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In trendy ever extra linked world buyers hold lots better expectations of the agencies they deal with.
They want groups to deem their preferences and bring a customized, profitable event. What's more they hope this totality of the time no longer simply at the aspect of sale.
To aid organizations carry for their shoppers IBM is the usage of its Smarter Commerce international apex in Florida to unveil ExperienceOne, an integrated portfolio of cloud-primarily based and on premise offerings to compile advertising, earnings and service practices and support create deeper, extra effective client engagements.
IBM ExperienceOne draws on innovation from IBM analysis in addition to more than $3 billion invested in biological evolution and acquisitions. it's additionally developed on pattern practices drawn from IBM's adventure of working with over 8,000 groups throughout the globe.
"Smarter Commerce is set assisting purchasers consistently reinvent themselves around the customer experience," says Craig Hayman, gauge manager, business Cloud options at IBM. "IBM ExperienceOne gives a cozy and simplified portfolio -- together with innovation from greater than 1,200 partners -- to assist customers design and deliver extra helpful consumer engagements. With cloud, on premise and hybrid alternate options, IBM ExperienceOne perquisite now scales to engage each customer in the second whereas conserving their privateness".
New capabilities wait on to multiply understanding of consumer relationships, maximize earnings with the aid of directing the revise present to the appropriate customer, and create spend of cell and convivial media to deliver better consumer event. Combining ExperienceOne with SoftLayer cloud infrastructure IBM is additionally capable of tender client statistics, client analytics and digital commerce as a provider.
The business is aiming to carry an identical ranges of consumer insight to the B2B sector as well with the launch of recent companion and agency assignation utility by the spend of its Smarter Commerce initiative. This comprises a Multi-enterprise Relationship administration (MRM) platform for more desirable collaboration. IBM Sterling B2B capabilities Reporting and Analytics to computer screen transactions and aid enterprise spot tendencies and create recommended decisions. Plus different materiel tender stronger adherence to compliance requisites and faster and greater efficient sharing of records.
"Now more than ever, the portion of any enterprise is deeply intertwined with the success of its community of companions and suppliers around the world," says John Mesberg, vice president, B2B & Commerce solutions at IBM. "by using orchestrating these intricate engagements with superb precision and perception, corporations can create novel gateways to alternate that enable organizations to bring outstanding consumer experiences. With these days’s information, IBM basically transforms these dynamics with partners and shoppers to power sooner time to income throughout the extended value chain".
that you would subsist able to learn more about IBM ExperienceOne on the business's website. there is additionally an infographic on how Smarter Commerce can carry greater customer assignation below.
photo credit score: Sergey Nivens / Shutterstock
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With today's global and distributed commerce, organizations of totality sizes are having to collaborate and exchange information with a growing ecosystem of divisions, partners and customers. Most companies want to communicate electronically and in true time, but beyond email, managing the exchange of data, messages and documents can subsist challenging and expensive.
Traditional EDI, networks or point-to-point integration systems are not providing the interoperability, agility and real-time information exchange businesses necessity to compete. In addition, companies necessity to Do more than merely exchange data; they necessity to integrate complete business processes, such as procurement, supply chain management, eCommerce, benefit claims processing, or logistics, to cognomen just a few.
As with other technologies, integration solutions are touching to the cloud in order to provide this increased flexibility and complexity. Today, there are an increasing number of technology vendors giving customers a selection of traditional on-premise integration - where the company manages the connections, mapping and business processes itself - or cloud-based products with stalwart self-service or managed service support.
While the cloud may not subsist appropriate for every company or solution, it is an pattern platform for integration, as it enables seamless interaction and collaboration across communities and systems. From pellucid economic benefits to increased IT agility to true business impact, a cloud-based integration solution brings value across the IT and business aspects of the organization. Below we've outlined the top 10 IT and business benefits of conducting multi-enterprise integration in the cloud.
Let's gawk at each of these in a bit more detail with real-world examples.
1. Improved ally and customer relations and retentionCompanies must create it smooth to Do business with them - it's no longer realistic to order suppliers to adhere to a single format, such as EDI, as companies hold investments in applications and systems they necessity to extend. Plus customers hold more choices than ever before, so if you create it arduous for a customer (or partner) to exchange information with you, they will retrograde to a competitor.
A Great example of this is a mid-sized electrical supply distributor, Mayer Electric Supply. An increasing amount of its business was being conducted online, but its eCommerce site and related processes were not keeping pace with customer demands, many of whom were big multinational organizations. Mayer chose to bring its online catalog in-house, having its internal IT team rework the catalog and manage the system, but it turned to a cloud-based integration platform to manage the eCommerce "punchout" and integrated purchase order exchange. This enabled totality customers to shop with Mayer directly from their existing procurement systems and incorporate the process into its overall procurement toil flow. The result for Mayer was improved customer retention and increased order size.
2. Increased revenue and marginOne of the greatest growth areas for cloud-based integration is in exact chain processes, because companies realize that keeping customers nearby and improving customer-facing business processes has a direct impact on the top and bottom line. With the companies we've surveyed, totality of them hold experienced improved metrics around retention, order size, revenue and margin.
Take, for example, Invitrogen (now Life Technologies Corp.), a $3 billion per-year supplier to the global life sciences community. The company wanted to improve its customers' online business experience to multiply revenues. By leveraging a cloud-based integration solution, Invitrogen was able to accept transactions from diverse customer procurement systems via its website and rationalize an order management system that encompassed more than a dozen platforms. Invitrogen saw orders soar 29 percent after an account was integrated.
3. Improved order accuracyOver the ultimate decade, they hold seen a significant multiply in exact for integrating eCommerce and procurement processes. These comprise procure-to-pay, order-to-cash and "punchout." By using a cloud-based integration solution, the experience to integrate these processes is seamless for customers and suppliers. One key benefit of this, as mentioned above, is increased revenue, but there is besides a secondary benefit around order accuracy. One eCommerce company saw order accuracy improve to 99% after implementing a cloud-based integration process with its customers, improving inventory management and delivery times, and removing manual intervention from the process.
4. Faster time-to-marketAcross industries and markets, there is an increasing customer constrain around the "power of now. Customers want to receive products and services more quickly and with less effort. This is Somewhat related to the overall trend around the consumerization of business technology, as business people want the very experience at toil that they receive shopping or researching online at home. This requires significant improvements in business agility and in the skill to deliver products more efficiently to meet fast-moving markets. To achieve this, companies must toil more closely than ever with suppliers, distributors, retailers and partners.
Cloud-based business integration enables real-time collaboration and the exchange of information surrounding logistics, parts, designs, inventory, customer order trends, procurement and other censorious processes. Being able to receive messages in a matter of hours versus days or weeks can create the dissimilarity between getting the deal or not.
5. Greater competitive advantageThe ease of cloud-based integration can besides wait on companies win novel customers and boost market share, enabling diminutive to mid-sized businesses to compete directly with much larger players. In addition, integration can ensure that companies can seamlessly toil with customers and partners by not requiring that totality business processes occur in a particular format, which may not subsist compatible with the format that the customer or ally is using.
For example, Office Depot turned a shortcoming that kept it from fulfilling portions of orders from customers into a competitive advantage. By touching specific transactions to a cloud-based integration platform, Office Depot was able to seamlessly toil with a diverse set of customers using many different procurement systems. The result: A "gain in market partake with very Little investment."
6. Reduced costs and capital expenditures (CapEx)Traditional integration solutions can subsist costly, often require a specialized and expensive skill set from workers, and are prone to crash at the slightest change in format or schema. Furthermore, IT departments are usually under pressure from the business side to improve IT operations and wait on drive greater revenue or business impact, but rarely are given the additional resources to Do so.
Integrating existing systems through cloud-based integration helps companies avoid or detain the costs of replacing infrastructure. The Software as a Service (SaaS) subscription pricing model allows funds for integration to subsist moved from the capital budget to the operating budget, making integration easier to meet into the IT budget, and enabling IT to spend capital on other more capex-intensive projects.
7. Increased operational efficienciesSome of the greatest gains in operational efficiency advance from transitional manual processes to automated ones. As they know, this besides tends to reduce costs and improve accuracy. With cloud-based integration, fewer people necessity to manage connections and transactions, as it enables frictionless system-to-system business processes automation.
While every IT team needs to note operational improvements, nearly everyone they talk to is worried that cloud or SaaS-based solutions will involve a reduction in IT staff. They hold not had one customer experience where this has occurred. On the contrary, what they hold seen is IT staff moved to more strategic projects or to working on novel innovations to drive business growth.
A Great example of this is with the consumer products division of Cisco, which uses cloud-based business integration to wait on manage and automate key processes across a growing, global distribution network. While the company says the journey to the cloud saved it the costs of two full-time staff, the IT team that had previously managed EDI connections and translations were moved to manage ally relationships and strategic projects.
The very is true for Whirlpool Corporation, whose North American CIO emphasizes that IT people are focused on managing strategic relationships and projects, and the company leverages the cloud and technology partners to manage much of its infrastructure and integration requirements.
8. Extended investments in legacy applications and systemsIntegration can extend the life of legacy assets by enabling totality members in the integration community to toil from existing systems. With cloud-based solutions, there is no "rip and replace" required, and there should subsist minimal to no software or hardware required behind the firewall. This is a Great route to upgrade business processes or improve efficiencies without having to invest heavily in solutions or migrate processes to a novel system. This interoperability and extension of systems is a censorious reason many companies are turning to cloud-based integration solutions.
9. Aligns IT with business goalsHow many times hold IT leaders heard it's totality about "business technology" and making sure IT impacts the business? Wouldn't it subsist nice to find a solution that provides this alignment with Little effort? business integration is one of those areas that is truly a win-win. Oftentimes, it is the line of business that discovers the necessity for improved integration, such as the logistics, procurement or eCommerce manager, where there is a pellucid ache and a necessity to improve processes. By working with the business on integration challenges and using cloud-based solutions to manage it, you can quickly achieve business impact without negatively impacting your IT budget or goals.
10. smooth scalability and flexibilityDuring the recent economic downturn, it was more significant than ever for companies to hold the option to scale back on IT and in some cases integration costs. With an on-demand integration solution, companies can quickly and easily multiply or diminish connections, transactions or the number of companies in their integration community, and then scale back up when business requires it. In addition, one of the greatest benefits of cloud solutions is the skill to start diminutive and expand as needed, when you are ready.
These are some of the top ways companies can remark measureable IT and business benefits from a SaaS-based integration solution, many of which are realized in a matter of weeks or months. Integration enables business process automation across the supply chain, exact chain, common operations, procurement, eCommerce and other business areas. A SaaS-based integration solution can besides wait on remove the challenge of traditional business integration methods while delivering substantial business and IT value.
Beyond the transaction, it can provide visibility into business processes, ally operations and customer needs. Benefits are realized across an entire organization, from business units to IT to the CIO, providing predictable costs, greater operational efficiency, higher margins and revenues, and automated business processes. For these reasons and others, business-to-business integration should subsist a key factor of consideration for any company's overall strategy.
“Fake News”: A Classic Statecraft Misdirect and Naiveté Writ Large
What, prey tell, explains how David took down Goliath? The ragtag lion coalition of “rebels with causes” and Deplorables with axes to grind had the secret sauce: TIS. convivial media was the sling and acute messages were the rocks and together they tattooed “TIS” perquisite between her eyes:
Mark Zuckerberg is trying arduous to convince voters that Facebook had no nefarious role in this election. “Our biggest incubator that allowed us to generate that money was Facebook,” says Parscale, who has been working for the crusade since before Trump officially announced his candidacy a year and a half ago. “Facebook and Twitter were the reason they won this thing,” he says. “Twitter for Mr. Trump. And Facebook for fundraising.” They preeminent how Clinton spent more than $200 million on television ads in the final months of the election while Trump spent less than half that. Because Trump wasn’t spending as much on television totality along, it seemed affection his team wasn’t investing in changing anyone’s minds. But they were: they were just doing it online.
Coby’s team took full edge of the skill to achieve massive tests with its ads. On any given day, Coby says, the crusade was running 40,000 to 50,000 variants of its ads, testing how they performed in different formats, with subtitles and without, and static versus video, among other diminutive differences. On the day of the third presidential debate in October, the team ran 175,000 variations. Coby calls this approach “A/B testing on steroids.” The more variations the team was able to produce, Coby says, the higher the likelihood that its ads would actually subsist served to Facebook users. “Every ad network and platform wants to serve the ad that’s going to obtain the most engagement,” Coby says.
(Source: WIRED, Issie Lapowsky, November 15, 2016, “Here’s How Facebook Actually Won Trump the Presidency”)This is the network structure of both political media crusade propaganda strategies: MSM are the big, old-school broadcasting networks near the focus dominated by DNC influence per the WikiLeaks disclosures and then there are smaller but quiet substantial alternative media sites and then an extremely long tail of interconnections of diminutive sites and convivial media where the RNC took the fight. The “underground” more bidirectional communications (blogs with comments) and convivial media won this round — both campaigns spend dis/misinformation (“fake news”) to influential the electorate using different tools. Which regions are RED and which are BLUE? (Source: spatial map by Jonathan Albright, assistant professor of communications at Elon University, North Carolina, “Google, democracy and the veracity about internet search”, The Guardian)
[Enlarge the above image]
The “shocking result” given that The novel York Times predicted a 85% desultory for conquest the day before the election quickly turned to the issue of the influence of “fake news” on the election outcome. Every sage from mainstream media (MSM) to alternative media was focused on “how can they eliminate fake news?” or witch-hunting impress Zuckerberg et al; this wavelength of thought presumes that fake word must subsist quelled no matter the cost (which is beyond calculation). This thinking is revise if word = veracity matters. But through the lens of reality — meaning surgical-strike propaganda — this view is gravely naive. What, you say? veracity doesn’t matter?
Here is a brief primer through the lens of reality that incorporates TIS, which spawned in embryonic shape in George Orwell’s novel 1984:The first-edition front cover of the novel Nineteen Eighty-Four first published in 1949. (Source: Wikipedia (public domain))
1984 has four themes:
(Source: 1984, Wikipedia)
All of these themes are intertwined and managed with communication through the “Ministry of Truth” which is brilliantly crafted and executed propaganda. Nationalism has already been addressed. In review, Goebbels, Hitler, and Ellul created the operating principles and contemporary examples of Nationalism are:
Question: Who Do you assume creates the semantic payloads?
Hint: Not the candidates.
All of these statements are crafted to trigger target audiences to engage sides (polarize into tribes and fight for me, for us, for their country, their route of life, their flag, etc.).
From 1984’s Ministry of Truth:
The keyword here is blackwhite. affection so many Newspeak words, this word has two mutually contradictory meanings. Applied to an opponent, it means the practice of impudently claiming that black is white, in contradiction of the unostentatious facts. Applied to a Party member, it means a loyal willingness to verbalize that black is white when Party discipline demands this. But it means besides the skill to believe that black is white, and more, to know that black is white, and to forget that one has ever believed the contrary.
Note: emphasis mine
(Source: fraction II, Chapter IX — “The Theory and practice of Oligarchical Collectivism”, which is from a “nonfiction engage within a fictional novel” written by a character in 1984)
To wait on assist you grasp the scale of global naiveté in proper context, this is from Johns Hopkins University’s Sheridan Libraries:
The World Wide Web offers information and data from totality over the world. Because so much information is available, and because that information can loom to subsist fairly “anonymous”, it is necessary to develop skills to evaluate what you find. When you spend a research or academic library, the books, journals and other resources hold already been evaluated by scholars, publishers and librarians. Every resource you find has been evaluated in one route or another before you ever remark it. A lot of Great information can subsist institute online, but it’s trickier to know what has been peer-reviewed online and what has not, because anyone can write a web page. Excellent resources reside along side the most dubious. The Internet epitomizes the concept of caveat lector: let the reader beware.
What constitutes a friendly fake is how well it resembles the true thing.
Propaganda is defined as the “systematic propagation of information or ideas by an interested party, esp. in a tendentious route in order to encourage or instill a particular attitude or response. Also, the ideas, doctrines, etc., disseminated thus; the vehicle of such propagation.” (from Oxford English Dictionary, 2nd ed., 1989)
Misinformation is defined as the action of misinforming or condition of being misinformed; or erroneous or incorrect information. Misinformation differs from propaganda in that it always refers to something which is not true. It differs from disinformation in that it is “intention neutral”: it isn’t deliberate, it’s just wrong or mistaken.
Never underestimate the evil intentions of some individuals or institutions to verbalize or write whatever suits a particular purpose, even when it requires deliberate fabrication. Disinformation refers to disseminating deliberately fraudulent information, especially when supplied by a government or its agent to a foreign power or on the media with the purpose of influencing policies of those who receive it.
Note: emphasis mine
(Source: Johns Hopkins University (Sheridan Libraries), Information and Its Counterfeits: Propaganda, Misinformation and Disinformation)
Which takes us from the clinical world of “fact checking (think safe sex)” in academic settings where credibility and veracity means everything to the nasty swamp of unrestrained, feral TIS where veracity is for losers which was lucidly foreshadowed by:
“We’ll know their disinformation program is complete when everything the American public believes is false.”
— William Casey, CIA Director, 1981
In other words, when black is white and white is black (“blackwhite”), they will finally hold achieved harmony from some alien perspective.“BLACK is WHITE” | Logo for INGSOC political party in 1984. (used in 1984 film adaptation) (Source: Wikimedia | CC BY-SA 3.0)
By Tyler Titherington
I am a restaurateur. I’m behind schedule. Again. Not because I am disorganized or hold too much to do, more so because I hold a hierarchy of tasks that are addressed based on priority. Guest needs are my first priority, staff needs are a nearby second and everything else last. There is a tertiary hierarchy in the ultimate basket as well. Some tasks with a lower priority topple through the cracks. Not because they are unimportant, but rather there just was not enough time. The veracity is that I am obsessively organized. I affection “To Do” lists, calendars, flow charts and the accomplishment of tasks. I devour projects for breakfast, while animated on the edge of chaos and complete catastrophe. Short staffed? Yawn. Drains flooding? Been there, done that. POS system crash during service on a weekend? Bring it. I am the duck – quiet above water and feet touching nonstop below. However, how Do I manage totality the curveballs and quiet manage to gain time without compromising any of my other priorities? It is very simple – reconcile and embrace technology wherever possible, specifically, cloud-based computing solutions that allow one to subsist in many places at one time. These applications simplify daily tasks for management teams and staff, which will ultimately leverage senior management down to focus on the bigger picture. Maybe even obtain a day off…
Over the ultimate 10 years or so, the increased availability of cloud-based computing solutions (using network computers over the internet rather than property-based arduous drives) has been a major paradigm shift for many industries. However, as with most technological advances, the restaurant industry has been very unhurried to adapt. tense margins, resistance to change, and fear of unknown outcomes hold long driven the restaurateur’s decision-making process. However, with increased options, cheaper costs, and ease of use, that mindset is quickly becoming a thing of the past. Restaurant operators are soar to embrace cloud-based solutions for everything from Point of Sale and Tableside Payment to Menu Design and Scheduling.
Our foray into cloud computing began with an unlucky set of circumstances that the entire industry was facing. The year was 2010 and the impending doom of PCI Compliance was upon us. At best, their network infrastructure was dated and they needed to act quickly to obtain it into compliance. affection most operators, their hand was forced and they had no choice. What is PCI Compliance? The retort depends on who you ask.
Your guests hold never heard of it and hold no understanding what it is. Most restaurant operators will order you that PCI Compliance is an almost unachievable set of network security standards designed to protect the credit card giants, who already imbue them route too much for credit card processing and continually squeeze them with a plethora of monthly fees. The definition of PCI Compliance is below, according to PCI ComplianceGuide.org
“The Payment Card Industry Data Security gauge (PCI DSS) is a set of security standards designed to ensure that totality companies that accept, process, store or transmit credit card information maintain a secure environment. The PCI Security Council Card focuses on improving payment account security throughout the transaction process. It is an independent corpse that was created by the major payment card brands (Visa, MasterCard, American Express, learn and JCB.).”[i]
PCI DSS is mandatory for any and totality businesses that accept credit cards. It involves a process of assessment, remediation and reporting. Operators must identify network vulnerabilities, physical vulnerabilities, and operational vulnerabilities that could result in a credit card violation and fix them. In summary, it is a painfully tedious, extremely time consuming, and potentially expensive process.
