding Q (the constructed global
quality variable), the establishment with the lowest mean score
reached 0.29 of the objectives in terms of excellence, whereas the
establishment with the best score (0.97) would need to improve
its performance in some items by just 0.03 points in order to
reach the highest level in excellence. In general, the lowest per-
formance in reaching these objectives was found for the variables
composing Leadership (LEAD; 0.59), whereas the highest perfor-
mance was found for the variables composing People (PEOP; 0.74)
and Partnerships and Resources (P&R; 0.74). In relation to Q, the
establishments analyzed reached a mean degree of excellence of
0.69.
4. Estimates
4.1. Econometric model
Having described the construction and measurement of the vari-
ables used in the estimates, we can specify the empirical Eq. (5),
2
This statement seems to be inconsistent with the information shown in Table 2.
This table also shows the number of hotels that gave a full response to all the items
included in the questionnaire for each of the quality variables used in the esti-
mates. However, in order to avoid a greater loss of observations, a minimum level of
response was considered for each set of items (enabler) to include the hotel in the
sample. This level was set at two-thirds of the answers for all the items. Overall, all
the hotels included in the sample answered 29 or more items out of the 36 items in
the questionnaire.
169
which, considering expression (4), also includes the four control
variables described above and the five quality constructs:
ln LPROD =  + ˛ ln AVR + (b − 1) ln FTEE + 1 CHA + 2 LOC
+ 3 CATEG + 4 AGE + ϕ1 LEAD + ϕ2 PEOP + ϕ3 STR
+ ϕ4 P&R + ϕ5 PRO + u (5)
The results of the estimation are shown in Table 4. However,
we considered that there may exist a problem of multicollinear-
ity between the different quality constructs included together as
independent variables in this equation. To explore this possibility,
we calculated the Variance Inflation Factor (VIF) for each coeffi-
cient. The high values of VIF obtained in the estimation of Eq. (5)
confirmed the existence of multicollinearity and thus we estimated
five different equations (Eqs. (1)–(5) shown in Table 5), including
a single construct or quality variable in each of them. A final equa-
tion was also estimated (Eq. (6) in Table 5) that included the overall
effect of quality by including the values obtained for the variable Q
in the model.
4.2. Results
By examining the results of the estimations of the equations
corresponding to each of the five constructs of quality and of the
equation that included the variable global quality, we can see
which variables have the greatest influence on labour productiv-
ity.
First, the results of estimating the coefficients for labour and
capital are in line with those obtained in the literature (Brown
and Dev, 2000; Marchante and Ortega, 2012). In relation to the
influence of the characteristics of the hotels, there is a positive asso-
ciation between labour productivity and belonging to a chain, being
located in a provincial capital, and the age of the establishment, and
a negative association if the establishment has three stars (the low-
est category analyzed); these results are also in line with Marchante
and Ortega (2012).
In addition, the following can be stated regarding the quality
variables:
- A positive but nonsignificant association was found between
labour productivity and the variables Leadership, and People.
Given the results obtained in items LEAD4 and PEOP1 shown
in Table A.1 (0.267 and 0.551, respectively), the lack of signif-
icance of the impact of Leadership and People on productivity
could be related to the fact that, in general, there may be lit-
tle awareness among hotel managers of the importance of staff
motivation and ongoing training as drivers of quality and pro-
ductivity. Moreover, it should be taken into account that, in the
context of TQM, the management’s commitment to quality is
shown through increased employee motivation (LEAD4) and sys-
tematic training programmes (PEOP1), which are the key factors
in attaining superior final service quality (Powell, 1995). More-
over, both items are related given that employee empowerment
and motivation is not effective unless employees have received
formal training in quality management (Ahire et al., 1996). For
these reasons, low scores on the two key items LEAD4 and PEOP1,
despite being compensated for by high scores on other items
within the Leadership and People constructs (LEAD and PEOP),
may indicate that hotels are failing to implement fully effective
quality-oriented management which, in turn, may explain its lack
of effect on performance. On this point, in-depth case studies
would be useful to analyze to what extent the lack of awareness
among managers of the importance of these key TQM elements
170 C.G. Benavides-Chicón, B. Ortega / International Journal of Hospitality Management 42 (2014) 165–173

Table 3
Descriptive statistics of the variables used in the estimations.

