HOSPITALITY INDUSTRY

Hospitality Industry



Hospitality Industry

Introduction

The hospitality industry is a profitable industry to operate in, especially for established companies such as FSH who have built strong brand awareness based on its exceptional service. However, due to economic downturns, existing comapnaies have to compete more aggressively than ever in order to attract and retain customers. In this paper we analyzed the Four Seasons Hotel.

Innovation in Hospitality

Meeting the challenges of an unstable and turbulent hospitality environment is not easy, following Darwin's evolution theory—survival of the fittest. To survive in the marketplace, hospitality businesses are consistently forced to modify and update their portfolio mix to meet the changing needs and wants of their target market segments. For example, a hospitality organization may consider the need to add a new brand to its range in response to the dynamic nature of its operating environment. A hotel may also be forced to develop new services to fill empty hotel rooms during off-peak seasons or to retain a good relationship with its customers. In addition, a hotel or a restaurant might have reached the maturity stage of its life cycle and may be in decline. Only by revising and improving the old concept may sales levels be maintained. Therefore, successful hospitality organizations need to implement sophisticated marketing techniques, such as the ability to successfully develop innovations. Innovations are critical for not only survival but also for long-term stability and profitability (Cooper & Edgett, 1999).

An innovation can be an idea, practice, process, or product that is perceived as new by an individual (Rogers, 1983) and that transforms a new problem-solving idea into an application (Kanter, 1983). Following suggestions by Burgelman and Maidique (1996), “innovations are the outcome of the innovation process, which can be defined as the combined activities leading to new, marketable products and services and/or new production and delivery systems” (p. 2). New hospitality service developments range from true innovations, which are totally new-to-theworld services with an entirely new market, to fairly minor modifications of existing services. Despite the importance of innovations, the success rate of new services is low. Indeed, 4 of 10 innovations fail in the marketplace (Griffin, 1997). There are no official figures available for hospitality innovations; however, it is suggested that the failure rate is even higher in the hospitality industry because such a high number of new hotel and restaurant concepts fail every year (Kotler, Bowen, & Makens, 2006). This high failure rate might be related to the limited knowledge about how to achieve success with hospitality innovations. As a result, hospitality managers have to rely on gut feeling, speculation, and their own limited experience about the keys to innovation success. The sources of failure for hospitality innovations might be widespread. Possible reasons for failure are that hospitality managers might develop a personal favorite idea without conducting market research, the new offer might be incorrectly positioned in the marketplace, or badly communicated to its potential customers. Perhaps the idea might be innovative but the market too small or the costs ...