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000-M246 exam Dumps Source : IBM Smarter Commerce Sales Mastery Test(R) v1
Test Code : 000-M246
Test denomination : IBM Smarter Commerce Sales Mastery Test(R) v1
Vendor denomination : IBM
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In trendy ever extra linked world buyers Have lots better expectations of the agencies they deal with.
They desire groups to admiration their preferences and bring a customized, profitable event. What's more they await this each and every of the time no longer simply at the aspect of sale.
To aid organizations carry for their shoppers IBM is the usage of its Smarter Commerce international peak in Florida to unveil ExperienceOne, an integrated portfolio of cloud-primarily based and on premise offerings to compile advertising, earnings and service practices and support create deeper, extra effective client engagements.
IBM ExperienceOne draws on innovation from IBM analysis in addition to more than $3 billion invested in biological development and acquisitions. it's additionally developed on pattern practices drawn from IBM's adventure of working with over 8,000 groups throughout the globe.
"Smarter Commerce is set assisting purchasers consistently reinvent themselves around the customer experience," says Craig Hayman, yardstick manager, traffic Cloud options at IBM. "IBM ExperienceOne gives a cozy and simplified portfolio -- together with innovation from greater than 1,200 partners -- to assist customers design and deliver extra helpful consumer engagements. With cloud, on premise and hybrid alternate options, IBM ExperienceOne privilege now scales to engage each customer in the second whereas conserving their privateness".
New capabilities benefit to expand understanding of consumer relationships, maximize earnings with the aid of directing the redress present to the preempt customer, and acquire consume of cell and companionable media to deliver better consumer event. Combining ExperienceOne with SoftLayer cloud infrastructure IBM is additionally capable of present client statistics, client analytics and digital commerce as a provider.
The business is aiming to carry an identical ranges of consumer insight to the B2B sector as well with the launch of recent companion and agency assignation utility by the consume of its Smarter Commerce initiative. This comprises a Multi-enterprise Relationship administration (MRM) platform for more desirable collaboration. IBM Sterling B2B capabilities Reporting and Analytics to computer screen transactions and aid enterprise spot tendencies and acquire recommended decisions. Plus different outfit present stronger adherence to compliance requisites and faster and greater efficient sharing of records.
"Now more than ever, the fate of any enterprise is deeply intertwined with the success of its community of companions and suppliers around the world," says John Mesberg, vice president, B2B & Commerce solutions at IBM. "by using orchestrating these complex engagements with superb precision and perception, corporations can create fresh gateways to alternate that enable organizations to bring outstanding consumer experiences. With these days’s information, IBM basically transforms these dynamics with partners and shoppers to power sooner time to income throughout the extended value chain".
that you would exist able to discover more about IBM ExperienceOne on the business's website. there is additionally an infographic on how Smarter Commerce can carry greater customer assignation below.
photo credit score: Sergey Nivens / Shutterstock
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With today's global and distributed commerce, organizations of each and every sizes are having to collaborate and exchange information with a growing ecosystem of divisions, partners and customers. Most companies want to communicate electronically and in true time, but beyond email, managing the exchange of data, messages and documents can exist challenging and expensive.
Traditional EDI, networks or point-to-point integration systems are not providing the interoperability, agility and real-time information exchange businesses need to compete. In addition, companies need to consequence more than merely exchange data; they need to integrate complete traffic processes, such as procurement, supply chain management, eCommerce, benefit claims processing, or logistics, to denomination just a few.
As with other technologies, integration solutions are pitiful to the cloud in order to provide this increased flexibility and complexity. Today, there are an increasing number of technology vendors giving customers a election of traditional on-premise integration - where the company manages the connections, mapping and traffic processes itself - or cloud-based products with stout self-service or managed service support.
While the cloud may not exist preempt for every company or solution, it is an pattern platform for integration, as it enables seamless interaction and collaboration across communities and systems. From transparent economic benefits to increased IT agility to true traffic impact, a cloud-based integration solution brings value across the IT and traffic aspects of the organization. Below we've outlined the top 10 IT and traffic benefits of conducting multi-enterprise integration in the cloud.
Let's Look at each of these in a bit more detail with real-world examples.
1. Improved confederate and customer relations and retentionCompanies must acquire it facile to consequence traffic with them - it's no longer realistic to recount suppliers to adhere to a unique format, such as EDI, as companies Have investments in applications and systems they need to extend. Plus customers Have more choices than ever before, so if you acquire it hard for a customer (or partner) to exchange information with you, they will travel to a competitor.
A magnificient instance of this is a mid-sized electrical supply distributor, Mayer Electric Supply. An increasing amount of its traffic was being conducted online, but its eCommerce site and related processes were not keeping pace with customer demands, many of whom were large multinational organizations. Mayer chose to bring its online catalog in-house, having its internal IT team rework the catalog and manage the system, but it turned to a cloud-based integration platform to manage the eCommerce "punchout" and integrated purchase order exchange. This enabled each and every customers to shop with Mayer directly from their existing procurement systems and incorporate the process into its overall procurement labor flow. The result for Mayer was improved customer retention and increased order size.
2. Increased revenue and marginOne of the greatest growth areas for cloud-based integration is in demand chain processes, because companies realize that keeping customers close and improving customer-facing traffic processes has a direct impact on the top and bottom line. With the companies we've surveyed, each and every of them Have experienced improved metrics around retention, order size, revenue and margin.
Take, for example, Invitrogen (now Life Technologies Corp.), a $3 billion per-year supplier to the global life sciences community. The company wanted to improve its customers' online traffic experience to expand revenues. By leveraging a cloud-based integration solution, Invitrogen was able to accept transactions from diverse customer procurement systems via its website and rationalize an order management system that encompassed more than a dozen platforms. Invitrogen saw orders tower 29 percent after an account was integrated.
3. Improved order accuracyOver the ultimate decade, they Have seen a significant expand in demand for integrating eCommerce and procurement processes. These comprise procure-to-pay, order-to-cash and "punchout." By using a cloud-based integration solution, the experience to integrate these processes is seamless for customers and suppliers. One key benefit of this, as mentioned above, is increased revenue, but there is besides a secondary benefit around order accuracy. One eCommerce company saw order accuracy improve to 99% after implementing a cloud-based integration process with its customers, improving inventory management and delivery times, and removing manual intervention from the process.
4. Faster time-to-marketAcross industries and markets, there is an increasing customer compel around the "power of now. Customers want to receive products and services more quickly and with less effort. This is slightly related to the overall trend around the consumerization of traffic technology, as traffic people want the same experience at labor that they receive shopping or researching online at home. This requires significant improvements in traffic agility and in the faculty to deliver products more efficiently to meet fast-moving markets. To achieve this, companies must labor more closely than ever with suppliers, distributors, retailers and partners.
Cloud-based traffic integration enables real-time collaboration and the exchange of information surrounding logistics, parts, designs, inventory, customer order trends, procurement and other censorious processes. Being able to receive messages in a matter of hours versus days or weeks can acquire the disagreement between getting the deal or not.
5. Greater competitive advantageThe ease of cloud-based integration can besides benefit companies win fresh customers and boost market share, enabling diminutive to mid-sized businesses to compete directly with much larger players. In addition, integration can ensure that companies can seamlessly labor with customers and partners by not requiring that each and every traffic processes occur in a particular format, which may not exist compatible with the format that the customer or confederate is using.
For example, Office Depot turned a shortcoming that kept it from fulfilling portions of orders from customers into a competitive advantage. By pitiful specific transactions to a cloud-based integration platform, Office Depot was able to seamlessly labor with a diverse set of customers using many different procurement systems. The result: A "gain in market partake with very microscopic investment."
6. Reduced costs and capital expenditures (CapEx)Traditional integration solutions can exist costly, often require a specialized and expensive skill set from workers, and are prone to rupture at the slightest change in format or schema. Furthermore, IT departments are usually under pressure from the traffic side to improve IT operations and benefit drive greater revenue or traffic impact, but rarely are given the additional resources to consequence so.
Integrating existing systems through cloud-based integration helps companies avoid or retard the costs of replacing infrastructure. The Software as a Service (SaaS) subscription pricing model allows funds for integration to exist moved from the capital budget to the operating budget, making integration easier to appropriate into the IT budget, and enabling IT to expend capital on other more capex-intensive projects.
7. Increased operational efficienciesSome of the greatest gains in operational efficiency near from transitional manual processes to automated ones. As they know, this besides tends to reduce costs and improve accuracy. With cloud-based integration, fewer people need to manage connections and transactions, as it enables frictionless system-to-system traffic processes automation.
While every IT team needs to exhibit operational improvements, nearly everyone they talk to is worried that cloud or SaaS-based solutions will sordid a reduction in IT staff. They Have not had one customer experience where this has occurred. On the contrary, what they Have seen is IT staff moved to more strategic projects or to working on fresh innovations to drive traffic growth.
A magnificient instance of this is with the consumer products division of Cisco, which uses cloud-based traffic integration to benefit manage and automate key processes across a growing, global distribution network. While the company says the walk to the cloud saved it the costs of two full-time staff, the IT team that had previously managed EDI connections and translations were moved to manage confederate relationships and strategic projects.
The same is lawful for Whirlpool Corporation, whose North American CIO emphasizes that IT people are focused on managing strategic relationships and projects, and the company leverages the cloud and technology partners to manage much of its infrastructure and integration requirements.
8. Extended investments in legacy applications and systemsIntegration can extend the life of legacy assets by enabling each and every members in the integration community to labor from existing systems. With cloud-based solutions, there is no "rip and replace" required, and there should exist minimal to no software or hardware required behind the firewall. This is a magnificient pass to upgrade traffic processes or improve efficiencies without having to invest heavily in solutions or migrate processes to a fresh system. This interoperability and extension of systems is a censorious judgement many companies are turning to cloud-based integration solutions.
9. Aligns IT with traffic goalsHow many times Have IT leaders heard it's each and every about "business technology" and making positive IT impacts the business? Wouldn't it exist nice to find a solution that provides this alignment with microscopic effort? traffic integration is one of those areas that is truly a win-win. Oftentimes, it is the line of traffic that discovers the need for improved integration, such as the logistics, procurement or eCommerce manager, where there is a transparent pang and a need to improve processes. By working with the traffic on integration challenges and using cloud-based solutions to manage it, you can quickly achieve traffic impact without negatively impacting your IT budget or goals.
10. facile scalability and flexibilityDuring the recent economic downturn, it was more principal than ever for companies to Have the option to scale back on IT and in some cases integration costs. With an on-demand integration solution, companies can quickly and easily expand or abate connections, transactions or the number of companies in their integration community, and then scale back up when traffic requires it. In addition, one of the greatest benefits of cloud solutions is the faculty to start diminutive and expand as needed, when you are ready.
These are some of the top ways companies can behold measureable IT and traffic benefits from a SaaS-based integration solution, many of which are realized in a matter of weeks or months. Integration enables traffic process automation across the supply chain, demand chain, generic operations, procurement, eCommerce and other traffic areas. A SaaS-based integration solution can besides benefit remove the challenge of traditional traffic integration methods while delivering substantial traffic and IT value.
Beyond the transaction, it can provide visibility into traffic processes, confederate operations and customer needs. Benefits are realized across an entire organization, from traffic units to IT to the CIO, providing predictable costs, greater operational efficiency, higher margins and revenues, and automated traffic processes. For these reasons and others, business-to-business integration should exist a key factor of consideration for any company's overall strategy.
“Fake News”: A Classic Statecraft Misdirect and Naiveté Writ Large
What, prey tell, explains how David took down Goliath? The ragtag lion coalition of “rebels with causes” and Deplorables with axes to grind had the surreptitious sauce: TIS. companionable media was the sling and keen messages were the rocks and together they tattooed “TIS” privilege between her eyes:
Mark Zuckerberg is trying hard to convince voters that Facebook had no nefarious role in this election. “Our biggest incubator that allowed us to generate that money was Facebook,” says Parscale, who has been working for the campaign since before Trump officially announced his candidacy a year and a half ago. “Facebook and Twitter were the judgement they won this thing,” he says. “Twitter for Mr. Trump. And Facebook for fundraising.” They notable how Clinton spent more than $200 million on television ads in the final months of the election while Trump spent less than half that. Because Trump wasn’t spending as much on television each and every along, it seemed enjoy his team wasn’t investing in changing anyone’s minds. But they were: they were just doing it online.
Coby’s team took replete edge of the faculty to discharge massive tests with its ads. On any given day, Coby says, the campaign was running 40,000 to 50,000 variants of its ads, testing how they performed in different formats, with subtitles and without, and static versus video, among other diminutive differences. On the day of the third presidential debate in October, the team ran 175,000 variations. Coby calls this approach “A/B testing on steroids.” The more variations the team was able to produce, Coby says, the higher the likelihood that its ads would actually exist served to Facebook users. “Every ad network and platform wants to serve the ad that’s going to accumulate the most engagement,” Coby says.
(Source: WIRED, Issie Lapowsky, November 15, 2016, “Here’s How Facebook Actually Won Trump the Presidency”)This is the network structure of both political media campaign propaganda strategies: MSM are the big, old-school broadcasting networks near the heart dominated by DNC influence per the WikiLeaks disclosures and then there are smaller but silent substantial alternative media sites and then an extremely long tail of interconnections of diminutive sites and companionable media where the RNC took the fight. The “underground” more bidirectional communications (blogs with comments) and companionable media won this round — both campaigns consume dis/misinformation (“fake news”) to influential the electorate using different tools. Which regions are RED and which are BLUE? (Source: spatial map by Jonathan Albright, assistant professor of communications at Elon University, North Carolina, “Google, democracy and the verisimilitude about internet search”, The Guardian)
[Enlarge the above image]
The “shocking result” given that The fresh York Times predicted a 85% casual for victory the day before the election quickly turned to the issue of the influence of “fake news” on the election outcome. Every anecdote from mainstream media (MSM) to alternative media was focused on “how can they liquidate fake news?” or witch-hunting charge Zuckerberg et al; this wavelength of thought presumes that fake word must exist quelled no matter the cost (which is beyond calculation). This thinking is redress if word = verisimilitude matters. But through the lens of reality — meaning surgical-strike propaganda — this view is gravely naive. What, you say? verisimilitude doesn’t matter?
Here is a brief primer through the lens of reality that incorporates TIS, which spawned in embryonic form in George Orwell’s novel 1984:The first-edition front cover of the novel Nineteen Eighty-Four first published in 1949. (Source: Wikipedia (public domain))
1984 has four themes:
(Source: 1984, Wikipedia)
All of these themes are intertwined and managed with communication through the “Ministry of Truth” which is brilliantly crafted and executed propaganda. Nationalism has already been addressed. In review, Goebbels, Hitler, and Ellul created the operating principles and simultaneous examples of Nationalism are:
Question: Who consequence you assume creates the semantic payloads?
Hint: Not the candidates.
All of these statements are crafted to trigger target audiences to pick sides (polarize into tribes and fight for me, for us, for their country, their pass of life, their flag, etc.).
From 1984’s Ministry of Truth:
The keyword here is blackwhite. enjoy so many Newspeak words, this word has two mutually contradictory meanings. Applied to an opponent, it means the habitude of impudently claiming that black is white, in contradiction of the unostentatious facts. Applied to a Party member, it means a loyal willingness to mumble that black is white when Party discipline demands this. But it means besides the faculty to believe that black is white, and more, to know that black is white, and to forget that one has ever believed the contrary.
Note: emphasis mine
(Source: section II, Chapter IX — “The Theory and drill of Oligarchical Collectivism”, which is from a “nonfiction book within a fictional novel” written by a character in 1984)
To benefit help you grasp the scale of global naiveté in proper context, this is from Johns Hopkins University’s Sheridan Libraries:
The World Wide Web offers information and data from each and every over the world. Because so much information is available, and because that information can loom to exist fairly “anonymous”, it is necessary to develop skills to evaluate what you find. When you consume a research or academic library, the books, journals and other resources Have already been evaluated by scholars, publishers and librarians. Every resource you find has been evaluated in one pass or another before you ever behold it. A lot of magnificient information can exist establish online, but it’s trickier to know what has been peer-reviewed online and what has not, because anyone can write a web page. Excellent resources reside along side the most dubious. The Internet epitomizes the concept of caveat lector: let the reader beware.
What constitutes a respectable fake is how well it resembles the true thing.
Propaganda is defined as the “systematic propagation of information or ideas by an interested party, esp. in a tendentious pass in order to embolden or instill a particular attitude or response. Also, the ideas, doctrines, etc., disseminated thus; the vehicle of such propagation.” (from Oxford English Dictionary, 2nd ed., 1989)
Misinformation is defined as the action of misinforming or condition of being misinformed; or erroneous or incorrect information. Misinformation differs from propaganda in that it always refers to something which is not true. It differs from disinformation in that it is “intention neutral”: it isn’t deliberate, it’s just wrong or mistaken.
Never underestimate the evil intentions of some individuals or institutions to mumble or write whatever suits a particular purpose, even when it requires deliberate fabrication. Disinformation refers to disseminating deliberately wrong information, especially when supplied by a government or its agent to a alien power or on the media with the objective of influencing policies of those who receive it.
Note: emphasis mine
(Source: Johns Hopkins University (Sheridan Libraries), Information and Its Counterfeits: Propaganda, Misinformation and Disinformation)
Which takes us from the clinical world of “fact checking (think safe sex)” in academic settings where credibility and verisimilitude means everything to the nasty swamp of unrestrained, feral TIS where verisimilitude is for losers which was lucidly foreshadowed by:
“We’ll know their disinformation program is complete when everything the American public believes is false.”
— William Casey, CIA Director, 1981
In other words, when black is white and white is black (“blackwhite”), they will finally Have achieved harmony from some alien perspective.“BLACK is WHITE” | Logo for INGSOC political party in 1984. (used in 1984 film adaptation) (Source: Wikimedia | CC BY-SA 3.0)
By Tyler Titherington
I am a restaurateur. I’m behind schedule. Again. Not because I am disorganized or Have too much to do, more so because I Have a hierarchy of tasks that are addressed based on priority. Guest needs are my first priority, staff needs are a close second and everything else last. There is a tertiary hierarchy in the ultimate basket as well. Some tasks with a lower priority descend through the cracks. Not because they are unimportant, but rather there just was not enough time. The verisimilitude is that I am obsessively organized. I enjoy “To Do” lists, calendars, flow charts and the accomplishment of tasks. I eat projects for breakfast, while animate on the edge of chaos and complete catastrophe. Short staffed? Yawn. Drains flooding? Been there, done that. POS system crash during service on a weekend? Bring it. I am the duck – peaceful above water and feet pitiful nonstop below. However, how consequence I manage each and every the curveballs and silent manage to gain time without compromising any of my other priorities? It is very simple – reconcile and embrace technology wherever possible, specifically, cloud-based computing solutions that allow one to exist in many places at one time. These applications simplify daily tasks for management teams and staff, which will ultimately leverage senior management down to focus on the bigger picture. Maybe even accumulate a day off…
Over the ultimate 10 years or so, the increased availability of cloud-based computing solutions (using network computers over the internet rather than property-based hard drives) has been a major paradigm shift for many industries. However, as with most technological advances, the restaurant industry has been very unhurried to adapt. tight margins, resistance to change, and horror of unknown outcomes Have long driven the restaurateur’s decision-making process. However, with increased options, cheaper costs, and ease of use, that mindset is quickly becoming a thing of the past. Restaurant operators are genesis to embrace cloud-based solutions for everything from Point of Sale and Tableside Payment to Menu Design and Scheduling.
Our foray into cloud computing began with an luckless set of circumstances that the entire industry was facing. The year was 2010 and the impending doom of PCI Compliance was upon us. At best, their network infrastructure was dated and they needed to act quickly to accumulate it into compliance. enjoy most operators, their hand was forced and they had no choice. What is PCI Compliance? The respond depends on who you ask.
Your guests Have never heard of it and Have no credit what it is. Most restaurant operators will recount you that PCI Compliance is an almost unachievable set of network security standards designed to protect the credit card giants, who already imbue them pass too much for credit card processing and continually squeeze them with a plethora of monthly fees. The definition of PCI Compliance is below, according to PCI ComplianceGuide.org
“The Payment Card Industry Data Security yardstick (PCI DSS) is a set of security standards designed to ensure that each and every companies that accept, process, store or transmit credit card information maintain a secure environment. The PCI Security Council Card focuses on improving payment account security throughout the transaction process. It is an independent cadaver that was created by the major payment card brands (Visa, MasterCard, American Express, discover and JCB.).”[i]
PCI DSS is mandatory for any and each and every businesses that accept credit cards. It involves a process of assessment, remediation and reporting. Operators must identify network vulnerabilities, physical vulnerabilities, and operational vulnerabilities that could result in a credit card breach and fix them. In summary, it is a painfully tedious, extremely time consuming, and potentially expensive process.