Variables Units Minimum Maximum Mean S.D.

GVA Euros (2008) 29,687 9,609,194 1,657,213.72 1,792,686.6

Labour productivity (GVA/total number of full-time equivalent employees) Euros (2008) 9,895.67 104,102.24 33,553.55 13,070.34
Total number of full-time equivalent employees Number 3 237 46.53 45.58
Number of available rooms Number 7 1200 141.87 149.53
Dummy = 1 if the hotel belongs to a chain % establ. – – 61.27 48.9
Dummy = 1 if hotel located in the capital of a province % establ. – – 42.77 49.6
Dummy = 1 if the hotel has 3 stars % establ. – – 42.2 49.5
Agea Years 0 79 13.22 14.06
Leadershipb 0 1 0.59 0.23
Peopleb 0.21 1 0.74 0.19
Strategyb 0 1 0.67 0.25
Partnerships and resourcesb 0.17 1 0.74 0.16
Processes, products and servicesb 0.40 1 0.74 0.12
Global qualityb 0.29 0.97 0.69 0.15
a
The minimum value, set at 0, corresponds to hotels that began to operate in 2008.
b
Values of the items that compose each construct, expressed on a scale from 0 to 1.
Table 4
Regression including all the quality variables in the model.

Variables Coefficients Vif

Number of rooms (ln) 0.208* (0.560) 3.933

Total number of full-time equivalent employees (ln) −0.154* (−0.392) 4.336
Dummy = 1 if the hotel belongs to a chain 0.095 (0.124) 2.177
Dummy = 1 if hotel located in the capital of a province 0.145* (0.190) 1.310
Dummy = 1 if the hotel has 3 stars −0.153* (−0.201) 1.665
Age 0.003* (0.123) 1.169
Leadership −0.066 (−0.039) 2.219
People −0.025 (−0.013) 1.862
Strategy 0.289** (0.190) 2.632
Partnerships and resources −0.266 (−0.114) 2.365
Processes, products and services 0.495* (0.160) 1.910

Adjusted R2 0.290
F statistic (p value) 7.377 (0.000)
Jarque–Bera test of normality in residuals (p value) 0.264 (0.876)
White heteroscedasticity test (p value) 1.226 (0.171)
Ramsey RESET test (p value) 1.142 (0.287)
Number of observations used 173

Note: The table shows the values of the OLS estimated coefficients of the variables and their corresponding standardized coefficients in brackets.
*
The coefficients of the corresponding variables are significant at 5%.
**
The coefficients of the corresponding variables are significant at 10%.
The dependent variable in all of them is the logarithm of labour productivity, measured as the ratio between the GVA and the total number of full-time equivalent employees.
Standard errors and covariance are White heteroscedasticity-consistent.
Table 5
Regressions using the different quality variables.

Variables Eq. (1) Eq. (2) Eq. (3) Eq. (4) Eq. (5) Eq. (6)

Number of rooms (ln) 0.185* (0.497) 0.180* (0.483) 0.196* (0.527) 0.180* (0.483) 0.193* (0.520) 0.188* (0.505)
Total number of full-time equivalent −0.140* (−0.357) −0.134* (−0.340) −0.144* (−0.365) −0.129* (−0.329) −0.151* (−0.383) −0.145* (−0.368)
employees (ln)
Dummy = 1 if the hotel belongs to a chain 0.127* (0.164) 0.139* (0.181) 0.073 (0.095) 0.143* (0.185) 0.135* (0.175) 0.109** (0.141)
Dummy = 1 if hotel located in the capital of 0.135* (0.178) 0.136* (0.178) 0.142* (0.187) 0.139* (0.184) 0.137* (0.181) 0.135* (0.178)
a province
Dummy = 1 if the hotel has 3 stars −0.174* (−0.229) −0.173* (−0.227) −0.153* (−0.201) −0.169* (−0.222) −0.170* (−0.223) −0.169* (−0.222)
Age 0.002** (0.091) 0.002** (0.095) 0.002** (0.087) 0.002** (0.094) 0.003* (0.118) 0.002** (0.092)
Leadership 0.138 (0.083) – – – – –
People – 0.153 (0.081) – – – –
Strategy – – 0.294* (0.193) – – –
Partnerships and resources – – – 0.003 (0.001) – –
Processes, products and services – – – – 0.523* (0.170) –
Global quality – – – – – 0.364* (0.142)

