INSTITUTE OF HOSPITALITY MANAGEMENT IN PRAGUE

Matej Križko

Innovations in the Hospitality/Tourism sector

Bachelor dissertation

2015
 Innovations in the Hospitality/Tourism sector

Bachelor dissertation

Matej Križko

Institute of the Hospitality Management in Prague 8, Ltd

Department of Hospitality Management

Major field of study: Hospitality Management

Thesis Advisor: Ing. Jana Kalabisová, Ph.D.
Date of Submission: 23.4.2015
Date of Thesis Defense: June 2015
E-mail: ma.krizko@gmail.com

Prague 2015
Acknowledgements

This way I would like to thank my supervisor Ing. Jana Kalabisová, PhD. for her time,
instructions and advices that were very helpful and essential during writing of this thesis.
Oath

I swear that the bachelor dissertation titled Innovations in the Hospitality/Tourism sector was
written by me independently, and that all literature and additional material used are cited in the
bibliography and that this version is exactly the same as the work submitted electronically.

In accordance with §47b law no. 111/1998 coll. on higher education institutions, I agree to my
dissertation being published in its complete form in the publicly accessible electronic database
of the Institute of Hospitality Management in Prague.

Signature

……………………………………

Matej Kriţko

In Prague 23.4.2015
Abstract

KRIŢKO, Matej. Innovations in the Hospitality/Tourism sector. [Bachelor dissertation]. The

Institute of the Hospitality Management. Prague 2015. 45 pages.

Maintaining competitiveness in the time of market globalization and the global crisis puts
pressure on new ideas and innovations also in the Slovak tourism companies. The aim of the
study was to examine the determinants of innovation in terms of influencing the innovation,
the predominant type of innovation and the benefits of innovation and to compare different
types of innovation in tourism enterprises which were made in the last three years. After
analyzing and comparing companies, was concluded that qualification level of employees, the
demand for innovative products and services and public funding opportunities for innovation
from public sources are not barriers to the introduction of innovations. Also was found that in
terms of the types of innovations introduced, there are only small differences between
different types of businesses.

Key words: innovation, tourism, business tourism, travel agency, restaurant, hotel,
determinants of innovation, types of innovation
Abstrakt

KRIŢKO Matej, Inovácie v sektore Cestovného ruchu/Turizme. [Bakalárska práca].

Vysoká škola hotelová v Prahe 8, spol. s.r.o., Praha: 2015. 45 strán.

V čase globalizácie trhu a svetovej krízy je aj u slovenských firiem cestovného ruchu

vytváraný tlak na udrţanie konkurencieschopnosti a na nové nápady a inovácie. Cieľom práce
je preskúmať inovácie z hľadiska determinantov ovplyvňujúcich inovácie, typov
prevládajúcich inovácií a prínosov inovácií a zároveň porovnať inovácie v jednotlivých typoch
podnikov cestovného ruchu, ktoré uskutočnili inovácie za posledné tri roky. Po analýze a
porovnaní podnikov sa dospelo k záveru, ţe podniky nepociťujú kvalifikačnú úroveň
zamestnancov, dopyt po inovovaných produktoch a sluţbách a moţnosti financovania inovácií
z verejných zdrojov ako prekáţky pri zavedení inovácií. Zároveň sa zistilo, ţe z hľadiska
typov zavedených inovácií existujú len malé rozdiely medzi jednotlivými typmi podnikov.

Kľúčové slová: inovácia, cestovný ruch, podniky cestovného ruchu, cestovná kancelária,
reštaurácia, hotel, determinanty inovácií, typy inovácií
List of Figures

Figure 1 Growth in innovation performance 2006-2013 of EU member states

Figure 2 Overview of EU member state enterprises with innovation activities and type of
innovation according to CIS

Figure 3 Overview of SSII in EU member states

List of Abriviations

EC European Community

IT Information Technology

OECD Organisation for Economic Co-operation and Development

SR Slovak Republic

SII Summary Innovation Index

SSII Service Sector Innovation Index

CSI Community Survey Index

EU European Union

ll, for all

TA Travel Agency
Content

Introduction.......................................................................................................................1

1 The current situation of domestic and foreign problems...........................................3

1.1 The term innovation......................................................................................................3

1.1.1 Innovations in tourism and services...........................................................................8

1.1.2 Determinants of innovation.......................................................................................11

1.1.3 Types of innovation...................................................................................................14

1.2 Examples of innovation................................................................................................17

2 Methodology..................................................................................................................20

3 Analytical part…….......................................................................................................23

3.1. Innovation activity in SR and EU and its measurement.............................................23

4. Findings…………………………………………………………………………….…27

4.1. Analysis of innovation activity in selected facilities..................................................27

4.1.1. Characteristics of tourism enterprises......................................................................27

4.1.2. The impact of determinants on innovation..............................................................30

4.1.3. Types of initiated innovation...................................................................................33

4.1.4. Benefits of innovation..............................................................................................35

5. Recommenadtions……………………………………...……………………….……36

6. Conclusion.....................................................................................................................40

List of References……….................................................................................................42
Introduction

Tourism market after the global economic crisis slowly comes to life and businesses which
survived the crisis are recovering after an unexpected loss of income. The ability of businesses
respond quickly to the current situation may contribute to maintaining competitiveness,
possibly to gain market leadership. The reactions undoubtedly include new ideas – innovations
which can be seen as a crucial tool for economic development of enterprises.

Constant repetition of combining factors of production in the same way leads only to a
stationary state which is characterized as quantitative economic growth. Development process,
according to Schumpeter (1987) begins only when this condition is disturbed by some
changes, thus innovation.

―The best way to get a good idea is to get a lot of ideas‖ (Keeley, 2001, p.54). Thanks to
brainstorming people come up with new ideas that can lead to breathtaking innovations. The
need for continuous improvement and change is achieved through innovation also present in
tourism businesses. The behavior of tourists are changing faster and faster, creating new trends
that require modification of an existing product or introduction of a new product. By quick
adjustment to the requirements of customers may enterprise overtake their competitors and
gain competitive advantage through innovation. However, the market quickly leads to the
imitation of product causing loss of extracted position of an innovative company. Therefore, it
is necessary that leading companies perceived innovation as continuous process.

The European Union has declared 2009 as the year of creativity and innovation which is based
on new ideas and approaches. Today because one of the key sources performance and
competitiveness treat the innovation capacity of enterprises such as and tourist centers.

In the area of policy at European Union we face complex developed innovative policy, while
in Slovakia at present there is no comprehensive innovation strategy and operational
innovation system. Slovakia compared to other European countries lagging behind in
innovation activity and is one of the least innovative countries in the EU. Slovak tourism is
characterized by small and medium-sized businesses that are easy to adapt to changing market
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conditions. The introduction of innovations makes this addition to the ability of a number of
other external and internal determinants. These factors have an influence in the hospitality
industry and travel agencies. The nature of the various types of enterprises arises also the
differences in the types of innovations introduced.
However, it is important to perceive innovation as a systematic and continuous activities
undertaken in tourism. If we searched for an answer to the question of how to name the most
important innovations and innovators in tourism, we could have met primarily with such
replies that depicts various organizations - for example, Thomas Cook, American Express or
destinations - LEGOLAND, Dubai and Ibiza. But it is necessary to point out that innovation in
tourism is not only important news that brought the well-known companies or modern
destinations. The correct perception of innovation is as changes in all enterprises,
establishments and tourist destination which for example are creating first website, renew the
menu or begin to distribute products electronically.

The aim of this work is to examine innovative activity in tourism businesses based on the
analysis of innovation in three different facilities with use of appropriate methods to detect
differences in innovation in different types of businesses. To attain the set objective, an
analysis of individual devices in terms of service is needed. In order to determine the
individual determinants of innovation activity the basic measurement of innovation activity in
Slovakia and the EU is also analyzed.

The goals are:

Analysis of selected determinants of innovation in the various types of facilities,
Determine the predominant type of innovation,
Determine the benefits of innovations in Slovak tourism enterprises tourism,
Comparison of innovations in different types of businesses.

Research question: Does the introduction of innovation in Slovak tourism businesses have a
positive impact on them?

