Innovation & Technology

A Shift in Service Paradigm

• 7 mins read
Share link on Facebook
Share link on LinkedIn
Share link via Email
Copy link

The hotel industry has been following a “one-size-fits-all” model for too long. New models are now emerging

The hotel and tourism industry has for too long been relying on a fixed way of doing things — so fixed that customers need to compromise their level of comfort to fit to the hotel’s own needs. CUHK Business School is resolved to lead the industry in making some drastic changes that put the customer’s needs first and foremost.

As consumers’ needs become more and more diverse, it is getting increasingly obvious that the hotel and tourism industry’s traditional “one-model-fits-all” star-rating system is getting outdated. Creating niche and customized services for tourists is the key that will drive innovation in the industry in 2014 and beyond. According to Prof. Denis Wang, Director of the School, the traditional “star system” adopted by hotels around the world is based on tourists’ social economic status.Increasingly, tourists care more about “functions” when they travel.

“Human needs are becoming more and more sophisticated and diverse, we need to come up with innovative and creative ways to satisfy those needs, which are not necessarily bound by social economic classes,” he says. “When you travel, what do you actually look for? This is the question we need to ask.”

To help practitioners in the hospitality and real estate industries in China and Hong Kong to become more competitive through innovation, the School of Hotel and Tourism Management at the CUHK Business School has been forging close collaborations with industries working on two big themes: function-based hotels which better serve human needs and the ‘China Wallet’ strategy.

Serving Human Needs

Prof. Wang cites a project that his school and a hotel developer have recently collaborated on as an example of a creative way to break the old star-based paradigm. The project aimed to renovate a three-star hotel near the Shanghai railway station to make it an attraction among the transient travelers passing through the area.

The key, he says, is to leverage on the strategic location of the hotel and the high traffic flow, and provide the most important features that train travelers crave for. After an open assessment of the customers’ needs, the team decided to focus on only two things: an ultra “heavenly” bed for a good night’s sleep and a spacious and well-equipped bathroom for cleaning up after a long train journey. As for other facilities, clean and simple furniture and vending machines would be sufficient to fulfill the guests’ needs. There are many restaurants nearby so it would be a waste of resources to provide room service, he says.

“This concept clearly breaks away from the rigid star system,” explains Prof. Wang. “Instead of having to install multiple features to satisfy the requirements of the star system, hotels can focus more on installing individual components that not only fulfill their guests’ needs but exceed their expectations. In this case, the bathroom fixtures and the beds are even better than those you’d normally find in a five-star hotel.”

Prof. Wang says that CUHK Business School hopes to further develop this function- or theme-based concept into a classification system to replace the arcane star system. “The old one-model-fits-all system classifies hotels based on very objective things like staff-to-customer ratio, interior decoration and facilities,” he says, adding that some of these “must-have’s” are superfluous. For example, personal butlers who follow guests around actually deprive them of their privacy. Many of the decorations and facilities just sit there as if “for display only.”

“What would make it more cost-efficient and competitive for hotels is to profile customers’ actual needs and invest in facilities to cater for their needs,” he continues. “The basic, common features across the board, no matter what ‘star’ the hotel belongs to, should include cleanliness, security and courteous and friendly service. Based on these prerequisites, a hotel can then leverage on other unique advantages it has, such as its particular environment and location, to further develop its niche market.”

Prof. Wang is leading an effort with his industry network to start a dialog with hotel and other travel-industry associations to replace the star-based system with a new accreditation system that assesses for quality, individual components, functions, logic and more.

This month, the School of Hotel and Tourism Management will launch an industry-based seminar to brainstorm and initiate new and emerging theories in hospitality and real estate. Professors, students and companies will be invited to collaborate with the aim of promoting innovations in the industry.

‘China Wallet’ Strategy

Another research and collaboration area that the School has been working on is the ‘China Wallet’ strategy. As an ever-increasing number of mainland Chinese are traveling around the world, the hotel and tourism industry must pay attention to their needs so as not to lose out to the competition, stresses Prof. Wang.

The School’s collaboration with Dorsett Hospitality International, a Hong Kong-based hotel operator, has yielded a number of interesting observations and innovative strategies that the company has applied to its 19 hotels in Hong Kong, Mainland China and Southeast Asia.

For example, the team has been observed that mainland tourists generally keep their purse strings tight except for purchases that would enhance their mianzi (face). So they would not pay for such hotel fees as late check-out charges, even if they insist on checking out late. This has made it difficult for hotel staff to check in new guests. To solve this problem, it came up with a new concept: a spa with free facilities, massage services and beverages for guests who need to leave the hotel later than the usual check-out time. The spa provides them with a place to hang out free-of-charge, while the hotel staff prepares the vacated rooms for the new guests.

“This strategy makes use of Mainland tourists’ psychology and has proven to be very popular,” recalls Prof. Wang.

Another new way of catering for Mainland customers’ needs is to take them on shopping tours by providing not only bus tours to popular shopping areas and stores, but also having the drivers take their shopping bags and depositing them in their rooms so they can continue on other tourist destinations without having to lug the bags around. “This is very function-based and matches Mainland tourists’ traveling style perfectly,” says Prof. Wang.

Another detail that the hotel group has covered is to skip the bed-sheet turndown service. This is because Mainland tourists like to spread the goods they have shopped on the bed in the evening. A turndown service would be inconvenient for them. On the other hand, hot water is provided in the room for free as Mainlanders have the habit of drinking hot or warm water and believe that one should not have to pay for it. In addition, extra insulation is installed in the walls because Mainland guests have the habit of talking very loudly.

“In the past, five-star hotels required customers to fit their habits to the hotel facilities,” Prof. Wang points out. “But today, it should be the other way round. People’s lifestyle has changed. They prefer having more choices. So hotels need to come up with innovative and creative ways to satisfy their guests’ needs based on their profiles.”

From Academia to Industry

To promote collaboration between the hotel school and the industry, the curriculum is designed in such a way that theory and practice are seamlessly integrated. For example, in the “Hospitality Facilities Planning and Design” course—required by the School’s final-year hotel students, some students have chosen to do in-depth research on the changing lifestyle and behavioral preferences of Mainland tourists and shoppers for their group projects. The goal is to come up with facilities design and managerial implications for hotels in Hong Kong that aim to adopt the “China Wallet” strategy.

“The findings and outcome of these group projects will have practical and useful implications for the hotel industry,” says Prof. Wang.

Hotel owners and operators interested in leveraging the ‘China Wallet’ strategy will be invited to attend the student presentations and learn from their research and analysis, and from the professor, who will be giving detailed guidance, comments and critique for the improvement of the projects.