International Issues in ther Hospitality Industry - Term Paper Example

Report on International Issues in the Hospitality Industry Table of Contents Introduction 2 Essence of Innovation 3 Service Blueprinting 4 Innovative Value Strategy 6 Conclusion 9 References 10 Bibliography 11 Introduction The experts of the industry have rightly observed that the only constant thing in the present world of today is the word ‘change’. With the massive developments in the arenas of information technology and communication process, the terms and the tricks of the trade are fast changing. The influential factor like that of globalisation has become too important to ignore. The world has become a small place to live in and the end customers have become all the more powerful. Today, with the advent of the revolution called internet, the end customer can purchase goods and services even without travelling to the market place. The competition has been intense like never before and the flow of information is regarded as the key decision making factor. The hospitality industry has also not been as exception either. The overall industry of hospitality has experienced paradigm shifts. As it happens with the service industry, the physical environment and the people have been instrumental for the growth and development of the companies that are into the hospitality industry. The other crucial factor that has been immensely important for the success of the companies in this industry has been the continuous research and innovation. The report studies the essence of innovation in the hospitality industry. Essence of Innovation There is a long pending debate upon the need and the essence of innovation in the hospitality industry. Many of the experts in the domain of hospitality industry are of the view that the increased focus upon the innovation enhances the cost by huge extent. According to them, the increased cost is no match for the rise in expected revenue and therefore, there is no point in focusing on continuous innovation. But the present day industry thinks in a different way altogether. As the industry has become too dynamic, the market leaders believe that it is no longer possible to meet the changing needs of the customer through the age old traditional methods. The three major factors that shape the need of innovation are as follows: The hotel managers often struggle to differentiate their products or services from that of their competitors. This is so because all the competing hotels produce and cater identical products and the services like lodging and fooding. The onus lies upon the individual hotels to present them in a differentiated way in front of the target group of customers and innovation facilitates the process. There is almost no doubt about the fact that the needs of the customers are changing fast. The life has become fast – paced and the customers of today increasingly prefer to book the hotels and complete other formalities through the channels of information technology. This change in attitude calls for proactive approach from the service providers. Continuous innovation is the only way out for successful implementation of such necessary changes. Increasing competition – It has been observed through various surveys and research reports that the customers of today (especially that of travelers) are not at all brand loyal. As the products and services as well as the prices, both the aspects are quite identical, the consumer behaviour can be instigated at slightest provocation. In order to assess the requirement and the preferred services of the customer, constant innovation is required on the part of both the hotel managers as well as the marketers. (Van Riel, 2005). The above facts clearly depict the scenario that suggests increasing essence of service transformation and innovation. In this respect, service blue printing holds optimum importance. Service Blueprinting Service blueprinting is the essence of effective performance in the service industry of today. In simple words, service blueprinting is all about having the service providers in the shoes of the customers and look for the changes and the requirements that the customers might require and look forward too. Through the method of service blueprinting, the service providers (the hotel managers in this case) can emphatically understand the latest requirements of the target group of customers and transform them in such necessary ways. According to Amy L. Ostrom and Felicia N. Morgan, “The uniqueness of the technique when compared to other process techniques is its unrelenting focus on the customer as the center and foundation for innovation, service improvement, and experience design. That doesn't mean that customers are the source of innovation, but rather that value to the customer (broadly construed) is the central purpose of innovation” (Ostrom & Morgan, n.d.). The effectiveness of service blueprinting in the hospitality industry is beyond doubt. The various aspects of any efficient service blueprinting can be as follows: Customer Actions – This includes the various steps that a customer initiates to complete the delivery process of the service. Onstage / Visible Contact Employee Actions – Visible contact employee actions comprise of those acts that are frontline and visible actions and can be easily identified. Backstage / Visible Contact Employee Actions – These actions are the most difficult to assess as no face to face interactions occur with the customers yet the staffs need to understand the customers’ feelings and perceptions and behave in the most apt way. Support Processes – Support process comprises of those actions that does not help the customer directly but are crucial for the successful business of the companies. Physical Evidence – Physical evidence includes all tangible things with which the customer directly comes into contact and that are necessary for successful completion of sales deal in the service industry like that of hotel. (Arizona State University, 