Generator Hostel Copenhagen

Methodology Project 2016

Generator Hostel – Copenhagen

1.0 Introductory chapter

1,1 Introduction

(Kertu and Mihaela)

Generator Hostels is a brand located in 12 different destinations, and it is the fastest growing hostel brand in Europe.1 The hostel was founded in 1995 and it is an award winning Global hostel brand 2. The company is expected to open the very first unit in America, South Beach in 2017.3

Copenhagen is one of the touristic destination where you can find Generator Hostel. Located in the heart of the city, the hostel is an attractive destination for backpackers because it is a cheaper way of accommodation, but starting with 2016 the company has begun targeting corporate companies.

The company becomes unique by the interior design and the corporate events they offer. Custom-designed furniture, the fancy bars and cafés, Tim Bjorn’s illustrations, large outdoor terrace, pétanque court, make the stay memorable for the guests.

As the manager says himself, “it doesn’t matter if you are looking for elegant Danish design, minimalistic Nordic fashion or the ingeniously innovative Scandinavian foodie scene, you will find it all in Generator”.

1.2 Motivation

(Kertu and Mihaela)

As international students coming from different countries across the Europe, when we have moved to Denmark, we interfered with the hospitality industry, while we were searching for a stable place to live. Because we are students and we do not have a stable income we were looking for cheaper places to stay. The hostels were the solution for us.

Also, hospitality and tourism are our main specializations, and we are wishing to have careers later on, in these industries. Therefore, we have a great interest in going in depth with analysing the trends in the hostels nowadays. We chose Generator because it is one of the brands that is focusing on changing the perception that hostels have for travellers by introducing the individual rooms, creating events and designing its interiors in an attractive manner.

1 https://generatorhostels.com/en/about/

2 https://www.linkedin.com/in/josh-wyatt-a232927a

3 https://skift.com/2016/02/29/generator-hostels-leaders-explain-the-rise-of-hostels-for-business-travelers/

1.3 Funnel model

(Beatriz)

HOSPITALITY INDUSTRY

GENERATOR HOSTELS

GENERATOR HOSTEL – COPENHAGEN

1.4 Research question

(Beatriz, Dominika, Edvinas, Kertu, Mihaela, Oana)

How can Generator Hostel Copenhagen improve customer’s satisfaction?

1.4.1 Sub questions

(Beatriz, Dominika, Oana)

Sub question 1:

What are the threats that Generator Hostel Copenhagen faces in terms of competition?

Sub question 2:

How is Generator Hostel Copenhagen differentiating itself from the other hostels?

Sub question 2:

What are the main gaps in the services that Generator Hostels deliver?

1.5 Interpretation:

(Beatriz, Dominika, Mihaela, Oana)

Customer’s satisfaction is an important aspect because if it exists in high levels, there is a high possibility of turning the guest into loyal customer. A loyal client is not only the customer who is going back to Generator Hostel Copenhagen, but also the customer who promotes the company to friends and family. When creating customers satisfaction, the company has to meet customers expectations or exceed them. However, the company must find a balance and choose a strategy which limits itself at meeting the expectations due to the fact that exceeding expectations can have negative results for the company(e.g. continuously increasing expectations of the guest, high costs) We believe that it is more likely to get dissatisfied by service and not by a product. The higher chance of disappointment of a service result from the characteristics of a service:perishability, spontaneity, heterogeneity, intangibility, customer satisfaction. To answer our sub question, we will interview the manager and also few customers or possible customers through an online survey.

Re-search question:

Improve – Act of enhancing or making better in terms of quality, value or usefulness.1

Customers’ satisfaction – Customer level of approval when comparing a product's perceived performance with his or her expectations.2

We wanted to find out how Generator Hostel Copenhagen can improve the customer’s perception regarding the services provided during their stay.

Sub-question 1:

Gap – what separates current state of a company to its desired state.3

The gaps that Generator Hostel Copenhagen has can also be pointed out as weaknesses. These help us understand what should be improved by the company so that the customers leave the hostel with a better level of satisfaction.

