Launch Your Hospitality Innovation Initiative to Success

Value-driven innovation, beyond technology.

Analyst perspective

Justify value in innovation to decrease risk.

In today's fast-paced economy, innovation is crucial to remaining competitive, but the complexity and cost of innovation initiatives often pose significant challenges for hospitality organizations. Many struggle to allocate the necessary time for thorough planning, leading to rushed decisions and overlooked details. This is compounded by the tendency to select initiatives without a sound business case, which undermines the justification for investment and increases the risk of project failure.

By establishing a unified vision of innovation and visualizing ideal processes, organizations can align efforts with goals, foster collaboration, and prioritize high-value projects through a cost-benefit analysis, driving sustainable growth and competitive advantage.

This approach not only fosters consensus but also ensures that the most beneficial solutions are selected, ultimately encouraging value-driven innovation in hospitality.

Elizabeth Silva Smulski
Senior Research Analyst, Gaming, Hospitality, Sports & Entertainment Industry
Info-Tech Research Group

Your Challenge

Your Challenge

Innovation in hospitality is risk averse, short-term focused, and lacks a clear vision.

A lack of synergy across functions and stakeholders hinders effective innovation.

Innovation is expensive, causing hospitality organizations to adopt a cautious approach to avoid financial risks.

Due to high costs and disruptions, older properties struggle to install the necessary infrastructure for innovation.

Common Obstacles

Stakeholder misalignment and the inability to allocate time due to limited resources and competing priorities leads to rushed planning, overlooked requirements, and, ultimately, suboptimal project outcomes.

Unclear benefit definitions make it hard to track performance and ROI, causing difficulties in effectively measuring success.

Ineffective decision-making is common within hospitality, where investments in innovation are typically based on intuition rather than data and potential business value.

Info-Tech's Approach

Define the initiative and its purpose by outlining the business need. Illustrate the current vs. ideal process using value chains, while considering alternatives.

Conduct a cost-benefit analysis, including the intended business value and accountability. Determine projections, document and track benefits in real-time using KPIs, and establish accountability with a RACI chart.

Craft a persuasive business case, effectively communicating the transformative value of the project to stakeholders.

Info-Tech Insight

Innovation is about delivering value, which may or may not involve technology. Effective innovation considers the purpose and context of its application.

A lack of continuous innovation puts the business at risk

The hospitality industry needs to remain agile in the face of competition.

Without continuous innovation, businesses risk falling behind their competition and losing market share. Additionally, innovation is pivotal for fostering growth. By creating new ideas and approaches, businesses can tap into new opportunities, avoiding a plateau and obstacles for future success.

Innovation helps businesses respond to change by:

1. Flexibility and adaptability: Innovative businesses can quickly adapt to market changes by pivoting their strategies, products, or services.
2. Problem-solving and creativity: Innovation helps businesses explore new ideas and develop creative solutions to complex problems.
3. Market differentiation: Innovation allows companies to stand out with unique products, services, or business models.
4. Risk management: Innovation helps mitigate risks by encouraging experimentation and diversification.
5. Employee engagement and resilience: A culture of innovation boosts employee morale, engagement, and adaptability.

Source: CFBL, 2024

Redefine hospitality with innovation

Four critical challenges stunt the development of strategic innovation in the hospitality industry.

1. Lack of strategic direction: Innovation in the hospitality industry is risk averse, short-term focused, and lacks a clear vision.
2. Siloed thinking: There is a lack of synergy across functions and stakeholders to effectively foster innovation throughout the organization.
3. High cost: Innovation is expensive, and financial constraints and the need to cover various overheads cause organizations to take a cautious "wait and see" approach to avoid financial risks.
4. Infrastructural limitations: While new-build properties can easily incorporate necessary physical and digital infrastructure, older properties face high costs and potential disruptions, making installation challenging or even impossible.

Source: EHL, 2020; Hotel Tech Report, 2022

Why innovate?