Analysis of innovation activity will also serve as a basis for comparison of innovation of the
above aspects in different types of businesses: hotel, restaurant and travel agency.
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 1. The current situation of domestic and foreign problems

1.1. The term Innovation

The word innovation comes from Latin and means "restoration". In most scientific disciplines
that term is understood as planned and controlled change in a system to achieve new and better
conditions. (Wienerova, 2007).

From time to time a new science comes up that entirely changes how field is conducted. This
is exactly what is happening in the current practice of innovation. But companies have to be
aware because myths are abundant and are exceptionally hard to eliminate (Keeley, Valters,
Pikkel, Quinn, 2013).

According to Nowotny (2008) innovation has become a religion that originates in discovering
new. Such definition could lead to mistakes that innovations are only results of scientific
research and technological breakthroughs. Schumpeter (1987) points out that innovation is not
the same as invention. Clearly defined by Kanter (Hall, 2008) who claims that innovation is a
process that results in anything new and any new product which is put into use. Changes in the
organization, the establishment of methods for reducing costs, new systems in the budget,
improve communication and development of new products are also innovations. Innovation is
then generalizations, adoption and implementation of new ideas, processes, products or
services.

Innovation is not only a breakthrough in technological solutions or scientific discoveries.

Innovation is not focused mainly on products but also on services, corporate and business
processes. Innovations are implemented on the market with customers who are willing to pay
higher, distinct or completely different value than is offered by competitors.

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When saying the word innovation, many people imagine revolutionary technological
inventions, researches and scientists in sophisticated laboratories. Innovations are sometimes
considered as transition to new technologies or creation of prototype of a developing product.
But this no longer true. A well-known professor of Fordham University Milan Zelený defines
innovations as quantitative and qualitative improvement of products, processes or business
models that significantly add value to the customer and enterprise, ideally both sides
simultaneously. If the added value is being carried out as the transaction within the market
innovation thus itself is created on the market at the time of sale. Actually is implemented by a
customer. Therefore is innovation fundamentally different from invention, patent or
improvement proposal. Those may remain unrealized, in safe, warehouse, in papers or at the
patent office. (Košturiak, Chaľ, 2008).

At the same time, we find various definitions of innovation. For the Classic in the theory of
innovation is generally considered Joseph Schumpeter, innovation is understood as the
following changes (Kubičková, Benešová, 2007):
Introduction of a new product on the market, which differs substantially from other
market
The introduction of new production techniques, new production processes,
Use of new materials,
Changes in the organization of production and assurance,
Opening of new markets.

Schumpeter on that basis distinguishes five types of innovation (Wienerová, 2007):

New products
New production methods,
New sources of supply,
Explore new markets
New ways of organizing trade.

Schumpeter's understanding of innovation has become the basis for further elaboration and the
emergence of modern concepts in the theory and application possibilities.

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In theory and practice, we encounter different kinds of innovation. In general, we can divide
innovation into technical and non-technical (Prnka, Hronek, Šperlink, 2003). Technical
innovations include a set of scientific, technical, financial and commercial activities. And the
term non-technical innovations are referred in particular innovations in management,
marketing, organizational structure or social innovation.

The last decade of the 20th century was for most companies in developed countries, the period
of prosperity. Contributed to that especially stable environment without wars, strong
demographic growth and prolonging life expectancy. To these factors should be assigned
increasingly sophisticated corporate marketing. Marketing departments with high budgets,
through which could develop new products, putting them on the market, educate consumers,
interact with them and lead them to test new products, to repeatedly purchase products and to
the strengthening brand loyalty. This changed on the beginning of 21st century and to become
successful started to be much more difficult (Kotler, Trias de Bes, 2005).

Reasons of this change are increasing concentrations in the distribution of consumer goods,
declining number of competing firms but growth in number of brands, significant decrease of
product life cycle, change of product is cheaper than its repair, digital technology caused a
revolution on many markets, people are weary of advertising and media fragmentation
complicates the introduction of new products on the market, opportunity to get in minds of
consumer is still smaller (Kotler, Trias de Bes, 2005).

There is much bigger competition on the market nowadays and it is getting difficult to remain
on the market. Consumers are picky and increasingly ignore commercial communication. The
only choice to attract them is innovation (Kotler, Trias de Bes, 2005).

Innovation is the basis of the current competitive strategies. Marketing rhythm of introducing
new products to market is directly frenetic but the failure rate is high. Therefore, it is
important to understand how innovations are created (Kotler, Trias de Bes, 2005).
While the innovations are reflected in different ways in different situations, it often leads to
their mutual influence and smooth shifting from one innovation to another (Kaafarani, 2011).
Innovative product is almost impossible to sell without a new communication strategy and

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new distribution channels. Similarly, the use of new materials creates a presumption that there
will be innovated food and beverages which will also lead to new menu. Or association of
property to the hotel network brings new standards in the provision of services, new demands
on quality and changes in the organizational structure.

Tureková and Mičieta (2003) talk about innovation as a specific business tool. They stress the
importance of innovation management and knowledge as follows:

• Innovation gives to the source new capacity to generate wealth but no such thing as a
"resource" exists until it finds something to use and does not award any economic value. This
rule applies equally in the social and economic sphere,
• In the economy, there is nothing more important than source of a "purchasing power"
• Innovation represents all what changes the potential of existing resources in order to create
more wealth,
• Example of social innovation is discipline of management itself.

Sources providing innovative opportunities allocated Tureková and Mičieta (2003) into two
main groups: sources located within the organization and changes outside the organization or
department.

a) Source located within the organization:

• Unexpected circumstances: unexpected success, unexpected failure and unexpected external
event
• Contradictory,
• Innovation based on the needs of a particular process,
• Changes in the structure of the field or market structure.

b) Changes outside the organization or department:

• Demographics,
• Changes in world view,
• New knowledge.

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Innovation for Pitra (2006) represents a new way of using existing resources in organization to
gain new business opportunities - to find new opportunities to increase revenues from their
business activities.

The ability to innovate, change their internal environment and engage in appropriate strategic
alliances decide on the level of competitiveness of the organization. The competitiveness of
the organization is the result of business decisions of the management staff resulting in a right
choice of business strategy (Pitra, 2006).

Implementation of innovations is a challenging process that can be facilitated if in the

company occurs these five assumptions (Hall, 2008). The first is the interconnection of
knowledge in the business and continuing education. The second is the use of various
communication networks that promote cooperation not only in business but also cooperation
with other firms in the industry. Thirdly, it is the presence of local attractions that support the
creation and development of innovation. The fourth important factor that facilitates innovation
represents the Agency to promote innovation. The availability of sufficient skilled and
educated workers who participate in the exchange of experiences and knowledge society is the
fifth factor in the success of the process of innovating. Result of the involvement of these
assumptions in the process of innovating then lies primarily in reducing the cost of innovation
and reducing the risks associated with failure of innovation. To be the process of innovation
for the enterprise favorable it is necessary to ensure the effective management of innovation in
the enterprise.

Model of innovation management system according to Havlicek (2011) consists of three basic
steps. The first is to look for opportunities that are based on marketing research, therefore, to
identify the needs and expectations of customers in existing markets as well as new business.
The second step is the analysis of resources (information, financial, personnel, technology and
raw materials) and decision-making. The third step in an innovative plan that includes goals,
implementation and control of realizing innovation. It is important to implement a process of
innovation in order to transform innovations into competitive advantage through high quality,

7
reasonable price and good timing of introduction it to the market (Jac, Rydvalová, Ţiška,
2005).

Communication from the Commission on the European Community entitled "Innovation

policy: updating the Union's approach in the context of the Lisbon strategy" in addition to the
identification of problems of innovation policy of the European Union defines in particular a
new direction for European innovation policy and system tasks in their implementation. The
European Commission considers as innovation "Reconstruction and expansion of products and
services and their associated markets; establishment of new methods of production, supply and
distribution, introduction of changes in management, work organization and working
conditions and skills of the workforce "(Tureková, Mičieta, 2003).

