Information system
Table of Contents
Table of Contents ........................................................................................................... 0
1. Introduction ............................................................................................................... 1
2. Case Study and Discussion ......................................................................................... 2
2.1 Case Study 1: Intelligent Robot and Big Data using in Starwood Hotels & Resorts ................................................................................................................... 2
2.2 Case Study 2: Internet of Things using in Jet Blue Airways ............................. 3
2.3 Case Study 3: AR, VR, and MR in Disneyland Shanghai ................................... 5
2.4 Case Study 4: The Park is Going Green in MGM Grand Las Vegas .................. 7
2.5 Comparisons and Recommendations .............................................................. 9
3. Conclusions .............................................................................................................. 10
4. References................................................................................................................ 11
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1. Introduction
Under today's high competition environment in the hospitality industry, how to
enhance its competitive advantage to provide excellent product and service through
new technology innovation is crucial for each company to gain the market share.
This report selects four IT case studies from different companies in hospitality and
tourism industry which are Starwood Hotels & Resorts, JetBlue Airways, Disneyland
Shanghai, and MGM Grand Las Vegas. The report will analyse successful factors of
four IT innovation cases. It also critically discusses the impacts of internal and
external factors in each case. Meanwhile, the report provides some
recommendations about how corporates make success in their IT Innovation in
hospitality and tourism industry.
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2. Case Study and Discussion
2.1 Case Study 1: Intelligent Robot and Big Data using in Starwood Hotels & Resorts
2.1.1 Background Introduction
Aloft is one of the brands in Starwood Hotels & Resorts. As the group core value:
"We Pursue Excellence" (Starwood Hotels & Resorts 2017), Aloft has been devoting
continuously to provide the best experience to customers. In August 2014, the first
intelligent robot named A.L.O. has become an employee in Aloft California. Except
delivering the items guests requested, A.L.O. also interacted and attended to guest
request and feedback. The new IT innovation provided new service model attract
more customers and received good feedback. Starwood has made a decision to use
intelligent robots in its other hotels since good feedback about A.L.O. usage
(Goodwin 2014). Furthermore, Starwood has set up an innovation lab in research
boosting revenue through using big data in 2015. Starwood utilized data warehouse
and analysis method to decide when promotions should be offered, what were the
optimum prices, and how long to hold promotional rates. New data analysis
technique made hotel revenue management more speedy and accurate and led to
the highest occupancy rates (Goodwin 2014; Boardroom Insiders Profiles 2015).
2.1.2 Successful Factors
Low labour cost and high-level personalized service are the key factors to make Aloft
and Starwood is in the lead in hotels. In hospitality, the ratio of employee costs is
very high. Aloft first adopted intelligent robot in the hotel industry to provide service.
The intelligent robot can replace employee in doing repetitive works, such as
newspapers delivery, room service, and so on. Therefore, the hotel can concentrate
on arranging limited human resources to create more personalized services. The
intelligent robot also provides personalized service, such as interact with the alone
guests during their waiting time. It enhances interaction between hotel and
customers (Business Mirror 2017; Qureshi & Sajjad 2017).
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On the other hand, Starwood uses new big data analytics to maximize hotel revenue
in dynamic tourism environment. Revenue management requests managers
response to market changes accurately and immediately. New big data analytics will
collect and analyse hospitality historical data, forecast the relationship between
room demand and room rate, and conclude the deterministic and applicable rate
accordingly (Tony & Yiu 2012). New technology also helps managers to establish and
manage complex price structure, and make an adjustment at any time (Huefner
2014).
2.1.3 Impacts of Internal and External Factors
Both external and internal factors are important to promote IT innovation success in
Starwood. There is an important external factor is the market requirement. The
trend has shown that young generation is becoming to play a major consumer group
in hotel industry. Young generation prefers creation (Gomezelj 2016). Electronic
products surround their lives. The emergence of intelligent robot in Aloft can meet
the young people demand from the movie imagine turn to the real world. Another
external factor is from the industrial high competition. It requests hotel must have
their characteristic products and services as competitive advantages to attract more
customers (Hilman & Kaliappen 2015). Aloft is a first mover and create a first
intellectualize service impression in customers' mind and win customers' high praise.
Meanwhile, good innovation culture is established in Starwood is an essential
internal factor to drive success. Management encourages innovation from all level
employees and gives them fully supports from human to financial. Starwood set up
IT department in each individual hotel and invest over million dollars to build
innovation lab to do research and development in Silicon Valley (Boardroom Insiders
Profiles 2015). Big data analytics is one of the research results in the lab. Starwood
management insists that IT innovation is as a tool for achieving competitiveness and
business success (Gomezelj 2016).