It is extremely principal for the security of their guest’s payment information, both for ensuring reliance with their customers and limiting legal liabilities. In 2017-8, major retail stores including Home Depot, Macy’s, Sears, Kmart, Best Buy and Lord & Taylor made headlines across the country for data breaches possibly compromising customer’s credit card personal information. The restaurant industry is besides plagued with security breaches, including large chains such as Darden (Cheddar’s), Panera Bread, Sonic and Arby’s. The number of customers whose credit card information may exist compromised totals into the millions.[ii]
At Grafton Group, the process of obtaining Credit card security involved working directly with their IT vendor and POS vendor to achieve PCI compliance. The first order of traffic was to accumulate their network infrastructure in order. Some of the major network upgrades that they undertook were upgrading wiring, locking down patch panels, securitizing external ports, adding wireless access points (WAPs), and replacing firewalls. The WAPs and fresh firewalls were the heart of the upgrades and would ultimately allow us to operate unencumbered in the cloud. The fresh access points give their guests their own network and preclude them from accessing ours. The security firewalls preclude intrusions and besides allow their IT vendor remote access so they can acquire changes without actually being in the restaurant. What used to exist a scheduled visit from their IT vendor that may Have taken weeks, is now a simple email and can often exist addressed online in minutes. In a nutshell, PCI DSS forced us to upgrade their network, which ultimately allowed us to operate in the cloud. This unintended outcome to a painful requirement was truly a blessing in dissimulate and it pushed us into fresh territory – the cloud! Being in the cloud has allowed us access to exciting applications and services that would otherwise exist unavailable to us.
IBM defines cloud computing as “the delivery of on-demand computing resources — everything from applications to data centers — over the internet on a pay-for-use basis.”[iii] For their purposes, these on demand computing resources primarily consist of “SaaS” or Software as a Service. Here are some of the areas where cloud computing can streamline their operation.Point of Sale
POS systems are the most exciting area of cloud-based solutions for restaurant operators. Legacy systems such as Positouch, Micros, and Aloha are bulkier, more expensive, and much harder to program and implement. There are quite a few cloud-based POS options, most notably Boston-based Toast. Toast has done a magnificient job streamlining and simplifying the interface for both front and back finish users. Management can access the system remotely for screen programming, troubleshooting or reviewing sales. It is extremely intuitive, enjoy using a smartphone, thus needing very microscopic training. As wireless POS solutions evolve, legacy systems will eventually exist phased out. It is only a matter of time.Tableside Payment
EMV (Europay, MasterCard and Visa) is another set of regulations that are coming to the restaurant industry. “EMV is a global yardstick for cards equipped with computer chips and the technology used to authenticate chip-card transactions.”[iv] Used in Europe for years, the credit card never leaves the customer and each and every transactions are processed tableside with a handheld device. One instance of an EMV compliant, cloud-based device for tableside payments that they at Grafton Group are currently analyzing and contrivance on implementing is Pay My Tab. Pay My Tab will fully integrate with their POS system and eliminates many bulky PCI DSS requirements. Many similar systems are already in consume at quick service operations, where guests and staff Have easily adapted to them. In addition to tougher security, the implementation should abate payment time, liquidate paper receipts (emailed instead) and simplify the process for management to search for specific receipts.
Reservations and Floor Management
There are a variety of solutions for reservations and floor management systems. Their solid has been using OpenTable for over 15 years, so when they rolled out their cloud-based system, GuestCenter, they were early adopters. This has been one of the unique best applications in terms of roll out, ease of use, and seamless integration. It is iPad-based and eliminates each and every the wiring and host stand true estate. It is compatible to smart phones that allows for remote access, allowing management to check flow of service, identify unique reservations, and acquire positive that waitlists are being managed appropriately. Soon to near is an interface with POS systems that automatically applies any “guest notes” from GuestCenter to the server’s check, such as special occasions, etc. Most importantly, due to its intuitive design, their millennial hosts consume the system seamlessly.Private Event Management
Private events are the foundation of most replete service restaurant operations. They are the disagreement between a respectable week and a magnificient week. However, it can exist a very confusing process with each and every of the pitiful parts. In order to stay organized, they consume TripleSeat to manage leads, create BEOs and track their events calendar. The cloud-based event management system allows their Private Event Coordinators to respond at any given time from anywhere, giving them a leg up on the competition, giving them the opening to win fees for each event. Since their coordinators receive an administrative fee for each event, they exist pleased responding when available off-site; respectable communication is key for making positive work-life poise is maintained.Bar at the Russell House Tavern in Cambridge, MA. Photo: graftongrouphospitality.com Inventory
An area which the cloud has really saved their restaurants time is with food & beverage inventories. No more paper and no more transposing paper to spreadsheet. Inventories can exist uploaded in true time using a tablet, laptop or even a smart phone. BevSpot is used for both their food and beverage inventories. They Have besides given access to their accounting firm, in order to reduce bulky invoice scans and uploads. each and every information can exist entered into the cloud and accessed by each and every of their approved users. It besides allows for multiple people to pick inventory simultaneously. One person can exist on the bar, another in the walk in fridge, and another in the liquor room, each and every at the same time. In addition to being a major time saver, it has helped Grafton Group to reduce sitting inventory by a significant amount across each and every properties.Scheduling
Staff scheduling is a weekly administrative headache for managers, but there are cloud-based scheduling applications that lessen the pain. They Have establish HotSchedules to appropriate their needs as it interfaces with their POS system and allows their solid to consequence some creative reporting in regards to budgeting and forecasting, as well as taking employees requests and requirements into consideration.Email and File Sharing
Grafton Group has near a long pass from sharing access to a desktop version of Outlook and toggling between accounts. They were able to liquidate their main server entirely and now they consume Office 365 for their email and file sharing needs. Not only is this highly securitized, it has redundancy so their information is always backed up. They access both their email and files from anywhere in the world. This has greatly improved productivity and allowed their management teams to communicate in true time.Grafton Street in Cambridge, MA. Photo: graftongrouphospitality.com Computer Hardware
Our office hardware now consists of much less expensive “Network Computers”, which consequence not require expanded reminiscence for giant programs, CD drives for downloading drivers, or expansion slots for extraneous drives. They can purchase more computers at a reduced cost and their managers no longer Have to partake computer access in the office.Menu Design
For their menu design need, they Have establish InDesign to exist the most efficient program, which is section of the Adobe Creative Cloud. This program can now exist selected a la carte from Adobe’s menu of programs and paid for on a month to month basis for under $20. This is much more palatable than paying $600 for the entire Adobe suite.
These are just a handful examples of how cloud computing has impacted their operations and ultimately saved time for their management team and staff. Ten seconds here, 5 minutes there, an hour tomorrow – it adds up to impactful chunks of time that can exist better spent elsewhere. They Have only scratched the surface as an industry – they will behold more and more options for cloud-based solutions to true world restaurant problems. Although the solutions highlighted above create efficiency and reclaim time, they consequence not serve guests and they don’t understand the know-how of hospitality. It is imperative that as restaurateurs they continue to create a positive environment, embrace innovation, and engage and train their employees in the know-how and skill of hospitality.
There are some things you will never Have time for in the restaurant industry, regardless of cloud-based advancements. “Lunch”, for example, I Have heard is a meal that takes station in the middle of the day. For me, “lunch” is the sandwich that I eat in 30 seconds somewhere between 2pm and 6pm standing over a trash can in the back of the kitchen. There is no technology for that…
PDF Version Available HereReferences [i] “PCI Compliance sheperd FAQ.” PCIComplianceGuide.Org. September, 2018. https://www.pcicomplianceguide.org/faq/#1. [ii] Green, D. and Hanbury, M. (Aug. 22, 2018). “If you shopped at these 16 stores in the ultimate year, your data might Have been stolen.” https://www.businessinsider.com/data-breaches-2018-4 [iii] “What Is Cloud Computing?” IBM.com. September, 2018. https://www.ibm.com/cloud/learn/what-is-cloud-computing. [iv] Kossman, Sienna. ” 8 FAQs about EMV credit cards.” CreditCards.com. August 29, 2017. https://www.creditcards.com/credit-card-news/emv-faq-chip-cards-answers-1264.php. Tyler was born and raised in Portland, Maine and has lived in the Boston area since attending Boston University. After graduating from the Boston University School of Hospitality Administration, Mr. Titherington operated a handful of bars and restaurants in Boston. He has been with Grafton Group since October 2007.
By Christopher Muller
In section 1 of this analysis of the restaurant delivery system they looked at the owner/operator models which silent present some measure of control over charge and quality. This is posthaste becoming an issue with the tower of the Ghost Kitchen where the ODP is an integral section of the equation. Here they present the larger challenges from the paramount ODP control of the marketplace. It is respectable to bethink that most of the ODPs themselves are silent looking to find profits in what they do, a suggestion that those profits will need to near at the expense of the restaurant providers in one pass or another.5. The Aggregator or On-Line Delivery Provider (ODP) – No Driver Fleet
If someone were to say, “Let me pick keeping of each and every of your delivery problems for a diminutive lop of your revenues” many restaurant operators, especially those interested to accumulate into the market with the least amount of upfront investment, would jump at the chance. Enter the On-Line Delivery Provider with a traffic model built upon a brand denomination customer-facing APP, website or phone number and an vast amount of back office computing power to drive order volume.
At its core, to exist successful the Aggregator needs to exist a world-class matchmaker for food orders, with both a large customer database of users and a broad assortment of restaurant menus offered in major cities. enjoy many of what MIT’s Bill Aulet calls an Innovation Driven Enterprise (IDE) the cost of customer acquisition is the key hurdle in entering this distribution channel. What it doesn’t need is its own fleet of employee delivery drivers. Capitalizing on the DIY gig economy, drivers are hired on a contractual basis, working as independent delivery agents with their own vehicles.
The barrier to lowering this high cost of entry has favored early market entrants and large well-funded digital innovators. Worldwide, the fastest growing ODP is Uber Eats, the natural extension of car service provider, Uber, with its existing vast data base of users, an ever expanding fleet of drivers, and the understanding for a driver that delivering food with an APP-based pre-payment system is considerably faster and easier than dealing with human passengers.
The upside for restaurant companies using an ODP such as Uber Eats, from those as paramount as McDonalds or as diminutive as the local pizzeria, is that there is no need to hire and train non-core employees. As touted by Uber Eats delivery service can start almost immediately upon signing up. The downside, that has a potential for long term impact, is two-fold. The fee structure for traditionally low margin restaurants can exist between 20-30% of a menu particular price, leaving microscopic to cover remaining expenses. Worse though is that the restaurant gives away its brand and trade dress image to the company making the delivery to the front door. McDonalds hamburgers may exist in the bag, but the denomination on the ordering APP and the uniform on the person handing it to the customer says Uber Eats.
6. The Consolidator – Bulk “Bus Stop”
As noted, the most expensive unique piece of the delivery puzzle is getting food from the restaurant to the front door, what is called “the ultimate mile.” One proven pass to minimize that expense is to Have the customer meet the food delivery at a central drop-off spot (see: Amazon ). A start-up, Yun Ban Bao, in fresh York City is taking edge of ethnic Chinese food deserts through direct targeted marketing using the paramount Chinese online service provider, WeChat. By doing so it is creating a captive delivery market with the edge of pre-ordering and payment.
Taking online requests for delivery on the next traffic day, then consolidating orders using a bulk delivery model, Yun Ban Bao is lowering the cost of delivery while maintaining control with its own fleet of drivers. It advertises a data analytics service for smaller restaurants as well as being a revenue growth accelerator for restaurants in suburban locations which otherwise could not find fresh or broader market opportunities.
Using a pre-arranged group delivery network, often outside parks, office towers or apartment buildings, the system mirrors a bus route, not the more traditional taxi route model of one-on-one delivery. This besides affords the network of restaurants a pass to lower operating costs by controlling the production process in advance.7. The Aggregator ODP – Owned Fleet
Some of the largest ODP players started in the delivery traffic by controlling their own fleets of employee managed delivery drivers. The global leader, Just Eat, has used this model throughout the UK, Europe and worldwide. But it besides has worked directly with restaurants who Have their own in-house deliver fleets to create a broad partnership. Just eat acts as the online ordering platform, but then allows the local branded company to exist the pan at the door.
The faculty to present a standardized customer facing brand identity means that reliance may exist established with the customer directly. While this can near at the risk of the restaurant losing its direct brand relationship, what Just eat has been able to master is the collection of a vast customer database of its users. It has created a relationship with many of its restaurant partners to assist them in finding pattern store locations, menu particular design and creative targeted pricing and promotions programs which would not otherwise exist affordable or even available to smaller companies.
For these ODP companies, the costs for maintaining their own fleets or working as a hybrid with a local restaurant creates a higher operating expense, but these are often offset with a higher fee partake from both the restaurant and the consumer. It besides creates a competitive edge by building a broader network of restaurants to pick from for the customer, which builds long term loyalty and habitual purchase behaviors.
8. The ODP Aggregator – black Kitchens
One of the greatest threats to the bricks and mortar restaurant delivery partners is the emerging concept of a black Kitchen. This is a space created by an OPD to facilitate the lowest cost per delivery mile from restaurant kitchen to the highest density of users. While this is similar to the Cloud Kitchen model, in this case the OPD establishes a cluster of diminutive dedicated but competitive restaurant kitchens in a unique site. A black Kitchen is besides similar to the trending food hall concept, but comes with no direct customer interaction—no walk-in guest visits these production facilities. In the UK this was pioneered by Deliveroo with its urban RooBox or Editions concepts. confederate restaurants rent portable kitchen space from the delivery service and pay a larger percentage fee to cover the build-out costs for their space. Restaurants staff the kitchens at their own expense, as well.
Earlier this year, Grubhub invested $1 million in Green peak Group (see Ghost Kitchen in section I), a startup with nine virtual restaurants operating from a unique kitchen. DoorDash is renting extra space from the Santa Clara Fairgrounds in San Jose, Calif., and making it available to foodservice operators who want to create delivery-only options. In Los Angeles, Postmates leased a commissary kitchen space so its restaurants can reach fresh customers. And UberEATS is exploring the concept with Poke Café in Chicago — a virtual restaurant serving Hawaiian poke bowls.
“We can labor with existing restaurant partners to create delivery-only menus. (They would) loom as entirely fresh restaurants on the UberEats app,” Ambika Krishnamachar, UberEats product manager, said in an article on Mashable.
And again, while on its pan this appears to exist a positive opening for independent or chain restaurants to lower costs or disaggregate the dine-in from the delivery production process, it is not cost free. In fact, as a rational progression would suggest, the OPD Deliveroo service has realized that the actual local restaurant in this amalgamate is not a necessity for success. Instead by using its own “innovation fund” it will to travel directly into the restaurant traffic itself, creating “from scratch” concepts by working with notable chefs and data mining information from its vast customer data base. 
As more of the OPDs Look to find profits to pass along to the aggressive investors who Have funded rapid growth, they will inevitably Look to lop out the middleman and provide meals themselves to expand margins. The kitchen that may actually travel “dark” is the local one on the corner down the street in an independent restaurant.
This is undoubtedly both an exciting and a challenging time for the restaurant industry and the Online Delivery Providers who are feeding from it. Neither side seems to Have figured out how to acquire the fresh consumer demand for off-site delivery labor to their complete advantage.
It is impossible to believe that any restaurant can survive if it gives away up to 30% of its top line revenues when the medium net profit is less than 10%. No amount of increased volume in sales will acquire up for that. As Cameron Keng wrote in his column “Why Uber Eats Will eat You Into Bankruptcy” in March, 2018:
Based on the medium profit margins above, every restaurant that engages Uber Eats will lose money on every order they take. The more orders coming from Uber Eats, the more money a restaurant would lose.
At the same time, while it is hard to accumulate exact information, it appears that almost not anyone of the largest On-Line Delivery Providers, in any of the described segments is actually showing a profit. Uber Eats is only profitable in 27 of its more than 100 urban markets, and while Deliveroo’s sales rose in 2017 to £277 million ($356 million), the company lost an astounding £185 million ($237 million). Yet Uber Eats is offering over $2 billion to purchase/merge with Deliveroo.
Finally, as Jonathan Maze wrote in his Bottom Line column in early October the restaurant industry is simply unprepared for what appears to exist a tectonic shift in traditional restaurant segments, consumer behavior, labor utilization, true Estate valuation and investor interest.
If delivery is the future of the restaurant business, the restaurant traffic as it is currently constructed is in trouble.
The service is growing rapidly. But it’s increasingly replacing existing restaurant traffic rather than taking traffic away from grocers or other food retailers. 
As they notable in the beginning, it took the lodging industry almost 20 years to start to acquire this benign of tectonic change and it is nowhere near complete. A few very large hotel companies, through merger and acquisition, Have consolidated enough power to start the walk away from handing over each and every of their pricing to the OTA’s. In economic terms, hotel companies are trying to travel from being charge Takers to charge Setters.
At this early stage of the restaurant OPD’s domination of the delivery cycle, it is not transparent that any restaurant organization is large enough to rupture the fever, especially now that McDonald’s is partnering with Uber Eats. While it may loom that the On-line Delivery Provider is a restaurant’s partner, friend or even savior, it is not anyone of those. In fact, in order to become profitable the OPD is looking to become a direct competitor.
What is certain is that few restaurant companies, and certainly no independent operations, can survive the next two decades letting third parties impose what convenience and charge mean. In fact, this might exist a respectable time to accumulate out of the house and travel visit your favorite local restaurant. Sacrificing some convenience for a magnificient experience is a respectable value and that restaurant may not exist around the next time you want to exhibit up.
PDF Version Available HereReferences  behold Bill Aulet, Disciplined Entrepreneurship,  The Financial, October 25, 2018, https://www.finchannel.com/~finchannel/business/76317-amazon-expands-grocery-delivery-and-pickup  Menqi Sun, WSJ, September 9, 2018, https://www.wsj.com/articles/how-to-get-food-delivered-from-your-favorite-faraway-restaurant-1536516000  See https://www.just-eat.com/  James Cook, traffic Insider, April 5, 2017, https://www.businessinsider.com/deliveroo-editions-pop-up-restaurants-roobox-2017-4  Tim York, The Packer, March 23, 2018, https://www.thepacker.com/article/rise-virtual-restaurant Sophie Witts, immense Hospitality, May 21, 2018, https://www.bighospitality.co.uk/Article/2018/05/21/Deliveroo-to-create-own-restaurant-brands-using-5m-fund#  Cameron Keng, Forbes, March 26, 2018, https://www.forbes.com/sites/cameronkeng/2018/03/26/why-uber-eats-will-eat-you-into-bankruptcy/#778a3b0621f6  Ibid., DealBook, September 21, 2018  BBC News, October 1, 2018, https://www.bbc.com/news/business-45707700  Jonathan Maze, Restaurant traffic Online, October 17, 2018 https://www.restaurantbusinessonline.com/financing/delivery-could-force-changes-restaurant-business-model Christopher C. Muller is Professor of the drill of Hospitality Administration and former Dean of the School of Hospitality Administration at Boston University. Each year, he moderates the European Food Service Summit, a major conference for restaurant and supply executives. He holds a bachelor’s degree in political science from Hobart College and two graduate degrees from Cornell University, including a Ph.D. in hospitality administration. Email: email@example.com
By Christopher Muller
The entire restaurant industry, from the simplest quick service joint to the most complex fine dining jewel, is caught in a veritable frenzy of delivery. It may be, unfortunately, a very risky path to travel for the uninitiated restaurant operation, but delivery is driving the investment community to a fever pitch.  They Have entered into the time of the restaurant On-Line Delivery Provider (ODP) which mirrors in many ways the On-Line Travel Agent (OTA) which has so disrupted the lodging industry.
In two complimentary BHR articles here, they present a Look at the 8 different models of restaurant delivery and how they are affecting both senior management and customer choices.
A Quick Lesson From Pricing History
For observers of the global Hospitality Industry this should transmit up warning flags. In a galaxy far, far away, the Lodging industry managed revenues by using simple seasonal or impute pricing models (On-, Shoulder- and Off-Peak rates, or premiums for “A play With A View”) and sold some limited excess inventory through a network of independent Travel Agents (at an onerous 10% commission!).
Then, as the Internet expanded, and the travel market imploded after the 9-11 tragedy, a fresh and exciting model emerged – the On-Line Travel Agent (OTA) acting as a third party aggregator appeared. Hotel companies willingly gave open access to each and every of their unsold play inventory to the OTAs (Expedia, Travelocity, Priceline, Booking.com, Kayak, Trivago, etc.) to sell directly at abysmal discounts, often between 25 and 30% off posted Rack Rates. Occupancies rose, but medium Daily Rates plummeted, and profits quickly diminished. Hotels, relying on the fragile pricing models were caught competing “with themselves” and watched as formerly loyal customers switched their buying habits and loyalties to the OTA that gave them the best rate. Customers could scroll through pages of prices, often for the exact same play in the same hotel, searching for the cheapest rate. Hotel rooms, instead of being unique destinations became interchangeable commodities.