The EC Commission document "EC rules on State aid for Innovation" in 2004, the European
Commission notes that the key issue is how to turn a relatively high quality of European
science into outputs implementable in practice and to innovation (Tureková, Mičieta, 2003).

1.1.1. Innovations in Tourism and Services

The hospitality industry is in trouble - a trouble of change and unpredictability; a trouble

brought on by the rapidly changing nature of the hospitality industry itself. The industry is in
metamorphosis – it is experiencing rapid and profound change. New technology, more
experienced consumers, global economic restructuring and environmental barriers to advance
are only a few of the threats that the faces (Hall, Williams, 2008).

The journey for more innovation in tourism from a practical and industry perspective and the
scientific research for answering questions regarding the foundation for and/or incentive or
burden of innovation attitude in the tourism industry and its many subdivisions spanning the
whole tourism group have been in coming. It started with the need for more quality or
a higher value added throughout that part of the world where mass tourism and destination life
cycle had reached top and where new approaches for refreshment of the destination life cycle

8
where needed which had been accurate for many European alpine regions but involved also
many European sea resorts (Poon 1993).

Innovation is the subject of scientific investigation for many years. An interesting fact is that
for a long time people did not attach too much importance to the process of service innovation.
Innovations were in fact perceived only as changes in industrial production and as new
discoveries in technology (Decelle, 2004). Tourism, as one of the fastest growing industries in
the national economy must constantly adapt to different trends. It responds not only to
changing consumer demands but also the development in technology, transport and politico-
economic situation of the area. Also in the past tourism had to flexible respond to the many
changes in society such as the development of railway transport, new destinations due to the
development of pilgrimage tourism, the introduction and expansion of internet or introduction
of cashless payments. Significant impact on the tourism was the emergence of a market
economy, growth in disposable income, reducing working time and changes in consumer
preferences.

Starting from Schumpeter's approach to innovation can therefore conclude that in tourism by
innovation we mean:

The provision of new services or products, improving the quality of provided services
and products,
Introduction of new ways of delivering services, product sales and distribution
Entering a new market, reaching a new segment of potential visitors,
Sourcing new suppliers or agents of products and services
Joining or splitting, developing a network business.

The service sector has a few differences from the manufacturing sector, which Kubičková
(2007) summarized by the following:
Close interaction between production and consumption,
Intangible nature of the output,
Main role of the human factor in the production of services,
Crucial role of management factors in the performance of businesses,

9
 Problem of protection of spiritual security in production services.

The specifics of the services of innovation:

Inseparability of production and consumption,
The intangible nature of the service with a high proportion of information
The key role of human resources in providing services,
Influence of organizational factors on the performance of the company.

The specific characteristics of tourism often constitute a restriction or problem that can serve
as a springboard to increase product value through innovation. Weiermair (2006) states these
differences between industry and tourism:
Tourism produces and sells packages of products (or "experience"), which are
intangible and cannot be stored,
Consumption requires the active involvement of the customer,
Production and marketing of tourism often involves large capital assets (airlines, hotel
chains, car rental).
Exchange, distribution and final consumption require interaction
Various workers (travel agencies, restaurants, buses, etc.)

Tourist consumes package in the area where he spends his vacation. To create experiences
multi-suppliers are involved which requires vertical cooperation because an overall quality
evaluation of the tourist depends on cumulative perception of quality. In terms of the tourist,
product is a complete experience that covers everything from the time he left the house until
he returned home. Unused offer cannot be stored. Efficient use of capacity is one of the major
problem areas of tourism (Weiermair, 2006).

Decelle (2006) points out that while innovation in tourism is more or less unlike than
innovation in other sectors of services, production models or even examples of agriculture can
help us better understand this process. He considers companies providing services in terms of
innovation for users of technology which was produced by other companies. Innovation in this

10
area does not concern technology but focuses primarily on professional know-how, brand and
design which play an important role.

1.1.2. Determinants of Innovation

The most important aspect of economic advance is the process of creative destruction. This
means that the structure of an enterprise will be changed by constant eliminating of old
products and structures and designing new ones. In this view innovations convert into basic
driving forces of economic change and growth (Walder, Weiermair, Sancho Perez, 2006).

Based on the analysis of motives Weiermair (2006) has earmarked 3 factors that determine the
level and pace of innovation in tourism:
Determinants related supplies and suppliers - offer factors,
Side of demand,
The level and pace of competition.

a) Offer factors. New technologies have caused the development of new skills, materials, new
services and new forms of organization. This was true especially in the last two decades in
which technological innovation played a key role. In the travel industry technologies have
brought new form of business called "e-tourism" which is now the most successful form of "e-
commerce". This event created a need for new skills management in tourism (e-marketing). A
new information services for guests emerged (e.g. database) and also new forms of
organization of the network, particularly cooperation in the field of marketing using new
technologies.

b) The changes on the demand side. As on the demand side there have been also changes as on
the supply side. Social progress in employment, population pyramid, individualization and
increased demand for quality changed the behavior of tourists and people in their free time.
The new lifestyle was created by change in working hours, higher incomes, increasing value
of leisure time and vacation which are now considered an important part of life. The key

11
drivers of quality services are accuracy, accountability, convenience/suitability, speed and
price. Aesthetics, personal attention and possibility of choice are secondary and are considered
as "added features". Anyway, it helps to create a special "value for money" for the customer.
Customer orientation plays an important role in service innovation. Valuable information can
be obtained from customer behavior which is closely involved in the production of tourist
services. Companies must be prepared to adapt to the changing interests and values of their
customers. The most successful new products offer special and unique value based on
innovation which takes into account the interests and needs of the client. Such innovations
lead to greater market share, increase efficiency and facilitate the achievement of the
objectives (revenue, profit).

c) Competition. Many of the tourism industries including airlines, transport, hotel chains, tour
operators, car rentals are highly concentrated and act as a global player in the field. The
growth of the market and further technological advances in IT can transform normal rivalry to
ruining competition. Globalization and deregulation have led to the amplification of
competition. As in other areas of economic activities that promote more innovation process
(networking, reservation and revenue management systems, etc.) than product innovation it is
too easy to emulate the opponent.

Kubičková (2006) reported the following innovation barriers in services:

Intellectual property rights and imitation - due to services variability imitation of an
intangible product and innovation becomes less of a problem for service businesses as
imitation products for the manufacturing enterprise,
Information – production of services is based on quality information and knowledge.
When selling services an excessive respectively unwanted information can come to the
client about the product parameters, respectively the process of providing services,
Unemployment growth, the level of knowledge and skills - expansion of the service
sector and the emergence of new fields of services has led to an increase in jobs in
services, and also to the need for highly skilled workers. These requirements have
grown so fast that employment has become one of the major problems of the services
sector,

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 Short cultural and institutional history of innovation in the service sector - service
companies do not have sufficient knowledge in this area and underestimate the
importance of innovation, in other words cannot be identified.

According to Pitra (2006) can be ensured a high level of competitiveness in organization with
these measures:
Regularly innovate offered products or services
Modernize production technology, distribution channels and efficiently deploy the
means of information and communication technologies for the realization of many
business activities,
innovate business processes by making the organizational changes of the internal
environment of the organization and also changes of the nature of social environment,
Ensure prompt supplement of missing resources and entrepreneurial capabilities of the
organization by its purposeful involvement in a suitable strategic alliance (Pitra, 2006).

Companies which will not comply and will not produce new products that better meet
emotional, social and practical needs will disappear. Brackenbury (2006) provides a rule under
which a company that fails to invest 10% of their annual revenue to innovation cannot
compete with others.

Brackenbury (2006) has developed a list of ideas that can be used to achieve successful
innovation:
Market Research
Monitoring trends,
Monitoring needs - finding a solution to the existing problem,
Monitoring solutions - finding new uses of existing technology, e.g. computers, laser,
Use of intellectual inventions
Uses of random events - innovators in such situations often run into something
significant.

