Business Model & Innovative Initiatives at the Ruggård Hay Hotel – Annkatrin Lange

The business model canvas

The business model canvas is a strategic management tool used by companies to simplify and to illustrate how money and success are made.
Alexander Osterwalder, one of the inventors of the business model canvas, says that: “A business model describes the rationale of how an organization creates, delivers, and captures value.” A business model needs to be simple, easy to understand and has to contain all relevant factors of a company.
The Osterwalder business model canvas combines nine blocks to build the business model. The nine elements are costumer segments, value proposition, channels, customer relationships, revenue streams, key resources, key activites, key partners and cost structure. 

The first block, the customer segments block, defines the target group the company aims to reach. The place in the market, which the company tries to reach, is regarded in this block as well (e.g. mass market or niche market).
The block of value proposition describes the products and services the company offers to create value and to satisfy the specific customer segment.
The third block, the channels, is very important because it describes how a company reaches and communicates with their customer segment. The channels connect the first, the customer segment, and the second, the value proposition, block.
The customer relationships block shows which type of relationship the company wants to establish with its customers. It can range from personal to automate.
The fifth block, the revenue streams block, represents the money the company earn from the customer segment. It’s important to find out for which value the customers are willed to pay.
The sixth block, the key resources, describes which resources are needed to create and offer the value proposition. But the key resources are required in distribution channels, customer relationship and financial aspects as well.
The key activities, the seventh block, are the most important activities to make the company work successfully.
The eighth block, the key partners, shows the partnership and alliances of the company.
The last block, the cost structure, shows all incurring costs to set the business model into operation.


The Ruggård Hay Hotel

The Ruggård Hay Hotel needs as a new business a business model as well.
The owners, Lisbeth and Christopher, had already filled in the Osterwalder business model canvas before our first meeting in September 2014. 

Hereafter, the Kjærs idea of the business model will be regarded and explained and some new ideas will be added.

1.    The customer segment

Family Kjær mentioned the Icelandic horse riders as the main target group. But racing cyclists, mountain bikers and anglers are possible guests as well. The very well developed network of hiking trails could attract hikers to the region. 

The Ruggård Hay Hotel could also be a place to stay over a weekend, maybe combined with a visit of Legoland Billund or Lalandia, or it could be a “rest area” for people travelling with their horses to competitions in Sweden or Norway.

2.    The value proposition

As already mentioned, the hiking, biking and horse riding trails are very well developed. This fact tempts nature loving people to this region.
The farm of family Kjær in Vejle Adal offers a lot of possibilities for the friends of horses and nature. Folding for the horses are already built and a riding arena is there as well. The tourists have the chance to bring their horses (Icelandic Horses) with them to Denmark and they don’t have to worry about the accommodation of their horses. The members of the Kjær family offer guided trips through the nature around the Ruggård Hay Hotel. The Ruggård Hay Hotel offers the possibility to experience the nature while sleeping in tents, in the hay or discovering the nature around the Hotel.
The family offers lunch and coffee arrangements for their guests and a breakfast as well. The breakfast could be taken in the house or even in the kitchen of the family. This leads to a close relationship to the members of the family.

The channels

 Lisbeth and Christopher chose, the Danish Icelandic Horse Association, local riding and hiking clubs, Icelandic Horse riders, and friends as their distribution channels. An own homepage of the Ruggård Hay Hotel with booking engine could be created as well. The homepage is a possibility to reach a part of the target group, too.
The choice of varied channels is very important to get in touch with the possible guests!

4.    The costumer relationship

Personal contact between the family and the guests is very important for Lisbeth and Christopher. They plan to achieve it through the booking process via telephone, but today the possibility to book online on the hotels homepage or on hotel platforms is provided by many guests. The close relationship can be reached through the breakfasts with the family or the guided tours as well.

5.    The revenue streams

The customers are going to pay for the accommodation, the catering and the guided tours. We haven’t talked yet about the prices for the offers. But I think that the prices should be different in the summer and the autumn- and winter season. The Break-Even-Point is 60.000 DKK a year.
Lisbeth and Christopher should think about the payment possibilities, like credit-card, mobile payment or only cash?  

6.    The key resources 

Lisbeth and Christopher are mentioning only one point referring to the key resources: the manpower of the family. But as both parents have fulltime jobs and the daughters are in school, maybe one of them has to change the job into a part-time employment. Or an employee could help with serving the breakfast or cleaning the apartment if the hotel is going well.

7.    The key activities

The key activities of the family will be the hosting of the guest and the horses. The cleaning of the accommodations and the stables are key activities as well. Serving the breakfast to the guests and the supply with lunch and coffee arrangements while the guided tours are an important key activity too.

8.    The key partners

Possible key partners are the Bindeballe Købmandsgård, the Bindeballe Station and the Idræts- og Fritidschef. Marketing partners could be and the Danish Icelandic Horse Association, maybe an advertisement on their homepages is possible.
The key suppliers could be some regional farms supplying the Ruggård Hay Hotel with ecological food.

9.    The cost structure

Right now, the Ruggård Hay Hotel won’t cost a lot of money, the apartments are already built and in good condition. Some small investments in furniture will be necessary before the opening of the hotel.
Some bigger investments have to be made in case of renting the second apartment as well.  


The innovative initiative

To differ from other B&Bs in the region the Ruggard Hay Hotel has to use some innovative ideas to create a unique selling proposition.

A chance to create the USP may be the Actractor-based innovation model:
The actractor, the event or activity which attracts the people, is the equestrian tourism at Ruggård. The attraction is the composition of nature, sports and culture in one experience. The scene (manifests the place and the identity of the actractor) is Vejle Adal and the scene-maker, who sees the possibility for using the attractor for increased visitation, is the Ruggård Hay Hotel. The scene-taker is the Hay Hotel, the local community, the tour guides, the small cafés and museum stores.   


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