Innovation adds value from the customer's perspective. It will enhance the guest experience by balancing technology and human interaction based on customer needs at different times.

Source: Boston Hospitality Review, 2023

Evolve with innovation to improve experiences

The hospitality sector provides services and experiences to customers, such as food, lodging, events, and recreation. It is one of the largest business sectors, relying on and/or contributing to travel and tourism.

Examples of innovation initiatives across hospitality sectors

Overcome misalignment to drive success

Three most common obstacles hindering the ability to overcome challenges:

1. Stakeholder misalignment and the inability to allocate time due to limited resources and competing priorities leads to rushed planning, overlooked details, and, ultimately, suboptimal project outcomes.
2. Unclear benefit definitions make it hard to track performance and ROI, causing difficulties in measuring success effectively.
3. Ineffective decision-making is common within hospitality, where investments in innovation are typically based on intuition rather than data.

"Leverage data-driven approaches, such as quantitative surveys or qualitative interviews, to gather comprehensive and objective feedback."

– Maria Rosa Torres Sejin, qtd. in Edison 365, 2024

Build a strong business case with four key dimensions

A business case to justify the investment of innovation will be required.

Budget holders, including the CFO, have numerous initiatives to evaluate but only a limited budget to allocate. Presenting a well-constructed, value-driven business case is a good way to ensure the benefits of your innovative initiative.

CFOs evaluate business cases across these four dimensions:

1. Credibility: The trustworthiness and reliability of the business case. It considers the sources of information and the expertise of those involved.
2. Strategic alignment: How well the business case aligns with the organization's overall strategic goals and objectives. It ensures that the purposed initiative supports the long-term vision and mission.
3. Accuracy: The precision and correctness of the information presented in the business case. It examines the validity of data, the soundness of the analysis, and the likelihood of achieving the projected outcomes.
4. Practical value: The real-world applicability and feasibility of the business case. It considers the practicality of implementation, the potential for tangible benefits, and the overall value it brings to the organization.

The Dimensions of an Effective Innovation Business Case

Info-Tech Insight

Incorporating innovation into any business strategy is essential for building strong customer relationships. Listening to market demands and changes is important for business longevity and sustainability.

Maximize benefits with a structured approach

Unlock strategic value and efficiency.

Clear alignment: Defining the initiative and its purpose ensures that the project aligns with the organization's strategic objectives, making it easier to gain support from stakeholders.

Informed decision-making: Conducting a cost-benefit analysis and considering alternatives allows for a thorough evaluation of options, leading to more informed and justified decisions.

Enhanced accountability and tracking: Establishing accountability with a RACI chart and tracking benefits in real time using KPIs ensures that responsibilities are clear, and progress is monitored effectively.

Improved communication: Crafting a persuasive business case helps effectively communicate the transformative value of the project to stakeholders, securing the necessary support and resources.

Optimized processes: Illustrating the current versus the ideal process using value chains helps identify gaps and opportunities for optimization, leading to more efficient and effective project implementation.

Launch Your Hospitality Innovation Initiative to Success

Info-Tech Insight: Innovation is about delivering value, which may or may not involve technology. Effective innovation considers the purpose and context of its application.

Blueprint deliverables

Each step of this blueprint is accompanied by supporting deliverables to help you accomplish your goals:

Hospitality Innovation Initiative Activity Workbook

A PowerPoint template providing the member with a structured approach to building a business case that will save time.

Innovation Benefits Commitment Form Template

This template will be used to define the intended business value of projects during intake and approval. It will also track and document the actual benefits achieved once the project has closed, outlining who is accountable for tracking success with a RACI chart.

Comprehensive Business Case Analysis Tool

This tool features a configurable calendar and cost/benefit allocation cadence, allowing for analysis over months, quarters, or years. It also includes the ability to develop a cost-benefit analysis for up to four options and provides a robust set of graphs and reports that can be integrated into the presentation.

Key deliverable:

Business Case Presentation Template

A PowerPoint template and sample providing the recommended structure and visuals for the final business case, leveraging information compiled during the range of business case analysis activities throughout the research.