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When monitoring the impact of different ideas to achieve success the following order was
created:
1. The use of random events
2. Market research
3. Monitoring needs
4. Monitoring solutions
5. The use of intellectual inventions
6. Tracking trends

The least successful was the category of "Monitoring/Repeating trends" followed by

"intellectual invention" with three times the failure versus success. "Monitoring needs" and
"Monitoring solutions" reached twice as many successes as failures. "Market Research"
produced three times as much success as failure. The winner was the category of "random
events".
The determinants in driving innovation include in particular obstacles that businesses have to
face. Weiermair (2006) as barriers mentioned lack of funds, time and know-how, aversion to
risk-taking and all internal factors. In his work he highlights the bureaucracy, politics and
other external factors that indicate particularly European companies as obstacles which in the
greatest extent influence the decision on the introduction of innovations.

1.1.3. Types of innovation

Weiermair (2006) and Moscardo (2008) used model of Hjalager to sort innovation in tourism.
Hjalager argues that despite the tendency to combine innovation with the creation of new
products product innovation is only one type of innovation. Other types are process
innovations (where the change is in the manufacturing process), management innovations and
institutional innovations.

The distribution of existing innovations in different branches of service (Kubičková,

Benešová, 2007):

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a) Product innovation. Result of product innovation is new or improved service. Requirements
of product innovation are based on:
1) Client. Change has to be recognized and accepted, bringing qualitatively superior benefits
2) Company. Change has to be effective and entrepreneurial rewarding.

Higher product innovation requires not only a higher level of technological security but brings
with it a greater risk and with it proportional possibility of better earnings.

b) Process (technological) innovation - its result is a new or significantly improved method of

providing services. Technological innovations have resulted in a new or significantly
improved method of service production. Industries emerge in the acquisition of new
technologies as producers and services are the main users. According to the results of the
OECD study, conducted in the 90s, tourism is one of the fields with smaller intensity use of
technology but the process of globalization has increased the need to use particular
information and communication technologies.
Technological innovation is reflected by streamlining the production processes through new or
improved technology. The most common application is in the form of computing and
communications technology.

c) Organizational innovation - significant organizational change. For organizational innovation

considered Kubičková (2007) introduction of a new organizational method in business
practices, workplace organization or external relations. She defines it as the implementation of
new or significant changes in the organizational structure or managerial methods in order to
greatly improve the use of knowledge that employees possess in the enterprise, improve the
quality of goods and services and streamline productivity.

There is a strong link between technological and organizational innovation in services. Both
types of innovation interact. Organizational innovation considered Kubičková (2006) for true
innovation because it results in the growth of labor productivity and profits and increases
competitiveness.

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Weiermair (2006) focused on the comparison of the frequency of occurrence of different types
of innovation. His main concern was to proof the superiority of the process innovation over
product innovation in different environments. Based on interviews conducted in the US and
Europe with major national and global companies in the field of tourism including tour
operators, travel agencies, hotels, hotel chains, cable car operators, amusement parks and
online tourism service providers, restaurants and charter airline concludes the following
conclusions:

The private sector carries out only those innovations that promise a profit (the main
driving factor)
High costs and risks of innovation combined with intense competition create an
environment for process innovation, a method to reduce costs,
Most companies with the exception of a few travel agencies and companies operating
the cable cars preferred strategy of product differentiation,
Between firm size and innovation activity is a direct connection
Small firms are particularly imitators; they are "stealing" innovation or prefer local or
regional products.

Weiermair (2006) states that the most important innovations in tourism are:
Information technology, online travel services and tourism (often not interpreted as
innovation),
New forms of business associations and cooperative marketing,
Quality assurance, marketing practices, customer and employee satisfaction,
New forms of distribution (online booking), relationships with intermediaries, reducing
costs of delivery of products.

Innovations in tourism are often based on key competences involving internal and external
factors. Internal corporate resources are the most important determinants of competitive
advantage for the company which is difficult to imitate. In this context, Hjaleger considers
particularly useful following definition of innovation: regular innovation, innovative niche,
revolutionary innovation and architectural innovation (Weiermair, 2006).

16
While innovative niche emphasizes new forms of co-operation and does not affect the existing
powers architectural innovation redefines relationships with customers and existing markets.
Branch structure and target groups remain unchanged in the case of a revolutionary
innovation, despite the fact that the service sector has experimented by the adoption of new
technologies. Regular or incremental innovations are implemented using existing
competencies and relationships. This includes: increasing productivity, improving the quality
and training of staff (Weiermair, 2006).

The above mentioned systematic categories considered Weiermair (2006) to be useful,

although especially in the last decade we can recognize the reduction of product life-cycle.
This change also applies to innovation and brings dynamic change to innovation.

1.2. Examples of innovation

If you Google the phrase "faith-based businesses," the results point to companies that pursue a
religious agenda. But there's another kind of faith in business: the belief that a product or
service can radically remake an industry, change consumer habits, challenge economic
assumptions. Proof for such innovative leap is thin, payoffs are long in coming if they come at
all (Safian, 2014).

Fast Company creates every year a list of most innovative companies around the world and
according to the research here are a few of the best for the year 2014:

1) GOOGLE - the most successful internet enterprise. Google is best known as a search engine
which is a simple function, and more than an advertising platform, although the vast majority
of its revenue comes from ads.

Many of its current projects or milestones are life-changing, or aim to be:

Calico - a spin-off company, working to extend the human lifespan.

17
 Google‘s autonomous vehicles – reached 500,000 driver-free mile benchmark,
incident-free.

Shopping Express - an experiment in same-day delivery with national and local

retailers.

Google Now which reminds users when their favorite band or author has a new release
and when the last train is leaving—before it's too late.

2) AIRBNB - By this summer, Airbnb will assume the InterContinental Hotels Group and
Hilton Worldwide as the world's largest hotel chain—without having a single hotel. The
startup, which allows users to rent out their unused rooms or available homes to strangers,
exceeded 10 million visits on its platform last year, doubled its listings to 550,000 (in 192
countries).

3) VIRGIN AMERICA - Virgin America is the only airline based in Silicon Valley, and it has
learned to act like its disruptive customers. It has tested everything from in-flight social
networks to reevaluating how to buy tickets, and the reward is Valley-like: 2014 revenue of
almost $1.5 billion and a $306 million IPO. They started to evolve services and trust that
business model would follow. Virgin put together a group of about 30 entrepreneur frequent
flyers, who generate ideas for the airline. They wanted an in-flight social network, so Virgin
collaborated with Here on Biz for an app that connects flyers with other travelers on their
craft, on other in-air flights, and even at the destination. In 2014 it revealed a sleek, headline-
grabbing website redesign that‘s set the benchmark for all ticket-buying websites, and
extended to include more cost-effective flights. It also offered stock options to frequent
customers before the firm went public.

4) E LA CARTE - Has developed a tablet for restaurant tables called Presto that growths sales
by up to 25%—so much so that Applebee‘s ordered 100,000 of them, and it is used at 200
restaurants. With Presto, guests can order food and beverages on their request, play games
while waiting for their dishes, and then pay the bill without having to wave on the waiter. E la
Carte owns the Presto tablets and makes recurring user fees from clienteles.

18
5) PANERA BREAD - Panera is in a crowded category called "quick service" like
McDonald´s or Pizza Hut. But Panera leads them all with a full restart called Panera 2.0,
which contains far-reaching adjustments to how customers dine in and out, how food is
prepared, and how it‘s provided. The modification began last year, and is currently being
evolved across all its 1,800 U.S. restaurants. The core of Panera 2.0 occurs in one of two
places: either on the Panera app on a customer mobile device, or at a booth of tablets in the
restaurant. On the app, to-go users can place a portable order up to five days in advance and
pick up food from a distinct shelf in the restaurant, thereby avoiding the line. Or dine-in users
can order on their device from their table, and food will be carried to them. Clients can modify
dishes as they order, and the app will remember users‘ preferences - so long as they‘re
registered in the restaurant‘s digital loyalty program.

―I do not believe that any amount of market research could have told us that the Sony
Walkman would be successful, not to say a sensational hit that would spawn many imitators.
And yet this small item has literally changed the music-listening habits of millions of people
all around the world‖ (Martin, 1994, p.3).

