Key issues in current hotel business innovation and examples

Position of the problem

Under the combined effects of national policy support, local economic drive, and market demand, my country's hotel industry has developed rapidly. By the end of 2011, there were more than 13,000 star-rated hotels and 1.4749 million guest rooms in the country. Both indicators have increased nearly 100 times compared with 1978. With the rapid development of the modern hotel industry, the hotel market is gradually becoming "oversupplied" and competition in the hotel industry is becoming increasingly fierce. Fierce competition in the hotel industry has accelerated the transformation and innovation of hotel formats. Entering the 21st century, under the simultaneous influence of market demand and market competition, my country's hotel industry has entered a period of rapid development of multiple formats. Modern hotels are gradually transforming from single formats to multiple formats. New hotel formats such as economy hotels, business hotels, theme hotels, boutique hotels, green hotels, conference hotels, property hotels, timeshare hotels, car hotels, hotel apartments, etc. are constantly emerging. And the number and scale are expanding rapidly, and the hotel business formats are becoming increasingly diversified.

On the other hand, although my country's hotel industry has initially formed a diversified business development pattern, there are still problems such as product homogeneity, backward business methods, insufficient market development, and weak competitiveness, which seriously restrict its health and development. sustainable development. Therefore, studying the hotel business innovation models and paths has important practical significance and is conducive to promoting the transformation, upgrading and sustainable development of hotels in our country.

Research Overview

Current domestic academic research on hotel formats mainly focuses on individual research on a certain hotel format. For example, for research results on budget hotels, a total of 1,001 documents were retrieved by searching the CNKI journal database; for research results on theme hotels, a total of 187 documents were retrieved by searching the CNKI journal database. However, there are few relevant results that directly study hotel formats. Searching CNKI's journal database using the keyword combination of "hotel" + "business format" or "hotel" + "business format" only retrieved more than ten relevant documents, among which documents related to the theoretical research on the hotel business format. There are only 6 articles.

Among them, Chen Yanying and Xie Chaowu (2006) analyzed the feasibility of strategic alliance between the hotel industry and the property management industry, and proposed the form of strategic alliance between the two industries and the innovative development of business formats it brings. Wang Jianping (2007) reviewed the development history of China's hotel formats and classified hotel formats based on different classification standards such as customer source market, grade, service function, and tourist accommodation facilities. Shen Hejiang and Feng Dongming (2007) studied the connotation of mobile restaurants, a new catering business, discussed the business types, characteristics, flow patterns and flow motivations of "mobile restaurants", and proposed how to establish a guarantee mechanism for the scientific development of rural "mobile restaurants" . Chu Xiaoheng (2009) believes that the hotel industry format is the sum of hotel investors and operators' strategies for specific business locations; the hotel industry format elements include five main dimensions, namely, hotel product portfolio form, hotel venue spatial form, hotel organizational form, The gathering pattern of hotels and the characteristic form of hotel products themselves. Gu Huimin (2011), on the basis of introducing the characteristics of domestic and foreign specialty hotels, put forward suggestions for the construction of specialty hotels from three aspects: elements, positioning, and strategic principles. In terms of books and literature, Gu Huimin (2011) conducted a systematic theoretical study on the hotel industry in "The Theory and Practice of New Hotel Industry Forms" and proposed the connotation and characteristics of the new hotel industry form as well as the dynamic system and development rules of the industry development.

To sum up, there is a serious lack of research on hotel industry innovation in China, which is mainly reflected in the fact that the research results are relatively scattered and do not form a systematic system; most of the research remains on shallow-level descriptions of phenomena and explanations of causes, and There is a lack of theoretical explanation of the underlying causes of the phenomenon, and the research results are not universal and applicable. Based on the shortcomings of domestic academic research on hotel formats, this article inherits the results of previous research and comprehensively constructs a hotel format innovation model based on a systemic perspective, in order to enrich and improve hotel strategic management theory and provide a reference for scientific decision-making by Chinese hotel companies.

The connotation of hotel business format innovation

The term "business format" originally originated in Japan and is the abbreviation of the business form of distribution enterprises. Scholars at home and abroad have defined business formats from different disciplinary perspectives (see Table 1), but a unified authoritative definition has not yet been formed. Based on the research results of domestic and foreign scholars, and combined with the service characteristics of hotels, this article defines the concept of hotel business formats as: dynamically selecting hotels based on customers' basic and additional needs for accommodation, catering, business, conferences, entertainment, leisure, etc. Product form, organizational form, business mode, sales form, service features and other business methods provide a standardized service form for sales and services.

Hotel business format innovation refers to the use of new concepts, new ideas, new methods, new technologies, etc. by the hotel to create new combinations of production factors, update and improve the hotel's product form, business form, organizational form, and sales form. etc. to form new economic capabilities. The connotation of hotel format innovation includes the following three points: First, the means of hotel format innovation is to achieve the recombination of production factors through updating, changing, and creating new concepts, new ideas, new methods, new technologies, etc., to influence and change Hotel business.

