Studies of Service Innovation have indicated that operational performance and guest evaluation are important mutually to one another. In other words, to create a successful innovation it is not only the matter of organizing and operating but also the contribution of guests via feedback. Besides, there is a call in the hospitality industry for service innovation that focuses on delighting guests with a new and unique experience, which are different from the commercial standardization.
2.1 Service Innovation
Traditionally, researchers have been following the perspective of assimilation on studying service innovation (Gallouj 2002; Carlborg et al. 2014; Witell et al. 2016). From this perspective, these researchers assert that theories and instruments, which are traditionally used for product innovation, can be adapted for analyzing service innovation (Kindström and Kowalkowski 2014). This school of thought defines individual firms as service producers and guests as service consumers, which are not associated with producing the service (Carlborg et al. 2014).
Furthermore, there is the assumption that services are supplier-dominated, in which service firms are passive recipients of innovations from other sectors (Witell et al. 2016). This perspective is also called as Supplier-Dominated Logic which emphasizes on the importance of technology and capital in influencing the development of the service sector (Gallouj and Savona 2009; Khan and Khan 2009; Toivonen and Tuominen 2009; Lee et al. 2014). However, the theories and instruments of product innovation have been adapted in this perspective without translation or modification (Snyder et al. 2016; Witell et al. 2016). This comes to an argument of the demarcation perspective whereby the assimilation perspective has dismissed the specificities of service’s characteristics. They also claim that the school overvalued the contribution that services can make to products innovation (Gadrey et al. 1995; Gustafsson et al. 2012; Snyder et al. 2016; Witell et al. 2016).
The demarcation perspective argues for the differences in product innovation and service innovation. It also emphasizes the development of new theories and models about service innovation that the service innovation is treated in a different domain, which is called Service-Dominant Logic (Fitzsimmons and Fitzsimmons 2000; Droege et al. 2009; Baron et al. 2010; Ordanini and Parasuraman 2010; Lusch and Nambisan 2015; Skålén et al. 2015). This school of thought considers the important elements of service delivery that has been neglected by Supplier-Dominant Logic. Specifically, guests not purchase for product only, they also expect value, performance and experience created in such exchange process (Hipp and Grupp 2005; Berry et al. 2006; Lusch and Nambisan 2015). As such, the Service Dominant Logic concerns to the aspects of intangible nature of services and the need for guest integration (Vargo and Lusch 2007; Gustafsson et al. 2012; Witell et al. 2016). Besides, Service-Dominant Logic believes that service innovation can be created beyond the contributions of organizational knowledge and non-technological elements (Hertog et al. 2010; Hertog et al. 2011). This perspective has been recognized to contribute to the expansion of service innovation (Witell et al. 2016).
Another service innovation school of thought should also be considered is the synthesis perspective, which emphasizes the importance of combining both the assimilation and the demarcation perspective (Witell et al. 2016). Researchers in this school of thought highlight the importance of the integrated definition of service innovation that is not limited to the technological innovations; they also argue that the definition of service innovation must be broad enough to encompass manufacturing and pure-service operations (Snyder et al. 2016). This synthesis perspective proposes that the combination of both perspectives may influence significantly and feasibly to economic growth (Gallouj 2002; Witell et al. 2016).
2.2 Innovative Service Hints
From the perspective of service operation, guest satisfaction is not only influenced by product and physical values but also by the intangible values of service delivery (Parasuraman et al. 1990). The reaction of guests as evaluating and giving opinions about the service quality of every individual event is defined as Transaction-Specific Satisfaction (Bitner and Hubbert 1994; Jones and Suh 2000). Before evaluating the services, guests have their expectation toward the service performance which is the antecedent of satisfaction (Zeithaml et al. 1990). The expectation, which is formed by accumulated experience, knowledge, information and demand, influences guest actual perception. The actual perception of service performance involves comparing the expected values and the actual values that they receive (Oliver 1977; Zeithaml et al. 1990). Thus, the satisfaction level can be higher or lower depending on expectation. Understanding how guests perceive and evaluate the services are critical points for promoting favorable behavioral intentions such as returning and recommending (Chua et al. 2014; Haddad et al. 2015; Ali et al. 2016; Ahmad et al. 2017).
Berry et al. (2006) classified the service attributes into three groups which are Mechanic hints, Humane hints and Functional hints. First, Mechanic hints consist of the sensory presentation of the service; for instance, ambience, scent, light, touch, taste and sound (Berry et al. 2006; Chua et al. 2014; Truong et al. 2017). Second, Humane hints consist of the appearance and behavior of service staff, who directly interact with and deliver the service values to guests (Berry et al. 2006). Service staff is considered as one of the key players that influence guest impression of the service performance. Humane hints are determinants that have always been a concern to scholars in the hospitality field to maximize the positive experience for guests (Chua et al. 2014; Nguyen et al. 2014; Garg and Amelia 2016; Truong et al. 2017). Third, Functional hints are those that deliver the efficiency and accuracy of the technical quality at its presence or absence (Berry et al. 2006).
