Journal of Human Resources in Hospitality & Tourism

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Strategic Human Resource Management in U.S.
Luxury Resorts—A Case Study
Marcia Taylor & Dori Finley
To cite this article: Marcia Taylor & Dori Finley (2008) Strategic Human Resource Management
in U.S. Luxury Resorts—A Case Study, Journal of Human Resources in Hospitality & Tourism,
8:1, 82-95, DOI: 10.1080/15332840802274460
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Published online: 02 Jan 2009.

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Date: 11 November 2016, At: 00:30


Journal of Human Resources in Hospitality & Tourism, 8:82–95, 2009
Copyright © Taylor & Francis Group, LLC
ISSN: 1533-2845 print / 1533-2853 online
DOI: 10.1080/15332840802274460




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labor shortage in seasonal resorts due to changes in immigration laws (Berta,
2004; Hedlund, 2004).
Solving the labor shortage problem is the responsibility of the human
resources (HR) department. Traditionally, this department has served as support for operations and was viewed as a funnel to provide workers. Administrative functions of the department were viewed as the only contribution
of HR to the total organization. This view changed due to a movement in
business and industry that treated HR as human capital. Today, in some
companies, the HR department has been viewed as a source of competitive
advantage and has become a strategic partner at the executive level (Kearns,
2004). This has served to differentiate companies with a strategic HR emphasis from those without. According to Cooper (2005), what differentiates great
companies from their peers is the ability to hire, develop, and retain the best
people. The effect of a strategic emphasis in hospitality HR departments has
not been documented in the United States, thus the need for research in this
area.
This article reports the results of a case study of five luxury resorts in
North Carolina. The issues investigated in this article include:
(1) recognition by luxury resort HR managers of the forces driving change
in the environment;
(2) competitive methods being utilized to solve the labor shortage;
(3) resources allocated to these competitive methods;
(4) alignment of the three elements of the model with firm performance.

REVIEW OF THE LITERATURE
Beginning with a review of literature on the labor shortage issue, changes in
HR, and the co-alignment model, this study reports results using the elements

hospitality industry has been recognized as a major force driving change
for decades; however, the industry has failed to identify solutions to address this issue. Solutions that could be implemented to ease the shortage
of labor in the industry include outsourcing, improving productivity, recruiting in target markets, developing attractive employment policies, marketing as employer of choice, and increasing skills of employees (Holt,
2006).
According to Ettedgui (2006), the best luxury hotels are known for providing exceptional services and for the sincerity of the people who deliver
those services. This is true in luxury resorts where the delivery of quality
service is usually the number-one priority. In a model of impediments to
improvements in service quality in luxury hotels, Presbury, Fitzgerald, and
Chapman (2005) identified four broad categories of impediments: (1) budget
constraints, (2) staff attitude, (3) lack of mentoring, and (4) high customer expectations. Two of these categories, staff attitude and lack of mentoring, are
impacted by HR policies and procedures. The authors indicate that a lack of
leadership, inexperienced managers, high turnover, recruitment procedures,
and a lack of service ethic in the organization are issues that contribute to the
lack of mentoring and staff attitude. All of these issues impact labor turnover
and should be addressed by hospitality HR directors.

Strategic Management in HR
Historically, the role of HR in a hospitality management company has been
administrative in nature. Fulford and Enz (1995) documented this administrative definition, which they called personnel administration, in the HR
department of a multi-unit restaurant chain. A national trend in HR is to
move from the administrative role to the incorporation of HR in strategic
planning. This movement was aided by the development of the concept
of human capital or human assets in an organization. Human capital is defined as including “skills, judgment, and intelligence of the firm’s employees”


Strategic Human Resource Management

85

(Barney & Wright, 1998, p. 32). In a Norwegian hotel chain, Engstrom, Westnes, and Westnes (2003) identified human capital as one of three components of intellectual capital; the other components were customer capital

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M. Taylor and D. Finley

FIGURE 1 Co-alignment Model Adapted from Olsen et al. (2007)