Adjusted R2 0.262 0.263 0.285 0.256 0.285 0.274

F statistic (p value) 9.743 (0.000) 9.762 (0.000) 10.786 (0.000) 9.466 (0.000) 10.775 (0.000) 10.261 (0.000)
Jarque–Bera test of normality in residuals 0.624 (0.732) 0.585 (0.746) 0.396 (0.820) 0.727 (0.695) 0.416 (0.812) 0.420 (0.811)
(p value)
White heteroscedasticity test (p value) 0.80 (0.766) 0.782 (0.788) 0.836 (0.717) 0.977 (0.510) 0.890 (0.639) 0.764 (0.811)
Ramsey RESET test (p value) 1.811 (0.180) 0.799 (0.372) 2.626 (0.107) 0.633 (0.427) 0.991 (0.321) 2.039 (0.155)
Number of observations used 173 173 173 173 173 173

Note: The table shows the values of the OLS estimated coefficients of the variables and their corresponding standardized coefficients in brackets.
*
The coefficients of the corresponding variables are significant at 5%.
**
The coefficients of the corresponding variables are significant at 10%.
The dependent variable in all of them is the logarithm of labour productivity, measured as the ratio between the GVA and the total number of full-time equivalent employees.
Standard errors and covariance are White heteroscedasticity-consistent.
 C.G. Benavides-Chicón, B. Ortega / International Journal of Hospitality Management 42 (2014) 165–173
could be related to the lack of significance in the estimations
detected in this paper.
- However, we found a positive and significant association between
productivity and the variables Strategy and Processes, Products and
Services, and the variable Global Quality.
- The variable Strategy had the largest effect of the three vari-
ables. Given the complexity of interpreting the scale used to
measure the quality variables, we considered that the best option
to determine their effects on productivity is to use their standard-
ized coefficients or beta coefficients (see Table 5). Specifically, an
increase of one standard deviation in this variable leads to an
increase of 0.193 standard deviations in labour productivity. The
importance of this criterion in the EFQM model is that its com-
ponent sub-criteria (related to the needs and expectations of the
stakeholders and business capacity, among others), are fully in
line with the first fundamental concept of excellence: achieving
balanced results. Therefore, it can be stated that the relationship
between strategy and desired outcomes (including value creation
and productivity, among others) is high.
- The variable Processes, Products, and Services is essential to under-
standing the importance of the EFQM model since, in the case of
this enabler, the higher achievement of the objectives ensures
better performance results (see EFQM, 2010). The positive coef-
ficient obtained for this variable (specifically, an increase of
one standard deviation in this variable leads to an increase
of 0.170 standard deviations in labour productivity) matches
expectations. In fact, the reliability of this construct was also
the highest. The items that compose it encompass important
aspects, such as the degree of implementation of business pro-
cess management (crucial to the philosophy of TQM), the needs
and expectations of the clients in order to introduce new services,
and the degree of quality achieved in the main processes of the
hotels.
- The positive association between the variable Global Qual-
ity and labour productivity is the most relevant finding of
this study, as it confirms the validity of the EFQM Excellence
Model regarding its positive effect on productivity in hotels.
Specifically, when the variable Global Quality increases by one
standard deviation, productivity increases by 0.142 standard
deviations. This result implies that the adoption of TQM mod-
els, or at least, the implementation of the principles underlying
the concept of total quality, is an expansive strategy that has
a direct effect on the value added of hotels and their labour
productivity.
5. Conclusions
The aim of this article was to determine the relationship
between productivity and quality. Both variables are crucial to any
business and particularly to companies in the hotel sector, given
the contextual and structural characteristics of the sector. As noted
above, given that there are very few empirical studies explicitly
addressing the relationship between the two variables, this paper
attempts to fill this gap in the literature.
This study represents a contribution as it explores quality from
a strategic perspective (TQM) taking into account the EFQM Excel-
lence Model as a foundation. The main finding of interest to
management is that some but not all dimensions of TQM practice
