Disruptive innovation in hospitality: Are we there yet?
Society both likes and fears the concept of disruptive innovation. We like to experience new ways of traveling and creativity in cooking dishes; at the same time, we may be somewhat anxious or even afraid of getting into a self-driving car or eating something cooked by a robot chef.
The term 'disruption' is widely used by the media to denote a form of breakthrough that takes place in rapidly-changing markets. It can mean different things to different people, along a continuum from incremental change to radical transformation. According to conventional wisdom, a provocative marketing campaign may be seen as 'disruptive' as an affordable-luxury hotel concept with shared bathrooms.
What disruption means to academics – and some business leaders who have been influenced by the theories of Harvard professor Clayton Christensen – is somewhat different. According to Christensen's well-known (and oftentimes misused) theory, disruption describes a process whereby relatively small companies with few resources are able to successfully challenge, often to the point of up-ending, incumbent businesses. Disruptive innovations are however differentiated from sustaining innovations. The former originate either in low-end markets or new-market footholds, whereas the latter make good products better. As such, there are few innovations that can truly be labelled 'disruptive'. Yet, few terms have so affected the collective psyche that companies in virtually every industry now seem to face constant disruptive innovation.
But the fear or hope of emerging disruption is exaggerated and misleading. For example, Christensen argues that Uber does not qualify as a genuinely disruptive company as it didn't originate either as a low-end opportunity or in a new market, primarily targeting non-consumers. In an article published a year ago, I made a similar claim about Airbnb. Yes, Airbnb's sustaining innovation effectively capitalizes on improving the efficiency of the system — in a dishonest way, some would argue — but it will not break the established industry's rules anytime soon. Rather, as my colleague, Professor Cindy Heo contends, Airbnb will develop into another major player in the industry.
Self-driving cars will be truly disruptive for the automobile industry if they are aligned with their developers' ultimate goal: that consumers will no longer need to have their own personal car anymore.
What is then a potential disruptive innovation in hospitality? No one has a crystal ball and is able to predict the future with any accuracy, so we must rely on intuition to forecast possible ways in which the hospitality sector may open up or see a fundamental change in the way hospitality is delivered to customers. Consider these two examples:
- 3-D printers: Hotels 'printed' using concrete will open up a new field for hotel/temporary housing development, valuation and real estate. Using the currently-available technology, a San Francisco-based start-up, Apis Cor, can 3-D print a hotel in one day. 3-D printing of buildings will allow accommodation hosting opportunities to develop and disappear very quickly in new areas, according to changing destination popularity, or to extend capacity following a surge of visitors, for example.
- Virtual reality: headsets or physical spaces will change the very notion of tourism. We will virtually travel not only to places, but in time as well. As another colleague, senior lecturer Remy Rein, commented to me recently: why would we physically travel to 21st century Rome, if we can 'virtually' visit Rome in the 1stcentury BC and experience 'real-time' how the Colosseum was built?