Sub-question 2:

With this sub question we want to find out what is Generator Hostel Copenhagen providing in order to please and entertain their customers. Specifically we want to break down the image and the concept of the company.

Sub-question 3:

Competition – Rivalry in which every seller tries to get what other sellers are seeking at the same time, for instance: customers.4

In order to be the first choice for customers, Generator Hostels should know which is its position in the market and which are the main competitors which they are facing. The analysis of the information facilitates the company in finding out what they should implement or change, for a better handling of the threats.

1 http://www.businessdictionary.com/definition/improve.html

2 http://www.businessdictionary.com/definition/satisfaction.html

3 http://www.businessdictionary.com/definition/gap-analysis.html

4 http://www.businessdictionary.com/definition/competition.html

1.6 Scope

(Beatriz,Mihaela)

The purpose of our project is to improve customers’ satisfaction regarding Generator Hostel Copenhagen, during their stay in the hostel.

Geography: Generator hostels can be found in 12 european cities (9 countries) but our focus will be Generator Hostel, Copenhagen. We chose to narrow our project to only one hostel because, from city to city, customers’ expectations change, which would represent a difficulty for our research. In addition, we are all living and studying in Copenhagen and it is easier to visit the place, talk face to face with the customers and conduct interviews with the employees from Generator Hostel.This being said our data collection would be more reliable than an internet based data research.

Service: The service is accomodation.

Segment: We chose the segment of people between 18-30 years old because they tend to have variable incomes which leads them to cheaper choices when looking into a travelling and hospitality perspective.

The fact that we delimitate our research only for Generator Hostel Copenhagen will help us, as we mentioned before, because gathering the data would be easier giving the fact that we are all living in Copenhagen.

Narrowing our segment to people between 18-30 will make it harder to gather information, since the segment group is so large.

Overall Scope: The purpose of our project is to increase customers’ satisfaction in Generator Hostel Copenhagen after analyzing its current situation and the current needs in the hostel branch of hospitality industry.

2.0 Methodology

2.1 Overall structure

(Beatriz)

The overall structure of the project looks as following:

The chosen research question is solution oriented, meaning that our research will have as a main goal, to come up with solutions that Generator Hostel (GH) can implement in order to answer our research question. To help us answering the research question, we came up with three sub questions: the first one will help us understand what are the main gaps that GH has, mainly in its delivery system, so that we can come up with some solutions to eliminate them.The second sub question aims to evaluate the competition that GH has to face. Finally, with the third sub question we will be able to analyse how GH is differentiating itself from the other hostels.

Firstly we are going to present an internal analysis of the company, secondly we will present the external analysis and lastly we will do a conclusion.

By analysing GH’s gaps (also called weaknesses), their competition and what they do to make GH a first choice hostel for its customers, we will be able, throughout the assignment, to come up with ideas/solutions, that can help GH increase customers’ satisfaction (which is our research question)

2.2 Theories and models

(Dominika)

Based on the research question and sub questions, we have decided to use and refer to different theories and modules.

· GAP model

For the first sub question we have decided to investigate the services processes and its gaps. Therefore we are looking into the services and how the delivery process is done first, and then we are actually analysing what gaps can be found during the process. For that we are using the GAP model, which helps us to understand customers, their expectations and perceptions, as well as it helps us to improve and minimize the gaps in the service.

· Porter’s 5 forces (without suppliers)

In the second sub question we are focusing on threats that Generator Hostel Copenhagen is facing in terms of competition. For that we are analysing the whole hospitality industry, more specifically the hostels branch in Copenhagen. To do that we are using Porter’s 5 forces, which is a model made for analysing the forces that act within an industry, meaning the analysis will give us a great overview of the whole industry. However we have decided not to include ‘power of suppliers’ because we find this part irrelevant, and also because we lack information about this.

· SMS

For the third sub question we wanted to examine what is Generator Hostel Copenhagen providing in order to please and entertain their customers. To do this, we are using the SMS model, also known as service management system, which is an all-encompassing management system meant to bring together all aspects of organization management such as planning, strategy policies, objectives, documentation and processes. Moreover we want to evaluate the image and the concept of the company which has a significant impact on differentiating Generator Hostel Copenhagen among other hostels.