have a significant impact on hotel labour productivity levels. It is
assumed that, as Samson and Terziovski (1999) pointed out, “TQM
is substantially composed of ‘the right stuff’ for management”.
However, the results obtained in this paper suggest that estab-
lishments should mainly concentrate on Strategy, and Processes,
Products and Services to improve hotel productivity. Not surpris-
ingly, these constructs include most of the added-value generating
171
activities within firms. This is not to say that the other enablers
should be ignored (authors like Bou-Llusar et al. (2009) consider
that it is highly recommended that managers take into account all
its components as they are closely linked), but rather that further
research is needed to analyze why Leadership and People in par-
ticular — although they show the expected positive relationship
with productivity — do not significantly explain the differences
in labour productivity across establishments. As noted above, this
finding could be related to the fact that there may be little aware-
ness among hotel managers of the importance of staff motivation,
recognition programmes, and ongoing training as quality compo-
nents. If so, managers would generally focus on excelling in some
items within these enablers, but would fail to pay enough atten-
tion to other key factors such as those mentioned above, which
have been identified for the hospitality industry by several authors
(Sasse and Harwood-Richardson, 1996; Kilic and Okumus, 2005;
Marchante and Ortega, 2012). Otherwise, this result may also be
due the fact that other items that are highly valued by man-
agers within these constructs have low predictive power regarding
hotel productivity. On this point, in-depth case studies would be
useful to analyze to what extent the lack of awareness among
managers of the importance of these TQM dimensions could be
related to the lack of significance in the estimations detected in
this paper.
For these reasons we consider that this analysis contributes to
a deeper understanding of the business value and strategic role
of each of the enablers of the EFQM Model in the hotel indus-
try, helping managers to allocate resources to those categories
that may have the greatest effect on performance. The analysis
also suggests areas for improvement that may in fact be impeding
improvements in productivity due to the managers being unaware
of them. This may be the case of Leadership and People. Neverthe-
less, further empirical research is also needed to investigate and
account for the possible lag between the implementation of TQM
and changes in productivity in establishments. It is possible that
in many firms the quality system may yet to have an impact on
labour productivity because it may have only been implemented
for a short time. In this sense, Schmidt and Finnigan (1992) consid-
ered that TQM cannot produce consistent benefits until after the
third year of implementation. Unfortunately we have no data to
control this feature in the sample. However, given the wide array
of hotels with different characteristics and presumably at different
stages of TQM practice in the sample, our results provide robust
evidence on the impact of EFQM Model enablers on hotel labour
productivity.
Finally, we discuss some of the limitations of this work. The main
limitation concerns the type of data used, since cross-sectional data
do not allow us to study how productivity evolves over time in
hotels. Furthermore, although the data used come from various
sources, in the case of the quality variable, the primary data used
came from the questionnaire. In this sense, the accuracy of the
data depends on the respondents and the information to which
they had access. Another limitation concerns the problem of mea-
suring outputs and inputs and the suitability of using one type of
measure or another. First, the measurement of FTEE has certain lim-
itations, as described in Section 3.3. In addition, the use of a partial
productivity measure, such as labour productivity, precludes the
consideration of other relevant factors. However, its use is fully
justified in the case of the hotel industry, as explained in Section
3.3.
Appendix.
Table A.1 shows the quality variables items included in the ques-
tionnaire.
172 C.G. Benavides-Chicón, B. Ortega / International Journal of Hospitality Management 42 (2014) 165–173

Table A.1
Quality variables items (the answers have been normalized in order to express all the items on a scale from 0 to 1).