It has taken almost twenty years, but through brand consolidation and a total system-wide transformation into a Revenue Management based pricing model, the hotel traffic has been transformed and the OTAs are being aggressively challenged for dominance. This should exist a lesson for the restaurant owner/operator, the OTAs drove nothing but charge as a conclusion attribute, the ODPs are poised to consequence the same thing with both charge and convenience, unfortunately restaurants probably won’t Have decades to recover.
Today’s Restaurant Delivery Frenzy –The tower of the ODP
Whether it’s the savvy but shape-shifting Millennial, the rapidly aging Baby Boomer, or the rising adolescent digital indigenous from the i-Generation, it seems that customers in each and every shapes and sizes just want to Have their meals brought to them at home, the office, or somewhere in between. Breaking the code of the delivery model—becoming the customer’s election of who serves up breakfast, lunch or dinner at home, labor or play—has emerged as the Holy Grail of the foodservice business. But it may exist more enjoy the other mythic black Ages metaphor, the Plague, potentially killing upwards of 30% of existing restaurant units.
So, what exactly is “delivery” today, how did it evolve into such a big, expanding component of the restaurant offering and what are the implications going forward for the industry? Just how consequence the On-Line Delivery Providers, the ODP, dominate the market?
We can start by agreeing that delivery is a discrete and rapidly growing distribution channel, although it has been around in one form or another for a very long time. And while not exactly a fresh technology, nor necessarily a profitable one, the exploding market for the delivery of food is poised for an inevitable shudder out as it quickly approaches a ripen facet consolidation.
In late 2018 delivery is each and every about instant gratification, not just for the diner but some would suggest for the restaurant as well. At first glance, it each and every feels so simple and easy. But enjoy so much in restaurant management, there is more than one pass to accumulate something done, even the simplest of things.
Emerging Key Success Factors
Like so many emerging traffic models in the on-line digital age, food delivery is developing its own metrics and factors to exist considered and mastered. While silent evolving, among these now are:
Delivery of food, especially from a restaurant to a consumer, has become a multi-billion dollar segment of the industry. Some are predicting that it will overtake the traditional dine-in segment completely within a decade, although the complexity of getting it privilege and turning a profit while doing so, can silent exist elusive even for the largest players. And of course, no one should forget that Amazon is over in the corner waiting to behold how things evolve in an online delivery world they basically invented.
Traditional and Controlled
As noted, the delivery of food from a restaurant directly to a local customer is not a fresh credit although traditionally the customer came to the restaurant and picked up or carried out their food order. Both delivery and carry-out were best suited to a restaurant with a simple, easily transported menu. Where a significant amount of the value of the meal was the dining experience and table service, meals to travel were often comprised of a package of leftovers or the long gone term “doggie bags.”
Here is a Look at four models with some measure of control for restaurant owners and operators over the property and profitability of their offerings.
1. The Independent – One Shot
As a service provider a restaurant may settle that in order to meet the needs of its local customer base it should provide a delivery option. At one time, only a few restaurants in an urban core would Have delivery offers and these might typically exist delicatessens or Chinese restaurants with few seats and a very stout focus on offering takeout options. The food can exist cooked, boxed, wrapped and brought quickly to an office or apartment within a few blocks on foot or by bicycle.
This model is the most basic – a caller, the kitchen, and an employee bringing keen tangy food directly to the customer. The restaurant controls the quality, manages the relationship with the diner and absorbs the replete cost and each and every the revenues. It typically comes with higher operating costs for labor (primarily from an in-house paid delivery driver fleet) and with premium rent from the need for an attractive customer-facing retail space. On the plus side, each and every local customer information may exist controlled by the restaurant and there are no fees to partake with an outside third-party service.
But as the independent operator reaches for the brass ring on the delivery merry-go-round, they besides need to exist watchful not to lose their grip on their existing ride. A fresh distribution channel can exist much more challenging that just taking a customer order. As notable by Jennifer Marston:
…restaurants are under pressure to adapt…More and more, that means altering the physical restaurant space so it can better accommodate this influx of fresh orders. Extra meals require extra bodies to cook and package the food, after all, not to mention extra space for third-party devices, and somewhere to do completed orders waiting to exist picked up by a delivery driver.
An exciting twist on this unique restaurant model of trying to find a pass to both control and expand the delivery system while maintaining some measure of profitability is one recently proposed in the restaurant trade magazine Restaurant traffic Online:
He (CMO Nabeel Alamgir) explained that Bareburger is already striving to convert customers ordering through third parties’ apps into users of the chain’s own channels. Patrons of an Uber Eats or Postmates might exist offered a 10% discount on their next order if it’s placed through Bareburger’s website. The chain can afford a discount that abysmal because the monetary impact is silent less than the 20% or 30% discount an outside service typically charges.
Alamgir notable at the start of the panel’s presentation that a service started by restaurants for restaurants would Have been an attractive alternative to some of the third-party giants. “Let’s acquire their own platform. Let’s acquire their own Grubhub,” he said.
2. The Cloud Kitchen – A Hub & Spoke System
It can exist argued that today’s focused delivery channel began in earnest when Domino’s offered up a “30 Minute or Free” guarantee in 1973. In order to acquire this guarantee effective, the company created a hub and spoke system, in consequence building a chain of franchised units in low cost locations. They were characterized by being geographically market-centered but with no need for a “High Street” customer facing address. This was directly in contrast to the overwhelming market edge owned by Pizza Hut and its network of “Red Roof” replete service pizzerias with their focus on dine-in and takeout service. But the competitive edge that came from having units with no dine-in, limited customer carry-out, and which were serviced by a central commissary set in motion the shift away from the traditional eat-in model.
“The reality is, when the red roof restaurant was created, the credit of delivery wasn’t section of the concept,” said Pizza Hut chief executive David Gibbs, a 26-year veteran at parent company Yum Brands…”so in many cases, their traffic has outgrown the capabilities of those restaurants…”
Now, four decades later Domino’s is the world leader in delivery, pizza or otherwise. It has done this by controlling the entire process or what is called the “full stack” in the delivery cycle. Now describing itself as an IT and logistics company that sells pizza, the backbone of the system is that they control the customer ordering process, the production property process, and through a vast franchise network the delivery process.
Next to come, using fresh GPS and AI technologies, Domino’s predicts that it will exist able to acquire deliveries not just to a formal building address, but to anywhere a customer can exist located by tracking their cellphone, even if that is a park bench or a blanket on the beach.
But Domino’s is not the only leader to exist expanding its Cloud Kitchen delivery system. Already designed on a commissary production system model, giant posthaste casual leader, Panera Bread, tested delivery in Boston and then announced an expansion across the United States in early May, 2018 with a system based upon using its own delivery drivers.  Following the trend in October the largest chicken sandwich chain, Chick-fil-A, announced it was genesis to test the hub and spoke model of delivery in Nashville, TN and Louisville, KY.
Chick-fil-A is opening two fresh restaurants that don’t Have something you commonly associate with the chain: seats.
Chick-fil-A, the Atlanta-based chicken sandwich chain, is testing catering and delivery locations in Nashville and Louisville, Ky., that will open this month.
The locations, according to an announcement on the chain’s website, Have no dining rooms or drive thru’s and are designed to exist hubs for catering and delivery orders. The restaurants will not accept cash, either.
The Cloud Kitchen model can exist very effective for restaurant companies with large enough scale, whether in a unique city or across a region, to pick edge of a unique production kitchen site with remote staging kitchens. Ultimately the “full stack” control from order to front door can near from as few as three restaurants or as many as 3000. This besides means that the foundation is laid for vast proprietary customer data collection and eventually data mining by the most forward-looking operators.
It can exist argued that the Food Truck movement of the past decade is a subset of the Cloud Kitchen model. By most local health code laws, food trucks must Have a “home kitchen” or commissary for their bulk production that meets each and every health and sanitation code requirements. In many urban centers, to be successful a food truck company needs to Have multiple trucks on the road acting as a distribution network. While this is besides a classic Hub & Spoke model, it comes with similarities to a model in the next article, #6 The Consolidator, with distribution on a bus quit route and not a one-to-one ultimate mile taxi route.
3. The Ghost Kitchen
One further refinement of the Cloud Kitchen is the Ghost Kitchen. As delivery becomes more of a threat to the traditional dine-in restaurant option, some suggest that this model, in fact, is the future of restaurants—basically a highly efficient hybrid of menu concepts, specialized production and logistics, and low labor cost with no eat-in customers.
In that way, this model is identified by three key components.
First, it removes the dining play or takeout from the restaurant completely, working out of a kitchen whose location is based on nearness to its core customer market yet in a typically low rent out-of-the-way space.
Second, it does not hire any paid employees to deliver, instead making consume (through partnership or agreement) of the many third-party delivery companies enjoy GrubHub, Postmates or Doordash.
Third, and possibly the most important, because of the flexibility of only needing an APP, website or traditional telephone ordering system, more than one cuisine can exist produced in the same kitchen space. facile to prepare, cook and deliver foods such as salads, sandwiches, Asian and other ethnic dishes, or gourmet pizza can each and every exist offered while cross-utilizing similar ingredients in creative menu offerings.
This can best exist described as an “order only” restaurant. The most prominent or well-known of these Ghost Kitchens would exist Green peak (see transition to #8 black Kitchen in section 2). While garnering a respectable amount of press, the notable chef David Chang’s Maple, closed its operation in 2017 with some assets pitiful to London and the delivery company Deliveroo. Chef Chang sold the physical kitchen space, Ando, to Uber Eats after ceasing operations in January, 2018. 
Because no customer ever sets foot through the front door the owners can do each and every of their investment in kitchen outfit and the technology of ordering. A Ghost Kitchen offers customers large menu choices, and just as its cousin the Cloud Kitchen, has the option to sustain track of its own proprietary customer data set through the direct ordering process. The tradeoff is that ownership sacrifices the customer interface at delivery of the Cloud Kitchen model. Operating and start-up costs are low and efficiency can exist very high. The risk is that a large portion of the margin (sometimes up to 30%) from market-driven menu prices is taken by the delivery partnership, who besides control the brand image when customers receive their orders off-site.4. Virtual Restaurants
Along with disrupting the taxi business, Uber Eats is about to globally disrupt the restaurant delivery business. As of October, 2018, Uber Eats had over 1600 “virtual restaurants” around the globe, with almost 1000 in its US partnership portfolio. The majority of these are not the Cloud or black Kitchen models mentioned above, but are existing restaurants with fresh brands that only exist through Uber Eats. This model, while charging very high fees to the restaurant, allows them to technically not compete with themselves in the home delivery marketplace. Uber Eats gains more menus to offer, and limits any need for an investment in a commissary space.
For SushiYaa, Kim says the virtual restaurant concept has been transformative. “Because this concept worked so well for us, they actually changed one of their restaurants from a sushi buffet concept to a regular restaurant with 8 different virtual restaurant brands inside it. The buffet sales weren’t doing so well and the delivery side was doing better, so they thought — let’s change it completely so we’re focused more on delivery.” From a sales standpoint, he says it’s “almost as if they Have another restaurant without paying additional rent and labor, even though [Uber Eats] takes about 30 percent.”
One other nature of Virtual Kitchen involves the licensing of existing restaurant recipes and menu items in a curated virtual model. The start-up concept respectable Uncle is using this to compete in the university meal contrivance segment, offering a compass of pricing options for higher property prepared meals, delivered by their own delivery fleet using the bus quit common drop off method. This is a limited menu, limited target market, which benefits from a direct marketing approach, lower operating costs, and uses both a subscription and premium fee based pricing system. It is a Virtual Kitchen because there is no restaurant or other customer facing facility, it exists only online.
Part One – Conclusions
Delivery models, some traditional, some evolving, present many opportunities for restaurant operators, especially those in the QSR and posthaste Casual segments, where speed and charge and convenience are the drivers of consumer choice.
The challenge in today’s delivery market is how owners and operators can maintain both high property and long-term profitability in the products/services they offer. For many meals, the time and distance from kitchen to table can exist more than 30 minutes or multiple miles. property of presentation and flavor may quickly diminish. More importantly, where the medium annual profitability for restaurants across each and every segments in the USA is considerably less than 10%, losing up to 30% of top line revenues is not a path to a successful future, (even if total sales expand by 20%).
PDF Version Available HereReferences  Heather Haddon and Julie Jargon, The Wall Street Journal online, October 24, 2018, https://www.wsj.com/articles/investors-are-craving-food-delivery-companies-1540375578?mod=cx_picks&cx_navSource=cx_picks&cx_tag=contextual&cx_artPos=4#cxrecs_s  Liam Proud, DealBook, NYTimes, September 21, 2018, https://www.nytimes.com/2018/09/21/business/dealbook/uber-eats-deliveroo.html  Jennifer Marston, The Spoon, July 31, 2018, https://thespoon.tech/delivery-is-making-these-restaurants-literally-redesign-the-way-they-do-business/  Peter Romeo, Restaurant traffic Online, Oct. 19, 2018 https://www.restaurantbusinessonline.com/operations/3-big-changes-looming-restaurants  Karen Robinson-Jabos, Dallas News, Jan 6, 2016. https://www.dallasnews.com/business/business/2016/01/06/pizza-hut-is-ditching-the-iconic-red-roof-for-a-more-modern-look  Janelle Nanos, Boston Globe, May 7, 2018, https://www.bostonglobe.com/business/2018/05/07/panera-expanding-its-delivery-service-cities/sZg4pO0yTw9cEdYpv514tL/story.html?event=event12  Jonathan Maze, Restaurant traffic Online, Oct. 09, 2018 https://www.restaurantbusinessonline.com/financing/chick-fil-opening-new-delivery-focused-prototype  Neal Ungerleider, 01.20.17 posthaste Company https://www.fastcompany.com/3064075/hold-the-storefront-how-delivery-only-ghost-restaurants-are-changing-take-out  Closing announcement from Maple, May 8, 2017 https://maple.com/letter/  Whitney Filloon, Eater, October 24, 2018, www.eater.com/2018/10/24/18018334/uber-eats-virtual-restaurants  behold the online Audiopedia site https://www.youtube.com/watch?v=BKO5JFbqKTA  Ibid, Eater, October 24, 2018  behold https://www.gooduncle.com/ Christopher C. Muller is Professor of the drill of Hospitality Administration and former Dean of the School of Hospitality Administration at Boston University. Each year, he moderates the European Food Service Summit, a major conference for restaurant and supply executives. He holds a bachelor’s degree in political science from Hobart College and two graduate degrees from Cornell University, including a Ph.D. in hospitality administration. Email: firstname.lastname@example.org
By Makarand Mody and Monica Gomez
For a long time, the hotel industry did not admiration Airbnb a threat. Both the industry and Airbnb claimed they were serving different markets and had different underlying traffic models. Over the years, as Airbnb become more successful and grown to being larger than the companies in the hotel industry, the rhetoric has changed. The hotel industry began to realize they had something to worry about.
A stage of denial was followed by the American Hotel & Lodging Association (AH&LA) attacking Airbnb by sponsoring research to demonstrate its negative impacts on the economy and lobbying governments to impose taxes and regulations on homesharing. The association is arguing for a flush playing realm between homesharing and hotels (and rightly so). The next stage of this battle involves competition and integration. Not only are hotels looking to add homesharing-like attributes and experiences to their properties, to more effectively compete with Airbnb, but are besides looking to tap into the platform-based traffic model that underlies Airbnb’s success.
The Past: How does Airbnb impact the hotel industry?
Airbnb’s disruption of the hotel industry is significant, both existentially and economically. A recent study by Dogru, Mody, and Suess (2018) establish that a 1% growth in Airbnb supply across 10 key hotel markets in the U.S. between 2008 and 2017 caused hotel RevPAR to decease 0.02% across each and every segments. While these numbers may not loom substantial at first, given that Airbnb supply grew by over 100% year-on-year over this ten year epoch means that the “real” abate in RevPAR was 2%, across hotel segments. Surprisingly, it was not just the economy but besides the frill hotel segment that was hard hit by Airbnb supply increases, experiencing a 4% true decline in RevPAR. The impact of Airbnb on ADR and occupancy was less severe. In Boston, RevPAR has decreased 2.5%, on average, over the ultimate ten years due to Airbnb supply increases. In 2016 alone, this 2.5% abate in RevPAR amounted to $5.8 million in revenue lost by hotels to Airbnb. Brands that felt the impact the most were those in the midscale and frill segments, with a abate in RevPAR of 4.3% and 2.3% respectively. These supply increases are besides fueling Airbnb taking an increasing partake of the accommodation market pie. For example, in fresh York City, Airbnb comprised 9.7% of accommodation demand, equaling approximately 8,000 rooms per night in Q1 2016 (Lane & Woodworth, 2016). As a whole, Airbnb’s accommodated demand made up nearly 3% of each and every traditional hotel demand in Q12016.
Buoyed by a growth rate of over 100% year on year, Airbnb now has over 4 million listings, with the U.S. being its largest market. The company besides has significant play to grow in other countries, particularly emerging markets in Africa and India. The company has speed into some competition in China, with local rivals Tujia and Xiaozhu. Also, within the U.S., the respectable word is that Airbnb will not grow at 100% indefinitely and will eventually plateau as it reaches a saturation point (Ting, 2017a). In view of this, the company has turned to alternative strategies to continue to expand supply. It is now targeting property developers to eddy entire buildings into potential Airbnb units, through its newest hotel-like brand, Niido. Currently, there are two Airbnb branded Niido buildings in Nashville, TN and Orlando, FL with over 300 units each and Airbnb plans to Have as many as 14 home-sharing properties by 2020 (Zaleski, 2018). Niido works by encouraging tenants to list their units on Airbnb, with Airbnb and Niido taking 25% of the revenue generated. Airbnb has besides clearly evolved from its original premise of “targeting a different market” to attracting segments traditionally targeted by hotels, such as the leisure family market, traffic travelers, and the upscale traveler, as evidenced through its latest offering, Airbnb Plus. These homes Have been verified for quality, comfort, design, maintenance, and the amenities they offer. They besides Have facile check in, premium internet access, and fully equipped kitchens. Their hosts are typically rated 4.8+, and travel above and beyond for their guests. Through Airbnb Experiences, travelers can partake in everything from the magnificient outdoors—hiking and surfing—to “hidden” concerts and food and wine tours. In addition to these products, Airbnb has besides “created” its own segments of travelers: novelty and experience seekers who are looking for unique and unconventional accommodation enjoy yurts, treehouses, and boats, each and every things that a traditional hotel company cannot provide.
The Present: Understanding what consumers want lies at the heart of the battle between hotels and Airbnb
There are larger societal trends that are impacting what consumers search travel, and they assume this has implications for the Airbnb and hotel dynamic. These trends include:
What consequence these trends mean? They require marketers and experience designers to re-think what the travel experience means to the customer. The notion of the experience economy was created by Pine and Gilmore in 1998, and included four dimensions: escapism, education, entertainment, and esthetic. Leveraging one, or ideally, more of these dimensions creates memorable experiences for customers, which in eddy results in brand loyalty. This dynamic has been fairly well-established in the academic literature. However, Airbnb has changed the game for the experience economy by emphasizing the sharing lifestyle and a sense of community, cleverly incorporating the above highlighted trends into its communications with customers. Because of Airbnb popularity and success, six fresh dimensions Have been incorporated into the experience economy, in the context of the travel experience: personalization, communitas, localness, hospitableness, serendipity, and ethical consumerism, as was presented by Mody in 2016.
Interestingly, in a recent study by Mody and colleagues (Mody, Suess, & Lehto, 2017), the researchers establish that Airbnb outperformed hotels on each and every the dimensions of this new, expanded, accommodation experiencescape. Airbnb outperforms hotels in the personalization dimension because of its wide array of homes and locations, enabling genuine micro-segmentation and the “perfect match” between guest and host (Dolnicar, 2018). Moreover, no one home is similar to another, giving customers a unique experience every time, enhancing the serendipity associated with an Airbnb stay. Airbnb elevates the sense of community that consumers seek, particularly when sharing space with other travelers and/or with the host, and allows consumers unparalleled access to “the local”—that café or cute microscopic store that only locals know about. However, there are areas where hotels hold their own. For example, the pathways between these dimensions and memorability were just as stout for hotels as for Airbnb, emphasizing the need for hotels to engage customers by leveraging the “right” dimensions for the brand—dimensions that align with the brand’s mission, story, and personality.
