The paper is a case study analysis of Jurys Inn Hotel and Ryanair Ltd. The research offers a business overview of the companies, their formation and their organizational structure. The analysis examines the management philosophy of innovation and the reasons why the companies have become so successful. The study investigates the innovations introduced by the management of Jurys Inn hotel so as to make it efficient and competitive within the industry. It also looks at the innovations implemented by the management of Ryanair so as to create a competitive advantage for the airline. The case study explains the role of entrepreneurship in the development of both companies and the fundamental reasons behind their success. The model concepts of both the airline and the hotel are also examined and explained in the endeavor to relate them to the success of both organizations.
The founder of the Jurys Doyle Hotel Group was a commercial traveler who identified an opportunity and established an inn that was aimed at serving the sector in which he was working. In 1839 the commercial traveler ventured into the entrepreneurial world by opening an Inn at Dublin College green which was later named the Commercial and Family Hotel. William Jury was an ambitious entrepreneur who constantly identified new opportunities, a fact that led to a partnership that led to the building of a new hotel known as the Shelbourne hotel. William sold the original inn at Dublin’s green college to his cousin Henry who was also a gifted entrepreneur. Henry Jury worked hard and the Commercial and Family Hotel grew significantly during his time leading to the name change to Jurys hotel. After the Second World War the Hotel which had been requisitioned by the British military was now vacant and deserted until some Irish entrepreneurs invested in the business and kept the Jury name. The businessmen invested in more hotel properties in Dublin and the tourist boom at the time encouraged them to invest in other areas such as Westport in 1970 and Sligo in the following year (Creaton, 2004). In the mid to the late seventies the tourist boom came to an end just at the time the company was making huge investments into an expansion plan and in addition the company was facing a high degree of competition from the Doyle group and it faced a uncertain future.
This resulted in a complete disbandment of the organization through a sale of assets and the formulation of a new Jurys hotel group with additional investors. The new strategy of the new organization was based on the acquisition of three lucrative properties from the Intercontinental Hotels group based in the Cork, Limerick and Ballsbridge (Bergsman, 2006).
Currently the chain of hotels is owned by Quinlan Private Venture Capital Company owned by Derek Quinlan who bought in 2007 from the Jurys Doyle Hotel Group. The hotel group was founded in Dublin Ireland back in 1881 by William Jury who initially set out to start a boarding house. The first major investment in the hotel chain was made in 1964 by PV Doyle and was named the Montrose and is located in Stillorgan in the city of Dublin. The Doyle group in Dublin, Washington DC and London hotel were consolidated in 1999 to form the now enlarged the Jurys Doyle Hotel Group.
The hotel chain is one the leading hotel groups within the republic of Ireland and has an ambitious international expansion strategy. The Jurys Doyle Hotel Group has thirty hotels in the United Kingdom, Ireland and the United States. The major part of the revenues earned by the hotel comes from the home base of Ireland. In the market, the fastest developing segment is that of the United Kingdom where the hotel has opened fifteen hotels since 1990.Withinn the United States the hotel chain has three investments and is conducting market surveys with a view of expanding in the region. The hotel chain has come with new strategies that involve a shift in portfolio from the three star Inn concept to the higher market segment of four star and five star hotels. The Jurys Doyle Hotel Group has categorized its services under two core brands, the inn brand concept which is mid priced and the four star concept which targets a higher end market (Clark, Andrew.2006).
After acquisition by the private capital venture group the hotel chain has an ambitious development program that involves more expansion in the United States and the addition of 1500 rooms. The Jurys Doyle Hotel Group is a registered company in the London and Irish stock exchanges and abides by the regulations that control publicly listed companies.
The hotel chain had 8000 rooms by the financial year ending 2011 and is continuously expanding its operations.
The hotel chain still follows the concept applied by William Jury even after changing ownership hands severally. Jury wanted to satisfy a market need and used his entrepreneurial skills to satisfy this need. The hotel was established to serve the needs of commercial travelers. This involved giving the customers value for money by offering clean and comfortable rooms at a price that is affordable. In addition the Inns are located at strategic points that are near major transportation systems such as airports, bus and train terminus. This was a meant to tap into this target market by incorporating a high level of convenience (Creaton, 2004).
