The hospitality industry experiences abundant growth rates, although it is one of the world’s toughest markets. Therefore, entrepreneurs need to aim for differentiation in order to gain an uncontested market position.
Blue Oceans are more than a natural wonder and a loophole for mass-market participants: It is an efficient strategy management tool that focuses on finding innovative business concepts and thus the key to success for adaptive companies. In contrast to saturated Red Oceans, Blue Oceans feature value innovation through an adjusted offering with costs benefits.
Similar to the Darwin’s “Survival of the Fittest”-approach the Blue Ocean Strategy depends on customizing and enhancing an already existing concept with innovative features.
In such highly competitive markets, monopolists – those who are able to find a market niche – exhibit the best chances for economic success.
W Hotels and MotelOne are two well-established paradigms for innovativeness in the hospitality industry. While W Hotels succeeded in adopting an exclusive lifestyle hotel destination with a focus on design, fashion and music, MotelOne concentrated on a premium low-cost oriented design-approach. Together both parties reinvented their segment through implementing trailblazing new concepts combined with the value- adding design factor. Moreover, Blue Oceans need to eliminate dispensable options, as W is less formal and more liberal than all its competitors, whereas MotelOne discarded unprofitable amenities like telephones, minibars or room service.
The economic surplus derives from wider target groups as well as higher profit margins, which is why trendsetting Blue Oceans are classified as a future-proof and promising corporate path.
Table of Contents
1 Introduction
2 Hospitality industry
2.1 Significance for overall economy
2.2 Hotel sector profile
3 Blue Ocean Strategy
3.1 Conception
3.2 Creating Blue Oceans
3.2.1 Principles
3.2.2 Implementation
3.2.3 Tools and frameworks
3.2.4 Red vs. Blue Oceans
3.2.5 Benefits and value
3.3 Critics
4 Positioning for hotels
4.1 SWOT Analysis
4.1.1 Strengths
4.1.2 Weaknesses
4.1.3 Opportunities
4.1.4 Threats
5 Examples
5.1 MotelOne
5.1.1 Implementation
5.1.2 Analysis
5.1.3 Evaluation
5.2 W Hotels
5.2.1 Implementation
5.2.2 Analysis
5.3.3 Evaluation
7 Outlook
8 Critical evaluation
9 Conclusion
Research Objectives and Topics
The primary objective of this thesis is to investigate the applicability of the Blue Ocean Strategy within the hospitality industry. It evaluates how hotel companies can identify and occupy uncontested market spaces to achieve sustainable growth and differentiation, rather than competing in saturated traditional markets.
- Theoretical foundations of the Blue Ocean Strategy
- Strategic analysis of the global hospitality sector
- SWOT analysis as a tool for hotel positioning
- Case study evaluation: MotelOne and W Hotels
- The relationship between value innovation and cost leadership in hotels
Excerpt from the Book
5.1.2 Analysis
First of all, it striking that MotelOne characteristics resemble the concept of so-called low-cost carriers – the low-price segment of the airline industry.
Southwest Airlines reinvented the airline business as a pioneer with its low-budget approach, when they reduced ticket prices in exchange for cutting back on service features such as free meals or free baggage, combined with less space for the passengers on board (Kim & Mauborgne, 2005, p.38). This demonstrates how a business in an equivalent, but different industry was able to distinguish itself from the competition, but does value innovation always derive from the procedure of Kim and Mauborgne?
The hotel industry’s decisive factors for differentiating the competition are the following: price, location, ambience/style, service, facilities and last but not least the category. Each industry has its special characteristics, which are displayed in a specific “Strategy Canvas”, while their occurrence reflects the market’s variety.
Applying the “Four Actions Framework” shows how MotelOne reconstructs the elements identified by the “Strategy Canvas” and thus was able to create a “New Value Curve” – equaling a new market.
In doing so it becomes clear how MotelOne precisely followed the guidelines advised by Kim and Mauborgne for finding a Blue Ocean.
MotelOne reduced its price and room size to an average extent of €69 and 16m2 (Klesse, 2012). Thus, guests benefit from a standardized offering with fixed prices and always know what to expect in a turquoise branded design-budget hotel.
Summary of Chapters
1 Introduction: This chapter introduces the hospitality industry as a global, competitive market and outlines the research focus on applying Blue Ocean Strategy to hotel business models.
2 Hospitality industry: Provides an overview of the global tourism sector, its economic significance, and the characteristics of the hotel market.
3 Blue Ocean Strategy: Details the theoretical framework, including concepts of value innovation, the Strategy Canvas, and the Four Actions Framework.
4 Positioning for hotels: Analyzes the hotel industry environment through a SWOT analysis to identify how hotels can leverage internal and external factors.
5 Examples: Investigates MotelOne and W Hotels as primary case studies to demonstrate successful implementation of Blue Ocean strategies.
7 Outlook: Discusses future trends in the hospitality industry, suggesting potential areas for new Blue Ocean creations like eco-friendly hotel concepts.
8 Critical evaluation: Critically assesses the limitations and challenges of applying the Blue Ocean Strategy, considering market complexities and competition.
9 Conclusion: Summarizes the findings, emphasizing that strategic success is found in continuous distinctiveness and the ability to adapt to unique customer demands.
Keywords
Blue Ocean Strategy, Hospitality Industry, Value Innovation, Differentiation, Hotel Management, MotelOne, W Hotels, SWOT Analysis, Market Niche, Competitive Advantage, Sustainable Growth, Business Models, Customer Experience, Strategy Canvas, Four Actions Framework.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis explores how the Blue Ocean Strategy can be adapted and applied within the global hotel sector to create new market spaces and achieve differentiation from competitors.
What are the central thematic fields covered?
The main themes include strategic management theories, global hospitality market analysis, and the practical implementation of value innovation in budget and luxury hotel segments.
What is the primary research goal?
The goal is to determine how successful the Blue Ocean Strategy method is for hotels and to evaluate the feasibility of "re-inventing" traditional industry segments.
Which scientific methods are employed?
The work utilizes a combination of literature review, secondary market data analysis, and qualitative case studies to analyze specific industry leaders.
What does the main body address?
It covers the theoretical background of the Blue Ocean Strategy, the current state of the hotel industry, and detailed analyses of MotelOne and W Hotels as practical case studies.
Which keywords best characterize this work?
Key terms include Blue Ocean Strategy, Value Innovation, Differentiation, Hospitality Industry, and competitive positioning.
How does MotelOne specifically achieve its Blue Ocean position?
MotelOne follows the Blue Ocean principles by combining low-cost standardized procedures with high-quality interior design, effectively creating a "budget design" niche that appeals to both business and leisure travelers.
In what way does W Hotels differ from traditional luxury hotels?
W Hotels shifts from traditional luxury formalities to a "lifestyle" approach, focusing on dynamic guest experiences, music, fashion, and creating social hubs within their properties to attract a younger, modern clientele.
- Quote paper
- Bachelor of Arts Onno Hetzke (Author), 2013, Blue Ocean Strategy in the Hotel Sector, Munich, GRIN Verlag, https://www.grin.com/document/264194