2.2 Case Study 2: Internet of Things using in Jet Blue Airways
2.2.1 Background Introduction
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Air travel makes international tourism more convenient and faster. How to
guarantee aircrafts' high-level security and improve passengers experience are two
challenges for all airline companies. Internet of Things (IoT) technologies are playing
a big role impacts make aviation more safety, efficiency, and providing a better
experience (Harpham 2016). It was reported that 40% of airlines indicated that
baggage shipping error and losing is one of their top three issues. JetBlue Airways
has deployed and used IoT technologies in baggage handling and improving
maintenance in 2014. JetBlue Airways used RFID (Radio Frequency Identification)
technology for tracking and recording airline baggage. The baggage tracking and
locating rate achieved 99% (GE 2017). Passengers could know where are their
luggage at any time. Moreover, JetBlue Airways also has utilized IoT technology to
find and solve mechanical failures in the first place. It helps not only to make planes
safer but also to reduce flight delay and provide better travel experience at the same
time (Harpham 2016).
2.2.2 Successful Factors
As one of the famous budget airlines in the world, cost focus strategy of generic
strategy is the key factor to success (Alexe 2014). As the cost of networking
equipment continues to plummet, JetBlue adopted IoT to apply in baggage tracking
and locating system. The benefit is not only locating baggage accurately to achieve
guests' satisfaction, but also reduce cost once baggage lost happened (Jenner 2015).
In short term, IT innovation cost will reduce the revenue. However, long-term
benefits will exceed initial technological investment for years to come. Meanwhile,
IoT technology can reduce time consume in solve mechanical problems and increase
efficiency (Harpham 2016). JetBlue also enhanced their products and services. In
addition, using new technology to check aircraft safety can seem as to take
responsibility to all customers and crews. It reduces air travel risk and improved
service (Harpham 2016). Actually, it improves the reputation of the company and
gains customer loyalty.
2.2.3 Impacts of Internal and External Factors
There have some internal and external factors to drive JetBlue innovation successful.
First, good leadership is the first key internal factor. Leadership provides and
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advances a company's innovation vision. JetBlue has collaborated with other
research institutions (e.g. IT team in GE and Silicon Valley) to exploring new
opportunities and methods to solve problems through IT innovation (Henry 2016).
Not only that, JetBlue has its own IT team to monitor and update system according
to the actual situation. Second, JetBlue chose focus strategy which is suitable the
company brand value (Alexe 2014). The airline industry is a highly competitive
industry. JetBlue pursues high-level service and low-level cost to win customer
loyalty (Transportation Business Journal 2016). This strategy has impacted the
company must to do some changes to survive and develop in the airline industry.
External factors are same important as internal items. Stricter aviation safety
industry policy and increasing safety demand from customers are essential external
factors. After the 911 terrorist attack, airlines industry and customers are paying
more attention to the safety issue. IoT using in examination and maintenance system
will ensure flights more safety and reduce cost of flight delay and mechanical
maintenance (Gerdes, Scholz & Galar 2016). IoT technology is becoming more and
more mature is another external factor. The cost of new technology is getting
cheaper and it can be allowed to use widely help to JetBlue make success in IT
innovation (Harpham 2016).
2.3 Case Study 3: AR, VR, and MR in Disneyland Shanghai
2.3.1 Background Introduction
Disneyland Shanghai opened on 16 June 2016 and has attracted worldwide attention.
It has been known as the most technologically advanced Disney theme park in the
world. Augmented reality (AR), virtual reality (VR), and mixed reality (MR)
technologies are used combinatorially in the theme park brings guests into the
dream-like world (Swanson 2016). Guests can experience the magic through a 360-
degree VR tours. For Example, one amazing innovation: “Once Upon A Time”
represented the story of 'Snow White and the Seven Dwarfs' through a new
interactive experience. As the Disney Park (2016) has published that 'The adventure
added computer-generated imagery, special effects, projections, digital media,
scenic illusions and motion-tracking technology which allow the guests to become
active participants in the story alongside Snow White'. It was reported that
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Disneyland Shanghai has become the best financial performer in the first year in all
Disneyland parks. Disneyland Shanghai already welcomed its first 10 million guests in
first 11 months and it was a historic milestone in The Walt Disney Company (The
Walt Disney Company 2017).