Track KPIs

Track metrics throughout the project to keep stakeholders informed.

The success of this deliverable can be measured through:

Info-Tech's Project Benefits Diagnostic

1. As this approach is adopted throughout the organization:
2. The innovation business case is approved with only minor amendments.
3. Project scoping will improve by incorporating risk management earlier.
4. Wasted resources will decrease and actual project costs will be within estimated costs.
5. Projected benefits are fully realized on schedule.

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

"Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful."

Guided Implementation

"Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track."

Workshop

"We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place."

Executive & Technical Counseling

"Our team and processes are maturing; however, to expedite the journey we'll need a seasoned practitioner to coach and validate approaches, deliverables, and opportunities."

Consulting

"Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project."

Diagnostics and consistent frameworks are used throughout all five options.

Info-Tech's methodology for Launch Your Hospitality Innovation Initiative to Success

Insight summary

Value-driven innovation, beyond technology

Innovation is about delivering value, which may or may not involve technology. Effective innovation considers the purpose and context of its application.

Innovate with purpose.

By creating a unified vision of innovation and visualizing ideal processes, organizations can align efforts with goals, foster collaboration, and prioritize high-value projects through thorough cost-benefit analysis, driving sustainable growth and competitive advantage.

Draft a compelling narrative.

Transform the business case into a compelling narrative, enhancing clarity and inviting stakeholders to envision the transformative potential of your proposal. This approach ensures that a powerful case for innovation is developed that resonates on both logical and emotional levels.

Approval alone doesn't guarantee success.

For project success, sponsors fully commit to realizing proposed benefits, not just approving them. Clearly defining benefits and securing strong commitment ensures better outcomes, reduces wasted efforts, and maximizes resource efficiency.

Guided Implementation

What does a typical GI on this topic look like?

A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.

A typical GI is 8 to 12 calls over the course of 4 to 6 months.

Workshop overview

Contact your account representative for more information.
workshops@infotech.com 1-888-670-8889

Phase 1

Leverage Value Chains to Make the Case

Launch Your Hospitality Innovation Initiative to Success

This phase will walk you through the following activities:
Align innovation with organizational goals, ultimately creating more effective and efficient initiatives, and create a visual representation of the ideal innovation processes.
This phase involves the following participants:

• CEO, CTO, whoever is requesting/sponsoring the pursuit of innovation
• Key decision-maker/sponsor for innovation
• Business analyst or business relationship manager
• PMO

1.1 Define innovation

Innovation is often easier to recognize than define.

Align on a useful definition of innovation for your organization before you embark on a journey of becoming more innovative.

If the innovation practice needs to be further defined or formally established, refer to the following research before continuing this initiative:

Download the Build Your Enterprise Innovation Program

Info-Tech Insight

Some innovations are incremental, while some are radically transformative. Decide what kind of innovation you want to cultivate before developing your strategy.

1.1 Define value by assessing business capabilities and value chains

Business value defines the success criteria of an organization as manifested through organizational goals and outcomes, and it is interpreted from four perspectives:

• Profit generation: The revenue generated from a business capability with a product that is enabled by modern technologies.
• Cost reduction: The cost reduction when performing business capabilities with a product that is enabled by modern technologies.
• Service enablement: The productivity and efficiency gains of internal business operations from products and capabilities enhanced with modern technologies.
• Customer and market reach: The improved reach and insights of the business in existing or new markets.

A business capability defines what a business does to enable value creation, rather than how.

Business capabilities:

• Represent stable business functions.
• Are unique and independent of each other.
• Typically will have a defined business outcome.

A value chain is comprised of business capabilities and a high-level analysis of how the industry creates value for the consumer as an overall end-to-end process.

Download and review the business capability map for your specific industry.

• Download the Hotel Industry Reference Architecture
• Download the Integrated Casino Industry Reference Architecture
• Download the Sports Entertainment Industry Business Reference Architecture