It is extremely significant for the security of their guest’s payment information, both for ensuring dependence with their customers and limiting legal liabilities. In 2017-8, major retail stores including Home Depot, Macy’s, Sears, Kmart, Best Buy and Lord & Taylor made headlines across the country for data breaches possibly compromising customer’s credit card personal information. The restaurant industry is besides plagued with security breaches, including big chains such as Darden (Cheddar’s), Panera Bread, Sonic and Arby’s. The number of customers whose credit card information may subsist compromised totals into the millions.[ii]
At Grafton Group, the process of obtaining Credit card security involved working directly with their IT vendor and POS vendor to achieve PCI compliance. The first order of business was to obtain their network infrastructure in order. Some of the major network upgrades that they undertook were upgrading wiring, locking down patch panels, securitizing external ports, adding wireless access points (WAPs), and replacing firewalls. The WAPs and novel firewalls were the heart of the upgrades and would ultimately allow us to operate unencumbered in the cloud. The novel access points give their guests their own network and forestall them from accessing ours. The security firewalls forestall intrusions and besides allow their IT vendor remote access so they can create changes without actually being in the restaurant. What used to subsist a scheduled visit from their IT vendor that may hold taken weeks, is now a simple email and can often subsist addressed online in minutes. In a nutshell, PCI DSS forced us to upgrade their network, which ultimately allowed us to operate in the cloud. This unintended outcome to a painful requirement was truly a blessing in camouflage and it pushed us into novel territory – the cloud! Being in the cloud has allowed us access to exciting applications and services that would otherwise subsist unavailable to us.
IBM defines cloud computing as “the delivery of on-demand computing resources — everything from applications to data centers — over the internet on a pay-for-use basis.”[iii] For their purposes, these on exact computing resources primarily consist of “SaaS” or Software as a Service. Here are some of the areas where cloud computing can streamline their operation.Point of Sale
POS systems are the most challenging locality of cloud-based solutions for restaurant operators. Legacy systems such as Positouch, Micros, and Aloha are bulkier, more expensive, and much harder to program and implement. There are quite a few cloud-based POS options, most notably Boston-based Toast. Toast has done a Great job streamlining and simplifying the interface for both front and back desist users. Management can access the system remotely for screen programming, troubleshooting or reviewing sales. It is extremely intuitive, affection using a smartphone, thus needing very Little training. As wireless POS solutions evolve, legacy systems will eventually subsist phased out. It is only a matter of time.Tableside Payment
EMV (Europay, MasterCard and Visa) is another set of regulations that are coming to the restaurant industry. “EMV is a global gauge for cards equipped with computer chips and the technology used to authenticate chip-card transactions.”[iv] Used in Europe for years, the credit card never leaves the customer and totality transactions are processed tableside with a handheld device. One example of an EMV compliant, cloud-based device for tableside payments that they at Grafton Group are currently analyzing and plot on implementing is Pay My Tab. Pay My Tab will fully integrate with their POS system and eliminates many bulky PCI DSS requirements. Many similar systems are already in spend at quick service operations, where guests and staff hold easily adapted to them. In addition to tougher security, the implementation should diminish payment time, eliminate paper receipts (emailed instead) and simplify the process for management to search for specific receipts.
Reservations and Floor Management
There are a variety of solutions for reservations and floor management systems. Their solid has been using OpenTable for over 15 years, so when they rolled out their cloud-based system, GuestCenter, they were early adopters. This has been one of the single best applications in terms of roll out, ease of use, and seamless integration. It is iPad-based and eliminates totality the wiring and host stand true estate. It is compatible to smart phones that allows for remote access, allowing management to check flow of service, identify unique reservations, and create sure that waitlists are being managed appropriately. Soon to advance is an interface with POS systems that automatically applies any “guest notes” from GuestCenter to the server’s check, such as special occasions, etc. Most importantly, due to its intuitive design, their millennial hosts spend the system seamlessly.Private Event Management
Private events are the foundation of most full service restaurant operations. They are the dissimilarity between a friendly week and a Great week. However, it can subsist a very confusing process with totality of the touching parts. In order to abide organized, they spend TripleSeat to manage leads, create BEOs and track their events calendar. The cloud-based event management system allows their Private Event Coordinators to respond at any given time from anywhere, giving them a leg up on the competition, giving them the chance to rate fees for each event. Since their coordinators receive an administrative fee for each event, they value responding when available off-site; friendly communication is key for making sure work-life equipoise is maintained.Bar at the Russell House Tavern in Cambridge, MA. Photo: graftongrouphospitality.com Inventory
An locality which the cloud has really saved their restaurants time is with food & beverage inventories. No more paper and no more transposing paper to spreadsheet. Inventories can subsist uploaded in true time using a tablet, laptop or even a smart phone. BevSpot is used for both their food and beverage inventories. They hold besides given access to their accounting firm, in order to reduce bulky invoice scans and uploads. totality information can subsist entered into the cloud and accessed by totality of their approved users. It besides allows for multiple people to engage inventory simultaneously. One person can subsist on the bar, another in the walk in fridge, and another in the liquor room, totality at the very time. In addition to being a major time saver, it has helped Grafton Group to reduce sitting inventory by a significant amount across totality properties.Scheduling
Staff scheduling is a weekly administrative headache for managers, but there are cloud-based scheduling applications that lessen the pain. They hold institute HotSchedules to meet their needs as it interfaces with their POS system and allows their solid to Do some creative reporting in regards to budgeting and forecasting, as well as taking employees requests and requirements into consideration.Email and File Sharing
Grafton Group has advance a long route from sharing access to a desktop version of Outlook and toggling between accounts. They were able to eliminate their main server entirely and now they spend Office 365 for their email and file sharing needs. Not only is this highly securitized, it has redundancy so their information is always backed up. They access both their email and files from anywhere in the world. This has greatly improved productivity and allowed their management teams to communicate in true time.Grafton Street in Cambridge, MA. Photo: graftongrouphospitality.com Computer Hardware
Our office hardware now consists of much less expensive “Network Computers”, which Do not require expanded memory for giant programs, CD drives for downloading drivers, or expansion slots for extraneous drives. They can purchase more computers at a reduced cost and their managers no longer hold to partake computer access in the office.Menu Design
For their menu design need, they hold institute InDesign to subsist the most efficient program, which is fraction of the Adobe Creative Cloud. This program can now subsist selected a la carte from Adobe’s menu of programs and paid for on a month to month basis for under $20. This is much more palatable than paying $600 for the entire Adobe suite.
These are just a handful examples of how cloud computing has impacted their operations and ultimately saved time for their management team and staff. Ten seconds here, 5 minutes there, an hour tomorrow – it adds up to impactful chunks of time that can subsist better spent elsewhere. They hold only scratched the surface as an industry – they will remark more and more options for cloud-based solutions to true world restaurant problems. Although the solutions highlighted above create efficiency and deliver time, they Do not serve guests and they don’t understand the expertise of hospitality. It is imperative that as restaurateurs they continue to create a positive environment, embrace innovation, and engage and train their employees in the expertise and skill of hospitality.
There are some things you will never hold time for in the restaurant industry, regardless of cloud-based advancements. “Lunch”, for example, I hold heard is a meal that takes status in the middle of the day. For me, “lunch” is the sandwich that I devour in 30 seconds somewhere between 2pm and 6pm standing over a trash can in the back of the kitchen. There is no technology for that…
PDF Version Available HereReferences [i] “PCI Compliance usher FAQ.” PCIComplianceGuide.Org. September, 2018. https://www.pcicomplianceguide.org/faq/#1. [ii] Green, D. and Hanbury, M. (Aug. 22, 2018). “If you shopped at these 16 stores in the ultimate year, your data might hold been stolen.” https://www.businessinsider.com/data-breaches-2018-4 [iii] “What Is Cloud Computing?” IBM.com. September, 2018. https://www.ibm.com/cloud/learn/what-is-cloud-computing. [iv] Kossman, Sienna. ” 8 FAQs about EMV credit cards.” CreditCards.com. August 29, 2017. https://www.creditcards.com/credit-card-news/emv-faq-chip-cards-answers-1264.php. Tyler was born and raised in Portland, Maine and has lived in the Boston locality since attending Boston University. After graduating from the Boston University School of Hospitality Administration, Mr. Titherington operated a handful of bars and restaurants in Boston. He has been with Grafton Group since October 2007.
By Christopher Muller
In fraction 1 of this analysis of the restaurant delivery system they looked at the owner/operator models which quiet tender some measure of control over price and quality. This is lickety-split becoming an issue with the soar of the Ghost Kitchen where the ODP is an integral fraction of the equation. Here they present the larger challenges from the dominant ODP control of the marketplace. It is friendly to recollect that most of the ODPs themselves are quiet looking to find profits in what they do, a suggestion that those profits will necessity to advance at the expense of the restaurant providers in one route or another.5. The Aggregator or On-Line Delivery Provider (ODP) – No Driver Fleet
If someone were to say, “Let me engage imbue of totality of your delivery problems for a diminutive chop of your revenues” many restaurant operators, especially those alive to to obtain into the market with the least amount of upfront investment, would jump at the chance. Enter the On-Line Delivery Provider with a business model built upon a brand cognomen customer-facing APP, website or phone number and an huge amount of back office computing power to drive order volume.
At its core, to subsist successful the Aggregator needs to subsist a world-class matchmaker for food orders, with both a big customer database of users and a broad assortment of restaurant menus offered in major cities. affection many of what MIT’s Bill Aulet calls an Innovation Driven Enterprise (IDE) the cost of customer acquisition is the key hurdle in entering this distribution channel. What it doesn’t necessity is its own fleet of employee delivery drivers. Capitalizing on the DIY gig economy, drivers are hired on a contractual basis, working as independent delivery agents with their own vehicles.
The barrier to lowering this towering cost of entry has favored early market entrants and big well-funded digital innovators. Worldwide, the fastest growing ODP is Uber Eats, the natural extension of car service provider, Uber, with its existing huge data ground of users, an ever expanding fleet of drivers, and the understanding for a driver that delivering food with an APP-based pre-payment system is considerably faster and easier than dealing with human passengers.
The upside for restaurant companies using an ODP such as Uber Eats, from those as dominant as McDonalds or as diminutive as the local pizzeria, is that there is no necessity to hire and train non-core employees. As touted by Uber Eats delivery service can start almost immediately upon signing up. The downside, that has a potential for long term impact, is two-fold. The fee structure for traditionally low margin restaurants can subsist between 20-30% of a menu particular price, leaving Little to cover remaining expenses. Worse though is that the restaurant gives away its brand and trade dress image to the company making the delivery to the front door. McDonalds hamburgers may subsist in the bag, but the cognomen on the ordering APP and the uniform on the person handing it to the customer says Uber Eats.
6. The Consolidator – Bulk “Bus Stop”
As noted, the most expensive single piece of the delivery mystify is getting food from the restaurant to the front door, what is called “the ultimate mile.” One proven route to minimize that expense is to hold the customer meet the food delivery at a central drop-off spot (see: Amazon ). A start-up, Yun Ban Bao, in novel York City is taking edge of ethnic Chinese food deserts through direct targeted marketing using the dominant Chinese online service provider, WeChat. By doing so it is creating a captive delivery market with the edge of pre-ordering and payment.
Taking online requests for delivery on the next business day, then consolidating orders using a bulk delivery model, Yun Ban Bao is lowering the cost of delivery while maintaining control with its own fleet of drivers. It advertises a data analytics service for smaller restaurants as well as being a revenue growth accelerator for restaurants in suburban locations which otherwise could not find novel or broader market opportunities.
Using a pre-arranged group delivery network, often outside parks, office towers or apartment buildings, the system mirrors a bus route, not the more traditional taxi route model of one-on-one delivery. This besides affords the network of restaurants a route to lower operating costs by controlling the production process in advance.7. The Aggregator ODP – Owned Fleet
Some of the largest ODP players started in the delivery business by controlling their own fleets of employee managed delivery drivers. The global leader, Just Eat, has used this model throughout the UK, Europe and worldwide. But it besides has worked directly with restaurants who hold their own in-house deliver fleets to create a broad partnership. Just devour acts as the online ordering platform, but then allows the local branded company to subsist the physiognomy at the door.
The skill to present a standardized customer facing brand identity means that dependence may subsist established with the customer directly. While this can advance at the risk of the restaurant losing its direct brand relationship, what Just devour has been able to master is the collection of a vast customer database of its users. It has created a relationship with many of its restaurant partners to assist them in finding pattern store locations, menu particular design and creative targeted pricing and promotions programs which would not otherwise subsist affordable or even available to smaller companies.
For these ODP companies, the costs for maintaining their own fleets or working as a hybrid with a local restaurant creates a higher operating expense, but these are often offset with a higher fee partake from both the restaurant and the consumer. It besides creates a competitive edge by edifice a broader network of restaurants to select from for the customer, which builds long term loyalty and habitual purchase behaviors.
8. The ODP Aggregator – melancholy Kitchens
One of the greatest threats to the bricks and mortar restaurant delivery partners is the emerging concept of a melancholy Kitchen. This is a space created by an OPD to facilitate the lowest cost per delivery mile from restaurant kitchen to the highest density of users. While this is similar to the Cloud Kitchen model, in this case the OPD establishes a cluster of diminutive dedicated but competitive restaurant kitchens in a single site. A melancholy Kitchen is besides similar to the trending food hall concept, but comes with no direct customer interaction—no walk-in guest visits these production facilities. In the UK this was pioneered by Deliveroo with its urban RooBox or Editions concepts. ally restaurants rent portable kitchen space from the delivery service and pay a larger percentage fee to cover the build-out costs for their space. Restaurants staff the kitchens at their own expense, as well.
Earlier this year, Grubhub invested $1 million in Green apex Group (see Ghost Kitchen in fraction I), a startup with nine virtual restaurants operating from a single kitchen. DoorDash is renting extra space from the Santa Clara Fairgrounds in San Jose, Calif., and making it available to foodservice operators who want to create delivery-only options. In Los Angeles, Postmates leased a commissary kitchen space so its restaurants can gain novel customers. And UberEATS is exploring the concept with Poke Café in Chicago — a virtual restaurant serving Hawaiian poke bowls.
“We can toil with existing restaurant partners to create delivery-only menus. (They would) loom as entirely novel restaurants on the UberEats app,” Ambika Krishnamachar, UberEats product manager, said in an article on Mashable.
And again, while on its physiognomy this appears to subsist a positive chance for independent or chain restaurants to lower costs or disaggregate the dine-in from the delivery production process, it is not cost free. In fact, as a ratiocinative progression would suggest, the OPD Deliveroo service has realized that the actual local restaurant in this mingle is not a necessity for success. Instead by using its own “innovation fund” it will to retrograde directly into the restaurant business itself, creating “from scratch” concepts by working with personage chefs and data mining information from its huge customer data base. 
As more of the OPDs gawk to find profits to pass along to the aggressive investors who hold funded rapid growth, they will inevitably gawk to chop out the middleman and provide meals themselves to multiply margins. The kitchen that may actually retrograde “dark” is the local one on the corner down the street in an independent restaurant.
This is undoubtedly both an challenging and a challenging time for the restaurant industry and the Online Delivery Providers who are feeding from it. Neither side seems to hold figured out how to create the novel consumer exact for off-site delivery toil to their complete advantage.
It is impossible to believe that any restaurant can survive if it gives away up to 30% of its top line revenues when the medium net profit is less than 10%. No amount of increased volume in sales will create up for that. As Cameron Keng wrote in his column “Why Uber Eats Will devour You Into Bankruptcy” in March, 2018:
Based on the medium profit margins above, every restaurant that engages Uber Eats will lose money on every order they take. The more orders coming from Uber Eats, the more money a restaurant would lose.
At the very time, while it is arduous to obtain exact information, it appears that almost not anyone of the largest On-Line Delivery Providers, in any of the described segments is actually showing a profit. Uber Eats is only profitable in 27 of its more than 100 urban markets, and while Deliveroo’s sales rose in 2017 to £277 million ($356 million), the company lost an astounding £185 million ($237 million). Yet Uber Eats is offering over $2 billion to purchase/merge with Deliveroo.
Finally, as Jonathan Maze wrote in his Bottom Line column in early October the restaurant industry is simply unprepared for what appears to subsist a tectonic shift in traditional restaurant segments, consumer behavior, labor utilization, true Estate valuation and investor interest.
If delivery is the future of the restaurant business, the restaurant business as it is currently constructed is in trouble.
The service is growing rapidly. But it’s increasingly replacing existing restaurant business rather than taking business away from grocers or other food retailers. 
As they preeminent in the beginning, it took the lodging industry almost 20 years to start to create this kindly of tectonic change and it is nowhere near complete. A few very big hotel companies, through merger and acquisition, hold consolidated enough power to start the journey away from handing over totality of their pricing to the OTA’s. In economic terms, hotel companies are trying to retrograde from being price Takers to price Setters.
At this early stage of the restaurant OPD’s domination of the delivery cycle, it is not pellucid that any restaurant organization is big enough to crash the fever, especially now that McDonald’s is partnering with Uber Eats. While it may loom that the On-line Delivery Provider is a restaurant’s partner, friend or even savior, it is not anyone of those. In fact, in order to become profitable the OPD is looking to become a direct competitor.
What is certain is that few restaurant companies, and certainly no independent operations, can survive the next two decades letting third parties dictate what convenience and price mean. In fact, this might subsist a friendly time to obtain out of the house and retrograde visit your favorite local restaurant. Sacrificing some convenience for a Great experience is a friendly value and that restaurant may not subsist around the next time you want to note up.
PDF Version Available HereReferences  remark Bill Aulet, Disciplined Entrepreneurship,  The Financial, October 25, 2018, https://www.finchannel.com/~finchannel/business/76317-amazon-expands-grocery-delivery-and-pickup  Menqi Sun, WSJ, September 9, 2018, https://www.wsj.com/articles/how-to-get-food-delivered-from-your-favorite-faraway-restaurant-1536516000  See https://www.just-eat.com/  James Cook, business Insider, April 5, 2017, https://www.businessinsider.com/deliveroo-editions-pop-up-restaurants-roobox-2017-4  Tim York, The Packer, March 23, 2018, https://www.thepacker.com/article/rise-virtual-restaurant Sophie Witts, stout Hospitality, May 21, 2018, https://www.bighospitality.co.uk/Article/2018/05/21/Deliveroo-to-create-own-restaurant-brands-using-5m-fund#  Cameron Keng, Forbes, March 26, 2018, https://www.forbes.com/sites/cameronkeng/2018/03/26/why-uber-eats-will-eat-you-into-bankruptcy/#778a3b0621f6  Ibid., DealBook, September 21, 2018  BBC News, October 1, 2018, https://www.bbc.com/news/business-45707700  Jonathan Maze, Restaurant business Online, October 17, 2018 https://www.restaurantbusinessonline.com/financing/delivery-could-force-changes-restaurant-business-model Christopher C. Muller is Professor of the practice of Hospitality Administration and former Dean of the School of Hospitality Administration at Boston University. Each year, he moderates the European Food Service Summit, a major conference for restaurant and supply executives. He holds a bachelor’s degree in political science from Hobart College and two graduate degrees from Cornell University, including a Ph.D. in hospitality administration. Email: email@example.com
By Christopher Muller
The entire restaurant industry, from the simplest quick service joint to the most intricate fine dining jewel, is caught in a veritable frenzy of delivery. It may be, unfortunately, a very risky path to travel for the uninitiated restaurant operation, but delivery is driving the investment community to a fever pitch.  They hold entered into the time of the restaurant On-Line Delivery Provider (ODP) which mirrors in many ways the On-Line Travel Agent (OTA) which has so disrupted the lodging industry.
In two complimentary BHR articles here, they present a gawk at the 8 different models of restaurant delivery and how they are affecting both senior management and customer choices.
A Quick Lesson From Pricing History
For observers of the global Hospitality Industry this should send up warning flags. In a galaxy far, far away, the Lodging industry managed revenues by using simple seasonal or assign pricing models (On-, Shoulder- and Off-Peak rates, or premiums for “A leeway With A View”) and sold some limited excess inventory through a network of independent Travel Agents (at an onerous 10% commission!).
Then, as the Internet expanded, and the travel market imploded after the 9-11 tragedy, a novel and exciting model emerged – the On-Line Travel Agent (OTA) acting as a third party aggregator appeared. Hotel companies willingly gave open access to totality of their unsold leeway inventory to the OTAs (Expedia, Travelocity, Priceline, Booking.com, Kayak, Trivago, etc.) to sell directly at deep discounts, often between 25 and 30% off posted Rack Rates. Occupancies rose, but medium Daily Rates plummeted, and profits quickly diminished. Hotels, relying on the ancient pricing models were caught competing “with themselves” and watched as formerly loyal customers switched their buying habits and loyalties to the OTA that gave them the best rate. Customers could scroll through pages of prices, often for the exact very leeway in the very hotel, searching for the cheapest rate. Hotel rooms, instead of being unique destinations became interchangeable commodities.
It has taken almost twenty years, but through brand consolidation and a total system-wide transformation into a Revenue Management based pricing model, the hotel business has been transformed and the OTAs are being aggressively challenged for dominance. This should subsist a lesson for the restaurant owner/operator, the OTAs drove nothing but price as a decision attribute, the ODPs are poised to Do the very thing with both price and convenience, unfortunately restaurants probably won’t hold decades to recover.
