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Evaluating service innovation and business performance in tourism: a multicriteria decision analysis approach

Kitsios Fotios, Grigoroudis Evaggelos

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PurposeThe purpose of this study is to evaluate the effectiveness of the new service development (NSD) process in tourism. For this reason, factors influencing the process of service innovation in the hospitality sector were explored and correlated with business performance in the hospitality industry through a multicriteria decision analysis approach.Design/methodology/approachAn original multicriteria decision analysis approach is applied in order to estimate the efficiency of the NSD process. The approach follows the principles of ordinal regression analysis, using goal programming techniques. Collected data are based on in-depth structured and questionnaire-based interviews of 77 hotel managers in 147 new services in a representative sample of 99 hotels in Greece. Several financial ratios, covering different aspects of business performance, are used in order to evaluate the NSD process for three years after the services innovation had been launched.FindingsThese findings reveal the importance of financial liquidity and business efficiency for the hotel industry (i.e. the ability of a firm to use available resources in order to achieve specific sales goals). The aforementioned variables can determine how quickly and effectively assets are converted to cash. In general, the findings show the emphasis that should be given to customer needs, as well as to the effective management of a NSD project.Originality/valueFindings of this study may support hotel managers to make complex strategic decisions for future development. These findings have suggested that service innovation should be included as a strategic tool to assess differentiation effort in the hotel industry.

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