service innovation - theory and practice in the hospitality industry

7/28/2019 Service Innovation - Theory and Practice in the Hospitality Industry

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INSTITUTE OF HOTEL MANAGEMENT,

AURANGABAD

Service InnovationTheory and Practice in the Hospitality Industry

Aarthi Ramani (H-1401)

Submitted in Fulfillment of the Requirement for BA (Hons.) in

Hotel Management

THE UNIVERSITY OF HUDDERSFIELD,

UNITED KINGDOM

April, 2010


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IHM-Aurangabad Service Innovation: Theory and Practice in the Hospitality Industry

Ramani A. (H-1401) 1

DECLARATION

I declare that this Dissertation is the result of my own individual efforts and that it conforms

to University, departmental and course regulations regarding cheating and plagiarisms. No

material contained within this project has been used in any other submissions, by the author,

for an academic award.

Aarthi Ramani

(H-1401)

April, 2010


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ACKNOWLEDGEMENTS

I take this opportunity to thank Mr. Satish Jayaram, Principal of the Institute of Hotel

Management, Aurangabad for his never- ending support and help throughout the duration of

this work.

I would like to acknowledge Mr. Rushad Kavina, my dissertation guide for his support and

perseverance and without whos constant and critique the dissertation would have not take

this topic.

Mr. Malay Biswas and Mr. Anand Iyengar for their expertise and guidance in the course of

research methodology stage of dissertation.

I would also like to thank the librarians Ms. Rupa Matthew, Ms. Bhagwati Bhainsora.

I would like to thank all the colleagues fro the University of Huddesfield, U.K., Institute of

Hotel Management, Aurangabad and elsewhere for their help and assistance in the

compilation of this work.


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SYNOPSIS

It is common knowledge that the service industry contributes to a great extent to a countries

economy. However, what is unknown is the financial benefits of innovating services

inherently come with their four characteristics namely, intangibility, inseparability,

heterogeneity and perishability. These four characteristics pose various challenges in

innovating services. Also due to these characteristics various risks are posed which may have,

financial implications that are unmeasurable. Therefore service firms have avoided

innovating services.

Research on service innovation too is in its infancy, however services can be innovated using

some theories and models that have been developed based on the new product developmentprocess as well as keeping in mind the various key elements, challenges and risks involved in

service innovation.

This research aims at finding out the degree of disparity between these theories and models

and what is being done in the hospitality industry currently. In order to achieve this the

researcher has firstly outlined the aims, objectives, scope, limitations and structure of the

research paper.

Further the researcher has outlines theories and models on innovation, its various aspects and

how they impact an organization. This has been carried out by extensively analysing various

research papers done by experts in the field.

Moving on the researcher has concentrated on the difference between products and services

and their respective development processes. The limitations of new product development help

in understanding the process for new service development.

Various challenges posed by the service innovation process are market, environment,

technology, etc. have been analysed to see their extent of impact on the success of new

services. Key elements of the service innovation process are customer preferences, product,

employees and stakeholder interests which need to be kept in mind and fulfilled while re-

innovating services or developing services.

Lastly the researcher has analysed case studies from the hospitality industry to verify if these

theories and models are being practiced as they are. The researcher has given a brief on the


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service which has been developed, how they are executed and what the outcomes are for this

purpose.

Overall, the researcher gives a fair view of the theories and practices of service innovation in

the hospitality industry.


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Table of Contents

DECLARATION .................................................................................................................. 1

ACKNOWLEDGEMENTS................................................................................................... 2

SYNOPSIS ........................................................................................................................... 3

Table of Contents .................................................................................................................. 5

Table of Figures .................................................................................................................... 8

Chapter 1: ISSUE IDENTIFICATION .................................................................................. 9

1.1 Introduction ................................................................................................................. 9

1.2 Issue Identification....................................................................................................... 91.3 Aim and Objectives ................................................................................................... 10

1.4 Scope ......................................................................................................................... 10

1.5 Limitations ................................................................................................................ 10

1.6 Structure .................................................................................................................... 10

1.7 Conclusion ................................................................................................................. 11

Chapter 2: LITERATURE REVIEW ................................................................................... 12

2.1 Innovation ................................................................................................................. 122.2 Need for Innovation ................................................................................................... 12

2.3 Traditional Innovation ............................................................................................... 13

2.4 Innovation Now ......................................................................................................... 13

2.5 Types of Innovation ................................................................................................... 14

2.5.1 Product Innovation: ............................................................................................. 14

2.5.2 Process Innovation: ............................................................................................. 14

2.5.3 Market Innovation: .............................................................................................. 142.4 Service Innovation ..................................................................................................... 15

2.4.1 Introduction ......................................................................................................... 15

2.4.2 Importance .......................................................................................................... 16

2.5 Products vs. Service ................................................................................................... 17

2.5.1 Testing ................................................................................................................ 17

2.5.2 Imitation .............................................................................................................. 17

2.5.3 Planning & Development .................................................................................... 17

2.5.4 Employee Empowerment..................................................................................... 18


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2.5.5 Measurement of Financial Impact ........................................................................ 18

2.5.6 Funding ............................................................................................................... 18

2.5.7 Measurement of emotional impact ....................................................................... 19

2.6 Limitation to New Product Innovation ....................................................................... 19

2.7 Service Vacuum ......................................................................................................... 20

2.8 Theoretical Framework .............................................................................................. 21

2.9 Innovating Services.................................................................................................... 24

2.10 Service Process Innovation ...................................................................................... 25

2.10.1 Practising Service Innovation ............................................................................ 27

2.10.2 New Service Development (NSD) ..................................................................... 27

2.11 Challenges ............................................................................................................... 28

2.12 Key Elements in Service Innovation ........................................................................ 29

2.12.1 Customer Focus ................................................................................................. 30

2.12.2 Innovation Process ............................................................................................ 31

2.12.3 Continuous Improvement .................................................................................. 31

2.12.4 Hotel Type ........................................................................................................ 31

2.12.5 Use of IT ........................................................................................................... 32

2.12.6 Customization of Services ................................................................................. 32

2.13 Conclusion ............................................................................................................... 33

Chapter 3: RESEARCH METHODOLOGY ....................................................................... 34

3.1. Introduction .............................................................................................................. 34

3.2 Research Purpose ....................................................................................................... 34

3.2.1 Exploratory Research .......................................................................................... 34

3.2.2 Descriptive Research ........................................................................................... 34

3.2.3 Explanatory Research .......................................................................................... 34

3.3 Research Process ....................................................................................................... 35

3.3.1 Observation ......................................................................................................... 36

3.3.2 Initial Information Gathering ............................................................................... 37

3.3.3 Review of Literature ............................................................................................ 38

3.3.4 Analysis & Interpretation of Data ........................................................................ 38

3.3.5 Case Study .......................................................................................................... 39

