Innovation Strategies in the Hotels Sector of Makkah, Saudi Arabia

Abstract

The city of Makkah has long had a thriving hospitality sector in Saudi Arabia, primarily due to the need for accommodating hajj and umrah pilgrims. In view of the kingdom's economic restructuring, global trends and the pandemic, this study examined existing innovation strategies in this sector in terms of how well they support economic sustainability. Structural equation modelling was used on a sample of 128 hotels to test for this role and relationship, as per the Schumpeterian approach. The results confirm an emphasis on service quality, standardized services, readiness for product introduction, and use of technology. Importantly, economic sustainability was found to be related positively with innovation strategy with respect to performance. It is concluded that existing innovation strategies are supportive of growth, profitability in long-term resource management, value chain management, and customer satisfaction. Implications are drawn for integrating sustainability with business strategies, and the need is highlighted for hotels to give greater prominence to strengthening innovation strategy for benefiting further from opportunities presented from sustainability. Particularly beneficial for longer-term sustainability would be improved understanding of customers' needs, and to focus on those innovative strategies which deal with socio-environmental issues.