SWOT Analysis of Hotel Service Quality in Medan in the Mice

Industry

Inneke Qamariah, Yasmin Chairunisa Muchtar, Fadli

Faculty of Economics and Business, Universitas Sumatera Utara

Keywords: MICE Industry, SWOT Analysis, Hotel, Service Quality, QSPM

Abstract: Medan is one of the MICE cities (Meetings, Incentives, Conferences, Exhibition) in Indonesia because it has

a fairly rapid growth in the number of hotels and has increase in organizing MICE activities. The hotel is a

temporary accommodation facility for guests who come from various places. At this time hotel is not only as

a place to stay but also a place for conducting business meetings, wedding parties, workshops, deliberations,

and other activities. The hotel is used as a place to do various activities because it has complete facilities and

infrastructure. This study aims to study strengths, weaknesses, opportunities, and threats (SWOT analysis) of

the quality of hotel services in the city of Medan in the MICE industry. The research method used is a

qualitative method using an internal factor evaluation (IFE) matrix and an external factor evaluation (EFE)

matrix with decision making using the Quantitative Strategic Planning Matrix (QSPM) matrix. The results of

this study indicate that the high competition in the hospitality industry is the most dominant. Analysis of

external and internal factors using the Internal Factor Evaluation (IFE) and External Factor Evaluation (EFE)

matrices indicate that external influences are greater than those of internal factors.

1 INTRODUCTION

One of the determinants of progress in the tourism

industry in an area is the growth of the opening of the

area to tourist visits from both national and

international levels. One of the increases in tourist

visits is the growth of MICE business on the

development of tourism in that area. The impact of

MICE business development can be observed from

the numerous national and international events held

by the government and private sector with various

objectives such as seminars, promotions, exhibitions

and international conventions to develop the tourism

industry. The progress of the tourism industry has a

strong relationship with the development of the

creative economy because MICE events can certainly

be able to push the economic chain and other related

industries.

The government has an important role in

developing the national tourism industry, especially

for MICE business. However, the MICE business can

only be enjoyed by a region that has supported its

tourism infrastructure such as Bali, Lombok, Jakarta,

and Surabaya. Whereas in some other regions in

Indonesia, the geographical structure is not different,

but due to the lack of management, so that region has

not yet become a destination area in organizing MICE

events. Sumatera Utara with abundance natural

conditions as well as a highly developed creative

industry should have become a MICE tourist

destination on an international scale because it has

attractions such as Lake Toba and other beautiful

beaches. The tourism industry and hotel business

should concern with quality of service (Brown,

Bowen, & Swartz, 1992; Tsaur & Lin, 2004).

Table 1.1 The Travel & Tourism Competitiveness

Country Economy Rank

Spain 1

France 2

Germany 3

Japan 4

United Kingdom 5

United States 6

Australia 7

Italy 8

Canada 9

Switzerland 10

Hong Kong SAR 11

Austria 12

Singapore 13

Qamariah, I., Muchtar, Y. and Fadli, .

SWOT Analysis of Hotel Service Quality in Medan in the Mice Industry.

DOI: 10.5220/0009308605150522

In Proceedings of the 2nd Economics and Business International Conference (EBIC 2019) - Economics and Business in Industrial Revolution 4.0, pages 515-522

ISBN: 978-989-758-498-5

515

Portugal 14

China 15

New Zealand 16

Netherlands 17

Norway 18

Korea. Rep 19

Sweden 20

Belgium 21

Mexico 22

Ireland 23

Greece 24

Iceland 25

Malaysia 26

Brazil 27

Luxembourg 28

United Arab Emirates 29

Taiwan, China 30

Denmark 31

Croatia 32

Finland 33

Thailand 34

Panama 35

Malta 36

Estonia 37

Costa Rica 38

Czech Republic 39

India 40

Slovenia 41

Indonesia 42

Source: World Economic Forum (2019)

Based on Table 1.1, Indonesia was ranked 42

The Travel & Tourism Competitiveness. Sumatera

Utara, particularly in Medan, MICE business

supports infrastructures such as star hotels, ports,

airports, shopping centers, culinary centers, cultural

heritage. The basis for organizing MICE events such

as seminars, conventions, exhibitions, and other

meetings. The facilities that are owned, apparently

not yet an attraction for organizers to organize MICE

events both national and international in Medan. It

becomes a problem because the hotel industry will be

very dependent on the level of occupancy and the

growth rate of the activities held at the hotel,

especially for the MICE event. It would be very ironic

if the number of star-rated hotels experience fairly

low occupancy rate and minimal MICE activities

conducted at the hotel. According to Bozac and

Tiporic (2006) to change the structure of

accommodation capacities is one of the priorities

along with the governmental directives to increase the

quality level of the existing basic facilities for

accommodation to reach three-stars and five-star.

