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The term "service innovation" refers to enhanced methods of creating and delivering services, which are essential in the service sectors since they allow for the improvement of consumers' experiences by meeting their needs (Parsa and Narapaeddy 2015, p.36). This action is crucial for keeping customers satisfied in the hotel industry. Because they offer more non-basic commodities, this industry attempts to make consumers happy, in contrast to other industries that concentrate on providing their needs. Event planning, housing, hotels, restaurants, and travel through airplanes, luxurious trains, and cruise ships are some of the hospitality-related industries (Sood 2017, p.82). Mostly, the modifications in this line is non-technological, it only relates to offering new solutions to service delivery by improving client interface, additional distribution method, and new approaches to conducting operations within the supply chain among others.
Discussion of the Importance of Service Innovation
The businesses within the hospitality industry often find simpler and efficient ways of service delivery through innovation (Kosaka & Shirahada 2014, p.90). Typically, change leads to the transformation to one method of conducting an activity to the other one that is usually improved. For instance, an organization that is keen on discovering the behaviors of its consumers would want to come up with a way in which to study every individual. An example in that line is the creation of the Customer Relationship Management Tool (CRM) (Agarwal, Selen, Roos, and Green 2015 p.87). This technique has allowed for the production of guests profiles by the hotels from where the customer service person can monitor the consumption habits of the individuals and propose the ways of making the buyers happy. In the process, the companies adopt particular courses of action such as the inclusion of additional services to help attract and retain more customers.
Additionally, service innovation helps adjust to growing customer needs and changing behavior concerning communication and interaction (Battisti 2012, n.p). Currently, the internet is overtaking the use of magazines and other common forms of spreading the information regarding the existence of some of the hospitality industry facilities such as restaurants and luxury transport activities. Consumers are finding the internet to be a faster means of passing information and getting a prompt response than the other channels. For instance, not everyone can get the exact magazine where a tourist hotel has made advertisements. Besides, the television also has specific times for airing any related service promotion (Sood 2017, p.71). Luckily, the internet enables one to contain the information in it at any particular time. Therefore, the hospitality industry finds it easy to reach most of the target consumers through such improved communication. The internet has helped communicate any update in the services offered and even maintain a flowing and instant correspondence between the businesses and their clients
Given that the focus of the hospitality industry is to make the consumers happy, the innovative activities help make such people more comfortable. Today, one of the significant innovations in the sector includes the inclusion of the improved in-room hardware and software. For instance, the travelling vessels have resorted to installing high-speed WIFI and television screens where the occupants can receive entertainment through the internet or even watch movies as they travel (Kimbell 2014, p.27). Hotels are also moving from the use of common television rooms within their premises to having every room with such facility, thereby, satisfying the need of every visitor regarding what program or movie that they might want to watch.
Service innovation has further enhanced the competitive nature of the firms. Competition is relatively high in some of the sectors within the industry such as transport and restaurant businesses. Most management have, therefore, embarked on making their services to be the best or most preferred through innovation (Macaulay 2012, p.18). For example, some airlines are coming up with private wings within their premises where the visitors can sit and continue with office activities as they wait to travel. Such a move is vital in reaching and attracting the class that might often be busy even during their travel.
Sustenance of the current market share is another critical benefit that the hospitality industry enterprises enjoy from having to conduct service innovation. Evidently, it is possible to lose customers to the creative firms that seem to offer what meets changing demands of buyers (Kosaka, and Shirahada 2014, p.121). For instance, a tourist transport company with a fast internet installation is likely to entice the customers of the competitors that do not offer such services. Therefore, one is forced to embrace such improvement to avoid losing their customers to the other competing firms just for such reasons.
Social innovation further helps improve cost-effectiveness for the participating organizations. For example, the introduction of the use of internet in communicating with the customers has seen most of the companies reduce the application of other traditional forms of passing information (Sørensen and Lapenta 2017, p.21). Currently, such enterprises have created websites and the social media platforms that include Facebook and Twitter where they can reach out to their customers, receive their concerns, and offer instant response to queries.
Also, service innovation has enabled the hospitality firms to diversify their activities, thereby, improving the level of consumers' satisfaction and even sales revenue (Bilgihan and Nejad 2015, n.p). An example of diversified business is that of a hotel that includes the gym and bar facilities within their premises. The idea of offering multiple amenities enables those on board to receive most of the luxurious items that they might require without having to leave the area (Battisti 2012, n.p). Hotel visitors who love body exercise would easily create time and use the facility indoors without spending extra time locating such a facility in other places within the vicinity. Moreover, those who would want an alcoholic drink will only need to get to the indoor bars and obtain the staff.