Today’s Restaurant Delivery Frenzy –The soar of the ODP
Whether it’s the savvy but shape-shifting Millennial, the rapidly aging Baby Boomer, or the rising puerile digital autochthonous from the i-Generation, it seems that customers in totality shapes and sizes just want to hold their meals brought to them at home, the office, or somewhere in between. Breaking the code of the delivery model—becoming the customer’s selection of who serves up breakfast, lunch or dinner at home, toil or play—has emerged as the Holy Grail of the foodservice business. But it may subsist more affection the other mythic melancholy Ages metaphor, the Plague, potentially killing upwards of 30% of existing restaurant units.
So, what exactly is “delivery” today, how did it evolve into such a big, expanding component of the restaurant offering and what are the implications going forward for the industry? Just how Do the On-Line Delivery Providers, the ODP, dominate the market?
We can start by agreeing that delivery is a several and rapidly growing distribution channel, although it has been around in one shape or another for a very long time. And while not exactly a novel technology, nor necessarily a profitable one, the exploding market for the delivery of food is poised for an inevitable quake out as it quickly approaches a ripen aspect consolidation.
In late 2018 delivery is totality about instant gratification, not just for the diner but some would insinuate for the restaurant as well. At first glance, it totality feels so simple and easy. But affection so much in restaurant management, there is more than one route to obtain something done, even the simplest of things.
Emerging Key Success Factors
Like so many emerging business models in the on-line digital age, food delivery is developing its own metrics and factors to subsist considered and mastered. While quiet evolving, among these now are:
Delivery of food, especially from a restaurant to a consumer, has become a multi-billion dollar segment of the industry. Some are predicting that it will overtake the traditional dine-in segment completely within a decade, although the complexity of getting it perquisite and turning a profit while doing so, can quiet subsist elusive even for the largest players. And of course, no one should forget that Amazon is over in the corner waiting to remark how things evolve in an online delivery world they basically invented.
Traditional and Controlled
As noted, the delivery of food from a restaurant directly to a local customer is not a novel understanding although traditionally the customer came to the restaurant and picked up or carried out their food order. Both delivery and carry-out were best suited to a restaurant with a simple, easily transported menu. Where a significant amount of the value of the meal was the dining experience and table service, meals to retrograde were often comprised of a package of leftovers or the long gone term “doggie bags.”
Here is a gawk at four models with some measure of control for restaurant owners and operators over the attribute and profitability of their offerings.
1. The Independent – One Shot
As a service provider a restaurant may resolve that in order to meet the needs of its local customer ground it should provide a delivery option. At one time, only a few restaurants in an urban core would hold delivery offers and these might typically subsist delicatessens or Chinese restaurants with few seats and a very stalwart focus on offering takeout options. The food can subsist cooked, boxed, wrapped and brought quickly to an office or apartment within a few blocks on foot or by bicycle.
This model is the most basic – a caller, the kitchen, and an employee bringing burning food directly to the customer. The restaurant controls the quality, manages the relationship with the diner and absorbs the full cost and totality the revenues. It typically comes with higher operating costs for labor (primarily from an in-house paid delivery driver fleet) and with premium rent from the necessity for an attractive customer-facing retail space. On the plus side, totality local customer information may subsist controlled by the restaurant and there are no fees to partake with an outside third-party service.
But as the independent operator reaches for the brass ring on the delivery merry-go-round, they besides necessity to subsist observant not to lose their grip on their existing ride. A novel distribution channel can subsist much more challenging that just taking a customer order. As preeminent by Jennifer Marston:
…restaurants are under pressure to adapt…More and more, that means altering the physical restaurant space so it can better accommodate this influx of novel orders. Extra meals require extra bodies to cook and package the food, after all, not to mention extra space for third-party devices, and somewhere to deliver completed orders waiting to subsist picked up by a delivery driver.
An challenging twist on this single restaurant model of trying to find a route to both control and expand the delivery system while maintaining some measure of profitability is one recently proposed in the restaurant trade magazine Restaurant business Online:
He (CMO Nabeel Alamgir) explained that Bareburger is already striving to transmogrify customers ordering through third parties’ apps into users of the chain’s own channels. Patrons of an Uber Eats or Postmates might subsist offered a 10% discount on their next order if it’s placed through Bareburger’s website. The chain can afford a discount that deep because the financial impact is quiet less than the 20% or 30% discount an outside service typically charges.
Alamgir preeminent at the start of the panel’s presentation that a service started by restaurants for restaurants would hold been an attractive alternative to some of the third-party giants. “Let’s create their own platform. Let’s create their own Grubhub,” he said.
2. The Cloud Kitchen – A Hub & Spoke System
It can subsist argued that today’s focused delivery channel began in earnest when Domino’s offered up a “30 Minute or Free” guarantee in 1973. In order to create this guarantee effective, the company created a hub and spoke system, in outcome edifice a string of franchised units in low cost locations. They were characterized by being geographically market-centered but with no necessity for a “High Street” customer facing address. This was directly in contrast to the overwhelming market edge owned by Pizza Hut and its network of “Red Roof” full service pizzerias with their focus on dine-in and takeout service. But the competitive edge that came from having units with no dine-in, limited customer carry-out, and which were serviced by a central commissary set in motion the shift away from the traditional eat-in model.
“The reality is, when the red roof restaurant was created, the understanding of delivery wasn’t fraction of the concept,” said Pizza Hut chief executive David Gibbs, a 26-year veteran at parent company Yum Brands…”so in many cases, their business has outgrown the capabilities of those restaurants…”
Now, four decades later Domino’s is the world leader in delivery, pizza or otherwise. It has done this by controlling the entire process or what is called the “full stack” in the delivery cycle. Now describing itself as an IT and logistics company that sells pizza, the backbone of the system is that they control the customer ordering process, the production attribute process, and through a vast franchise network the delivery process.
Next to come, using novel GPS and AI technologies, Domino’s predicts that it will subsist able to create deliveries not just to a formal edifice address, but to anywhere a customer can subsist located by tracking their cellphone, even if that is a park bench or a blanket on the beach.
But Domino’s is not the only leader to subsist expanding its Cloud Kitchen delivery system. Already designed on a commissary production system model, giant lickety-split casual leader, Panera Bread, tested delivery in Boston and then announced an expansion across the United States in early May, 2018 with a system based upon using its own delivery drivers.  Following the trend in October the largest chicken sandwich chain, Chick-fil-A, announced it was soar to test the hub and spoke model of delivery in Nashville, TN and Louisville, KY.
Chick-fil-A is opening two novel restaurants that don’t hold something you commonly associate with the chain: seats.
Chick-fil-A, the Atlanta-based chicken sandwich chain, is testing catering and delivery locations in Nashville and Louisville, Ky., that will open this month.
The locations, according to an announcement on the chain’s website, hold no dining rooms or drive thru’s and are designed to subsist hubs for catering and delivery orders. The restaurants will not accept cash, either.
The Cloud Kitchen model can subsist very effective for restaurant companies with big enough scale, whether in a single city or across a region, to engage edge of a single production kitchen site with remote staging kitchens. Ultimately the “full stack” control from order to front door can advance from as few as three restaurants or as many as 3000. This besides means that the foundation is laid for vast proprietary customer data collection and eventually data mining by the most forward-looking operators.
It can subsist argued that the Food Truck movement of the past decade is a subset of the Cloud Kitchen model. By most local health code laws, food trucks must hold a “home kitchen” or commissary for their bulk production that meets totality health and sanitation code requirements. In many urban centers, to be successful a food truck company needs to hold multiple trucks on the road acting as a distribution network. While this is besides a classic Hub & Spoke model, it comes with similarities to a model in the next article, #6 The Consolidator, with distribution on a bus desist route and not a one-to-one ultimate mile taxi route.
3. The Ghost Kitchen
One further refinement of the Cloud Kitchen is the Ghost Kitchen. As delivery becomes more of a threat to the traditional dine-in restaurant option, some insinuate that this model, in fact, is the future of restaurants—basically a highly efficient hybrid of menu concepts, specialized production and logistics, and low labor cost with no eat-in customers.
In that way, this model is identified by three key components.
First, it removes the dining leeway or takeout from the restaurant completely, working out of a kitchen whose location is based on nearness to its core customer market yet in a typically low rent out-of-the-way space.
Second, it does not hire any paid employees to deliver, instead making spend (through partnership or agreement) of the many third-party delivery companies affection GrubHub, Postmates or Doordash.
Third, and possibly the most important, because of the flexibility of only needing an APP, website or traditional telephone ordering system, more than one cuisine can subsist produced in the very kitchen space. smooth to prepare, cook and deliver foods such as salads, sandwiches, Asian and other ethnic dishes, or gourmet pizza can totality subsist offered while cross-utilizing similar ingredients in creative menu offerings.
This can best subsist described as an “order only” restaurant. The most prominent or well-known of these Ghost Kitchens would subsist Green apex (see transition to #8 melancholy Kitchen in fraction 2). While garnering a friendly amount of press, the personage chef David Chang’s Maple, closed its operation in 2017 with some assets touching to London and the delivery company Deliveroo. Chef Chang sold the physical kitchen space, Ando, to Uber Eats after ceasing operations in January, 2018. 
Because no customer ever sets foot through the front door the owners can deliver totality of their investment in kitchen materiel and the technology of ordering. A Ghost Kitchen offers customers big menu choices, and just as its cousin the Cloud Kitchen, has the option to advocate track of its own proprietary customer data set through the direct ordering process. The tradeoff is that ownership sacrifices the customer interface at delivery of the Cloud Kitchen model. Operating and start-up costs are low and efficiency can subsist very high. The risk is that a big portion of the margin (sometimes up to 30%) from market-driven menu prices is taken by the delivery partnership, who besides control the brand image when customers receive their orders off-site.4. Virtual Restaurants
Along with disrupting the taxi business, Uber Eats is about to globally disrupt the restaurant delivery business. As of October, 2018, Uber Eats had over 1600 “virtual restaurants” around the globe, with almost 1000 in its US partnership portfolio. The majority of these are not the Cloud or melancholy Kitchen models mentioned above, but are existing restaurants with novel brands that only exist through Uber Eats. This model, while charging very towering fees to the restaurant, allows them to technically not compete with themselves in the home delivery marketplace. Uber Eats gains more menus to offer, and limits any necessity for an investment in a commissary space.
For SushiYaa, Kim says the virtual restaurant concept has been transformative. “Because this concept worked so well for us, they actually changed one of their restaurants from a sushi buffet concept to a regular restaurant with 8 different virtual restaurant brands inside it. The buffet sales weren’t doing so well and the delivery side was doing better, so they thought — let’s change it completely so we’re focused more on delivery.” From a sales standpoint, he says it’s “almost as if they hold another restaurant without paying additional rent and labor, even though [Uber Eats] takes about 30 percent.”
One other type of Virtual Kitchen involves the licensing of existing restaurant recipes and menu items in a curated virtual model. The start-up concept friendly Uncle is using this to compete in the university meal plot segment, offering a ambit of pricing options for higher attribute prepared meals, delivered by their own delivery fleet using the bus desist common drop off method. This is a limited menu, limited target market, which benefits from a direct marketing approach, lower operating costs, and uses both a subscription and premium fee based pricing system. It is a Virtual Kitchen because there is no restaurant or other customer facing facility, it exists only online.
Part One – Conclusions
Delivery models, some traditional, some evolving, tender many opportunities for restaurant operators, especially those in the QSR and lickety-split Casual segments, where speed and price and convenience are the drivers of consumer choice.
The challenge in today’s delivery market is how owners and operators can maintain both towering attribute and long-term profitability in the products/services they offer. For many meals, the time and distance from kitchen to table can subsist more than 30 minutes or multiple miles. attribute of presentation and flavor may quickly diminish. More importantly, where the medium annual profitability for restaurants across totality segments in the USA is considerably less than 10%, losing up to 30% of top line revenues is not a path to a successful future, (even if total sales multiply by 20%).
PDF Version Available HereReferences  Heather Haddon and Julie Jargon, The Wall Street Journal online, October 24, 2018, https://www.wsj.com/articles/investors-are-craving-food-delivery-companies-1540375578?mod=cx_picks&cx_navSource=cx_picks&cx_tag=contextual&cx_artPos=4#cxrecs_s  Liam Proud, DealBook, NYTimes, September 21, 2018, https://www.nytimes.com/2018/09/21/business/dealbook/uber-eats-deliveroo.html  Jennifer Marston, The Spoon, July 31, 2018, https://thespoon.tech/delivery-is-making-these-restaurants-literally-redesign-the-way-they-do-business/  Peter Romeo, Restaurant business Online, Oct. 19, 2018 https://www.restaurantbusinessonline.com/operations/3-big-changes-looming-restaurants  Karen Robinson-Jabos, Dallas News, Jan 6, 2016. https://www.dallasnews.com/business/business/2016/01/06/pizza-hut-is-ditching-the-iconic-red-roof-for-a-more-modern-look  Janelle Nanos, Boston Globe, May 7, 2018, https://www.bostonglobe.com/business/2018/05/07/panera-expanding-its-delivery-service-cities/sZg4pO0yTw9cEdYpv514tL/story.html?event=event12  Jonathan Maze, Restaurant business Online, Oct. 09, 2018 https://www.restaurantbusinessonline.com/financing/chick-fil-opening-new-delivery-focused-prototype  Neal Ungerleider, 01.20.17 lickety-split Company https://www.fastcompany.com/3064075/hold-the-storefront-how-delivery-only-ghost-restaurants-are-changing-take-out  Closing announcement from Maple, May 8, 2017 https://maple.com/letter/  Whitney Filloon, Eater, October 24, 2018, www.eater.com/2018/10/24/18018334/uber-eats-virtual-restaurants  remark the online Audiopedia site https://www.youtube.com/watch?v=BKO5JFbqKTA  Ibid, Eater, October 24, 2018  remark https://www.gooduncle.com/ Christopher C. Muller is Professor of the practice of Hospitality Administration and former Dean of the School of Hospitality Administration at Boston University. Each year, he moderates the European Food Service Summit, a major conference for restaurant and supply executives. He holds a bachelor’s degree in political science from Hobart College and two graduate degrees from Cornell University, including a Ph.D. in hospitality administration. Email: firstname.lastname@example.org
By Makarand Mody and Monica Gomez
For a long time, the hotel industry did not deem Airbnb a threat. Both the industry and Airbnb claimed they were serving different markets and had different underlying business models. Over the years, as Airbnb become more successful and grown to being larger than the companies in the hotel industry, the rhetoric has changed. The hotel industry began to realize they had something to worry about.
A stage of denial was followed by the American Hotel & Lodging Association (AH&LA) attacking Airbnb by sponsoring research to demonstrate its negative impacts on the economy and lobbying governments to impose taxes and regulations on homesharing. The association is arguing for a plane playing bailiwick between homesharing and hotels (and rightly so). The next stage of this battle involves competition and integration. Not only are hotels looking to add homesharing-like attributes and experiences to their properties, to more effectively compete with Airbnb, but are besides looking to tap into the platform-based business model that underlies Airbnb’s success.
The Past: How does Airbnb impact the hotel industry?
Airbnb’s disruption of the hotel industry is significant, both existentially and economically. A recent study by Dogru, Mody, and Suess (2018) institute that a 1% growth in Airbnb supply across 10 key hotel markets in the U.S. between 2008 and 2017 caused hotel RevPAR to decease 0.02% across totality segments. While these numbers may not loom substantial at first, given that Airbnb supply grew by over 100% year-on-year over this ten year era means that the “real” diminish in RevPAR was 2%, across hotel segments. Surprisingly, it was not just the economy but besides the frill hotel segment that was arduous hit by Airbnb supply increases, experiencing a 4% true decline in RevPAR. The impact of Airbnb on ADR and occupancy was less severe. In Boston, RevPAR has decreased 2.5%, on average, over the ultimate ten years due to Airbnb supply increases. In 2016 alone, this 2.5% diminish in RevPAR amounted to $5.8 million in revenue lost by hotels to Airbnb. Brands that felt the impact the most were those in the midscale and frill segments, with a diminish in RevPAR of 4.3% and 2.3% respectively. These supply increases are besides fueling Airbnb taking an increasing partake of the accommodation market pie. For example, in novel York City, Airbnb comprised 9.7% of accommodation demand, equaling approximately 8,000 rooms per night in Q1 2016 (Lane & Woodworth, 2016). As a whole, Airbnb’s accommodated exact made up nearly 3% of totality traditional hotel exact in Q12016.
Buoyed by a growth rate of over 100% year on year, Airbnb now has over 4 million listings, with the U.S. being its largest market. The company besides has significant leeway to grow in other countries, particularly emerging markets in Africa and India. The company has accelerate into some competition in China, with local rivals Tujia and Xiaozhu. Also, within the U.S., the friendly word is that Airbnb will not grow at 100% indefinitely and will eventually plateau as it reaches a saturation point (Ting, 2017a). In view of this, the company has turned to alternative strategies to continue to multiply supply. It is now targeting property developers to whirl entire buildings into potential Airbnb units, through its newest hotel-like brand, Niido. Currently, there are two Airbnb branded Niido buildings in Nashville, TN and Orlando, FL with over 300 units each and Airbnb plans to hold as many as 14 home-sharing properties by 2020 (Zaleski, 2018). Niido works by encouraging tenants to list their units on Airbnb, with Airbnb and Niido taking 25% of the revenue generated. Airbnb has besides clearly evolved from its original premise of “targeting a different market” to attracting segments traditionally targeted by hotels, such as the leisure family market, business travelers, and the upscale traveler, as evidenced through its latest offering, Airbnb Plus. These homes hold been verified for quality, comfort, design, maintenance, and the amenities they offer. They besides hold smooth check in, premium internet access, and fully equipped kitchens. Their hosts are typically rated 4.8+, and retrograde above and beyond for their guests. Through Airbnb Experiences, travelers can partake in everything from the Great outdoors—hiking and surfing—to “hidden” concerts and food and wine tours. In addition to these products, Airbnb has besides “created” its own segments of travelers: novelty and experience seekers who are looking for unique and unconventional accommodation affection yurts, treehouses, and boats, totality things that a traditional hotel company cannot provide.
The Present: Understanding what consumers want lies at the heart of the battle between hotels and Airbnb
There are larger societal trends that are impacting what consumers quest travel, and they assume this has implications for the Airbnb and hotel dynamic. These trends include:
What Do these trends mean? They require marketers and experience designers to re-think what the travel experience means to the customer. The notion of the experience economy was created by Pine and Gilmore in 1998, and included four dimensions: escapism, education, entertainment, and esthetic. Leveraging one, or ideally, more of these dimensions creates memorable experiences for customers, which in whirl results in brand loyalty. This dynamic has been fairly well-established in the academic literature. However, Airbnb has changed the game for the experience economy by emphasizing the sharing lifestyle and a sense of community, cleverly incorporating the above highlighted trends into its communications with customers. Because of Airbnb popularity and success, six novel dimensions hold been incorporated into the experience economy, in the context of the travel experience: personalization, communitas, localness, hospitableness, serendipity, and ethical consumerism, as was presented by Mody in 2016.
Interestingly, in a recent study by Mody and colleagues (Mody, Suess, & Lehto, 2017), the researchers institute that Airbnb outperformed hotels on totality the dimensions of this new, expanded, accommodation experiencescape. Airbnb outperforms hotels in the personalization dimension because of its wide array of homes and locations, enabling genuine micro-segmentation and the “perfect match” between guest and host (Dolnicar, 2018). Moreover, no one home is similar to another, giving customers a unique experience every time, enhancing the serendipity associated with an Airbnb stay. Airbnb elevates the sense of community that consumers seek, particularly when sharing space with other travelers and/or with the host, and allows consumers unparalleled access to “the local”—that café or cute Little store that only locals know about. However, there are areas where hotels hold their own. For example, the pathways between these dimensions and memorability were just as stalwart for hotels as for Airbnb, emphasizing the necessity for hotels to engage customers by leveraging the “right” dimensions for the brand—dimensions that align with the brand’s mission, story, and personality.
One such dimension where hotels achieve just as well as Airbnb is hospitableness, as confirmed in a study by Mody, Suess, and Lehto (2018). More “investor units” on the Airbnb platform means that the host is often not present when guests arrive to the home; moreover, totality communication is done electronically and with someone who “manages” the Airbnb unit and doesn’t necessarily own or live in it. In turn, hotels that leverage the human factor—the welcome of a friendly check-in agent, the helpfulness of the concierge, the warm greeting and genuine interaction between guest and food and beverage staff—create more positive emotions, which subsequently lead to higher brand loyalty. It is imperative that hotel brands really assume about the high-tech, towering palpate experience they are looking to provide, particularly in the golden age of brand proliferation that they live in.
