Service Innovation and Its Impact on Customer Satisfaction and Business Performance in the Hospitality Industry: A Systematic Literature Review

Abstract

Service innovation has become critical in driving customer satisfaction and business performance in the hospitality industry. With increasing competition and evolving customer expectations, businesses are adopting innovative strategies that incorporate technological advancements, human-centric service improvements, and sustainability-driven initiatives to enhance service quality. Despite the growing emphasis on service innovation, existing research lacks a comprehensive synthesis of its impact on customer experience and operational success. This study conducts a systematic literature review to address this gap by analysing the role of service innovation in the hospitality industry. Data were collected using an advanced search strategy from Scopus and Web of Science databases, ensuring a comprehensive selection of peer-reviewed literature. The search yielded 446 records, systematically screened based on predefined inclusion and exclusion criteria. After removing irrelevant studies and duplicates, 30 articles were identified as eligible for analysis. The findings indicate that service innovation significantly contributes to operational efficiency, customer engagement, and financial performance. Technological innovations such as artificial intelligence, digital marketing, and innovative hotel solutions improve service accessibility and personalisation, while human-related innovations, including employee engagement and experiential marketing, enhance customer relationships. Sustainability-driven innovations, such as corporate social responsibility initiatives and eco-friendly practices, further strengthen brand reputation and customer loyalty. The study highlights the necessity of integrating technological, human-related, and sustainable service innovations to achieve long-term success. The findings provide valuable insights for hospitality practitioners and researchers by identifying key trends, challenges, and opportunities in service innovation. Future research should explore the dynamic interplay between these innovation dimensions and their evolving impact on customer satisfaction and business sustainability.