Analysis of the Importance of Service Innovation
The review explores the benefits of service innovation in enhancing service delivery, profitability, customer satisfaction, competitiveness, market share, and sustainability.
The fact that an organization improves effectiveness in service delivery through service innovation makes this element an essential step in satisfying consumer needs. The companies are usually on the lookout of how to satisfy their customers, and such a move enables the enterprises to investigate and offer satisfactory services (Bilgihan and Nejad 2015, n.p). Once the consumers are happy through improvements of services; it is easy to retain such people and even increase their visits to the facility, thereby, helping the innovative businesses to generate sufficient revenues and become sustainable by acquiring many loyal buyers.
The possibility of adjusting to the customers' needs and changing behavior with regards to communication and interaction is also critical in retaining and improving competitiveness. Typically, consumers do not want to struggle in finding information (Noorani 2014, p.24). Therefore, they often tend to embrace those firms that make it possible for them to receive business details in the most convenient manner. The achievement of such needs then contributes towards attracting and retaining of customers, thus, enhancing competitiveness.
The ability to make the customers happier through service innovation is also critical to improving profitability, competitiveness, and making the clients satisfied. Notably, the buyers will usually want to obtain services from the innovative firms because they derive a lot of utility from them. In the process, the organizations become more competitive than the rest that might not enable the clients to attain such a high level of satisfaction (Carlborg, Kindström, and Kowalkowski 2014, p.110). The reception of a high number of clients then helps maintain the flow of income since they buy numerous times. Besides, the enterprises increase their market share that enables for additional benefits such as popularity and attraction to the potential investors.
The benefit of sustaining the market share is also of a critical need to every business because it assures the investors of continued sustainability and flow of revenues. The hospitality companies struggle to impress their clients, and the incorporation of service innovation can efficiently help them attract a high number of customers (Sood 2017, p.56). As they grow in fame, such organizations find it easy to expand their businesses to other territories, thereby, increasing their market share.
The improvement of cost-effectiveness through service innovation is of great importance to the owners of the hospitality businesses as it enhances profitability. The minimal expenditure allows for the maximization of profits in companies that further move towards the maximization of shareholders' wealth through additional investments and expansion. Moreover, the achievement of cost-effectiveness through improved processes is critical in conducting and embracing extra quality or service delivery enhancements in an organization (Noorani 2014, p.34). For example, a firm that has cut on the cost of communication and advertisement can efficiently allocate some of the funds in creating and maintaining a research and development department that will facilitate more improvements. Also, they get sufficient monetary resources to train the employees and hire highly skilled personnel who would continuously improve the services to attract and retain more consumers.
The diversification of an organization's activities through service innovation also plays an essential role in keeping the businesses sustainable, profitable, competitive, as well as satisfying to the clients because of the several offers. The fact that a hotel can create its gymnasium and bar facilities helps in providing several services to the customers who are on board. The management will be then likely to collect more revenues because the clients would mostly want to consume the services from the hotel without leaving the compound to seek for such extra items such as gym (Toivonen 2016, p.92). The consumers are also highly likely to return to such premises in the future because they are assured of obtaining most of what they require. In the process, the diversified enterprises end up retaining more customers that enhance their competitiveness, sustainability, and profitability.
Challenges of Service Innovation
The hospitality organizations often face the problem of having to incur costs in the process of service innovation through expenditures on additional inputs. For instance, the expenses might come about if the change creates the need to employ additional resources such as machinery and human resource (Carlborg, Kindström, and Kowalkowski 2014, p.111). A modification of the means of communication to embrace website and social media would usually see the enterprise install computers and subscribe to the internet providers. Therefore, there is often a substantial increase in the costs of operations. The worst of the outcome is when the innovation is of no immediate significant economic benefit to the organization because they do not get to realize revenue upon which to counter the increased costs. An example of such a scenario is when a hotel has to create a social media platform which might only gain popularity in the long-run.
The existence of cross-cultural differences can also prove to be a challenge to the businesses especially the one that has operations in regions with different cultures. For example, a hotel might think of diversifying its accommodation services by including an indoor bar to help attract more customers. However, the strategy might not be useful in some cultures where drinking of alcoholic beverage is not appreciated (Sood 2017, p.45). Notably, a Muslim dominated community might tend to be non-supportive to such business, thus having the management to depend on the visitors from outside such territories solely. Moreover, they risk losing the local customers who cannot withstand the existence of a bar near them. Therefore, the company might be forced to employ such an approach is just selected areas that might also not be cost-effective.
