Linh Chi Nguyen

101133319

Baumol’s theory “denied that profit maximization is the dominant objective of

leaders” and affirmed that “ the primary goal of leaders is revenue maximization, even at the
expense of lower profits” (Mabry, Siders, 1967). Baumol’s cost disease applies to
labour-intensive industries (Chant, 2016) and productivity level across multiple sectors in the
economy (Cobb, 2017), including hospitality and tourism. With the case of the worldwide
pandemic, the concern for productivity and innovation are key to maintaining the economy
and stabilizing the marketplace; therefore, businesses are finding ways to operate amid Covid
with innovations.
Innovation in the service industry contributes to “more personalized experiences for
guests, fulfilling guests’ expectations and providing improved values" (Pascual-Fernández,
Santos-Vijande & López-Sánchez, 2020). During the pandemic, many new contactless
methods of operations have been observed and adopted by restaurants and hotels.

Service extensions like family meal bundles, meal kits subscription, groceries
shopping using online apps, etc. were adopted by many businesses (Fox, 2020. As social
distancing becomes the norms, the use of technology is crucial. For example, tours and
festivals are held virtually such as “The New York City Wine & Food Festival launched "At
Home" virtual cooking to benefit the NYCWFF Restaurant Employee Relief Fund and
support local businesses” (Fox, 2020). The Faroe Islands’s self-guided tour of the archipelago
was carried out by Camera-wearing locals responding to sight-seeing commands from virtual
tourists to control their own route through an app (7 Travel Innovations, 2020).

Hotels are also adopting new approaches for a safer guest’s experience such as using
Contactless Check-in/out and Keyless Room Entry. Digital locking systems enable guests to
access their assigned guestrooms using their phones as digital keys. With this feature, guests
can check in remotely, avoiding unwanted interactions and feeling safer (Hospitality Net,
2020). Another method put to use is Virtual TV Remote Control, which can “reduce exposure
to potentially contaminated surface areas and encourages use of in-room interactive services”
and it is “automatically disabled on guest checkout” (Hospitality Net, 2020).

Facing the crisis, service industry leaders “must brainstorm, conduct intensive market
research to come up with great tourism products and packages, for specific markets and
specific customer segments” and to offer unforgettable experiences to customers (COVID
Impact: Hospitality Redefined, 2020). Businesses of all sectors are now being as productive
and innovative as they can be to endure the hardships hitting the economy and to survive the
battle to come out stronger, more efficient and adaptive in the future.
References:

Chant, J. (2016, September 22) Baumol’s “cost disease” applies to labour-intensive

industries. Fraser Forum. Retrieved from
https://www.fraserinstitute.org/blogs/baumol-s-cost-disease-applies-to-labour-intensive-indus
tries

Cobb, K. (2017, June 4). Baumol’s cost disease, productivity and the future of growth.
Resource Insights. Retrieved on
https://www.resilience.org/stories/2017-06-04/baumols-cost-disease-productivity-future-grow
th/

COVID Impact: Hospitality Redefined. (2020, June 22). Business World, NA.
https://link.gale.com/apps/doc/A627256449/STND?u=toro15002&sid=STND&xid=f850320a

Fox, J. T. (2020). 5 dining trends for a post-COVID world. Hotel Management.

Hospitality Net. (2020, May 13). COVID-19 Resource: 5 Technologies for a 'New Normal'
Hotel (Part 1). Retrieved October 11, 2020, from
https://www.hospitalitynet.org/news/4098642.html

Mabry, B. D., & Siders, D. L. (1967). An Empirical Test of the Sales Maximization
Hypothesis. Southern Economic Journal, 33(3), 367.
https://doi-org.gbcprx01.georgebrown.ca/10.2307/1055118

Pascual-Fernández, P., Santos-Vijande, M. L & López-Sánchez, J. A. (2020). Harnessing

innovation success in hotels: the interplay among key drivers of new service performance.
International Journal of Contemporary Hospitality Management, 32(9), 2757–2776.
https://doi-org.gbcprx01.georgebrown.ca/10.1108/IJCHM-12-2019-0988

7 Travel Innovations Responding to Coronavirus. (2020, May 27). Retrieved October 11,
2020, from
https://www.springwise.com/innovation-snapshot/travel-tourism-coronavirus-covid