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Formulation of a Sustainable Financial Management Strategy for South African Universities’ Hotel Schools

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Formulation of a Sustainable Financial Management Strategy for South African Universities’ Hotel Schools FORMULATION OF A SUSTAINABLE FINANCIAL MANAGEMENT STRATEGY FOR SOUTH AFRICAN UNIVERSITIES’ HOTEL SCHOOLS Dalene Crowther Master’s Degree in Higher Education Dissertation submitted in fulfilment of the requirements for the degree DOCTOR OF BUSINESS ADMINISTRATION in the Department of Business Support Studies Faculty of Management Sciences at the Central University of Technology, Free State Supervisor: Prof. Albertus J. Strydom [BCom; BCom (Hons); MCom (Money and Banking); HDE; PhD (Economics)] BLOEMFONTEIN July 2018 i © Central University of Technology, Free State DECLARATION WITH REGARD TO INDEPENDENT WORK I, DALENE CROWTHER, identity number and student number , do hereby declare that this research project, submitted to the Central University of Technology, Free State for the degree DOCTOR OF BUSINESS ADMINISTRATION, is my own independent work; complies with the Code of Academic Integrity, as well as other relevant policies, procedures, rules and regulations of the Central University of Technology, Free State; and has not been submitted before to any institution by myself or any other person in fulfilment (or partial fulfilment) of the requirements for the attainment of any qualification. ________________________ 2018/07/20 SIGNATURE OF STUDENT DATE i © Central University of Technology, Free State SUMMARY In recent years, the Central University of Technology, Free State (CUT) Hotel School has been nominated as Bloemfontein’s Business of the Year; internationally recognised as a leader in the field of education and training in the service industries; and regarded as “one of South Africa’s premier hotel schools”. The Hotel School finds it increasingly challenging to balance its income and expenses, and to function as a financially viable academic unit in a sustainable way. Reasons ascribed to these negative figures are the capped student intake, regulating the state-funded Teaching Input Grant and the tuition fees received; the relatively low lecturer-student ratio; relatively high operational costs; relatively high dropout rates, with a negative effect on the Actual Teaching Output Grant received from the state; unsatisfactory staff research outputs, negatively impacting on the state Actual Research Output Grant received; and third-stream income potential not being fully realised. National and international challenges in higher education, such as the continuously increasing demand for quality education, increased access rates, strong competition, deteriorating resource allocation, high dropout rates, poor knowledge production, and low success rates, are also faced by the CUT Hotel School. Innovative ways of generating income options must thus be identified in order to move towards a sustainable financial model. Therefore, the main aim of this study is to formulate a sustainable financial management strategy for South African universities’ hotel schools. The researcher employed a qualitative research design, using document analyses and one-to-one semi-structured interviews held at top international, as well as at South African universities’ hotel schools. The findings that were obtained were transcribed verbatim, coded and categorised into themes. The computer software programme Atlas.ti was also used to assist in data analysis. The main findings of this study indicated that an increase in Full-time Equivalent students (FTEs), an increase in research output, and an increase ii © Central University of Technology, Free State in teaching output are required to improve the financial sustainability of hotel schools. This can only be accomplished through the implementation of a proper hotel school marketing strategy, focused on promoting the academic offerings of the schools, short and online courses, as well as the operational facilities and services that hotel schools can offer, including the possible expansion of such services in an attempt to generate additional sources of third-stream income. A strong alumni and industry partner network needs to be built and maintained, as this will also assist in improving the financial sustainability of hotel schools. The findings of this study inform a sustainable financial management strategy for South African universities’ hotel schools. iii © Central University of Technology, Free State ACKNOWLEDGEMENTS This thesis would not have been possible without my Heavenly Father, who carried me day by day and sentence by sentence. All the glory belongs to Him. My sincere appreciation is extended to the following people, who have contributed in many ways towards the completion of this research study: - Professor Albert Strydom, my study leader and academic father – for your support, constructive feedback and belief in me. - Riaan Crowther, my husband – thank you for believing in me and supporting me from beginning to end. - My children – Edrich, Darius and Lienke – ultimately, I did this for you. I hope that one day you will also have the courage to take on mountains, and to conquer it with and for your Heavenly Father. - My mother, Jolene de Bruin, father-in-law, Robert Crowther, and mother-in-law, Dinah Crowther, as well as family – thank you for supporting me in so many ways. - A colleague and friend, Dr Henri Jacobs – for sharing knowledge, advice and providing support. - Ms Leanne Posthumus – for assisting with the historical research of the CUT Hotel School and its building. - My friends and colleagues – for believing in me from the very first step, and continuing to believe, even when I had doubts. - The Central University of Technology, Free State (CUT) – for granting me sabbatical leave and providing financial support. - The top international hotel schools and the South African universities’ hotel schools – for allowing me to conduct interviews with them and other staff members, and significantly contributed to the success of this study. - The Department of Higher Education and Training (DHET) – for supporting me with funding, thus allowing me to complete this study. iv © Central University of Technology, Free State I dedicate this thesis to my late father, Danie de Bruin, whose belief in me has carried me through many accomplishments, including, and specifically this one. v © Central University of Technology, Free State vi © Central University of Technology, Free State TABLE OF CONTENTS CHAPTER 1 INTRODUCTORY BACKGROUND TO THE STUDY ............. 1 1.1 Introduction ........................................................................................... 1 1.2 Goal of the chapter ................................................................................ 1 1.3 Background and rationale of the research............................................. 1 1.4 Problem statement and research questions .......................................... 3 1.4.1 Main research question ......................................................................... 3 1.4.2 Secondary research questions .............................................................. 3 1.5 Objectives of the study .......................................................................... 4 1.5.1 Primary objective ................................................................................... 4 1.5.2 Secondary objectives ............................................................................ 4 1.6 The Higher Education Environment ...................................................... 5 1.7 The Resource Allocation Model (RAM) ............................................... 12 1.8 Previous research ............................................................................... 13 1.9 Theoretical framework ......................................................................... 16 1.10 Conceptual framework ........................................................................ 17 1.11 Research design ................................................................................. 17 vii © Central University of Technology, Free State 1.12 Research strategy ............................................................................... 18 1.13 Methodology ........................................................................................ 19 1.14 Research population ........................................................................... 19 1.15 Sampling ............................................................................................. 20 1.16 Measuring instruments ........................................................................ 21 1.17 Data-collection .................................................................................... 22 1.18 Data analysis ....................................................................................... 23 1.19 Quality assurance ............................................................................... 24 1.20 Limitations to the study ....................................................................... 24 1.21 Acronyms and definition of concepts ................................................... 26 1.21.1 Acronyms ............................................................................................ 26 1.21.2 Definitions of concepts ........................................................................ 27 1.22 Chapter layout ..................................................................................... 29 1.23 Chapter Summary ............................................................................... 31 CHAPTER 2 HIGHER EDUCATION FUNDING ........................................ 32 2.1 Outline of the chapter .........................................................................
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