The hotel has targeted the three star hotel customer base since its inception and this has led to the current success being experienced by the Jurys Doyle Hotel Group. The three star hotel brand is a concept that heavily relies on central convenient locations and value based services that are flexible in nature. The hotel chain has managed to align its brand portfolio with the expectations of the customer. For over a hundred years the hotel chain has been synonymous with affordable excellent service to the business traveler. The management has been able to apply the appropriate entrepreneurial skills necessary to sustain the business model even through difficult and trying times. The Jurys hotel brand has been based on a budget hotel concept and has managed to offer professional but limited services to travelers and other customers for over a hundred year. Studies have shown that the budget model is now very popular in the hospitality industry especially during the global economic slowdown that has seen problems in both the United States and in Europe (Walsh, 2004). The current statistics show that in both the united and in Europe, budget hotels make up seventy percent of hotels. The Jurys Inn model was a pioneer in conceptualizing this model and serving a niche market at the time which has now become the main market.
Managerial entrepreneurship has been a key component of the success seen at the Jurys Doyle Hotel Group. The management has been able to adapt to the business environment by applying the right expansion and acquisition strategies at the right time and in the right manner. The budget hotel in concept has been implemented and managed effectively leading to the stable growth of the company in the last four decades. The management at Jurys has been able to offer innovative services based on the service concept within the hospitality industry. In essence the service concept incorporates the “what” and “how” of service design and at the same time aligns the strategies of the organization and the needs of the customer. The management of the hotel chain has been able to use innovative pricing to attract different market segments based on a flexible system that is season and service oriented (Chitium, 2004) The hotel chain offers no frills in its establishments and this enables it to lower rates for its customers. The business traveler has become the main customer for the Jurys Inn and prices are set according to the services and the needs of a particular customer. Only the in accommodation does the hotel have a standard standing charge, because all the other services are optional depending on the wishes of the customer. Another value added innovation is the location of the hotels in the most convenient place for both business travelers and tourists. The hotel is has Inns in Heathrow airport and the hotels at Glasgow and Birmingham are suitably located near big near public transport systems and international convention centers (Braiden, 2009). By these actions the management has ensured that the hotel chain has tapped into the tourist and business traveler market. Those attending international conferences in Glasgow can seek accommodation at the Jurys Inn in the area and enjoy the competitive prices offered at the establishment. The management has innovatively used information technology to make it convenient for customers to make reservations and make inquiries about the services offered by hotel chain.
It must be noted that all these services are offered at different Jurys Inn establishments depending on the needs of the customers. The rooms have been modernized to include high speed internet access as a value added service in line with five star industry standards. The rooms have customized décor for those couples who are on their honey moon or on romantic holidays who select to stay in budget hotels for financial reasons. The management has also implemented flexible check in and checkout policies that are convenient and which accommodate the needs of both tourists and travelers. The managers at the hotel chain have instituted these innovations through the use of customer surveys and research that indicates the reasons why customers select to stay at Jurys Inn. This enables the management to come up with a service design for particular establishments where they note unique customer trends and behavior. Studies show that organizations that are successful must be fully aware of the preferences of their customers and consequently develop their services according to the targets of the market. Due to its long history in the sector the management has had used the experience to add only those innovations that reflect on the bottom line. Research has shown that service innovation is an essential component of market differentiation and can be a distinct competitive advantage in the hospitality industry (Schall, 2003). The company has implemented business centers in some of the Inns within London to cater for the small scale business traveler. The management has innovatively used training to ensure that the staff is an additional value to the services of the hotel. The staff is taught crucial interpersonal skills that cater to the needs of the customers. The management has instituted a Jurys reward system that benefits frequent travelers who stay at the Inns. This is meant to reward loyal customers and to build lasting relationships with them. They earn points depending on the number of visits to the hotel and they can exchange this points for free nights or high street vouchers that can be used in high end shops and restaurants within London.
