BRANDING BOUTIQUE HOTELS: MANAGEMENT AND EMPLOYEES’ PERSPECTIVES A thesis submitted to the Kent State University College and Graduate School of Education, Health and Human Services in partial fulfillment of the requirements for the degree of Master of Science By Lara Özarslan May 2014 Thesis written by Lara Özarslan B.A., International School of Management, 2012 M.S., Kent State University, 2014 Approved by ______________________________, Director, Master’s Thesis Committee Ning-Kuang Chuang ______________________________, Member, Master’s Thesis Committee Swathi Ravichandran ______________________________, Member, Master’s Thesis Committee Andrew Lepp Accepted by _____________________________, Director, School of Foundations, Leadership Shawn M. Fitzgerald and Administration _____________________________, Dean, College of Education, Health, and Daniel F. Mahony Human Services ii ÖZARSLAN, LARA, M.S., MAY 2014 Hospitality and Tourism Management BRANDING BOUTIQUE HOTELS: MANAGEMENT AND EMPLOYEES’ PERSPECTIVES (238 pp.) Director of Thesis: Ning-Kuang Chuang, PhD Boutique hotels have become increasingly popular due to excess supply of homogenous chains and changing consumer expectations. The industry faces challenges of shifting away from traditional branding to adopting innovative customer-driven strategies that respond to tomorrow’s boutique hotel guests’ demands. Branding opportunities for boutique hotels are under-explored. To date, no research has specifically explored the phenomenon of internal and external branding within the boutique hotel sector. The objectives of the qualitative portion of this study are: (a) to understand how boutique hotels position their brands internally through exploring the three variables (communication, consistency, and core values) that drive successful brands and (b) to gain deeper knowledge of managements’ perception about employees’ importance in the boutique hotel sector. The quantitative section aims to (a) investigate boutique hotel employees’ attitudinal and behavioral support towards their particular hotel, (b) to test the predictive powers of the following variables on employees’ brand promise delivery: internal branding prerequisites, attitudes, behavior, and authenticity; and (c) to determine whether demographics or hotel type have an impact on the variables. A mixed methodology approach was used: in-depth interviews were conducted with General Managers (GMs) and electronic and survey papers were administered to chain-affiliated and independent boutique hotel employees at all levels. Descriptive statistics, independent-tests, one-way Analysis of Variance (ANOVA), and several multiple regression analysis were used to obtain results. Qualitative results offered best practice examples and valuable information about branding boutique hotels. Results of the quantitative part indicated significant relationships among the internal branding variables. ACKNOWLEDGMENTS I wish to thank various people for their contribution to this thesis: I would like to offer my thanks to Dr. Swathi Ravichandran and Dr. Andrew Lepp for their support, advice, as well as valuable and constructive suggestions provided during the proposal and defense of my thesis. Special thanks for both of them for making my defense enjoyable through their comments and professional expertise. Furthermore, I would like to express my deep gratitude to Dr. Ning-Kuang Chuang, my thesis committee director. This thesis would not have been possible without the continuous encouragement, guidance, patience and motivation from Dr. Chuang. Her dedication, professional expertise, helpful critiques and valuable advice throughout the entire process enabled me to ensure this thesis was the best it possibly could be. Dr. Chuang has been a tremendous thesis director, and her willingness to give so much of her time has been very much appreciated. I would also like to extend a special thank you to my family. Without my parents this degree and thesis would financially and emotionally not have been possible. Particularly, words cannot express how grateful I am to my mother for all her sacrifices and full efforts in guiding, supporting and continuously motivating me in achieving my goal. iii TABLE OF CONTENTS ACKNOWLEDGMENTS ................................................................................................. iii LIST OF FIGURES .......................................................................................................... vii LIST OF TABLES ........................................................................................................... viii CHAPTER Page I INTRODUCTION ......................................................................................................1 Boutique Hotels ..........................................................................................................6 II REVIEW OF LITERATURE .....................................................................................9 The Boutique Hotel Industry – Definition and Characteristics ..................................9 Historical Overview and Evolution of Boutique Hotels ...........................................11 Boutique Hotel Sector in the USA and the Role of Chain Hotels ...........................13 Brands .......................................................................................................................15 Service Brand vs. Product Brand .....................................................................16 Shift from Classical Branding to Corporate Branding ..............................................21 Classical Branding ...........................................................................................21 Corporate Branding ..........................................................................................23 Manager’s Role in Corporate Branding ...................................................................25 Positioning .......................................................................................................27 Corporate Communication ..............................................................................29 Consistency ......................................................................................................31 Core Values ......................................................................................................33 Hotel Branding ..........................................................................................................35 Internal Branding .....................................................................................................36 Link between Corporate Branding and Internal Branding ..............................37 Employees’ Role in Internal Branding ...........................................................38 Internal Branding Relevance in the Hotel Industry ........................................39 Past Research on Internal Branding .........................................................................43 Communication ...............................................................................................43 Brand Knowledge Dissemination and Brand Supportive Behavior ...............44 Brand Supporting Attitudes and Brand Supporting Behavior .........................47 Brand Supporting Attitudes and Brand Performance .....................................49 Authenticity......................................................................................................53 Theoretical Underpinning ................................................................................56 Theoretical Framework ....................................................................................60 iv TABLE OF CONTENTS (Continued) Prerequisites: Internal Communications and Internal Brand Knowledge ................62 Brand Supportive Attitudes..............................................................................64 Brand Commitment ..........................................................................................64 Brand Loyalty ..................................................................................................65 Brand Identification .........................................................................................66 Brand Supportive Behavior..............................................................................67 Brand Authenticity ...........................................................................................68 Delivered Brand Promise ................................................................................69 Rationale for Current Study .....................................................................................70 III METHODOLOGY ...................................................................................................72 Human Subject Review.............................................................................................72 Sample Selection ......................................................................................................73 Development of Survey Instruments .......................................................................77 Qualitative Component: Expert Interview Questions ....................................77 Qualitative Component: Survey Instrument Design ......................................78 Internal Branding Prerequisites....................................................................... 79 Brand Supporting Attitudes .............................................................................80