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citizenM: Radical innovation in the hotel industry
In 2008, a group of five entrepreneurs and executives teamed up to launch an innovative hotel chain into what seemed like a highly competitive industry. Rattan Chadha, the founder of fashion company MEXX and Michael Levie, a hotel industry veteran, teamed up with Hans Meyer, a hotel development specialist, Campagne corporate strategist Klaas van Lookeren, and architect and interior designer Rob Wagemans to launch the new concept. They took a different approach to innovation in the hospitality sector. Instead of trying to invent few features – products and services – with which to attract a broad range of customers, they innovated by removing what they believed to be features that were not attractive to a core consumer target: tech-savvy, mobile travellers.The citizenM case details the differences between this new hotel concept and the typical features offered by luxury and high-to mid-range hotels. Each aspect of the customer-facing experience and behind-the-scenes operating model is discussed and defined. It describes the tight fit between all aspects of citizenM’s innovative business model, ranging from the location of their hotels, their construction, the facilities (and absence there-off), staffing, operations, and marketing. The case ends by outlining citizenM’s prospects as the leadership team looks to grow their new concept.
- Reviewing an example of business model innovation that relies on, first, focusing on a specific customer target and, second, removing extraneous products and services (and thus complexity and cost) in order to serve that target.
- Understanding that there are trade-offs in new business models. For example, in this case, focusing on one target customer meant that traditional customer segments – corporations, for example – had to be ignored.
- Concluding that delivering on a unique value proposition requires the firm’s resources and activities – both customer-facing and internal – to be in alignment.
- Assessing how unique business models – and their associated value propositions – can scale beyond the proof-of-concept. Growth will come through replicating the value proposition in another city, for example, taking into account the unique challenges the situation in each new city will present.
|Publication Date:||July 2015|
|LBS Case Code:||CS-18-011|
|Subjects:||Business model innovation, Digital disruption, Online platforms|