From a non-experience standpoint, regulation is another bone of contention that merits nearby inspection. After years of denying that Airbnb was a competitor, in 2016, the American Hotel & Lodging Association first began an extensive lobbying effort for the imposition of taxes and regulations on Airbnb that plane the playing field. Over the ultimate yoke of years, the voices of the hotel lobby and other community groups hold translated into governments taking some action, in the U.S. and abroad. However, in a study of regulation across 12 European and American cities, Nieuwland and van Melik (2018) institute that governments hold been fairly lenient towards short-term rentals with Little to no (meaningful) regulations thus far. Moreover, regulations hold been designed to alleviate the negative externalities of Airbnb on neighborhoods and communities rather than to plane the playing bailiwick between Airbnb and hotels. Another challenge with regulating the peer to peer economy has been enforcement. In novel York City, under the Multiple Dwelling law, it is illegal for a unit to subsist rented out for less than 30 days unless the owner is present in the unit at the time the guest is renting. However, it is quiet practicable to find “entire homes” on Airbnb in novel York City, even though, in principle, these typically comprise homes where the host is not present during the guest’s stay. Moreover, Nieuwland and van Melik (2018) and Hajibaba and Dolnicar (2017) hold institute that regulations tend to subsist very similar across cities, without accounting for the specificities of a particular location, which makes the process perfunctory and superficial. There besides remains the danger of over-regulating Airbnb, given that there is quiet very Little information about effective ways of regulating these innovations in the sharing economy, thus stifling their potential. Avoid over-regulation is critical, since Airbnb has significant welfare effects in the economy. In addition to stimulating travel to previously inaccessible markets, Airbnb besides creates customer surplus (Farronato & Fradkin, 2018), an significant economic value measure. Moreover, other research has suggested that the medium resident is not as negative towards the Airbnb as media rhetoric might insinuate (Mody, Suess, & Dogru, 2018). The necessity for a data-driven approach to Airbnb regulation remains paramount.
The Future: Competing with the sharing economy requires re-thinking the brand and the experience
While regulation is outside the control of the hotel industry, the brand and the customer experience are not. They contend that these are the areas where hotel companies’ efforts necessity to subsist focused. Hotels necessity to re-think the brand promise, both for the parent brand as well as individual brands in the portfolio, and how it defines and shapes the guest experience. Recent research by Mody and Hanks (2018) indicates that while Airbnb leverages the authenticity of the travel experience—by enabling local experiences that provide a sense of self and sense of place, hotel brands that are perceived as being authentic—original, genuine, and sincere—can generate higher brand loyalty. Thus, while it’s arduous to compete with homesharing in terms of experiential authenticity, brand authenticity is a pillar on which hotels can build a stalwart foundation for loyal brand relationships. This is particularly significant because while Airbnb promotes experiential authenticity as a key reason to spend the brand, most travelers tend to abide with the brand for much more functional requirements, such as space and price (Chen & Xie, 2017; Dogru & Pekin, 2017)
There is no one definition for or manifestation of an “authentic” brand. It’s a perception, a passion that consumers hold about what you stand for. An undoubted brand has at its core the brand promise, an undoubted value proposition that gives consumers a raison d’etre for associating with the brand. However, what an undoubted brand does require is effective storytelling. A brand is perceived to subsist authentic, if it has an undoubted sage that feeds it. Brand stories can advance from many sources: a brand’s values, personality, heritage, uniqueness, or its quest and purpose. What is significant is telling compelling and coherent stories across the brand’s various touchpoints to engage consumers at a visceral, emotional level. Taking off industry blinders, and looking for inspiration outside the hotel industry, is critical. Tom’s Shoes is an excellent example of leveraging its quest—One for One—in creating a compelling brand story. As another example, in an industry typically focused on the in-store, “physical” experience, Burberry has set the gold gauge for authentic, digitally-led and emotive storytelling, by looking within and leveraging over 150 years of history (Watch the YouTube Video here). In this vein, they assume that Fairfield Inn and Suites’ recur to “where it totality began”—the Marriott family’s Fairfield Farm in the Blue Ridge Mountains of Virginia— to craft the brand experience of the future, from a design and communications standpoint, is an excellent example of leveraging authenticity and crafting a compelling brand covenant (Ting, 2017b).
Another understanding that lies at the heat of the brand covenant is what they convoke the experiential value proposition, or EVP. For the longest time, hotel marketers hold relied on the guest leeway as the primary source of value for the guest. But assume about the ultimate time you traveled. Was it the prospect of the hotel leeway that got you excited about your trip? Or was it everything that the hotel enables you to Do – the experience outside the guestroom? From experiencing expertise and music in the lobby to its proximity to the must-do craft beer garden, hotel marketers must realize that it’s the complete package—what’s inside and outside the room—that customers spend as cues for making their decision to select an accommodation. They convoke this proposition offered by the hotel—what’s inside and outside the guest room, enclosed within an experience of hospitableness and a connection to humanity—its EVP. They present the EVP in motif 1. The EVP mirrors the value paradigm of the modern traveler, something that must subsist reflected in the hotel brand’s sales, marketing and pricing and revenue management efforts. Thinking about a brand through the lens of the EVP paradigm has the power to re-orient the customer’s mindset from one of price-shopping to experience-shopping.
Figure 1. The Experiential Value Proposition Framework
How does a hotel marketer apply the EVP paradigm? Its application can open up many avenues. Hotels can start by rethinking the design of their primary digital channels, led by the website by adding more rich, vivid content that goes beyond the guestroom, in order to better integrate aspects of the wider hotel and local experience. The gauge Hotels serves as an excellent example (http://www.standardhotels.com/) Its website feels more affection a local lifestyle and culture magazine than a digital media property “selling” a hotel room. The website’s loaded images and stories draw the visitor into wanting to learn more about what the brand has to offer. While not every hotel can or would want to retrograde the gauge way, since the brand has its own several voice and personality, there is a case to subsist made for going beyond static images of beds in guestrooms, which tend to blend into one indistinguishable gross after a point, particularly on OTA websites. When was the ultimate time the image of a hotel bed excited you to want to abide there? Yet, when you gawk at the imagery deliver out by most hotels, this is what marketers quiet focus on.
Placing an emphasis on humanity and providing a sense of hospitableness can besides enhance a brand’s EVP. Instead of technology replacing the human connection, the industry needs to gawk for ways in which technology can actually free up employees so that they can spend their time crafting more personal and unique experiences, delighting guests instead of performing routine transactions. Moreover, if the human connection is what people quest out when traveling with Airbnb, why is it that hotel confirmation emails quiet obtain sent out by automated systems that highlight the “facelessness” of the hotel entity. Why not spend that as an chance to truly welcome the guest; a simple palpate such as a welcome epistle from the GM with his/her photo, or that of an employee who is “assigned” as “your personal host” during your abide can retrograde a long route in emulating the human connection that the sharing economy enables.
The design of the hotel’s public spaces can subsist used to enhance the guest’s experience of “communitas”. Ian Schrager would conform (Schaal, 2017). After all, with much of Airbnb’s supply being dominated by investor units that provide Little or no host contact, what better an chance for hotel brands to note that they are the original connectors of human beings? Sheraton has been wise in incorporating some of these communal elements into its brand makeover by introducing productivity tables and studio spaces and a day-time coffee bar that transforms into a bar at night. In terms of another design element, Airbnb’s attractiveness to family and group travelers can subsist offset by offering connecting and/or multiple rooms for one price, with other experience value-adds thrown in (as with the Marriott family leeway connecting rooms package.
Finally, the role of the loyalty program cannot subsist emphasized enough. Loyalty programs must journey beyond programmatic levels to being able to leverage data from guest history, convivial media, and other marketing data sources, powered by predictive analytics, to personalize and individualize the guest experience of the brand. In an age of instant gratification, the loyalty program has to subsist gamified to unlock value-adds and tender creative bundling.
At the plane of the hotel company, beyond the individual brand, the hotel industry has started participating in the home sharing business and is increasingly looking to integrate these platform business models. For example, while Accor purchased Onefinestay, Marriott has teamed up with Hostmaker to create Tribute Portfolio Homes, a partnership that was recently expanded to four European cities (Fox, 2018). From an organic brand evolution standpoint, Accor’s newest Jo & Joe brand mimics the sharing economy within the confines of a traditional hotel space. Other, more innovative and bold ways of integrating the sharing economy ethos into a hotel could comprise offering an “Airbnb floor”, an antithesis to the club floor, one that would not tender housekeeping and other hotel services and thus subsist offered at a lower price. With hotel brands becoming “branded marketplaces” for accommodation and not just hotel rooms, perhaps there is merit in listing hotel rooms on alternative accommodation platforms. HomeAway is already adding hotels to its platform through the Expedia Affiliate Network, while Airbnb is making a push for bed-and-breakfasts and boutique hotels. Homesharing providers hope that by adding these options to their listings, they will fulfill their goal of being “for everyone”, while allowing independent and boutique hotels to garner the benefits of branded distribution at a lower cost than traditional OTA brands.
In sum, hotels must adopt a sales, marketing, and revenue management approach that is both strategic and tactical.
At a strategic level, hotel brands necessity to re-think their story, and how they portray and fulfill their authenticity and brand promises. At a tactical level, it’s the experience and value beyond the guestroom that must subsist factored into what is presented to current and potential guests, what they are charged for it, and how it is leverage to create “memorable memories” that lead to higher net promotor scores and brand loyalty. They present a graphical summary of the past, present, and future of Airbnb vs. hotels in motif 2.
Figure 2. Summarizing the past, present and future of Airbnb vs. hotels
PDF Version Available HereReferences Chen, Y., & Xie, K. (2017). Consumer valuation of Airbnb listings: a hedonic pricing approach. International Journal of contemporary Hospitality Management, 29(9), 2405–2424. http://doi.org/10.1108/IJCHM-10-2016-0606 Dogru, T., Mody, M., & Suess, C. (2018). Adding evidence to the debate: Quantifying Airbnb’s disruptive impact on ten key hotel markets. Dogru, T., & Pekin, O. (2017). What Do guests value most in Airbnb accommodations? An application of the hedonic pricing approach. Boston Hospitality Review. Dolnicar, S. (2018). Unique Features of Peer-to-Peer Accommodation Networks. In S. Dolnicar (Ed.), Peer-to-Peer Accommodation Networks: Pushing the boundaries (pp. 1–14). Oxford: Goodfellow Publishers Ltd. Farronato, C., & Fradkin, A. (2018). The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb. Fox, J. (2018). Marriott expands homesharing program in Europe. Hotel Management. Retrieved from https://www.hotelmanagement.net/own/marriott-expands-homesharing-program-to-3-european-cities Hajibaba, H., & Dolnicar, S. (2017). Regulatory Reactions Around the World. In S. Dolnicar (Ed.), Peer-to-Peer Accommodation Networks: Pushing the boundaries (pp. 120–136). Oxford: Goodfellow Publishers Ltd. Lane, J., & Woodworth, M. (2016). The Sharing Economy Checks In: An Analysis of Airbnb in the United States. Retrieved from http://www.cbrehotels.com/EN/Research/Pages/An-Analysis-of-Airbnb-in-the-United-States.aspx Mody, M. A., Suess, C., & Lehto, X. (2017). The accommodation experiencescape: a comparative assessment of hotels and Airbnb. International Journal of contemporary Hospitality Management, 29(9), 2377–2404. http://doi.org/10.1108/IJCHM-09-2016-0501 Mody, M., & Hanks, L. (2018). Parallel pathways to brand loyalty: Mapping the consequences of undoubted consumption experiences for hotels and Airbnb. Mody, M., Suess, C., & Dogru, T. (2018). Not in my backyard? Is the anti-Airbnb discourse truly warranted? Annals of Tourism Research. http://doi.org/10.1016/j.annals.2018.05.004 Mody, M., Suess, C., & Lehto, X. (2018). Going back to its roots : Can hospitableness provide hotels competitive edge over the sharing economy ? International Journal of Hospitality Management. http://doi.org/10.1016/j.ijhm.2018.05.017 Nieuwland, S., & van Melik, R. (2018). Regulating Airbnb: how cities deal with perceived negative externalities of short-term rentals. Current Issues in Tourism, 0(0), 1–15. http://doi.org/10.1080/13683500.2018.1504899 Schaal, D. (2017). Ian Schrager Calls Out Hotel Industry’s Airbnb Strategy as Misguided. Skift. Retrieved from https://skift.com/2017/12/08/ian-schrager-calls-out-hotel-industrys-airbnb-strategy-as-misguided/ Ting, D. (2017a). Airbnb Growth sage Has a Plot Twist — A Saturation Point. Skift. Retrieved from https://skift.com/2017/11/15/airbnb-growth-story-has-a-plot-twist-a-saturation-point/ Ting, D. (2017b). Marriott and selection engage Varied Approaches to Reviving Classic Midscale Brands. Skift. Zaleski, O. (2018). Airbnb and Niido to Open as Many as 14 Home-Sharing Apartment Complexes by 2020. Retrieved from https://www.bloomberg.com/news/articles/2018-08-14/airbnb-and-niido-to-open-as-many-as-14-home-sharing-apartment-complexes-by-2020 Makarand Mody, Ph.D. has a varied industry background. He has worked with Hyatt Hotels Corporation in Mumbai as a Trainer and as a attribute Analyst with India’s erstwhile premier airline, Kingfisher Airlines. His most recent experience has been in the market research industry, where he worked as a qualitative research specialist with India’s leading provider of market research and insights, IMRB International. Makarand’s research is based on different aspects of marketing and consumer conduct within the hospitality and tourism industries. He is published in leading journals in the field, including the International Journal of contemporary Hospitality Management, Tourism Management Perspectives, Tourism Analysis and the International Journal of Tourism Anthropology. His toil involves the extensive spend of inter and cross-disciplinary perspectives to understand hospitality and tourism phenomena. Makarand besides serves as reviewer for several leading journals in the field. In topple 2015, he joined the faculty at the Boston University School of Hospitality Administration (SHA). He received his Ph.D. in Hospitality Management from Purdue University, and besides holds a Master’s degree from the University of Strathclyde in Scotland. Monica Gomez is a graduate student in the School of Hospitality Administration at Boston University. She received her Bachelor’s degree in Tourism, Recreation, and Sport Management from the University of Florida and has held previous internship positions in hotel operations and event management. She is a member of the Hospitality Sales and Marketing International Association and is interested in hotel revenue management.
By Mike Oshins
Over the past 15-20 years, changes in hotel ownership and management, the growth and evolution of online reservation systems and the proliferation of lodging alternatives hold altered the hospitality landscape, bringing novel complexity to the industry. Two decades ago, a Marriott hotel was commonly owned and managed by Marriott; now, many are owned by one company, franchised with the Marriott name, and managed by a third company. While customers used to subsist able to pick up the phone and convoke a hotel’s reservations focus or spend their local travel agency to engage a room, today online distribution systems affection Expedia, Travelocity, and Kayak are powerful intermediaries that hold totality but replaced traditional consumer travel agencies. Travelers may select among many alternatives to hotels for lodging, including AirBnB, HomeAway, Flipkey, and VBRO. Mergers and acquisitions continue to multiply, exemplified most notably by Marriott’s purchase of Starwood to create the world’s largest hotel company with 30 brands. Millennials’ preferences hold pushed the evolution of novel brands with novel thinking about hotel design, as demonstrated with Hilton’s Tru, Best Western’s Vib and Glo chains, and Intercontinental’s EVEN.
Travel patterns hold besides changed. China has become the largest exporter of tourists in the world, totaling almost 100 million outbound travelers and representing almost one in ten tourists in the world. Chinese travelers besides spent the most money, roughly $250 billion in 2015. For reference, the second highest spenders were Americans at $110 billion. In the U.S., national discussion about travel bans, novel barriers to hiring non-domestic seasonal workers (a key factor in novel England’s summer tourist season), practicable elimination of the national Brand USA marketing effort, and tenuous Cuba travel policies are totality creating mistrust in the tourism market. These changes and ambiguities present novel challenges, both big and small, for the hospitality industry, requiring those at the forefront of the bailiwick to anticipate and respond to the subsequent fallout.
Prolific business author John Kotter states that the main role of leadership is dealing with change. Depending on how it’s viewed, with the appropriate perspective and pliancy, change can present an organization with novel opportunities—the possibility of taking edge of changing demographics, novel technologies, or the emergence of novel markets. Change can besides raise dilemmas, such as the necessity to address novel competitors, contend with a crisis or cope with a lack of available employees. Even before developing and implementing successful change management processes, organizational leaders must hold the skill to recognize the opportunities and dilemmas presented by change and know how to assume about them. To remark the necessity for change, to identify novel realities, either current or future, one must subsist able to view the stout picture and the current climate in novel ways. This skill to remark the present and near future from a novel vantage point is one of the main reasons common Electric (GE) CEO, Jeff Immelt, moved GE world headquarters to Boston’s expanding Seaport District. GE’s novel home will “place his leadership team in a vibrant city with a world-renowned innovation scene, instead of in a wooded Connecticut suburb” (Boston Globe), thus giving his senior team a novel perspective, and the chance to create closer connections with institutions able to stimulate novel ideas and create a novel pipeline for employees. Other than touching a $240 billion company’s world headquarters—something that’s not always feasible to achieve—how else can one enhance a leadership kit with tools for responding effectively to change? The skill to assume more creatively, shape novel habits, change paradigms, reframe one’s perspective, and assume differently by learning novel ideas are totality tools that can aid in addressing the first factor of leading change, that is identifying that change is needed. The following examples highlight some of the ways one can learn to subsist more successful in thinking about and capitalizing on the opportunities presented by change.Creative Thinking
IBM interviewed 1500 CEOs around the world in 2010 and institute Creativity is now the single most significant leadership competency and is needed in totality aspects of leadership. If one thinks in the very route as everyone else, the chance for novel ideas (and novel solutions) is limited. The irreverent and offbeat humor of Monty Python is captured in their tagline, “And now for something completely different!” assume Different! is the mantra for Steve Jobs and Apple, as eloquently explained in Simon Sinek’s Start with Why. Sir Ken Robinson, author and the holder of the top TED Talk Do Schools assassinate Creativity, defines creativity as, “the process of having original ideas that hold value.” There are many ways to multiply creativity, including:
Creating a novel practice or set of habits is another route to change how they remark things. In his iconic 1989 book, The 7 Habits of Highly effective People, Stephen Covey illustrates how powerful an influence habits can subsist in their lives. Covey describes a practice as the intersection of knowledge, skill, and desire: “Knowledge is the what they Do and why they Do it [principles], want is the motivation, the want to do, and skill is the how to do.” His seven habits—Be Proactive, start with the desist in mind, deliver first things first, assume win/win, quest first to understand…then subsist understood, Synergize, and Sharpen the saw—provide a route of thinking and acting in business and life. By embracing these habits, one can maintain a better equipoise and create the chance to find novel ways of looking at situations.
Charles Duhigg’s more recent bestseller, The Power of Habit, addresses the understanding of habits as “why they Do what they Do in business and life.” Taking a psychological approach, Duhigg explores the theory of cues (something that triggers a habit), routines (actions taken in response to cues), and rewards (the positive experiences resulting from routines), which together comprise the practice loop. For example, Starbucks develops habits of willpower to wait on their staff deal with stressful times. Through role-playing, discussion, and feedback, they train employees how to react to a cue (e.g., an ireful customer or a diligent period) by choosing a certain routine ahead of time (e.g., remaining calm, looking for solutions, etc.). When an inflection point arrives (cue), employees are able to ply the situation smoothly, resulting in the reward of a satisfied customer and successful chaos management. In this scenario, Starbucks helps their staff create habits by helping them change how they approach and address dilemmas. One employee now thinks of his green Starbucks apron as a shield – when he puts it on, ireful customers can no longer palpate him!Reframing
“The power of reframing things can unlock a vast array of solutions to problems stout and small,” states author Tina Seelig. She illustrates reframing using a classic scene from the Pink Panther movie (a hospitality example, no less).
Inspector Clouseau: Does your dog bite?
Hotel Clerk: No.
Clouseau [bowing down to pet the dog] Nice doggie.
[The dog bites Clouseau’s hand.]
Clouseau: I thought you said your dog did not bite!
Hotel clerk: That is not my dog.
We might subsist tempted to guilt the clerk when the dog bites Clouseau, but the clerk’s final statement surprises us and causes us to deem the situation differently.
One of the key elements of reframing is to view a circumstance with a fresh perspective. In Tom Stoppard’s play, Rosencrantz and Guildenstern are Dead, they remark Shakespeare’s classic sage of Hamlet through the lens of two minor characters, and in the Broadway hit Wicked, the Wizard of Oz sage is interpreted from the witches’ perspectives, revealing a more intricate and altered understanding of the Wicked Witch of the West and Glinda, the friendly Witch. Reframing a situation allows the possibility of novel lessons and solutions which otherwise may retrograde unnoticed.