Second, the content of hotel business format innovation is very extensive, mainly involving five aspects: product innovation, business innovation, market innovation, supply chain innovation and organizational innovation, and each aspect involves a number of specific performance elements, thus forming a systematic hotel business format. Innovative content system. Third, the purpose of hotel format innovation is to form new production capabilities for hotels, pursue value maximization, and gain comparative competitive advantage.

Analysis of motivations for hotel industry innovation

In the 21st century, under the dual effects of market competition and market demand, modern hotel industry continues to innovate and shows a diversified development trend.

(1) Promoted by market competition

The business innovation of hotels is closely related to the market competition environment. Hotel companies mainly face competition from competitors within the existing industry, competition from potential competitors, competition from substitute competitors, etc. In terms of competitors in the industry, due to the low barriers to hotel technology and product differentiation, competitors in the industry tend to compete on the same level, and price wars have become a common means of market competition. In terms of potential competitors, under the background of global economic integration, foreign hotels have accelerated their entry into the Chinese market; traditional industries have diversified and expanded, and diversified social capital has entered the emerging hotel industry. Potential competitors affect the industry market competition pattern. In terms of replacing competitors, as the functions of modern hotels expand and extend, hotels of different formats compete with each other for customers; social catering, entertainment companies, luxury cruises and other companies with the same or similar functional products divert hotel customers. For general industries, the greater the intensity of industry competition, the industry's investment rate of return will decline until it reaches the lowest rate of return, leading some companies to exit the industry. However, the hotel industry is an industry with "low entry barriers and high exit barriers". Once you invest in a hotel company, it will be difficult to convert the hotel to other uses unless it is sold. And when the overall operating performance of the industry is poor, it is difficult to sell the hotel. It is very difficult, which leads to a high exit threshold for hotel companies. This characteristic determines that the greater the competition intensity in the hotel market, the greater the motivation for hotel format innovation. Because no hotel wants to be defeated or merged by other competitors in the market competition, when the exit cost is very high, it can only gain comparative competitive advantage through business innovation. (2) Market demand drives

In a market economy, customers select and eliminate producers through their own selection and purchase of products. As tourists become increasingly rich in consumption experience and their consumption concepts continue to improve, they have put forward higher requirements for the quality and quality of hotel products. Tourists are no longer satisfied with the functional needs provided by standardized and standardized hotel products and services, but pursue diversified, personalized and themed travel needs. Like any economic entity, it is the nature of hotels to pursue profits. New market opportunities are a source of profit. Changes in market demand provide hotels with new market opportunities and new ideas for product development, guiding hotels to innovate hotel formats based on market demand.

Construction of the hotel industry innovation model

In 1912, the Austrian-American economist Joseph Alois Schumpeter introduced "innovation" into economics in his representative work " "Economic Development Theory" gives "innovation" an economic connotation and lays the foundation for modern innovation theory. After that, Schumpeter systematically summarized the ideas of innovation theory in two works, "Business Cycle" (1939) and "Capitalism, Socialism and Democracy" (1942), and put forward a comprehensive theory of innovation. Regarding the concept of "innovation", Schumpeter believed that innovation is the establishment of a new production function, a new combination of production factors by entrepreneurs, that is, the introduction of a new combination of production factors and production conditions that has never been seen before into production. system, thereby forming a new production capacity to obtain potential profits. Regarding the content of "innovation", Schumpeter generally summarized five types of innovation: adopting a new product or a new feature of a product; adopting a new production method; opening up a new market; grabbing or controlling raw materials or A new source of supply for semi-manufactured goods; a new organization for any kind of industry.

Based on Schumpeter’s innovation theory and combined with the characteristics of hotel companies, five key elements of hotel business innovation can be extracted, namely product innovation, business innovation, market innovation, supply chain innovation and organizational innovation. These five elements are the most basic and important factors for the innovative development of hotel business formats. The five basic elements of the hotel format reflect the basic characteristics of the hotel format, but they cannot explain the individual characteristics of each hotel format. Therefore, it is necessary to refine the specific manifestation carriers of the basic elements of the hotel business, that is, the dimensions of the elements (Li Fei, 2006). According to the individual characteristics of the hotel format and combined with the hotel format innovation practice, 11 dimensions of hotel format innovation elements were comprehensively summarized (see Table 2).

The process of hotel format innovation is the dynamic combination process of hotel format innovation elements. By arranging the 11 main dimensions of hotel format elements vertically, a roadmap for hotel format innovation can be drawn (see Figure 1). From the perspective of specific dimensions, there are mainly 11 aspects of innovation, and each aspect has several performance elements. This forms a relatively complete map of hotel industry innovation. In the process of business innovation, hotels can make decisions by filling in this map by vertically connecting the 11 dimensions of the relevant hotel business formats with straight lines.

In the road map, changing any one of the 11 dimensions will change the original hotel format, create a new hotel format, or improve the old hotel format.

