Why Knowledge Management matters to the hotel industry

Knowledge Management“There is clear evidence that behavioral science can be applied at work to achieve positive outcomes for both individuals and the organization. This isn’t about ‘Jedi mind tricks’ or duping; science can genuinely make us happier and more productive. It’s about understanding what drives performance and human behavior, what makes us tick….” wrote Johny Gifford in www.cipd.co.uk 1 in 2014. 

How does the above statement relate to the hotel industry? Let us look at an example:

Johny Hotelgeek an experienced and highly respected Hotel General Manager (GM), who is running a branded city hotel in Jakarta. He opens up his email to find a message from his Singapore based Vice President (VP). It says that he should make contact with the GM of the Bangkok property to arrange a video conference to discuss/learn from each other about the company’s latest intranet web tool. They should consequently provide feedback to the VP and report the degree of user friendliness and level of utilization.

What happens after that?

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Will the GMs look at the tool, read the manual or other additional information in preparation of their online meeting a few days later? Will they perform the online meeting, deeply discuss the matter, and in the process, “cross pollinate” with each other with what they know/learned about the tool?

Will the meeting motivate, inspire and satisfy them because they managed to share and enrich their knowledge?

Unfortunately, in reality, in at least 90% of the cases (based on experience), nothing will happen till he receives a reminder.

He will then call the GM in Bangkok, ask him whether he took a look at the new tool, and 2-3 seconds into the call, they will agree that they are very busy and that this new technology is a waste of time and will not work anyway.

What are the missed opportunities?

Firstly, most organizations do not have a strong culture to work as teams. They may have a fantastic structure, but fail with the implementation of processes and cultural change (for example, from a silo culture to a culture of engagement and collaboration).  Often, people see sharing as a threat, since they have to expose themselves, which links back to limitations of their team culture.

Fostering a team culture creates a range of performance benefits, but to be able to do that, the right people in the organization are essential who are:

  • Skilled in building trust
  • Influential and good at connecting with colleagues (in networks and emotionally)
  • Effective communicators (clarity, motivational, positive, inspiring)
  • Culturally sensitive

Why does all the above matter?

Simple…because it is big money!

Let’s briefly look at other industry sectors. Historically, leading companies in terms of Knowledge Management (KM) culture (sharing and knowledge harvesting) and teamwork such as British Petroleum, International Business Machines and General Electric have saved the organization millions of dollars each year (e.g. BP had USD 260 million cost savings in a year, Chevron Texaco saved  USD 2 billion in 1991 v. 1998 and Schlumberger USD 200 million in a year as mentioned in  http://www.providersedge.com/docs/km_articles/Measuring_KM.pdf). Potentially, the same can apply for large hotel companies provided they brace themselves for exploiting and harnessing KM.

In the hotel industry particularly, knowledge holds a high value because in the service industry (arguably more than any other), there are plenty of theatres where knowledge is stored or needed for a hotel to perform at its optimum.

  • Financial Data (Business Intelligence)
  • Repository for best practice (cases / knowledge assets / lessons learned)
  • Library of knowledge (e.g. Policy / Manuals / Standards / training material)
  •  Guest (Sales) Data Base
  • Guest Service Data Base (preferences / likings)

Yes, the big boys (Starwood, Marriott, Hilton, IHG etc.) have fully integrated KM systems but how efficiently they work is another question.

Quickly pop back to the example above where the VP tasked the GM to use a new tool. Let’s assume the VP may have asked the GMs to get familiarized with a new integrated Guest Services Tool where the profiles (habits / preferences) can be shared (accessed) across all hotels in the system (brand).

The benefit of this tool would be that a guest traveling around the globe and staying with that brand in various cities could be pampered by allowing any hotel to access the profile before arrival and see the guest preference (e.g. likes buck weed pillow, “Châteaux Petrus” red wine, prefers to be called by his first name, picked up by Mercedes Benz Limo, suite room and connecting room for private gym set up).

All that sounds very coherent and simple, but in reality the industry is still far away from such a level of system integration (or utilization). The guest is deprived of such an outstanding experience and the hotel potentially forfeits millions of dollars in revenue (loyalty / engagement) because hotel companies struggle to integrate and foster collaboration (even if a KM system exists, it still requires the people and culture which ultimately decides the degree of utilization in order to generate the benefits).