One such dimension where hotels discharge just as well as Airbnb is hospitableness, as confirmed in a study by Mody, Suess, and Lehto (2018). More “investor units” on the Airbnb platform means that the host is often not present when guests arrive to the home; moreover, each and every communication is done electronically and with someone who “manages” the Airbnb unit and doesn’t necessarily own or live in it. In turn, hotels that leverage the human factor—the welcome of a friendly check-in agent, the helpfulness of the concierge, the warm greeting and genuine interaction between guest and food and beverage staff—create more positive emotions, which subsequently lead to higher brand loyalty. It is imperative that hotel brands really assume about the high-tech, high finger experience they are looking to provide, particularly in the golden age of brand proliferation that they live in.
From a non-experience standpoint, regulation is another bone of contention that merits close inspection. After years of denying that Airbnb was a competitor, in 2016, the American Hotel & Lodging Association first began an extensive lobbying exertion for the imposition of taxes and regulations on Airbnb that flush the playing field. Over the ultimate yoke of years, the voices of the hotel lobby and other community groups Have translated into governments taking some action, in the U.S. and abroad. However, in a study of regulation across 12 European and American cities, Nieuwland and van Melik (2018) establish that governments Have been fairly lenient towards short-term rentals with microscopic to no (meaningful) regulations thus far. Moreover, regulations Have been designed to alleviate the negative externalities of Airbnb on neighborhoods and communities rather than to flush the playing realm between Airbnb and hotels. Another challenge with regulating the peer to peer economy has been enforcement. In fresh York City, under the Multiple Dwelling law, it is illegal for a unit to exist rented out for less than 30 days unless the owner is present in the unit at the time the guest is renting. However, it is silent possible to find “entire homes” on Airbnb in fresh York City, even though, in principle, these typically comprise homes where the host is not present during the guest’s stay. Moreover, Nieuwland and van Melik (2018) and Hajibaba and Dolnicar (2017) Have establish that regulations tend to exist very similar across cities, without accounting for the specificities of a particular location, which makes the process perfunctory and superficial. There besides remains the danger of over-regulating Airbnb, given that there is silent very microscopic knowledge about effective ways of regulating these innovations in the sharing economy, thus stifling their potential. Avoid over-regulation is critical, since Airbnb has significant welfare effects in the economy. In addition to stimulating travel to previously inaccessible markets, Airbnb besides creates customer surplus (Farronato & Fradkin, 2018), an principal economic value measure. Moreover, other research has suggested that the medium resident is not as negative towards the Airbnb as media rhetoric might suggest (Mody, Suess, & Dogru, 2018). The need for a data-driven approach to Airbnb regulation remains paramount.
The Future: Competing with the sharing economy requires re-thinking the brand and the experience
While regulation is outside the control of the hotel industry, the brand and the customer experience are not. They contend that these are the areas where hotel companies’ efforts need to exist focused. Hotels need to re-think the brand promise, both for the parent brand as well as individual brands in the portfolio, and how it defines and shapes the guest experience. Recent research by Mody and Hanks (2018) indicates that while Airbnb leverages the authenticity of the travel experience—by enabling local experiences that provide a sense of self and sense of place, hotel brands that are perceived as being authentic—original, genuine, and sincere—can generate higher brand loyalty. Thus, while it’s hard to compete with homesharing in terms of experiential authenticity, brand authenticity is a pillar on which hotels can build a stout foundation for loyal brand relationships. This is particularly principal because while Airbnb promotes experiential authenticity as a key judgement to consume the brand, most travelers tend to stay with the brand for much more functional requirements, such as space and charge (Chen & Xie, 2017; Dogru & Pekin, 2017)
There is no one definition for or manifestation of an “authentic” brand. It’s a perception, a emotion that consumers Have about what you stand for. An true brand has at its core the brand promise, an true value proposition that gives consumers a raison d’etre for associating with the brand. However, what an true brand does require is effective storytelling. A brand is perceived to exist authentic, if it has an true anecdote that feeds it. Brand stories can near from many sources: a brand’s values, personality, heritage, uniqueness, or its quest and purpose. What is principal is telling compelling and coherent stories across the brand’s various touchpoints to engage consumers at a visceral, emotional level. Taking off industry blinders, and looking for inspiration outside the hotel industry, is critical. Tom’s Shoes is an excellent instance of leveraging its quest—One for One—in creating a compelling brand story. As another example, in an industry typically focused on the in-store, “physical” experience, Burberry has set the gold yardstick for authentic, digitally-led and emotive storytelling, by looking within and leveraging over 150 years of history (Watch the YouTube Video here). In this vein, they assume that Fairfield Inn and Suites’ revert to “where it each and every began”—the Marriott family’s Fairfield Farm in the Blue Ridge Mountains of Virginia— to craft the brand experience of the future, from a design and communications standpoint, is an excellent instance of leveraging authenticity and crafting a compelling brand swear (Ting, 2017b).
Another credit that lies at the heat of the brand swear is what they convene the experiential value proposition, or EVP. For the longest time, hotel marketers Have relied on the guest play as the primary source of value for the guest. But assume about the ultimate time you traveled. Was it the prospect of the hotel play that got you excited about your trip? Or was it everything that the hotel enables you to consequence – the experience outside the guestroom? From experiencing know-how and music in the lobby to its proximity to the must-do craft beer garden, hotel marketers must realize that it’s the complete package—what’s inside and outside the room—that customers consume as cues for making their conclusion to pick an accommodation. They convene this proposition offered by the hotel—what’s inside and outside the guest room, enclosed within an experience of hospitableness and a connection to humanity—its EVP. They present the EVP in pattern 1. The EVP mirrors the value paradigm of the modern traveler, something that must exist reflected in the hotel brand’s sales, marketing and pricing and revenue management efforts. Thinking about a brand through the lens of the EVP paradigm has the power to re-orient the customer’s mindset from one of price-shopping to experience-shopping.
Figure 1. The Experiential Value Proposition Framework
How does a hotel marketer apply the EVP paradigm? Its application can open up many avenues. Hotels can start by rethinking the design of their primary digital channels, led by the website by adding more rich, vivid content that goes beyond the guestroom, in order to better integrate aspects of the wider hotel and local experience. The yardstick Hotels serves as an excellent instance (http://www.standardhotels.com/) Its website feels more enjoy a local lifestyle and culture magazine than a digital media property “selling” a hotel room. The website’s moneyed images and stories draw the visitor into wanting to learn more about what the brand has to offer. While not every hotel can or would want to travel the yardstick way, since the brand has its own discrete voice and personality, there is a case to exist made for going beyond static images of beds in guestrooms, which tend to blend into one indistinguishable gross after a point, particularly on OTA websites. When was the ultimate time the image of a hotel bed excited you to want to stay there? Yet, when you Look at the imagery do out by most hotels, this is what marketers silent focus on.
Placing an emphasis on humanity and providing a sense of hospitableness can besides enhance a brand’s EVP. Instead of technology replacing the human connection, the industry needs to Look for ways in which technology can actually free up employees so that they can expend their time crafting more personal and unique experiences, delighting guests instead of performing routine transactions. Moreover, if the human connection is what people search out when traveling with Airbnb, why is it that hotel confirmation emails silent accumulate sent out by automated systems that highlight the “facelessness” of the hotel entity. Why not consume that as an opening to truly welcome the guest; a simple finger such as a welcome epistle from the GM with his/her photo, or that of an employee who is “assigned” as “your personal host” during your stay can travel a long pass in emulating the human connection that the sharing economy enables.
The design of the hotel’s public spaces can exist used to enhance the guest’s experience of “communitas”. Ian Schrager would correspond (Schaal, 2017). After all, with much of Airbnb’s supply being dominated by investor units that provide microscopic or no host contact, what better an opening for hotel brands to exhibit that they are the original connectors of human beings? Sheraton has been judicious in incorporating some of these communal elements into its brand makeover by introducing productivity tables and studio spaces and a day-time coffee bar that transforms into a bar at night. In terms of another design element, Airbnb’s attractiveness to family and group travelers can exist offset by offering connecting and/or multiple rooms for one price, with other experience value-adds thrown in (as with the Marriott family play connecting rooms package.
Finally, the role of the loyalty program cannot exist emphasized enough. Loyalty programs must walk beyond programmatic levels to being able to leverage data from guest history, companionable media, and other marketing data sources, powered by predictive analytics, to personalize and individualize the guest experience of the brand. In an age of instant gratification, the loyalty program has to exist gamified to unlock value-adds and present creative bundling.
At the flush of the hotel company, beyond the individual brand, the hotel industry has started participating in the home sharing traffic and is increasingly looking to integrate these platform traffic models. For example, while Accor purchased Onefinestay, Marriott has teamed up with Hostmaker to create Tribute Portfolio Homes, a partnership that was recently expanded to four European cities (Fox, 2018). From an organic brand development standpoint, Accor’s newest Jo & Joe brand mimics the sharing economy within the confines of a traditional hotel space. Other, more innovative and bold ways of integrating the sharing economy ethos into a hotel could comprise offering an “Airbnb floor”, an antithesis to the club floor, one that would not present housekeeping and other hotel services and thus exist offered at a lower price. With hotel brands becoming “branded marketplaces” for accommodation and not just hotel rooms, perhaps there is merit in listing hotel rooms on alternative accommodation platforms. HomeAway is already adding hotels to its platform through the Expedia Affiliate Network, while Airbnb is making a shove for bed-and-breakfasts and boutique hotels. Homesharing providers hope that by adding these options to their listings, they will fulfill their goal of being “for everyone”, while allowing independent and boutique hotels to reap the benefits of branded distribution at a lower cost than traditional OTA brands.
In sum, hotels must adopt a sales, marketing, and revenue management approach that is both strategic and tactical.
At a strategic level, hotel brands need to re-think their story, and how they portray and fulfill their authenticity and brand promises. At a tactical level, it’s the experience and value beyond the guestroom that must exist factored into what is presented to current and potential guests, what they are charged for it, and how it is leverage to create “memorable memories” that lead to higher net promotor scores and brand loyalty. They present a graphical summary of the past, present, and future of Airbnb vs. hotels in pattern 2.
Figure 2. Summarizing the past, present and future of Airbnb vs. hotels
PDF Version Available HereReferences Chen, Y., & Xie, K. (2017). Consumer valuation of Airbnb listings: a hedonic pricing approach. International Journal of simultaneous Hospitality Management, 29(9), 2405–2424. http://doi.org/10.1108/IJCHM-10-2016-0606 Dogru, T., Mody, M., & Suess, C. (2018). Adding evidence to the debate: Quantifying Airbnb’s disruptive impact on ten key hotel markets. Dogru, T., & Pekin, O. (2017). What consequence guests value most in Airbnb accommodations? An application of the hedonic pricing approach. Boston Hospitality Review. Dolnicar, S. (2018). Unique Features of Peer-to-Peer Accommodation Networks. In S. Dolnicar (Ed.), Peer-to-Peer Accommodation Networks: Pushing the boundaries (pp. 1–14). Oxford: Goodfellow Publishers Ltd. Farronato, C., & Fradkin, A. (2018). The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb. Fox, J. (2018). Marriott expands homesharing program in Europe. Hotel Management. Retrieved from https://www.hotelmanagement.net/own/marriott-expands-homesharing-program-to-3-european-cities Hajibaba, H., & Dolnicar, S. (2017). Regulatory Reactions Around the World. In S. Dolnicar (Ed.), Peer-to-Peer Accommodation Networks: Pushing the boundaries (pp. 120–136). Oxford: Goodfellow Publishers Ltd. Lane, J., & Woodworth, M. (2016). The Sharing Economy Checks In: An Analysis of Airbnb in the United States. Retrieved from http://www.cbrehotels.com/EN/Research/Pages/An-Analysis-of-Airbnb-in-the-United-States.aspx Mody, M. A., Suess, C., & Lehto, X. (2017). The accommodation experiencescape: a comparative assessment of hotels and Airbnb. International Journal of simultaneous Hospitality Management, 29(9), 2377–2404. http://doi.org/10.1108/IJCHM-09-2016-0501 Mody, M., & Hanks, L. (2018). Parallel pathways to brand loyalty: Mapping the consequences of true consumption experiences for hotels and Airbnb. Mody, M., Suess, C., & Dogru, T. (2018). Not in my backyard? Is the anti-Airbnb discourse truly warranted? Annals of Tourism Research. http://doi.org/10.1016/j.annals.2018.05.004 Mody, M., Suess, C., & Lehto, X. (2018). Going back to its roots : Can hospitableness provide hotels competitive edge over the sharing economy ? International Journal of Hospitality Management. http://doi.org/10.1016/j.ijhm.2018.05.017 Nieuwland, S., & van Melik, R. (2018). Regulating Airbnb: how cities deal with perceived negative externalities of short-term rentals. Current Issues in Tourism, 0(0), 1–15. http://doi.org/10.1080/13683500.2018.1504899 Schaal, D. (2017). Ian Schrager Calls Out Hotel Industry’s Airbnb Strategy as Misguided. Skift. Retrieved from https://skift.com/2017/12/08/ian-schrager-calls-out-hotel-industrys-airbnb-strategy-as-misguided/ Ting, D. (2017a). Airbnb Growth anecdote Has a Plot Twist — A Saturation Point. Skift. Retrieved from https://skift.com/2017/11/15/airbnb-growth-story-has-a-plot-twist-a-saturation-point/ Ting, D. (2017b). Marriott and election pick Varied Approaches to Reviving Classic Midscale Brands. Skift. Zaleski, O. (2018). Airbnb and Niido to Open as Many as 14 Home-Sharing Apartment Complexes by 2020. Retrieved from https://www.bloomberg.com/news/articles/2018-08-14/airbnb-and-niido-to-open-as-many-as-14-home-sharing-apartment-complexes-by-2020 Makarand Mody, Ph.D. has a varied industry background. He has worked with Hyatt Hotels Corporation in Mumbai as a Trainer and as a property Analyst with India’s erstwhile premier airline, Kingfisher Airlines. His most recent experience has been in the market research industry, where he worked as a qualitative research specialist with India’s leading provider of market research and insights, IMRB International. Makarand’s research is based on different aspects of marketing and consumer behavior within the hospitality and tourism industries. He is published in leading journals in the field, including the International Journal of simultaneous Hospitality Management, Tourism Management Perspectives, Tourism Analysis and the International Journal of Tourism Anthropology. His labor involves the extensive consume of inter and cross-disciplinary perspectives to understand hospitality and tourism phenomena. Makarand besides serves as reviewer for several leading journals in the field. In descend 2015, he joined the faculty at the Boston University School of Hospitality Administration (SHA). He received his Ph.D. in Hospitality Management from Purdue University, and besides holds a Master’s degree from the University of Strathclyde in Scotland. Monica Gomez is a graduate student in the School of Hospitality Administration at Boston University. She received her Bachelor’s degree in Tourism, Recreation, and Sport Management from the University of Florida and has held previous internship positions in hotel operations and event management. She is a member of the Hospitality Sales and Marketing International Association and is interested in hotel revenue management.
By Mike Oshins
Over the past 15-20 years, changes in hotel ownership and management, the growth and development of online reservation systems and the proliferation of lodging alternatives Have altered the hospitality landscape, bringing fresh complexity to the industry. Two decades ago, a Marriott hotel was commonly owned and managed by Marriott; now, many are owned by one company, franchised with the Marriott name, and managed by a third company. While customers used to exist able to pick up the phone and convene a hotel’s reservations heart or consume their local travel agency to book a room, today online distribution systems enjoy Expedia, Travelocity, and Kayak are powerful intermediaries that Have each and every but replaced traditional consumer travel agencies. Travelers may pick among many alternatives to hotels for lodging, including AirBnB, HomeAway, Flipkey, and VBRO. Mergers and acquisitions continue to multiply, exemplified most notably by Marriott’s purchase of Starwood to create the world’s largest hotel company with 30 brands. Millennials’ preferences Have pushed the development of fresh brands with fresh thinking about hotel design, as demonstrated with Hilton’s Tru, Best Western’s Vib and Glo chains, and Intercontinental’s EVEN.
Travel patterns Have besides changed. China has become the largest exporter of tourists in the world, totaling almost 100 million outbound travelers and representing almost one in ten tourists in the world. Chinese travelers besides spent the most money, roughly $250 billion in 2015. For reference, the second highest spenders were Americans at $110 billion. In the U.S., national discussion about travel bans, fresh barriers to hiring non-domestic seasonal workers (a key factor in fresh England’s summer tourist season), possible elimination of the national Brand USA marketing effort, and tenuous Cuba travel policies are each and every creating suspicion in the tourism market. These changes and ambiguities present fresh challenges, both large and small, for the hospitality industry, requiring those at the forefront of the realm to anticipate and respond to the subsequent fallout.
Prolific traffic author John Kotter states that the main role of leadership is dealing with change. Depending on how it’s viewed, with the preempt perspective and pliancy, change can present an organization with fresh opportunities—the possibility of taking edge of changing demographics, fresh technologies, or the emergence of fresh markets. Change can besides raise dilemmas, such as the need to address fresh competitors, contend with a juncture or cope with a want of available employees. Even before developing and implementing successful change management processes, organizational leaders must Have the faculty to recognize the opportunities and dilemmas presented by change and know how to assume about them. To behold the need for change, to identify fresh realities, either current or future, one must exist able to view the immense picture and the current climate in fresh ways. This faculty to behold the present and near future from a fresh vantage point is one of the main reasons generic Electric (GE) CEO, Jeff Immelt, moved GE world headquarters to Boston’s expanding Seaport District. GE’s fresh home will “place his leadership team in a vibrant city with a world-renowned innovation scene, instead of in a wooded Connecticut suburb” (Boston Globe), thus giving his senior team a fresh perspective, and the opening to acquire closer connections with institutions able to stimulate fresh ideas and create a fresh pipeline for employees. Other than pitiful a $240 billion company’s world headquarters—something that’s not always feasible to achieve—how else can one enhance a leadership kit with tools for responding effectively to change? The faculty to assume more creatively, form fresh habits, change paradigms, reframe one’s perspective, and assume differently by learning fresh ideas are each and every tools that can aid in addressing the first factor of leading change, that is identifying that change is needed. The following examples highlight some of the ways one can learn to exist more successful in thinking about and capitalizing on the opportunities presented by change.Creative Thinking
IBM interviewed 1500 CEOs around the world in 2010 and establish Creativity is now the unique most principal leadership competency and is needed in each and every aspects of leadership. If one thinks in the same pass as everyone else, the opening for fresh ideas (and fresh solutions) is limited. The irreverent and offbeat humor of Monty Python is captured in their tagline, “And now for something completely different!” assume Different! is the mantra for Steve Jobs and Apple, as eloquently explained in Simon Sinek’s Start with Why. Sir Ken Robinson, author and the holder of the top TED Talk consequence Schools cancel Creativity, defines creativity as, “the process of having original ideas that Have value.” There are many ways to expand creativity, including:
Creating a fresh habitude or set of habits is another pass to change how they behold things. In his iconic 1989 book, The 7 Habits of Highly effective People, Stephen Covey illustrates how powerful an influence habits can exist in their lives. Covey describes a habitude as the intersection of knowledge, skill, and desire: “Knowledge is the what they consequence and why they consequence it [principles], desire is the motivation, the want to do, and skill is the how to do.” His seven habits—Be Proactive, start with the finish in mind, do first things first, assume win/win, search first to understand…then exist understood, Synergize, and Sharpen the saw—provide a pass of thinking and acting in traffic and life. By embracing these habits, one can maintain a better poise and create the opening to find fresh ways of looking at situations.
Charles Duhigg’s more recent bestseller, The Power of Habit, addresses the credit of habits as “why they consequence what they consequence in traffic and life.” Taking a psychological approach, Duhigg explores the theory of cues (something that triggers a habit), routines (actions taken in response to cues), and rewards (the positive experiences resulting from routines), which together comprise the habitude loop. For example, Starbucks develops habits of willpower to benefit their staff deal with stressful times. Through role-playing, discussion, and feedback, they train employees how to react to a cue (e.g., an furious customer or a assiduous period) by choosing a certain routine ahead of time (e.g., remaining calm, looking for solutions, etc.). When an inflection point arrives (cue), employees are able to handle the situation smoothly, resulting in the reward of a satisfied customer and successful chaos management. In this scenario, Starbucks helps their staff create habits by helping them change how they approach and address dilemmas. One employee now thinks of his green Starbucks apron as a shield – when he puts it on, furious customers can no longer impress him!Reframing
“The power of reframing things can unlock a vast array of solutions to problems immense and small,” states author Tina Seelig. She illustrates reframing using a classic scene from the Pink Panther movie (a hospitality example, no less).
Inspector Clouseau: Does your dog bite?
Hotel Clerk: No.
Clouseau [bowing down to pet the dog] Nice doggie.
[The dog bites Clouseau’s hand.]
Clouseau: I thought you said your dog did not bite!
Hotel clerk: That is not my dog.
We might exist tempted to guilt the clerk when the dog bites Clouseau, but the clerk’s final statement surprises us and causes us to admiration the situation differently.
