I t was Swiss hotelier Csar Ritz, founder of the Parisian Htel Ritz back in 1898, who

I t was Swiss hotelier César Ritz, founder of the Parisian Hôtel Ritz back in 1898, who coined the familiar phrase “the customer is always right.” For the modern hospitality manager who must constantly deal with online guest reviews, the statement holds as true today as it did 120 years ago.

A frustrated attempt to plan a family vacation led Stephen Kaufer to co-found TripAdvisor in 2000 and help people make better travel decisions. In the hospitality industry, platforms like TripAdvisor have strengthened the bargaining power of customers.

Now more than ever, hospitality managers are continuously challenged to offer memorable experiences for good reviews and more bookings. Some have invested in new technology; others have hired designated teams to respond to online reviews with personalized messages, for the human touch remains a competitive advantage in the hospitality industry, even in a high-tech world.72 On the supply side, digital tech has led to fiercer competition.

Back in 2007, when they could not afford the rent of their apartment in San-Francisco, Brian Chesky and Joe Gebbia put an air mattress in their living room and turned it into a bed and breakfast.

Then, with Nathan Blecharczyk, they created Airbedandbreakfast. com, a website offering short-term living accommodations. In 2009, the name was shortened to Airbnb.com, and the offer was extended to a variety of properties, including castles, boats, tipis, igloos, and even private islands. Together, the world’s largest hotel companies add up to more than 3.8 million rooms nowadays, according to STR. Yet this is less than what Airbnb offers—more than 4 million listings worldwide, bookable in one click.

Hotel and restaurant guidebooks, local travel agencies, vacation rentals, and hotels were established businesses once, but sites like Airbnb and TripAdvisor have turned that on its head. Today, the latter has become an online travel agency like its former parent company Expedia and has acquired a number of vacation rental portals like HouseTrip.

TripAdvisor might be Airbnb biggest competitor, but hotels’ next competitors may be something altogether different. Arnaud Bertrand, co-founder of HouseTrip,73 thinks the next big threat is self-driving cars, for people may be freed from driving to spend that traveling time working, sleeping, and entertaining themselves—all things we normally do in a hotel room!

Discussion Questions 

1. What forces are driving disruptive innovations in the hospitality industry?

2. Which innovations are disruptive ones, and which are sustaining ones? Which of them are product, service, process, organizational,

or marketing innovations? Discuss.

3. What role have entrepreneurs like Airbnb and TripAdvisor’s founders played in terms of disruptive innovations?

4. In your assigned group, suppose you have been asked to write a report on the implications of disruptive innovations in the hospitality industry for corporate managers of established hotel and restaurant businesses. Come up with recommendations to help these managers transform disruptive innovations into business opportunities.