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Discuss about the Innovation in Tourism and Hospitality Industries.

Beside Australia tourism has a critical role in developing most economies around the world. Therefore developing this sector goes beyond the mere service to the clients; it is also about creating an environment of innovation to make their services better and preferable. It is of utmost importance to know how innovation has impacted on the performance of this sensitive sector in Australia.

The business models alongside innovative technologies have all helped in transforming the sector. Innovation has brought in new ways of operation. Such items include timing, organization, and placement of both collective and individual processes that relate to clients. Research on tourism and hospitality industry has changed demarcation in perspective from the generic perspective (Coldwell, 2017). From this concept, it is important to note that such form of service innovation should not be confused with product innovation. In the same perspective, we shall consider the impact the Airbnb on the hospitality industry (as the pillar of change in tourism and hospitality in Australia).

Within this research paper, we shall focus on Airbnb’s modernization level in the hospitality and traveling field. According to Airbnb’s concept of operation, travelers are in a position to access several hospitality and hotel agencies thus, giving travellers a lot of housing options as established by Guttentag, (2016, pg.1200). Unlike the older system of service delivery in the hospitality field, Airbnb (an online platform) ensures that travellers book their own choices of housing including castles, flats, and even villas in their stay destinations. It is, thus, evident that the advent of Airbnb has changed the travelling habits of most people. Such is because the process of booking hotel services and housing is more luxurious with Airbnb. In this case, we shall use Airbnb as a case study to showcase the impacts of innovation in hospitality and tourism industries particularly in Australia as illuminated by Aznar, (2017, pg.150).

Smits and Smits (2015) explain how hospitality in Australia consists of small unbranded hotels which mostly lack ranking in any way. They lack target when it comes to both domestic and international tourism. Little is done to make them competitive in the tourism sector which requires high levels of innovation. The competition is high, and therefore these small business hotels need to innovate and become attractive tourist destination hubs.

Much of the research was needed to address how hospitality in the tourism industry is adapting to changing trends of the world. Such changes as social media, competition, business synergies, environmental changes and world economy have influenced the decision made by business communities around the world and tourism is not an exception. This is according to World Economic Forum (2015) which establishes the travel and tourism competitive report.

Airbnb's Innovation in Hospitality and Traveling

This research activity considers several issues to discuss the aspect of innovation introduced herein. Such problems include emerging business models, integrated and novel marketing approaches, talent and customer management, distribution channels, service delivery, and discovery tools. With Airbnb as an online co-innovation community, clients are in a position to discuss, share, and have their ideas advanced. The advent of the online environment does not give companies a source of innovation but also ensures that service providers continue being innovative as well as redesign the services they provide. Impact Analysis Report, (2015) focuses on the impact of the Airbnb to the lodging industry and economy in New York City. With Airbnb, clients have the chance to access an array of house locations, experience local culture, access household amenities, and get services at low costs. One of the ways through which the hospitality industry has benefited from travellers is through potential bookings. On the contrary, the ancient method of booking is slowly being changed by a new, better concept thanks to Airbnb. Also, the aspect of reduced travelling and booking prices gives Airbnb an edge over the traditional idea of booking. Apart from the reduced costs, Airbnb has also introduced a range of houses for reservation. Such houses are villas, apartments, and castles all of which offer comfortability at prices that are lower than before as reported in Hospitality Ireland (2016).

The research will seek to study how hospitality sector in Australia is responsive to the changing trends in the tourism industry. It will also target the client service and how their needs and expectations are fulfilled using those innovative responses to those trends.

This research paper will conduct the study on how hospitality and other tourism stakeholders have integrated innovation to capture a larger share of the market and also to remain relevant in the industry where competition is high. The research will concentrate on the larger part of Sydney where it intends to collect information from more than 1000 respondents in the tourism industry. The research was conducted during pick season of tourists in Sydney. This period was best for soliciting anticipated response and observations from the participants.

This paper aims at establishing the key innovativeness used in the tourism industry in Sydney to spur growth and competitiveness. It seeds to explore the range of changes in the industry and the responsive mechanism that need to be adopted by tourism and hospitality sector. Though the industry is facing different challenges especially in global market changes, the study explains the issues in the light of how they are adapted to provide a conducive environment for their growth prospects.