One of the key elements of reframing is to view a circumstance with a fresh perspective. In Tom Stoppard’s play, Rosencrantz and Guildenstern are Dead, they behold Shakespeare’s classic anecdote of Hamlet through the lens of two minor characters, and in the Broadway hit Wicked, the Wizard of Oz anecdote is interpreted from the witches’ perspectives, revealing a more complex and altered understanding of the Wicked Witch of the West and Glinda, the respectable Witch. Reframing a situation allows the possibility of fresh lessons and solutions which otherwise may travel unnoticed.
In their approach to reframing, authors Bolman and Deal consume frames as a useful tool to acquire sense of organizations. The four frames, structural (emphasizing roles & policies), human resource (highlighting human needs, skills and relationships), political (focuses on power, conflict and competition) and symbolic (emphasizing culture, meaning, ceremonies and stories) present different perspective on how to assume about organizations. Each frame provides a different language and model in managing, evaluating, diagnosing and understanding and leading an organization. Altering the pass in which they typically frame an organization can benefit us better communicate with those who interpret the organization differently. Viewing an organization from different frames may besides unleash a variety of fresh ideas to address current or emerging dilemmas or raise up fresh opportunities to respond to change in their world.
Another instance of reframing is illustrated, quite literally, in how they view the world. This spring, 600 classrooms in the Boston Public School system switched from teaching the traditional European-centric Mercator map, developed in the 1500s, to the Peters Projection map (1974), in which land masses are more accurately represented in relation (size and proximity) to one another. For example, using the Mercator map, Greenland and Africa loom the same size; in the Peters map, however, Africa, which is 14 times larger than Greenland, is more proportionally displayed. This credit was brought to mainstream US in a 2001 West Wing clip by the ‘cartographers for companionable equality’. At one point, when confronted with these fresh perspectives, a West wing official asked, “You sordid Germany is not where they assume it is?”— to which a cartographer responded, “Nothing is where you assume it is.” The issue of perspective and change about their world, met with incredulity in a fictional drama, became reality this spring in Boston Public Schools.Paradigms Shifts
The Oxford Dictionary defines a paradigm as “a typical instance or pattern of something; a pattern or model.” Scientist Thomas Kuhn introduced the concept of the paradigm shift in his influential 1962 book, The Structure of Scientific Revolutions. Groundbreaking paradigm shifts comprise examples in areas as diverse as physics, health, and astronomy—think of what Galileo had to travel though to convince royalty that the earth rotated around the sun (Copernicus theory) when most astronomers believed the invert to exist true. A paradigm shift changes how they Look at things. Malcolm Gladwell’s best-selling books focus on rethinking preconceived ideas, starting with his breakthrough 2006 book The Tipping Point and continuing with his more recent book David and Goliath, which offers several true life examples of when a perceived strength can exist a weakness and a weakness… a strength. For example, an extraordinary high number of successful entrepreneurs are dyslexic, including Jet Blue founder David Neeleman. The challenge of dyslexia as a child may provide coping skills later in life – billionaire Sir Richard Branson of Virgin Air considers his dyslexia his greatest traffic advantage.
In business, paradigm shift examples comprise disruptive innovations (e.g., the Internet, mobile technology, and immense data analytics), shifting global economies, climate change, employee and societal demands, and changing consumer preferences. Futurist Joel Barker explains that when a paradigm shift occurs, everything resets to zero, past successes guarantee nothing, and shifting traffic models shift to create fresh realities. For example, once-successful immense box stores and corporations that could not reconcile to the digital age, such as Borders Books, Blockbuster, and Kodak, went bankrupt. Compare these examples to Netflix, which was able to successfully navigate from their traffic model of renting DVDs through the mail to streaming movies and television shows over the internet to expand their market share. Flexibility to reconcile to paradigm shifts is a powerful tool. As Charles Darwin explains in describing his iconic research: “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”Self-Reflection and Understanding
Shifting paradigms and changing one’s perspective starts with self-reflection: the better they understand ourselves, the better they can approach change. Daniel Goleman provides the multi-faceted framework of emotional intelligence, including two personal competencies (self awareness and self management) and two companionable competencies (relationship management and companionable awareness) that should exist examined to benefit better understand moods and how they impress those around them. Peter Drucker asserts in order to exist productive over a 50-year work-life it is principal to cultivate a abysmal understanding of one’s self. He offers several penetrating questions in his Harvard traffic Review article Managing Oneself, including “How consequence I work?” “Where consequence I belong?” and “What can I contribute?”
There are besides many tools available to benefit provide insight into the ways in which they each view and navigate the world around us. With over two million Myers Briggs nature Indicator (MBTI) assessments being administered every year in more than 70 countries, this personality profile tool, based on the labor of notable psychologist Carl Jung, continues to exist wildly favorite in helping people better understand themselves. Key MBTI elements comprise how they focus their energy (introversion vs. extroversion), the pass they pick in information (sensing vs. intuitive), acquire decisions (thinking vs. feeling) and their attitudes toward the external world and how they orient ourselves to it (view the world to exist organized and systematic vs. springy and exist experienced). The immense Five personality traits, Fundamental Interpersonal Relations Orientation (FIRO), Thomas-Kilmann conflict mode instrument (TKI), and the stout Interest inventory are each and every additional tools that can benefit dissect one’s preferences.
Identifying one’s personal values is besides a stout trend in traffic today, with a plethora of instruments available for self-discovery. For example, after a two-day, internal values-clarification exercise, each member of the senior leadership team of the Vail Centre posts his/her top five values on the company’s website for everyone to see. Determining and focusing on one’s strengths rather than one’s weaknesses is the cornerstone approach to Gallop Poll and Don Clifton’s Strengthfinder 2.0. This self-assessment tool enables one to identify their top 5 of 34 different talent themes, from Achiever to WOO (winning others over). By better understanding one’s natural instincts, strengths, weaknesses and personal preferences, one can expand the likelihood to learn how other colleagues or customers from different backgrounds, cultures, generations or perspectives behold things differently, enabling fresh approaches or frames to address change.
In his book, The Spirit to Serve, Marriott International founder J.W. Marriott, Jr. adopted 19th century philosophy Alfred North Whitehead’s perspective when developing the Marriott Way, “The know-how of progress is to preserve order amid change and to preserve change amid order.” The faculty to assume differently as the hospitality industry moves into uncharted territories—both nationally and internationally, within organizations and in local markets, online and in person—is becoming more principal as change continues to evolve at a faster pace than ever before. Being quick and open-minded enough to adapt, addressing challenges and/or seizing opportunities, will determine which companies wither away and which ones thrive. At the heart of these circumstances is the faculty to recognize trends, realize the need for change and act on these situations in ways that navigate the needs of an organization, and its staff and customers. Mental flexibility, adaptability, creativity and personal awareness are key tools in this process that can benefit hospitality leaders behold things from different perspectives, gain fresh insights, develop and pilot fresh ideas and better respond to an ever-changing world.
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Michael Oshins is Associate Professor of the drill of Leadership in the School of Hospitality Administration at Boston University. He is former Vice President of Integer Dynamics, a hospitality consulting solid focused on operational productivity and technology. He holds a doctorate in human resource education from Boston University and a master’s degree in hotel administration from Cornell University. Email: email@example.com References
By Tarik Dogru, Makarand Mody, and Courtney Suess
If you are in the hotel industry, chances are that Airbnb has near up in conversation at some point or another. The sharing economy phenomenon and the economic, social, and technological changes fueling its growth Have challenged the hotel industry to rethink its experiential value proposition to the customer (Mody, Suess, & Lehto, in press). Airbnb founder and CEO Brian Chesky tweeted that “Airbnb hosted more than 2 million guests in the past fresh Year’s Eve,” and that with the ultimate round of financing, which was $1 billion, Airbnb is now valued at $31 billion (Yurieff, 2017). As a result, Airbnb has been at the core of discussions in the world of hospitality and beyond, mainly due to its potential and uncalculated impacts. On one hand, Airbnb might Have positive economic impacts on hospitality and tourism institutions, such as restaurants, bars, and other area attractions, through increases in income and job creations. On the other hand, potential adverse economic impacts of Airbnb cannot exist overlooked: Airbnb might negatively impress the hotel industry, if visitors were to shift their demand from hotels to Airbnb accommodations. However, it is not yet transparent whether Airbnb is taking a partake of the existing hotel industry pie or increasing the size of the overall accommodations industry.
The results from the most comprehensive study analyzing the effects of Airbnb on the hotel industry showed that a 1% expand in Airbnb listings decreases hotel revenue by 0.05% (Zervas, Proserpio, & Byers, 2016). Thus, although negative effects on hotel revenues by pass of Airbnb were reported in this study, the magnitude of these effects was diminutive in the given location of Texas. On the other hand, a study conducted in Korea showed that Airbnb does not impress hotel revenues at each and every (Choi, Jung, Ryu, consequence Kim, & Yoon, 2015). A recent study conducted by Smith Travel Research (STR) in 13 global markets reported that Airbnb listings did not impress hotel demand and revenues (Haywood, Mayock, Freitag, Owoo, & Fiorilla, 2017).
While there are limited studies from which to draw definitive conclusions on the effects of Airbnb on the hotel industry, according to Mr. Chesky, Airbnb does not directly compete with the hotel industry. He claims that Airbnb guests are not typical hotel customers, but rather those who would Have stayed with friends and family (Intelligence, 2017). Although Airbnb argues that it brings fresh visitors to destinations and that 70% of its listings are outside of hotel districts, a report by Morgan Stanley indicates that about 42% and 36% of Airbnb guests switched from hotels and bed and breakfasts respectively, whereas only 31% of Airbnb guests depict those who would Have stayed with friends and family (Intelligence, 2017). Furthermore, a recent study conducted in Los Angeles showed that more than 60% of the properties listed on Airbnb are solely used for commercial purposes and thus are excluded from the residential true estate market (Lee, 2016). According to a recent report by CBRE, revenue generated by hosts renting out two or more units was about $1.8 billion, and hosts renting out ten or more units generated $175 million in 13 major US markets in 2016 (CBRE, 2017). Despite this massive amount of generated revenue, the hosts are generally not paying taxes on their properties.
While there seems to exist free-riders on the market that pick edge of the sharing economy platforms enjoy Airbnb by listing multiple properties, based on the current knowledge, it is silent not transparent whether Airbnb has an adverse consequence on the hotel industry. The present study compares the hotel industry and Airbnb in terms of key performance metrics, including occupancy, ADR, and RevPAR, to determine whether and how Airbnb affects the hotel industry in Boston. Boston is a stout hotel market, but italso has a considerable and growing Airbnb supply, so it provides an excellent context for their analysis.
In their analyses, they treated Airbnb as an accommodation solid to dissect whether it is directly competing with hotels in Boston. Accordingly, the number of Airbnb units listed and the number of units rented (including entire homes and private and shared rooms) multiplied by the number of days in a specified time epoch constitute Airbnb supply and demand figures, respectively. Occupancy, ADR, and RevPAR were calculated following the same methodology used to calculate these statistics in hotel industry. The Airbnb and hotel data were provided by Airdna and STR, respectively. They analyzed data for the epoch between January 2015 and September 2016.ANALYSIS Comparing changes in supply and demand
Tables 1 and 2 present the supply, demand, and revenue statistics for Airbnb and hotels in the city of Boston during the analysis period.Table 1. Airbnb Supply and Demand Period Airbnb Supply % Change in Supply Airbnb Demand % Change in Demand Jan-15 79,110 N/A 575 N/A Feb-15 85,890 8.6 4,506 683.7 Mar-15 91,710 6.8 7,811 73.3 Apr-15 106,380 16.0 18,733 139.8 May-15 114,330 7.5 30,547 63.1 Jun-15 123,180 7.7 38,545 26.2 Jul-15 122,670 -0.4 51,378 33.3 Aug-15 119,580 -2.5 37,555 -26.9 Sep-15 128,730 7.7 51,757 37.8 Oct-15 142,470 10.7 41,011 -20.8 Nov-15 363,660 155.3 76,451 86.4 Dec-15 383,880 5.6 65,064 -14.9 Jan-16 380,910 -0.8 73,300 12.7 Feb-16 375,480 -1.4 101,409 38.3 Mar-16 372,540 -0.8 112,501 10.9 Apr-16 373,050 0.1 134,951 20.0 May-16 374,970 0.5 137,347 1.8 Jun-16 378,870 1.0 147,947 7.7 Jul-16 385,260 1.7 148,473 0.4 Aug-16 385,620 0.1 123,588 -16.8 Sep-16 390,270 1.2 107,690 -12.9 Table 2. Hotel Supply and Demand Period Hotel Supply % Change in Supply Hotel Demand % Change in Demand Jan-15 1,588,843 N/A 896,065 N/A Feb-15 1,436,512 -9.6 901,459 0.6 Mar-15 1,598,701 11.3 1,200,426 33.2 Apr-15 1,550,910 -3.0 1,216,283 1.3 May-15 1,605,304 3.5 1,328,932 9.3 Jun-15 1,558,800 -2.9 1,357,872 2.2 Jul-15 1,610,760 3.3 1,413,521 4.1 Aug-15 1,616,278 0.3 1,393,622 -1.4 Sep-15 1,564,170 -3.2 1,335,976 -4.1 Oct-15 1,616,340 3.3 1,394,364 4.4 Nov-15 1,564,170 -3.2 1,105,292 -20.7 Dec-15 1,616,309 3.3 906,619 -18.0 Jan-16 1,632,367 1.0 909,132 0.3 Feb-16 1,482,796 -9.2 895,546 -1.5 Mar-16 1,646,410 11.0 1,150,937 28.5 Apr-16 1,593,300 -3.2 1,273,368 10.6 May-16 1,650,409 3.6 1,303,974 2.4 Jun-16 1,603,050 -2.9 1,366,553 4.8 Jul-16 1,656,392 3.3 1,406,893 3.0 Aug-16 1,667,955 0.7 1,403,774 -0.2 Sep-16 1,622,130 -2.7 1,347,565 -4.0
The number of Airbnb listings has increased dramatically from 79,110 in January 2015 to 390,270 in September 2016. While the highest growth in hotel play supply was about 11% month-over-month (in March 2016), Airbnb supply experienced a phenomenal growth rate of 155% (in November 2015). Extraordinary changes in hotel play supply might exist due to renovations and the completions of ongoing projects in the pipeline. However, the extreme supply shocks in the case of Airbnb are due to the greater flexibility of adding or removing existing residential properties in the market.
Changes in demand were greater than the changes in supply for both Airbnb and the hotel industry. Yet overall trends witness that Airbnb experienced greater increases in demand as compared to the increases in the demand for hotel rooms. For example, Airbnb demand increased by 684%, 140%, and 33% in February, April, and July 2015 respectively, whereas hotel demand only increased by 0.6%, 1.3%, and 4.1% during these months. Although the changes in demand for Airbnb and the hotel industry during the analysis epoch were, for most part, in the same direction (albeit to varying degrees), there were some anomalies where the changes occurred in the contradictory direction. For example, in September and November 2015, while hotel demand decreased by around 4% and 21% respectively, the demand for Airbnb accommodations increased by about 38% and 86% respectively. Also, demand for Airbnb accommodations decreased by 21% in October 2015, whereas hotel demand increased by 4% during the same period.Comparing Occupancy, ADR, and RevPAR
Tables 3 and 4 shows occupancy, ADR, and RevPAR statistics for Airbnb and hotels in the city of Boston during the analysis period.Table 3. Airbnb OCC-ADR-RevPAR Period Airbnb Occupancy Airbnb
ADRAirbnb RevPAR Jan-15 0.70 $158.86 $1.15 Feb-15 5.20 $133.05 $6.98 Mar-15 8.50 $153.44 $13.07 Apr-15 17.6 $161.00 $28.35 May-15 26.7 $134.61 $35.97 Jun-15 31.3 $186.51 $58.36 Jul-15 41.9 $180.12 $75.44 Aug-15 31.4 $142.24 $44.67 Sep-15 40.2 $183.34 $73.71 Oct-15 28.8 $171.78 $49.45 Nov-15 21.0 $151.97 $31.95 Dec-15 16.9 $149.88 $25.40 Jan-16 19.2 $142.60 $27.44 Feb-16 27.0 $160.89 $43.45 Mar-16 30.2 $156.35 $47.22 Apr-16 36.2 $158.33 $57.27 May-16 36.6 $160.96 $58.96 Jun-16 39.0 $187.26 $73.13 Jul-16 38.5 $176.45 $68.00 Aug-16 32.0 $145.23 $46.55 Sep-16 27.6 $159.41 $43.99 Table 4. Hotel OCC-ADR-RevPAR Period Hotel Occupancy Hotel
ADRHotel RevPAR Jan-15 56.4 $142.74 $80.50 Feb-15 62.8 $144.29 $90.55 Mar-15 75.1 $170.58 $128.08 Apr-15 78.4 $188.01 $147.44 May-15 82.8 $205.62 $170.22 Jun-15 87.1 $206.68 $180.04 Jul-15 87.8 $200.44 $175.90 Aug-15 86.2 $193.64 $166.96 Sep-15 85.4 $209.00 $178.51 Oct-15 86.3 $220.10 $189.87 Nov-15 70.7 $183.17 $129.43 Dec-15 56.1 $147.97 $83.00 Jan-16 55.7 $146.43 $81.55 Feb-16 60.4 $146.65 $88.57 Mar-16 69.9 $171.94 $120.20 Apr-16 79.9 $201.51 $161.04 May-16 79.0 $207.29 $163.78 Jun-16 85.2 $212.35 $181.02 Jul-16 84.9 $199.52 $169.47 Aug-16 84.2 $198.45 $167.02 Sep-16 83.1 $219.26 $182.15
Hotel occupancy rates decreased to 83% in September 2016 from 85% in the same epoch of the previous year, whereas Airbnb’s occupancy has seen a greater abate from 40% to 28% in the same period. In February 2015, Airbnb’s occupancy was around 5% and reached about 28% in September 2016. While Airbnb experienced a dramatic expand in occupancy growth throughout the analysis period, these gains did not look to impress the hotel industry’s occupancy rates.
Although hotel ADR was generally greater than that of Airbnb, Airbnb’s ADR figures were greater than hotel ADR in three months (January 2015, December 2015, and February 2016). Hotel ADR was $209 in September 2015 and increased to about $219 in September 2016. Despite the lower occupancy in hotels in September 2016 as compared to the same time in the previous year (September 2015), the RevPAR was comparatively higher even after correcting for inflation. (Note: The RevPAR increased from $75.17 to $75.58 based on 1982=100 prices.) A transparent trend can exist observed in hotel ADR and RevPAR figures through 2015, and this trend seemed to persist in 2016 in terms of the month-over-month growth rates. However, Airbnb ADR and RevPAR seemed to fluctuate throughout 2015 and consequence not look to ensue a seasonal movement. Indeed, supply and demand dynamics may Have caused the changes in Airbnb ADR and RevPAR, where the equilibrium charge is set within the Airbnb market. However, the want of revenue management practices by Airbnb hosts might besides Have contributed to these fluctuations in ADR and RevPAR.
Hotel performance before and after the arrival of Airbnb
We further analyzed the hotel industry trends for Boston during ultimate 12 years (presented in Table 5), both before and after Airbnb’s entry into the market, to determine whether Airbnb has an consequence on hotel supply, demand, and revenue dynamics. The hotel play supply has continued to grow, which suggests that hotel industry look to continue to grow despite the tower of the Airbnb. The hotel industry’s occupancy saw its lowest point in 2009 and reached over 85% in 2015. Although hotel occupancy experienced a few declines year over year, these decreases loom to exist due to supply shocks. For example, in 2016, occupancy decreased by about 2.7%; however, supply growth was around 3.7%. That is, the decline cannot exist entirely attributed to the growth in Airbnb. Despite the declines in occupancy, both ADR and RevPAR Have continued to expand without a decline after the juncture epoch and around the arrival of Airbnb onto the scene (2008-2009), and reached their peak in September 2016.Table 5. Historical Hotel Dynamics Period Supply Demand Occupancy ADR RevPAR Sep-05 1418370 1092599 77.0 $143.85 $110.81 Sep-06 1460070 1095808 75.1 $152.20 $114.23 Sep-07 1472790 1164487 79.1 $165.97 $131.23 Sep-08 1492830 1105819 74.1 $171.52 $127.06 Sep-09 1504560 1091371 72.5 $143.20 $103.88 Sep-10 1512540 1176147 77.8 $155.26 $120.73 Sep-11 1512810 1225707 81.0 $162.31 $131.51 Sep-12 1528290 1208011 79.0 $170.08 $134.43 Sep-13 1538100 1251193 81.3 $180.20 $146.58 Sep-14 1537860 1306622 85.0 $202.38 $171.95 Sep-15 1564170 1335976 85.4 $209.00 $178.51 Sep-16 1622130 1347565 83.1 $219.26 $182.15 So, has Airbnb impacted hotel performance in Boston? The data suggests “no”!