Practical exploration of "Jinjiang Inn" business format innovation

In 1997, Jinjiang Inn pioneered the first economy hotel - Jinjiang Inn Shanghai Jinjiang Paradise Store. After fifteen years of development, Jinjiang Inn has grown into one of the largest economic hotel brands in China. Jinjiang Inn has made useful explorations in innovative economic hotel formats.

In terms of product innovation, first of all, Jinjiang Inn launched the concept of economical hotel products for the first time in China, presenting consumers with a very high level of economical prices, mid-range facilities, high-quality services and a clean and hygienic environment. Luxury hotel. The product features of the budget hotel format accurately capture the needs of consumer groups between mid- and high-star hotel consumer groups and low-end social hotel consumer groups, thus quickly winning market recognition. While expanding the Jinjiang Inn brand, Jinjiang Inn innovatively developed the new brand "Bestay Express" to satisfy the 100-yuan consumer group (Ding Wenjing, 2011). Secondly, Jinjiang Inn positions the hotel brand image as an economical hotel product that "taste natural health and enjoy simple comfort", providing guests with professional, value-for-money, simple, safe and comfortable products and services. Thirdly, Jinjiang Inn innovates its product form and pursues a quiet and elegant atmosphere and simple and exquisite layout based on the original economic hotel products. For example, the color tone of the guest rooms is warmer, and the size and height of the coffee table in the standard room are improved to enhance the quality of the hotel. The "comfortable sleep plan" emphasizes warm, breathable, soft and comfortable bedding; the use of environmentally friendly floors and paints; white walls, white bedding and light yellow furniture give people a spotless visual effect. Continuous product innovation adapts to changes in market demand and reflects Jinjiang Inn's unique product personality, thus winning market recognition.

In terms of business innovation, Jinjiang Inn first implements the "direct operation + franchise" business model. In its initial stage from 1997 to 1999, Jinjiang Inn implemented a direct operation model and only developed 5 chain stores in two years; after 2000, Jinjiang Inn introduced the concept of chain stores and expanded its business model from "self-operated" to "franchised" and "entrusted management"; after 2007, the number of Jinjiang Inn franchise stores accounted for more than 60% of all stores (Xie Shili, Mao Liya, 2010). The company's expansion speed accelerated, and its market network radiated from Shanghai to the "Yangtze River Delta" and then gradually expanded to the whole country. Secondly, Jinjiang Inn innovated information management methods and developed a PMS system to create a data management center that can support multi-brand business and its stores; it developed an information network system to manage the company's marketing, sales, business, finance, personnel, procurement, and engineering. and implement comprehensive network management for the daily operation and management of each chain store (Guilin and Chen Jian, 2009); built and launched the "Jinjiang Inn" e-commerce with Chinese, English, French, and Japanese languages ??and real-time booking functions website.

In terms of market innovation, on the one hand, in terms of regional market expansion, Jinjiang Inn has experienced four stages of local expansion, regional expansion, cross-regional national expansion, and international expansion. From 1997 to 1999, Jinjiang Star's market area was limited to Shanghai, with 5 stores; from 2000 to 2003, Jinjiang Star's market area gradually radiated to the "Yangtze River Delta" region, operating in Shanghai, Suzhou, Ningbo, Wuxi and other places There are more than 10 stores (An Shuwei and Zhang Jinjin, 2011); since 2003, Jinjiang Inn has fully expanded to the national market, and the number of hotels under the company has grown to 756, covering 175 cities in 31 provinces and cities. In 2011, Jinjiang Inn began to try international expansion, entering the Philippine and French markets through brand export and brand alliance respectively, kicking off the international expansion of China's budget hotels. On the other hand, based on in-depth market segmentation, Jinjiang Inn targets the high-end, mid-range and low-end market needs of economic hotel consumer groups, and through innovative diversified brands, it has formed a complete series of high, medium and low-end economic hotel brands to achieve Comprehensive coverage of the budget hotel market.

In terms of supply chain innovation, Jinjiang Inn and the American Del Group jointly established Jinjiang Del Interactive Co., Ltd., introduced the advanced GenaRes reservation system, and developed the Central Reservation System (CRS); in cooperation with IBM, they established A large comprehensive call center with 250 seats, refined operation management, standardized services and sales processes; it cooperates with professional travel networks such as Ctrip and E-Long to carry out extensive online marketing and online sales. In terms of organizational innovation, Jinjiang Inn implements a divisional organizational structure at the headquarters level and implements the "1111" management structure, which means a strong headquarters, 10 regional companies, 100 regions, and 1,000 chain stores. At the store level, we innovate and flatten the organizational structure. The organizational structure of Jinjiang Inn stores only has the operation department and the management department; the management level is reduced, and the department only has two levels: manager and employee. The traditional supervisor position is removed, and the manager directly faces the grassroots employees; the position is combined and one person is in charge. Across multiple positions, human capital is greatly saved.

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