Innovative Responses by Hospitality Sector in Australia

The main objective of this study is to establish the role of innovation in tourism and hospitality industry in Australia a case study of Airbnb.

In particular, this study seeks to:

  1. Demonstrate (with Airbnb as the case study) how innovation has helped in easing service delivery in the hospitality industry.
  2. Determine why travellers are more comfortable with using the services provided by Airbnb.
  3. To establish how hospitality sector applies innovation in the services delivery.
  4. Examine how Airbnb has affected tourism industry in Sydney.
  5. Literature Review

According to Zervas, Proserpio, and Byers (2014), people are beginning to abandon the traditional methods of booking hotels. Central to such results is the advanced Airbnb service delivery methods including the cheap, fast methods of booking hotels. Therefore, companies that are still basing their operations traditional service delivery systems are primarily affected worldwide. To add to the same, Quattrone et al. (2016) suggests (in a report regarding the impacts of innovation in the hotel industry) that the ancient tourism and hotel industry has realized losses. In a statistical viewpoint, such losses as experienced by organizations that use traditional systems are valued at 27% while associated ancillary loses are at 3%. The same report asserts that the supremacy of services provided Airbnb is slowly increasing (Zervas, Proserpio & Byers, 2014).

In a personal standpoint, one such factor that influences a customer's process of decision making, in this case, is related to household amenities. As innovative as Airbnb is, it has been able to provide houses considered by most customers to be more feasible. Feasibility, in this case, pertains to the features of the houses as compared to the traditional accommodation styles. As a result of such reasons, most travellers are attracted to services Airbnb provide. On the same note, one should also note that Airbnb not only provides apartments but also enable one rent a whole home for as long as he or she needs. In this way, maintenance of privacy and security of clients is enhanced (Zervas, Proserpio and Byers, 2014).

Apart from the noted impacts, there are yet some researchers that still critic such sort of innovative ideas brought by Airbnb. According to a journal written by Ryerson University, Airbnb has brought a lot of disadvantages than advantages to the hospitality sector. According to the journal, capitalists have tried so much to coax the Australian government to retain the balance between the modern and the traditional hospitality sub-sectors. Further arguments are that the advent of online platforms like Airbnb has resulted in market autonomy making the ancient firms afraid that they may be forced to shut down their operations (Ryerson, 2017). With prices of housing reducing, more clients are veering from ancient hospitality firms. Traditional firms are afraid of being bound to operating under policies and protocols that include payment of taxes. Therefore, such companies aren’t able to reduce the prices of their services beyond a given amount. On the contrary, Airbnb is not restricted to any regulations or policies whatsoever thus; it can lower its prices as much as it requires (Guttentag 2016).

Adapting to Changing Trends in the Tourism Industry

Another article by Levendis and Dicle (2016) argues differently. According to this article, even though clients are happy and contented with Airbnb’s services, the feeling is controversial. There are particular countries like the US where Airbnb advertise houses without considering the local renting protocols and policies. It would be impractical to consider since states like New York City (or even others worldwide) prohibit agencies that provide hospitality to rent rooms for more than thirty days. Other regulations require customers to pay for accommodation regardless of holiday accommodations (Levendis &Dicle, 2016). Such rules have always hindered the operations of Airbnb. In Barcelona, for instance, Airbnb had to pay a hefty fine for breaching tourism laws. Other areas that the company faces modern criticism include New Orleans, San Francisco, Malibu, and Berlin. However, as more of such critics continue arising, Airbnb is still a steadfast choice for individuals that wish to book houses while on vacation.

In Australia, according to Turner (2016), business models and innovative technologies have revolutionized a lot the tourism and hospitality industries. Such innovations include:

  1. Introduction of phone-as-key-cards
  2. Introduction of mobile self-check-in
  3. Introduction of mobile booking
  4. Availability of self-service check-in kiosks
  5. Availability of lobby media panels
  6. Electronic luggage tags
  7. BYOD (bring your own device)
  8. BYOCP (bring your own content platforms)
  9. Smartphone boarding passes
  10. Systems for hotel service optimization
  11. Guest device connectivity tools

Such innovations can be used in different operations to increase efficiency and security. Turner also argues that such innovations can be used in the service frontline to be used by customers or in the backend where their applications are “invisible.” On the contrary, innovations including CRM (customer relationship management) and tools of customer intelligence are not observable by guests, but hotel managers can enhance or customize them to create and maintain the histories of orders and patterns of service consumption. Through innovation, hotels are also able to predict the needs and wants of customer thereby, increasing loyalty. Such can also be used to expand customer base, increase productivity and efficiency, and reduced capacities that are unused.