3.3.5 Conclusion & Recommendations ......................................................................... 39

Chapter 4: CASE ANALYSIS............................................................................................. 40


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4.1 Introduction ............................................................................................................... 40

4.2 CAPELLA HOTELS AND RESORTS: 24-HOUR CHECK-IN AND CHECK-OUT

POLICY (Enz et. al., 2009).............................................................................................. 40

4.2.1 Execution ............................................................................................................ 40

4.2.2 Outcome .............................................................................................................. 41

4.2.3 Insights................................................................................................................ 41

4.2.4 Analysis .............................................................................................................. 41

4.3 ROYAL PLAZA ON SCOTTS: SUCCESSFUL BRANDING OF CUSTOMER

SERVICE (Enz, et. al., 2009) .......................................................................................... 45

4.3.1 Execution ............................................................................................................ 45

4.3.2 Outcome .............................................................................................................. 46

4.3.3 Insights................................................................................................................ 47

4.3.4 Analysis .............................................................................................................. 47

4.4 Conclusion ................................................................................................................. 52

Chapter 5: CONCLUSION AND RECOMMENDATIONS ................................................ 54

5.1 Introduction ............................................................................................................... 54

5.2 Discussion ................................................................................................................. 54

5.3 Recommendations...................................................................................................... 56

5.5 Scope for Further Research ........................................................................................ 57

REFERENCES ................................................................................................................... 58


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Table of Figures

Fig. 1: The vertical process used in this dissertation. ........................................................... 11

Fig. 2: New Product Innovation Process (Knox, 2002) ........................................................ 19

Fig. 3: Categorizing New Product & Service Innovation According to Risk (Knox, 2002)... 23

Fig. 4: Examples of Service Process Innovation (Verma, et. al., 2008) ................................ 25

Fig. 5: Key Elements of Service Innovation (Verma, et. al., 2008) ....................................... 30


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Chapter 1: ISSUE IDENTIFICATION

1.1 Introduction

This research attempts to investigate the difference in theory and application of service

innovation hospitality and related services. Whilst highlighting the reasons for identifying the

above issue in the hospitality sector, this chapter also deals with the aim and objectives that

will be achieved in due course of completion. Scope for further research has been listed along

with the limitations of this study. On a whole, this chapter deals with the antecedents

involved in choosing this particular topic for research, what it aims to achieve, the scope it

has for further research as well as the limitations that will be faced along the course of the

paper.

1.2 Issue Identification

Hildebrand and Forcada (2009) have reported that focus for the last few decades has been on

innovations related to technological artefacts or products whereas sparse knowledge has been

gained regarding the innovation process which occurs during the development of new

services which has resulted in the fact that current theory and understanding of the strategies

and tactics for developing new services is inadequate (Drejer, 2004)

Gallouj and Weinstein (1997) in their research showed that not only was innovation in

services recognised on both the empirical and theoretical levels but that service activities

played an increasingly prominent role in productive systems. Their research states that

innovation in services is difficult in theory as well as in the activities. Service innovation

based theory has been developed essentially on the basis of analysis of technological

innovation in manufacturing activities. Also, the specific properties of service activities,

especially the analytically vague nature of the output of services, make it tougher to measure

them by traditional economic methods or their productivity and to detect improvement or

change, on a qualitative level. (Gallouj and Weinstein, 1997)

Models that relate to product innovations cannot be applied to services. Services are

predominantly intangible, heterogeneous, perishable and simultaneously produced and

served. (Khan and Khan, 2009)


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Ramani A. (H-1401) 10

1.3 Aim and Objectives

Aim: To observe the degree of discrepancies between theoretical service innovation strategies

and their practical implementation in hospitality and related services through case studies

Objectives:

To gain theoretical knowledge on implementing service innovation in the hospitalityindustry

To study the practical application of service innovation in the hospitality industrythrough case studies

Analysing the above data to find the difference in them1.4 Scope

This dissertation has tried to give the reader a review of the innovations in the services for the

hospitality industry. The researcher has explored the role of developing new services and

various strategies being used by the hospitality industry in new service development have

been documented in order to map current trends. Various literature and case study have been

reviewed for this purpose.

1.5 Limitations

The review of the case studies considers particular destinations and environments andthus cannot be considered universal.

Having gained academic significance rather late, research in this field is in its infancy. Being a desktop research the author had access to limited electronic resources

1.6 Structure

A structured systematic format has been used for this dissertation. Chapter one deals with

informing the reader of the issue being researched along with the aims, objectives, scope and

limitations of the dissertation. Chapter two contains the literature review which deals with

data that has been obtained from published sources including journals, books, electronic

database as well as other web sources. The review begins with the concept of innovation in

services especially for new service development. Key elements that play a role in service

innovation too have been reviewed.


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Ramani A. (H-1401) 11

Chapter three has the method used for the research and the procedure for carrying out the

research. The researcher has conducted a desktop research by reviewing literature that has

been done. Then case studies of hotels that are implementing various service innovation and

its results has been covered in chapter four. The concluding chapter five has

recommendations for implementation and scope for future research made by the author.

Fig. 1: The vertical process used in this dissertation.

1.7 Conclusion

Service innovation has recently come to light as its economic benefits have gained

importance. The researcher intends to study theories and literature on this subject in order to

make recommendations for more effective implementation. A systematic desktop research

has been conducted to give the reader a three dimensional view of the subject. The researcher

tries to study the development of new services in the current hospitality industry using case

studies.

Issue Identification

Statement of aim andobjectives and outline structure

Review of previous literature

Methodology used for research

Analysis of case study

Conslusion andRecommendations


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Ramani A. (H-1401) 12

Chapter 2: LITERATURE REVIEW

2.1 Innovation

According to one definition innovation is defined as the intentional introduction and

application within a role, group or organization of ideas, processes, products or procedures,

new to the relevant unit of adoption, designed to significantly benefit the individual, the

group, organization or wider society (West and Farr, 1990, pp. 8-10).

Their paper suggested a modified version of this definition based on the nature of services:

Services innovation is the intentional introduction and application within a role, group or

organization of ideas, processes, procedures, or products related to services, designed to

significantly benefit the individual, the group, organization, or region; considering the

distinguished characteristics of services and consumer satisfaction. Sundbo (1997) presented

three different theoretical approaches to explaining and understanding innovation:

the technological paradigm which sees technological development as being at thecentre of the innovation process

the entrepreneur paradigmwhich assumes that an entrepreneurial act is at the coreof the innovation process

the strategic innovation paradigm which emphasizes the organizations strategy asthe main driver for innovations

2.2 Need for Innovation

The deeper meaning of being a customer-led organization is the ability to create superior

customer value. Superior means their abilities are judged by reference to the best in class

competitor and customer value is about being obsessive over the things customers value mosthighly and seeking to find better solutions. (Knox, 2002)

Knox, (2002) explains that the organizations top management must nurture and embed the

distinctive behaviours and organizational capabilities which deliver innovation solutions. It is

the combination of many factors which together make the innovative organization.

