Revisiting the relationship between formal planning process and planning effectiveness

Said Elbanna,Tamer H Elsharnouby

doi:10.1108/ijchm-12-2016-0675

Said Elbanna, Tamer H Elsharnouby

Open Access

https://doi.org/10.1108/ijchm-12-2016-0675

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Abstract

PurposeThe purpose of this study is to address a timely research question by clarifying whether formal planning is a worthy approach for hotels. In so doing, the authors developed a theoretical model that extends prior research by exploring how the formal planning process influences organizational capabilities and decision-making style. The model also examines the impact of the three identified factors on planning effectiveness.Design/methodology/approachData were collected from 175 hotels located in United Arab Emirates (UAE) and Qatar and hypotheses were tested using structural equation modeling (SEM).FindingsThe study concludes that the practice of formal planning in the tourism sector does matter and both organizational capabilities and decision-making style are important factors in predicting planning effectiveness.Research limitations/implicationsGeneralizations to organizations operating in other sectors, such as manufacturing or government sectors, should be drawn cautiously.Practical implicationsTaking into account oil price volatility and serious political crises in the region, this study provides several insights to hotel managers into how the formal planning process can influence planning effectiveness.Originality/valueThe findings enrich the debate on the role of formal planning in the tourism sector, which has been relatively devoid of similar studies.

Highlights

Is the formal business planning process a worthy approach for hotels? Is it worth the effort and resources used in this process? What begs these questions regarding the applicability of formal planning for hotels is the nature of the tourism sector
The additional analysis we conducted provides strong support for this claim, as our results suggest that planning effectiveness is not achieved directly by a formal planning process, but by adopting a technocratic decision-making style, which is enabled by formal planning
With regard to planning practices in the tourism industry, this study constitutes one of few empirical studies of its nature to build on the emerging literature on strategic practices in the tourism industry

Summary

Introduction

Is the formal business planning process a worthy approach for hotels? Is it worth the effort and resources used in this process? What begs these questions regarding the applicability of formal planning for hotels is the nature of the tourism sector. Ambivalence toward the applicability of formal planning in tourism stems from the notion that tourism firms do not usually operate in the same way as companies do (Harrington and Ottenbacher, 2011). Some crucial aspects of the planning process, such as adopting systematic approach that starts with specific ends in mind, its focus on results, performance improvement and the needs of customers and stakeholders, render this managerial activity very useful in the tourism field (Sotiriadis, 2015). This sentiment is supported by strategic planning success in the tourism context (Elbanna et al, 2016). The effective business planning practice in emerging tourism countries such as the setting of this study – namely, the United Arab Emirates (UAE) and Qatar – is important at present to help these countries get ready for the post-oil era (Elbanna et al, 2015)

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