However, Zervas, Proserpio, and Byers (2014) believe that there are business models that would still emerge shortly. Such can be predicted with the emergence of a collaborative economy as a business model. Such a model has the ability to change further the landscape of tourism and hospitality. The idea used in this model is the utilization of personal resources that are unused like car seats and spare bedrooms. For a company that has tried the new model like Airbnb, the new business model has proved successful. However, Net (2017) has its own explanation for the same. In his argument, he states that innovations in the tourism and hospitality sector follow a given trajectory. This trajectory is known as service innovation modes and differs from product innovation. The same innovations have created more value and increased the efficiency of operations for customers. With innovation still increasing, firms associated with the provision of services will even improve the quality of services they offer. Also, the entrance of new companies offering innovative tourism and hospitality services will challenge the incumbent service providers. Advanced websites for online booking have forced several traditional agencies dealing in travels to shut down operations.

Challenges Faced by the Hospitality Sector


In this activity, we have realized innovation in service delivery has helped most industrialized countries in the world to develop their economies. It has also been clear that business models and innovative technologies have increased the rate of maturity within hospitality and tourism sector. Simply put, innovation in service delivery has introduced several things into the service way of operation in this sector. All the same, the way in which research activities are performed has also changed a lot due to innovation. Scientifically, such change can be termed as a demarcation in perspective. From this concept, it is important to note that such form of service innovation should not be confused with product innovation (Coyle and Yeung, 2015).


Aznar, J., Sayeras, J., Rocafort, A. and Galiana, J. (2017). The irruption of AirBNB and its effects on hotels' profitability: An analysis of Barcelona's hotel sector. Intangible Capital, 13(1), p.147.

Ryerson University. (2017). Why tourists choose Airbnb over hotels. [online] Available at  [Accessed 23 April. 2018]

Net, H. (2017). The Impact of Airbnb on Hotel and Hospitality Industry | By Ahmed Mahmoud – Hospitality Net. [online] Hospitality Net. Available at:  [Accessed 23 April. 2018]

Quattrone, G. et al. (2016) Who Benefits from the “Sharing” Economy of Airbnb? International World Wide Web Conference Committee.

Turner, R. (2016). Travel & Tourism Economic impact 2015 the Caribbean. [online] Available at:  [Accessed 23 April. 2018]

Ireland, H. (2016). National Hospitality Conference 2016 Underway In Dublin | Hospitality Ireland. [online] Hospitality Ireland. Available at: [Accessed 16 May 2018].

Levendis, J. and Dicle, M. (2016). The Economic Impact of Airbnb on New Orleans. [online] Available at [Accessed 16 May 2018]

Marin, M. (2015) HB on the Scene. Hotel Business 24(7), pp. 11-12.

Coyle, D. and Yeung, T. (2015) Understanding AirBnB in Fourteen European cities. [ONLINE] Available at  [Accessed 16 May 2018]

Smits, R. and Smits, R. (2015). Overview of the Australian Hospitality Sector | AHS Advisory. [online] Available at: [Accessed 16 May 2018]. (2015). Airbnb and Impacts on the New York City Lodging Market and Economy. [online] Available at: [Accessed 16 May 2018].

World Economic Forum (2015). The Travel & Tourism Competitiveness Report 2015.

Zervas, G., Proserpio, D., and Byers, J.W., (2014).The rise of the sharing economy: Estimating the impact of airbnb on the hotel industry. Journal of marketing research.

Coldwell, W. (2014). Airbnb's legal troubles: what are the issues?. [online] the Guardian. Available at: [Accessed 16 May 2018].

Kurtz, M. (2014) Airbnb’s Inroads into the Hotel Industry. [online] Available at [Accessed 16 May 2018]

Guttentag, D. (2013). Airbnb: disruptive innovation and the rise of an informal tourism accommodation sector. Current Issues in Tourism, 18(12), pp.1192-1217.

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