The hotel industry has been characterized by intense competition after the Second World War and the stabilization of the global economy. Changing customer preferences and the rapid advances in technology have seen hospitality organizations apply entrepreneurial concepts to develop their establishments and remain competitive in the long term. The issue of success by the Jurys hotel chain group is tied to service innovation where the hotel chain used new ideas and concepts to target a niche market. The founder of the hotels saw an opportunity to serve business travelers by giving them affordable services in a comfortable, convenient and safe environment. This ensured that the hotel chain created a niche for itself within the market in Ireland. William Jury was an entrepreneur who conceived an idea and worked towards its implementation. The founder of the hotel chain had an entrepreneurial self employment mind set which helped develop the small bed and breakfast at Dublin green college to a reputable budget hotel. The hotel was designed according to the owner’s vision, which was to build an establishment that would efficiently cater to the needs of the commercial traveler. The Jurys hotel faced collapse during the Second World War when the British army had taken over the premises. A group of Irish entrepreneurs then saw the potential of the Inns and invested in the business once more, because they identified the opportunities provided by the low cost traveler. This entrepreneurial spirit was the catalyst that led to the development and success of the hotel chain since its inception. The concept of entrepreneurial leadership provided by management has led to the high level of service innovation seen in the hotel chain. The leadership of the hotel chain noted earlier on that the differences between low budget hotels and their more high end counterparts was becoming narrower as the big players employed competitive strategies that lowered prices significantly. The hotel chain was struggling to differentiate itself as budget hotel, because of the price strategy of four and five star establishments and the management implemented a service concept strategy that was characterized by an increase in services offered so that in the end it ended up as a mid market establishment with the competitive pricing of a low end budget hotel. Entrepreneurship requires the taking of risks which is also evident in Jurys Inn’s ambitious expansion strategy that has seen the chain grow to thirty hotels within two decades. Organizations that are led by entrepreneurs are constantly looking to break new ground in their quest to dominate the market and offer first class services to their customers.
The low budget airline was formed in 1985 and has its headquarters at Dublin airport. The airline has a strategy that involves the use of the Boeing 737-800 model in all its flights. One of the objectives of the airline was to increase the number of tourists visiting Ireland. The company has had an ambitious expansion strategy in its quest to attain a larger market share and to improve on its capabilities. The expansion plans are also meant to satisfy the target market which requires an investment into more routes. The company began its operations by flying from Waterford to London. In 1997 the company went public and used the new financing to expand into the European market. The profit revenue has risen from 231 million dollars in 1998 to 339 million Euros in 2010. Tony Ryan, Christopher Ryan and Liam Lonergan formed the airline in order to satisfy a market need and to break the duopoly of Aer Lingus and British airways (Riegel, 2010). After the deregulation of the airline industry the company added a new route in 1986 and begun to compete directly with British airways by flying from Dublin to Luton. The company had been able to meet the industry standards and was allowed by the British government to fly across Europe. The airline did well for the next four years but by 19991 it was in trouble and needed restructuring. An innovative manager known as Michael O’Leary was given the task of turning around the fortunes of the airline. He came up with a new strategy of combining low fares with quick around times as a way of reducing costs and increasing revenue. This was a critical time for the company as the new CEO discovered that the company could effectively compete within the European air market by offering cheap frills and low cost fares. The company used regional airports that were less expensive and this allowed it to charge low fares that attracted the budget traveler. By the year 1995 Ryan air had carried 2.5 million passengers and was on its way to becoming the largest low budget carrier in Europe. Ryan air used only one model of Boeing 737-800 aircraft to expand into Europe in the most effective low cost strategy possible. The company operated roots near Paris, Stockholm and near Brussels as it penetrated the European market. In its expansion plans the company ordered a record 155 Boeing planes which were to be delivered in eight years from 2002. In 2003 the company demonstrated a great deal of confidence in its business model by ordering 100 more planes in line with its vision of low budget market dominance. In the same year the company acquired a low budget competitor Buzz which added to its flight capabilities and added sixty new routes to its portfolio. The 2004 season also saw trying times for the airline industry and Ryanair posted a loss of three million Euros. After this turbulent time only two major European players remained Ryanair and Easy jet. The stock of the company has grown by over fifty percent and in 2009 the CEO Michael O’Leary announced that the company was moving into the long haul flight sector .They strategy involved charging low fares and the addition of a business class category of passengers who were going to pay a higher premium for the extra comfort and services. This was meant to enable the airline to compete effectively with carriers such as Virgin Atlantic.