In their approach to reframing, authors Bolman and Deal spend frames as a useful tool to create sense of organizations. The four frames, structural (emphasizing roles & policies), human resource (highlighting human needs, skills and relationships), political (focuses on power, combat and competition) and symbolic (emphasizing culture, meaning, ceremonies and stories) tender different perspective on how to assume about organizations. Each frame provides a different language and model in managing, evaluating, diagnosing and understanding and leading an organization. Altering the route in which they typically frame an organization can wait on us better communicate with those who interpret the organization differently. Viewing an organization from different frames may besides unleash a variety of novel ideas to address current or emerging dilemmas or raise up novel opportunities to respond to change in their world.
Another example of reframing is illustrated, quite literally, in how they view the world. This spring, 600 classrooms in the Boston Public School system switched from teaching the traditional European-centric Mercator map, developed in the 1500s, to the Peters Projection map (1974), in which land masses are more accurately represented in relation (size and proximity) to one another. For example, using the Mercator map, Greenland and Africa loom the very size; in the Peters map, however, Africa, which is 14 times larger than Greenland, is more proportionally displayed. This understanding was brought to mainstream US in a 2001 West Wing clip by the ‘cartographers for convivial equality’. At one point, when confronted with these novel perspectives, a West wing official asked, “You involve Germany is not where they assume it is?”— to which a cartographer responded, “Nothing is where you assume it is.” The issue of perspective and change about their world, met with incredulity in a fictional drama, became reality this spring in Boston Public Schools.Paradigms Shifts
The Oxford Dictionary defines a paradigm as “a typical example or pattern of something; a pattern or model.” Scientist Thomas Kuhn introduced the concept of the paradigm shift in his influential 1962 book, The Structure of Scientific Revolutions. Groundbreaking paradigm shifts comprise examples in areas as diverse as physics, health, and astronomy—think of what Galileo had to retrograde though to convince royalty that the earth rotated around the sun (Copernicus theory) when most astronomers believed the reverse to subsist true. A paradigm shift changes how they gawk at things. Malcolm Gladwell’s best-selling books focus on rethinking preconceived ideas, starting with his breakthrough 2006 engage The Tipping Point and continuing with his more recent engage David and Goliath, which offers several true life examples of when a perceived power can subsist a weakness and a weakness… a strength. For example, an extraordinary towering number of successful entrepreneurs are dyslexic, including Jet Blue founder David Neeleman. The challenge of dyslexia as a child may provide coping skills later in life – billionaire Sir Richard Branson of Virgin Air considers his dyslexia his greatest business advantage.
In business, paradigm shift examples comprise disruptive innovations (e.g., the Internet, mobile technology, and stout data analytics), shifting global economies, climate change, employee and societal demands, and changing consumer preferences. Futurist Joel Barker explains that when a paradigm shift occurs, everything resets to zero, past successes guarantee nothing, and shifting business models shift to create novel realities. For example, once-successful stout box stores and corporations that could not reconcile to the digital age, such as Borders Books, Blockbuster, and Kodak, went bankrupt. Compare these examples to Netflix, which was able to successfully navigate from their business model of renting DVDs through the mail to streaming movies and television shows over the internet to multiply their market share. Flexibility to reconcile to paradigm shifts is a powerful tool. As Charles Darwin explains in describing his iconic research: “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”Self-Reflection and Understanding
Shifting paradigms and changing one’s perspective starts with self-reflection: the better they understand ourselves, the better they can approach change. Daniel Goleman provides the multi-faceted framework of emotional intelligence, including two personal competencies (self awareness and self management) and two convivial competencies (relationship management and convivial awareness) that should subsist examined to wait on better understand moods and how they palpate those around them. Peter Drucker asserts in order to subsist productive over a 50-year work-life it is significant to cultivate a deep understanding of one’s self. He offers several penetrating questions in his Harvard business Review article Managing Oneself, including “How Do I work?” “Where Do I belong?” and “What can I contribute?”
There are besides many tools available to wait on provide insight into the ways in which they each view and navigate the world around us. With over two million Myers Briggs type Indicator (MBTI) assessments being administered every year in more than 70 countries, this personality profile tool, based on the toil of preeminent psychologist Carl Jung, continues to subsist wildly common in helping people better understand themselves. Key MBTI elements comprise how they focus their energy (introversion vs. extroversion), the route they engage in information (sensing vs. intuitive), create decisions (thinking vs. feeling) and their attitudes toward the external world and how they orient ourselves to it (view the world to subsist organized and systematic vs. elastic and subsist experienced). The stout Five personality traits, Fundamental Interpersonal Relations Orientation (FIRO), Thomas-Kilmann combat mode instrument (TKI), and the stalwart Interest inventory are totality additional tools that can wait on resolve one’s preferences.
Identifying one’s personal values is besides a stalwart trend in business today, with a plethora of instruments available for self-discovery. For example, after a two-day, internal values-clarification exercise, each member of the senior leadership team of the Vail Centre posts his/her top five values on the company’s website for everyone to see. Determining and focusing on one’s strengths rather than one’s weaknesses is the cornerstone approach to Gallop Poll and Don Clifton’s Strengthfinder 2.0. This self-assessment tool enables one to identify their top 5 of 34 different talent themes, from Achiever to WOO (winning others over). By better understanding one’s natural instincts, strengths, weaknesses and personal preferences, one can multiply the likelihood to learn how other colleagues or customers from different backgrounds, cultures, generations or perspectives remark things differently, enabling novel approaches or frames to address change.
In his book, The Spirit to Serve, Marriott International founder J.W. Marriott, Jr. adopted 19th century philosophy Alfred North Whitehead’s perspective when developing the Marriott Way, “The expertise of progress is to preserve order amid change and to preserve change amid order.” The skill to assume differently as the hospitality industry moves into uncharted territories—both nationally and internationally, within organizations and in local markets, online and in person—is becoming more significant as change continues to evolve at a faster pace than ever before. Being spry and open-minded enough to adapt, addressing challenges and/or seizing opportunities, will determine which companies wither away and which ones thrive. At the heart of these circumstances is the skill to recognize trends, realize the necessity for change and act on these situations in ways that navigate the needs of an organization, and its staff and customers. Mental flexibility, adaptability, creativity and personal awareness are key tools in this process that can wait on hospitality leaders remark things from different perspectives, gain novel insights, develop and pilot novel ideas and better respond to an ever-changing world.
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Michael Oshins is Associate Professor of the practice of Leadership in the School of Hospitality Administration at Boston University. He is former Vice President of Integer Dynamics, a hospitality consulting solid focused on operational productivity and technology. He holds a doctorate in human resource education from Boston University and a master’s degree in hotel administration from Cornell University. Email: email@example.com References
By Tarik Dogru, Makarand Mody, and Courtney Suess
If you are in the hotel industry, chances are that Airbnb has advance up in conversation at some point or another. The sharing economy phenomenon and the economic, social, and technological changes fueling its growth hold challenged the hotel industry to rethink its experiential value proposition to the customer (Mody, Suess, & Lehto, in press). Airbnb founder and CEO Brian Chesky tweeted that “Airbnb hosted more than 2 million guests in the past novel Year’s Eve,” and that with the ultimate round of financing, which was $1 billion, Airbnb is now valued at $31 billion (Yurieff, 2017). As a result, Airbnb has been at the core of discussions in the world of hospitality and beyond, mainly due to its potential and uncalculated impacts. On one hand, Airbnb might hold positive economic impacts on hospitality and tourism institutions, such as restaurants, bars, and other locality attractions, through increases in income and job creations. On the other hand, potential adverse economic impacts of Airbnb cannot subsist overlooked: Airbnb might negatively palpate the hotel industry, if visitors were to shift their exact from hotels to Airbnb accommodations. However, it is not yet pellucid whether Airbnb is taking a partake of the existing hotel industry pie or increasing the size of the overall accommodations industry.
The results from the most comprehensive study analyzing the effects of Airbnb on the hotel industry showed that a 1% multiply in Airbnb listings decreases hotel revenue by 0.05% (Zervas, Proserpio, & Byers, 2016). Thus, although negative effects on hotel revenues by route of Airbnb were reported in this study, the magnitude of these effects was diminutive in the given location of Texas. On the other hand, a study conducted in Korea showed that Airbnb does not palpate hotel revenues at totality (Choi, Jung, Ryu, Do Kim, & Yoon, 2015). A recent study conducted by Smith Travel Research (STR) in 13 global markets reported that Airbnb listings did not palpate hotel exact and revenues (Haywood, Mayock, Freitag, Owoo, & Fiorilla, 2017).
While there are limited studies from which to draw definitive conclusions on the effects of Airbnb on the hotel industry, according to Mr. Chesky, Airbnb does not directly compete with the hotel industry. He claims that Airbnb guests are not typical hotel customers, but rather those who would hold stayed with friends and family (Intelligence, 2017). Although Airbnb argues that it brings novel visitors to destinations and that 70% of its listings are outside of hotel districts, a report by Morgan Stanley indicates that about 42% and 36% of Airbnb guests switched from hotels and bed and breakfasts respectively, whereas only 31% of Airbnb guests depict those who would hold stayed with friends and family (Intelligence, 2017). Furthermore, a recent study conducted in Los Angeles showed that more than 60% of the properties listed on Airbnb are solely used for commercial purposes and thus are excluded from the residential true estate market (Lee, 2016). According to a recent report by CBRE, revenue generated by hosts renting out two or more units was about $1.8 billion, and hosts renting out ten or more units generated $175 million in 13 major US markets in 2016 (CBRE, 2017). Despite this massive amount of generated revenue, the hosts are generally not paying taxes on their properties.
While there seems to subsist free-riders on the market that engage edge of the sharing economy platforms affection Airbnb by listing multiple properties, based on the current knowledge, it is quiet not pellucid whether Airbnb has an adverse outcome on the hotel industry. The present study compares the hotel industry and Airbnb in terms of key performance metrics, including occupancy, ADR, and RevPAR, to determine whether and how Airbnb affects the hotel industry in Boston. Boston is a stalwart hotel market, but italso has a considerable and growing Airbnb supply, so it provides an excellent context for their analysis.
In their analyses, they treated Airbnb as an accommodation solid to resolve whether it is directly competing with hotels in Boston. Accordingly, the number of Airbnb units listed and the number of units rented (including entire homes and private and shared rooms) multiplied by the number of days in a specified time era constitute Airbnb supply and exact figures, respectively. Occupancy, ADR, and RevPAR were calculated following the very methodology used to motif these statistics in hotel industry. The Airbnb and hotel data were provided by Airdna and STR, respectively. They analyzed data for the era between January 2015 and September 2016.ANALYSIS Comparing changes in supply and demand
Tables 1 and 2 present the supply, demand, and revenue statistics for Airbnb and hotels in the city of Boston during the analysis period.Table 1. Airbnb Supply and Demand Period Airbnb Supply % Change in Supply Airbnb Demand % Change in Demand Jan-15 79,110 N/A 575 N/A Feb-15 85,890 8.6 4,506 683.7 Mar-15 91,710 6.8 7,811 73.3 Apr-15 106,380 16.0 18,733 139.8 May-15 114,330 7.5 30,547 63.1 Jun-15 123,180 7.7 38,545 26.2 Jul-15 122,670 -0.4 51,378 33.3 Aug-15 119,580 -2.5 37,555 -26.9 Sep-15 128,730 7.7 51,757 37.8 Oct-15 142,470 10.7 41,011 -20.8 Nov-15 363,660 155.3 76,451 86.4 Dec-15 383,880 5.6 65,064 -14.9 Jan-16 380,910 -0.8 73,300 12.7 Feb-16 375,480 -1.4 101,409 38.3 Mar-16 372,540 -0.8 112,501 10.9 Apr-16 373,050 0.1 134,951 20.0 May-16 374,970 0.5 137,347 1.8 Jun-16 378,870 1.0 147,947 7.7 Jul-16 385,260 1.7 148,473 0.4 Aug-16 385,620 0.1 123,588 -16.8 Sep-16 390,270 1.2 107,690 -12.9 Table 2. Hotel Supply and Demand Period Hotel Supply % Change in Supply Hotel Demand % Change in Demand Jan-15 1,588,843 N/A 896,065 N/A Feb-15 1,436,512 -9.6 901,459 0.6 Mar-15 1,598,701 11.3 1,200,426 33.2 Apr-15 1,550,910 -3.0 1,216,283 1.3 May-15 1,605,304 3.5 1,328,932 9.3 Jun-15 1,558,800 -2.9 1,357,872 2.2 Jul-15 1,610,760 3.3 1,413,521 4.1 Aug-15 1,616,278 0.3 1,393,622 -1.4 Sep-15 1,564,170 -3.2 1,335,976 -4.1 Oct-15 1,616,340 3.3 1,394,364 4.4 Nov-15 1,564,170 -3.2 1,105,292 -20.7 Dec-15 1,616,309 3.3 906,619 -18.0 Jan-16 1,632,367 1.0 909,132 0.3 Feb-16 1,482,796 -9.2 895,546 -1.5 Mar-16 1,646,410 11.0 1,150,937 28.5 Apr-16 1,593,300 -3.2 1,273,368 10.6 May-16 1,650,409 3.6 1,303,974 2.4 Jun-16 1,603,050 -2.9 1,366,553 4.8 Jul-16 1,656,392 3.3 1,406,893 3.0 Aug-16 1,667,955 0.7 1,403,774 -0.2 Sep-16 1,622,130 -2.7 1,347,565 -4.0
The number of Airbnb listings has increased dramatically from 79,110 in January 2015 to 390,270 in September 2016. While the highest growth in hotel leeway supply was about 11% month-over-month (in March 2016), Airbnb supply experienced a phenomenal growth rate of 155% (in November 2015). Extraordinary changes in hotel leeway supply might subsist due to renovations and the completions of ongoing projects in the pipeline. However, the extreme supply shocks in the case of Airbnb are due to the greater flexibility of adding or removing existing residential properties in the market.
Changes in exact were greater than the changes in supply for both Airbnb and the hotel industry. Yet overall trends witness that Airbnb experienced greater increases in exact as compared to the increases in the exact for hotel rooms. For example, Airbnb exact increased by 684%, 140%, and 33% in February, April, and July 2015 respectively, whereas hotel exact only increased by 0.6%, 1.3%, and 4.1% during these months. Although the changes in exact for Airbnb and the hotel industry during the analysis era were, for most part, in the very direction (albeit to varying degrees), there were some anomalies where the changes occurred in the contrary direction. For example, in September and November 2015, while hotel exact decreased by around 4% and 21% respectively, the exact for Airbnb accommodations increased by about 38% and 86% respectively. Also, exact for Airbnb accommodations decreased by 21% in October 2015, whereas hotel exact increased by 4% during the very period.Comparing Occupancy, ADR, and RevPAR
Tables 3 and 4 shows occupancy, ADR, and RevPAR statistics for Airbnb and hotels in the city of Boston during the analysis period.Table 3. Airbnb OCC-ADR-RevPAR Period Airbnb Occupancy Airbnb
ADRAirbnb RevPAR Jan-15 0.70 $158.86 $1.15 Feb-15 5.20 $133.05 $6.98 Mar-15 8.50 $153.44 $13.07 Apr-15 17.6 $161.00 $28.35 May-15 26.7 $134.61 $35.97 Jun-15 31.3 $186.51 $58.36 Jul-15 41.9 $180.12 $75.44 Aug-15 31.4 $142.24 $44.67 Sep-15 40.2 $183.34 $73.71 Oct-15 28.8 $171.78 $49.45 Nov-15 21.0 $151.97 $31.95 Dec-15 16.9 $149.88 $25.40 Jan-16 19.2 $142.60 $27.44 Feb-16 27.0 $160.89 $43.45 Mar-16 30.2 $156.35 $47.22 Apr-16 36.2 $158.33 $57.27 May-16 36.6 $160.96 $58.96 Jun-16 39.0 $187.26 $73.13 Jul-16 38.5 $176.45 $68.00 Aug-16 32.0 $145.23 $46.55 Sep-16 27.6 $159.41 $43.99 Table 4. Hotel OCC-ADR-RevPAR Period Hotel Occupancy Hotel
ADRHotel RevPAR Jan-15 56.4 $142.74 $80.50 Feb-15 62.8 $144.29 $90.55 Mar-15 75.1 $170.58 $128.08 Apr-15 78.4 $188.01 $147.44 May-15 82.8 $205.62 $170.22 Jun-15 87.1 $206.68 $180.04 Jul-15 87.8 $200.44 $175.90 Aug-15 86.2 $193.64 $166.96 Sep-15 85.4 $209.00 $178.51 Oct-15 86.3 $220.10 $189.87 Nov-15 70.7 $183.17 $129.43 Dec-15 56.1 $147.97 $83.00 Jan-16 55.7 $146.43 $81.55 Feb-16 60.4 $146.65 $88.57 Mar-16 69.9 $171.94 $120.20 Apr-16 79.9 $201.51 $161.04 May-16 79.0 $207.29 $163.78 Jun-16 85.2 $212.35 $181.02 Jul-16 84.9 $199.52 $169.47 Aug-16 84.2 $198.45 $167.02 Sep-16 83.1 $219.26 $182.15
Hotel occupancy rates decreased to 83% in September 2016 from 85% in the very era of the previous year, whereas Airbnb’s occupancy has seen a greater diminish from 40% to 28% in the very period. In February 2015, Airbnb’s occupancy was around 5% and reached about 28% in September 2016. While Airbnb experienced a dramatic multiply in occupancy growth throughout the analysis period, these gains did not seem to palpate the hotel industry’s occupancy rates.
Although hotel ADR was generally greater than that of Airbnb, Airbnb’s ADR figures were greater than hotel ADR in three months (January 2015, December 2015, and February 2016). Hotel ADR was $209 in September 2015 and increased to about $219 in September 2016. Despite the lower occupancy in hotels in September 2016 as compared to the very time in the previous year (September 2015), the RevPAR was comparatively higher even after correcting for inflation. (Note: The RevPAR increased from $75.17 to $75.58 based on 1982=100 prices.) A pellucid trend can subsist observed in hotel ADR and RevPAR figures through 2015, and this trend seemed to persist in 2016 in terms of the month-over-month growth rates. However, Airbnb ADR and RevPAR seemed to fluctuate throughout 2015 and Do not seem to succeed a seasonal movement. Indeed, supply and exact dynamics may hold caused the changes in Airbnb ADR and RevPAR, where the equilibrium price is set within the Airbnb market. However, the lack of revenue management practices by Airbnb hosts might besides hold contributed to these fluctuations in ADR and RevPAR.
Hotel performance before and after the arrival of Airbnb
We further analyzed the hotel industry trends for Boston during ultimate 12 years (presented in Table 5), both before and after Airbnb’s entry into the market, to determine whether Airbnb has an outcome on hotel supply, demand, and revenue dynamics. The hotel leeway supply has continued to grow, which suggests that hotel industry seem to continue to grow despite the soar of the Airbnb. The hotel industry’s occupancy saw its lowest point in 2009 and reached over 85% in 2015. Although hotel occupancy experienced a few declines year over year, these decreases loom to subsist due to supply shocks. For example, in 2016, occupancy decreased by about 2.7%; however, supply growth was around 3.7%. That is, the decline cannot subsist entirely attributed to the growth in Airbnb. Despite the declines in occupancy, both ADR and RevPAR hold continued to multiply without a decline after the crisis era and around the arrival of Airbnb onto the scene (2008-2009), and reached their peak in September 2016.Table 5. Historical Hotel Dynamics Period Supply Demand Occupancy ADR RevPAR Sep-05 1418370 1092599 77.0 $143.85 $110.81 Sep-06 1460070 1095808 75.1 $152.20 $114.23 Sep-07 1472790 1164487 79.1 $165.97 $131.23 Sep-08 1492830 1105819 74.1 $171.52 $127.06 Sep-09 1504560 1091371 72.5 $143.20 $103.88 Sep-10 1512540 1176147 77.8 $155.26 $120.73 Sep-11 1512810 1225707 81.0 $162.31 $131.51 Sep-12 1528290 1208011 79.0 $170.08 $134.43 Sep-13 1538100 1251193 81.3 $180.20 $146.58 Sep-14 1537860 1306622 85.0 $202.38 $171.95 Sep-15 1564170 1335976 85.4 $209.00 $178.51 Sep-16 1622130 1347565 83.1 $219.26 $182.15 So, has Airbnb impacted hotel performance in Boston? The data suggests “no”!
