Innovation – defined as the process of turning a novel idea into something tangible that can be utilised and put into practice – is a key driver of competitive advantages in hospitality and tourism. By embracing innovation, businesses in this industry can attract customers, boost their profits and carve out a long-term niche in a vibrant yet unstable market landscape.
“The quantity and quality of relevant innovation research are, therefore, increasing”, the researchers point out. Topics have ranged from technology innovation to employee innovation and sustainability innovation. However, most relevant studies have focused on the outcomes rather than the process of innovation. “The innovation process remains fairly opaque”, say the researchers. “It is often referred to as a ‘black box’.”
This is certainly true for small to medium-sized enterprises (SMEs), which represent the overwhelming majority of hospitality and tourism businesses worldwide. Innovative products and processes can help boost SMEs’ profits and thereby support the whole development of the industry – a vital mission as the hospitality industry continues to find its feet after COVID-19. Yet we still know too little about how these SMEs engage in innovation.
“The innovation process of small- and medium-sized hotels is not necessarily analogous to that of large or multinational hotels”, the researchers warn. The management of small firms may be unsupportive of innovation due to risk aversion and resource constraints, and the employees of such firms tend to be similarly conservative. How can these barriers to innovation be overcome for hospitality SMEs?
The answer may lie in design-driven innovation (DDI) – an approach to developing new products or services that places a strong emphasis on understanding and meeting the needs of users through thoughtful design. At the core of DDI is design thinking, a human-centred problem-solving method that prioritises customers’ needs. “As personal experience lies at the heart of tourism and hospitality”, note the researchers, “DDI may be an attractive option for myriad hospitality firms”.
This approach may be particularly well suited to boutique hotels (BHs), which are small to medium-sized hotels that offer a high level of service. “These establishments differentiate themselves from traditional chain hotels”, say the authors, “by focusing on unique and immersive guest experiences that are grounded in thoughtful design and aesthetics”. Therefore, this sector could offer valuable opportunities to implement DDI.
Collaboration and networking are crucial to the success of innovation in general and DDI in particular. “Firms seeking to realise DDI must establish open-ended social networks whose actors may include technical experts and elites in the sociocultural domain”, the authors tell us. However, the processes involved remain poorly understood. “The cornerstone of this type of innovation – the dynamic of design discourse – is still seen as ‘invisible and magical’”, the researchers note.
To gain much-needed new insights into how hospitality and tourism SMEs innovate, the authors created a qualitative multi-case research design focusing on three Chinese BHs. “Answering a call to scrutinise SMEs’ innovative practices in the hospitality and tourism industry”, the authors explain, “this study attempted to unravel social networks among primary BH actors”. They also mapped how such networks interact across stages of innovation, focusing on a particular system of innovation: DDI.
After a rigorous 3-month pilot study, the researchers selected three design-driven innovative BHs for analysis. They were all based in mainland China; had high guest ratings and exceptional performance; were of a small scale (i.e. no more than 150 rooms/suites); and were either independent or part of a small group. “Che’fle Canal Hotel was reconstructed from a historical silk warehouse”, the researchers report, “and the Scholars Hotel Pingjiangfu was renovated from a former Suzhou garden”. The third hotel, Heduli Paddy Hotel, had a similarly fascinating history, having been restored from an unused village school in the countryside.
Data were collected for analysis from a variety of sources, including webpages on Ctrip, China’s most popular online travel agency; participant observation; and semi-structured interviews. Following the secondary data collection, the participant observation happened in two stages. “First, it was necessary to experience each hotel as a customer”, the researchers say. “Second, [we] toured each hotel alongside a manager”. Finally, they interviewed 12 key actors in the innovation networks of the three hotels.
The researchers’ analysis shed new light on how the patterns and dynamics of a particular social network – the executive–interpreter network – contribute to innovation in small and medium-sized hotels. The executive–interpreter network is the set of close relationships between executives (such as hotel owners and managers) and interpreters (individuals who help to translate innovative ideas into tangible products and services).
“Innovation firms can benefit from understanding the dynamics of these elements during network transformation”, the authors point out. “This research provides guidance for SMEs keen to become more competent in the tourism and hospitality market through innovation”. Crucially, hotel owners, general managers and other executives must recognise the benefits of social networking for innovation purposes. They should also be skilled in managing network dynamics at different stages of innovation.
“To ensure success in this regard”, the researchers say, “executives must leverage their resources and interpreters well, develop flexible ties with interpreters and deftly balance influential factors throughout”. Meanwhile, interpreters should realise that when supporting innovative ideas, “effective social networking with firms engenders a win–win situation from which both sides can profit in the long run.”
Fruitful innovation can enhance the customer experience and boost hotels’ profits and competitive advantages. Yet smaller hospitality and tourism firms continue to face barriers to innovation, due to limited practical understanding of this process. By unravelling the innovation processes and network dynamics of three boutique hotels – a sector “that is currently outperforming general hotel trading and represents an emerging segment within hospitality” – the researchers offer invaluable guidance for SMEs on innovating more effectively through a design-driven approach. Indeed, say the researchers, “the idea of DDI presents an opportunity to reframe the innovation process and serve as an alternative to conventional hotel practices”. Drawn from unique Chinese hotel enterprises, their findings also shed much-needed new light on networking and collaboration for value cocreation in tourism and hospitality against an Eastern sociocultural background.
Li, Mimi, Xu, Wenqing, Liu, Weiwei, and Cao, Huiyi. (2024). Networking for Innovation Dynamics: A Design-Driven Approach in the Hospitality Industry. International Journal of Contemporary Hospitality Management, Vol. 36, No. 2, pp. 632-660.
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