The work categorized these factors into 4 broad categories which help sustaining innovation:

Culture and climate, Assets and capabilities of the management, Organizational structure and

controls, new product, service and process development.


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Ramani A. (H-1401) 13

The organizations board plays a key role in innovation as they intervene and maintain a

balance between these factors. The senior management team must foster the market-led

approach, and empower employees to think innovatively about meeting customer needs at all

times.

Many researches have emphasized process (Hammer and Champy, 1993), technology (Day

and Schoemaker, 2000) and first mover advantage or time-to-market (Stalk and Hout, 1990).

However, relying too much on any one of these could lead to disaster.

Over these factors, Knox (2002) said that market understanding was most important. This

involved understanding the customers purchasing environment, the way they perceive value,

and how the customer will respond to the proposed innovation.

However, there is a certain degree of variability that makes it difficult, if not impossible, to

assess the success or failure of an innovation. Recently there is an increased interest in the

service innovation research (Drejer, 2004 and Sundbo, 1997). There is also a suggestion of

combining of approaches to innovation between the manufacturing and the service sector

(Drejer, 2004).

2.3 Traditional Innovation

Innovation and invention are often confused. Invention is the bringing out of new product and

technologies to the market, whereas innovation is about providing new solutions that offer

value to customers. Knox quoted American management guru Peter Drucker, exploiting

change as an opportunity Drucker also made the famous distinction between efficiency

doing things right; and effectiveness - Doing the right things. The former involving cost

reduction, while the latter implying innovation. Cutting on cost will undoubtedly lead to

short-term performance improvements, but many of them do not generate long-term

shareholder value.

2.4 Innovation Now

By definition innovation is about solutions that offer better value to customers. Developing

new products and services fulfils these requirements, but even a renewal of the innovation

process if it brings new products and services to the market more quickly.


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According to Knox (2002), the most effective way to build a reputation as an innovative

company is through a comprehensive market-led approach, which focuses on building value-

generating relationships with customers through the core processes by committed people

within the organizationas well as introducing new products and services.

2.5 Types of Innovation

Johne (1999) was of the view that a business serious about competing in a fast changing

market with fast changing technology must innovate. Lack of innovation could facilitate

competitors to succeed better than it is. New entrants in an industry have used market

innovation to achieve groundbreaking results. However, prior to market innovation, it is

useful to consider the other two types of innovation which contribute to organic business

developmentproduct innovation, process innovation and market innovation (Johne, 1999).

2.5.1 Product Innovation:

Product innovation provides the most obvious means for generating revenues. Process

innovation, on the other hand, provides the means for safeguarding and improving quality

and also for saving costs. Improved and radically changed products are regarded as

particularly important for long term business growth (Hart, 1996).

2.5.2 Process Innovation:

Process innovation embraces quality function deployment and business process reengineering

(Cumming, 1998). Although harder to execute, its purpose is now easily understood. Many

companies are currently working at reducing operating costs and also to increase service

quality through process innovation. It plays an important role in both the supply of the core

product and it supports other parts of the offer, both of which require quality standards to be

met and maintained (Johne, 1999). In the case of services, which by their very nature rely on

personal interactions to achieve results, the management of process innovation is a

particularly challenging activity (Johne and Storey, 1998).

2.5.3 Market Innovation:

Market innovation is concerned with improving the mix of target markets and how chosen

markets are best served. Its purpose is to identify better (new) potential markets; and better

(new) ways to serve target markets. We deal first with the identification of potential markets.

Identification is achieved through skilful market segmentation. Market segmentation, which


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Ramani A. (H-1401) 15

involves dividing a total potential market into smaller more manageable parts, is critically

important if the aim is to develop the profitability of a business to the full. Incomplete market

segmentation will result in a less than optimal mix of target markets, meaning that revenues

which might have been earned are misread.

2.4 Service Innovation

Hildebrand and Forcada (2009) have reported that focus for the last few decades has been on

innovations related to technological artefacts or products whereas sparse knowledge has been

gained regarding the innovation process which occurs during the development of new

services which has resulted in the fact that current theory and understanding of the strategies

and tactics for developing new services is inadequate (Drejer, 2004)

A research by Khan and Khan (2009) also suggests that most of the innovations as well as the

theories related to innovation have been predominantly in the area of products when

compared to services, whereas now with services playing a major role in the economy of any

country, the current focus is on the development and study of innovation in services. Another

reason stated by them was the tremendous competition in business that differentiating

services from products and studying innovation in services became required for success.

Development of new technologies has tremendously accelerated this need.

2.4.1 Introduction

Past research and anecdotal evidence suggest that service innovation, in general, has a

positive impact on customers choice and can result in increased revenues for a firm. IBMs

innovative service program is just one example of the financial benefits that can be realized

from implementing service innovation.

At the Cornell Rountable Hospitality Proceedings reported by Verma, et. al. (2008),

participants lamented that there was a lack of innovative organizations in the service

industries. Almost 80 percent of the United States gross domestic product (GDP) and about

the same percentage of the labour force are involved in services, but service firms constitute

only 30 percent of the worlds most innovative companies, as recording in the survey of the

twenty-five most innovative companies by the Boston Consulting Group (Jena McGregor,

The Worlds Most Innovative Companies, Business Week, April 24, 2006

www.businessweek.com/magazine/content/06_17/b3981401.htm)


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They also noted that in companies known for innovation usually lean towards products and

not services. Hospitality firms in specific have remained relatively unbranded in this category

because of the lack of historical tracking for service innovation. Without records and

benchmarking, learning and growth of innovation as a status for the company is difficult.

Participants at the roundtable proceedings reported in a paper by Verma, et. al., (2008) found

that the tendency for viewing innovation as the opposite of a standardized approach to service

delivery. As this is normally associated with economical benefits, organizations avoid

innovation in their service delivery methods.

2.4.2 Importance

Evidence from Gray, Matear and Mathesons (2000) research shows that market o rientationhas a relatively large impact on the company performance and that this concept can be

applied to both manufacturers as well as service providers. Other organizational

characteristics which could affect marketing and performance include corporate culture, the

adoption of new information technologies, promotion of ethical guidelines and procedures

and most importantly for this research and emphasis on innovation.

Their research also noted that the business strategy, services marketing and innovation

literatures emphasise links between environmental scanning, innovation and firm

performance, with some evidence that innovation might mediate the market orientation-

performance relationship (Han et al., 1998).

However, comparing the characteristics of hospitality firms with the most highly market-

oriented service firms from other sectors has produced some important insights into possible

ways of improving hospitality management and performance (Gray, Matear and Matheson,

2000).