Hotels were able to sell more rooms over the ultimate 12 years—that is, more people stayed in hotels in 2016 compared to previous years, despite the exact that was captured by Airbnb. Although it is not pellucid whether the excess exact in the overall accommodations market was created solely because of Airbnb, the additional demand, at least to some extent, could hold been accommodated by hotels in Boston. Hotels in the city have, on average, around 83% occupancy. Thus, for example, if the Airbnb guests were to subsist captured by the hotels in Boston, the medium hotel occupancy would hold been around 90% in September 2016. However, considering the fact that Airbnb’s ADR was lower than that of hotels ($159 vs. $219), hotels would probably hold captured the Airbnb exact within this lower Airbnb price range. It should besides subsist preeminent that, historically, the hotel occupancy in the Boston market has fluctuated between 74 and 85%. With this in mind, Airbnb does not seem to whip from the hotel industry’s market share, but rather seems to hold created novel demand. Although correlation does not witness causation, the correlation coefficients between hotel and Airbnb supply, demand, revenue, occupancy, ADR, and RevPAR (presented in Table 6) besides insinuate that Airbnb does not seem to adversely palpate the hotel industry in Boston.Table 6. Correlations Hotel Supply Hotel Demand Hotel Occupancy Hotel ADR Hotel RevPAR Airbnb Supply 0.386 Airbnb Demand 0.289 Airbnb Occupancy 0.716 Airbnb ADR 0.494 Airbnb RevPAR 0.358
Nevertheless, as Table 7 indicates, Airbnb has been able to multiply its market partake quite remarkably. In particular, Airbnb’s market partake in terms of supply has increased from about 5% in January 2015 to about 19% of the overall accommodation market (i.e., available leeway nights) in September 2016. Theoretically, the Airbnb supply can subsist as big as the residential true estate market in a location. However, it takes a few years to develop a hotel and thus boost the hotel leeway supply in the market, so comparing the market partake in terms of supply is less than ideal. Airbnb’s market partake in terms of exact besides shows significant growth, from less than 0.1% in January 2015 to more than 7% in September 2016. Despite Airbnb’s penetration into the market in terms of supply and demand, Airbnb’s market partake in terms of revenues was only around 5.5% in September 2016. The lower market partake in revenues is likely due to lower prices compared to those of hotels and the lack of revenue management practices by the Airbnb hosts. While a 5.5% market partake in terms of revenue is considerable for a start-up affection Airbnb, it should subsist highlighted that Airbnb seems to hold created novel exact by increasing the market size. They estimated approximately $15 million in tax obligations based on the revenues generated by Airbnb during 2015-2016, which is similar to the figures institute in the recent CBRE report.Table 7. Airbnb Market Share Period Airbnb Market partake (Supply) Airbnb Market partake (Demand) Airbnb Market partake (Revenue) Jan-15 4.74% 0.06% 0.07% Feb-15 5.64% 0.50% 0.46% Mar-15 5.43% 0.65% 0.58% Apr-15 6.42% 1.52% 1.30% May-15 6.65% 2.25% 1.48% Jun-15 7.32% 2.76% 2.50% Jul-15 7.08% 3.51% 3.16% Aug-15 6.89% 2.62% 1.94% Sep-15 7.60% 3.73% 3.29% Oct-15 8.10% 2.86% 2.24% Nov-15 18.86% 6.47% 5.43% Dec-15 19.19% 6.70% 6.78% Jan-16 18.92% 7.46% 7.28% Feb-16 20.21% 10.17% 11.05% Mar-16 18.45% 8.90% 8.16% Apr-16 18.97% 9.58% 7.69% May-16 18.51% 9.53% 7.56% Jun-16 19.12% 9.77% 8.72% Jul-16 18.87% 9.55% 8.54% Aug-16 18.78% 8.09% 6.05% Sep-16 19.39% 7.40% 5.49%
While it is quiet not pellucid from their analysis whether the multiply in overall exact was caused by Airbnb or other economic factors, the descriptive analyses presented in this study insinuate that Airbnb does not seem to subsist competing directly with the hotel industry. However, this was an investigation of the overall hotel market with limited Airbnb data; further analysis is required to determine within-hotel industry effects (e.g. midscale, economy, luxury) and whether Airbnb has a greater impact on asset massive hotel-REITs or asset-light hotel management and franchising companies (Dogru, 2017a).
Airbnb accommodations may provide substantial financial, economic, and convivial benefits to the city of Boston if the listings drive additional tourists to the city, which seems to subsist the case as suggested by their analyses. These benefits comprise but are not limited to generating additional tax revenues for cities and local governments, especially to neighborhoods not traditionally visited by guests staying within the hotel-dominated areas (Tussyadiah & Pesonen, 2016), and additional income for hosts, which would reason a surge in per capita income. Furthermore, during peak seasons or in the cases of mega-events affection the Olympics, the availability of supplementary Airbnb rentals may subsist more advantageous than edifice hotels that will later not subsist utilized at optimal levels (Dogru, 2016, 2017b).
However, the positive economic impacts may not sufficiently compensate for the potential decline in residents’ attribute of life. Airbnb could hold an adverse impact on the attribute of life of local residents in neighborhoods that hold Airbnb offerings because of nuisances and disruptions caused by visitors. Also, the increasing number of Airbnb listings might hold undesirable effects on the residential housing market. Homeowners might simply whirl their properties into Airbnbs if they believe they can create more money, which may exacerbate preexisting housing problems in metropolitan cities (Lee, 2016). There is Little empirical evidence on the economic or convivial impacts of Airbnb to advocate either the proponents or the critics of Airbnb. Thus, the course and the magnitude of these impacts Do not retrograde beyond speculation for the time being. Moreover, the economic impacts of Airbnb might subsist better observed once the sharing economy market is regulated. Therefore, further investigations are necessary to measure the economic and convivial impacts of Airbnb.Summary of key findings
PDF Version Available HereTarik Dogru earned his Ph.D. in Hospitality Management from University of South Carolina, and holds Master’s degree in business Administration from Zonguldak Karaelmas University in Turkey.Prior to joining the Boston University School of Hospitality Administration faculty, he was an adjunct faculty at University of South Carolina (2013-2016) and research assistant at Ahi Evran University (2009-2012) in Turkey. He has taught a variety of courses, including Economics, Finance, Accounting, Hospitality, and Tourism in business and hospitality schools. He is a Certified Hospitality Educator (CHE) and holds Certification in Hotel Industry Analytics (CHIA) from American Hotel & Lodging Educational Institute. Tarik’s research interests span a wide ambit of topics in hospitality finance, corporate finance, behavioral finance, true estate investment trusts (REITs), hotel investments, tourism economics, and climate change. Makarand Mody, Ph.D. has a varied industry background. He has worked with Hyatt Hotels Corporation in Mumbai as a Trainer and as a attribute Analyst with India’s erstwhile premier airline, Kingfisher Airlines. His most recent experience has been in the market research industry, where he worked as a qualitative research specialist with India’s leading provider of market research and insights, IMRB International. Makarand’s research is based on different aspects of marketing and consumer conduct within the hospitality and tourism industries. He is published in leading journals in the field, including the International Journal of contemporary Hospitality Management, Tourism Management Perspectives, Tourism Analysis and the International Journal of Tourism Anthropology. His toil involves the extensive spend of inter and cross-disciplinary perspectives to understand hospitality and tourism phenomena. Makarand besides serves as reviewer for several leading journals in the field. In topple 2015, he joined the faculty at the Boston University School of Hospitality Administration (SHA). He received his Ph.D. in Hospitality Management from Purdue University, and besides holds a Master’s degree from the University of Strathclyde in Scotland.
Courtney Raeisinafchi, Ph.D spent 6 years designing and developing hotels and restaurants with Jordan Mozer and Associates, Ltd., an architecture solid based in Chicago, IL, after completing a bachelors degree at the School of the expertise Institute of Chicago where she studied architecture. Some notable projects she was involved in includes Marriott’s Renaissance Hotel, Times Square and Hotel 57 in Manhattan, NY; both hotels hold received the International Hotel , Motel and Restaurant Society’s Golden Key Awards for Best hotel design. While drafting novel proposals for hospitality projects for Jordan Mozer and Associates in Southeast Asia, she began a masters degree, studying hospitality administration, at the University of Nevada, Las Vegas (UNLV) in Singapore. After graduating, she continued to complete her doctoral degree in Hospitality Administration at UNLV in Las Vegas and studied towards a second masters degree in architecture at UNLV’s School of Architecture. Courtney joined the Boston University School of Hospitality Administration in 2013. She teaches the Design and evolution Class as well as Lodging Operations and Technology. She is an vigorous quantitative researcher on the topics of hospitality evolution and built environments, as well as design and atmospherics impacts on consumer behavior. References
By Tarik Dogru and Osman Pekin
The sharing economy has become a major phenomenon; Airbnb, Uber, ZipCar, Kickstarter and many more comprise the rapidly expanding list of pioneers in the world of the sharing economy. This novel concept has introduced an alternative platform for consumers, widely known as peer-to-peer marketplace, in which participants are motivated by the understanding of “what’s mine is yours” (Botsman, 2010). Unlike traditional businesses, the concept of the sharing economy is a two-way street wherein users at both ends can benefit either as consumers, suppliers, or both. Sharing economy platforms allow people to partake their underutilized properties through user-friendly websites or mobile applications with relatively lower transaction costs and usually at a lower rate compared to those of traditional businesses. Thus, many people hold started to participate in sharing economy platforms because of the economic and financial benefits it provides both for consumers and suppliers. In particular, these platforms provide cost-saving benefits and convenience to the consumers, while allowing suppliers to generate extra income (Mohlmann, 2015).
Participants of sharing economy platforms, however, hold indicated that convivial benefits are more significant than the economic and financial benefits that sharing economy platforms provide (Tapio & Airi, 2015). Indeed, consumers may perceive differently the value of services offered through sharing economy platforms than they Do the value of traditional businesses. For example, consumers may value the sociability, trustworthiness, and friendliness of their Airbnb hosts and the experience they value during their abide (Mody, Suess, & Lehto, in press). However, the value placement might subsist more closely tied to the dollars consumers spend. That is, the route consumers perceive the benefits from goods and services is likely to subsist different in sharing economy platforms. While traditional businesses are unhurried to advocate up with these changes, the mutually advantageous characteristics of sharing economy platforms seem to subsist one of the main reasons behind the significant growth of the sharing economy marketplace, which is now considered a major threat by traditional businesses.
Airbnb, the largest accommodation solid in the sharing economy marketplace, has about 3 million listings, including entire homes, shared rooms, and private rooms, which is more than world’s largest three hotel chains combined (IHG, Marriott, Hilton, 2.58 M listings). Over five years, it hosted about 50 million guests, 30 millions of whom were hosted in 2015 solitary (Airbnb Summer Travel Report, 2015). In a recent report, STR showed that Airbnb currently has around 9% of the market partake in terms of supply. Although Airbnb supply dynamics are much more elastic than those of traditional accommodations, such a big supply capacity might create a substantial threat to the lodging industry (Haywood et al., 2017).The remarkable volume of listings and record-breaking growth in number of guests has caused Airbnb to subsist recognized as a “disruptor” for the lodging industry (Guttentag, 2015). Critics of the sharing economy wrangle that if Airbnb did not exist or if it were to operate by the very rules that traditional lodging firms do, then most, if not all, of the leeway nights would subsist booked in traditional hotels. In a recent study, researchers institute that a one percent multiply in the number of Airbnb listings decreased hotel leeway revenue by 0.5% in Texas (Zervas, Byers, & Proserpio, 2017). These results provided advocate for the concerns expressed by stakeholders in the lodging industry that the growth of sharing economy platforms is likely to adversely palpate the lodging industry’s revenue stream. Furthermore, if the hotel exact were to subsist shifted to Airbnb, hotel developments in the pipeline might create an overinvestment problem in the market (Dogru, 2017a).
The impact of Airbnb on big lodging corporations’ revenue streams does not necessarily insinuate that Airbnb will disrupt the overall economy or local economies. In other words, despite the potential adverse effects of the sharing economy on traditional business platforms, the sharing economy could instead provide positive economic benefits for local communities and the tourism industry by generating novel jobs and novel sources of income (Fang, Ye & Law 2015). According to an economic impact study conducted by Airbnb, guests spent $352 on medium in the neighborhood where they stayed, supporting 490 jobs with an overall economic impact of $51 million from July 2013 to June 2014. The company besides suggests that this sharing economy platform helped conserve energy equivalent to 220 homes in Boston during this period. Similar findings were besides reported in other major cities in the US and around the world. Although these reports might subsist biased and independent studies should subsist conducted to determine the economic impact of Airbnb, these findings point out the flip-side of the coin and provide insight about potential positive impacts of the sharing economy on local economies.
Regardless of the potential economic, social, and environmental impacts, whether they subsist positive or negative, Airbnb should subsist considered one of the major competitors in the lodging industry, considering its market partake and value (Dogru, 2017b). Recent efforts of the lodging industry to “ensure [regulatory] legislation in key markets” insinuate that the industry indeed considers Airbnb to subsist such a major competitor (Benner, 2017). Therefore, understanding what drives consumers to engage Airbnb accommodations becomes necessary for the hotel industry in developing strategies to compete with Airbnb. The physical (i.e., space, location, amenities, etc.) and non-physical (i.e., sociability, trustworthiness, friendliness, etc.) attributes, which are reflected on the price of the Airbnb accommodations, may play a crucial role on Airbnb guests’ decision making. In other words, the price of Airbnb properties is determined based on the value consumers status on the attributes of Airbnb accommodations. Therefore, examining the price determinants of Airbnb properties may play a crucial role in understanding the factors that drive the growth of the sharing economy based accommodation services. This study examines the price determinants of Airbnb properties listed in the city of Boston using the hedonic pricing approach.
Studies that hold investigated the pricing determinants of sharing economy-based services are limited. A number of studies hold examined the effects of reviews, ratings, and host photos on the prices of Airbnb accommodations. Hosts awarded a “Superhost” badge, a status given to hosts with a friendly standing and excellent service standards, post their properties at higher prices, especially when they receive more reviews and higher ratings (Liang, Schuckert, Law & Chen 2017). Furthermore, studies hold shown that guests determine the trustworthiness of hosts from their photos and are willing to engage more expensive Airbnb properties if the hosts seem to subsist trustworthy. However, online reviews and ratings did not loom to hold an outcome on the listing price (Ert, Fleischer, & Magen, 2015). These results can subsist attributed to the fact that, on average, Airbnb hosts hold a rating of 4.5 out of 5, which is very extreme compared to hotel firms’ ratings (Zervas, Proserpio, & Byers, 2015). Analyzing the price determinants of Airbnb accommodations in 33 cities, where exact and supply dynamics for accommodation services are likely to subsist different, Wang and Nicolau (2017) institute results similar to those of the hotel industry (see e.g., Chen & Rothschild, 2010).
In general, factors related to the site and property characteristics, amenities, services, rental rules, and customer reviews significantly palpate the prices of sharing economy-based accommodations. In particular, Airbnb listings that tender amenities such as true beds, wireless Internet, and free parking had higher prices compared to those that lacked these amenities. Although the city of Boston was included in this study, the time era studied was limited to October 2015, and Boston was defined as the greater Boston area. In their study, they analyzed the price determinants of Airbnb accommodations in the city of Boston, and they included properties listed during the era of January, 2015 to September, 2016. Although the price determinants might vary greatly from one city to another, the former study analyzed these determinants using aggregate data from 33 cities around the globe. Therefore, it is necessary to conduct a city-level analysis to identify the price determinants more accurately.Analysis
The data was obtained from Airdna, which is a company that provides data and analytics to entrepreneurs, investors, and academic researchers (Airdna, 2017). Airbnb listings with no reviews were removed from their analysis in order to provide more accurate estimates, as Airbnb listings with at least one review will subsist closer to the market equilibrium price. The final sample consisted of 2,699 Airbnb properties listed between 2015 and 2017. Table 1 presents the summary statistics of the dependent and independent variables used in this study, along with minimum and maximum values of these variables where applicable.Table 1. Summary Statistics Variables Mean Std. Dev. Minimum Maximum Dependent Variable Published Rate 215.12 214.17 10 10,000 Space Attributes Entire Home 0.70 0.45 Private Room 0.27 0.44 Shared Room 0.03 0.17 Quality Attributes Cleaning Fee 0.70 0.45 Overall Rating 92 9.40 20 100 Number of Reviews 18 32.31 1 374 Number of Photos 12 9.19 0 105 Superhost Badge 0.09 0.28 Friendliness Pets allowed 0.12 0.33 Handicap Accessible 0.06 0.24 Family Friendly 0.46 0.49 Freebies Kitchen 0.94 0.23 Washer 0.69 0.46 Dryer 0.69 0.46 Free Parking 0.05 0.22 Breakfast Included 0.06 0.23 Commerciality Attributes Suitable for Events 0.04 0.19 Business Ready 0.17 0.38 Hosts with Multiple units 18.34 45.65 1 242 Location Distance from City Center 3.25 1.39 0.19 7.24
The dependent variable, the published nightly leeway rate, averages $215 in the city of Boston and ranges anywhere between $10 and $10,000. They classified the attributes of Airbnb accommodations, which are the independent variables of this study, into six categories. Exhibit 1 shows the attributes of a frill Airbnb accommodation in Boston.
Space attributes comprise entire homes, private rooms, and shared rooms. According to these results, 70% and 27% of the Airbnb listings are entire homes and private rooms, respectively, whereas only 3% of Airbnb listings are shared rooms. Exhibits 2, 3, and 4 illustrate examples of Airbnb listings in Boston.
Quality attributes consist of the cleaning fee, overall ratings, number of reviews, number of photos, and the Superhost Badge status. A major percentage (70%) of Airbnb hosts require a cleaning fee. While overall ratings vary greatly between 20 and 100, on medium hosts receive an overall rating of 92. Further analysis showed that there were only 242 hosts with an overall rating below 80. The data for the number of reviews indicates the number of times an Airbnb property was booked, since only people who hold stayed in a property are allowed to provide a review. On average, Airbnb hosts had 18 reviews or stays during the study period. Airbnb hosts on medium posted 12 photos of their properties, and only 9% of the hosts had the Superhost status.
Friendliness attributes define whether the property listed is pet-friendly, handicap accessible, and family-friendly. Only 12% of the properties studied allow pets. While 46% of the Airbnb properties listed in Boston are family-friendly, only 6% are handicap accessible.
In general, a kitchen and laundry services are the amenities most commonly offered in an Airbnb property. In Boston, 94% and 69% of the hosts offered access to a kitchen and the spend of washer and dryer, respectively. Furthermore, the percentage of Airbnb hosts who offered free parking and free breakfast were about 5 and 6%, respectively.
As they define it, the commerciality category includes attributes affection suitability for events, business-readiness, and hosts with multiple units. Only 4% of the Airbnb properties are suitable for events and about 17% are business-ready. On average, a host has 18 units listed on Airbnb. More strikingly, some hosts in Boston hold 242 properties, whether they subsist entire homes, private rooms, or shared rooms, listed for rent.
The ultimate assign category is the location, which represents the geographic distance of an Airbnb property from the city center. Distance from the city focus seems to subsist low—3.25 miles on average—suggesting that most of the properties are in nearby proximity to the city center, which may create a convenience to the guests.
We examined the price determinants of Airbnb properties utilizing the ordinary least squares regression technique. In particular, they analyzed the effects of space, quality, commerciality, friendliness, freebies, and location factors on the nightly published rate of Airbnb listings. Table 2 presents these results.Table 2. price Determinants of Airbnb Accommodations (1) (2) (3) (4) Space Attributes Coefficient t-statistics Significance Relative Entire Home 0.88 15.60 *** 141% Private Room 0.25 4.33 *** 28% Quality Attributes Cleaning Fee 0.16 8.14 *** 17% Overall Rating 0.005 5.38 *** 0.5% Number of Reviews -0.001 -8.00 *** -0.4% Number of Photos 0.01 10.11 *** 1% Superhost Badge 0.05 1.80 * 5% Friendliness Pet friendly -0.02 -0.72 -2% Handicap Accessible 0.11 3.26 *** 11% Family Friendly 0.10 5.43 *** 10% Freebies Kitchen -0.15 -3.73 *** -14% Washer 0.06 1.04 6% Dryer 0.10 1.71 * 10% Free Parking -0.002 -0.06 -0.2% Free Breakfast 0.11 2.88 *** 11% Commerciality Attributes Suitable for Events 0.06 1.52 6% Business Ready -0.04 -1.88 * -4% Hosts with Multiple units 0.001 6.25 *** 0.1% Location Distance from City Center -0.01 -1.84 * -1% Notes: The dependent variable is published nightly rate. ***, **, and * denotes 0.01, 0.05, and 0.1% statistical significance plane respectively.
Key findings can subsist summarized as follows.