Table 1.2 Hotel Room Occupancy Rate in North Sumatra

and Other Accommodation by month and classification (%)

in 2016.

Three-star Four-

star

2016 71,46 54,07

January 63,81 52,1

February 58 51,85

March 61,36 51,82

April 58,95 47,76

May 54,4 51,44

June 80,73 59,64

July 62,6 49,93

August 80,49 59,38

September 69,32 53,71

October 83,14 59,31

November 113,53 61,14

December 90,58 53,09

Source: BPS of Sumatera Utara Province (2019)

Based on data on occupancy rates and growth of

MICE activities in five-star hotels in Sumatera Utara,

especially in Medan, data obtained that tourists visit

and MICE events in Medan city have not reached

average occupancy rates and MICE events compared

to other large cities such as Bali, Jakarta, and

Surabaya. Realizing this, business strategy is needed,

especially strategy that must be implemented,

especially for the hotel industry to create the

appropriate strategy to boost tourism growth,

especially the MICE industry. The tourism industry

and hotel business are not exempt from service

quality concerns (Brown, Bowen, & Swartz, 1992;

Tsaur & Lin, 2004). Measurements of some quality

of the hospitality industry such as prices, quality of

services, cooperation with the government, and

supporting infrastructure namely roads, sanitation,

bureaucracy must be a guideline in determining

strategies and steps in promoting tourism growth in

the city of Medan. Thus to determine the strategy, an

approach and analysis should be created to determine

the strengths, weaknesses, opportunities, and threats

from both external and internal owned by the hotel

industry, especially in the city of Medan, which are

summarized in the SWOT analysis strategy and

approach.

2 RESEARCH AIM

This research is to find out and determine the strategy

with the SWOT analysis approach in the hotel

industry in Medan city.

EBIC 2019 - Economics and Business International Conference 2019

516

3 LITERATURE REVIEW

3.1 Mice Industry

Service quality is considered a highly reliable source

of market information for current business

organizations. Service quality will influence purchase

intention since it is regarded considered as the main

aspect of customer satisfaction (Spreng and Mckoy,

1996; De Ruyter et al., 1997). The significance of

service quality evaluation through the measurement

of customer satisfaction is strengthened by the

necessity of adopting a "sustainable improvement”

philosophy and comprehend customer perceptions

(e.g. needs, expectations). Moreover, the direct

benefits not merely received by tourist, it contributes

to economic positively through the increasing new

investigates and job creation. (Bosworth

&Farrell,2011). It can be stated that the quality of

entrepreneurship, as well as entrepreneurial

leadership, have demonstrated a positive effect on the

business performance of a tourism enterprise. It is

critical to identify the particular factors which affect

success in small tourism businesses as well

(Taskovetal.,2011).

Buhalis (2000) also propose that a destination

consists of a central for the following elements

namely the six as framework including attraction,

accessibility, amenities, available package, activities

and ancillary.

Indeed, the most important part of the hospitality

industry is the hotel sector because most of the

tourists' time is spent in the hotel during a trip. Hotel

is the place to complete the purpose of traveling

namely for conferences and business meetings. (Page,

2009)

3.2 Service Quality

Cai (2010) states that Parasuraman, Berry, and

Zeithaml (1985,1988) are the founder of The Gaps

model of Service Quality and SERVQUAL as its

measurement scale. The Gaps Model of Service

Quality and SERVQUAL are the basis for service

quality studies in numerous areas such as hospitality

and tourism that or adapted the scale for restaurants,

hotels, and services at retail travel.

In order to provide hotel service, there are two key

components are needed: material base and service,

because of these different components the owners of

hotels experience an uncertain problem of quality,

which are two different quality aspects: technical

quality, which represent a material basis, and

functional or process quality (service) (Vitkienė,

2004Vitkienė, E. (2004).

According to Anderson, Fornell & Lehmann,

(1994), the important key success of organization in

dynamic market competition is quality improvement.

3.3 Swot Analysis

Athiyaman (1995) posited because of the

globalization, fierce competition and rapid

technological change are some prominent factors

affecting the organization, both effective and efficient

management reaction toward internal and external

threats lead to the long term survival of organization

The profile of Environmental threat and

opportunity (ETOP) is used by some authors, while

others prefer to use the Strength, Weakness, and

Opportunities (SWOT) as a tool to diagnose the

environment. .Barney (1991) later develops the

resource-based view and redesign SWOT as the

foundation for connecting the resources of the

company, hence it will lead to the sustained

competitive (Grigor-oudis and Siskos, 2010).