2.3 Data collection

(Kertu)

Empirical Data

The data for the study will be collected via quantitative online questionnaire, whereby it is measured by a numerical value. A qualitative data will be received through 2 interviews. With the event coordinator of the company which will be made via e-mail and a second one, which will be made with a limited number of guests from Generator Hostel. For the online questionnaire we have decided to focus on the people's opinion of accommodation, as well as the opinion about the services of the hostel from the possible and already existing guests. The aim would be to gather as much answers as possible in the process of finding solutions to our research question. Quantitative data is divided into 9 questions.

In the interview with event coordinator we are going to concentrate on finding information about the competition with other hostels, are they offering special services to loyal customers or business travellers and what differentiates them from other hostel. The second interview with the guests has focus on customers satisfaction by providing us with answers about services, overall satisfaction of the company and if the guest would like to implement anything else in order to make the services run smoother.

2.4 Reflection and criticism

(Kertu)

Method criticism is offering criticism of collected qualitative data. We gathered the data by 2 ways. Interview with the member of the staff at the Generator Hostel and secondly interview with guests of the hostel. No one among the hostel staff was able to provide us with face-to-face interview, instead of that, we needed to make one by using e-mail. We end up making the interview with the event coordinator of the hostel. The interview did not come out exactly as we expected, since we collected very minimal information. If we would gain more information from the event coordinator, it would have been easier to analyse the way how the Generator Hostel differentiating itself from other hostels and also how the hostel improving the customer's satisfaction.

Quantitative data…

The models and theories used during the project are properly established by letting the writer analyse…….

2.5 Objectives

The main purpose of this project is to answer the research question: How can Generator Hostel Copenhagen increase the satisfaction of its customers?. To answer this question we will analyse the company internally and externally, and afterwards we will come up with some solutions.

In addition, since this is a Methodology exam our group aims to fulfil the methodology requirements that we have been taught during the past methodology classes.

3.0 Analysis

3.1 Internal analysis

3.1.1 Service Management System (SMS)

(Dominika and Edvinas)

The service management system

(Edvinas)

A service management system (SMS1) is an all-encompassing system meant to bring together all the aspects of the organization management. Moreover, the SMS model is a tool which helps to manage services successfully. The service management system consists of five linked elements. These five elements are the followings: the market segment, the service concept, the delivery system, the image and the culture and philosophy.

The market segment

(Edvinas)

The first element is the market segment, is the customers that service system aimed at. Also, the market segment is a group of individuals, sharing the same needs. However, the main bases of segmentation are: geographic, demographic, behavioral and psychographic. The market segmentation is based on age, social class, gender, occupancy, ethnicity, education. Also something to add, customers are divided into existing and potential customers. The more the company knows about their customers,the more this company is able to adapt their services to them.

The main target group of hostel Generator is the backpackers between the age of 18-30. Furthermore, people of all ethnicity and social classes. So, we can assume that potential customers are those, who like to travel and those who are between the age 18-30. The hostel Generator is located in center of a city, so it is easy reachable. According to demographics and psychographic bases the targets are the students, who likes to travel and are looking for cheap staying. Furthermore, the single rooms are evolving into an interesting hospitality sub-sector for business travelers seeking a non-corporate hotel stay. To sum up everything, we can assume that the potential customers of hostel Generator is the backpackers looking for cheap accommodation between the age of 18-30. For the potential customers stands business travelers.

The service concept

(Edvinas)

The second element is called the service concept. The service concept is based on the service package. The service package is defined as a bundle of goods and services that is provided in some environment. The bundle consists of the following features: supporting facility, facilitating goods, explicit services, implicit services and information.

Supporting facilities for this hostel are the objects that facilitate the delivery of the service. For the supporting facilities stands building itself, bar, large outdoor terrace. Facilitating goods are café, travel shop, petanque bar (game area), chill out areas. Explicit services are the benefits lightly observable by the sense. For the explicit services we can name events, which are happening in hostel Generator. Generator hostel is organizing these kind of events: pool contests, cinema nights, board games competitions, live music concerts, karaoke. Implicit services are psychological benefits. The implicit services for the hostel are knowledgeable staff, the safety measures (fire alarm, first aid kits, housekeeping, software maintenance).