The motives driving people to abide in Airbnb accommodations are yet to subsist determined for certain. Although Airbnb guests might status more value on the sociability, trustworthiness, and friendliness of their Airbnb hosts and the experience, Airbnb guests are, to some extent, economically motivated. That is, Airbnb guests might subsist specifically comparing Airbnb and traditional hotels for cost-saving purposes. The results of their study showed that Airbnb guests status more value on space, cleanliness, number of photos, handicap accessibility, family friendliness, free breakfast, location, and unique experiences. Based on this information, hotel firms might focus on these factors to attract guests from Airbnb’s consumer base.
Airbnb guests pay more for space and privacy, despite the conception that the sharing economy is a convivial platform wherein participants are motivated by potential convivial interactions. While such convivial interactions may quiet occur when guests rent entire homes, they either value privacy and hence Do not want to live with the host, or they value the space because they are traveling in stout groups and they require more locality in which to spread out. Despite the potential economic gains, Airbnb guests seem to pay extra for cleanliness. Specifically, Airbnb guests pay an additional cleaning fee that may ambit between $5 and $700 and besides pay 17% higher rates compared to properties that Do not require cleaning fees. Airbnb guests pay less for properties that allow access to the kitchen, suggesting that these properties are regular apartments, condos, and houses and that Airbnb guests are not likely to pay extreme prices for staying in such properties. The price dissimilarity might rather subsist due to the rate deviation within Airbnb listings, where unique properties, such as treehouses, villas, and yachts, are posted and guests pay more for the experience. However, further research is required to resolve this issue. Airbnb guests besides value and pay more for more photos of the Airbnb properties; however, they pay lower rates for Airbnb properties that seem to hold commercial purposes. Previous studies hold shown that Airbnb hosts Do not seem to utilize revenue management practices, which serve to maximize hosts’ profits, but rather list their properties around the median market price (Tapio Ikkala & Airi Lampinen, 2015). Their results may usher Airbnb hosts in determining their properties’ rates. For example, Airbnb hosts may tender free breakfast and hence multiply their rates by about 10%.
In conclusion, Airbnb guests pay higher rates for space, quality, friendliness, and unique experiences. To compete with Airbnb properties, traditional hotels should create more opportunities for unique experiences, post more photos of the hotel and guest rooms and provide a family-friendly environment. In particular, hotel firms might tender alternative packages to attract Airbnb guests, especially when operating at lower occupancies. Hence, it may subsist the time for hotels to comprise Airbnb in their competitive sets or regularly track Airbnb exact and supply dynamics, especially in the markets with a big Airbnb presence.
PDF Version Available HereTarik Dogru earned his Ph.D. in Hospitality Management from University of South Carolina, and holds Master’s degree in business Administration from Zonguldak Karaelmas University in Turkey.Prior to joining the Boston University School of Hospitality Administration faculty, he was an adjunct faculty at University of South Carolina (2013-2016) and research assistant at Ahi Evran University (2009-2012) in Turkey. He has taught a variety of courses, including Economics, Finance, Accounting, Hospitality, and Tourism in business and hospitality schools. He is a Certified Hospitality Educator (CHE) and holds Certification in Hotel Industry Analytics (CHIA) from American Hotel & Lodging Educational Institute. Tarik’s research interests span a wide ambit of topics in hospitality finance, corporate finance, behavioral finance, true estate investment trusts (REITs), hotel investments, tourism economics, and climate change.
Osman Pekin is a recent graduate from the Boston University School of Hospitality Administration. As a student he served as a research assistant and accounting tutor while working as a Food and Beverage Supervisor at the Westin Boston Waterfront Hotel. References
By Christopher Muller
What is a restaurant?
In today’s omni-channel foodservice system what exactly does it involve to verbalize something is a restaurant meal? Does it involve a full formal dining experience with a chef-prepared customized meal, presented by a waiter to a guest at a table with a white tablecloth or can it subsist a hand-made burrito delivered by a kid on a bicycle working for a third party service directly to your front door?
Ultimately the question comes down to determining the two main components of a restaurant, food and service. For the food the questions are: how fresh is it; what shape is it in; and how nearby to immediately edible is the preparation of each meal? For the service the main question is: how much supplier labor intensity is required versus how much consumer labor intensity is necessary?The Evolution of shape and Function
Just a few decades ago the restaurant experience was divided into only two categories, full Service (or “white table cloth”) and Limited Service (or “counter service’) restaurants. Both were built on the requirement that food was personally served by someone to the consumer, typically in a very structured menu format, inside a simple square meter of physical space. The diner was expected to hold a working information of this system: being informed of the hand crafted preparation in the kitchen by the trained chef or a skilled short-order cook; the nature of the ratiocinative flow of the courses as they were presented; and how to order and pay (including how to properly leave a tip). For the vast majority of customers this was something done only on special occasions or when dining away from home, and could subsist too intimidating to master.
Then in the mid-1950’s came a novel upstart, the Fast-Food or Quick Service Restaurant, which by being systems based and not chef driven created a novel approach to how consumers viewed the dining experience. In a disruption of tradition, both the composition and order of the meal (“…if I want to devour my fries before my burger, who cares?”) and the concept of self service (“…no waiter, no tipping, I’ll gladly pellucid my own table”) were controlled by the consumer, not the supplier. Much of the food was prepared in an off-site facility and assembled to order or batch cooked by semi-skilled kitchen workers. Once the drive-thru window came into play, the necessity to even obtain out of the car for a meal disappeared (“…is my front seat a restaurant?”). Anyone could spend this system at any time during the day. While the QSRs were not originally considered “real” restaurants, dining out became an smooth and every day option.
During the 1990’s the market saw the explosion of the Casual Theme restaurant which took totality of the formality out of Fine Dining, including the white table cloth, and significantly sped up the dining process. Table service was quiet an integral fraction of the experience but with less personal connection to the waiter as food was often delivered by a runner directly from the kitchen. Standardized meal choices were assembled on-site by slightly more skilled journeymen led by a kitchen manager instead of a chef, who used a mass customization process to match the individual desires of the consumer.
In the ultimate decade the lickety-split Casual restaurant came to the attention of the consumer public. This novel hybrid is a mingle of the self-service from lickety-split food with the consumer selection options presented by a traditional cafeteria system. Table service is replaced by a modified multi-phase counter service with customers being given more customizable options, whether by a barista or a burrito-maker. This customization is made practicable with the recur of an on-site short-order cook who assembles to order food which has the appearance of being hand-crafted, but is prepared in a batch style and often brought in from an off-site commissary.
This brings us up to date where they are witnessing an explosion of segments and dining choice. Today they remark a marketplace of narrow segments (Casual Elegance, Food Trucks, Grab & Go, Build Your Own, GastroPub, Convenience Store, Market Hall, Delivery) and other fine grained niches that beard simple categorization. For example, Panera Bread is a leader in the lickety-split casual segment while filling the role of the top retail bakery/café offer. But it besides leads in the technology of smartphone based customized take-out. The top of the food chain for fine dining is at one and the very time a personage chef-driven stratospheric offering such as Keller’s French Laundry or a standardized, national prime aged steakhouse chain affection Del Frisco. For the dining public, what exactly does Casual urbanity involve except that there are no tablecloths, there is a wine list and expensive cocktails, no chef and the wait staff wear logos on their shirts? What really is the dissimilarity if I buy a packaged turkey sandwich at a Pret a Manger, at a 7 Eleven, or at a gross Foods?Where Are They Heading?
So, the retort to the question “what is a restaurant?” can really only subsist answered with “it depends.” What does it depend on- mainly how the dining public continues to redefine how, when, why, where and what a meal actually is? Is a smart phone a modern day vending machine? Is a communal table in a market hall a dining room? Is a “sous vide” pouch heated by a chef in a two-star restaurant a freshly prepared dinner? Is Chef Chang’s Ando really a restaurant or just a conceptual kitchen? Are Just Eat, Grub Hub, Deliveroo, Uber Eats and Amazon Prime just waiters expanding the ultimate square meter of personal restaurant service? The answers are probably totality yes.
When someone wants to eat, it might subsist better to hope “what isn’t a restaurant?”A Restaurant Taxonomy for 2017 If I Bring It Home To Reheat For Dinner Tomorrow, Is It A Restaurant Meal?
Photo Source: Olive GardenIs Eataly a restaurant or a market?
Source: Creative Commons / Mary CrosseWhat Does It involve If My Pizza Restaurant Is On My iPhone?
Photo Source: Pizza Hut Mobile App ScreenshotIf I Pick Lunch Up In 10 Minutes And devour In My Office Is It A Restaurant Meal?
Photo Source: Panera Bread Mobile App ScreenshotHow About Dinner Arriving Via UberEats in 3 Minutes To My Front Door?
Photo Source: UberIs It Really A Restaurant, Chef Chang? Christopher C. Muller is Professor of the practice of Hospitality Administration and former Dean of the School of Hospitality Administration at Boston University. Each year, he moderates the European Food Service Summit, a major conference for restaurant and supply executives. He holds a bachelor’s degree in political science from Hobart College and two graduate degrees from Cornell University, including a Ph.D. in hospitality administration. Email firstname.lastname@example.org
PDF Version Available Here.Airbnb’s tender an at-home atmosphere and depending on the host, includes a variety of unique amenities at an affordable price. (Photo by Getty Images, Britta Pedersen)
By Makarand Mody
No one can negate that the hotel industry has a fight on its hands when it comes to the peer-to-peer accommodation market. A recent PWC report showed that while 6% of the US population has participated in the sharing economy for the hospitality industry as a consumer; 1.4% has served as a provider. Following a string of acquisitions, Airbnb is the undoubtedly the hotel industry’s biggest competitor. While much of the discussion that follows uses Airbnb as an example, the underlying logic applies to the broader concept of the sharing economy and its implications for the hotel industry.
Some veterans in the hotel industry hold tried to shrug off the emerging threat by highlighting that the sharing economy is a “fundamentally different business” model, serving a gross novel set of consumers, and thus not a direct competitor. A recent analysis by Smith Travel Research of Airbnb’s impact on novel York City’s five boroughs seems to advocate this title by highlighting that “Airbnb might subsist filling a void in the novel York City market by providing a different lodging option at a much lower price point”. Concurrently, the analysis points to the fact that “it is difficult to negate that some exact might subsist touching from hotels to Airbnb”. An American Hotel & Lodging Association (AH&LA) report about Airbnb host activity institute that the most successful and valuable hosts on the site are a rapidly growing class of micro-entrepreneurs – full time hosts and multiple-unit operators, accounting for around 65% of Airbnb’s $1.3 billion revenue in its top 12 markets. There seems to subsist increasing evidence that the greater leeway supply created by Airbnb has helped bridle prices that traditional hotels can imbue in some markets. Such statistics hold resulted in the hotel industry crying foul about not having a plane playing bailiwick on various accounts, from occupancy taxes to sharing economy providers skirting health and safety standards. Cities and other jurisdictions across the country are engaged in their own efforts to regulate the sharing economy.Consumers are getting more restful with the understanding of becoming Airbnb hosts with their own properties. In Cuba, Airbnb has institute booming success as locals become private entrepreneurs. (Photo by Getty Images/Yamil Lage0)
Meanwhile, sharing economy operators continue along their route to intensify their fight for the hotel industry’s customers. Now that more consumers themselves restful hosting, the supply of operators affection Airbnb seems to subsist growing exponentially, offering renters an unprecedented ambit of accommodation choices, from a US$15 per night spot on the couch to an $8,000 per night mansion on a sprawling 100-acre property (and everything in between). Consistent with the theory of the Travel Career Ladder (suggested by Philip Pearce and his colleagues), while younger leisure consumers often travel on a tense budget using the sharing economy, tastes and preferences become more expensive as these consumers become older and more settled. Just affection hotel companies hold their loyalty programs that capture travelers as they progress through their life-cycles by offering a variety of different brands, operators such as Airbnb seem to subsist performing well at the differentiation game.What About the business Traveler?
The business traveler market is expanding for sharing economy providers. While travelers working for themselves or diminutive companies were the most likely professionals to spend the sharing economy, more business travelers are using these platforms when stout trade shows hold filled city hotel rooms; in fact, that’s how Airbnb was originally birthed Recognizing these patterns, Airbnb recently launched its business Travel Ready initiative that identifies specific listings with a business Travel badge, indicating that the hosts are providing additional amenities suitable for business travelers. These amenities ambit from ironing boards to fire alarms and CO2 detectors. The company besides formed a partnership with a leading meeting planning management company, Experient, for adding Airbnb leeway blocks to official MICE event leeway inventory (Meetings, Incentives, Conferences, and Events), and providing metrics about booking patterns. There besides seems to subsist an increasing “official” acceptance of the company: the San Francisco Tourism Board recently partnered with the company to provide neighborhood tourism materials for local businesses to wait on attract Airbnb guests. Such official recognition by Destination Marketing Organizations (DMO) is likely to further intensify the hotel industry’s efforts to impose regulations on the sharing economy.Airbnb is finding both opposition and advocate in cities totality over the world. In October 2015, novel York City residents showed advocate for Airbnb while the city council debated on how to regulate the company. The San Francisco Tourism Board recently partnered with the company to provide neighborhood tourism materials for local businesses to wait on attract Airbnb guests. (Photo by Getty Images/Andrew Burton) Hotels Advantages vs. Airbnb’s Sense of Community
There are factors that remain in favor of hotels: for reasons of security, hygiene, and uncertain and fluctuating quality, consumers familiar with the sharing economy are 34% more likely to dependence a leading hotel brand than Airbnb. A spate of safety-related incidents is likely to advocate this statistic in favor of hotels: from the horror sage of Jacob Lopez, who was allegedly sexually assaulted and locked in his leeway in a Madrid Airbnb, to the company being sued by a woman over an alleged hidden camera in a rented apartment, there is likely to subsist a population of skeptics who are unlikely to rent from strangers. However, the immense popularity of the concept is supported by a host of economic, social, and technological changes in society. A Skift report institute these changes to encompass issues pertaining to amenities, diversity and local experiences, a “personal concierge”, a “home away from home” experience, and the skill to develop personal connections/a sense of community. These varied experiential value propositions are evidenced in Airbnb’s strategic platform of “Belong Anywhere”, and, more recently, “Don’t retrograde There. Live There”; propositions that are changing the route tourists travel within the United States and outside. Thus, while regulation of the sharing economy is likely to plane the playing bailiwick to a certain extent, the hotel industry must besides gawk to contend with the underlying experiential drivers of consumption that are fueling the popularity and growth of the sharing economy.Airbnb Research and Training
According to Chip Conley, the inventor of the boutique hotel aesthetic and Airbnb’s Head of Global Hospitality and Strategy, the company’s focus on enhancing the guest experience lies at the very heart of its strategic plans for the future. Airbnb has created a hospitality lab in Dublin to provide training to hosts on standards, and to study hosts and guests together in a physical space in an effort to enhance its experiential offerings. The company has besides experimented with providing add-on services such as full-service cleaning and stocking facility for hosts in cities such as novel York, San Francisco, and Los Angeles. Recently, Airbnb has been testing hotel-style packaging and amenities – such as local treats, wines, and upgraded bath products – in a select number of highly rated listings in Sonoma, California, to broaden its appeal to travelers who prefer more of a blend of a traditional hotel abide and that of an Airbnb: the comforts of a hotel abide affection special amenities and treats as well as instant booking, combined with the more personalized, peer-to-peer, local experience that the Airbnb platform facilitates. Such efforts witness Airbnb’s purpose to whirl itself into a full-blown hospitality brand, one that delivers a seamless end-to-end experience when its customers travel. While the company initially disrupted the hospitality business by serving as a provider of alternative accommodation, it is now trying to engage this disruption to the next plane by competing along the lines of the guest experience.Applying Extended Framework of the experience Economy
At such a time, the Pine and Gilmore’s seminal concept of the experience economy can subsist immensely useful to hotel companies looking to fight back against its sharing economy competitors. When towering plane product and service attribute can no longer subsist used to differentiate choices for consumers, hotel companies must focus on creating unique, memorable experiences in order to develop a several value-added provision for products and services that hold already achieved a consistent, towering plane of functional quality. To demonstrate how this can subsist done, I not only mention to Pine and Gilmore’s framework but rather extend the four realms of experience to eight realms. Examples are highlighted of what sharing economy providers, especially Airbnb, and hotel companies are doing perquisite in each of these realms that the industry as a gross can learn from and incorporate into their own experience creation efforts. These eight realms are represented in the extended framework of the experience economy.Extended Framework of the experience Economy (adapted from Pine and Gilmore, 1999)
Pine and Gilmore’s four original dimensions comprise education, escapism, esthetics, and entertainment. While education and escapism are classified as vigorous dimensions in which participants personally palpate the performance or event that becomes fraction of his or her experience i.e. there is an interactive assignation of the reason and/or the body, esthetics and entertainment are passive dimensions in which participants Do not directly palpate or alter the nature of the environment presented to them. To these, I add four additional dimensions (highlighted in blue) that capture the essence of the type of experience that the sharing economy aims and claims to facilitate: two vigorous dimensions of localness and “communitas”, and two passive dimensions of hospitableness and personalization. While these dimensions are not exclusive to the sharing economy, providers such as Airbnb attempt to create them their own by providing for and emphasizing these dimensions in how they develop products and communicate their experiences.
Getaway, a startup concept of the Millenial Housing Lab, builds tiny houses, currently outside the Boston and novel York City areas, places them on unbiased rustic land and rents them by the night to city dwellers looking to elude the digital grind and test-drive tiny house living. The sense of adventure is maintained by the fact that the exact location is only provided to travelers after the booking is completed, serving as a faultless example of Escapism for couples, writing weekends, or those looking to “put a dent in a stack of unread books”. onefinestay is an example of the sharing economy at toil from an Esthetics perspective. It offers over 2,500 frill vacation apartments in London, novel York, Paris, Los Angeles, and Rome, each one handpicked for space, character, comfort, and a distinctive design aesthetic. It differs from other sharing economy concepts affection Airbnb in that each home is selected for inclusion into the brand’s curated portfolio based on exacting standards of architecture and design. The Liberty Hotel in Boston, fraction of Starwood’s frill Hotel Collection, leverages the Entertainment dimension of the hotel experience by engaging guests into the creative flow of towering style in Boston. Fashionably Late Thursdays is a weekly event that showcases the collection of a style designer or seasonal fashions from a major retailer in a live style note format. The note begins at 10 pm, followed by music, mingling, and signature mixes from the bar. Airbnb’s novel positioning, “Live There”, focuses on touching the brand beyond stays to creating experiences, which comprise Education(al) activities in neighborhoods and communities. For example, Ranida, a Thai autochthonous and hospitality management grad, working and animated in San Francisco, offers 3 hour long group-based undoubted Thai food cooking classes, allowing guests and locals alike to learn a novel cuisine from someone with a passion for cooking and teaching.
Airbnb’s previous positioning of “Belong Anywhere”, which the company is using to supplement “Live There”, is centered around creating the sense of community and belonging that its travelers seek. animated in someone’s home naturally involves individuals putting themselves out there to meet novel people. Airbnb has cleverly used this simple but powerful understanding to position itself as a platform that helps people crash barriers and truly leverage the socially transformative power of travel. Its sharing economy competitor, HomeAway, on the other hand, claims to tender the most comprehensive selection of rentals for families and groups, allowing them to recreate “home away from home”, a sense of Communitas with those nearby to you. Guest Personalization is an increasing focus for travel brands, with many hotel companies using their loyalty programs to gather information about their guests in order to enhance the overall guest experience. Moreover, technology such as tracking Beacons and Augmented Reality is likely to play an increasingly significant role in the future in terms of personalizing the guest experience. For example, The James Hotels, which has locations in Chicago, Miami, and novel York City, offers the James Pocket Assistant, which uses Beacon technology to allow guests to access special offers, view maps, contact the hotel, and request services. The app besides lets users engage a self-guided tour of the hotel’s expertise collect and notifies users of special offers and perks based on their location on the property. The Clarion Collection Hotel Tapto in Stockholm offers a walk-in closet where guests are given a selection of their favorite clothing brands to try on. If they find something they really like, they can add it to the bill. Airbnb is jumping onto the personalization bandwagon with a novel “matching system” that takes travelers’ preferences into account, matching them with homes, neighborhoods, and experiences that meet their needs.