The generally used tool to analyze the

environment systematically and assist in situation

decisions is SWOT analysis (Wheelen&Hunger,

1995). The objective of conducting SWOT analysis is

to make in identification both internal and external

factors, as well as to design achievable alternative

strategies (Baker, 2000; Helms & Nixon, 2010).

According to David (1986), The Quantitative

Strategic Planning (QSPM) is beneficial to decide the

relative attractiveness of various strategies for the

prospective implementation

4 METHODOLOGY

The Methods of this research are doing the data

collection with the literature study, observation study

in region and comparison, and depth interview.

SWOT Analysis of Hotel Service Quality in Medan in the Mice Industry

517

5 RESULT AND DISCUSSION

Table 5.1: SWOT Analysis of Hotel Service Quality in Medan Matriks Ife and Efe Swot Analysis

STRENGTH ( S) WEIGHT RATING SCORE

1 Good name and reputation 0,15 4 0,6

2 Strong Management Team 0,10 3 0,3

3 Efficient Asset and Financial Management 0,10 2 0,2

4 Ease of Access 0,08 2 0,16

5 Security and Safety Guarantee 0,07 2 0,14

WEAKNESS ( W )

1 Limited space for MICE activities 0,15 4 0,6

2 Human Resources are less professional 0,10 3 0,3

3 Infrastructure condition that is

elow standard 0,05 3 0,15

4 The high cost of managemen

hotel 0,10 2 0,2

5 Lack of hotel management innovation 0,10 2 0,2

TOTAL 1,00 2,85

OPPORTUNITY ( O ) WEIGHT RATING SCORE

1 Increased tourism industry growth 0,12 4 0,48

2 Cooperation with the government and the private secto

0,12 3 0,36

3 Ease of licensing and investment from the government 0,10 2 0,2

4 Increased purchasing power of the people 0,08 4 0,32

5 Improved technology and social media 0,08 2 0,16

THREAT ( T )

1 The high competition of the hospitality industry 0,15 4 0,6

2 Unstable political and security situation 0,10 3 0,3

3 Global economic recession and inflation 0,05 3 0,15

4 Natural disasters and terrorism 0,10 2 0,2

5 Environmental damage and pollution 0,10 2 0,2

TOTAL 1,00 2,97

Based on table 5.1, it is obtained that the internal

factors which are strength owned by 4 star and 5-star

hotels in Medan are good names and reputations with

the highest score of 0.6. Whereas the highest score of

weaknesses is the limited space for MICE activities.

Limited space with adequate capacity such as

exhibitions, music concerts, and large-scale activities.

The total score of the internal environmental strategy

factor (IFE) is 2.85 obtained with the average

category.

Table 5.1 shows the external factor which is

opportunities owned by 4-star and 5-star hotels in

Medan is the increasing growth of the tourism

industry with a score of 0.48. While the highest score

of threat is the high competition of the hospitality

industry with a score of 0.6. Such as price

competition, quality competition, and service

competition. In the IFE-EFE on the S Axis the

weighted average total of 1.0-1.99 is considered low;

values from 2.0-2.99 are intermediate; and 3.0-4.0

values are high. In the IFE-EFE Matrix above the

company's position is in the fifth awareness which

shows (2.85) while the external factor (2.97) is in a

moderate condition. This means that the service

quality of hotels in Medan already has quite strategic

internal factors but they have not been maximized in

exploiting opportunities and threats.

EBIC 2019 - Economics and Business International Conference 2019

518

Table 5.2: Matrix SWOT

STRENGTH ( S) WEAKNESS ( W )

ood name and re

utation

Limited space for MICE activities

Stron

Mana

ement Tea

Human Resources are less professional

Efficient Asset and Financial Management

Infrastructure condition that is not good ye

Ease of Access

The high cost of managing a hotel

Security and Safety Guarantee

Lack of hotel management innovation

S-O STRATEGY W-O STRATEGY

rove service

ualit

to customers Im

roved hotel infrastructure that su

orts MICE

Improve management competence Utilizing capital assistance from the government

Increase promotion through social media Make an interesting promotional event

Provides efficient rates Evaluatin

cost com

onents to be efficient

MICE collaboration with the government and the private

secto

S-T STRATEGY W-T STRATEGY

Take part in cultural exhibitions at the embassy

Increase the capacity of special rooms for MICE

events

Security cooperation with related parties Following the hospitality industry exhibition abroa