The innovative service hints should be new regarding guest accumulated experience, knowledge and information. To influence guest satisfaction of innovative services, the service operations can create innovative hints by service delivery (Lusch and Nambisan 2015). The distinctive feeling may happen at the time the guests encounter with the sensory attributes of the service operation, and they were entirely unaware of the feeling they may receive (Bramble 2013). Thus, the Innovative Mechanic hints can be perceived through the five senses attached with positive emotions to give guests unexpected joy. The tactic of service script that guides the staff’s behavior toward guest-oriented interaction can promote guest perception of warmth and friendliness (Nguyen et al. 2014). The warmth, caring and friendliness are important attributes that offer guests the distinctive memories in the century of standardized service with the development of machine and technology (Kattara and ElSaid 2014; Gabriel et al. 2016).
Therefore, Innovative Humane hints can be reflected by the staff’s manner, appearance and communication technique that encourages guest citizenship and the mutual bonding between service staff and the guests. Positive guest experience expects the innovation delivered by technology and digital applications to be convenient and safe (Kattara and El-Said 2014; Moon et al. 2015; Zhang and Hou 2017). Therefore, Innovative Functional hints include technological products, digital applications and programs embedded with efficiency to facilitate the convenience and safety for guests. Innovative Functional hints could optimize service performance technically toward guest satisfaction of innovativeness.
2.3 The Nature of Hospitality Service Operations
The most dominated approach for defining hospitality is suggested from the work of Brotherton and Wood (2000). The authors define the concept of hospitality that “A contemporaneous human exchange, which is voluntarily entered into, and designed to enhance the mutual well-being of the parties concerned through the provision of accommodation, and/or food, and/or drink” (Brotherton and Wood 2000, p. 142). Although the definition has been challenged as not to capture the sense of the exciting, vibrant and creative of the industry in the practice, it essentially highlights the importance of hospitableness cantered by food, drink and accommodation (Telfer 2000; Hemmington 2007). Additionally, Slattery (2002) emphasizes the three domains approach to define hospitality which are: social/cultural, private and commercial; the author also advises on the context of hospitability business that is industry, corporate and the venue context (Lynch et al. 2011). This classification of hospitality operations has been evaluated as very useful and worth considering of scholars for hospitality studies (Hemmington 2007; Ottenbacher et al. 2009; Ariffin and Maghzi 2012). In such situation, there is a call for investigators to looking at hospitality as a multi-aspect definition to understand and create specific research contexts that can help to explain the characteristics of hospitality comprehensively (Hemmington 2007; Ottenbacher et al. 2009; Lynch et al. 2011; Lashley 2015).
Hospitality is not just about commercial service activities but the warranty of enjoyment, feeling and experience. First, hospitality in the domain of cultural considers the social setting, which is expected to give the guests the cultural value, the expected meaning of religion that the host should be able to offer (Lynch et al. 2011; Ariffin and Maghzi 2012). These cultural values should be well delivered to the guests through food, drink, entertaining activities and accommodation setting (Lashley 2015). In this domain, the most important element is not about the impression of interesting physical materials, but rather the experience, the feeling and the spirit of culture should be well served to the guests (Slattery 2002). Second, the domain of private concerns to the feeling of home that the guests could receive, and the service must be charged reasonably. In other words, the guests expect the value of the service delivered through food, drink, accommodation and leisure activities in the highest standard of hospitableness, which exceeds the price (Slattery 2002). Besides, in the private domain, the relationship between service providers and service receivers is emphasized as a critical point in business management (Slattery 2002; Ottenbacher and Gnoth 2005; Lashley 2015).
Whereas, the domain of commercial is more concentrating on the profitability and the wealthiness of the service operations rather than putting guests’ pleasure as a priority (Slattery 2002; Lashley 2015). The guests will receive the service called “hospitality” as long as they pay for their demand; thus, types of hospitality operations are various such as lodge, bars, clubs, tourism operations, etc. However, the guests, in this domain, do not receive the hospitableness as the academics have defined (Slattery 2002; Lashley 2015).
Lashley (2015) emphasized that almost of studies have been done in the hospitality appears to focus on the commercial domain, with the employment of high-technology to ensure the satisfaction and loyalty of guests for profit concentration (Ottenbacher et al. 2006; Ottenbacher 2007), but neglect to study the influence of private and social domain on actual experience of guests.
Generally, according to the definition of hospitality, the service of pure hospitality operations should ensure the hospitable and memorable experience with entertainment, specialized service quality through service delivery; service products and facilities with high-tech functions to fulfil the guests’ expectation (Slattery 2002; Lashley 2008; Ottenbacher et al. 2009; Rogerson 2010; Lynch et al. 2011; Lashley 2015).