One of the reasons why the low budget carrier has been so successful is due to the reason that the management has been very good at negotiating with airport authorities. This enabled the company to lower the cost of doing business and made it competitive when it came to charging low fares. The model involves the use of fewer crew members so as to reduce the costs in a flight. The Ryan air business model involves the use of one type of aircraft in all flights. This reduces the cost of maintenance and ensures maximum efficiency as pilots and crews get used to the mechanism of the model. The use of one model also reduces staff training costs and the cost of obtaining spares.
The Ryan business model is based on a cost reduction strategy so as to remain competitive within the industry. One of the strategies that the company uses is outsourcing whereby it engages the services of other companies in activities that are not part of its core business. As mentioned the company negotiated for low airport charges and flexible route policies that give it leverage when it comes to operational agility. The cost strategy also involves the hiring of only essential staff and the managing of any other staff costs (Bamber et al., 2009). The company pays low wages but has a pay structure that is performance related which acts as a motivation. The CEO of Ryan air came up with a strategy that enhances the turnaround time making the company more efficient in its flights. The company utilizes regional airports where it can use its bargaining power to negotiate favorable deals with regard to airport charges. The airline operates from point to point and does not incur costs when it comes to connecting passengers. The company has been able to effectively keep its marketing costs down by using the internet and utilizing the most effective magazines and electronic media.
The company has used a no frills strategy as a way for improving the productivity and efficiency of the airline. This involves the streamlining of in flight services such as food and drinks and the seat allocation method. Customers are charged for those in flight services that they utilize and employees are paid for the amount of sales that they make while on board. This enhances the efficiency of the company in terms of efficiency. The low costs strategy gives the company the opportunity to concentrate its efforts in adding the volume of customers and not the passenger margins. This approach then transcends to a customer oriented strategy that ensures that the company focuses on meeting their needs.
The Ryan air business model has been characterized by high service performance which is marked by high rates of flight completion, a high rate of punctuality and a low rate of baggage loss (Hensdill, 2002). This performance levels enable the company to have a highs level of adaptability and agility when it comes to operating in a highly competitive environment. The model has been characterized by the efficient utilization of planes which has resulted in longer aircraft use, which has led to a lowering of costs when it comes to the purchase of new planes. In other words the company optimizes the use of the aircraft. Ryan air also engages in fuel hedging so as to shield its operations from the constant fluctuation in global oil prices.
Tony Ryan was an entrepreneur who worked for the Aer Lingus Group Plc but then moved on to start Ryanair. Aer Lingus airline is one of the major rivals of Ryanair and was the training ground for Tony Ryan who had risen to be an executive in Ireland’s oldest extant airline. The entrepreneur used the knowledge and contacts he had gained at Aer Lingus to start a low budget carrier that became a direct competitor at Dublin airport. One of Tony Ryan’s objectives in starting Ryanair was to end the dominance of Aer Lingus in the Waterford-Dublin route. The competition between Aer Lingus and Ryanair was fierce as the young airline attempted to increase its market share through a pricing strategy. Ryanair eventually dominated the low cost carrier and owns a 29.4% stake in its rival Aer Lingus. Aer Lingus gave Tony Ryan the experience he needed to make Ryanair a success.
The company has also receives negative media press, because of some of its policies and attitudes. It constantly gets into disputes with airports over terminal charges because of unreasonable demands from its officials. The company has faced costly route battles with its main rival Easy Jet. The CEO has also been accused of arrogance and courting negative publicity as a tool of promotion. The company constantly makes wilds proposals like charging for toilet use or charging more for overweight people only to claim it was a joke.