When introducing costly innovation it is important to predict their success. But as it is possible
to see, it is very difficult to forecast success of innovative products. Following examples show
failures when anticipating the most important innovations of the 20th century: In 1939, The
New York Times reported the success of attempts which predicted the coming of a potentially
fascinating new product: television. Reporters and the newspaper did not think that the new
product could be a success - at least not in the United States. They thought that television will
never be a serious rival for the radio since everyone must sit and keep their eyes on the screen
for which an average American family does not have time. AT & T in 1983 let one of the most
famous consulting firms made a forecast about the likely number of mobile phone users in
America in 1999. The forecast predicted roughly one million subscribers of mobile phones
that year. In fact, this number exceeded 70 million (Rosenberg, 2004).

19
2 Methodology

The procedure for handling this work and different methods are used to achieve the main
objective and partial aims of the work. Bachelor thesis consists of three main parts: theoretical
basis for solving those problems, analytical and suggestion section.

Within the theoretical part is defined the term of innovation, characterized innovation in
services, listed factors affecting innovation and given specific types innovation.

The aim of the analytical part is to identify differences when introducing innovation in
different tourist facilities. For objects of research were selected following companies: Travel
agency Avicenum, Hotel Park, and Restaurant Svišť. These companies are situated all over the
Slovakia. Feature selection was made to take into account the criterion of diversity in terms of
the type of business and the criterion of experience with implementing innovations.

Methodology of the thesis is divided into several interrelated parts:

Study the domestic and foreign literature which deals with solving problems,
Defining the objects of research,
Collection of secondary and primary data and supporting documents
Analysis and evaluation of information
Evaluate and propose solutions.

In this work will be used the following theoretical methods:

Method of analysis and synthesis - general logical methods are used to obtain
information on resolving the issue. The analysis is viewed as decomposition
components of the whole which leads to the relatively simplest components, synthesis
consists the joining of parts to a whole.
Method of abstraction – is based on the thought separation of the essential
characteristics from not that significant. Abstraction is one of the basic thought-
operations, in which one element is isolated and all other are excluded, abstracts from
them.
20
 Induction-deductive method - the scientific method, which is used in the formulation
of conclusions. Induction is understood as a process from the particular to the general,
it allows the formation of theories and hypotheses. Deduction is understood as the
process of the general to the particular, in which the arguments which are believed to
be correct, logically infers a true conclusion.

To process this thesis is necessary to obtain information from secondary resources that already
exist, and primary sources, which are obtained in the field. From secondary sources will be
used library resources, information published in specialist publications and information from
web materials of various facilities.

To accomplish the goals of work is necessary to obtain information from primary sources,
using the method of controlled interview. This method requires direct communication with
people. It is a way of knowing the truth about a topic by purposeful and guided interview. This
method will be used during a meeting with representatives of the various companies.

For the purposes of the interview were developed questions on the basis of partial indicators of
SSII used in the survey CIS considering 4 areas:
1. Determinants of innovation: human resources, the demand for innovative products and
services, financing options,
2. The types of innovation: technological (product and process), non-technological
(organizational and marketing)
3. Results of innovation: outcomes, the benefits of innovation,
4. Protection against imitations - intellectual property, patent, trademark, industrial design.

Introducing innovation is strongly affected by the skills level of employees in charge of

companies. Analysis of Human Resources is focused on determining the availability of skilled
workers in the labor market and the willingness of companies to invest in increasing the
educational level of workers.

21
Another analyzed factor influencing the innovation is the demand for innovative products and
services. This determinant has been studied according to a survey of the CIS and 10.7% of
companies indicated a lack of demand for innovative products by customers as the major
obstacle of innovation. The aim was to establish whether individual companies suffer from
consumer demand for new products and services, what products / services are queried, or there
are different requirements from customers.

Lack of funding for innovation is according to Weiermair (2006) the most important
determinant of innovation. Some innovations can be financed from public funds, for example
under the operational program Competitiveness and Economic growth, which is a call for
support of innovation activities in enterprises. By this analyze will be determined the view of
individual firms to innovation funding opportunities from public sources.

Types of innovation in different facilities may vary in relation to the services, technology
services, the existing organizational structure and marketing methods. Part of the analysis is
focused on determining the predominant type of innovations in individual enterprises. The
analysis will also serve to compare different types of innovation in enterprises.

The aim of introducing innovation is the change of existing condition of an indicator to a

better condition. The benefits of technological and non-technological innovation may vary.
The aim of this section is to highlight the benefits of different types of innovation in analyzed
enterprises and possible quantification of outcomes.

Since innovation is the key to having an advantage of innovative firms in the market the
question of protection against imitation arises. In Slovakia there are legal options to protect
intellectual property; however, due to the nature of innovation in tourism in some cases these
options are irrelevant. The last part of the analysis will be focused on the need to use the legal
possibilities of intellectual property protection regarding innovations in individual companies.

22
3 Analytical part

To maintain competitiveness in time of globalization and the global market crisis put pressure
on creating new ideas even in Slovak tourism companies.
The analytical part deals with innovation activity and its measurement on the European scale
and analyzes and compares the innovation in selected Slovak tourism businesses.

3.1 . Innovation activity in SR and EU and its measurement

Tracking the development of innovation in the Member States of the European Union provides
Communication Commission (European Commission) no. 1450/2004, which the Commission
(Eurostat) collects and evaluates statistical indicators.

An important indicator by which we can compare the innovative activity in each country is the
Summary innovation index (SII) which provides an overview of aggregate national innovation
performance (Figure 1). SII is an identifier that is composed of 24 indicators. SII value is
between 0 (low performance) and 1 (high performance). Based on the performance the
individual states are classified into the following categories: innovation leaders, innovation
followers, moderate innovators, modest innovators.

Compared to other EU countries, Slovakia belongs to the "moderate innovators" countries

together with Spain, Latvia, Poland, Portugal and Hungary. Their results in this area remain
below the EU average, although in the 2006 - 2013 achieved a significant improvement in the
index.

Another indicator that takes into account the specifics characterizing innovative activity in the
service is the service sector innovation index (SSII). This indicator takes into account other
performances than SII which is why there are differences in the order of states in the SII and
SSII.

23
 Figure 1 Growth in innovation performance 2006-2013 of EU member states
Source: Innovation Union Scoreboard, 2014

The most important source of innovation indicators is the CIS (Community Innovation
Survey), which is a survey of innovation activities across the EU. The latest survey, the data
are available on the Eurostat website New Crones was launched in 2012 and provides an
overview of cross-cutting firms with 10 or more employees in the 28 EU member states.
Information was collected from respondents of manufacture industry and service sectors.

24
 Figure 2 Overview of EU member state enterprises with innovation activities and type of
innovation according to CIS
Source: Statistics Sweden, 2015

For the purpose of the survey CIS was the pointer SSII compiled and based on 23 indicators in
9 areas.
Calculating the indicator is based on the conversion values using min-max method:

(xcij – min( c jxij))

r
X cij = ______________________________

(max( c jxij) – min( c jxij))

Where x rcij is the re-scaled value for the country c of indicator i in sector j. The re-scaled
value is obtained by first subtracting the minimum value of the indicator i in sector j for all
countries with data and then dividing the difference of the maximum and minimum values for

25
indicator i in sector j. All values are transformed to a value between 0 and 1 the maximum
value is transformed to 1 and the minimum value to 0.

SSII
0.6

0.5

0.4

0.3

0.2

0.1

0
Bulgaria

Slovenia

Sweden
Poland

Malta

Austria
Latvia

Cyprus

Denmark
Italy

Hungary

Luxembourg

Estonia
Slovakia

Portugal

Lithuana

France

UK

Belgium
Romania

Greece

EU

Germany
Croatia
Czech Rep.

Spain

Ireland

Netherlands

Finland
Figure 3 Overview of SSII in EU member states
Source: European Service Innovation Scoreboard, 2015

The most innovative countries in the field of services are Denmark followed by Finland and
Estonia. On the contrary, the least innovative countries include Romania, Bulgaria, and Latvia
and on the fourth worse place is for Slovakia (Figure 3).

26
4 Findings

4.1 Analysis of innovation activity in selected facilities

For realization the analysis of innovation activity were 3 business travel industries selected.
Selection criteria were set to be possible to analyze different types of facilities in which
innovations were introduced.

