E-Commerce in Tourism

1. E-Commerce in Tourism HFT3444

2. Intro The hospitality and tourism industry has probably been the most affected industry by the Internet. The industry depends on the distribution of information about its products and services. Hospitality and tourism suppliers have been looking for new ways to expand channels of distribution so that they can reach target travelers in a more efficient and effective way.

3. Tourism Industry • Tourism is an information rich industry… • Information is the ‘lifeblood’ of the industry… • Tourists are unable to pretest an intangible hospitality or tourism product… O’Conner, P. (1999). Electronic Information Distribution in Tourism and Hospitality. Oxford: CABI.

4. Tourism Industry • Tourism industry operators depend on finding and developing new means to distribute information-based travel products and services, marketing information to customers at their convenience… Zhou, Z. (2004). E-commerce and information technology in hospitality and tourism. Canada: Delmar. • Clearly the development of internet services by players in the tourism industry assists with this goal as e-tourism offers opportunities for speedy communication and global access with minimal expense… Buhalis, D. (2001). The future of eTourism intermediaries. Tourism Management, 23, 207-220.

5. Tourism Industry • As well as providing an opportunity for the tourism industry to market its wares, there is substantial evidence to point to tourists demanding access to travel information through electronic channels. Trends point clearly towards a changing face of the travel industry: for instance the opportunity of disintermediation allows final product or service providers to bypass the services of travel agents to directly target their customers resulting in travel agents being forced to adapt their business model from a intermediary to an infomediary… Nadkarni, S. & Peng, C. (2001). The relevance of travel agencies in the era of e-commerce and globalization. http://www.mca.org.mo/

6. Tourism Industry • Travel agents are repositioning themselves as a consultant or trusted, independent advisor… Ching-biuTse, A. (2003). Disintermediation of travel agencies in the hotel industry. Hospitality Management, 22, 453-460 • The nature of information provision, whether through intermediary or provider, is also changing as new communication tools are developed and offered, with email, live chat rooms or bulletin boards allowing asynchronous or synchronous communication to suit the circumstances… Cox, B., & Koelzer, W. (2004). Stickiness: Internet marketing in hospitality. New Jersey: Pearson Education. Picozzi, L. (2005). Understand Online Customer Service. http://www.score.org

7. Introduction • E-commerce: doing business over the Internet • Another way of doing business

8. Definitions • Electronic commerce is a set of technologies, applications, and business processes that link business, consumers, and communities. • For buying, selling, and delivering products and services • For integrating and optimizing processes within and between businesses.

9. New Types of Intermediaries • With the birth of dot-com sites such as Expedia.com, Priceline.com, and Travelocity.com the hospitality industry has had to change how they do business

10. Customization • Technology has been useful in assisting companies in understanding their customers and potential customers on an individual level and developing marketing to their specific wants.

11. Benefits to Buyers • Convenient • Easy and private • Greater product access and selection • Offers comparative information • Immediate and interactive

12. Benefits to Sellers • Builds customer relationships • Reduces costs • Quick and efficient • Reduces communication costs

13. E-Commerce Domains • B2C (business to consumer) • B2B (business to business) • C2B (consumer to business) • C2C (consumer to consumer)

14. Designing Attractive Web Sites • The key is to create enough value and excitement to get consumers to come to the site, stick around, and come back again

15. Content • Convey what the company is and what the company has to offer • Project brand image • Easy to navigate • Attractive • Have a “contact us” page • Ask permission to send information on specials • Able to purchase products online

16. Legal and Ethical Issues • Online Privacy and Security • Online privacyis perhaps the number-one e-commerce concern • Identification theft and commercial espionage are security fears of consumers and companies alike

17. Some E-Commerce Business Models • Advertising • Auctioning • E-markets

18. E-Marketing • Crawlers (Spiders) • Directory (Human Powered) • Paid Listings • Meta-Tag: descriptions and Keywords • Entire Web site scanned for relevant words and links to other web sites • Paying

19. Internet Business Models and Integration Requirements • Internet enables new models for marketplaces, trading communities, outsourcing, open sourcing, buying consortia, supply chain integration and “virtual enterprises” that are fundamentally different

20. Components of an on-line store • Display mechanism • Registration system for customers • Transaction and Order Processing System • Shopping cart • Order processing system • Secure transaction path to “payment gateway”

21. Airlines • For decades, airlines have been heavily dependent on travel intermediaries • The Internet has changed everything, enabling airlines to find a way to bypass intermediaries to reach their customers directly and save money at the same time • Their first move was to cut commissions they paid to the travel agents

22. Airlines Cont’d • The airlines use strategies such as online pricing and incentives to lure travelers to book and plan travel on their sites. • Today, all major airlines own their own Web sites that are capable of taking reservations online as well as conducting other travel services. • In fact, all major airlines are aggressively investing in the e-commerce, using all kinds of marketing strategies to lure customers to book and shop at their Web sites. • At the heart of the popularity of online booking and reservations is the idea of customization of travel products and services.

23. Airlines Cont’d • These online booking capabilities reduce costs by eliminating transactional fees and providing real-time reporting tools for travel managers. • Before the Internet online reservation, this customization process was done through the travel agents, airline products and services are not that complicated to customize and therefore the Internet becomes a perfect channel of distribution of airline travel products and services.

24. Cruise Lines • Cruises are designed to replicate the many variety of amenities and activities available at the world’s leading land resorts. • To book a cruise requires the consumer to make a variety of major decisions that can include elements of three major travel categories, airlines, hotel and cruises.

25. Cruise Lines (cont.) • With the emergence of Internet e-commerce in the travel industry, the cruise lines were tempted several times to follow the airlines in offering direct online marketing and reservations. • Intangible part

26. Lodging • The lodging sector of the travel industry, though starting late in e-commerce, is fast catching up. • Hotel industry room nights and revenue booked electronically in 2001 by travel agents and consumers grew at a rapid rate. • This growth was spurred by GDS booking both by consumers directly and through third-party travel Web sites such as Travelocity.com and Expedia.com

27. Lodging (cont.) • Today, all major lodging chains have invested in e-commerce and information technology to various degrees. • These investments include in-room high-speed Internet connections, online direct booking Web sites, and online procurement of services and products. • Small bed-and-breakfast properties, too, are either setting up their own Web sites or joining major bed-and-breakfast marketing sites.

28. A survey of Major Lodging Websites.

29. Rental Car Industry • With its quiet start in the early 20th century, the rental car industry has gone a long way toward embracing technology. • Beginning in the 1990s, the industry started to adopt technology to improve its reservation systems • Online booking and marketing of vehicles has helped rental companies streamline their business, increase its reach and efficiency and at the same time better serve the customers’ needs and wants. • Rental car companies are targeting their Web strategies not only at leisure travel customers but also at the corporate travel market.

30. Questions