2008). Innovative Value Strategy The service innovation in the hospitality industry especially in the segment of the hotels largely depends upon the broad categories into which the hotels fall. The hotels basically are either managed through the franchisee system or are under the direct control of the management. Both the distribution channels have certain advantages and the disadvantages. It is true that the hotels that are run though the franchisee system do not always possess the required independence that are essential for the purpose of continuous innovation and the resultant implementation as those hotels are guided by certain rules that are required to be followed for the brand they are catering too. Therefore, it can be said without much doubt that the hotels require greater independence to inculcate the much required service innovation within it. The studies have suggested that major service innovations are expected in the economy class (or the low budget hotels) and among the leisure travelling customer segments. The medium priced or the high priced hotels are more dependent on the brand value or the repeat customers but in the low price segment, even a slightest additional benefit provided by the competing hotel can significantly reduce the customer base. Same happens with the leisure travelers. As those customers (unlike those travelling for official purposes and are frequent travelers) use the service of the hotel in order to enjoy their holidays, they would like to have the best of the services within the price specified range. In order to execute proper service innovation strategies, the hotel operators basically depend upon two vital factors namely the customisation of the services offered and the use of information technology. The customers would always prefer such a company (or a hotel in this case) that could provide better customisation. With the rise in intense competition, it is the minute details about the customer needs and aspirations; that are proving to be the ‘X-Factor’ in the service industry. For example, if the customer is a repeat one, the hotel must keep the past details of the customers. It would help the hotel to offer the customer, certain services that he or she had used earlier. Such a measure would have profound effect among the customers as they would certainly feel to be ‘someone special’. People hate being generalised and the hotel operators should try and explore customisation as a major way to fight competition. The information technology has been the buzzword of present day service industry. As it has already been discussed that the customers increasingly use information technology for the purpose of greater convenience, the hoteliers also should try and adapt with the changing ways of doing business. It is utmost necessary for the hotel companies to use internet marketing as the major channel of communication with the target group of customers. The hotel operators can also initiate certain surveys and other sales promotions through the channels of information technology so that the customers find them differentiated from the lot. Conclusion It can be said without any hesitation that the continuous innovation is the only way to fight the ever increasing competition within the service industry and to ensure the sustainable growth and development. The most important factor in order to have innovation within the companies is the commitment of the top management. The innovation calls for heavy investment without any short – term benefits and often management does not provide for the required resources. But the fact is that without constant innovation, research, development and betterment of the services offered, the companies in the hotel industry cannot expect to have long term growth and sustainable development. References Arizona State University, 2008. A Key to Service Innovation: Services Blueprinting. Knowledge @ W. P. Carey. [Online] Available at: http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1546\ [Accessed March 26, 2010]. Ostrom Amy L. & Morgan, Felicia N., No Date. Service Blueprinting. California Management Review. Van Riel, Allan C. R. Service Innovation Management. Emerald Publishing House, 2005. Bibliography Bitner, M & Et. Al, 2007. Service Blueprinting: A Practical Technique for Service Innovation. UC Berkeley School of Information. [Online] Available at: http://people.ischool.berkeley.edu/~glushko/IS243Readings/ServiceBlueprinting.pdf [Accessed March 26, 2010]. Besant, J. & Tidd, J. Innovation and Entrepreneurship. John Willey & Sons, 2007. Cornell University, No Date. The Center for Hospitality Research. Publications. [Online] Available at: http://www.hotelschool.cornell.edu/research/chr/pubs/ [Accessed March 26, 2010]. Gustafsson, A. & Johnson, M. D. Competing in a service economy: how to create a competitive advantage through service development and innovation. John Wiley and Sons, 2003. Mansharamani, V., 2005. Towards a Theory of Service Innovation: An Inductive Case study Approach to Evaluating the Uniqueness of Services. Massachusetts Institute of Technology. [Online] Available at: http://dspace.mit.edu/bitstream/handle/1721.1/28828/60351922.pdf;jsessionid=F5267150E54B15BD3910694384408B40?sequence=1 [Accessed March 26, 2010]. NC State University, 2006. Aligning Services Design and Standards. Services Management. [Online] Available at: http://www4.ncsu.edu/~hp/MMW-Lecture4.pdf [Accessed March 26, 2010]. Tidd, J. & Hull, F. Service innovation: organizational responses to technological opportunities & market imperatives. Imperial College Press, 2003. Ulwick, A. What customers want: using outcome-driven innovation to create breakthrough products and services. McGraw-Hill Professional, 2005. Voss, C. & Zomerdijk, L., 2007. Innovation in Experiential Services – An Empirical View. London Business School. [Online] Available at: http://www.london.edu/assets/documents/facultyandresearch/Innovation_in_Experiential_Services_with_cover.pdf [Accessed March 26, 2010]. Read More