Blue Ocean strategies in hotel industry - Theory and Practice in Hospitality and Tourism Research - page 45

4 THE ATTRIBUTES OF BLUE OCEAN

STRATEGIES IN HOTEL INDUSTRY

Table 2. Characteristics of BOS in Taiwan hotel.

In assessing the growth strategies of three Chinese
Domestic Hotel Companies, Qin, Adler and Cai
(2012) asserted that the essential elements of their
strategies were innovative positioning, keeping cost
low, rapid expansion, continuous innovation, focus
on quality consistency, extensive training and sev-
eral indigenous Chinese cultural operational prac-
tices. Except for the later, these attributes are the
key elements in the Blue Ocean Strategy. According
to authors also aggregating and integrating with
the indigenous operation practices could create a
huge competitive advantages for the three hotels
which allow them to outperform other domestic
hotels and compete successfully with their foreign
counterparts.
Yang (2012b) further identified the attributes
of Blue Ocean Strategies in selected hotels in Tai-
wan as laid out in Table 2. Although the findings
cannot be generalized to all contextual setting, the
input somehow is influential precedent in deter-
mining the intrinsic values to be considered when
adapting BOS in hotel setting.
Parvinen, Aspara, Heitanen, and Kajalo (2011),
pointed out that different approaches to BOS work
in different contexts and context combinations.
Like other industry, the attributes of BOS in hotel
industry may vary from one hotel to another due
to differences in business scale, scope, spatial and
cultural differences. As hotel is a labor-intensive
industry, other internal and external factors such
as staff turnover rate can be considered. Other
attributes for example hotel theme, product and
services offering, marketing intelligence and type
of delivery system employed may profoundly
impact the company's financial and non-financial
performance. The most important thing is for
organization to consider the factors that they have
control over and those they could not or beyond
control.
These attributes however, should dwell within
the three main features of BOS, namely focus,
divergence, and offering gripping tagline to cre-
ate value innovation and enable firm to occupy a
strong branding image to the customers. As com-
petition is unavoided, firms need to find a way to
reconstruct the market boundaries by focusing
on various issues as the alternative industries, the
business dyads, the network chain, complementary
products and service offerings, functional or emo-
tional appeal to buyers and time. At the level of
sales management, the strategic seeking of uncon-
tested space by creating totally new network roles,
value creation logics and benefits for customers
does indeed facilitate profitable growth (Parvinen
et al., 2011).

Source: Yang (2012a).

5 FORMULATING AND EXECUTING

BLUE OCEAN STRATEGIES IN HOTEL
INDUSTRY

Understanding of the basic strategy canvas will help
the company to start looking at how to formulate
the Blue Ocean strategy. Company must first break
the competition and unlock the uncontested mar-
ket space. It is important to justify the reasons why
companies must change from Red Ocean to Blue
Ocean. It is mainly because of the increase in price
wars among hotels that boost up the intensity level
of competition. With that, it will leads to shrink-
ing of profit margin and market shares. Anecdotal
evidence shows that in most of the industries, the
supply is now overtaking the demand. The con-
cept introduced by the companies becomes more
similar while differentiation becomes harder. Take
the example of hotel industry, there are more and
more hotels being built from time to time. Albeit
hotel providers claimed that they had launched a
new concept, somehow the basic things are still the
same, providing product and services like rooms
for the customers to stay. The only way that dif-
ferentiates one hotel over the other is the element
of value innovation inside their strategic move. For
example, improving on the technology used like
room internet to the customers could be one of the
value innovation elements or targeting students
(youngsters) to stay in hotel rather than middle or
high income customers.
Furthermore, Qin et al. (2012) postulated that
the more brand expansion is performed, the more