The last component of service package is information. Information for this hotel is their Facebook and twitter account, their own webpage – https://generatorhostels.com/en/ and booking sites: www.booking.com, www.thehostelworld.com. Also, as information we can mention petanque bar menu and café menu (for the menus look at the references) . Therefore, you can sign up for a newsletter and get the latest offers and news about latest events as well. To sum up everything, the bundle of service package creates service experience. However, as the core services of the hostel we can name the rooms they are selling. For the peripheral services stand events, cafe, restaurant inside the hostel.

Service delivery system

(Dominika)

Service delivery system is a unique aspect of hospitality. The service flow and service process mainly affect how service gets executed and are therefore key factors to increase customer satisfaction. In Generator Hostel Copenhagen we can find the traditional service represented, meaning you have to interact with employees during the check in process/having a breakfast in the kitchen/having a drink in the bar. The detailed delivery process is then shown on the blueprint attached (Appendix 1).

Image

(Dominika)

The image is tightly connected to branding. The image of Generator Hostel Copenhagen is very important because it can attract more people to come. The chain Generator Hostels is based on very simple and minimalistic design, but at the same time they are differentiating themselves by boutique style that is a unique feature among other hostels. Furthermore the hostel is using their website to promote themselves, as well as social media and booking platforms such as www.booking.com. Both of these promotion channels are pleasant for the eyes of the customers, making it easier for them to choose from variety of competitors. In summary, the fresh and cozy atmosphere, all the facilities and modern minimalistic interior can easily influence customers to choose Generator Hostels over competition.

Culture and philosophy

(Oana)

Culture and philosophy promote the company and functions as a feature that differentiates them from the other companies on the market. A well-understood company’s philosophy can guarantee a long term success as well as it can also guide employees at decisions making. Generator Hostel’s philosophy has as its main point fun. Inducing from the first time of entering in the hostel the ‘Number 1 Rule: Have Fun!’ to its customers the hostel welcomes the guest into a loose and relax atmosphere. Moreover, the same relaxed feeling seems to be present in the mind of the personnel. The vibe transmitted by the bar’s employees is one of comfort and friendliness which is also present among the front desk employees. Every employee which is met during a stay in Generator Hostel is suggesting to be called on their first name by the guest and is trying to build a very informal, friendly, line of communication.

Subquestion 1 Conclusion:

After finding what is the main target group for Generator Hostel Copenhagen,we started analysing the provided services. Therefore, the brightest aspect of the Service Management System is the atmosphere as statedCulture and Philosophy. By emphasizing on the relationship the staff tries to create with their customers,the company in differentiates itself by the competition. Also, another solution would be for the company to use fully the image created when promoting itself. The location of the hostel, the hangout area and the Copenhagen flyer maps are strengths worth to value in order to attract and satisfy their customers.

All in all, the company should focus on its strongest points in order to become better and increase the satisfaction which is going to be felt by the guests.

3.1.2 Gap Model

(Beatriz)

GAP Model, also known as Service Quality Model, was created in 1985 and it helps companies to deliver a high quality service by highlighting the main 4 possible ways of creating a gap, in general, between what customers want to receive from the company and what they actually receive, and afterwards, erase them.

When a customer visits the hostel, he has already created expectations about what he is going to receive from the company. These expectations are based, for example, on what the customer has seen in advertisements (in Generator Hostel’ Facebook page), in Generator Hostel webpage or on what he has heard from other people that have been in the hostel. When these expectations are not meet, a gap arises. There are four mainly gaps that can emerge.