Their research showed that innovation is an important source of competitive advantage in

markets where customer preferences are changing rapidly, where competition is intense,

where product lifecycles are shortening and maturing, and/or where differentiation is limited.

Gray, Matear and Matheson chose this research as a fairly large amount of research had

already been done which link innovation and performance in the goods or manufacturing

area. This relation in the case of the services sector has been done recently by authors such as

de Brentani (1989, 1993); de Brentani and Cooper (1993), Johne and Storey (1998).


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2.5 Products vs. Service

The hospitality industrys challenge of innovating in real time sets up the distinction between

service and product innovation.

2.5.1 Testing

Verma, et. al., (2008) said that although its possible to run limited tests of service

innovations, services are simultaneously produced and consumed. Thus, the testing of service

innovations tends to occur in the actual marketplace, irrespective of how limited the test,

while product innovations can often be tested in a lab or in tightly controlled focus groups.

As a result, failures for service innovations are viewed as being extremely costly and

considered more risky than product innovations.

2.5.2 Imitation

In most cases, service innovations are easy to imitate. Verma, et. al. (2008), noted that the

terms service innovation and imitation often go hand in hand. Therefore, what is todays

service innovation becomes tomorrows commonplace service. Guests quickly learn to expect

what was once novel and hospitality firms must engage in a never-ending search for the next

new idea for service.

2.5.3 Planning & Development

Another key difference between service innovations and product innovations is that a single

person can develop a new product, but it takes a team to implement a new service.

Thus, service innovation tends to follow a democratic process where a leader needs to create

a culture that motivates employees to innovate. A top executive from a major hotel chain

stated that service innovation involves a cultural imperative, where a process is in place for

encouraging innovating thinking and the development of new ideas.

As stated by Verma, et. al.(2008), Such a culture is especially important in the hospitality

industry because, unlike manufacturing firms, most hospitality companies do not have

laboratories expressly devoted to research and development, and because innovative ideas

can arise from any individual at any level of the hospitality organization.


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2.5.4 Employee Empowerment

In an organization, the employees are the resources that are most in contact with a guest,

especially concerning the hospitality industry. Thus they must be empowered to come up

with new ideas, without worrying of a risk of failure. Managers should make clear to

employees that failure is not only allowed, but also acceptable as part of the innovation

process. As a consequence, evaluation methods should support innovative thinking. It is

managements role to be facilitators of innovation because a service innovation that exists

outside the context of motivation will ultimately fail.

2.5.5 Measurement of Financial Impact

In the success and failure of service innovations is the problem of how to measure the successof service innovations. Even with guest surveys and other measurement techniques, one

roundtable participant noted that it is hard to quantify a guests experience to determine the

success of an innovation.

Specifically noted by Verma, et. al., (2008), was the inability to accurately measure the

impact that a service innovation, has on profitability in isolation from other elements. In

product innovation it is possible to accurately measure R&D expenses, launch costs, and

resultant profits generated by a particular product, but with service innovation, the picture is

jumbled. Especially in a hotel, many service elements are bundled together and may be

either chosen or not chosen by each guest.

Thus, the task of accurately measuring the impact of any one service innovation is next to

impossible in the short term. Even in the long term the effects can only be suggested via

increased market share or brand equity. Nevertheless, without financial measures of success it

is hard to sell the idea of service innovation.

2.5.6 Funding

In relation to the challenge of measuring the impact of a service innovation is the difficulty in

getting research and development funding for service innovations because of the lack of hard

financial data that would support the projected profitability of an innovation.


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2.5.7 Measurement of emotional impact

Beyond finances, the connection between customers and services is emotional rather than

rational, and measuring this experience is difficult. Hence, it comes to innovations that

involve human interaction, and because every customer has different expectations and

perceptions of service delivery, hospitality firms must take different approaches to serving

different customersand different approaches to measuring their reactions to an innovation.

(Verma, et. al., 2008)

In summary, the distinction between product and service innovation was evident by the

challenges that arise with service innovations. Innovative companies are focused on new

methods for assessing the customers experience, particularly blogs and internet forums.

2.6 Limitation to New Product Innovation

Fig. 2: New Product Innovation Process (Knox, 2002)

Traditional NPD and NSD are sequential and functionally driven. Marketing and sales act as

the intermediary of customer needs. The simplified feed back path illustrated shows the

hands-off that can occur. (Knox, 2002)


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The diagram also leads to two distinct points noted by Knox (2002) as:

The traditional sequential procedures for moving idea through to final products andservices are no longer sustainable in todays business environment

Developing new products and services is a narrowed approach to creating customervalue.

Customer value is created when what is offered is better, cheaper and faster. For this

companies must come close to their customer, which requires innovative thinking at all levels

in the organization.

By introducing measures of value-added time versus non-value added time, the innovation

team can work together to identify the total time involved in value-adding activities and to

eliminate time wasted in hands-off in the process. This leads to parallel activities across the

multifunctional team, better internal communications and a clearer interpretation of customer

needs and insights within the team.

2.7 Service Vacuum

Considering the distinction between service and product innovation, it can be noted that there

is an absence of innovative firms in the service industries. Hospitality companies may be

unfairly labelled because of the lack of historical tracking for service innovation in

comparison to product innovation. Without a record of service innovation developments and

benchmarks of success, it is harder to learn and grow, but it is also harder to document a

firms status as an innovator.

Complicating the lack of documentation for services, participants again indicated that

products can be patented and clearly belong to the innovating firm, while services are

easily imitable. A successful service innovation that is quickly imitated by competitors seems

not so innovative.

Verma, et. al. (2008) also identified disincentives to innovation. In particular, once an

innovation is rolled out, it is hard to reverse the innovation or to pull a new service from the

market. When a single failure can result in expensive consequences, the risk becomes great

enough to discourage firms from pursuing service innovations.


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Ramani A. (H-1401) 21

Finally, often firms are torn between minimizing costs and providing an extraordinary

customer experience.

2.8 Theoretical Framework

Models that relate to product innovations cannot be applied to services. Services are

predominantly intangible, heterogeneous, perishable and simultaneously produced and

served. (Khan and Khan, 2009).

