MNG10720: Literature Review of Innovation in Tourism & Hospitality

This literature review explores the impact of innovation on the tourism and hospitality industries, with a focus on Australia and the disruptive influence of Airbnb. It highlights how innovation, driven by emerging business models and technological advancements, is transforming service delivery, ma...Read More

Innovation in Tourism and Hospitality Industries1
Innovation in Tourism and Hospitality Industries
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INNOVATION IN TOURISM AND HOSPITALITY INDUSTRIES
A. Background
Beside Australia tourism has a critical role in developing most economies around the world.
Therefore developing this sector goes beyond the mere service to the clients; it is also about
creating an environment of innovation to make their services better and preferable. It is of utmost
importance to know how innovation has impacted on the performance of this sensitive sector in
Australia.
The business models alongside innovative technologies have all helped in transforming the
sector. Innovation has brought in new ways of operation. Such items include timing,
organization, and placement of both collective and individual processes that relate to clients.
Research on tourism and hospitality industry has changed demarcation in perspective from the
generic perspective (Coldwell, 2017). From this concept, it is important to note that such form of
service innovation should not be confused with product innovation. In the same perspective, we
shall consider the impact the Airbnb on the hospitality industry (as the pillar of change in tourism
and hospitality in Australia).
Within this research paper, we shall focus on Airbnb’s modernization level in the hospitality
and traveling field. According to Airbnb’s concept of operation, travelers are in a position to
access several hospitality and hotel agencies thus, giving travellers a lot of housing options as
established by Guttentag, (2016, pg.1200). Unlike the older system of service delivery in the
hospitality field, Airbnb (an online platform) ensures that travellers book their own choices of
housing including castles, flats, and even villas in their stay destinations. It is, thus, evident that
the advent of Airbnb has changed the travelling habits of most people. Such is because the

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process of booking hotel services and housing is more luxurious with Airbnb. In this case, we
shall use Airbnb as a case study to showcase the impacts of innovation in hospitality and tourism
industries particularly in Australia as illuminated by Aznar, (2017, pg.150).
B. Significance

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Smits and Smits (2015) explain how hospitality in Australia consists of small unbranded
hotels which mostly lack ranking in any way. They lack target when it comes to both
domestic and international tourism. Little is done to make them competitive in the tourism
sector which requires high levels of innovation. The competition is high, and therefore these
small business hotels need to innovate and become attractive tourist destination hubs.
Much of the research was needed to address how hospitality in the tourism industry is
adapting to changing trends of the world. Such changes as social media, competition,
business synergies, environmental changes and world economy have influenced the decision
made by business communities around the world and tourism is not an exception. This is
according to World Economic Forum (2015) which establishes the travel and tourism
competitive report.
This research activity considers several issues to discuss the aspect of innovation
introduced herein. Such problems include emerging business models, integrated and novel
marketing approaches, talent and customer management, distribution channels, service
delivery, and discovery tools. With Airbnb as an online co-innovation community, clients are
in a position to discuss, share, and have their ideas advanced. The advent of the online
environment does not give companies a source of innovation but also ensures that service
providers continue being innovative as well as redesign the services they provide. Impact
Analysis Report, (2015) focuses on the impact of the Airbnb to the lodging industry and
economy in New York City. With Airbnb, clients have the chance to access an array of house
locations, experience local culture, access household amenities, and get services at low costs.
One of the ways through which the hospitality industry has benefited from travellers is
through potential bookings. On the contrary, the ancient method of booking is slowly being
changed by a new, better concept thanks to Airbnb. Also, the aspect of reduced travelling and
booking prices gives Airbnb an edge over the traditional idea of booking. Apart from the
reduced costs, Airbnb has also introduced a range of houses for reservation. Such houses are
villas, apartments, and castles all of which offer comfortability at prices that are lower than
before as reported in Hospitality Ireland (2016).