The hospitality businesses further face the risk of failure by implementing a particular service innovation initiative. Typically, the companies incur funds in the process of service innovation by conducting research and employing the necessary resources (Bilgihan and Nejad 2015, n.p). However, the failure to reach the targeted outcome often sees the firms lose money and the time utilized. An example of failure is when an airline that has included private offices within its premises for the travellers to hire as they wait for their flights finds it challenging to have those who use such rooms. At the same time, it can be a failure if a restaurant does not obtain sufficient resources to oversee the full implementation of the creation of a free WIFI facility, thus, abandoning the project after spending substantial monetary resources.
The implementation of a new innovative idea might further be a challenge if the organization has no sufficient skills for a successful implementation. Notably, a medium sized restaurant without the IT department might find it hard to create and maintain a website and active social media platforms without employing professional IT personnel. In such a case, the enterprises might take a long time in hiring the experts who might also take time to understand the operations and the goals of the organization (Bilgihan and Nejad 2015, n.p). Besides, additional time will be required to train the existing employees to enable them to accept and participate in the implementation of the same.
The new service innovative ideas may also lack the supportive technology to oversee their use. The employees might often conceive a plan that can be effective upon a successful implementation (Kosaka and Shirahada 2014, p.123). However, the practicability of such concepts might not be possible especially if they require some technology that may not be in place.
Solutions to the Importance of Service Innovation
The hospitality service providers might overcome the challenge of having to incur costs by ensuring that the innovations are of financial benefits (Noorani 2014, p.23). That way, it will be possible to generate sufficient revenue to help counter the expenses. Moreover, there is the need to allocate some funds towards innovation even when there is no immediate idea of improvement. Such a creation will help avoid a crisis of having to use the available working capital for running the daily operations and at the same time conducting the innovating activities.
Concerning the existence of different cultural beliefs and practices in the regions where an organization might be having its operations, it is crucial for the management to first conduct due diligence (Snyder et al., 2016, p.2403). The process will help ascertain the possibility of a service innovation facilitating the achievement of the desired level of competitiveness, profitability, and customer satisfaction. The process should be done for each independent branch of the firm to help obtain facts for every place. Therefore, the decision to implement the modifications will help maximize the targeted benefits because they will only be employed in the relevant regions without the adverse effects of the culture.
The risk of failure is another major problem that is existent in every industry and might hinder the adoption of a feasible project. A firm should efficiently overcome it to avoid the situation of forgoing profitable business opportunities (Noorani 2014, p.16). First, it is essential to accept the risk and proceed with the project provided that its successful implementation can be of a tremendous financial benefit. However, it is necessary to employ techniques such as the insurance of the related operations to obtain compensation from the relevant insurance company in the case of a loss. Second, the management needs to employ risk reduction techniques such as the employment of experts to help with the innovation process. In such a case, there will be limited chances of having the idea fail.
To overcome the challenge of not having sufficient skills to attend to some of the innovative ideas, the hospitality businesses should ensure that they create all the vital departments and employ experts in such functions (Nieves and Segarra-Ciprés 2015, p.54). At least, the units and the professionals should handle activities of the variety of fields where the firm might want to create an innovative project in the future. That way, it is possible to have the personnel conduct the innovation without having to hire additional experts, except for consultation purposes.
In the case that an organization comes up with an idea without an existing supportive technology, it is imperative that they describe the concept and approach the relevant stakeholders that can help develop the required technology (Noorani 2014, p.15). From there, it is possible to obtain help and carry on with the plan. For instance, the experts could help develop customized software to support the proposed operations.
Service innovation is vital in the hospitality industry given that it enables the participants to find more straightforward and efficient ways of service delivery; adjust to growing customer needs and to change behavior concerning communication and interaction, and to make the consumers happier. Additionally, it enhances competitiveness, sustenance of the current market share, improvement of cost-effectiveness, and diversification of activities. These benefits of service innovation collectively lead towards improving service delivery, profitability, customer satisfaction, competitiveness, market share, and sustainability, thereby, making it an essential aspect of every player in the sector. Nevertheless, the hospitality organizations often face the challenge of having to incur costs, the existence of cross-cultural differences, the risk of failure, lack of sufficient skills, and lack of supportive technology when pursuing service innovation. However, the management of such enterprises employs specific strategies in overcoming such challenges. The administration could ensure that the changes are of financial benefits, carry out an innovation idea that cannot suffer adverse cultural impacts, accept the risks, create all the vital departments to support innovation, and consults with the relevant expert in the case of lack of supportive technology respectively.
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