The first gap is called knowledge gap and it arises when customers’ expectations do not meet the expectations that the manager thinks that customers have. For example, from the reviews we read in TripAdvisor we were able to conclude that some people expect to receive some kind of ‘gifts’ from the hostel, such as a small package with shampoo and hand sp to use in the rooms, for example. But normally, in hostels, people do not receive those kind of offers like they do in most of hotels. And here we can find the gap: people expect something that they will not receive because managers do not expect customers to expect those kind of offers. These kind of gaps can be solved with a market research. When manager know what customers’ expectations are, they are able to: a) try to meet customers’ expectations; or b) inform the customers that the hostel will not provide something that they are expecting.

The second gap that may occur is called standard gap and relates the service standards that the customers are expecting and the service standards that the hostel actually provide. Based on TripAdvidor we could see that a significantly amount of customers claim that some rooms are too small and sometimes the facilities are poorly clean. One example is the following comment on TripAdvisor from Loris M: “(…) Unfortunately I found the place, both common areas and the room, dirty. Dust, crumbs and stains were everywhere. (…) I'm not picky but I've never seen in my life such a dirty place to eat, cutlery were so dirty I had to go to the bathroom to clean it myself, shelf where the food was were full of dust as well as the lamps on top of the tables (…).”. Also in our survey, and in addition to some similar comments on TripAdvisor, someone wrote the comment “too small rooms”, as we can see in the appendix, questionnaire, question number 8. These may occur because the hostel does not have set systems so that the same standards are kept up all the time. One solution is train employees so that they all are able to deliver a correct and similar service.

The third gap is called delivery gap. This gap arises when the service quality specification does not meet the service delivery. This occurs when employees are not empowered enough to make ‘last call’ decisions when something unexpected happens. For instance, one of the complains that we came across a couple of times while reading customers’ reviews in TripAdvisor is that some customers are really noisy, mainly during the night. (As we can read in the following comment written by Berta D: “Extremely noisy ! The noises from the daily parties in the bar were beyond acceptable. The morning is the only time you can actually sleep, not before 4am.”). In addition, some comments like the following “the shower drain got clog and it flooded the room. They did very little to solve the problem : they put a paper saying not to use the shower and let us get rid of the water.” from Amélie P, inform us that staff are not ready to act quickly and efficiently when something unusual happens. To erase this gap employees must be trained to react to these situations as quickly as possible and have the power to answer to them as they think it is the right way. For example, a flood in the room is something really rare to happen but the employees should be able to solve the problem without having to call the supervisor every time something unusual happens.

The fourth and last gap is called communication gap and it relates the ‘promises’ that the hostel do as a company and what is actually delivered to the customers. For instance, GH, as a company, claims that it is not like other hostels. In its webpage (www.generatorhostels.com) we can read “(…) we combine affordable luxury rooms with

By analysing the four main gaps in the services that GH faces, we are knowledgeable about what the company can improve when it comes to delivering services. In the first place, a market research should be conducted in order for the company to know its customers and their wants/needs, so that the needs can be fulfilled or at least, to aware the customers about what they will not receive (from what they were expecting). Secondly, to avoid differences on the services delivered, all the employees must be trained exactly the same way so that the customers receive exactly the same services, every

Subquestion 3 Conclusion:

In conclusion, the service delivery system would be improved if Generator Hostel Copenhagen would work on the gaps stated above. That can be done by….

3.2 External analysis

(Oana)

3.2.1 Porter’s 5 Forces

Porter’s 5 Forces Model was developed by Michael Porter in order to facilitate the analysis upon the forces that exist in an industry’s market. Michael Porter identified 5 forces which are present in each industry and which, by being analysed give a better overview if the industry’s market is or not penetrable, or if the industry market is or not viable for development. The forces stated are : Competition, Threat of new entrants, Buyer’s Power, Supplier Power, Threat of substitution.

Industry: Hospitality

Branch: Hostels

Subquestion 2 Conclusion:

To conclude the hostels branch of the hospitality industry may be a proper environment in which Generator Hostels to continue development. With a low threat of new entry the hostel can focus easily on strengthening the brand. The high competition and threat of substitution may motivate the company to a more defined and customised service design. The medium buyer power can be understood as a very important point, because the most important thing about it is that the buyer sets the demanded services and the demanded quality in the industry, so Generator Hostel could take advantage of the information received and implement services that respond to the customers’ demands.

