A recent stay at the Ruby Lilly hotel in Munich reminded me of the power of value innovation. This concept was made famous in the strategy classic Blue Ocean Strategy by INSEAD professor Chan Kim, who I was lucky to have as my strategy teacher at INSEAD. Rather than fighting for share in a crowded “red ocean,” value innovation is about creating a whole new space—a “blue ocean”—by delivering more of what matters to target customers, and less of what doesn’t.
That’s exactly what Ruby Hotels have done with great effect. Since launching in 2013, the brand has opened 20 hotels and 8 co-working spaces across Europe, with 14 more in the pipeline. It’s clearly a winning model—evidenced by InterContinental Hotels Group (IHG) recently acquiring the Ruby™ brand and IP for €110.5 million (1). So how have they pulled this off? Here are four key lessons from their value innovation playbook.
1. Deliver on the Basics
Ruby’s rooms are compact but deliver the core functional benefits guests want. The brand promises “a big, cosy bed, aromatherapy Ruby Care products, and soft, fluffy towels.” The bed was comfy (though definitely queen, not king), and the towels were more ‘functional’ than ‘fluffy.’ But they nailed the stuff that really counts. The breakfast buffet was packed with fresh fruit, wholegrain bread, superfood cereals, local cheeses and meats. Add in bottomless barista coffee and you’ve got a great formula to start the day right.
2. Dial Up the distinctiveness
“Where you stay should be stylish and inspiring,” says Ruby (1). And on this front, they absolutely walk the talk brand wise. The Ruby Lilly’s lobby is as stylish and cool a bar area as I’ve seen. On a Tuesday night, it was buzzing with a mix of locals and travellers. A rooftop garden adds extra fun factor and the cosy library area is a cool place to work or hang out. This emotional sizzle that elevate a stay from functional to memorable.
3. Save costs smartly
Value innovation is not about being cheap—it’s about being smart. Ruby uses a string of cost-saving tactics to deliver their brand experience at an affordable price. This is what Ruby calls “Lean Luxury”. For example, a one night flexible stay with breakfast in Amsterdam is only €166 in Ruby Emma. This is 29% less than a similar room rate at the Hoxton, another budget boutique hotel with a funky feel.
Some examples of the Lean Luxury approach:
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No mini-bar or kettle in the room. Instead, a “Galley” area on each floor offers tea-making facilities and vending machines (see below).
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Self check-in and check-out via digital kiosks—no front desk, no queues.
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A free drink if you skip room cleaning on multi-night stays. Lower costs, greener footprint and more bar traffic. Genius!
These aren’t cost cuts that frustrate customers—they’re service signatures that feel modern and aligned with guest values. And they free up money to invest in the things that do drive delight (see point 1).
4. Bring to Life a Local Personality
Unlike cookie-cutter chains that replicate the same dull format city after city, each Ruby hotel has its own name and local design twist. The Ruby Lilly in Munich, for example, is inspired by the cult 1980s TV series Monaco Franze, about an early-retired police detective and man-about-town Franz Münchinger. The hotel name references his unrequited love, Lilly—and the interior playfully riffs on the decade’s decadence, with cassette tapes, old TVs and even a champagne chandelier.
This approach delivers what we call fresh consistency—a strong brand idea (“Lean Luxury”) expressed in diverse, location-specific ways. The consistent value innovation model (small rooms, big experience) is maintained, while local flavour adds memorability.
In conclusion, Ruby Hotels shows how value innovation can carve out a winning niche in even the most crowded categories. By combining solid functional delivery (“sausage”) with stylish, emotionally resonant touches (“sizzle”), they’ve created a brand that’s both distinctive and profitable. And as the IHG acquisition shows, this is more than a cool concept—it’s a commercially powerful one.
