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Tour operators and ISO9000

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LuggageWhy do tour operators implement quality assurance, and what are the benefits of doing so? A recent study interviewed the senior managers of three accredited tour operators, and the findings are included here.

The study looked at three tour operators who received ISO 9000 certification in the period of 1996-2006.

The tour operators went for ISO 9000 for a number of reasons, including image building, promotion and advertising; to raise and equalise standards amongst different departments; to build an understanding of their operations; to review their operations procedures and systems, and the management of the tour operators; as well as to legitimize the senior management's action to make changes.

Based on the experience of the tour operators post-certification, ISO 9000 brought many different benefits, but a number of negative aspects were found too, including the high cost of implementation, lukewarm reception by staff, and reduced effectiveness over time, and that consistency of procedures did not equate to good or improving quality.

Management benefits

Accreditation allowed one tour operator to review the company structure in detail, and legitimize the actions of the senior management team, who wanted to make significant changes in the company.

One of the purposes of going for ISO 9000 was to build an understanding of the operational procedures of the company so as to enhance management control. Other industries may find it strange that senior management has difficulty mastering the operations of a full-service travel agency, but because different departments have different operating characteristics it is not easy for a manager to make decisions without a thorough understanding of procedures.

With certification, all three tour operators agreed that companies can focus on procedures that are proactive rather than reactive.

Marketing benefits

At the time, a tour operator implementing ISO 9000 was an innovation in the sector. According to one of the tour operators, the intention behind attaining ISO 9000 was exactly that –the promotion and advertising impact generated by being the first travel intermediary to receive the ISO certification. This would distinguish the company from its competitors and make them a benchmark in the sector.

ISO 9000 was used as part of an image-building exercise, with the tour operators noting that the ISO quality assurance programme enhanced the image of the company.

Service benefits

Prior to the implementation of ISO 9000, tour operators achieved quality control mainly through the customer service department. They ensured the quality of service delivery by conducting customer feedback surveys, receiving escort reports and handling customer complaints. The tour operators admitted they lacked preventive measures to avoid non-conformance to pre-determined standards, and thus, to avoid dissatisfied customers. ISO 9000 can also rectify the varying quality assurance standards amongst different departments and achieving lower incidence of mistakes.

Financial benefits

Analyzing an organization so intently helps management realize significant cost savings through a more efficient workflow. The tour operator benefited from the implementation of ISO in other areas. This included the reduction of manpower in some departments; increased efficiency in most departments.

The Costs of ISO 9000

Successful ISO implementation did have its difficulties, with cost being the main area singled out for criticism. Tour operators complained that they had too much paperwork and too many routine documents to deal with because of the nature of their business – i.e. acting as an intermediary between customers and service or product providers. Forms, and controlled and uncontrolled documents increase company costs, offsetting some of the savings made by efficiency, and additional manpower needs to be deployed to handle documentation.

Other drawbacks

ISO accreditation is a long process that involves the participation and efforts of the whole organization, with attendant frustrations.

The tour operators experienced the drawbacks of the top-down approach to implementing ISO 9000. Staff did not really know the value of quality assurance and were lukewarm about ISO 9000. They were unsure whether it would increase their workload or help them to improve at all. Some of the staff thought that a number of the required documents were unnecessary.

Over time, the effectiveness of ISO diminishes in terms of quality control and in particular marketing value. The management pays less attention to the ISO 9000 system and values it less. This is because there is no significant improvement in business performance and quality control after several years of implementation.

“Having motivated staff who value quality assurance enables tour operators to go that extra mile for their customers.”

After ISO certification

Post-certification, one of the tour operators looked into applying the 5-STM approach to the company to ensure that quality remained high. ISO 9000 certification is meant to ensure consistency of procedures and does not necessarily mean good or improving product quality. When all the main competitors have the ISO certification they are on the same level playing field, so any competitive advantage gained through accreditation is lost.

Implications

ISO certification for tour operators was an attempt to build the foundation of a quality assurance system through offering consistent standards for tour products and related services. It had a two-fold purpose. One, it solidified the importance of quality within the organization and two, it was hoped that customers would recognize the value offered by a company that has gone through the certification process. But it is not clear that these objectives were obtained.

The significance of pursuing ISO 9000 certification varies between tour operators. Based on the experience of the three tour operators examined in this study, benefits were achieved in the area of cost saving that comes from workflow reductions, and increased operating efficiencies. Increased business coupled with greater efficiencies leads to a higher return even when the costs incurred in ISO certification are considered. Greater understanding of the complex structure and operational procedures inherent in tour operations is another perceived benefit from obtaining ISO certification. Tour operators that have obtained ISO certification benefit from benchmarking with counterparts, an enhanced image of quality service, and a better operational system that helps prevent service failure. One of the benefits not uncovered in previous research studies is how ISO 9000 can be used to legitimize corporate re-structuring.

However, tour operators, when considering obtaining ISO certification, should be aware of a shortcoming that had not been previously identified, that is the diminishing effectiveness and marketing value that may occur over time. If the majority of tour operators obtain ISO certification the customer will perceive little or no benefit from choosing an operator based on this attribute. Only the early adopters will benefit especially if they are able to increase market share and make loyal customers from those who initially chose the company because it stood out from its competitors by having obtained ISO certification. For example, the third tour operator examined in this study did not widely publicise the achievement of receiving the accreditation.

Large tour operators would be in a better position to consider obtaining ISO certification since their operations are more complicated and involve many staff members and procedures. It is difficult to standardize service quality even if staff members follow all procedures. It is not easy to measure performance and efficiency. Nonetheless, where an attempt at standardization is made, there does seem to be a significant reduction in human error even though the quality of products and services may not be higher than previously offered. Adoption of a system approach, such as ISO 9000, can reassure customers and internal staff of the importance of service quality and sustain success.

All three ISO certified tour operators examined in this study are large companies. The significant commitment of time and finance required to obtain ISO certification may be beyond the reach of most SMEs. Since the cost of obtaining ISO certification may be higher than benefits derived from cost saving and customer satisfaction, SMEs must carefully consider whether ISO certification will provide them enough benefit. It may be in their interest simply to concentrate on building a loyal customer base by providing personalized service. Large companies normally do not have this luxury and must use other cues, such as ISO certification to communicate quality to their customers.

Staff attitude and input are of great importance in the delivery of service quality assurance for any tour operator. Some of the negative aspects of ISO 9000, including a lukewarm reception by staff due to increased reporting requirements, may lead senior management to seriously consider the value of pursuing ISO certification.

Having motivated staff who value quality assurance enables tour operators to go that extra mile for their customers. Thus, management should offer quality assurance training for all staff regardless of whether they choose to pursue ISO 900 certification. Tour operators should also be aware of their motivation and ultimate goal for obtaining ISO certification.

Large tour operators may see the pursuit of certification as necessary because of external pressure to align with their competitors. ISO 9000 certification does not automatically lead to quality improvement and performance; enable companies to attain world-class quality; or change the tour operator into a total quality management operator. It is only a process but one that can point in the right direction.

It is what is delivered in the form of quality products and services that ultimately matters and not the ISO 9000 certification label on the company's door. ISO 9000 certification may be a starting point for some tour operators. Successful operators will eventually move from a focus on processes to a focus on total quality management.

May 2011
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This is a shortened version of “ISO certification in the tour operator sector” which originally appeared in International Journal of Contemporary Hospitality Management, Volume 23, Number 1, 2011.

The author is Barry L.M. Mak.