Hotels were able to sell more rooms over the ultimate 12 years—that is, more people stayed in hotels in 2016 compared to previous years, despite the demand that was captured by Airbnb. Although it is not transparent whether the excess demand in the overall accommodations market was created solely because of Airbnb, the additional demand, at least to some extent, could Have been accommodated by hotels in Boston. Hotels in the city have, on average, around 83% occupancy. Thus, for example, if the Airbnb guests were to exist captured by the hotels in Boston, the medium hotel occupancy would Have been around 90% in September 2016. However, considering the fact that Airbnb’s ADR was lower than that of hotels ($159 vs. $219), hotels would probably Have captured the Airbnb demand within this lower Airbnb charge range. It should besides exist notable that, historically, the hotel occupancy in the Boston market has fluctuated between 74 and 85%. With this in mind, Airbnb does not look to whip from the hotel industry’s market share, but rather seems to Have created fresh demand. Although correlation does not witness causation, the correlation coefficients between hotel and Airbnb supply, demand, revenue, occupancy, ADR, and RevPAR (presented in Table 6) besides suggest that Airbnb does not look to adversely impress the hotel industry in Boston.Table 6. Correlations Hotel Supply Hotel Demand Hotel Occupancy Hotel ADR Hotel RevPAR Airbnb Supply 0.386 Airbnb Demand 0.289 Airbnb Occupancy 0.716 Airbnb ADR 0.494 Airbnb RevPAR 0.358
Nevertheless, as Table 7 indicates, Airbnb has been able to expand its market partake quite remarkably. In particular, Airbnb’s market partake in terms of supply has increased from about 5% in January 2015 to about 19% of the overall accommodation market (i.e., available play nights) in September 2016. Theoretically, the Airbnb supply can exist as large as the residential true estate market in a location. However, it takes a few years to develop a hotel and thus boost the hotel play supply in the market, so comparing the market partake in terms of supply is less than ideal. Airbnb’s market partake in terms of demand besides shows significant growth, from less than 0.1% in January 2015 to more than 7% in September 2016. Despite Airbnb’s penetration into the market in terms of supply and demand, Airbnb’s market partake in terms of revenues was only around 5.5% in September 2016. The lower market partake in revenues is likely due to lower prices compared to those of hotels and the want of revenue management practices by the Airbnb hosts. While a 5.5% market partake in terms of revenue is considerable for a start-up enjoy Airbnb, it should exist highlighted that Airbnb seems to Have created fresh demand by increasing the market size. They estimated approximately $15 million in tax obligations based on the revenues generated by Airbnb during 2015-2016, which is similar to the figures establish in the recent CBRE report.Table 7. Airbnb Market Share Period Airbnb Market partake (Supply) Airbnb Market partake (Demand) Airbnb Market partake (Revenue) Jan-15 4.74% 0.06% 0.07% Feb-15 5.64% 0.50% 0.46% Mar-15 5.43% 0.65% 0.58% Apr-15 6.42% 1.52% 1.30% May-15 6.65% 2.25% 1.48% Jun-15 7.32% 2.76% 2.50% Jul-15 7.08% 3.51% 3.16% Aug-15 6.89% 2.62% 1.94% Sep-15 7.60% 3.73% 3.29% Oct-15 8.10% 2.86% 2.24% Nov-15 18.86% 6.47% 5.43% Dec-15 19.19% 6.70% 6.78% Jan-16 18.92% 7.46% 7.28% Feb-16 20.21% 10.17% 11.05% Mar-16 18.45% 8.90% 8.16% Apr-16 18.97% 9.58% 7.69% May-16 18.51% 9.53% 7.56% Jun-16 19.12% 9.77% 8.72% Jul-16 18.87% 9.55% 8.54% Aug-16 18.78% 8.09% 6.05% Sep-16 19.39% 7.40% 5.49%
While it is silent not transparent from their analysis whether the expand in overall demand was caused by Airbnb or other economic factors, the descriptive analyses presented in this study suggest that Airbnb does not look to exist competing directly with the hotel industry. However, this was an investigation of the overall hotel market with limited Airbnb data; further analysis is required to determine within-hotel industry effects (e.g. midscale, economy, luxury) and whether Airbnb has a greater impact on asset massive hotel-REITs or asset-light hotel management and franchising companies (Dogru, 2017a).
Airbnb accommodations may provide substantial financial, economic, and companionable benefits to the city of Boston if the listings drive additional tourists to the city, which seems to exist the case as suggested by their analyses. These benefits comprise but are not limited to generating additional tax revenues for cities and local governments, especially to neighborhoods not traditionally visited by guests staying within the hotel-dominated areas (Tussyadiah & Pesonen, 2016), and additional income for hosts, which would cause a surge in per capita income. Furthermore, during peak seasons or in the cases of mega-events enjoy the Olympics, the availability of supplementary Airbnb rentals may exist more advantageous than building hotels that will later not exist utilized at optimal levels (Dogru, 2016, 2017b).
However, the positive economic impacts may not sufficiently compensate for the potential decline in residents’ property of life. Airbnb could Have an adverse impact on the property of life of local residents in neighborhoods that hold Airbnb offerings because of nuisances and disruptions caused by visitors. Also, the increasing number of Airbnb listings might Have undesirable effects on the residential housing market. Homeowners might simply eddy their properties into Airbnbs if they believe they can acquire more money, which may exacerbate preexisting housing problems in metropolitan cities (Lee, 2016). There is microscopic empirical evidence on the economic or companionable impacts of Airbnb to back either the proponents or the critics of Airbnb. Thus, the course and the magnitude of these impacts consequence not travel beyond speculation for the time being. Moreover, the economic impacts of Airbnb might exist better observed once the sharing economy market is regulated. Therefore, further investigations are necessary to measure the economic and companionable impacts of Airbnb.Summary of key findings
PDF Version Available HereTarik Dogru earned his Ph.D. in Hospitality Management from University of South Carolina, and holds Master’s degree in traffic Administration from Zonguldak Karaelmas University in Turkey.Prior to joining the Boston University School of Hospitality Administration faculty, he was an adjunct faculty at University of South Carolina (2013-2016) and research assistant at Ahi Evran University (2009-2012) in Turkey. He has taught a variety of courses, including Economics, Finance, Accounting, Hospitality, and Tourism in traffic and hospitality schools. He is a Certified Hospitality Educator (CHE) and holds Certification in Hotel Industry Analytics (CHIA) from American Hotel & Lodging Educational Institute. Tarik’s research interests span a wide compass of topics in hospitality finance, corporate finance, behavioral finance, true estate investment trusts (REITs), hotel investments, tourism economics, and climate change. Makarand Mody, Ph.D. has a varied industry background. He has worked with Hyatt Hotels Corporation in Mumbai as a Trainer and as a property Analyst with India’s erstwhile premier airline, Kingfisher Airlines. His most recent experience has been in the market research industry, where he worked as a qualitative research specialist with India’s leading provider of market research and insights, IMRB International. Makarand’s research is based on different aspects of marketing and consumer behavior within the hospitality and tourism industries. He is published in leading journals in the field, including the International Journal of simultaneous Hospitality Management, Tourism Management Perspectives, Tourism Analysis and the International Journal of Tourism Anthropology. His labor involves the extensive consume of inter and cross-disciplinary perspectives to understand hospitality and tourism phenomena. Makarand besides serves as reviewer for several leading journals in the field. In descend 2015, he joined the faculty at the Boston University School of Hospitality Administration (SHA). He received his Ph.D. in Hospitality Management from Purdue University, and besides holds a Master’s degree from the University of Strathclyde in Scotland.
Courtney Raeisinafchi, Ph.D spent 6 years designing and developing hotels and restaurants with Jordan Mozer and Associates, Ltd., an architecture solid based in Chicago, IL, after completing a bachelors degree at the School of the know-how Institute of Chicago where she studied architecture. Some notable projects she was involved in includes Marriott’s Renaissance Hotel, Times Square and Hotel 57 in Manhattan, NY; both hotels Have received the International Hotel , Motel and Restaurant Society’s Golden Key Awards for Best hotel design. While drafting fresh proposals for hospitality projects for Jordan Mozer and Associates in Southeast Asia, she began a masters degree, studying hospitality administration, at the University of Nevada, Las Vegas (UNLV) in Singapore. After graduating, she continued to complete her doctoral degree in Hospitality Administration at UNLV in Las Vegas and studied towards a second masters degree in architecture at UNLV’s School of Architecture. Courtney joined the Boston University School of Hospitality Administration in 2013. She teaches the Design and development Class as well as Lodging Operations and Technology. She is an lively quantitative researcher on the topics of hospitality development and built environments, as well as design and atmospherics impacts on consumer behavior. References
By Tarik Dogru and Osman Pekin
The sharing economy has become a major phenomenon; Airbnb, Uber, ZipCar, Kickstarter and many more comprise the rapidly expanding list of pioneers in the world of the sharing economy. This fresh concept has introduced an alternative platform for consumers, widely known as peer-to-peer marketplace, in which participants are motivated by the credit of “what’s mine is yours” (Botsman, 2010). Unlike traditional businesses, the concept of the sharing economy is a two-way street wherein users at both ends can benefit either as consumers, suppliers, or both. Sharing economy platforms allow people to partake their underutilized properties through user-friendly websites or mobile applications with relatively lower transaction costs and usually at a lower rate compared to those of traditional businesses. Thus, many people Have started to participate in sharing economy platforms because of the economic and monetary benefits it provides both for consumers and suppliers. In particular, these platforms provide cost-saving benefits and convenience to the consumers, while allowing suppliers to generate extra income (Mohlmann, 2015).
Participants of sharing economy platforms, however, Have indicated that companionable benefits are more principal than the economic and monetary benefits that sharing economy platforms provide (Tapio & Airi, 2015). Indeed, consumers may perceive differently the value of services offered through sharing economy platforms than they consequence the value of traditional businesses. For example, consumers may value the sociability, trustworthiness, and friendliness of their Airbnb hosts and the experience they exist pleased during their stay (Mody, Suess, & Lehto, in press). However, the value placement might exist more closely tied to the dollars consumers spend. That is, the pass consumers perceive the benefits from goods and services is likely to exist different in sharing economy platforms. While traditional businesses are unhurried to sustain up with these changes, the mutually advantageous characteristics of sharing economy platforms look to exist one of the main reasons behind the significant growth of the sharing economy marketplace, which is now considered a major threat by traditional businesses.
Airbnb, the largest accommodation solid in the sharing economy marketplace, has about 3 million listings, including entire homes, shared rooms, and private rooms, which is more than world’s largest three hotel chains combined (IHG, Marriott, Hilton, 2.58 M listings). Over five years, it hosted about 50 million guests, 30 millions of whom were hosted in 2015 solitary (Airbnb Summer Travel Report, 2015). In a recent report, STR showed that Airbnb currently has around 9% of the market partake in terms of supply. Although Airbnb supply dynamics are much more springy than those of traditional accommodations, such a large supply capacity might create a substantial threat to the lodging industry (Haywood et al., 2017).The remarkable volume of listings and record-breaking growth in number of guests has caused Airbnb to exist recognized as a “disruptor” for the lodging industry (Guttentag, 2015). Critics of the sharing economy bicker that if Airbnb did not exist or if it were to operate by the same rules that traditional lodging firms do, then most, if not all, of the play nights would exist booked in traditional hotels. In a recent study, researchers establish that a one percent expand in the number of Airbnb listings decreased hotel play revenue by 0.5% in Texas (Zervas, Byers, & Proserpio, 2017). These results provided back for the concerns expressed by stakeholders in the lodging industry that the growth of sharing economy platforms is likely to adversely impress the lodging industry’s revenue stream. Furthermore, if the hotel demand were to exist shifted to Airbnb, hotel developments in the pipeline might create an overinvestment problem in the market (Dogru, 2017a).
The impact of Airbnb on large lodging corporations’ revenue streams does not necessarily suggest that Airbnb will disrupt the overall economy or local economies. In other words, despite the potential adverse effects of the sharing economy on traditional traffic platforms, the sharing economy could instead provide positive economic benefits for local communities and the tourism industry by generating fresh jobs and fresh sources of income (Fang, Ye & Law 2015). According to an economic impact study conducted by Airbnb, guests spent $352 on medium in the neighborhood where they stayed, supporting 490 jobs with an overall economic impact of $51 million from July 2013 to June 2014. The company besides suggests that this sharing economy platform helped conserve energy equivalent to 220 homes in Boston during this period. Similar findings were besides reported in other major cities in the US and around the world. Although these reports might exist biased and independent studies should exist conducted to determine the economic impact of Airbnb, these findings point out the flip-side of the coin and provide insight about potential positive impacts of the sharing economy on local economies.
Regardless of the potential economic, social, and environmental impacts, whether they exist positive or negative, Airbnb should exist considered one of the major competitors in the lodging industry, considering its market partake and value (Dogru, 2017b). Recent efforts of the lodging industry to “ensure [regulatory] legislation in key markets” suggest that the industry indeed considers Airbnb to exist such a major competitor (Benner, 2017). Therefore, understanding what drives consumers to book Airbnb accommodations becomes necessary for the hotel industry in developing strategies to compete with Airbnb. The physical (i.e., space, location, amenities, etc.) and non-physical (i.e., sociability, trustworthiness, friendliness, etc.) attributes, which are reflected on the charge of the Airbnb accommodations, may play a crucial role on Airbnb guests’ conclusion making. In other words, the charge of Airbnb properties is determined based on the value consumers station on the attributes of Airbnb accommodations. Therefore, examining the charge determinants of Airbnb properties may play a crucial role in understanding the factors that drive the growth of the sharing economy based accommodation services. This study examines the charge determinants of Airbnb properties listed in the city of Boston using the hedonic pricing approach.
Studies that Have investigated the pricing determinants of sharing economy-based services are limited. A number of studies Have examined the effects of reviews, ratings, and host photos on the prices of Airbnb accommodations. Hosts awarded a “Superhost” badge, a status given to hosts with a respectable standing and excellent service standards, post their properties at higher prices, especially when they receive more reviews and higher ratings (Liang, Schuckert, Law & Chen 2017). Furthermore, studies Have shown that guests determine the trustworthiness of hosts from their photos and are willing to book more expensive Airbnb properties if the hosts look to exist trustworthy. However, online reviews and ratings did not loom to Have an consequence on the listing charge (Ert, Fleischer, & Magen, 2015). These results can exist attributed to the fact that, on average, Airbnb hosts Have a rating of 4.5 out of 5, which is very extreme compared to hotel firms’ ratings (Zervas, Proserpio, & Byers, 2015). Analyzing the charge determinants of Airbnb accommodations in 33 cities, where demand and supply dynamics for accommodation services are likely to exist different, Wang and Nicolau (2017) establish results similar to those of the hotel industry (see e.g., Chen & Rothschild, 2010).
In general, factors related to the site and property characteristics, amenities, services, rental rules, and customer reviews significantly impress the prices of sharing economy-based accommodations. In particular, Airbnb listings that present amenities such as true beds, wireless Internet, and free parking had higher prices compared to those that lacked these amenities. Although the city of Boston was included in this study, the time epoch studied was limited to October 2015, and Boston was defined as the greater Boston area. In their study, they analyzed the charge determinants of Airbnb accommodations in the city of Boston, and they included properties listed during the epoch of January, 2015 to September, 2016. Although the charge determinants might vary greatly from one city to another, the former study analyzed these determinants using aggregate data from 33 cities around the globe. Therefore, it is necessary to conduct a city-level analysis to identify the charge determinants more accurately.Analysis
The data was obtained from Airdna, which is a company that provides data and analytics to entrepreneurs, investors, and academic researchers (Airdna, 2017). Airbnb listings with no reviews were removed from their analysis in order to provide more accurate estimates, as Airbnb listings with at least one review will exist closer to the market equilibrium price. The final sample consisted of 2,699 Airbnb properties listed between 2015 and 2017. Table 1 presents the summary statistics of the relative and independent variables used in this study, along with minimum and maximum values of these variables where applicable.Table 1. Summary Statistics Variables Mean Std. Dev. Minimum Maximum Dependent Variable Published Rate 215.12 214.17 10 10,000 Space Attributes Entire Home 0.70 0.45 Private Room 0.27 0.44 Shared Room 0.03 0.17 Quality Attributes Cleaning Fee 0.70 0.45 Overall Rating 92 9.40 20 100 Number of Reviews 18 32.31 1 374 Number of Photos 12 9.19 0 105 Superhost Badge 0.09 0.28 Friendliness Pets allowed 0.12 0.33 Handicap Accessible 0.06 0.24 Family Friendly 0.46 0.49 Freebies Kitchen 0.94 0.23 Washer 0.69 0.46 Dryer 0.69 0.46 Free Parking 0.05 0.22 Breakfast Included 0.06 0.23 Commerciality Attributes Suitable for Events 0.04 0.19 Business Ready 0.17 0.38 Hosts with Multiple units 18.34 45.65 1 242 Location Distance from City Center 3.25 1.39 0.19 7.24
The relative variable, the published nightly play rate, averages $215 in the city of Boston and ranges anywhere between $10 and $10,000. They classified the attributes of Airbnb accommodations, which are the independent variables of this study, into six categories. Exhibit 1 shows the attributes of a frill Airbnb accommodation in Boston.
Space attributes comprise entire homes, private rooms, and shared rooms. According to these results, 70% and 27% of the Airbnb listings are entire homes and private rooms, respectively, whereas only 3% of Airbnb listings are shared rooms. Exhibits 2, 3, and 4 illustrate examples of Airbnb listings in Boston.
Quality attributes consist of the cleaning fee, overall ratings, number of reviews, number of photos, and the Superhost Badge status. A major percentage (70%) of Airbnb hosts require a cleaning fee. While overall ratings vary greatly between 20 and 100, on medium hosts receive an overall rating of 92. Further analysis showed that there were only 242 hosts with an overall rating below 80. The data for the number of reviews indicates the number of times an Airbnb property was booked, since only people who Have stayed in a property are allowed to provide a review. On average, Airbnb hosts had 18 reviews or stays during the study period. Airbnb hosts on medium posted 12 photos of their properties, and only 9% of the hosts had the Superhost status.
Friendliness attributes define whether the property listed is pet-friendly, handicap accessible, and family-friendly. Only 12% of the properties studied allow pets. While 46% of the Airbnb properties listed in Boston are family-friendly, only 6% are handicap accessible.
In general, a kitchen and laundry services are the amenities most commonly offered in an Airbnb property. In Boston, 94% and 69% of the hosts offered access to a kitchen and the consume of washer and dryer, respectively. Furthermore, the percentage of Airbnb hosts who offered free parking and free breakfast were about 5 and 6%, respectively.
As they define it, the commerciality category includes attributes enjoy suitability for events, business-readiness, and hosts with multiple units. Only 4% of the Airbnb properties are suitable for events and about 17% are business-ready. On average, a host has 18 units listed on Airbnb. More strikingly, some hosts in Boston Have 242 properties, whether they exist entire homes, private rooms, or shared rooms, listed for rent.
The ultimate impute category is the location, which represents the geographic distance of an Airbnb property from the city center. Distance from the city heart seems to exist low—3.25 miles on average—suggesting that most of the properties are in close proximity to the city center, which may create a convenience to the guests.
We examined the charge determinants of Airbnb properties utilizing the ordinary least squares regression technique. In particular, they analyzed the effects of space, quality, commerciality, friendliness, freebies, and location factors on the nightly published rate of Airbnb listings. Table 2 presents these results.Table 2. charge Determinants of Airbnb Accommodations (1) (2) (3) (4) Space Attributes Coefficient t-statistics Significance Relative Entire Home 0.88 15.60 *** 141% Private Room 0.25 4.33 *** 28% Quality Attributes Cleaning Fee 0.16 8.14 *** 17% Overall Rating 0.005 5.38 *** 0.5% Number of Reviews -0.001 -8.00 *** -0.4% Number of Photos 0.01 10.11 *** 1% Superhost Badge 0.05 1.80 * 5% Friendliness Pet friendly -0.02 -0.72 -2% Handicap Accessible 0.11 3.26 *** 11% Family Friendly 0.10 5.43 *** 10% Freebies Kitchen -0.15 -3.73 *** -14% Washer 0.06 1.04 6% Dryer 0.10 1.71 * 10% Free Parking -0.002 -0.06 -0.2% Free Breakfast 0.11 2.88 *** 11% Commerciality Attributes Suitable for Events 0.06 1.52 6% Business Ready -0.04 -1.88 * -4% Hosts with Multiple units 0.001 6.25 *** 0.1% Location Distance from City Center -0.01 -1.84 * -1% Notes: The relative variable is published nightly rate. ***, **, and * denotes 0.01, 0.05, and 0.1% statistical significance flush respectively.
Key findings can exist summarized as follows.
