Innovation in boutique hotels in Valletta, Malta

Abstract

Tourism plays a key role in economic and societal development, catalysing both financial growth and job creation. The accommodation sector, which is characterised by competitiveness and dynamism, encompasses a range of market offerings, including boutique hotels. Boutique hotels, which represent a nascent accommodation category, are often defined by their aesthetic idiosyncrasy and sense of individualism. However, as a result of their small scale and heterogeneity, these establishments generally require ongoing innovations to maintain their sense of distinctiveness. Although there is some debate of innovation in boutique hotels, these forms of accommodation remain underrepresented in broader discussions on the subject. To bridge this gap, this study investigates innovation in boutique hotels in Valletta, Malta. This study explores innovation in boutique hotels from the perspective of hotel owners, managers, customers, and stakeholders in the Maltese tourism sector. These perspectives relate to not only innovation as a phenomenon but also to innovation as a process (at both micro-foundation and firm levels) as well as the characteristics of the innovation efforts implemented in boutique hotels. A qualitative approach involving semi-structured interviews with stakeholders, boutique hotel owners and managers from 14 boutique hotels in Valletta as well as focus group discussions with boutique hotel customers offered granular and context sensitive data. The results of this study suggest that innovation in boutique hotels generally constitutes an outcome-centric construct occurring in products, services, and processes. Product innovation manifests as product differentiation, aesthetic individualism, and the novelty of being situated in a heritage premises. Service innovation focuses on creating idiosyncratic experiences for customers to enjoy and novel service delivery systems. Process innovation manifests as improvements in new work methods, digitization and eco-innovations. Innovation unfolds at both the individual- and firm-level, comprising between six to nine micro-foundation processes and various heterogeneous individual-level practices. At the firm-level, evidence of knowledge-based dynamic capabilities were identified. However, different forms of ownership were observed to influence the number of steps comprising both micro-foundation processes and firm-level capabilities. Most innovations in boutique hotels are incremental and they often occur in processes, services and products. This research offers three key contributions. First, it presents a comprehensive and granular framework of innovation relevant to boutique hotels. This framework offers a broad understanding of innovation, demonstrating how boutique hotels adapt to their specific environment. Second, this thesis extends the literature on the innovation process by illustrating the diversity of innovation trajectories that manifest in boutique hotels. This can inspire practitioners to rethink their innovation strategies for augmented performance. Third, this thesis enriches the scholarly discourse on the novelty dimension of innovation by illustrating what is considered new and to whom in boutique hotels.