When choosing businesses were taken into account the following criteria:
Company has introduced innovations in the last three years,
Businesses have different scope (accommodation, catering, travel agency),
Enterprises are located in different regions of Slovakia.

4.1.1. Characteristics of tourism enterprises

Representatives of the various types of analyzed enterprises are:

Avicenum Ltd. based in Bratislava - travel agency
Wellness Hotel Park in Piešťany – accommodation facility
Restaurant Svišť in Nový Smokovec - catering facility

a) Avicenum Ltd.
The company Avicenum Ltd. is a travel agency that provides services to individual and
corporate clients, travel agencies and government institutions. On the Slovak market and
abroad has been operating since 2002. The company has a presence through partner offices in
Austria, Germany, UAE, Kuwait and Saudi Arabia.

Company name Avicenum points to the most important Persian thinker and writer of 11th
century, Avicenna, real name Abu Ali al-Husajn Adb Allah Ibn Sina al- Quanúni. His most

27
important work is Canon medicine, which for years has become a code of principles of
scientific medicine and most widely read work in medical schools.

The company was founded in 2000 with the name Bora-Bora, Ltd. and in 2001 was renamed
the Avicenum, Ltd. the name that more accurately reflects the main focus of the travel agency.

Number of owners in 2007 was reduced from two to one, and by 100% owner became Ing.
Peter Salem.

The main area of TA Avicenum activity is an area of spa tourism but it provides also corporate
services and holidays. Company offers its products to its customers mainly through electronic
catalog on which is currently attached the whole reservation system. Booking system of spa
and wellness stays of avicenum.net specializes in therapeutic and relaxation stays in the spa
and wellness facilities in Central Europe. Since 2006, it uses the internet brand name Relax
Galaxy and is available in eight languages (Slovak, Czech, Hungarian, Polish, English,
German, Russian, and Arabic). The company provides its customers a wide range of
relaxation, wellness and family stays in spa and wellness facilities in Central Europe -
Slovakia, the Czech Republic and Hungary, Poland, Austria and Slovenia. On August 31st
2014 was in travel agency´s offer registered more than 400 facilities in 170 destinations of six
countries. For fast and efficient processing of client requests is to operator available a special
reservation system which records client requirements, provides an overview of the state of the
requirements and make available a great amount of additional information. Company
management provides interesting statistics not only on the quantity but also the quality of
product sales, as well as it gives an overview to suppliers of the interests of the market and
also the information of customer satisfaction with the services of specific facility.

The organizational structure includes the staff consists of 10 internal and 4 external
employees. The owner of the company is also the executive director. Running the company is
provided by staff in the following positions: executive director, spa project director, product
manager, finance manager, finance assistant, client service manager, project manager, regional
manager, design and web and call center staff.

28
 b) Hotel Park Piešťany
Hotel Park is a wellness and spa hotel which provides accommodation and food services,
supplemented by medical treatments, wellness services and other additional services at the
level of three-star hotel. Offer of the hotel complete conference facility for 200 guests and
training equipment. For guests is available an accommodation part of the hotel with a total of
212 beds. Beds are located in 89 double rooms and 7 suites. The hotel has provided medical
treatment in the field of physical medicine, balneology and medical rehabilitation.
Professional guarantor of health care is a hotel doctor.

Hotel name was derived from its position. Located in a pleasant and quiet city park, next to the
river Váh, less than 500 meters from the pedestrian zone and Spa Island.

The hotel has a long history, its current form and name received in 2006, when it has
undergone a reconstruction. In 2011, was completed a new part of the hotel with additional
services: relaxation pool with water attractions such as waterfall, bottom geyser, water chairs.

Company based on the number of employees is among medium-sized enterprises with an

average of 54 employees (in 2014). The hotel is owned by the company Merk Reality Inc.
based in Bratislava which was established in 2000 as a division of SATUR Inc. to the three
companies of which one is the Merk Reality Inc.

c) Restaurant Svišť
Restaurant Svišť is situated in the center of High Tatras - the part of Nový Smokovec in the
area of hotel complex. In the warmer months, the area of restaurant Svišť also extends to the
terrace. The restaurant offers a choice of meat, vegetarian, farinaceous dishes, salads,
alcoholic and non-alcoholic beverages. The restaurant is connected to the convention center,
which is a guarantee of the complexity of services provided when organizing of congresses.
The proximity of churches is an advantage when organizing weddings or christenings.

29
Name of the restaurant highlights the connection with the Tatras nature. Svišť in translation is
a marmot and is a typical representative of the Tatras fauna, which is strictly protected because
they are on the edge of extinction.

Restaurant was created because of the pressure of the spa customers to create a comfortable
and entertaining dining environment and social events. Compared to the spa tradition it is one
of the younger establishments, founded in 1995.

Organizationally belongs the restaurant under the Spa Nový Smokovec, it is the property of
Spa Nový Smokovec, Inc. Hotel guests are within their individual stays using the restaurant in
Hotel Palace. Restaurant Svišť is used primarily during special events, routes, receptions,
banquets and celebrations.

The organizational structure of the company is due to the low number of employees simple.
Restaurant manager manages group of 8 members consisting of 4 chefs and 4 waiters.

4.1.2. The impact of determinants on innovation

Introducing innovations may significantly affect the qualification of human resources, the
existence of demand for innovative products or services, and the financing of innovation. The
different types of facilities were analyzed following determinants.

Human Resources
Tourism enterprises are characterized by lower levels of qualification of the human resources.
In the sector are predominant positions that do not require specific skills and knowledge.

Avicenum: Travel agency requires from employees primarily language and computer skills,
communication and organizational skills. The majority of employees have a university degree
in economics. Since headquarters is in Bratislava, it often employs young graduates without
practical experience. In such cases is important internal training and investment in knowledge

30
transfer. Travel agency in connection with the introduction of a new reservation system
SPADKOS implemented training of employees in the long-term (one year). This project was
co-financed by the EU.

Hotel Park Piešťany: Analyzed hotel in addition to accommodation and food services provides
also health services; it employs highly qualified personnel in the field of medicine (doctors,
physiotherapists). Despite these conditions the hotel management is satisfied with the skills
level of staff and the hotel does not suffer from a shortage of skilled labor. The hotel Park staff
training was carried out at the opening of a new relaxation pool, sauna. Since it was the
extension of the hotel´s services, new employees were recruited who meet the requirements
and have the necessary expertise. The training was focused mainly on the maintenance of
equipment.

Restaurant Svišť: Restaurant in the words of manager has a shortage of skilled workers.
Problems can be seen especially among the younger generation, from which many talented
people go abroad. The employment of graduates is facing a lack of knowledge of modern
technologies.

In terms of human resources, is necessary to say that the introduction of costly innovations is
mainly in the hands of company management. Analyzed companies belong to small and
medium sized businesses that lack work positions focusing on innovation and development of
new products. Development of new products, services, introduction of procedural or
organizational innovation was initiated by qualified managers who have lot of experience.
From the financial point of view the smallest range of innovation was introduced in Restaurant
Svišť, which is the smallest of the analyzed companies and the only, the manager does not
have a university degree.

Educational activities were carried out in all businesses in connection with the implementation
of innovations. However, these activities were not affected by managerial skills for
innovation.

31
Demand for innovative products and services
Another analyzed factor influencing the innovation was the demand for innovative products
and services. This determinant has been studied due to the CIS survey which showed that
10.7% of companies indicated a lack of demand for innovations by customers as the major
obstacle in innovation.

Avicenum: Travel agency specializing in the spa and wellness stays and in its offer has more
than 400 facilities in six countries. This offer is regularly updated, new facilities are added
while the least demanded are removed from the menu. There is pressure from customers to
introduce new products in the form of other devices that are to some extent taken into account
when introducing new products. Based on the responses of clients the main distribution
channel of travel agency is regularly updated, which is the website. The long-desired service
in this area is an online payment.

Hotel Park Piešťany: Due to the changes in customer behavior demand for new products and
services are generating. Before the new product is introduced these requirements are necessary
to examine in terms of profitability. The manager of the hotel, as searched innovative
products, mentioned mainly complementary services (treatments, leisure activities) and
creation of conditions for special clients (families, immobile persons, customers with pets).