Gallouj and Weinstein (1997) in their research showed that not only was innovation in

services recognised on both the empirical and theoretical levels but that service activities

played an increasingly prominent role in productive systems. Their research states that

innovation in services is difficult in theory as well as in the activities. Service innovation

based theory has been developed essentially on the basis of analysis of technological

innovation in manufacturing activities. Also, the specific properties of service activities,

especially the analytically vague nature of the output of services, make it tougher to measure

them by traditional economic methods or their productivity and to detect improvement or

change, on a qualitative level. (Gallouj and Weinstein, 1997)

These two difficulties constitute the starting point for complementary groups of studies on

innovation in service. (Gallouj and Weinstein, 1997)

One group focuses on analysis of the introduction of technical equipment and systems in

service firms and industries. Gallouj and Weinstein reiterated work done by Barras (1986)

who observed a product life cycle that is the converse of the traditional industrial cycle. The

basic element of this reverse product cycle theory is the adoption of an item of computer

equipment by a service activity that triggers what might be called a natural technolog ical

trajectory. (Gallouj and Weinstein, 1997)

This leads to the emergence of incremental process innovations which are meant to improve

the efficiency of the service being provided, an improvement in service quality through more

radical process innovation and to the emergence of product innovation. However, Gallouj and

Weinstein are of the view that Barras model is less a theory of innovation in services than a

theory of the diffusion within the service sector of technological innovation derived from the

manufacturing industry.


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Ramani A. (H-1401) 22

The second groups study does not ignore the technological dimension, but focuses on non-

technological forms of innovation. These follow the precedent set by Schumpeter, whose

definition of innovation was particularly broad and open. Schumpeter identified several

different forms of innovation: the introduction of a new good, the introduction of a new

means of production, the discovery of a new source of raw material or semi-finished product,

the conquest of a new market, and the establishment of a new organisation (Gallouj and

Weinstein, 1997). In this case Gallouj and Weinstein report that ad hoc forms of innovation,

which are not immediately reproducible, as well as institutional formalisation trajectories

(i.e., the search for a certain degree of formalisation, although not necessarily, or even

predominantly, in tangible form) were more rampant.

Gallouj and Weinstein found that the latter trajectory was also recently highlighted in the

field of catering and related services by Callon (1995) and Dubuisson (1995).

Gallouj and Weinstein (1997) have mentioned that many researchers found that innovations

in services do not follow a technological trajectory, but rather service-professional

trajectories in which technology is just one factor among several others.

Being a successfully innovative organization helps respond to the cause of change and

requires a long term, customer-led strategy. The most obvious form of innovation is in theform of new products or new services. However, as many leaders would agree, developing

genuinely new products is a high-risk activity: industrial products have only a 50:50 chance

of being successful, while consumer goods fare even worse, with a one in ten chance of

succeeding (Cooper, 1993). To reduce the risk of failure, a robust multi-staged review

procedure is adopted as shown below:


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Fig. 3: Categorizing New Product & Service Innovation According to Risk (Knox, 2002)

Although successful inventions may offer genuine value to customers and be highly

desirable, when they are patented, their value may not be sustainable.

Products and services can be new in 2 ways:

New to the company- the organization has never made or sold the type of productbefore, although other firms might have

New to customers- the product or service is the first of its kind and is new to themarket.

They thus offer six different categories of new innovation which are summarized by Avlontis

et al. (2001) as:

New-to-the-market service including new-to-the-world services. New-to-the-company service, services that are new to the firm but not new to the

market.

New delivery process consisting of lines new to a firm, but not new to the world. Service modifications, major improvements or modifications of an existing service. Service line extension, addition to a firms existing lines. Service repositioning, that is, repositioning of an existing service.


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Most companies feature a mixed portfolio of NPD and NSD. Those which are stepping out

are in the highest risk zone. Product improvements and line extensions are lower risk and

represent over half of all new development activity. Similarly, the lowest risk developments

are cost reduction and repositioning, or a combination of the two.

2.9 Innovating Services

Given the need to communicate intangible benefits, and the relative importance of good

customer relationships, it could be expected that more rapid adoption of new information

technologies such as the Internet, and the presence of written codes of ethics could also be of

particular value to service firms, especially those in the hospitality industry. From previous

market orientation and services marketing research it could be expected that company

performance in the hospitality sector should be positively linked to:

Market-oriented behaviour (or a market orientation);Market Orientation is a term that has been popularised by marketing practitioners

that acts as an indicator of the extent to which a firm implements their marketing

concept. This in turn holds the key to achieving organizational goals including

market share and profitability. (Agarwal, Erramilli and Dev, 2003). Their research

showed that performance is a mediator in the relationship as well as between

innovation and objective performance.

A ``balanced'' corporate culture which incorporates marketing, employee andstakeholder concerns;

Effective and efficient innovation strategies; Yearly adoption of new media such as e-mail and the Internet for business

communication; and

Codes of ethics to guide staff conduct.(Gray, Matear and Matheson, 2000)


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2.10 Service Process Innovation

Fig. 4: Examples of Service Process Innovation (Verma, et. al., 2008)

Looking at service process innovation, or ways to improve the way they perform a task,

Verma, et. al. (2008) has outlined ways to assess their services.

Majority of the service process focused on new methods for assessing the customers

experience. Examples include using open forums (or blogs) in which customers share their

experiences (with the entire world), and creating complaint systems that are designed so that

service failures can be recovered prior to a guests departure.

Electronic word of mouth (e-WOM), i.e. any positive or negative statement made by

potential, actual, or former customers about a product or company, which is made available

to a multitude of people and institutions via the internet (Andreassen and Streukens, 2009).

There are several reasons for this endeavour.

Access to need-related information is often sticky, which means that it is costly toacquire, transfer, and use in a new location. One customer related information source

that may overcome some of the stickiness and cost issue is e-WOM.

Customers believe web-based e-WOM to be a credible and relevant communicationchannel.


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As a source of social capital e-WOM encourages others to share their knowledge,thereby being an ever-expanding knowledge base that contains information that

enables innovating organizations to achieve a sustainable competitive advantage.

Their study was the first to disclose that e-WOM is a multi-dimensional construct consisting

of four unique core categories, i.e. request for information and usage experience issues,

business practice issues, and comments pertaining to new products launches/developments.

They found that, with the strong increase in consumers engaging in various discussion forums

and blogs as evidenced by the increase in number of discussion forums (e.g. Google.com,

Yahoo.com), the increase in number of blogs (e.g. www.myspace.com, www.blogging.com),

and the development of dedicated blog search agents (e.g. www.technorati.com,

www.feedster.com, www.pubsub.com), there is both a dire need and a unique opportunity to

better understand what people talk about when engaging in product- or service-related online

conversations - an understanding that may help and guide firms in their quest for the next

disruptive or sustainable innovation (Christensen et al., 2004).

They then proposed that a proactive approach to e-WOM by listening in to ongoing

discussions in relevant discussion forums would help firms to improve their service

innovations in three ways. First, by listening to customers' desires, firms can get customerfeedback faster. Second, by better reflecting customer needs in future a service, the quality of

market information is improved, thus leading to superior decisions. Third, by adapting

existing services and business practice, actions based on customer responses become more

effective. If e-WOM can report the customers' voice effectively and efficiently, this may help

firms manage the adoption process for new products or services more effectively. If this is

indeed the case, then the bottom line is an improved innovation rate with better, faster results

(Andreassen and Streukens, 2009)

In addition, participants shared service innovations designed to wow customers. The group

was particularly interested in various forms of technological advances to the service process,

such as one-stop shopping, which allows the hotel to assist customers in planning an entire

vacation.

