Abstract:

Recent studies shown that EU tourism companies are increasingly product-driven rather than consumer-driven, and that the sector lacks innovative solutions to handle major challenges, such as identifying new niche markets; reducing the seasonality of demand; improving working conditions; and increasing the satisfaction and loyalty of consumers.
This research seeks to develop a deeper understanding of how Internal Marketing (IM), defined as a form of organizational culture that promotes the development of strategies which aim to achieve increased satisfaction and commitment of the organizations’ employees, contributes to improve hotels competitiveness.
To do so, the study examines the effect of applying IM on firms' degree of market orientation (MO) as well as on their predisposition to involve customers and front-line employees in service innovation, and how these practices ultimately improve the hotels' long term performance relative to competition.
The conceptual model is evaluated using structural equations modelling and the information provided by a Spanish sample of 240 hotels. The results enable us to conclude that hotel companies which apply an IM strategy to the greatest extent are the most predisposed to co-creation with customers as a result of their higher MO; and such companies also value the contributions of their front-line employees in service innovation design more highly. The hotels' willingness to involve customers and front-line employees in the service innovation process improves their results with both customers and employees, which finally leads to higher financial and market performance rates. Accordingly, this research supports the importance of the co-creation culture for hotels' competitiveness and the key role of IM to valuate co-creation.

Keywords:

Internal marketing, co-creation in innovation, customers, market orientation, front-line employees, results.