Innovation management in the Ryanair model has been characterized by an emphasis on the systematic processes used to develop the services offered by the airline. This involved a high degree of creativity that is in line with the needs of the customer and which matches the business strategies of the airline. The management of Ryanair has a strong history of using innovation to create a competitive advantage. As a matter of fact the whole Ryanair concept is founded on an innovative business model that made it possible for more people to afford flying. According to the CEO, Michael O’Leary the innovative strategy of Ryan is based on a notion of looking at business process and eliminating those things that increase costs and complicate operations. This essentially involves dissecting processes into components that are measurable and assessing their value to the customer in order to eliminate those that are not geared towards meeting the needs of the customers. Fundamentally this has made Ryan Air one of the most cost effective businesses in the world. The basic idea is to concentrate on the core function of flying passengers from point A to point B. Before the company brought down the costs of traveling by air, flying was a preserve of those with means. This new model introduced by Ryan Air was based on taking the concept of flying to its bare essentials. The company begun by operating with two planes on two routes and used the lessons learnt to identify a market need and to innovatively address the practical challenges raised by the strategy. The use of the Boeing 737 is an innovative strategy that was pioneered by Ryan Air as part of its cost reduction strategy. The management was able to institute a single passenger class which is flexible and allows passengers to sit wherever they prefer (Riegel, 2010).
Another noted innovative strategy is the use of direct ticket sales by the airline as a way of cutting out middle men and reducing the costs. This involves the use of the internet and the staff to sell the tickets to customers and this enables the company to charge very competitive fares, because it does not have to pay commissions to ticketing agents.
The budget airline has also innovatively used information technology as a value added service on its flights. This is meant to support the business traveler to communicate and work while on board. The net revenue of in-flight internet use has increased by 472% since its implementation in 2001.The management at Ryanair have applied the concept of low budget transportation and reducing the services to the barest minimum as a way of enhancing their competitive advantage a small airline within Europe.
The innovation strategy at the budget airline was heavily influenced by the changing needs of the customer, because of their increased sensitivity to pricing. Every cost reductive strategy found at Ryan Air is customer oriented and is meant to increase the volume of passengers by offering quick and affordable services.
The company was founded by the Irish businessmen Tony Ryan, Christopher Ryan and Liam Lonergan were entrepreneurs who saw an opportunity to serve a market need and looked for ways to get the resources required to fill this gap. One of the major characteristics of entrepreneurs is the fact that they take risks so as to achieve their goal. The two founders invested in a risky business that required a lot of capital and was under strict European regulation. The industry was also dominated by big airlines such as British airways that had the resources to stifle any competition. Entrepreneurship requires the use of innovation to come up with a product or service that is unique and which gives the organization a competitive advantage over others (Ruddock, 2007). The two founders practiced disruptive innovation which improved the access to flying within the European market after offering prices that could be afforded by a larger market. One of the major components of entrepreneurship is change which the company has pursued and exploited. Entrepreneurs are able to take advantage of situations as was demonstrated when they European air market was deregulated and Ryanair positioned itself to expand its services by offering a product that was different from its competitors. Entrepreneurship at Ryanair has been characterized by the repositioning of an existing service in order to reach a new market segment. The company has had to make continuous innovations to its services and business model due to the challenges that exist within the industry. The company has had entrepreneurial leadership in the CEO. Michael O’Leary has demonstrated skills that have seen the company expand into new markets and emerge from difficult times to experience success. When the company underwent challenges in the early nineties the CEO was able to change strategies and improve on existing services which made Ryanair more productive and efficient. One of the dimensions of entrepreneurship is proactiveness which in the business realm means being action oriented. Ryan Air is a company that operates in a highly competitive industry and it has had to continuously improve its services so as to remain competitive. The company is currently targeting the business traveler by offering a new business class service. This is because the business class target market has changed trends and the customers want more services at an affordable price. Ryanair is continuously looking for more opportunities that would add value to its services and which would increase its ability to compete. It seeks to introduce new services ahead of its rivals as has been illustrated by the introduction of business oriented long haul flights. It constantly applies strategies that remove operations that are declining as a way of reducing costs and in this regard the company only flies in strategic routes so as to maximize on profits and efficiency. Studies have shown that organizations with strong entrepreneurial orientations perform better, because they are able to deal with the challenges that face them in as more proactive manner. The leadership is not afraid to take calculated risks that are aimed at giving the company a competitive edge within the industry. Ryanair is a company that has survived and succeeded by competently and effectively studying the market and industry. The airline industry continuously analyzes the trends in the industry and the market so as to identify any notable changes that might require a change of strategy. After a critical analysis of the routes the company which enjoys a high level of flexibility can quickly negotiate with authorities for terminus expansion or can withdraw depending on its best interests. In its entrepreneurial nature the company has been able to expand into more tourist destinations since this is a lucrative market for budget airlines which have greatly benefitted from budget hotels. In its expansion plans in the past the company has applied an international strategy as part of its overall corporate strategy.