As the participants of the Cornell Roundtable dissected innovation failures, they found that

the majority of the failures stem from the peculiar characteristics of service innovation, most

of which they had already outlined. As the use of technology expands, employees may see


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technological applications as a threat, particularly technology that allows guest self service.

Finding ways to encourage employee acceptance of self-service technology is a challenge.

2.10.1 Practising Service Innovation

Service innovation consists of two inter linked issues: how to innovate and what to innovate

(Andreassen and Streukens, 2009). Acquiring a better understanding of what customers really

need would need is an efficient method of developing these ideas.

2.10.2 New Service Development (NSD)

NSD, as mentioned before, is risky as it has a failure rate of about 50 percent. In order to

address this high failure rate, studies have been focused on the factors that affect the

performance of new services. Some of these factors include new service strategy and

ascertaining the significance of NSD stages. (Alam, 2005)

Alam and Perrys (2002) research observed that research had been done on service

innovation and new service success factors, but little on the area of New Service

Development (NSD) and how they are actually developed. To further complicate this,

innovation has traditionally been associated with tangible products, resulting in literature

about NPD rich. Also, as mentioned before, because of the unique characteristics of services,viz., intangibility, heterogeneity, perishability and inseparability, the intricacies of NSD have

not yet been captured. Thus, NPD and NSD have stark distinctions in them.

Alam and Perry (2002) reported that only two NSD models in empirical studies are available.

The first model described eight linear and sequential stages of developing new services by

Bowers, (1987 and 1989). In turn, Scheuing and Johnson (1989) developed an expanded

model of 15 stages:

Formulation of new service objectives Idea generation Idea screening Concept development Concept testing Business analysis Project authorization Service design and testing


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Process and system design and testing Market program design and testing Personnel training

Service testing and pilot run Test marketing Full scale launch and post launch review

Although this second NSD models 15 stages are more comprehensive, the model does not

address the important issues of cross-functional teams, parallel processing of the development

stages and cycle time reduction that have been highlighted in the new tangible product

development models above. Thus, there is no model of NSD that matches the models of new

tangible product development.

2.11 Challenges

Considering future efforts to encourage service innovation, executives outlined the many

challenges they face in Verma et. al. (2008) research.

Some of the challenges mentioned included:

How to measure service innovations effects on profit Understanding what delights customers How to predict whether a technological innovation will be accepted by customers and

employees,

Establishing employee reward and motivation systems to encourage innovation The fact that innovations can be easily imitated

One of the main challenges identifies was that service innovations are easily imitable. Others

included the real-time nature of introducing new services and that services could not be tested

in a laboratory. New services once executed are difficult to recall like products. (Verma et.

al., 2008). Another very stark reason for this is being tangible products are easily patented

and are owned by the firm. Services on the other are easily imitable rendering them not so

innovative, and they typically spread and are copied.

The bottom-line for all the challenges, however, is the many sources of risk connected to

innovation: particularly, risk associated with service innovation failure, risk from the lack of


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measurement tools, or the risk of competitors imitating your innovation. At root, the risk of

service innovation derives from the unknowns involved with implementing that innovation.

Service organizations must constantly try to find new innovative ways to serve customers

more effectively and efficiently. Although it is essential, organizations face some challenges

in their efforts.

Participants of the Cornell Roundtable cited such trends as technological advances to

services, the offering of personalized service, and the use of customer relationship

management tools to gather guest preference data

2.12 Key Elements in Service Innovation

During recent decades, the importance of services to the global economy has steadily grown

while the importance of goods has somewhat declined. In fact, the service industries

comprise approximately 70% of aggregate production and employment in the Organisation

for Economic Cooperation and Development (OECD) nations and contributing about 75% of

US gross domestic product (GDP) (Berry et al., 2006).

Among all service industries in the United States, restaurant industry ranks among the top

with 945,000 locations, 13 million employees and sales forecasted to reach $566 billion in2009 reported Khan and Khan. It is projected to grow in 2009 in spite of the most challenging

economic environment in nearly three decades, according to the National Restaurant

Association (2009) Restaurant Industry Forecast

Verma et. al. (2008) said, especially in context to the hospitality industry, innovation is the

oxygen that keeps concepts fresh and attracts new customers, as well as encourages repeat

customers. Although innovation requires creative thinking, coming up with a new idea is only

the first step in ensuring successful service innovations.

Participants in the Cornell Hospitality Roundtable Proceedings agree that service innovation

was more complicated than just innovation. One participant said that service innovation is

the process by which significant improvements in products and services are adapted and

ultimately delivered to users.

Three key elements of service innovation were identified by Verma et. al. (2008) in his report

of the roundtable proceedings:


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Having a customer focusexceeding expectations of customers Having a process focusincreasing efficiency Utilizing a continuous improvement mindset to doing business

Fig. 5: Key Elements of Service Innovation (Verma, et. al., 2008)

Using the key elements found in the above figure, roundtable participants developed the

following collective definition for service innovation, encompassing the essential factors

related to service innovation, namely: customer focus, process focus, and continuous

improvement (Verma, et. al., 2008)

According to Verma et. al. (2008), Service innovation is the introduction of new or novel

ideas which focus on services that provide new ways of delivering a benefit, new service

concepts, or new service business models through continuous operational improvement,

technology, investment in employee performance, or management of the customer

experience.

2.12.1 Customer Focus

Falling within the customer focus category is not only the importance of understanding and

measuring customer acceptance of innovation but finding out their preferences as well.


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2.12.2 Innovation Process

The process related aspects of service innovation, which involve both the design and

management of the service process. In regard to managing the service process, many

researchers stressed that a service innovations success depends on employees both being on

board with innovation and feeling motivated to innovate.

To the end, a company must instil a culture that supports innovative thinking. Phrases such as

cultural imperative, democraticprocess, and employee empowerment were brought up

on several occasions to describe the impact employees have on innovation success. Along

with motivating employees to innovate and to help them embrace new service methods,

adding technology to personal services and to offer self-service options enhances the service

process innovation. In that context, it is important to remember that the success of technology

based service innovations is greatly influenced by employees being involved with the service

innovation process. In short, technology alone cannot support a service innovation.

2.12.3 Continuous Improvement

Many of the participants in the Cornell Roundtable noted that innovation often stems from

efforts for continuous improvement. To innovate, one must constantly search for and

implement improvements and new features to the current service offering. Measurement is

essential for continuous improvement. Many participants emphasized the importance of

continuously testing, analysing, and improving processes.

Verma, Plaschka and Dev, (2005) analysed various innovations in the hospitality. They

include

2.12.4 Hotel Type

Introduction of the boutique hotels concept in the recent past is an excellent example of an

innovative product, in an industry that is mostly based on standards.