The motives driving people to stay in Airbnb accommodations are yet to exist determined for certain. Although Airbnb guests might station more value on the sociability, trustworthiness, and friendliness of their Airbnb hosts and the experience, Airbnb guests are, to some extent, economically motivated. That is, Airbnb guests might exist specifically comparing Airbnb and traditional hotels for cost-saving purposes. The results of their study showed that Airbnb guests station more value on space, cleanliness, number of photos, handicap accessibility, family friendliness, free breakfast, location, and unique experiences. Based on this information, hotel firms might focus on these factors to attract guests from Airbnb’s consumer base.
Airbnb guests pay more for space and privacy, despite the conception that the sharing economy is a companionable platform wherein participants are motivated by potential companionable interactions. While such companionable interactions may silent occur when guests rent entire homes, they either value privacy and hence consequence not want to live with the host, or they value the space because they are traveling in immense groups and they require more area in which to spread out. Despite the potential economic gains, Airbnb guests look to pay extra for cleanliness. Specifically, Airbnb guests pay an additional cleaning fee that may compass between $5 and $700 and besides pay 17% higher rates compared to properties that consequence not require cleaning fees. Airbnb guests pay less for properties that allow access to the kitchen, suggesting that these properties are regular apartments, condos, and houses and that Airbnb guests are not likely to pay extreme prices for staying in such properties. The charge disagreement might rather exist due to the rate deviation within Airbnb listings, where unique properties, such as treehouses, villas, and yachts, are posted and guests pay more for the experience. However, further research is required to dissect this issue. Airbnb guests besides appreciate and pay more for more photos of the Airbnb properties; however, they pay lower rates for Airbnb properties that look to Have commercial purposes. Previous studies Have shown that Airbnb hosts consequence not look to utilize revenue management practices, which serve to maximize hosts’ profits, but rather list their properties around the median market charge (Tapio Ikkala & Airi Lampinen, 2015). Their results may sheperd Airbnb hosts in determining their properties’ rates. For example, Airbnb hosts may present free breakfast and hence expand their rates by about 10%.
In conclusion, Airbnb guests pay higher rates for space, quality, friendliness, and unique experiences. To compete with Airbnb properties, traditional hotels should create more opportunities for unique experiences, post more photos of the hotel and guest rooms and provide a family-friendly environment. In particular, hotel firms might present alternative packages to attract Airbnb guests, especially when operating at lower occupancies. Hence, it may exist the time for hotels to comprise Airbnb in their competitive sets or regularly track Airbnb demand and supply dynamics, especially in the markets with a large Airbnb presence.
PDF Version Available HereTarik Dogru earned his Ph.D. in Hospitality Management from University of South Carolina, and holds Master’s degree in traffic Administration from Zonguldak Karaelmas University in Turkey.Prior to joining the Boston University School of Hospitality Administration faculty, he was an adjunct faculty at University of South Carolina (2013-2016) and research assistant at Ahi Evran University (2009-2012) in Turkey. He has taught a variety of courses, including Economics, Finance, Accounting, Hospitality, and Tourism in traffic and hospitality schools. He is a Certified Hospitality Educator (CHE) and holds Certification in Hotel Industry Analytics (CHIA) from American Hotel & Lodging Educational Institute. Tarik’s research interests span a wide compass of topics in hospitality finance, corporate finance, behavioral finance, true estate investment trusts (REITs), hotel investments, tourism economics, and climate change.
Osman Pekin is a recent graduate from the Boston University School of Hospitality Administration. As a student he served as a research assistant and accounting tutor while working as a Food and Beverage Supervisor at the Westin Boston Waterfront Hotel. References
By Christopher Muller
What is a restaurant?
In today’s omni-channel foodservice system what exactly does it sordid to mumble something is a restaurant meal? Does it sordid a replete formal dining experience with a chef-prepared customized meal, presented by a waiter to a guest at a table with a white tablecloth or can it exist a hand-made burrito delivered by a kid on a bicycle working for a third party service directly to your front door?
Ultimately the question comes down to determining the two main components of a restaurant, food and service. For the food the questions are: how fresh is it; what form is it in; and how close to immediately edible is the preparation of each meal? For the service the main question is: how much supplier labor intensity is required versus how much consumer labor intensity is necessary?The Evolution of form and Function
Just a few decades ago the restaurant experience was divided into only two categories, replete Service (or “white table cloth”) and Limited Service (or “counter service’) restaurants. Both were built on the requirement that food was personally served by someone to the consumer, typically in a very structured menu format, inside a simple square meter of physical space. The diner was expected to Have a working knowledge of this system: being informed of the hand crafted preparation in the kitchen by the trained chef or a skilled short-order cook; the nature of the rational flow of the courses as they were presented; and how to order and pay (including how to properly leave a tip). For the vast majority of customers this was something done only on special occasions or when dining away from home, and could exist too intimidating to master.
Then in the mid-1950’s came a fresh upstart, the Fast-Food or Quick Service Restaurant, which by being systems based and not chef driven created a fresh approach to how consumers viewed the dining experience. In a disruption of tradition, both the composition and order of the meal (“…if I want to eat my fries before my burger, who cares?”) and the concept of self service (“…no waiter, no tipping, I’ll gladly transparent my own table”) were controlled by the consumer, not the supplier. Much of the food was prepared in an off-site facility and assembled to order or batch cooked by semi-skilled kitchen workers. Once the drive-thru window came into play, the need to even accumulate out of the car for a meal disappeared (“…is my front seat a restaurant?”). Anyone could consume this system at any time during the day. While the QSRs were not originally considered “real” restaurants, dining out became an facile and every day option.
During the 1990’s the market saw the explosion of the Casual Theme restaurant which took each and every of the formality out of Fine Dining, including the white table cloth, and significantly sped up the dining process. Table service was silent an integral section of the experience but with less personal connection to the waiter as food was often delivered by a runner directly from the kitchen. Standardized meal choices were assembled on-site by slightly more skilled journeymen led by a kitchen manager instead of a chef, who used a mass customization process to match the individual desires of the consumer.
In the ultimate decade the posthaste Casual restaurant came to the attention of the consumer public. This fresh hybrid is a amalgamate of the self-service from posthaste food with the consumer selection options presented by a traditional cafeteria system. Table service is replaced by a modified multi-phase counter service with customers being given more customizable options, whether by a barista or a burrito-maker. This customization is made possible with the revert of an on-site short-order cook who assembles to order food which has the appearance of being hand-crafted, but is prepared in a batch style and often brought in from an off-site commissary.
This brings us up to date where they are witnessing an explosion of segments and dining choice. Today they behold a marketplace of narrow segments (Casual Elegance, Food Trucks, Grab & Go, Build Your Own, GastroPub, Convenience Store, Market Hall, Delivery) and other fine grained niches that front simple categorization. For example, Panera Bread is a leader in the posthaste casual segment while filling the role of the top retail bakery/café offer. But it besides leads in the technology of smartphone based customized take-out. The top of the food chain for fine dining is at one and the same time a notable chef-driven stratospheric offering such as Keller’s French Laundry or a standardized, national prime aged steakhouse chain enjoy Del Frisco. For the dining public, what exactly does Casual polish sordid except that there are no tablecloths, there is a wine list and expensive cocktails, no chef and the wait staff wear logos on their shirts? What really is the disagreement if I buy a packaged turkey sandwich at a Pret a Manger, at a 7 Eleven, or at a gross Foods?Where Are They Heading?
So, the respond to the question “what is a restaurant?” can really only exist answered with “it depends.” What does it depend on- mainly how the dining public continues to redefine how, when, why, where and what a meal actually is? Is a smart phone a modern day vending machine? Is a communal table in a market hall a dining room? Is a “sous vide” pouch heated by a chef in a two-star restaurant a freshly prepared dinner? Is Chef Chang’s Ando really a restaurant or just a conceptual kitchen? Are Just Eat, Grub Hub, Deliveroo, Uber Eats and Amazon Prime just waiters expanding the ultimate square meter of personal restaurant service? The answers are probably each and every yes.
When someone wants to eat, it might exist better to ask “what isn’t a restaurant?”A Restaurant Taxonomy for 2017 If I Bring It Home To Reheat For Dinner Tomorrow, Is It A Restaurant Meal?
Photo Source: Olive GardenIs Eataly a restaurant or a market?
Source: Creative Commons / Mary CrosseWhat Does It sordid If My Pizza Restaurant Is On My iPhone?
Photo Source: Pizza Hut Mobile App ScreenshotIf I Pick Lunch Up In 10 Minutes And eat In My Office Is It A Restaurant Meal?
Photo Source: Panera Bread Mobile App ScreenshotHow About Dinner Arriving Via UberEats in 3 Minutes To My Front Door?
Photo Source: UberIs It Really A Restaurant, Chef Chang? Christopher C. Muller is Professor of the drill of Hospitality Administration and former Dean of the School of Hospitality Administration at Boston University. Each year, he moderates the European Food Service Summit, a major conference for restaurant and supply executives. He holds a bachelor’s degree in political science from Hobart College and two graduate degrees from Cornell University, including a Ph.D. in hospitality administration. Email firstname.lastname@example.org
PDF Version Available Here.Airbnb’s present an at-home atmosphere and depending on the host, includes a variety of unique amenities at an affordable price. (Photo by Getty Images, Britta Pedersen)
By Makarand Mody
No one can disaffirm that the hotel industry has a fight on its hands when it comes to the peer-to-peer accommodation market. A recent PWC report showed that while 6% of the US population has participated in the sharing economy for the hospitality industry as a consumer; 1.4% has served as a provider. Following a chain of acquisitions, Airbnb is the undoubtedly the hotel industry’s biggest competitor. While much of the discussion that follows uses Airbnb as an example, the underlying logic applies to the broader concept of the sharing economy and its implications for the hotel industry.
Some veterans in the hotel industry Have tried to shrug off the emerging threat by highlighting that the sharing economy is a “fundamentally different business” model, serving a gross fresh set of consumers, and thus not a direct competitor. A recent analysis by Smith Travel Research of Airbnb’s impact on fresh York City’s five boroughs seems to back this pretense by highlighting that “Airbnb might exist filling a void in the fresh York City market by providing a different lodging option at a much lower charge point”. Concurrently, the analysis points to the fact that “it is difficult to disaffirm that some demand might exist pitiful from hotels to Airbnb”. An American Hotel & Lodging Association (AH&LA) report about Airbnb host activity establish that the most successful and valuable hosts on the site are a rapidly growing class of micro-entrepreneurs – replete time hosts and multiple-unit operators, accounting for around 65% of Airbnb’s $1.3 billion revenue in its top 12 markets. There seems to exist increasing evidence that the greater play supply created by Airbnb has helped check prices that traditional hotels can imbue in some markets. Such statistics Have resulted in the hotel industry crying foul about not having a flush playing realm on various accounts, from occupancy taxes to sharing economy providers skirting health and safety standards. Cities and other jurisdictions across the country are engaged in their own efforts to regulate the sharing economy.Consumers are getting more comfortable with the credit of becoming Airbnb hosts with their own properties. In Cuba, Airbnb has establish booming success as locals become private entrepreneurs. (Photo by Getty Images/Yamil Lage0)
Meanwhile, sharing economy operators continue along their pass to intensify their fight for the hotel industry’s customers. Now that more consumers themselves comfortable hosting, the supply of operators enjoy Airbnb seems to exist growing exponentially, offering renters an unprecedented compass of accommodation choices, from a US$15 per night spot on the couch to an $8,000 per night mansion on a sprawling 100-acre property (and everything in between). Consistent with the theory of the Travel Career Ladder (suggested by Philip Pearce and his colleagues), while younger leisure consumers often travel on a tight budget using the sharing economy, tastes and preferences become more expensive as these consumers become older and more settled. Just enjoy hotel companies Have their loyalty programs that capture travelers as they progress through their life-cycles by offering a variety of different brands, operators such as Airbnb look to exist performing well at the differentiation game.What About the traffic Traveler?
The traffic traveler market is expanding for sharing economy providers. While travelers working for themselves or diminutive companies were the most likely professionals to consume the sharing economy, more traffic travelers are using these platforms when immense trade shows Have filled city hotel rooms; in fact, that’s how Airbnb was originally birthed Recognizing these patterns, Airbnb recently launched its traffic Travel Ready initiative that identifies specific listings with a traffic Travel badge, indicating that the hosts are providing additional amenities suitable for traffic travelers. These amenities compass from ironing boards to fire alarms and CO2 detectors. The company besides formed a partnership with a leading meeting planning management company, Experient, for adding Airbnb play blocks to official MICE event play inventory (Meetings, Incentives, Conferences, and Events), and providing metrics about booking patterns. There besides seems to exist an increasing “official” acceptance of the company: the San Francisco Tourism Board recently partnered with the company to provide neighborhood tourism materials for local businesses to benefit attract Airbnb guests. Such official recognition by Destination Marketing Organizations (DMO) is likely to further intensify the hotel industry’s efforts to impose regulations on the sharing economy.Airbnb is finding both opposition and back in cities each and every over the world. In October 2015, fresh York City residents showed back for Airbnb while the city council debated on how to regulate the company. The San Francisco Tourism Board recently partnered with the company to provide neighborhood tourism materials for local businesses to benefit attract Airbnb guests. (Photo by Getty Images/Andrew Burton) Hotels Advantages vs. Airbnb’s Sense of Community
There are factors that remain in favor of hotels: for reasons of security, hygiene, and uncertain and fluctuating quality, consumers intimate with the sharing economy are 34% more likely to reliance a leading hotel brand than Airbnb. A spate of safety-related incidents is likely to sustain this statistic in favor of hotels: from the horror anecdote of Jacob Lopez, who was allegedly sexually assaulted and locked in his play in a Madrid Airbnb, to the company being sued by a woman over an alleged hidden camera in a rented apartment, there is likely to exist a population of skeptics who are unlikely to rent from strangers. However, the immense popularity of the concept is supported by a host of economic, social, and technological changes in society. A Skift report establish these changes to encompass issues pertaining to amenities, diversity and local experiences, a “personal concierge”, a “home away from home” experience, and the faculty to develop personal connections/a sense of community. These varied experiential value propositions are evidenced in Airbnb’s strategic platform of “Belong Anywhere”, and, more recently, “Don’t travel There. Live There”; propositions that are changing the pass tourists travel within the United States and outside. Thus, while regulation of the sharing economy is likely to flush the playing realm to a certain extent, the hotel industry must besides Look to contend with the underlying experiential drivers of consumption that are fueling the popularity and growth of the sharing economy.Airbnb Research and Training
According to Chip Conley, the inventor of the boutique hotel aesthetic and Airbnb’s Head of Global Hospitality and Strategy, the company’s focus on enhancing the guest experience lies at the very heart of its strategic plans for the future. Airbnb has created a hospitality lab in Dublin to provide training to hosts on standards, and to study hosts and guests together in a physical space in an exertion to enhance its experiential offerings. The company has besides experimented with providing add-on services such as full-service cleaning and stocking facility for hosts in cities such as fresh York, San Francisco, and Los Angeles. Recently, Airbnb has been testing hotel-style packaging and amenities – such as local treats, wines, and upgraded bath products – in a select number of highly rated listings in Sonoma, California, to broaden its appeal to travelers who prefer more of a blend of a traditional hotel stay and that of an Airbnb: the comforts of a hotel stay enjoy special amenities and treats as well as instant booking, combined with the more personalized, peer-to-peer, local experience that the Airbnb platform facilitates. Such efforts witness Airbnb’s objective to eddy itself into a full-blown hospitality brand, one that delivers a seamless end-to-end experience when its customers travel. While the company initially disrupted the hospitality traffic by serving as a provider of alternative accommodation, it is now trying to pick this disruption to the next flush by competing along the lines of the guest experience.Applying Extended Framework of the experience Economy
At such a time, the Pine and Gilmore’s seminal concept of the experience economy can exist immensely useful to hotel companies looking to fight back against its sharing economy competitors. When high flush product and service property can no longer exist used to differentiate choices for consumers, hotel companies must focus on creating unique, memorable experiences in order to develop a discrete value-added provision for products and services that Have already achieved a consistent, high flush of functional quality. To demonstrate how this can exist done, I not only refer to Pine and Gilmore’s framework but rather extend the four realms of experience to eight realms. Examples are highlighted of what sharing economy providers, especially Airbnb, and hotel companies are doing privilege in each of these realms that the industry as a gross can learn from and incorporate into their own experience creation efforts. These eight realms are represented in the extended framework of the experience economy.Extended Framework of the experience Economy (adapted from Pine and Gilmore, 1999)
Pine and Gilmore’s four original dimensions comprise education, escapism, esthetics, and entertainment. While education and escapism are classified as lively dimensions in which participants personally impress the performance or event that becomes section of his or her experience i.e. there is an interactive assignation of the judgement and/or the body, esthetics and entertainment are passive dimensions in which participants consequence not directly impress or alter the nature of the environment presented to them. To these, I add four additional dimensions (highlighted in blue) that capture the essence of the nature of experience that the sharing economy aims and claims to facilitate: two lively dimensions of localness and “communitas”, and two passive dimensions of hospitableness and personalization. While these dimensions are not exclusive to the sharing economy, providers such as Airbnb attempt to acquire them their own by providing for and emphasizing these dimensions in how they develop products and communicate their experiences.
Getaway, a startup concept of the Millenial Housing Lab, builds tiny houses, currently outside the Boston and fresh York City areas, places them on glowing rural land and rents them by the night to city dwellers looking to evade the digital grind and test-drive tiny house living. The sense of adventure is maintained by the fact that the exact location is only provided to travelers after the booking is completed, serving as a faultless instance of Escapism for couples, writing weekends, or those looking to “put a dent in a stack of unread books”. onefinestay is an instance of the sharing economy at labor from an Esthetics perspective. It offers over 2,500 frill vacation apartments in London, fresh York, Paris, Los Angeles, and Rome, each one handpicked for space, character, comfort, and a distinctive design aesthetic. It differs from other sharing economy concepts enjoy Airbnb in that each home is selected for inclusion into the brand’s curated portfolio based on exacting standards of architecture and design. The Liberty Hotel in Boston, section of Starwood’s frill Hotel Collection, leverages the Entertainment dimension of the hotel experience by engaging guests into the creative flow of high mode in Boston. Fashionably Late Thursdays is a weekly event that showcases the collection of a mode designer or seasonal fashions from a major retailer in a live mode exhibit format. The exhibit begins at 10 pm, followed by music, mingling, and signature mixes from the bar. Airbnb’s fresh positioning, “Live There”, focuses on pitiful the brand beyond stays to creating experiences, which comprise Education(al) activities in neighborhoods and communities. For example, Ranida, a Thai indigenous and hospitality management grad, working and animate in San Francisco, offers 3 hour long group-based true Thai food cooking classes, allowing guests and locals alike to learn a fresh cuisine from someone with a fire for cooking and teaching.
Airbnb’s previous positioning of “Belong Anywhere”, which the company is using to supplement “Live There”, is centered around creating the sense of community and belonging that its travelers seek. animate in someone’s home naturally involves individuals putting themselves out there to meet fresh people. Airbnb has cleverly used this simple but powerful credit to position itself as a platform that helps people rupture barriers and truly leverage the socially transformative power of travel. Its sharing economy competitor, HomeAway, on the other hand, claims to present the most comprehensive selection of rentals for families and groups, allowing them to recreate “home away from home”, a sense of Communitas with those close to you. Guest Personalization is an increasing focus for travel brands, with many hotel companies using their loyalty programs to accumulate information about their guests in order to enhance the overall guest experience. Moreover, technology such as tracking Beacons and Augmented Reality is likely to play an increasingly principal role in the future in terms of personalizing the guest experience. For example, The James Hotels, which has locations in Chicago, Miami, and fresh York City, offers the James Pocket Assistant, which uses Beacon technology to allow guests to access special offers, view maps, contact the hotel, and request services. The app besides lets users pick a self-guided tour of the hotel’s know-how collect and notifies users of special offers and perks based on their location on the property. The Clarion Collection Hotel Tapto in Stockholm offers a walk-in closet where guests are given a selection of their favorite clothing brands to try on. If they find something they really like, they can add it to the bill. Airbnb is jumping onto the personalization bandwagon with a fresh “matching system” that takes travelers’ preferences into account, matching them with homes, neighborhoods, and experiences that meet their needs.