Co-Alignment Model
As early as 1983, strategic management has been recognized as important for managers in the hospitality industry (Reichel, 1983). More recently Kim and Oh (2004) recommended the use of a comprehensive,
integrated strategic-management method to give hotels a competitive advantage. The co-alignment principle is a strategic-management theory that
implies that companies can gain a sustainable competitive advantage if
management adopts the principles of the theory in their everyday operations (Olsen et al., 2007). In support of this theory, Olsen et al. (2007)
developed a model that consists of four constructs necessary in achieving co-alignment within business. According to the co-alignment principle model, if management can (1) identify opportunities that exist in the
forces driving change in the environment, (2) invest in competitive methods (strategy choices) that take advantage of these opportunities, and (3)
allocate resources to those methods that create the greatest value, then they
can (4) achieve sustainable competitive advantage (Olsen et al., 2007; see
Figure 1).
A firm’s success depends on the management’s awareness of the environment and ability to identify and adapt to changes. According to Olsen
et al. (2007), the co-alignment model is similar to other strategic management concepts, but it is future oriented. The application of the co-alignment
model to the hospitality industry has been reported by Olsen et al. (2007)
and in many unpublished dissertations. Typically, the hotel industry is considered a “copycat industry.” Hoteliers are quick to copy innovations by
others. Adopting the co-alignment model can give a resort manager a competitive advantage in the marketplace. Due to the competition for luxury
travelers and the short lifespan of luxury services, application of this model
is appropriate for managers in luxury resorts.

PURPOSE OF STUDY
The purpose of this study was to answer two research questions: (1) Are
luxury resorts investing in competitive methods to take advantage of the


Strategic Human Resource Management

each director on location at the resort. Six of the questions were descriptive
of the resort. Five questions sought to identify the forces in the environment
identified by the HR director as driving change in the hotel industry. These
forces also have the potential of affecting the resort in the future and are
contributing to problems in HR at the resort. Four questions addressed the
strategy choices or competitive methods utilized by the resorts. Specifically,
the HR directors were asked to identify the resort’s competitive methods and
what was included in each method. They were also asked how competitive methods were chosen and which methods were perceived as adding
the most value to the resort. The next five questions sought to identify how


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M. Taylor and D. Finley

capital and HR were allocated to the competitive methods. Firm performance
in terms of financial performance was identified in the final eight questions.
The questionnaire was e-mailed to the HR director for preparation prior
to the face-to-face interview. The interviews ranged from 1.5 to 2.5 hours
in length. In addition to the interview, the researchers were able to observe
the implemented strategies at each property to confirm information received
during the interviews. Interviews were transcribed and content analysis was
used to evaluate the responses (Neuendorf, 2002).

RESULTS AND DISCUSSION
The results of the case study include demographic information about the
resorts, content analysis for components of the co-alignment model, and
evaluation of the alignment/nonalignment of the components.

Characteristics of the Sample

directors had participated in an executive-level strategic-planning process
that identified forces in the environment that were impacting their resorts.
While at the other end of the continuum, the HR directors monitored local
events.

Strategy Choices/Competitive Methods
The second component of the co-alignment model is the utilization of strategy choices/competitive methods. The HR directors identified their strategy
choices/competitive methods for two of the labor issues and both of the
guests’ issues. No strategy choices/competitive methods were identified for
the technology and environmental issues (see Table 1). Strategies selected to
address the unemployment rate issue included use of H2B and H-1 visa employees (guest workers or temporary workers), offering competitive benefits
and salaries, leadership development and increased training, developing a
company culture and loyalty among employees, offering incentive programs,
redefining full-time employment, and extending the seasons with off-season
offerings. Strategies utilized to address the increased cost and changing nature of benefits included redefining full-time employment, flextime, child
care, and job sharing. No strategies were implemented to address the HRrelated issues of immigration and diversity of the workforce, energy costs for
employees, or the generational mix.
The growth in family travel was addressed by renovated facilities, added
amenities, increased service quality, and package pricing. New competition
resulted in renovated facilities, added amenities, increased service quality,
package pricing, leadership development, and increased training and cobranding. The strategies identified for the two changes in guest needs were
the same with new competition generating the need for leadership development, increased training, and co-branding.
It can be concluded from these findings that HR directors are making
strategic choices or developing competitive methods to address the forces
driving change in the environment. Six methods were developed to address
more than one force in the environment, which is similar to the results in
other studies (Young et al., 2005). The range in strategy choices varied from
comprehensive to piecemeal. Three of the HR directors described “People
Strategies,” which were very comprehensive programs, while others listed
separate competitive methods with no linkage. The range of the methods was