This hotel type is an innovation to the traditional hotel experience and an attractive option for

customers. This becomes furthermore innovated if it crosses with other industries to obtain

co-branding for say fashion and jewellery concepts like the Bvlgari-Marriott alliance (Verma,

Dev and Plaschka, 2005).


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2.12.5 Use of IT

Use of up-dated Information technology is another form of innovation for hospitality

organizations. One study determined which of the recent technological innovations were most

beneficial, least beneficial, and had future benefits for hotels (Reid and Sandler, 1992).

Those which were found most beneficial include: wake-up systems, electronic door locks, in-

room pay-per-view, music players, internet connectivity, video check out, and a software

library (Reid and Sandler, 1992). Lack of operational capability or limited resources make

adopting some technology impractical.

Aside from customer preferences for technology, the addition of new technological features

to a hotels service concept has distinct phases of adoption (Namasivayam et al., 2000). Thetechnology adoption process includes:

Customer signalling, such as internet booking and in-room modems Enabling management, such as management email Enabling employees, such as voice mail Customer service revenue add-ons, such as ATM and interactive TVs Customer service value add-ons, such as internet access and in-room fax machines Wireless technology, such as curb side check-in, voice recognition, and smart cards

(Namasivayam et al., 2000)

2.12.6 Customization of Services

Service innovation can also be done through customization of the same service offered by the

organization to suit the needs of a variety of clientele. This could include:

Allowing guests to have flexible check in/out times Personalizing room decor Having child care options available

One of the challenges in implementing service innovation in this manner was the lack of

operational capability. Adding such a policy successfully requires the alignment of hotels

marketing and operational activities.


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Skinner (1974) provides a product-oriented example of the importance of balancing

marketing and operational activities. He suggests that although it may seem profitable to add

more products/features to the product mix, it may be too difficult operationally to implement

(Skinner, 1974). This could occur in a service background as well.

After extensive research, Verma, Plaschk and Dev (2005), found that overall, innovation does

matter when selecting a hotel to both business and leisure customer segments.

2.13 Conclusion

Service innovation is a rather difficult task, especially when compared to product-innovation.

Further, complicating this is the fact that the hospitality industry is one where real-time

scenarios could affect a guests perception of the hotel. This makes execution of service

innovation tougher.

However, New Service Development (NSD) can be undertaken following the model shown

in the research. Also, in this process some of the key factors that play a role include the

customer, technology, the market or environment, culture, and the management of the

organization itself.

In conclusion, it can be said that although various theories and models exist on serviceinnovation, many challenges both foreseeable and unforeseeable appear when innovation is

being done. In order to overcome these challenges an organization can focus on the key

elements which make up service innovation in order to find alternatives or solutions.


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Chapter 3: RESEARCH METHODOLOGY

3.1. Introduction

A successful research can be conducted through a well planned and organized structure. In

this chapter the author has discussed the method used for conducting the research. This

section gives a step by step elucidation of the research path with appropriate justification for

the adopted method. A desktop research has been conducted where a review of past and

present literature is done. Also analysis of case studies has been done in the following

chapter. Analysis method for the data has also been shown.

3.2 Research Purpose

Methodology defined by Robson (1993) is the approach to find the answer to a research

problem. It helps to determine the technique in order to find the solution to an issue or a

research question. It identifies the path taken to achieve the outcome. The purpose of the

research identifies the aim and the means to achieve it. Robson explains the purpose of a

research in the context of Exploratory researches, Descriptive Research and Explanatory

research.

3.2.1 Exploratory Research

This type is undertaken when the research problem has not been clearly defined. It

determines the best research design, data collection method and selection of subjects.

Exploratory research relies on secondary research

3.2.2 Descriptive Research

This research describes data and characteristics about the population and phenomenon being

studied. Thus the purpose of the research is to describe. It gives the choice of various

perspectives, aspects, levels, terms and concepts to observe, register, systemise, classify and

interpret.

3.2.3 Explanatory Research

This type is applied when the issue is already known and has a description of it. The desire to

know why to explain is its purpose. It builds on exploratory and descrip tive research and

goes on to identify the reasons for something that occurs. It looks for the causes and reasons


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In this research, the researcher has explored service innovation in theory and practice

through detailed literature review. The researcher has tried to find out the factors that impact

innovation in services in hospitality organization and the importance of NSD in innovating

services.

Thus, it can be said that the research undertaken is an explanatory research which builds on

exploratory research aspects. This method allows the researcher to understand and analyse

theories and make deductive statements from them. The research is centred on service

innovation during New service Development and funnels to the factors affecting innovation

in services. Analysis of data on this subject is done through the previous literature review and

case studies which is seen in a later section.

3.3 Research Process

The main purpose of conducting a research is discovering, interpreting, and developing

methods and systems for the advancement of knowledge on a wide variety of subject.

(http://en.wikipedia.org/wiki/Research)

Research is an organized, systematic, data based, critical, scientific enquiry or investigation

into a specific problem, undertaken with the objective of finding answers or solutions to it.

Sekran (2003)

The motive behind conducting a desktop research in the area of service innovation is to

identify the theoretical as well as practical implications it has on the hospitality industry. It

also explores the importance of NSD as a method of service innovation.

Zikmund (1991) showed the actual research process in the following 6 steps:

1. Identifying the research problem

2. Defining the research problem

3. Determining how to conduct the research or the method

4. Collecting research data before analysing

5. Interpreting the data

6. Presenting the result


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For the purpose of this desktop research however, the researcher would be using an adapted

research method based on Zikmunds research process that would go in the following steps:

3.3.1 Observation

According to Sekrans (2003) work observation is the first stage in which one sense that

certain changes are occurring or that some new behaviours, attitudes and feeling are surfacing

in ones environment. When the observed phenomena are seen to have potentially important

consequences, one would proceed to the next step. A people oriented manager is always

sensitive to and aware of what is happening in and around the workplace. Changes in attitude,

behaviour, communication patterns and style along with various other verbal and non-verbal

cues can be readily picked up the manager who is sensitive to the various nuances.

This stage therefore involves screening certain stages occurring within the environment.

Broadly, this research is pertaining to service innovation, which is essential for organizational

success in todays competitive age. Service innovation and its benefits have come to light

only recently and thus, in the form NSD it proves successful for smart -innovating

organizations.

Economic profitability that can be gained through innovation has also made many managers

and organizations rethink their innovation strategies. Thus, there is a need to study the

antecedents, role and advantages of service innovation.