Standard Hotels provides a masterclass in the consume of Localness. Its fresh website, with a mobile-first mission, leads wholly with lifestyle content about music, food, arts, and other cultural programming, both on-property and offsite. The website reads more enjoy an online travel magazine, with the hotels positioned to serve as base-camp from which to explore “the local” in the cities in which they are located. Airbnb’s Guidebooks and Neighborhoods features consequence something similar, with stunning photography, local editorial perspective, insider tips from Airbnb hosts, and practical information about neighborhoods worldwide. The eight and final dimension of Hospitableness, which lies at the very core of the hotel industry, is something that sharing economy competitors look to exist leveraging more so than the hotels. These companies pretense to present an alternative to bland, cookie-cutter, inhospitable hotel experiences, with local hosts at the very heart of delivering hospitality in its most primal form – creating memorable experiences through good-old fashioned interpersonal contact. For example, an Airbnb host and his wife in San Francisco rent out the second floor of their two-storied house to families, and cook a delightful barbecue in the evening to welcome their weary travelers. My own recent experience in the town of San Luis Obispo in California attests to this dimension. The hosts, a retired yoke who seemed truly delighted to Have us in their home, did everything from talking each and every about their family and getting to know more about mine, to providing hotel-like toiletries in the bathroom, leaving croissants and fresh strawberries in the refrigerator, and, most memorably, placing a diminutive welcome sign on a chalkboard on the dresser – a systematic microscopic touch. Interestingly, it appears that while the hotel industry, to a magnificient extent, is placing technology-enabled convenience and entertainment at the heart of its experience (digital keys, selecting your exact play prior to arrival via app, a robot that stores your luggage, Netflix on your guestroom TV, among others), the sharing economy is using technology to facilitate a simpler, more authentic, down-to-its-roots hospitality experience.A simple welcome sign that makes each and every the disagreement in creating an authentic, memorable, hospitality experience.
Two other elements of the extended experience economy framework – Serendipity and Ethical Consumerism – can benefit hoteliers assume about the design and delivery of memorable experiences. These elements straddle multiple dimensions, and, as such, can serve as experiential “deltas” that can set one experience apart from another.
The very local, customizable, peer-to-peer nature of the sharing economy experience allows guests to exist surprised by their hosts, exist it with a bottle of local wine upon arrival, or a stocked refrigerator that satiates the need for that midnight snack (of course, the safety-related incidents mentioned earlier can besides lead to unpleasant surprises). Canopy by Hilton, one of the latest additions to the company’s portfolio adds this factor of astonish with a property-specific gift to welcome guests on arrival. But hoteliers need to assume beyond gifts to add that factor of Serendipity to an otherwise predictable guest experience. Last, but certainly not the least, they live in the age of activist Millennial. There is enough evidence to exhibit that this fresh generation of travelers is more likely to back a company that does it bit for society, beyond the adhoc corporate companionable responsibility initiatives that acquire for respectable PR but are subsequently forgotten. An factor of Ethical Consumerism can and should exist weaved into the consumer’s experience wherever possible. There is some evidence to suggest that consumers believe that the sharing economy provides opportunities for a responsible form of consumption (and travel). The Airbnb machinery has been awake to this marketing opportunity. A recent NPR article talks about how Airbnb is changing the pass global tourists accumulate to know Africa, by connecting them directly to the local economy. The anecdote of Ndosi, a 23 year fragile from Arusha, Tanzania, is used to demonstrate the company’s “vision” to “create a fresh generation of micro-entrepreneurs from local hosts to local businesses”. Not only does the article talk about how some tourists staying with Ndosi and his parents “found their family” (Communitas), but besides the money allowed him to fund his graduate school education. Many hotels Have been doing their bit for the environment for some time now; with towel re-use policies and LEED certified buildings, among other initiatives. Perhaps it is time for hoteliers to assume about how the “social” dimension of Ethical Consumerism can exist weaved into the guest experience.A Fundamental Rethink for Hotels
The extended experience economy framework provides hoteliers with a mechanism to create experiential value. By no means does this suggest that hotels consequence not or are not innovating. The examples provided above are by no means exhaustive; there are many hotels around the world executing unique, innovative features along these dimensions of experience. However, the sharing economy providers Have the edge of a immaculate slate and look to exist making several of these dimensions their own. The emergence of these competitors means that the hotel industry may need a fundamental experiential rethink to proactively stay ahead of the game. Don’t believe me? Maybe Marriott floating the credit of factor being “an exciting alternative to sharing economy platforms” may convince you otherwise. While one can only miracle how such a transformation of the factor may pick place, the framework presented here can serve as a starting point for such a rethink.
Makarand Mody, Ph.D. has a varied industry background. He has worked with Hyatt Hotels Corporation in Mumbai as a Trainer and as a property Analyst with India’s erstwhile premier airline, Kingfisher Airlines. His most recent experience has been in the market research industry, where he worked as a qualitative research specialist with India’s leading provider of market research and insights, IMRB International. Makarand’s research is based on different aspects of marketing and consumer behavior within the hospitality and tourism industries. He is published in leading journals in the field, including the International Journal of simultaneous Hospitality Management, Tourism Management Perspectives, Tourism Analysis and the International Journal of Tourism Anthropology. His labor involves the extensive consume of inter and cross-disciplinary perspectives to understand hospitality and tourism phenomena. Makarand besides serves as reviewer for several leading journals in the field. In descend 2015, he joined the faculty at the Boston University School of Hospitality Administration (SHA). He received his Ph.D. in Hospitality Management from Purdue University, and besides holds a Master’s degree from the University of Strathclyde in Scotland.
PDF Version: Creating Memorable Experiences How hotels can fight back against Airbnb and other sharing economy providers
By Christopher Muller
On the first day of my HF 100 Introduction to Hospitality Management class I present a lecture that raises the question, “How consequence You teach Hospitality?” It’s my first Power Point skid and is then repeated as my ultimate skid for the day. I suspect (maybe hope) that this question is at the front of the minds of the thousands of people who daily assume about hospitality education, training, management and leadership.
In his book, Setting the Table, restaurant icon Danny Meyer (2006) notes that his company, Union Square Hospitality Group, looks to hire individuals he calls the “51-percenters.” These are people who exhibit a positive poise of 51 to 49 percent between emotional skills and technical excellence. The five core emotional skills which USHG looks for are: Optimistic Warmth; Intelligence (defined as insatiable curiosity); labor Ethic; Empathy; and Self-Awareness/Integrity. He notes that:
Emotional skills are harder to assess, and it’s usually necessary to expend meaningful time with people—often in the labor environment—to determine whether or not they are a respectable fit. But it’s censorious to start by being definite about which emotional skills you are seeking.
It should near as no astonish that emotional skills are not easily imbedded in a modern university traffic curriculum, which is the academic realm where Hospitality Management programs most often reside. Yet many hospitality management students loom to bring with them a tacit knowledge of these emotional skills when they start their studies. After more than three decades of watching hospitality students ripen I would mumble that they certainly exhibit stout emotional skills when they head out for a fresh career. Where then does this knowledge, or alternately, pass of knowing, near from?
Is there something discrete about the traditional Hospitality Management curriculum? First offered in 1893 at the Ecole Hoteliere Lausanne in Switzerland and launched in the United States at The School of Hotel Administration at Cornell University in 1922, has this course of study evolved over time to focus on both of Meyer’s skills – originally based on technical skills but now transforming to emotional skills?
A respectable station to start their inquisition may exist to determine this: is Hospitality Management an academic discipline, suggesting it is something which can exist codified, written down, and erudite by definite means? Or as some educators note, is it better described as a realm of study which dwells in the realm of tacit learning and requires extensive personal contact, experience and observation but may not exist adequately articulated by verbal means? How is knowledge managed by teachers, practitioners and students of the industry?
Next they should admiration how innovation is applied in the drill and study of hospitality. Is the industry built on the sustaining innovation of measured diminutive improvements in property and process or on the disruptive innovative introduction of completely fresh products and services unlike any others which Have near before?
On another dimension, they must add a component on the process of thinking and decision-making in hospitality management. Which parts of the traffic are more intuitive, heuristic and built on gut-feeling and which are more iterative, objective and built on quantitative data analysis?
And a fourth area may exist included, how students and practitioners learn. For example, at which point in the education process is it more desirable to Have a convergent, fact-based and systematic perspective leading to a unique solution, and which point is more likely to reward a divergent, multiple-option perspective where there may exist more than one creative or “correct” answer?
This paper presents a model using each of these well-regarded theoretical constructs in an attempt to advance the discussion and respond the question, “How consequence you teach hospitality?”Tacit and definite Knowledge
Michael Polanyi (1958, 1966) suggested that knowledge could exist segmented into two different realms, tacit knowledge and definite knowledge. His seminal labor focused on tacit knowledge and “tacit knowing” which he suggested requires a personal involvement at the individual flush of learning. Tacit knowledge is acquired in a non-verbal, observant or experience-based way. It is the knowledge where “we know more than they can tell” to others, or possibly even to ourselves. Harry Collins (2010) expanded the definition of tacit knowledge to comprise three areas, one involving the relational nature of human companionable life, one including the autonomic nature of the cadaver and one in the collective nature of society.
Common examples used by both men to interpret tacit knowledge comprise learning to ride a bicycle or to play piano – thinking about the details of the process often leads to not being able to discharge at all. Reading a book about riding a bicycle will not lead to winning the Tour de France nor will a manual about finger placements in C# scales eddy one into Vladimir Horowitz, no matter how long the study. But months riding a bike through the French Alps with a professional coach or taking a Master Class with a professional musician may in fact lead to personal success. Observing the “embodied knowledge” of experts in a manner which involves personal contact, regular interaction and reliance may create tacit knowledge in the observer.
While tacit knowledge is non-verbal, practical and experience based, definite knowledge is articulated, codified, and language based. It is more deductive and logical. Another characteristic of definite knowledge is that it can exist collected in a unique station to exist accessed by both individuals and groups (a library, Wikipedia, or a smartphone app should near to mind).
Tacit knowledge is the accumulation of individual “know-how” while definite knowledge is the fact-based aggregation of shared “know-that.” Collins points out that tacit knowledge is a prerequisite for definite knowledge, you need to know something before you can interpret what it is that you know. Yet the powerful human current to partake their knowledge, to write things down, to articulate the non-verbal lesson is at the heart of each and every education, and is besides the driver for automation, digitalization and emerging artificial intelligence technology.Les Roches Food and Beverage Course (Photo via Les Roches International School of Hotel Management)
Students who are enrolled in an introductory Culinary Arts program preparing menus of yardstick recipes from the Professional Chef textbook can exist said to exist using the definite knowledge of cooks. Students who are engaged in a rotational Stage with the chef at a 3-star Michelin restaurant who exhibits grace and timing under pressure are mostly experiencing tacit knowledge. Both types of knowledge are necessary in learning to exist a cook, one articulated and one individually experienced.Sustaining and Disruptive Innovation
Dr. Clayton Christianson originally proposed the favorite management theory of “Disruptive Innovation” in a 1995 Harvard traffic School article. He clearly owes a large debt to Joseph Schumpeter (1942) and the concept of capitalism being built on “creative destruction.” The current model presents a framework for the creative process in traffic formation and innovation. Christianson lays out the differences between the iterative improvement he terms sustaining innovation and the discontinuous offering of the next fresh thing he terms disruptive innovation.
Sustainers are the well established and typically market dominating major players in an industry. They maintain their leadership position by keying on the needs of their best and most profitable customers. They accomplish this by seeking continuous improvement of products and services they already Have on offer. There are many observers who rightly point out that this form of innovation has a significant track record of success, the “standing on the shoulders of giants model” of accretive progress.
The disruptors in traffic thrive most often when they are technically simpler, cheaper, faster or easier than the established previous generation of products and services they train to replace. The risk is that these same attributes are often besides of inferior property and therefore Have a short, volatile, and vain-glorious impact on the industry they search to change. But it is the disruptors, enjoy a thunderstorm providing both the destructive potential of a lightning strike and the torrential rain that leads to fresh growth, who give us the energy to renew and revitalize an industry.
The incumbents maintain their market positions when customers are seeking incremental innovations to existing products or services that are already perceived as being of higher quality. These sustaining innovations are often associated with the phrase “new and improved” although by definition nothing can truly exist both fresh and improved. In many cases step-wise improvements are more likely to find market acceptance than the disruptive newcomers, though the “blue ocean” mindset does sustain the capital markets constantly looking for the next fresh thing just over the horizon.
In traffic education and drill much has been made of the process of Total property Management or the principles of Six Sigma. The step-wise improvement known as the Deming Cycle is another instance of the application of sustaining innovation in the classroom. The disruptive innovation of Strategic Management, Principles of companionable Media Marketing, or the study of charismatic Leadership styles, each and every where the fresh is a positive addition to the topics, besides appropriate well in the Hospitality Management curriculum.Heuristic and Iterative Thinking
The Nobel laureate economist, Daniel Kahneman, wrote Thinking posthaste and unhurried (2011) to detail the different modes of thinking used by humans, modes that he termed System 1 or “Fast Thinking” and System 2 or “Slow Thinking.”
Fast thinking is automatic, intuitive and associative. The process comes to the surface in the human current to create heuristic mental programs based on previous experiences, rubrics or tested frameworks. An impress Heuristic conclusion is made quickly using judgments based on microscopic more than feelings of liking or disliking the demur or situation. An Availability Heuristic is quickly made on the desire to find import and patterns using information appropriate into the immediate present situation. In both cases the judgement finds a best conclusion by rapidly relying on pertinent past experiences or situations that look intimate and similar to other successful past decisions.
Slow thinking is controlled, iterative, systematic, or what Kahneman termed “statistical.” This is the decision-making style where thinking about a topic requires attention to detail, focus, and a narrow realm of vision. Each fresh decision, and the thoughts associated with it, is built on the structures of previous decisions in an arduous step-wise process. unhurried thinking can exist easily disrupted when attention spans are lop short, but it is the balancing counterweight which keeps humans from acting impetuously or in an antisocial manner.
Students in a course learning about Entrepreneurship may exist called upon to labor in diminutive groups “brain-storming” fresh concepts for their final project. In another course they may exist using traffic case studies where they will near to reliance their gut feelings for identifying the best possible alternative from a broad selection of outcomes. First year students who pick Accounting 101 which then leads in year two to Accounting 201 and so on are engaged in an iterative learning process. A doctoral dissertation is the ultimate instance of a controlled, systematic and step-wise model of fresh knowledge creation.Convergent and Divergent Learning Perspectives
The theorist J.P. Guilford (1967) offered a generic theory of human intelligence he named the Structure of Intellect. While this complex theory incorporates up to 150 dimensions, section of it describes the learning processes for reasoning and problem-solving, which he termed Convergent and Divergent production. People who decipher problems via a convergent strategy are focused on finding a unique redress respond (consider a question on a multiple election test). In many situations, the convergent learner feels most comfortable in a traditional student/teacher role, with data and facts presented to finding one outcome, for instance a unique mathematical calculation. Convergent learners collect facts, often from a variety of sources, dissect the situation and search to test for the best feasible or optimal solution.
In opposition to this pattern would exist the divergent learner, one able to identify multiple possible options or solutions. Guilford was very interested in the creative process, which he saw as in the realm of divergent production. A divergent perspective might draw an individual to the arts and humanities, creative writing, or history (where multiple perspective need to labor together to find broad solutions) as opposed to science, technology or math as a course of study.After an internship or labor experience, students benefit from reflection assignments.
For the Hospitality Management major, convergent production might exist seen in fact-based introductory or survey courses, the proscriptive side of Hospitality Law, or in the monetary skills associated with an MBA curriculum. The divergent production side might best exist embedded in courses with a fluid or “what if” set of answers, including Communications, the self-reflective analysis after an internship or labor study program, and the group process.The Amalgamated Model
In order to consume these theories in a comprehensive way, an Amalgamated Model (Figure 1) can exist formed into a rubric using each of the four key competencies on alternating sides of a two-by-two matrix. knowledge is either definite or Tacit, Learning is Convergent or Divergent, Innovation is Sustaining or Disruptive, and Thinking is Heuristic or Iterative. The corresponding quadrants each then suggest a different means for evaluating a Hospitality Management curriculum.Figure 1. A Suggested Learning Rubric (Click image to enlarge)
The Quadrant Profile
Expanding on the basic model (Figure 2), each quadrant suggests a teaching/learning viewpoint with specific weight placed on different emotional and technical skills. The ECSI quadrant would reward a codified, focused, incrementally improved and statistical (slow) set of learning objectives. Quadrant two encompassing the EDSH attributes would Look for codified, expansive/creative, incremental and intuitive (fast) offerings. The third Quadrant with a TDDH amalgamate encourages learning in an experiential, expansive/creative, discontinuous fresh and intuitively posthaste manner. The final TCDI quadrant would involve an experiential, focused, discontinuous fresh and statistical (slow) combination.Application to the Hospitality Management Curriculum
If they admiration the traditional Hospitality Management curriculum (Figure 3), both required and elective courses, and Look at the entire compass of educational levels, from undergraduate to doctoral studies, the Amalgamated Model can thus exist helpful in creating a typology of course offerings.
Quadrant One (ECSI) concerns itself with student competence and technical skills, with courses that build on a core knowledge structure or discipline. Such classes as the Accounting sequence (Financial Accounting, Management Accounting, and Finance), or a Marketing sequence (Introduction to Marketing, Services Marketing, Advertising Communication, Consumer Behavior) appropriate well here. A case can exist made that the core Master of traffic Administration curriculum is besides focused, stepwise, definite and data based and is best located here.
Quadrant Two (EDSH) is more the domain associated with concept mastery, silent using the accumulated articulated knowledge of specific topical information. The various labor done in a kitchen or culinary class, based on the multitude of recipes and cookbooks can exist exhibited here. But so can the definite knowledge written down in the form of industry case studies, where students learn by creating their own system of decision-making heuristics.
In the third Quadrant (TDDH) the practical life experience which students bring with them to class gives them an opening to learn by doing. Experiential learning in the form of internships and labor study, group projects and brain-storming fresh traffic concepts allows them to exist creative in a traffic setting.
The final Quadrant (TCDI) is where students gain the focused perspective that enables a measure of expertise to develop. Whether at the elective/concentration flush for undergraduates or the process of undertaking the years long process involved in doctoral studies, this is the time when data and hypotheses are tested, and preconceived notions are challenged.Getting to 51%
Let’s consume the information shared by Danny Meyer in the quote from above but parse individual phrases to benefit disclose how the theories just discussed are informing the discussion:
Emotional skills are harder to assess, and it’s usually necessary to expend meaningful time with people—often in the labor environment—to determine whether or not they are a respectable fit. But it’s censorious to start by being definite about which emotional skills you are seeking.
Emotional skills, what Meyer uses to determine the attractiveness of the “51%-ers” to a restaurant unit of USHG, are as he suggests hard to assess. These “soft skills” consequence not near with easily tested variables. But there is besides the 49% applied to the technical skills of the labor of hospitality to consider. The definite knowledge erudite in first the ECSI and then the EDSH afford the student a pass to build up a base shared knowledge of facts, protocols and historical constructs (Figure 4). These courses besides establish the foundation of a shared vocabulary, and mastery of skills which will allow them to become section of a broader companionable environment.
Meyer besides suggests that it is principal to invest time in each individual in order to highlight the emotional skills his company desires. The slow, iterative process of even improvement and property control besides appears in the ECSI and EDSH quadrants.
…necessary to expend meaningful time with people…
Also embedded in the Meyer observation is the tacit learning only afforded by an individual, experience based and hands-on set of lessons in the actual labor environment. This is the internship model used extensively in hospitality management education.
…often in the labor environment…
To acquire his search uniform and standardized, he acknowledges the need for pitiful from the highly personalized, but incongruous system of tacit learning. He suggests, as did Collins, the need to partake their learning and expertise by making it explicit, articulated, and language based.
…it’s censorious to start by being definite about which emotional skills you are seeking…
Finally, although it is unstated in his admonition for each and every traffic enterprises to comprise hospitality in their development, he silent requires employees to Have the technical skills and transparent focus to become experts in their endeavors. Whether it is in the expertise of the Sommelier, the Executive Chef, or the Chief monetary Officer, no magnificient hospitality company can survive without highly skilled and knowledgeable practitioners.A revert To Their Question
So, as I ask my students, and indirectly myself, “How consequence you teach Hospitality?” the Amalgamated Model may capitulate a better casual of finding an answer. Not too long ago hospitality management appropriate comfortably in the experiential apprentice/journeyman/master craftsman system of observational study. While pertinent for the passing along of both tacit and technical skills, this system continues to descend short of the definite knowledge and fact based needs of a modern traffic enterprise. Likewise the current exertion focused only on monetary numeracy and a statistical path to knowledge besides falls short in the emotional intelligence necessary to achieve Meyer’s 51% status.
Instead of a curriculum being centered in just one or two quadrants, a more holistic approach, one looking to fullfil the requirements of being competent, conceptual, pragmatic and a content expert may capitulate a more robust and therefore more rigorous election for hospitality curriculum design in the 21st Century.Christopher C. Muller is Professor of the drill of Hospitality Administration and former Dean of the School of Hospitality Administration at Boston University. Each year, he moderates the European Food Service Summit, a major conference for restaurant and supply executives. He holds a bachelor’s degree in political science from Hobart College and two graduate degrees from Cornell University, including a Ph.D. in hospitality administration. Email email@example.com
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