It is a commonly belief held that in today’s highly unstable and competitive business environment, human resources (HR) are the best and ultimate resource an organization can buy for its survival and long-term success. Thus, human resources are attracting more and more attention from both academia and industries. The traditional role of human resource management, which focuses on the various practices used to manage people within an organization, is widely challenged. In the past two decades, more and more human resource managers and scholars have advocated strongly that human resources have great potential that has been ‘hidden’, and, instead, should be fully considered during an organization’s strategic planning and decision-making process.

This thesis is devoted to exploring whether and how HR contributes to improved organizational performance when it is integrated with the organization’s strategic planning and decision making at different levels. The research is conducted on the large hotel sector in New Zealand. This context was chosen because of the gaps in the current strategic human resource management studies – they are dominated by research on manufacturing sectors in Europe and the US and lack evidence from the service industries in other parts of the world. The significance of the hotel business to New Zealand’s economy as a whole adds value to the justification.

A mixed-method approach, namely interviews and a web survey, was used to collect data from general managers of hotels with more than 50 rooms throughout New Zealand. Emphasis was put on two major areas: current HR practices in the hotels, and the HR-strategy integration level and its influence on a hotel’s financial and non-financial performances. To explore the influence in depth, factors such as the size and ownership of the hotel, as well as business strategies being used by the hotels, were taken into consideration. Results from the two sources (interviews and a web survey) are carefully compared and contrasted.

Results of the research indicate that the importance of HR is widely recognized by New Zealand hotel managers. HR practices that are being used by hotels all over the world have been adopted by hotels in New Zealand. More importantly, the HR-strategy integration present in New Zealand hotels is found have a positive association with a hotel’s future performance, through the hotel’s HR outcomes. More particularly, the high level of HR’s involvement in a hotel’s strategic decision-making process is significantly linked with the functional flexibility of a hotel’s staff, which in turn links to the hotel’s labour productivity.

The findings of the thesis contribute to the theory development of strategic human resource management in that it supports the proposition that close HR-strategy integration has positive impacts on an organization’s performance. Also, it supports the hypothesis that there exists a time lag between the integration and the performance. The methodology used by the thesis also contributes to research in strategic human resources and hotel studies. The implications of the findings for hotel practitioners and policy-makers within the tourism industry are also discussed.