Partici

ate in efforts to save the environment Join the hos

italit

industr

association

Participate in efforts to save the environment

Become a donor in environmental conservation

organizations

SWOT Analysis of Hotel Service Quality in Medan in the Mice Industry

519

Table 5.3 Table QSPM

QUANTITATIVE STRATEGIC PLANNING MATRIX ( QSPM)

ALTERNATIVE 1 ALTERNATIVE 2

HR Quality

Improvement

Hotel Infrastructure

Improvement

Hospitality

KEY FACTORS WEIGHT AS TAS WEIGHT AS TAS

STRENGTH ( S)

1 Good name and reputation 0,25 4 1 0,13 4 0,52

2 Strong Management Tea

0,20 3 0,6 0,10 4 0,4

3 Efficient Asset and Financial Managemen

0,10 4 0,4 0,04 2 0,08

4 Ease of Access 0,08 2 0,16 0,08 2 0,16

5 Security and Safety Guarantee 0,01 2 0,02 0,07 2 0,14

WEAKNESS ( W )

1 Limited space for MICE activities 0,04 2 0,08 0,15 4 0,6

2 Human Resources are less professional 0,20 4 0,8 0,05 3 0,15

3 Infrastructure condition that is not good ye

0,05 3 0,15 0,25 4 1

4 The high cost of managing a hotel 0,03 3 0,09 0,05 2 0,1

5 Lack of hotel management innovation 0,04 3 0,12 0,08 2 0,16

TOTAL 1,00 3,42 1,00

3,31

OPPORTUNITY ( O )

1 Increased tourism industry growt

0,12 2 0,24 0,12 4 0,48

Cooperation with the government and the private

secto

0,12 3 0,36 0,12 3 0,36

Ease of licensing and investment from the

governmen

0,10 2 0,2 0,10 2 0,2

4 Increased purchasing power of the people 0,08 4 0,32 0,08 4 0,32

5 Improved technology and social media 0,08 3 0,24 0,08 2 0,16

THREAT ( T )

1 The high competition of the hospitality industry 0,17 4 0,68 0,15 4 0,6

2 Unstable political and security situation 0,08 2 0,16 0,10 3 0,3

3 Global economic recession and inflation 0,05 3 0,15 0,05 3 0,15

4 Natural disasters and terrorism 0,10 2 0,2 0,10 2 0,2

5 Environmental damage and pollution 0,10 2 0,2 0,10 2 0,2

TOTAL 1,00 6,17 1,00

6,28

It requires several alternative strategies to decide

the appropriate alternative actions in the strategy

formulation based on an assessment called the QSPM

(Quantitative Strategic Planning Matrix) matrix. In

this Matrix, the score of TAS (Total Attractiveness

Score) which is a combination of alternative

strategies and the weights given according to the

strengths of those strategies. The weight of the

Attractiveness Score (AS) is divided into 4, namely:

1 = not interesting

2 = rather interesting

3 = interesting enough

EBIC 2019 - Economics and Business International Conference 2019

520

4 = very interesting

Alternative strategies were calculated based on

the value of STAS (Sum of Total Attractiveness

Score) because a higher value indicates a more

attractive and more rational strategy to be

implemented in improving the quality of hotel

services in the city of Medan. Based on the results of

the STAS from the two alternative strategies above,

the best strategy chosen was the Improvement of

Hotel Infrastructure with a score of 6.28. This

strategy is more appealing because to face future

competition in the hotel industry which will promote

the development of the MICE industry, therefore the

improvement of hotel infrastructure ought to be

prioritized. Since there is limited space for large scale

of MICE activities in Medan city particularly.

To achieve the strategy required several actions

(actions) as follows:

1. Enlarging the hotel area for MICE facilities such

as Ball Room, parking lot, business centers

according to Barrows et al (2012), event with

guest rooms equipped in many properties like

mini office, business travelers expect and business

centers, particularly in service hotels.

2. MICE infrastructure and design following the

customer's needs. Barrow et al (2012) to

differentiate its property to competitors, the hotel

offers wide range services (other than food and

beverage).

3. Improvement of road access, sanitation and flood-

free area around the hotel. It is in line with

Chidsey (2013), the overall events naturally are

greatly resource-intensive, may possess

environmental consequences for the host city and

population. Specifically for conferences and

conventions which can be categorized as large

scale events, these type of events may cause

pollution, waste and greenhouse gas emission.

The environmental effect of events not simply to

energy usage, it includes water consumption,

carbon emission, and transport. Therefore,

undertaking sustainable practices will be able to

decrease the economic costs and environmental

impact of all related activities at the convention

center.