Restaurant Svišť: The restaurant meets the demand for new products (food, drink) mainly
when organizing events: weddings, routes, receptions, banquets, celebrations. In these
situations they mostly satisfying client needs. These products, however, do not appear on the
menu, as their production in a small scale would be costly and unprofitable considering the
material and technology. As an example can be mentioned seafood which due to high price
and insufficient demand is not included in the menu.

All analyzed companies perceive the needs of customers to change existing or introduce new
products, services and distribution methods. The reaction on the requirements for all
companies depends on the financial requirements of innovation and expected benefits of that
innovation.

32
Possibilities of public funding
Avicenum: Travel agency is in these years implementing a project to introduce a new
reservation system called SPADKOS. Within the project was procured office equipment, a
new reservation system and conducted training of new employees. Manager of the TA
considers public funding for a method which can largely influence the decision on the
introduction of innovations.

Hotel Park Piešťany: Innovation of products and services should be performed continuously
and it is therefore not possible to rely on public resources. When introducing costly
modifications is needed to utilize all available resources. Financing investment activities of
public funding sees manager limited. More resources can be used to finance non-investment
activities, such as education, creation of partnerships.

Restaurant Svišť: Restaurant was able to obtain funding from public funds to finance staff
training and similar resources were funded exchange and completion of catering facilities of
the restaurants.

Funding opportunities for innovation from public sources see managers as limited. Despite
experience with the financing of innovation activities from public funds they do not rely in the
future only on these resources but consider them rather complementary.

4.1.3. Types of initiated innovation

According to the survey CIS; companies that made innovation, prevalent the process
innovation (75.6%) over the product innovation (65.1%) to a small extent. Organizational
innovations were introduced to a similar extent (64.9%). At least companies have introduced
marketing innovations (35.6%).

33
Selection of the analyzed companies was conditioned by introducing innovations. In all cases
was conducted product innovation. Besides this innovation all companies have introduced
other types of innovation.

Avicenum: Travel agency introduces new products in the form of new equipment and product
packages regularly. These innovations are less costly; they are making the information on the
website easily available and creating conditions of booking. In 2012, the agency has
introduced a new reservation system, which records the demands of clients, provides an
overview of the state of the requirements and make available the amount of additional
information. Accompanying phenomenon of this process innovation was an organizational
innovation in which the company´s call center was moved from Bratislava to Rimavská
Sobota. As a marketing innovation can by mentioned the renewal of the web site of travel
agency which in addition to basic information about the price and description of the services
included in the price provides an overview of the capacity of the hotel. Calendar is regularly
updated and this change is performed by competent staff of individual accommodations.
Information about the availability helps the client to decide and to speed up the work of travel
agency staff.

Hotel Park Piešťany: In the hotel the following product innovations were established:
construction of relaxation pool, reconstruction of conference room equipment, creating new
accommodation packages that include access to spa pool, creating access to the internet and
widen the choice of treatments. Construction of the pool and putting it in service required the
introduction of organizational and marketing innovations: recruitment of new staff, their
training, publishing new promotional materials, renewal of the hotel website. Among the
procedural innovations can be considered enabling of online booking of rooms.

Restaurant Svišť: Restaurant introduced the following product innovations: the introduction of
new dishes related to change in technologies, weekend events (e.g. Grill party), renovation of
the restaurant equipment. Buying a new grill was procedural innovation in the form of the
introduction of new cooking technologies on this unit. Organizational and marketing
innovations of larger scale were not introduced.

34
The comparison of individual facilities is possible to see that the introduction of product and
process innovation generally causes also the introduction of different types of innovation.
Product innovations introduced in the travel agency and restaurant are less costly than in the
hotel. In spite of that, in all analyzed companies prevailed product innovation over the
procedural. Less costly non-technological innovations (organizational and marketing) were
introduced in the travel agency and the hotel. In case of such innovation it is not a radical
change but it is a series of incremental changes.

4.1.4. Benefits of innovation

The benefits of innovation were analyzed in terms of improving flexibility, improving the
quality of products and services, reduction of labor costs, reduce overall costs and reducing the
reaction time to customer needs.

Avicenum: Travel agency by introducing a new reservation system acquired the ability to
respond faster to customer requirements, simpler handling of bookings and thus also saving
costs on the labor force. This saving is based on the reduction of the time needed to handle
client requests. At the same time organizational change and shift of call center to Rimavská
Sobota caused a reduction of labor costs which is also connected to the different conditions in
the labor market. The introduction of regular calendar occupancy updating and other
information the percentage for handling requirements increased from 35% to 50%. In 2014,
however, neither product innovation was able to prevent a decline in annual sales.

Hotel Park Piešťany: As a result of product innovation, was the improvement of the hotel´s
quality of providing service, extending the offer and creation of new products in the form of
accommodation packages. Marketing activities (participation in international fairs, edition of
promotional material, print ads, the possibility of online booking through the hotel website)
significantly affected the percentage of hotel occupancy. Compared to 2013, room‘s
occupancy increased from 25% to 40% and bed occupancy from 22% to 37%.

35
Restaurant Svišť: Restaurant manager as the main contribution of innovation mentioned the
fact that in times of economic crisis visit of the restaurant remained unchanged. The
introduction of product and process innovation improved the quality of products and they are
more flexible in dealing with the special requirements during the events. The main objective
of innovation is to increase profit. Benefits of the innovation are, however, difficult to quantify
in terms of increased revenue for several reasons:
In the same period (in the same year) was introduced more innovations in several
areas,
Benefits of the innovation may not be reflected immediately after its introduction,
Revenues may also affect the external factors.

Enterprises except for a travel agency stated that they did not reduce the volume of annual
sales for the last three years. Process innovations in the restaurant and travel agency brought
flexibility in response to customer requests.

5. Recommendations

Introducing innovation in Slovak tourism enterprises showed that in two out of the three
companies has led to an increase in profit. TA introduced innovation which led to increase in
handling requirements however the total revenue did not exceeded last year. Therefore to raise
the profit the following recommendations could be launched.

Avicenum: TA should work closely with hoteliers a recommend them necessary

improvements that customers often complain about. Most common advices could be keep your
rooms and water glasses clean. Replace worn carpet. Never forget the importance of customer
service. Partner with TA for a win-win. Their websites are beautiful, but customers urge them
to have vital information just one click away. Always deliver value. And finally, travelers
want Internet access to be free.

36
Another counsel that can be used is engaging website to share customer‘s experience. Travel
is commonly suitable to visual media. Content marketing especially through social media has
been driven mostly by pictures, and the travel agency could adopt them as the main way it
speaks to its users in digital media.

Technology that places high-quality cameras in travelers' hands has also powered the
marketing development. Agency can tap travelers' photos, videos, and social networks for
their marketing materials. Travelers can lead the conversation independent too, using hashtags
and geotagging to share their experiences of a place or attraction.

TA could share attractive visuals on their website that not only depict a place, but draw
emotion from the viewer.

Next suggestion is also including website. Sometimes travel agency offer cheaper but
nonrefundable deal on a hotel room but unexpectedly people have to cancel their trip and they
lose their entire payment. But that does not have to be true. People could post their unusable
reservation on TA website, where some other traveler might buy it (TA makes sure the hotel
accepts the transfer including the acceptance of a name change). Clearly, they have to sell it at
a reduced price. TA does not have to guarantee that somebody would buy the listing. But a
possibility for even a partial refund is better than losing the whole prepayment.

Hotel Park Piešťany: New trends that are becoming popular among big chain hotel are for
example seamless check-in. The guest can check-in via his/her smartphone and go right to
their assigned room without needing to stop at the front desk. Reduced load on front desk,
labor efficiency for hotel and enables staff to focus on meaningful communications with the
guests that choose a full service check-in process. Convenience and choice of service for the
connected guest, those guests that value the ‗full service‘ check-in process can use the services
the front desk. At the same time, the ―silent traveler‖ those customers that value speed and
convenience can choose their favorite silent path. It increases TripAdvisor scores, hotels that
deliver on service choice and decreases waiting gain higher scores on the important review
sites. And as the industry now knows, the higher the review scores the higher increases
revenues.

