Dr Stavros Sindakis explores products, processes, and experiences that transform the hotel market.
Innovations change the world we live in. Innovation in hotels alters the way we experience hospitality, the way we enjoy traveling, and the means and approaches by which hotels accommodate travelers’ needs.
People are especially fascinated by the unexpected innovations, which demonstrate that big hotel corporations or small thematic hotels pay particular attention to address their needs, by adopting strategies, developing products and services, and by adjusting themselves, following eco-friendly, and sustainable approaches of operation. Most of us often consider innovation as new products or services that become successful commercialized offerings. Nevertheless, innovation is much more than that. There are several types of innovation, and the fact is that successful companies manage to incorporate more than one type in their corporate innovation strategy.
According to Keeley et al (2013), there are innovations that emerge either from inside or outside the organization. Process innovation and new product development are those two types of innovation that arise from inside the company and most of the times lead to novel outcomes that are promoted to the market. While the former refers to the systems, techniques and procedures that form the structure of a firm, create the value chain, and stimulate collaborations, the latter stands for the actual offering, its performance, the system that encircles it, as well as the way by which companies service their customers. Process innovation in hotels improves the activities or develop new in order to effectively produce and deliver services to customers. For instance, new check-in and check-out processes that reduce the required time for customers when they arrive in or departure from the hotel. The Conrad Concierge is an award-winning travel mobile application that enables customers of the Conrad Hotels & Resorts to select pre-arrival amenities, order in room dining, and enjoy mobile check-out. Likewise, Swisscom has developed ‘Wireless Share’, a service innovation for hotel rooms, which allows guests to enjoy the contents (e.g. videos, pictures, music) and applications from their smartphones / tablets in full HD quality on the guest room TV set. Product innovations, however, may come in several forms. The new Hilton Connectivity Station by Hilton Hotels & Resorts is an innovation that surrounds the hospitality package. A new solution within the lobby area, which provides computer hardware and versatile internet access to business people in a comfortable and friendly environment, is considered an added value for guests.
On the other hand, innovation in delivery and in finance are the types of innovation that emanate from outside the firm. The former regards the channels that connect companies and their offerings with customers, the brands that communicate the offerings’ benefits and values to customers, as well as the ways by which firms create integrated customer experiences. Amadeus and Fast Future conducted a study, the ‘Hotels 2020 – Beyond Segmentation’, which reports that “customizable and responsive guest environments and service robots may become commonplace as guests demand deep personalization, increased comfort and innovative experiences”. We should not be surprised if we see intelligent furniture or experience adaptive room environments and personalized entertainment in the near future. Individually tailored nutrition and ‘thought control’ of guest facing systems and appliances are also features that will be developed within the next decade. According to the study, the 92% of travelers expect total personalization around their choices; therefore, hotels must become ‘living innovation laboratories’ and invest on innovation to survive in this fierce global competition. Jérôme Destors, Director of Hotel IT at Amadeus, argues “Only by looking at the global drivers and forces of change can we begin to understand the future hotel guest and what this means for hotel chains”.
Moreover, innovation in finance relates to the networking capabilities and the business model of firms as a system that makes profit and enables sustainable development. The Nadler Hotels Group, an innovative concept of affordable luxury, creates smart-luxury, design hotels in busy, stylish neighbourhoods that offer a choice of bars, restaurants, gyms, and boutiques. Instead of building these facilities inside the hotel, The Nadler concentrates on providing high-spec rooms and suites at affordable prices, while equipping its rooms with the necessary tools (e.g. mini-kitchens, on-screen entertainment directory) and encouraging guests to use local amenities for a customized stay without any hotel mark-up. This innovative business model promotes the three aspects of sustainability, by supporting the growth of local economies and communities, while protecting the environment. This example is consistent with the results of the aforementioned study, which highlights the possibility of emerging new hotel business models – such as invitation-only hotels, hotels co-branded with luxury brands, white-label hotels, etc. -, that will meet the demands of and will provide customized services to travelers. Rohit Talwar, Chief Executive of Fast Future Research reports, “What’s becoming very clear is that guests want far more say over the delivery of the hotel experience. In response, what we see is a shift from neatly defined customer segments to a more fragmented set of service spectrums that will demand hotels act in a way that is guest-focused, personal, connected and informed. This also opens the door for more partnerships with luxury and high street brands to enter the hotel market to create highly differentiated brand experiences.”
Nonetheless, innovation in hotels is about not only new products, services or experiences. Finding the suitable ways and powerful means to promote these are also critical factors for success and sales increase. Innovation in hotel marketing regards those strategies and actions that adopt new modes of communication to connect the firm with its customers. Marketing strategies define target segments, identify customer requirements, set competitive positioning, and are accompanied by measurable metrics that evaluate their performance. Likewise, travel technology allows hotels to improve their reservation systems, revenue management, and develop mobile platforms that will enhance their operational management capabilities and provide them with valuable information about the needs of guests. Many business and leisure travelers use smartphone applications to book their accommodation, and complete the check-in and check-out processes through their mobiles. This convenient way to organize trips gains the trust of and becomes a tool for tourists. A good advice to hotels, therefore, would be to innovate their digital offerings, and adapt their marketing strategies to these evolutions to sustain their leadership.
Nowadays, big data and social media give opportunities to companies to reduce the cost of communication, while making it effective, authentic, and transparent. Google has improved and integrated its platforms, allowing, on one hand, hotel marketeers to add images and landing pages to the Adwords advertising tool, boosting their brand awareness, while, on the other, prospective customers can access to the latest news of the hotel, posted on its Google+ page, while searching for lodging. Internet marketing is a promising field, providing powerful tools for hotels to increase and develop efficient and direct communications with their customers. For instance, cutting-edge technology enables hotels to create interactive websites, where guests can project their stay and discover the hotel as if they were there. Buuteeq developed Design Concierge, an online marketing system, which helps hotels to improve their websites, providing enhanced user experience, and business performance, while improving web architecture.
Even though all these initiatives and arguments give us a clear picture of the elements of innovation in hotel industry, the key questions remain: How can hotels become innovative? How can they develop customer-oriented services? The development of partnerships is the way to go. Making strategic partnerships with technology firms, tourism and travel agents, as well as with lead customers provide hotels with the knowledge, capabilities, and means to move forward. Open or collaborative innovation enables firms to design change programs, experiment, and develop co-brand values.
Share your experience:
- What are the real expectations of your guests and clients?
- How well do you understand the competition and market environment? What kind of collaborations have you developed, and what is the outcome?
- What types of distribution channels do you use to generate business?
Dr. Stavros Sindakis is Assistant Professor of Innovation Management at Bangkok University, and member of The Institute for Knowledge and Innovation – South East Asia. His principal research interests lie in innovation and development of new technology-driven and customer-oriented products and services as well as in the exploitation of entrepreneurial opportunities in the knowledge intensive industries.
Dr. Sindakis participates as speaker in many international conferences, and is leading several research projects, funded by Governments and University institutions. He is also the co-author of 4 books on such topics as entrepreneurship, analytics, innovation and excellence-driven sustainability, social-ecological innovation, and customer-driven innovation. His main academic contributions relate to Innovation and Enterprise Excellence, Organizational Sustainability and Growth, Coopetition and Entrepreneurship.