4. Cooperation with local government to accelerate

infrastructure improvement in the area around the

hotel. Refer to Buathong and Chun Lai (2017), the

motor engine of development sustainable event in

Thailand is collaboration between government

agencies and private sectors. However, there is a

lot of areas which could provide greater support

consist of environmental education, event

sustainability standard, and better know-how on

sustainable event development, budget

management, and national policies.

5. Participate in national and international hotel

association in terms of reward program such as

frequent stay program, to escalate the brand

loyalty and opportunities to receive important

information from customers. ( Ernst and

Young,2001),

6 CONCLUSION

1. The greatest score of strength in the hospitality

industry is a good name and reputation, hence

both factors must be enhanced.

2. The biggest weakness in the hospitality industry

is the limited space for MICE activities.

3. The biggest opportunity is the growth of the

tourism industry

4. The biggest challenge is the high competition in

the hospitality industry

5. The most fitted business strategy to improve the

quality of hotel services in the MICE industry is

through the upgrading of hotel infrastructure

because based on conditions, especially in the city

of Medan, which is still limited in providing space

with a large capacity to support the MICE

industry.

REFERENCES

Anderson, E. W., Fornell, C., & Lehmann, D. R. (1994).

Customer satisfaction, market share, and proﬁtability:

Findings from Sweden. Journal of Marketing, 58(3),

53–66.

Athiyaman,A.,Strategic planning inlarge tourism firms:

Anempirical analysis.Tourism Management,vol. 16(3),

pp. 199-205,1995.

Barney, J.B. (1991). “Firm resources and sustained

competitive advantage”,Journal of Management 17:

99-129.

Bosworth, G. and Farrell, H., Tourism entrepreneurs

in Northumberland. Annals of Tourism Research, vol.

38(4), pp. 1474-1494, 2011.

Braun, B. M. 1992. “The Economic Contribution of

Conventions: the Case of Orlando, Florida”, Journal of

Travel Research, 30(3), pp. 32–37.

Brown, M. W., & Cudeck, R. (1993). Alternative ways of

assessing model ﬁt. In K. Bollen, & J. S. Long (Eds.),

Testing structural equation models (pp. 136–162).

Newbury Park, CA: Sage.

Buhalis,D.,Marketing the competitive destination of the future .

Tourism Management, vol.21, pp. 97-116, 2000.

SWOT Analysis of Hotel Service Quality in Medan in the Mice Industry

521

Cai, L. (2010). Customer Expectations.In A. Pizam (Ed),

The International Encyclopedia of Hospitality

Management (pp,136-140). Oxford : Elsevier

David, F. (1985). The Strategic Planning Matrix-A

Quantitative Approach. Long Range Planning, 19, 95-

105.

Grigoroudis,E. and Y. Siskos(2010). Customer satisfaction

evaluation: Methods for measuring and implementing

service quality, Springer, New York

http://sumut.bps.go .id

ICCA, 2009,“Statistics Reports, The International

Association Meetings Market Abstract for non-

members” pp.17-20.

Kim, S.S., Chon, K. and Chung, K. Y. 2003 “Convention

Industry in South Korea: An Economic Impact

Analysis”, Tourism Management 24, pp. 533–541.

M. Gonan Božac, D. Tipurić: Top Management's Attitudes

- Based SWOT Analysis... EKONOMSKI PREGLED,

57 (7-8) 429-474 (2006).

Page, S.J. 2009. Tourism management: managing for

change. Amsterdam: ElsevierButterworth-Heinemann

Spreng,R.A. and R.D. McKoy(1996).An empirical

examination of a model of perceived service quality and

satisfaction, Journal of Retailing, 72(2), 201-214

Spreng,R.A. and R.D. McKoy(1996).An empirical

examination of a model of perceived service quality and

satisfaction, Journal of Retailing, 72(2), 201-214.

Taskov,N.,Metodijeski,D., Dzaleve,T.and Filipovski,O.,

Entrepreneurship in Tourism Industry Lead to Business

Benefits. 2nd Biennial International Scientific

Congress. The Influence of Tourism on Economic

Development,2011.

Vitkienė, E. (2004). Paslaugų marketingas [Service

Marketing, in Lithuanian]. Klaipėda: Klaipėdos

universiteto leidykla.

Wheelen,T.L. and Hunger ,J. D., Strategic Management

and Business Policy. Upper Saddle River, N. J: Prentice

Hall, 1995.

Yee-Man Siu, N., Wan, P.Y.K. and Dong P. 2012. “The

Impact of the Service scape on the Desire to Stay in

Convention and Exhibition Centers: The Case of

Macao”, International Journal of Hospitality

Management, 31, pp. 236–246.

EBIC 2019 - Economics and Business International Conference 2019

522