Service Innovation in Hospitality Industry

By shifting focus from „Goods-Dominant Logic? to „Service-Dominant Logic? , Service Science presents a new perspective on value creation and service experience. In this new perspective, value is co-created by various roles, experienced and evaluated by customers. However, the problem is how to implement theories in a specific industry. Focusing on hotel industry, this paper aims to illustrate how service evolves with the development of technology and theory based on the case study of InfoQuest, which is an IT company mainly providing SaberKnot.

InfoQuest redefines several economic roles (hotels, IT system provider, local businesses and customers) and relationships among them (from a linear model to a netlike model) where it injects Hotel Industry with new vitality. Both competitive advantages and potential problems that might arise from the service innovation are subsequently discussed. At last, a further analysis is made on the China market in order to show the possibility of that business entering into China. I Acknowledgements Acknowledgements are given to all the people who supported me with the dissertation.

First, I am deeply indebted to my supervisors Mr. Lars Haglund and Mr. Erik Sundstro for their m, stimulating suggestions and helpful cooperation in the time of writing this dissertation. I should also express my gratitude to InfoQuest where I worked during the time of writing this thesis. Special thanks should be made to Mr. Ronald U. Telson, Mr. Christer Hellholm, Ms. Lena Bryske, and other colleagues who provided a lot of useful information and valuable ideas and suggestions. Most importantly, none of this would have been possible without the love and patience of my family and my friends.

For many of travelers in their vacation, visit or business trip, hotels are places they stay when out of home. As a mature industry, hotels industry now includes all types of lodging from luxurious 5-star hotels to youth hostels. Besides room services, most hotels also offer a variety of accessorial services, including but not limited to food, beverage, laundry and valet services. Additionally, the high level hotels can offer conference rooms, swimming pools, beauty salons, fitness centers and many other facilities to both business and leisure travelers.

Information technology (IT) is defined by the Information Technology Association of America (ITAA) as “the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware”. Compared to hotel industry, Information technology came out rather recently, but has developed into one of the biggest industries with influences to most other industries. In hotel industry, the possibility to supply qualified IT services is regarded as one of the prerequisites for, at least, top level hotels.

Service Science is an emerging discipline that focuses on fundamental science, models, theories and applications to drive innovation, competition, and quality of life through service(s) (Bitner, Brown, Goul and Urban, 2006). Through shifting from Goods-Dominant Logic to Service-Dominant Logic, Service Science focuses on “operant resources” rather than -1- “operand resources”, which implies all economies are service economies. It maintains that services (including goods and services) co-created by stakeholders and customers can only be experienced and evaluated by customers. . 2 Objectives and structure InfoQuest Group AB (InfoQuest) is a company specializes in the IT segment with the purpose to bring its customers and partners innovative solutions. With the help of Information Technology, the company introduces a service innovation into hotel industry, which is the gravity of the research. The service innovation redefines several economic roles (hotels, IT system provider, local businesses and customers) and relationships among them (from a linear model to a netlike model).

This thesis aims to examine (1) the competitive advantages and potential problems that might be brought by this service innovation and (2) the possibility to transplant such the new business model created by InfoQuest in Europe to China market, taking into account service theory. The structure of the dissertation can be described as follow: ? Service literature review ? which first provides a summary of Service Science and service innovation and then compares Goods-Dominant Logic with Service-Dominant Logic; ? Corporation description which introduces InfoQuest and its main product SaberKnot, in particular its technical principles and commercial principles; ? Service innovation in hotel industry ? Roles redefinition; ? Value co-creation; ? Competitive advantages; ? Potential problems; ? Market opportunity analysis in China ? China market introduction; ? Typical local businesses; ? Opportunities; -2- ? Difficulties and risks; ? Conclusion. 1. 3 Methodology This thesis focuses on research of service innovation in hotel industry. In order to carry out an in-depth investigation, this thesis adopts case study as the research design.

A company named InfoQuest and its flagship product SaberKnot show us a possible way to innovate service in hotel industry, which is the case of this thesis. I choose InfoQuest as the case is because its new netlike business model involves both the shifting from Goods-Dominant Logic to Service-Dominant Logic and service innovation in hotel industry, which can confirm and supplement existed theory. ? Data collection The research methods used in this thesis mainly include documents review, secondary analysis, participant observation, official statistics, etc.

Bryman and Bell (2007) pointed out the importance of literature review, most obvious reason of which is to know what is already known in the research area. From academic literature review, we can see advantages in the shifting from Goods-Dominant Logic to Service-Dominant Logic and theories of service innovation. There are quite a lot researches related to service theory and service innovation, so my study starts from a literature review to build up a theoretical basis, which covers the fields of service definition, Service-Dominant Logic, Goods-Dominant Logic, service innovation, etc.

Literature resources include academic papers, books, and web pages, which provide me with existing research achievements in this field. However, most of these literatures do not focus on service innovation in a specific industry, and no primary data can be acquired from literature review. According to Bryman and Bell (2007), “the basic case study entails the detailed and intensive analysis of single case. ” From their opinion, a case can be an organization, a location, a person, or an event, etc. They also mentioned that qualitative methods, such as participant observation and unstructured interviewing, are very helpful methods in case study.

The information of InfoQuest and SaberKnot is collected from several channels, including internal documents, participant observation, communication with colleagues, etc. In addition, the raw -3- materials used in China market analysis are mainly collected from official statistics. Most tables are quoted from website of National Tourism Administration of The People? s China, and website of National Bureau of Statistics of China. Other statistics and policies are referred to websites of local governments or organizations. Some information from companies? ebsites is also used to make competitor analysis.

According to Vargo and Lusch (2007), “the value network member that is the prime integrator is in a stronger competitive position”. In our case, no prime “integrator” exists, but it does need a prime or core player who leads members in the network to go forward. The dominant position makes core player to own more influence in the network, which is the reason why participants contend for it. It is not a big issue if everything goes well in the network, but the threat is how to deal with the faults, if any, emerging in this loosely organized system, which will become crucial.

For example, if a shop in the network being complained by customers several times, who should take the responsibility to decide whether to keep the shop any longer for its own-remedy or to kick it out immediately? In addition, other issues following the service innovation include how much power the prime player is supposed to possess, how to supervise the use of power, etc. Among the four types of participants, customers are not suitable to act as prime player in terms of leading power, although being

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