Building loyalty among
employees
Incentive programs
Redefining full-time
employment
Extending seasons
Redefining full-time
employment

Firm Structure
Increased HR
budgets
Changing
management
structure to
compliment capital
investment
HR as strategic
partner
Culture committee

Flextime
Child care
Job sharing
Immigration and
diversity of the work
force
Energy costs for
employees
Generational mix

91

For example, in one resort, for every dollar invested in their employees
an increase of three dollars in profit was generated. At another resort, any
increase in revenue was interpreted as meaning that they were doing the
right thing.
Competitive strategies that impacted employees directly included redefining full-time work, offering competitive wages and benefits, creating
loyalty in employees, and a variety of changes to encourage a more-stable
workforce. In one resort, the minimum number of hours required for an employee to receive full-time benefits was decreased from 40 hours per week
to 30 hours per week. This change allowed employees to stay on the payroll
and receive benefits during slower seasons. A variety of wellness programs
and incentive programs were described as methods for increasing the health
and well-being of employees and to reward employees for contributing to
the bottom line of the resort.
The HR director at one resort reported treating employees like family as a method used to create loyalty in the workforce. Examples of how
a family environment type of work culture was created included fundraisers, company support for employees with need, supporting the community
with funds, and paid time for employees to assist community organizations.
Changes made to encourage a more stable workforce included extending
the seasons by offering themed weekend events, promoting job sharing,
and offering flextime. It is interesting to note that none of the resorts used
outsourcing to solve labor problems and the implementation of all of these
changes decreased the need to use guest workers.
Competitive HR strategies that were implemented in response to the
changes in guest needs included more training and leadership development,
and developing a full-time, year-round workforce. The increase in training
allowed the resorts to capitalize on the strengths of their current employees.
By decreasing the need for part-time or seasonal workers, the resorts could
offer consistent quality service as demanded by guests at a luxury resort.

Firm Structure

32% to 38.5%, employees to rooms ranging from 1.1 to 1.9, and turnover
percentages ranging from 16.5% to 65%.
The wide range in RevPar, occupancy rates and turnover were due to
data from one seasonal resort. Turnover rates were also impacted by the
use of temporary guest workers. The HR directors reported that turnover
rates were not increasing. This trend is different from a study by the Society
for Human Resource Management where 38% of the members reported increasing turnover rates (Feeney, 2007). While it is difficult to link these data
as outcomes for a strategy choice and change in firm structure, there was
a trend for lower turnover rates in the resorts with a more comprehensive
“People Strategy.”

IMPLICATIONS AND CONCLUSION
Succeeding in the resort industry requires alignment between the four elements of the co-alignment model: (1) the environment, (2) strategy choice(s),
and (3) firm structure, which leads to an outcome reflected in the (4) firm
performance (Olsen et al., 2007). From the interviews with the HR directors,
it was clear that the forces driving change in the hospitality industry environment, and more specifically the resort industry, were identified as economic
issues related to labor and guests. Each of the HR directors identified forces
in the environment; however, the critical difference was in looking locally
versus nationally for changes. In two of the five resorts, the HR director was
viewed as a source for strategies to address the changes in the environment.
In the other three resorts, the HR director was not. In all but one of the
resorts creative structural changes are being made to achieve competitive
advantage.


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93

When applying the co-alignment model in this case study, there is very

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