Definition of Customer's Satisfaction

The area we have decided to work with is customer's satisfaction in Generator Hostel. The definition of customer's satisfaction is a measure of how products and services supplied by a company meet or surpass customer expectation.1 Customer's satisfaction or customer-centric business is extremely important for the business to improve or manage better. It is mostly common to ask customers to rate the satisfaction just to see if the customers become loyal or they are unhappy and possibly will not come back. The key to a loyal customer is the differentiation. Different products ( quality and price), atmosphere in the hostel, personnel attentiveness, image, location. When a customer have become a loyal, it is easier to make them satisfied by for example knowing their name, offering specific packages what the customer have purchased before. Little things turn into a lifetime value and memorable experience.

1.https://en.wikipedia.org/wiki/Customer_satisfaction

5.0 Conclusion

I conclude that we did what you wanted so let us pass.

Questions:

1. What are the main reasons why guests choose Generator Hostel over other hostels?

2. Does it happen frequently that guests are coming back to the hostel? (customer's loyalty)

3. Who are the biggest competitors to Generator Hostel?

4. The statistics of the hostel, are there any nationalities which visit more the hostel then others?

5. Do you have any specific packages to business travellers?

6. Does Generator Hostel offers seasonal packages to guests?

Answers:

1.There is different reasons but it could be location, they know and like the brand etc.

2.Confidential

3.No comment

4.Confidential

5.No comment

6.Yes these are made by our head office in London so I can't give you any other information

6.0 Appendix

(Beatriz, Dominika, Edvinas, Kertu, Mihaela, Oana)

6.1 Interview

6.2 Questionnaire

Interview

Guest 1 – 23 years old, Texas

Guest 2 – 25 years old, New York

Question1: Why did you choose Generator Hostel?

G1: I have searched on hostelworld.com and the hostel had great rating. Also, I saw the pictures, the hang-out area seemed really nice and so I decided to stay here.

G2: I had, actually stayed at Generator Hostel in Barcelona, and I enjoyed it. Also, I have checked the prices. So it was basically 3 things: the price, the previous experience and the locatio.

Question2: Did you have other any other options of hostels besides Generator Hostel?

G1: Actually, I have stayed in another hostel, Bedwood, one night before, but it was too simple and I decided to move here.

G1: Sure, Airbnb.

Question3:Scale 1-5, how do you rate your overall satisfaction in Generator Hostel?

G1: I would say very satisfied, as far as fashion goes I would say 5, but if there were some things that I would like more…Maybe a kitchen would be nice, but on the other side they have this nice bar which offers good food.

G2:I would give it a 5.

Question4:Was there anything that disappointed you? If there was, what?

G1:I don’t think there is something that disappointed me.

G2: I think the lack of early check-out.

Question5:Was there anything specific what satisfied you the most? What?

G1: Yea, this hand out area is one of the best I’ve been to, the couches and the TVs and everything is great.

G2:I guess, the location but also the convenience of having information and access to information about Copenhagen.

Question6:Would you add anything to the services in the hostel?

G1: I can not really thing about actual improvements.

G2:Yea, I would probably add a free locker, I think if you are not from the area and you don’t have local coins it can be complicated.

Question7: Would you visit Generator Hostel?

G1:Yes, definitely.

G2:Yes.

References:

James A. Fitzsimmons / Mona J. Fitzsimmons / Sanjeev K. Bordoloi. Service Management: operations, strategy, information technology. 8th ed. McGraw-Hill international edition, 2014.

https://www.techopedia.com/definition/30103/service-management-system-sms

https://generatorhostels.com/en/destinations/copenhagen/

https://generator.imgix.net/images/transaction/Menus/petanque%20menu.pdf

https://generator.imgix.net/images/transaction/Menus/GEN_web_menu_cop-Bar.pdf

https://skift.com/2016/02/29/generator-hostels-leaders-explain-the-rise-of-hostels-for-business-

travelers/

http://service-thlinking.blogspot.dk/2013/03/service-package-and-augmented-service.html