Items N Mean Standard deviation

Leadership
LEAD1A Is there a Quality Committee composed of the Director, Deputy 164 0.51 0.501
Director (if any) and Area Managers?
LEAD1B Is there a Quality or Improvement Plan coordinator? 162 0.72 0.452
LEAD2 What is the degree of personal commitment of the director to 171 0.897 0.171
ensure continuous improvement of the establishment’s
management system?
LEAD3 To what extent do the director and area managers participate 173 0.562 0.29
in professional associations, conferences, and seminars, and
give and receive training courses dedicated to the issue of
quality and excellence?
LEAD4 To what extent is continuous improvement promoted by 173 0.267 0.342
prizes, employee of the month awards, or other staff
recognition programmes?

People
PEOP1 How often do the staff receive quality training and how often 173 0.551 0.30
are they trained to match their skills to the needs of the
establishment?
PEOP2 To what extent are staff committed to and assume 172 0.678 0.246
responsibility for quality, for example, by participating in
improvement teams, contributing ideas and suggestions in
events and meetings?
PEOP3 Does the management promote awareness of hygiene, safety, 172 0.833 0.207
the environment, and social responsibility through meetings
or other media?

Strategy
STR1 Has the establishment or chain defined their Strategic Plan? 171 0.74 0.438
STR2A Is there a Corporate Social Responsibility policy? 168 0.75 0.434
STR2B Does the company have a master plan that describes these 160 0.39 0.490
policies?
STR3 To what extent is all the information that may affect its future 173 0.753 0.267
systematically taken into account?
STR4 How often does the establishment or chain develop, revise and 172 0.69 0.275
update its policy and strategy?

Partnerships and resources

P&R1 How often does the establishment develop partnerships and 173 0.723 0.258
cooperate with other companies and organizations? How
diverse are they?
P&R2 To what degree have economic and financial management 170 0.705 0.268
tools, such as a Balanced Scorecard, a wide range of indicators,
formal accounting, risk management, investment
management, and so on been developed?
P&R3 How effective is the use of resources and the conservation of 171 0.734 0.229
buildings and infrastructure? Are criteria of sustainability and
environmental protection applied?
P&R4 To what extent do the information and communication 172 0.796 0.181
systems allow people from different areas to access
appropriate and accurate information to do their jobs?

Processes, products and services

PRO1 To what degree is Process Management implemented? 172 0.727 0.299
PRO2A Indicate how often you develop innovations in management, 172 0.499 0.258
change processes in management, staff policies, organizational
structure, information technology, etc.
PRO2B Indicate how often you introduce new services based on 172 0.673 0.252
customer needs and expectations
PRO3A Degree of Quality: Complete customer service process 172 0.727 0.246
PRO3B Degree of Quality: Comfort 173 0.718 0.217
PRO3C Degree of Quality: Functionality 173 0.76 0.236
PRO3D Degree of Quality: Cleaning of rooms and common spaces 173 0.754 0.308
PRO3E Degree of Quality: Purchases 172 0.744 0.224
PRO3F Degree of Quality: Maintenance of facilities and equipment 173 0.772 0.19
PRO3G Degree of Quality: Modernity 173 0.755 0.201
PRO3H Degree of Quality: Food and drink 159 0.839 0.157
PRO3I Degree of Quality: Leisure activities 120 0.701 0.241
PRO3J Degree of Quality: Organization of events 137 0.79 0.219
PRO3K Degree of Quality: Customers and employee safety 173 0.74 0.273
PRO3L Degree of Quality: Location 170 0.892 0.172
PRO3M Degree of Quality: Human Resources Management 171 0.792 0.166
PRO3N Degree of Quality: Promotion, Marketing 172 0.654 0.225
PRO3O Degree of Quality: Strategic Planning 170 0.732 0.178
PRO3P Degree of Quality: Administration 172 0.756 0.202
 C.G. Benavides-Chicón, B. Ortega / International Journal of Hospitality Management 42 (2014) 165–173
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