Standard Hotels provides a masterclass in the spend of Localness. Its novel website, with a mobile-first mission, leads wholly with lifestyle content about music, food, arts, and other cultural programming, both on-property and offsite. The website reads more affection an online travel magazine, with the hotels positioned to serve as base-camp from which to explore “the local” in the cities in which they are located. Airbnb’s Guidebooks and Neighborhoods features Do something similar, with stunning photography, local editorial perspective, insider tips from Airbnb hosts, and practical information about neighborhoods worldwide. The eight and final dimension of Hospitableness, which lies at the very core of the hotel industry, is something that sharing economy competitors seem to subsist leveraging more so than the hotels. These companies title to tender an alternative to bland, cookie-cutter, inhospitable hotel experiences, with local hosts at the very focus of delivering hospitality in its most primal shape – creating memorable experiences through good-old fashioned interpersonal contact. For example, an Airbnb host and his wife in San Francisco rent out the second floor of their two-storied house to families, and cook a toothsome barbecue in the evening to welcome their weary travelers. My own recent experience in the town of San Luis Obispo in California attests to this dimension. The hosts, a retired yoke who seemed truly delighted to hold us in their home, did everything from talking totality about their family and getting to know more about mine, to providing hotel-like toiletries in the bathroom, leaving croissants and fresh strawberries in the refrigerator, and, most memorably, placing a diminutive welcome symptom on a chalkboard on the dresser – a systematic Little touch. Interestingly, it appears that while the hotel industry, to a Great extent, is placing technology-enabled convenience and entertainment at the focus of its experience (digital keys, selecting your exact leeway prior to arrival via app, a robot that stores your luggage, Netflix on your guestroom TV, among others), the sharing economy is using technology to facilitate a simpler, more authentic, down-to-its-roots hospitality experience.A simple welcome symptom that makes totality the dissimilarity in creating an authentic, memorable, hospitality experience.
Two other elements of the extended experience economy framework – Serendipity and Ethical Consumerism – can wait on hoteliers assume about the design and delivery of memorable experiences. These elements straddle multiple dimensions, and, as such, can serve as experiential “deltas” that can set one experience apart from another.
The very local, customizable, peer-to-peer nature of the sharing economy experience allows guests to subsist surprised by their hosts, subsist it with a bottle of local wine upon arrival, or a stocked refrigerator that satiates the necessity for that midnight snack (of course, the safety-related incidents mentioned earlier can besides lead to unpleasant surprises). Canopy by Hilton, one of the latest additions to the company’s portfolio adds this factor of astonish with a property-specific gift to welcome guests on arrival. But hoteliers necessity to assume beyond gifts to add that factor of Serendipity to an otherwise predictable guest experience. Last, but certainly not the least, they live in the age of activist Millennial. There is enough evidence to note that this novel generation of travelers is more likely to advocate a company that does it bit for society, beyond the adhoc corporate convivial responsibility initiatives that create for friendly PR but are subsequently forgotten. An factor of Ethical Consumerism can and should subsist weaved into the consumer’s experience wherever possible. There is some evidence to insinuate that consumers believe that the sharing economy provides opportunities for a answerable shape of consumption (and travel). The Airbnb machinery has been awake to this marketing opportunity. A recent NPR article talks about how Airbnb is changing the route global tourists obtain to know Africa, by connecting them directly to the local economy. The sage of Ndosi, a 23 year ancient from Arusha, Tanzania, is used to demonstrate the company’s “vision” to “create a novel generation of micro-entrepreneurs from local hosts to local businesses”. Not only does the article talk about how some tourists staying with Ndosi and his parents “found their family” (Communitas), but besides the money allowed him to fund his graduate school education. Many hotels hold been doing their bit for the environment for some time now; with towel re-use policies and LEED certified buildings, among other initiatives. Perhaps it is time for hoteliers to assume about how the “social” dimension of Ethical Consumerism can subsist weaved into the guest experience.A Fundamental Rethink for Hotels
The extended experience economy framework provides hoteliers with a mechanism to create experiential value. By no means does this insinuate that hotels Do not or are not innovating. The examples provided above are by no means exhaustive; there are many hotels around the world executing unique, innovative features along these dimensions of experience. However, the sharing economy providers hold the edge of a antiseptic slate and seem to subsist making several of these dimensions their own. The emergence of these competitors means that the hotel industry may necessity a fundamental experiential rethink to proactively abide ahead of the game. Don’t believe me? Maybe Marriott floating the understanding of factor being “an challenging alternative to sharing economy platforms” may convince you otherwise. While one can only wonder how such a transformation of the factor may engage place, the framework presented here can serve as a starting point for such a rethink.
Makarand Mody, Ph.D. has a varied industry background. He has worked with Hyatt Hotels Corporation in Mumbai as a Trainer and as a attribute Analyst with India’s erstwhile premier airline, Kingfisher Airlines. His most recent experience has been in the market research industry, where he worked as a qualitative research specialist with India’s leading provider of market research and insights, IMRB International. Makarand’s research is based on different aspects of marketing and consumer conduct within the hospitality and tourism industries. He is published in leading journals in the field, including the International Journal of contemporary Hospitality Management, Tourism Management Perspectives, Tourism Analysis and the International Journal of Tourism Anthropology. His toil involves the extensive spend of inter and cross-disciplinary perspectives to understand hospitality and tourism phenomena. Makarand besides serves as reviewer for several leading journals in the field. In topple 2015, he joined the faculty at the Boston University School of Hospitality Administration (SHA). He received his Ph.D. in Hospitality Management from Purdue University, and besides holds a Master’s degree from the University of Strathclyde in Scotland.
PDF Version: Creating Memorable Experiences How hotels can fight back against Airbnb and other sharing economy providers
By Christopher Muller
On the first day of my HF 100 Introduction to Hospitality Management class I present a lecture that raises the question, “How Do You school Hospitality?” It’s my first Power Point slide and is then repeated as my ultimate slide for the day. I suspect (maybe hope) that this question is at the front of the minds of the thousands of people who daily assume about hospitality education, training, management and leadership.
In his book, Setting the Table, restaurant icon Danny Meyer (2006) notes that his company, Union Square Hospitality Group, looks to hire individuals he calls the “51-percenters.” These are people who note a positive equipoise of 51 to 49 percent between emotional skills and technical excellence. The five core emotional skills which USHG looks for are: Optimistic Warmth; Intelligence (defined as insatiable curiosity); toil Ethic; Empathy; and Self-Awareness/Integrity. He notes that:
Emotional skills are harder to assess, and it’s usually necessary to spend meaningful time with people—often in the toil environment—to determine whether or not they are a friendly fit. But it’s censorious to start by being specific about which emotional skills you are seeking.
It should advance as no astonish that emotional skills are not easily imbedded in a modern university business curriculum, which is the academic realm where Hospitality Management programs most often reside. Yet many hospitality management students loom to bring with them a tacit information of these emotional skills when they start their studies. After more than three decades of watching hospitality students ripen I would verbalize that they certainly exhibit stalwart emotional skills when they head out for a novel career. Where then does this knowledge, or alternately, route of knowing, advance from?
Is there something several about the traditional Hospitality Management curriculum? First offered in 1893 at the Ecole Hoteliere Lausanne in Switzerland and launched in the United States at The School of Hotel Administration at Cornell University in 1922, has this course of study evolved over time to focus on both of Meyer’s skills – originally based on technical skills but now transforming to emotional skills?
A friendly status to start their inquest may subsist to determine this: is Hospitality Management an academic discipline, suggesting it is something which can subsist codified, written down, and scholarly by specific means? Or as some educators note, is it better described as a bailiwick of study which dwells in the realm of tacit learning and requires extensive personal contact, experience and observation but may not subsist adequately articulated by verbal means? How is information managed by teachers, practitioners and students of the industry?
Next they should deem how innovation is applied in the practice and study of hospitality. Is the industry built on the sustaining innovation of measured diminutive improvements in attribute and process or on the disruptive innovative introduction of completely novel products and services unlike any others which hold advance before?
On another dimension, they must add a component on the process of thinking and decision-making in hospitality management. Which parts of the business are more intuitive, heuristic and built on gut-feeling and which are more iterative, objective and built on quantitative data analysis?
And a fourth locality may subsist included, how students and practitioners learn. For example, at which point in the education process is it more desirable to hold a convergent, fact-based and systematic perspective leading to a single solution, and which point is more likely to reward a divergent, multiple-option perspective where there may subsist more than one creative or “correct” answer?
This paper presents a model using each of these well-regarded speculative constructs in an attempt to advance the discussion and retort the question, “How Do you school hospitality?”Tacit and specific Knowledge
Michael Polanyi (1958, 1966) suggested that information could subsist segmented into two different realms, tacit information and specific knowledge. His seminal toil focused on tacit information and “tacit knowing” which he suggested requires a personal involvement at the individual plane of learning. Tacit information is acquired in a non-verbal, observant or experience-based way. It is the information where “we know more than they can tell” to others, or possibly even to ourselves. Harry Collins (2010) expanded the definition of tacit information to comprise three areas, one involving the relational nature of human convivial life, one including the autonomic nature of the corpse and one in the collective nature of society.
Common examples used by both men to account for tacit information comprise learning to ride a bicycle or to play piano – thinking about the details of the process often leads to not being able to achieve at all. Reading a engage about riding a bicycle will not lead to winning the Tour de France nor will a manual about finger placements in C# scales whirl one into Vladimir Horowitz, no matter how long the study. But months riding a bike through the French Alps with a professional coach or taking a Master Class with a professional musician may in fact lead to personal success. Observing the “embodied knowledge” of experts in a manner which involves personal contact, regular interaction and dependence may create tacit information in the observer.
While tacit information is non-verbal, practical and experience based, specific information is articulated, codified, and language based. It is more deductive and logical. Another characteristic of specific information is that it can subsist collected in a single status to subsist accessed by both individuals and groups (a library, Wikipedia, or a smartphone app should advance to mind).
Tacit information is the accumulation of individual “know-how” while specific information is the fact-based aggregation of shared “know-that.” Collins points out that tacit information is a prerequisite for specific knowledge, you necessity to know something before you can account for what it is that you know. Yet the powerful human trend to partake their knowledge, to write things down, to articulate the non-verbal lesson is at the heart of totality education, and is besides the driver for automation, digitalization and emerging simulated intelligence technology.Les Roches Food and Beverage Course (Photo via Les Roches International School of Hotel Management)
Students who are enrolled in an introductory Culinary Arts program preparing menus of gauge recipes from the Professional Chef textbook can subsist said to subsist using the specific information of cooks. Students who are engaged in a rotational Stage with the chef at a 3-star Michelin restaurant who exhibits grace and timing under pressure are mostly experiencing tacit knowledge. Both types of information are necessary in learning to subsist a cook, one articulated and one individually experienced.Sustaining and Disruptive Innovation
Dr. Clayton Christianson originally proposed the common management theory of “Disruptive Innovation” in a 1995 Harvard business School article. He clearly owes a big debt to Joseph Schumpeter (1942) and the concept of capitalism being built on “creative destruction.” The current model presents a framework for the creative process in business formation and innovation. Christianson lays out the differences between the iterative improvement he terms sustaining innovation and the discontinuous offering of the next novel thing he terms disruptive innovation.
Sustainers are the well established and typically market dominating major players in an industry. They maintain their leadership position by keying on the needs of their best and most profitable customers. They accomplish this by seeking continuous improvement of products and services they already hold on offer. There are many observers who rightly point out that this shape of innovation has a significant track record of success, the “standing on the shoulders of giants model” of accretive progress.
The disruptors in business thrive most often when they are technically simpler, cheaper, faster or easier than the established previous generation of products and services they plane to replace. The risk is that these very attributes are often besides of inferior attribute and therefore hold a short, volatile, and vain-glorious impact on the industry they quest to change. But it is the disruptors, affection a thunderstorm providing both the destructive potential of a lightning strike and the torrential rain that leads to novel growth, who give us the energy to renew and revitalize an industry.
The incumbents maintain their market positions when customers are seeking incremental innovations to existing products or services that are already perceived as being of higher quality. These sustaining innovations are often associated with the phrase “new and improved” although by definition nothing can truly subsist both novel and improved. In many cases step-wise improvements are more likely to find market acceptance than the disruptive newcomers, though the “blue ocean” mindset does advocate the capital markets constantly looking for the next novel thing just over the horizon.
In business education and practice much has been made of the process of Total attribute Management or the principles of Six Sigma. The step-wise improvement known as the Deming Cycle is another example of the application of sustaining innovation in the classroom. The disruptive innovation of Strategic Management, Principles of convivial Media Marketing, or the study of charismatic Leadership styles, totality where the novel is a positive addition to the topics, besides meet well in the Hospitality Management curriculum.Heuristic and Iterative Thinking
The Nobel laureate economist, Daniel Kahneman, wrote Thinking lickety-split and unhurried (2011) to detail the different modes of thinking used by humans, modes that he termed System 1 or “Fast Thinking” and System 2 or “Slow Thinking.”
Fast thinking is automatic, intuitive and associative. The process comes to the surface in the human trend to create heuristic mental programs based on previous experiences, rubrics or tested frameworks. An palpate Heuristic decision is made quickly using judgments based on Little more than feelings of liking or disliking the remonstrate or situation. An Availability Heuristic is quickly made on the want to find signification and patterns using information meet into the immediate present situation. In both cases the reason finds a best decision by rapidly relying on pertinent past experiences or situations that seem familiar and similar to other successful past decisions.
Slow thinking is controlled, iterative, systematic, or what Kahneman termed “statistical.” This is the decision-making style where thinking about a topic requires attention to detail, focus, and a narrow bailiwick of vision. Each novel decision, and the thoughts associated with it, is built on the structures of previous decisions in an arduous step-wise process. unhurried thinking can subsist easily disrupted when attention spans are chop short, but it is the balancing counterweight which keeps humans from acting impetuously or in an antisocial manner.
Students in a course learning about Entrepreneurship may subsist called upon to toil in diminutive groups “brain-storming” novel concepts for their final project. In another course they may subsist using business case studies where they will advance to dependence their gut feelings for identifying the best practicable alternative from a broad selection of outcomes. First year students who engage Accounting 101 which then leads in year two to Accounting 201 and so on are engaged in an iterative learning process. A doctoral dissertation is the ultimate example of a controlled, systematic and step-wise model of novel information creation.Convergent and Divergent Learning Perspectives
The theorist J.P. Guilford (1967) offered a common theory of human intelligence he named the Structure of Intellect. While this intricate theory incorporates up to 150 dimensions, fraction of it describes the learning processes for reasoning and problem-solving, which he termed Convergent and Divergent production. People who unravel problems via a convergent strategy are focused on finding a single revise retort (consider a question on a multiple selection test). In many situations, the convergent learner feels most restful in a traditional student/teacher role, with data and facts presented to finding one outcome, for example a single mathematical calculation. Convergent learners collect facts, often from a variety of sources, resolve the situation and quest to test for the best feasible or optimal solution.
In opposition to this pattern would subsist the divergent learner, one able to identify multiple practicable options or solutions. Guilford was very interested in the creative process, which he saw as in the realm of divergent production. A divergent perspective might draw an individual to the arts and humanities, creative writing, or history (where multiple perspective necessity to toil together to find broad solutions) as opposed to science, technology or math as a course of study.After an internship or toil experience, students benefit from reflection assignments.
For the Hospitality Management major, convergent production might subsist seen in fact-based introductory or survey courses, the proscriptive side of Hospitality Law, or in the financial skills associated with an MBA curriculum. The divergent production side might best subsist embedded in courses with a fluid or “what if” set of answers, including Communications, the self-reflective analysis after an internship or toil study program, and the group process.The Amalgamated Model
In order to spend these theories in a comprehensive way, an Amalgamated Model (Figure 1) can subsist formed into a rubric using each of the four key competencies on alternating sides of a two-by-two matrix. information is either specific or Tacit, Learning is Convergent or Divergent, Innovation is Sustaining or Disruptive, and Thinking is Heuristic or Iterative. The corresponding quadrants each then insinuate a different means for evaluating a Hospitality Management curriculum.Figure 1. A Suggested Learning Rubric (Click image to enlarge)
The Quadrant Profile
Expanding on the basic model (Figure 2), each quadrant suggests a teaching/learning viewpoint with specific weight placed on different emotional and technical skills. The ECSI quadrant would reward a codified, focused, incrementally improved and statistical (slow) set of learning objectives. Quadrant two encompassing the EDSH attributes would gawk for codified, expansive/creative, incremental and intuitive (fast) offerings. The third Quadrant with a TDDH mingle encourages learning in an experiential, expansive/creative, discontinuous novel and intuitively lickety-split manner. The final TCDI quadrant would involve an experiential, focused, discontinuous novel and statistical (slow) combination.Application to the Hospitality Management Curriculum
If they deem the traditional Hospitality Management curriculum (Figure 3), both required and elective courses, and gawk at the entire ambit of educational levels, from undergraduate to doctoral studies, the Amalgamated Model can thus subsist helpful in creating a typology of course offerings.
Quadrant One (ECSI) concerns itself with student competence and technical skills, with courses that build on a core information structure or discipline. Such classes as the Accounting sequence (Financial Accounting, Management Accounting, and Finance), or a Marketing sequence (Introduction to Marketing, Services Marketing, Advertising Communication, Consumer Behavior) meet well here. A case can subsist made that the core Master of business Administration curriculum is besides focused, stepwise, specific and data based and is best located here.
Quadrant Two (EDSH) is more the domain associated with concept mastery, quiet using the accumulated articulated information of specific topical information. The various toil done in a kitchen or culinary class, based on the legion of recipes and cookbooks can subsist exhibited here. But so can the specific information written down in the shape of industry case studies, where students learn by creating their own system of decision-making heuristics.
In the third Quadrant (TDDH) the practical life experience which students bring with them to class gives them an chance to learn by doing. Experiential learning in the shape of internships and toil study, group projects and brain-storming novel business concepts allows them to subsist creative in a business setting.
The final Quadrant (TCDI) is where students gain the focused perspective that enables a measure of expertise to develop. Whether at the elective/concentration plane for undergraduates or the process of undertaking the years long process involved in doctoral studies, this is the time when data and hypotheses are tested, and preconceived notions are challenged.Getting to 51%
Let’s spend the information shared by Danny Meyer in the quote from above but parse individual phrases to wait on disclose how the theories just discussed are informing the discussion:
Emotional skills are harder to assess, and it’s usually necessary to spend meaningful time with people—often in the toil environment—to determine whether or not they are a friendly fit. But it’s censorious to start by being specific about which emotional skills you are seeking.
Emotional skills, what Meyer uses to determine the attractiveness of the “51%-ers” to a restaurant unit of USHG, are as he suggests arduous to assess. These “soft skills” Do not advance with easily tested variables. But there is besides the 49% applied to the technical skills of the toil of hospitality to consider. The specific information scholarly in first the ECSI and then the EDSH afford the student a route to build up a ground shared information of facts, protocols and historical constructs (Figure 4). These courses besides establish the foundation of a shared vocabulary, and mastery of skills which will allow them to become fraction of a broader convivial environment.
Meyer besides suggests that it is significant to invest time in each individual in order to highlight the emotional skills his company desires. The slow, iterative process of uniform improvement and attribute control besides appears in the ECSI and EDSH quadrants.
…necessary to spend meaningful time with people…
Also embedded in the Meyer observation is the tacit learning only afforded by an individual, experience based and hands-on set of lessons in the actual toil environment. This is the internship model used extensively in hospitality management education.
…often in the toil environment…
To create his search uniform and standardized, he acknowledges the necessity for touching from the highly personalized, but inconsistent system of tacit learning. He suggests, as did Collins, the necessity to partake their learning and expertise by making it explicit, articulated, and language based.
…it’s censorious to start by being specific about which emotional skills you are seeking…
Finally, although it is unstated in his admonition for totality business enterprises to comprise hospitality in their development, he quiet requires employees to hold the technical skills and pellucid focus to become experts in their endeavors. Whether it is in the expertise of the Sommelier, the Executive Chef, or the Chief financial Officer, no Great hospitality company can survive without highly skilled and knowledgeable practitioners.A recur To Their Question
So, as I hope my students, and indirectly myself, “How Do you school Hospitality?” the Amalgamated Model may relent a better desultory of finding an answer. Not too long ago hospitality management meet comfortably in the experiential apprentice/journeyman/master craftsman system of observational study. While pertinent for the passing along of both tacit and technical skills, this system continues to topple short of the specific information and fact based needs of a modern business enterprise. Likewise the current effort focused only on financial numeracy and a statistical path to information besides falls short in the emotional intelligence necessary to achieve Meyer’s 51% status.
Instead of a curriculum being centered in just one or two quadrants, a more holistic approach, one looking to fill the requirements of being competent, conceptual, pragmatic and a content expert may relent a more robust and therefore more rigorous selection for hospitality curriculum design in the 21st Century.Christopher C. Muller is Professor of the practice of Hospitality Administration and former Dean of the School of Hospitality Administration at Boston University. Each year, he moderates the European Food Service Summit, a major conference for restaurant and supply executives. He holds a bachelor’s degree in political science from Hobart College and two graduate degrees from Cornell University, including a Ph.D. in hospitality administration. Email email@example.com
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