2.3.2 Successful Factors
The threat of substitute products or services is one part of the Porter’s five forces
framework can explain the reason for success in Disneyland Shanghai (Harrington et
al. 2014). With the rapid growth of theme park industry in the world, traditional
equipment can not adapt to the increasing demands of customers. To avoid be
substituted, Disneyland Shanghai needs excellent equipment, service, and activities
with appropriate prices to attract visitors. AR, VR and MR technologies will bring new
unique fantastic experience to customers (Fritz 2016). Another success factor is
Disneyland Shanghai understood that its target market was not only limited in
children. It has expanded its target customers at different ages. Nowadays, lots of
adults also have a childlike innocence, even the aged. High-tech will help them to
make childhood dreams come true (Canada NewsWire 2017). The power of new
technology can meet different ages customers' demands and make service
satisfaction (Li 2017). New technology applied in Disneyland Shanghai has made the
theme park becoming a popular place to have parties and ceremonies with friends
rather than only limited in family activities (Disney Park 2016).
2.3.3 Impacts of Internal and External Factors
The key internal factors impact Disney Shanghai to success in IT-enabled innovation
are the company has sufficient financial support and strict technical approval process
and standards. Any IT innovation can not be implemented without sufficient capital
(Byoung, Hyoung & Ko 2013). The total investment is up to 5.5 billion dollars
including IT sector is the highlight point for the new park (Disney Park 2016).
However, financial support is actually from management support. It proves that the
Disney management advocates IT innovation ((Byoung, Hyoung & Ko 2013).
Meanwhile, Disney has a very strict technical approval process and standards. The
company construction team strictly followed 'Building In-formation Modeling' (BIM)
standards to complete IT innovation during whole project process (China Economic
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Net 2016).
In addition, external factors affection also can not be ignored. The first is thes
political element. Shanghai government pays high attention to this project from
preparation until now. The government adopts more liberal policies and appoints
technicians to assist IT innovation process implementation (Viswanath 2016).
Another external element is the advent of data era also forced the theme park
industry must have to do some changes in their products and service. Obviously,
using high-tech to attract tourists' attention is a new trend (Alla & Mykhaylo 2017).
Disneyland Shanghai catches the opportunity to meet customers' needs through
adopting AR, VR and MR technologies to lead new fashion in theme park tourism.
2.4 Case Study 4: The Park is Going Green in MGM Grand Las Vegas
2.4.1 Background Introduction
MGM Grand Las Vegas is the biggest casino hotel in Las Vegas. The Park, which is the
hotel's immersive outdoor dining and entertainment area, opened in April 2016. The
spectacularity of park was that new technologies were applicated reflecting in an all-
encompassing appearance from designing, construction, completion, and operation.
As we know, Las Vegas has been built in a desert which is bad environment and
scarcity of natural resources. The concept of the park is striving for the reduction of
natural resources, maintaining environmental sustainability, and provide
characteristic experience to customers. Inspired by the ecosystem, The Park features
innovative aspects are including water conservation, energy efficiency, waste
recycling, material selection and other green building strategies. The 'cooler than the
rest' creation should be worth mentioned. The temperature of Las Vegas is too high
to do outdoor most activities during the summer days. The park was designed to
keep its temperature cooler through new sensor technology. It is a new selling point
in MGM that customers can enjoy their dining and entertainment outdoor even in
the summer (MGM Resorts International 2016).
2.4.2 Successful Factors
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The first factor of The Park is so popular is that MGM Grand Las Vegas meet
customers' demands. Guests would like to enjoy their holidays outdoor in the
summer, but the climate condition is too bad. However, The Park can provide a
comfortable environment to do outdoor activities will attract more customers
(Thompson 2014). Second, it also enhances the hotel's competitive advantages.
MGM Grand Las Vegas is the first mover to using new advantage technology to build
a green hotel. The new experience already attracted large numbers of tourists and
raised consumption (Yu, Li & Jai 2017). Third, sustainable development is the hottest
topic in the world (Wan, Chan & Huang 2017). MGM Grand Las Vegas complies with
the trend of environmental protection concept. The concept also successfully
attracted lots of customers who are environmental advocates (Compagno 2016).
Some arguments are about the high investment in IT innovation to build a green
hotel, such as waste recycling system, geothermal collecting system. However, as a
long-term strategy, it will reduce cost and increase profits. Furthermore, building
green hotel through IT innovation has propagandist effect as well (Ajagunna, 2014;
Gössling 2017).