Observation

Initial InformationGathering

Review of Literature /Theoretical Framework

Analysis andInterpretation of Data

Discussion andFindings


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3.3.2 Initial Information Gathering

Preliminary data collection comes from the initial data gathered from the researchers

observation. However, these must be reliable sources of data. Thus, initial information

gathered for this research included the basic literature review of the past and present stance of

service innovation. Its antecedents and importance was analysed for supporting the

theoretical framework being used in this dissertation. The researcher observed that interest

was being shown in this field of service innovation and development. Multiple sources of

literature were used in order to analyse the role service innovation plays during the process of

NSD.

Firstly some books were used to get basic academic knowledge on the subject. . Articles by

Alam and Perry, 2002; Chen, Daugherty and Grawe, 2009; Dev, et. al.; Drejer, 2004; Enz, et.

al., 2009; Gallouj and Weinstein, 1997; Gray, Matear and Matheson, 2000; Hildebrand and

Forcada, 2009; Khan and Khan, 2009; Knox, 2002; Oke, 2007; Sundbo, 1997; Verma, et. al.,

2008; and Verma, Plaschka and Dev, 2005 were reviewed to get a clearer picture of the task

involved. Articles dated as far back as 1989 and as recent as 2010 have been reviewed. After

this generalized electronic search engines were used such as Google, Google Scholar and

Wikipedia. Key search words for this purpose included Service Innovation, Process

Innovation, New Service Development (NSD)and Innovation in hotel services.

After a sufficient amount of literature and articles were collected, a citation index was made

for quick reference. The major part of information was gathered from electronic databases

such as Emerald Insight, EBSCO Host, Science Direct, Springer Link, and Sage Publications

available through Huddersfield Metalib E-Library using an Athens Databank Login.

Some of the Journals referred to include Journal of Services Marketing, Managing Service

Quality, European Journal of Innovation Management, International Journal of Contemporary

Hospitality Management, etc.

The researcher also referred to various white paper researches available on the world wide

web. The researcher used the snowballing approach to get deeper into the subject. Industry

reports and surveys done by Boston Consulting Group (BCG), Harvard Business Review

(HBR) and the Cornell- Centre for Hospitality Research, etc. were used. Referencing was

also done from newspaper and magazine articles such as Business Week.


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For the purpose of discussion, the author has reviewed, analysed and interpreted various case

studies pertaining to this subject.

3.3.3 Review of Literature

The researcher read extensively on available published literature by various authors on many

related subjects. It reviews the past and present of service innovation along with its impact on

the NSD process. The theoretical framework discuses the various relations shared by them

and the impact one have on another.

The basic structure of the literature review covers aspects such as innovation and its

importance especially in the field of hospitality. It talks about the need for hotels and related

hospitality services. It highlights the various different aspects of service versus productinnovation. Types innovation like product innovation, process innovation and market

innovation are discussed with illustrations on how they can be implemented successfully. The

service innovation process and various theories and models developed over years of research

have been illustrated. It concludes by discussing in-depth the key elements that assist service

innovation and the various challenges they brought on during the process.

From the above it can be seen that it summarizes the variable that are studied in this research

3.3.4 Analysis & Interpretation of Data

In order to support the theoretical framework built by the researcher additional data was

gathered. This data is in the form of case studies obtained from electronic article database of

various organizations, particularly those in hospitality and related services. The data would

contain information supporting the level of service innovation and development in the

organization.

Deduction is the procedure of arriving at conclusions by interpreting the meaning of the data

analysis (Sekaran, 1992).

The researcher will build using a detailed explanation of the data gathered. This will be in a

narrative style and compared to theoretically significant propositions. The findings will be

compared to the data from the literature review.


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3.3.5 Case Study

A study in which the researcher explores in detail a program, an event, an activity, a process

of one or more individuals can be called a case study (Creswell, 2003). The study of a

particular case is always time bound and data is collected using various tools and procedures

such as interviews, questionnaires, etc., over a period of time. For the exploratory part of a

research according to Yin (2003), a case study is most suitable. Various reasons support this

such as less control in the hands of the researcher with regards to events and the current facts

which are aligned to reality. One of the main benefits of case study analysis is that the

researcher is not restricted or bound by a particular methodological tool.

3.3.5 Conclusion & Recommendations

The discussion will lead to the discussions and findings of the explanatory study. Suitable

recommendations would be made to enhance understanding.

The conclusion is finally obtained by comparing the literature review results with the data

collected. Therefore, the researcher observes that the conclusions of the research are logically

linked to the research done earlier.


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Chapter 4: CASE ANALYSIS

4.1 Introduction

Analysis of data is imperative as it supports the researchs problem or aim and objectives. In

this chapter data collected from the various literary sources is analysed. The data gathered

from the case studies too is collated and analysed. This is then compared to results obtained

form the analysis of data which was obtained from the academic literature that has been done.

Thus, the practical data is compared to the theoretical data acquired.

Thus, the researcher has transcribed the case studies by studying it. The researcher then

identifies the various themes emerging from it. These themes from the empirical data and the

case study are then compared to arrive at sustainable conclusions.

4.2 CAPELLA HOTELS AND RESORTS: 24-HOUR CHECK-IN AND

CHECK-OUT POLICY (Enz et. al., 2009)

The Capella Hotels and Resorts chain allows its guests to check in and check out at any time,

day or night. Capella has pledged to have a room ready for each new guest upon arrival,

rather than asking the guest to wait until 2:00 pm or 3:00 pm, as is the industry norm.

Furthermore, guests can use the room as long as they like, rather than being required to

check out by 12:00 noon. In fact, guests are charged for an extra night only if they check out

after midnight. The focus on quality customer service is reflected in their twenty-four written

service standards, one of which states: The suggested hours of operation are guidelines, not

limitations for satisfying individual guest desires and preferences. (Enz, et. al., 2009)

4.2.1 Execution

Leaders at Schulze and Capella developed brands service standards knowing that check-in

and check-out times were areas of guest frustration. In putting to effect this 24-hour

standard innovative service concept affects operations for the front office, reservations,

laundry, and housekeeping. Employees soon became excited about the opportunity to pioneer

a new process which improved customer service.


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4.2.2 Outcome

Capella does not have complete data on satisfaction or loyalty yet because many of its

properties have just opened. They believe from 12 months of guest data collected for their

Velden and Dusseldorf properties that together yielded a 91-percent average overall guest

satisfaction score and a 93-percent score for likelihood of recommending the property.

Capellas first 18 months, there were no negative comments about rooms not being available,

but many positive comments about flexibility and personalized guest experiences.

More importantly their service standard influenced staff at all levels and inspired them to be

more customer focused. The employees felt empowered to provide the guests with the

experience they desired, and felt good about providing outstanding service. Even an

independent employee satisfaction survey in November 2008, employees rated their feeling

of empowerment at 92 percent.

4.2.3 Insights

Capellas 24-hour check-in and check-out policy is simple in concept, but could have been

difficult to execute. While the 24-hour po

service innovation - theory and practice in the hospitality industry

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