Strategic Innovation in Hospitality: A Case Study of Hilton Hotels

This report provides a comprehensive analysis of innovation within the hospitality industry, with a specific focus on Hilton Hotels. It begins by defining innovation and exploring its various sources, drawing upon Peter Drucker's seven sources. The report then delves into the importance of innovation for business performance, highlighting its impact on problem-solving, productivity, and market expansion. It evaluates the contributions of innovation to business performance and details the benefits derived from it. Furthermore, the report identifies and analyzes key factors driving innovation in the hospitality sector, including sustainability, customer experience, and competitive advantage. It examines the advantages and disadvantages associated with these factors. The report also explores a range of innovative concepts and approaches implemented in the hospitality industry, such as virtual reality training, eco-friendly practices, and the use of artificial intelligence through chatbots. Finally, the report proposes an innovative concept for the hospitality industry, suggesting the use of augmented reality to assist customers in decision-making and enhance their overall experience, particularly at Hilton Hotels.

Hospitality innovation and
concepts

INTRODUCTION
 Innovation can be simply defined as a process or an idea of innovating something new.
Innovation has brought various kinds of changes in hospitality industry.
 In fact, in hospitality industry adoption of innovative concepts and approaches have
become a necessity as it has increased overall expectations of their customers in terms of
provision of products and services.
 This assignment will lay emphasis upon concept of innovation in hospitality industry and
provide details of Innovation concept and different sources of innovation, analysis of the
factors driving innovation in hospitality industry, innovative concepts and approaches that
have been implemented in the hospitality industry, and pitching of an innovative concept.
 Organizations focused upon in this assignment is Hilton. It is an international hospitality
organization that has their hotels and resorts in approximately 6250 locations.

Innovation concept and different sources
of innovation
 Innovation concept can be defined as a process introducing or implementing new ideas or
methods.
 It can also help a firm in gaining competitive advantage and achieving success.
 There are various sources of innovation that can help an organization in achieving success. Perter
Drucker’s has explained seven sources of innovation, that are:
 Unexpected: One of the most common sources of innovation is an unexpected success or
failure.

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 Incongruity: Many times, firms develop their products and services without actually thinking about
incongruity. Without doing market research organizations cannot identity what their customers
actually want. Development of products without market research can lead a company towards
downfall or failure. But this downfall can be a great source of innovation as it can help the
organization in knowing needs and requirement of their customers in a much better manner.
 Market Structure: Sudden change in market structure can also bring various kinds of opportunities
with then that can help in innovating something new.
 Process need: Most of the innovations or invention is done because of necessity. Necessity of
bringing change within internal or external process of company can lead to development of
innovative solution that can not only helps company in bringing necessary changes within required
process but can also help in innovating something new.

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 Demographics: if demographics changes then it can result in change demand of product and
services because of which new opportunities can emerge for company. Like in hospitality industry,
requirement of 24*7 customer service gave rise to development of application where online website
or application that can be used by customers for booking required services.
 Changing perception: It is one of the most common sources of innovation as change in perception
can become a source of innovation. For example: today customers prefer more environment friendly
hotels. This gave rise to increasing usage of products that uses renewable energy like solar heaters.
 New knowledge: it is one of the best sources that can lead an organization towards success. New
knowledge areas such as artificial intelligence, bio technology etc. are great source of innovation.

Importance of innovation to business
performance
 Innovation is one of the most important factors that can affect overall business performance
in both positive and negative manner.
 It can not only help in increasing success chances of organization, but can also help in
enhancing overall productivity and performance of a firm.
 Focusing upon innovation can also help a firm in expanding their overall business in new
market segment as well. Some of the main reasons or factors that can help in explaining
innovation importance for business performance are as follows: Innovation can help in
identifying innovative or creative ways that can be used for resolving business problems in
an appropriate manner.
 For example Hilton provide virtual reality based training their employees so that they can
understand complex business operations easily. Innovative solutions help in thinking of
creative ideas that can help in resolving any kind of business problem and enhancing
overall performance of organization.

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 Innovation can help in bringing positive changes within overall operations of an
organization due to which overall productivity and performance of company can
increase.
 Innovation can help in development of new technology that can directly boost overall
productivity like automation in machinery has not only helped in reducing requirement
of man force but has also enhanced productivity and accuracy.

Evaluation of contribution of innovation’ to
business performance and benefits that can
gained from it
 Innovation has helped in bringing various kinds of changes within the way in which
business operates and has also helped in enhancing overall performance of firms by
providing different kinds of benefits from it.
 Innovation has helped in making business operations much simpler and advance. One
of the main benefits that innovation has provided is bring changes within business
processes as per the changing market trend and neds and requirement of customers.
 It has not only helped firms in enhancing their overall performance but it has also
brought changes within their current offering as per the changing neds and
requirements of customers.

Factors driving innovation in the
hospitality industry
 Factors driving innovation are the factors that encourage firms and organisation to
innovate in order to sustain their performance and for effective attainment of the organisational
objectives. There are several factors that drive innovation in Hilton and mainly these factors
involve strategic directions of the company or factors that exist in internal and external
environment of the organisation. Concerned with strategic direction for Hilton this involves driving
loyal, profitable guest to property, enhancing guest experience. Other than this, target market and
competitors are also important element to drive innovation in Hilton. Concerned with Hilton target
more than one customer segment, its target market involves middle and senior level professionals
with high income or those belonging to upper class and pursues luxury lifestyle.

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These are certain factors that drive innovation in Hilton Hotel. Other than this, factors driving innovation in hospitality industry involves-
Sustainability
This is one of the most important factors that drive innovation in hospitality industry. Sustainability refers to long term benefits that
organisation can have and innovation provides benefit of sustainability to organisation.
Hospitality experience
This is another important factor driving innovation in hospitality industry. This means that Hilton Hotel is working towards providing its
guest and customers best hospitality experience and with help of innovation hospitality industry can improve customer’s experience in
their hotel.
Competitive advantage
This is another important factor that drives innovation in hospitality industry. This is because hospitality industry is getting more
competitive and firms are competing over their hospitality experience.

Analysis of advantage and disadvantage of factors
driving innovation in hospitality industry
 Every factor that drive innovation has few positive elements that provide advantage
associated with innovation. In above discussed factors that drive innovation involve sustainability,
experience and competitive advantage of the organisation. Concerned with sustainability advantage
are long term benefits and position that Hilton Hotel will get and also sustainable driven innovation
can be expensive initially but long terms financial impact of these practices and services are positive
for Hilton Hotel. However, success of such innovation mainly depends on their uniqueness and their
inimitability. Concerned with innovation driven on the basis of hospitality experience, in relation with
this it can contribute in increasing customers and their loyalty for Hilton Hotel but as hospitality
industry is getting more conscious about customer experience, such innovation cannot provide long
term success.

Different innovative concepts and approaches that
have been implemented in the hospitality industry
 There are various kinds of innovative concepts that has helped organization in providing
unique and different products and services to customers. Some of the most unique and
innovative concepts and approaches that have been applied in hospitality industry are as
follows:
 Virtual reality training programs is one of the most innovative concepts that have been
implemented in this industry. Nowadays many hotels are focusing upon using VR headsets for
different purposes like providing a virtual tour to customers or provide training to employees
though VR headsets.
 For example, Hilton is one of those hotels that has adopted this technology. They provide
virtual training to their employees though VR headsets. So that they can understand
physicality and complexity of hotel operations in a much better and appropriate manner.
Marriott has focused upon adapting this virtual reality concept. They provide their customers
with a virtual trip of hotel though room service with the help of VR headsets.