Changing customer trends and a slowdown in the global economy has resulted in the development and expansion of low cost hotels and airlines. The two service industries have come together to serve a growing market need. Both industries are heavily associated with the tourism and travel sector and depend on low pricing and efficient services as key components of attracting and retaining customers. The Jurys Inn business model was created in order to serve the commercial traveler by offering lean comfortable and affordable accommodation. The low cost carriers also target the business traveler by offering quick, efficient and affordable flight services to this market. The philosophy behind low cost carriers like Ryan Air and low budget hotels like Jurys Inn is the emphasis on reducing the costs of doing business therefore allowing the organization to offer competitive prices. Market research has shown that the hospitality and airline industries are characterized by customers who are price sensitive. Both organizations were founded to satisfy a market need by making the travel experience of both tourists and business travelers more affordable. In the current business environment typified by intense competition, cost cutting strategies have become as important as other competitive strategies because only lean and efficient organizations are successful.
The Jurys Inn business model is aimed at targeting the low cost traveler who is also the target for low cost carriers (Schall, 2003). The hotel chain allows customers to pay only for those services they want or need. The concept is marked by a high level of flexibility whereby the customer can pay for rooms in an hourly rate depending on their travel arrangements. This is very attractive to those business travelers and tourists who make stop-over’s that require only a few hours stay in a hotel. If they wish for more services like the use of the internet, food and drinks or room service then they pay for them directly. The Ryanair model also has a similar concept where passengers only pay those services that they prefer. When one pays for a flight, it is not inclusive of any other service, which then requires that that if they need extra services like food and drinks then they can pay for them on board. This concept allows both the airline and the hotel to charge competitive rates by offering the most basic services in a safe accommodative environment.
One of the advantages of low-cost carriers and budget hotels is their ability to compete effectively with traditional rivals my minimizing the cost of doing business and raising capabilities in such a way that attracts the customer to prefer their services. The Ryan air concept is simply based on cheap efficient travel and it is meant for people whose main aim is to move from point A to B. The Jurys in model is directed at those customers whose main aim is comfortable and clean accommodation and not luxury.
The two organizations have experienced their level of success due to the entrepreneurial spirit of their founders and subsequent management. The hotel chain has implemented a risky expansion strategy in the nineties that saw successful growth within the market segment. Ryanair at the same time was also implementing its international strategy and ordering over two hundred Boeing 737 planes to be delivered within the same decade. Entrepreneurship drove both organizations to apply innovative concepts that became a competitive advantage which led to sustainable growth. Innovation of services is the fundamental driver of both low cost airlines and budget hotels. The Jurys hotel business model was innovatively designed to serve tourists and business travelers from a convenient location near major transport systems like airports, train stations and bus terminus. This ensures that the hotel chain effectively taps into the travel and tourism market through convenience and competitive pricing. The Ryan Air concept has also used innovative strategies such as the quick turnaround policy to ensure that they have a higher level of efficiency that their competitors.