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C. Scope

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The research will seek to study how hospitality sector in Australia is responsive to the
changing trends in the tourism industry. It will also target the client service and how their needs
and expectations are fulfilled using those innovative responses to those trends.
This research paper will conduct the study on how hospitality and other tourism stakeholders
have integrated innovation to capture a larger share of the market and also to remain relevant in
the industry where competition is high. The research will concentrate on the larger part of
Sydney where it intends to collect information from more than 1000 respondents in the tourism
industry. The research was conducted during pick season of tourists in Sydney. This period was
best for soliciting anticipated response and observations from the participants.
A. Objectives and Problem Statement
This paper aims at establishing the key innovativeness used in the tourism industry in Sydney
to spur growth and competitiveness. It seeds to explore the range of changes in the industry and
the responsive mechanism that need to be adopted by tourism and hospitality sector. Though the
industry is facing different challenges especially in global market changes, the study explains the
issues in the light of how they are adapted to provide a conducive environment for their growth
prospects.
The main objective of this study is to establish the role of innovation in tourism and
hospitality industry in Australia a case study of Airbnb.
In particular, this study seeks to:
1. Demonstrate (with Airbnb as the case study) how innovation has helped in easing service
delivery in the hospitality industry.
2. Determine why travellers are more comfortable with using the services provided by
Airbnb.
3. To establish how hospitality sector applies innovation in the services delivery.
4. Examine how Airbnb has affected tourism industry in Sydney.

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Reference
Aznar, J., Sayeras, J., Rocafort, A. and Galiana, J. (2017). The irruption of AirBNB and its
effects on hotels' profitability: An analysis of Barcelona's hotel sector. Intangible
Capital, 13(1), p.147.
Ryerson University. (2017). Why tourists choose Airbnb over hotels. [online] Available at
http://www.ryerson.ca/news-events/news/2016/10/why-tourists-choose-airbnb-over-
hotels/ [Accessed 23 April. 2018]
Net, H. (2017). The Impact of Airbnb on Hotel and Hospitality Industry | By Ahmed Mahmoud –
Hospitality Net. [online] Hospitality Net. Available at:
https://www.hospitalitynet.org/opinion/4074708.html [Accessed 23 April. 2018]
Quattrone, G. et al. (2016) Who Benefits from the “Sharing” Economy of Airbnb? International
World Wide Web Conference Committee.
Turner, R. (2016). Travel & Tourism Economic impact 2015 the Caribbean. [online] wttc.org.
Available at: https://www.wttc.org/-/media/files/reports/economic%20impact
%20research/regional%202015/caribbean2015.pdf [Accessed 23 April. 2018]
Ireland, H. (2016). National Hospitality Conference 2016 Underway In Dublin | Hospitality
Ireland. [online] Hospitality Ireland. Available at:
https://www.hospitalityireland.com/national-hospitality-conference-2016-underway-
dublin/34554 [Accessed 16 May 2018].
Levendis, J. and Dicle, M. (2016). The Economic Impact of Airbnb on New Orleans. [online]
Available at
https://www.airbnbaction.com/wp-content/uploads/2016/10/Final_rbtn_economic_impact
_study-2016.pdf [Accessed 16 May 2018]
Marin, M. (2015) HB on the Scene. Hotel Business 24(7), pp. 11-12.
Coyle, D. and Yeung, T. (2015) Understanding AirBnB in Fourteen European cities. [ONLINE]
Available at https://www.tse-fr.eu/sites/default/files/TSE/documents/ChaireJJL/
PolicyPapers/
2016_30_12_pp_understanding_airbnb_in_14_european_cities_coyle_yeung_v.3.1.pdf
[Accessed 16 May 2018]
Smits, R. and Smits, R. (2015). Overview of the Australian Hospitality Sector | AHS Advisory.
[online] Ahsadvisory.com.au. Available at:
http://www.ahsadvisory.com.au/articles/australia-hospitality-sector-overview [Accessed
16 May 2018].
Hanyc.org. (2015). Airbnb and Impacts on the New York City Lodging Market and Economy.
[online] Available at: http://www.hanyc.org/wp-content/uploads/2015/10/HVS-Impact-
Study-FINAL-Airbnb-and-the-NYC-Lodging-Market-10-27-15-copy.pdf [Accessed 16
May 2018].
World Economic Forum (2015). The Travel & Tourism Competitiveness Report 2015.
Zervas, G., Proserpio, D., and Byers, J.W., (2014).The rise of the sharing economy: Estimating
the impact of airbnb on the hotel industry. Journal of marketing research.

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D. Appendices
1. The figure below shows the Number of Airbnb users as at 2012
Source: Airbnb Company; RJ Metrics