37
Another recommendation is the Cloud: Most hotels still have their most critical software
system installed on property. Often can happen that the PMS server fails, network fails or
power fails and hotels do not have a backup procedure in place. As a result the client lost
usually multiple days of transactions, sometimes all is lost, and the system is sometimes out
for more than 24 hours.

Hotels can by hosted instead of having their software in property. Hosting solution is 20 times
more reliable than those installed in the property and when things do go wrong, due to good IT
processes a backup is actually available to repair from.

Technical Benefits: Cost effective, No IT required, Reducing cost of ownership, Security, It is

more reliable

Service benefits: Things such as self-service using an iPhone will be a necessary. In order for
guests to interact through their own smartphone with the hotel (to check-in or order room
service), the device needs to connect to the hotel PMS. If the PMS is installed at the property,
the added complexity and security requirements are difficult to manage for the independent
hotels.

Guests and employees will also want to use the advantages of the PMS when they are not in
the hotel. This is difficult when the PMS is installed at the property, however, when it‘s in the
cloud, it can easily be accessed from anywhere on any mobile device.

Next idea is use of mobile phones enabling door opening: It is connected to the PMS of the
hotel. Mobile room keys when combined with the rise of mobile check-in, mobile room key
introduces the seamless check-in for the guest, saves time and it is more convenient.

Last suggestion is mobile applications: Receive alerts telling them the online check-in service
is open. Access information about their bookings: arrival date, number of nights, number of
guests. Receive information about the hotel‘s services (free Wi-Fi, parking, spa, swimming
pool, etc.) Access the interactive map, including the hotel‘s location and the local weather
forecast.

38
Restaurant Svišť: Restaurant Svišť did not introduce almost any innovations nonetheless its
revenue increased. Suggestions that may lead to even higher growth of profit and attracting
new customers go as follow.

Often happens that customers do not know how much to tip. Some of them may not be aware
what the right amount is and could feel ashamed. Others do not like to tip at all. Therefore
restaurant could start to include tipping in the bill automatically. It may lead to a point where
wait staff are simply paid a higher wage and do not have to rely on tips to earn more money
and tips will be built into the price of the meal.

Mobile apps for pre-ordering your meal before you even arrive. In the restaurant a tablets may
be included which can shorten the time of ordering and overall process of serving will be
faster. Indecisive guests may swipe the pictures of meals which could help to choose from the
menu. To reduce the time of waiting multiple games will be available, internet to read news or
in the meantime to entertain kids for families with children.

Because a big part of the Restaurant Svišť revenue is from events to recommend some
improvement they can use an unusual decoration. Food that is locally obtained the farm to
table style trend. Event design too has become more maintainable in which consumable foods
and beverage are cleverly incorporated as decoration into the event.

Another improvement could be immersive events which involve the attendee‘s 5 senses and
put the attendee at the center. This can happen by inviting them to secret locations never been
used before, by connecting them with the sense of smell or by making them feel part of the
lighting of the event. Attendees create the show together with the planners and are part of the
venue. Everyone contributes to make it even better.

39
6. Conclusion

This work has dealt with innovation in selected Slovak tourism businesses. The goals of this
work were met and the analysis of chosen facilities was successful.

The analysis was performed in three different types of tourism businesses, which made
innovations in the last three years:
Travel agency - Avicenum Ltd.,
Accommodation facility - Hotel Park, Piešťany,
Catering facility - Restaurant Svišť, Nový Smokovec.

Areas of the analysis were selected to correspond with the methodology of the survey CIS,
which was conducted in order to identify innovation activity in the services sector.

In selected businesses were analyzed determinants influencing innovation, prevailing types of

innovation, the benefits of innovation and intellectual property protection. At the same time
the factors mentioned above were compared in different types of enterprises.

Selected innovative companies do not feel any barriers when implementing innovations
concerned the condition of qualified human resources, the demand for innovative products and
services and public funding. In the area of human resources they have sufficient qualified
professionals and moreover they increase their working skills by further training. Innovations
of the smallest range were introduced in the company with the smallest number of employees
and the smallest share of university graduates.

Another examined determinant was demand for innovative products and services. All analyzed
companies perceive customer requirements to change of an existing or to introduce new
products, services and distribution methods. The reaction on the requirements for all

40
companies depends from financial necessity of innovation and expected benefits of
innovation.

When comparing the types of innovation can be concluded that the product innovations at a
travel agency and restaurant were less costly than product innovation in the hotel. The
introduction of product and process innovations generally caused also introduction of other
types of innovation. In the case of marketing innovation is not a radical change but a series of
incremental changes were implemented.

Most important innovation contribution of restaurant and hotel was stabilizing of annual sales
even in times of economic crisis. Process innovations in the restaurant and travel agency
brought flexibility in response to customer requests.

To the protection of intellectual property was not devoted a separate section, as far as analyzed
companies do not feel the need to protect their intellectual property mainly because of the
innovations introduction is not completely new to the market and therefore they do not
consider this form of protection against imitations as important.

Answer to the research question is yes. Introduced innovation helped to boost the performance
of all analyzed businesses. It shortens the time of handling requirements and Hotel Park
Piešťany and Restaurant Svišť were able to increase their profit.

For further analysis would be useful to conduct a research of innovation on a greater number
of enterprises which would preserve the diversity of enterprises in terms of size and type in
order to identify the most important criteria when deciding on the introduction of innovations.

41
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Appendices

Appendix 1 List of SSII indicators

1. HUMAN RESOURCES
Share of firms engaged in training for innovation purposes
Share of firms reporting lack of qualified personnel as an important issue – reversed indicator

2. INNOVATION DEMAND
Share of firms reporting uncertain demand as an important issue – reversed indicator
Share of firms reporting no need to innovate because no demand for innovation – reversed
indicator

3. PUBLIC SUPPORT FOR INNOVATION

Share of firms that received any public funding for innovations

4. PRODUCT AND PROCESS INNOVATION

Share of firms engaged in intramural R&D
Expenditures in intramural R&D (% of total innovation expenditure)
Share of firms engaged in acquisition of machinery etc.

5. PRODUCT AND PROCESS OUTPUTS

Share of firms with highly important effects in reduced materials and energy
Share of firms with highly important effects in improved flexibility
Share of firms with highly important effects in improved quality
Share of firms with highly important effects in reduced labor costs
6. NON TECHNOLOGICAL INNOVATION
Share of firms that introduced organizational and/or marketing innovations
Share of firms that introduced organizational innovations
Share of firms that introduced marketing innovations

7. NON TECHNOLOGICAL INNOVATION OUTPUTS

Share of firms with highly important effects in reduced time to respond
Share of firms with highly important effects in improved quality
Share of firms with highly important effects in reduced costs

8. COMMERCIALISATION
Turnover of new and significantly improved products only new to firm (% of total turnover)
Share of firms that have new or significantly improved products new to market

9. INTELLECTUAL PROPERTY
Share of firms that applied for a patent
Share of firms that registered an industrial design
Share of firms that registered a trademark
Appendix 2 Questions of guided interview
1. How do you perceive the qualification level of your employees? Do you lack skilled labor?

2. Did your employees attend training activities in connection with the introduction of
innovations in the last three years? What kind?

3. Do you feel pressure from customers to introduce innovative products and services?

4. Is there a real possibility regarding the innovation funding from the public purse?

5. Have you obtained new devices for the last three years, software for providing new
services? What kind of new services have you introduced for the last three years?

6. Did the introduction of innovations have any effects on improving flexibility, improve the
quality of products, and reduce labor costs? What kind?

7. Was introduced any change in the organizational structure? What kind?

8. Was introduced any change in marketing? Have you introduced new or significantly
improved design, marketing methods to increase the attractiveness of a company or entering a
new market?

9. Did the introduction of innovations have any effects on improving the quality of services,
reduction overall costs and reduction of reaction time to customer needs?

10. Did the annual sales volume increase after the introduction of new products?

11. You have requested registration of intellectual property, patent, industrial design or trade
mark? Why?