Such an interfaced KM system typically includes other modules like a best practice (business cases) repository or knowledge (Policy / standards / learning videos/ manuals) and a library. However, possessing such resources and engaging people to use them effectively is sadly not the same. Do the teams (hotel company employees) have a high level of trust? If not, employee mindsets are more focused on individual competitiveness and train of thought is along the lines of “….I better keep these ideas / best practices to myself so I have an advantage over others (knowledge is power).”

Another opportunity for better integration lies in business intelligence. Even with a database holding all relevant details about the hotel owning company’s previous correspondence (Directors) and preferences (e.g. owner preferred monthly PowerPoint presentation format), owners come to the hotel and walk the back of the house once a week or want to meet with applicants for HOD positions in person before employing them, again to understand the nature of the person that database reports can’t successfully highlight.

Well designed and managed knowledge (repository storage) helps to feed leads to the Business Development Department of the brand. A hotel owner may share that his cousin plans to build a hotel in another city with the GM. If captured and managed professionally, this lead would be put in the KM system and processed by the Business Development Department so that the hotel management company could offer their services, at an early stage, which could translate into a management agreement worth a couple millions of dollars.

Hotel entrepreneurs and executives reading this article should be excited about the opportunities and see the logic, but also understand the most challenging factor is motivating people to engage together and build a collaborative organizational culture.(Old habits die hard and generally what was followed in the past is continued in the present and future.)

Dr Arthur Shelley, in his book “Being a Successful Knowledge Leader (2009)” explains the phenomenon of the human factor as: “Knowledge is like electricity providing a conductive environment and it can enlighten. However also like electricity, KM flows can be dangerous or easily disrupted through insular agents.”

The difficulty with knowledge is that it is not easy to measure and it can be hard to specify the tangible benefits of a more engaging culture. However, it is possible to measure how much money the company potentially lost (or gained because of KM) by looking at the indications of good versus poor KM through staff turnover, sick days and general productivity. These are all directly impacted by the culture and the degree of loyalty and trust in the organization.

The good news is that even without expensive technology or web tools, if a company is able to engage their people to work as teams and share knowledge and utilize optimal results of companies, it can possibly increase financial results easily by 10-20%.

Knowing that major hotel companies generate yearly revenues of about USD 5-10 billion globally and assuming an improvement of 20%, the staggering value at stake is an enhancement of USD 2 billion. That is serious business.

However, managing to get your associates all working, well aligned and with KM supportive behaviors is a very tall order. It requires an enlightened leader to leverage KM theory and practical implementation. Were it easy, all hotel companies would have done it already. The truth is that only a few dedicated hotel companies have so far managed to achieve the secrets of successful KM.


SHELLEY, AW (2009) Being a Successful Knowledge Leader. What knowledge practitioners need to know to make a difference. ARK Publishing. UK.

http://www.providersedge.com/docs/km_articles/Measuring_KM.pdf, accessed 20 September 2015

(http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2014/11/05/seven-ways-hr-can-prepare-for-the-future-s-entrepreneurial-employees.aspx?utm_term=63756&utm_content=buffer47bc2&utm_medium=social&utm_source=linkedin.com&utm_campaign=buffer), accessed 19 September 2015

(http://spotonlists.com/misc/business/top-10-largest-hotel-chains-in-the-world-2013, accessed 20 September 2015

About the author

Christoph Voegeli Christoph Voegeli, born in Klauserslautern, Germany, is a hospitality management veteran with over 25 years of experience and exposure including significant experience in guest speaking and lecturing.

Graduating from Hotelfachschule Sudliche Weinstrasse (Germany) in Hotel Management, he furthered his studies with RMIT- Melbourne earning an Executive MBA.

During his extensive career in hospitality, he has worked for international, regional and local companies across the globe in Europe, Asia and also on the sea.

His interest specializes in Sales and Marketing (including revenue and e-commerce), Leadership (including a cross-cultural perspective), Organization Restructuring/Transformation, and People Development.


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