2.4.3 Impacts of Internal and External Factors
MGM Group as a legend in the hotel industry and its knack is constant creation and
innovation. The corporate culture is encouraging creation and innovation. The hotel
has special technical team cooperate with the best research institutions in the world.
Innovation is team game throughout all process from research until application. One
core value in MGM Group is teamwork. The group will provide support for financial
and human resources to ensure innovation project success (MGM Resorts
International 2016).
Although internal factor is essential to make MGM Grand Las Vegas IT success in
innovation, external factors may be more important in this case. MGM Grand Las
Vegas commits to provide excellent products and service to customers. However,
the bad environmental condition limits customers' outdoor activities. Limited natural
resource forces the hotel must explore new product to enhance its competitive
advantage through reducing the depletion of natural resources (Ribaric 2015).
Meanwhile, sustainable tourism has becoming one basic social and community
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requirement. Sustainable development is one of the corporation social responsibility
(CSR) in contemporary corporates. MGM Group also actively respond to the
development of green tourism and environmental protection. (Chan & Hsu 2016).
Sustainable tourism requests IT innovation as a long-term strategy contributes to
global green hotel development (MGM Resorts International 2016).
2.5 Comparisons and Recommendations
Through analysing and discussing 4 cases, it clearly shows that IT innovation has
already impacted hospitality and tourism industry widely. A successful IT innovation
will be improving efficiency, reducing cost, increasing revenue, enhancing
competitive advantages, and providing excellent customers' experience (Goodwin
2014). The similarity of the successful factor is highlighted in all four companies have
adopted correct IT innovation strategy according to their different market demands.
Both internal and external factors are essential to drive the result of IT innovation.
The internal factors are most related to corporate culture and management.
Innovation is a team work. All these cases proved that establishing an innovative
culture is necessary for the company to engage all level staff to involve in the
creation and innovation. Good management is an important capability to promote IT
innovation success and as the part of firm’s core competence (Tchuta & Xie 2017).
Industry element is the most important external factor to impact IT innovation. The
high competition environment and changing market force each corporate to make
some differences from others. IT innovation is a new assistive channel to enhance
company's competitive advantage and support its strategic goals (Gomezelj 2016). It
is worth to mention that natural environment factor also needs to be considered.
Sustainable development has becoming one part of CSR in contemporary corporate
governance theory and effecting the result of IT innovation.
Based on above comprehensive discussion and comparison, some recommendations
for hospitality and tourism industry in successful IT innovation are provided as below:
1, Companies should understand their market positioning and customers' demands
before they start to plan IT innovation. Any organization in hospitality and tourism
industry should analyse whole industry and market information first, and then select
its own market positioning and meet customers demands. Incorrect market
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positioning and customers' demands understanding will cause failure of IT
innovation.
2, Companies should respond market changes accurately and immediately.
Hospitality and tourism is a highly competitive industry. Market information is
constantly updated nowadays. Organizations need to provide new products and
service through planning and implement IT innovation once they perceive market
changes. Being a first mover will help company to create a pioneering impression
and create unique product or service to the customers.
3, Companies should establish good innovation corporate culture and make it as a
long-term strategy. Innovation is a teamwork and related to all departments and
staffs. Management should develop and encourage entrepreneurship within
corporates and provide support, resources, and capabilities to drive IT innovation
success.
4, IT innovation should be devoting to cost reduction and efficiency improvement. In
hospitality and tourism industry, providing excellent experience is vital for any
organization. Moreover, the long-term benefit of IT innovation must be from cost
reduction and working efficiency improvement.
5, Companies must consider corporate social responsibility as one part of IT
innovation. Hospitality and tourism industry is closely related to the natural
environment. New technology should meet guest satisfaction as well as contribute
to environmental protection and sustainable development.
3. Conclusions
This report selects four IT innovation in four different companies in hospitality and
tourism industry to critically discuss how companies strategic utilize IT innovation to
successfully enhance their competitive advantages and achieve companies' goals.
The key successf factors are all the companies can understand their market
positioning and adopt correct IT innovation strategy immediately according to
constant market changes. Companies are also clear about applying IT innovation to
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reducing cost and increase efficiency. The report also critically analyses the main
internal and external factors to impact IT innovation success. Establishing an
innovative corporate culture and good management are the main internal factors to
effect IT innovation success. On the other hand, high competition environment is an
external factor to request all companies need to make some differences to attract
customers through new technology application. In addition, CSR has becoming more
and more important external element that companies must be considered to do IT
innovation. At the end, the report gives five recommendations about how to help
companies to make success in IT innovation in hospitality and tourism industry.
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