The Economics and Management of Innovation in Travel and Tourism Services: The Case of European Cruise Industry in Dubai

By Di Foggia, Giacomo; Lazzarotti, Valentina et al. | UTMS Journal of Economics, December 2012 | Go to article overview

The Economics and Management of Innovation in Travel and Tourism Services: The Case of European Cruise Industry in Dubai


Di Foggia, Giacomo, Lazzarotti, Valentina, Pizzurno, Emanuele, UTMS Journal of Economics


Abstract:

Firms entering new markets face a difficult challenge: how to manage the innovation process to satisfy specific clients' requests. In view of its geographical location and business friendly policies Dubai has become the gateway between East and West. Thus, European travel & tourism industry predicts business development. Prior research suggests that managers should consider religious factors to avoid strategic drift. In this paper we explore what kind of innovations should be introduced in travel service to comply with specific clients. We argue that after a long period of strategic and market analysis, the very affected conceptual step is "service development and market testing". Our arguments are supported by empirical analysis.

Key words: Travel management, Tourism innovatio, Hospitality, innovation process, Dubai, tourism economics.

Jel Classification: F23, L83

INTRODUCTION

Nowadays the share of global GDP produced by tourism and its induced activities is roughly 9% (WTTC 2011). In last decades, tourism has become a vehicle for development and business diversification, in developed and emerging markets alike (Sharpley 2002). In today's evolving environment, service innovation has become a vehicle to compete, enter new markets and foster position in existing ones. According to OECD services represent 80% of advanced economies, nevertheless only a marginal share of literature is available.

Prior research on innovation suggests that only a little share of companies adopt a formalized model, however those who apply one have a higher success rate (Cooper 2005).

Supported by former research on product innovation (Di Foggia et al. 2011) one might expect that both adaptations and structural changes are necessary to comply with specific requirements. We extend this idea in detail and design our research in order to cover many aspects of service development and investigate how the process is influenced mainly by religious factors.

Despite the availability of contributions dealing with Islamic issues (Vignali 2001; Nakata and Sivakumar 2001; Souiden 2002; Shafie and Othman 2006; Haniffa and Hudaib 2007; Marinov 2007; Wilson and Lim 2008; Pink 2009; Lada, Tanakinjal, and Amin 2009); studies dealing with the determinants of tourism success (Ottenbacher Gnoth, and Jones 2006; Hjalager 2010; Williams and Shaw 2011); we strengthen the literature on innovation in tourism applying a theoretical framework of service development composed of seven phases: strategic planning, idea generation, idea screening, business analysis, service design and market test, HR training, commercialization to a real case.

The reminder of this paper is organized as follows: we first carry out a literature review of the concept used in this paper, then introduce the challenges to succeed. After that the case study and relative evidences are presented. Finally we list conclusions, limits and future research.

LITERATURE REVIEW

Service development

It is worth it to introduce the concept of service development since it can be acknowledged that service and product development may differ (Dolfsma 2004), however services are always more being integrated into products and products are becoming part of services Vargo and Lusch (2004). Services have peculiarities which include inseparability, since consume and production happen in the same time; heterogeneity because of the interaction of human activity and perishability as service cannot be stocked Jaw, Lo, and Lin (2010). Moreover, service is not patentable, therefore any first-mover advantage cannot come from monopoly guaranteed by the patent. Shekar (2007) adds that a service can't be tried before being purchased and emphasise the role of staffwhich is fundamental in service production and delivery.

Alam and Perry (2002) consider as pioneer work on service development the model presented by Bowers (1987). The structure was similar to the idea of Booz, Allen and Hamilton of new product development Booz et al. …

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