Chapter 10 The Future Of Hospitality And Tourism E-commerce And Information Technology

1. E-commerce and Information Technology in Hospitality and Tourism Chapter 10The Future Of Hospitality And Tourism E-commerce And Information Technology Copyright 2004 by Zongqing Zhou, PhD Niagara University

2. Learning Objectives • After you complete your study of this chapter, you should be able to: • Describe new technology trends. • Understand new e-commerce paradigms. • Grasp new e-commerce strategies. • Understand the issues, problems, and barriers in hospitality and tourism e-commerce and information technology. • Understand the implications of all those changes.

3. 10.1 New Technologies, New Paradigms, And New Strategies • With new technologies, new paradigms are being created, and therefore new strategies are being formed to compete in this ever changing but profitable world of e-commerce in the hospitality and tourism industry

4. 10.2 New Technology Trends • The needs of humankind for technology • communication • information distribution • business transactions

5. 10.2 New Technology Trends (cont.) • The Internet is the beginning of the continuous process of seeking communications that is • instant • real-time • 24/7 • mobile and accessible anywhere

6. 10.2 New Technology Trends (cont.) • Future developments in technology can be predicted to continue the process. And so the new trends will be: • Broadband • Mobility and accessibility • Instant messaging (IM) • Convergence of technologies • Integration of business and e-commerce • voice recognition • tracking technologies • wireless communications

7. 10.2 New Technology Trends (cont.) • BROADBAND AND SPEED • Broadband will be key in solving the speed problem. • The diffusion of broadband technology among Internet users will greatly increase the appeal of hospitality and tourism e-commerce since the intangible nature of hospitality and tourism services requires much more visual information and interaction over the Internet than any other industry. • Broadband technologies such as DSL, ISDN, cable, fiber optics, satellite, and radio wireless will become the norm in the future. • In the future, the question will change from ‘What can you put onto the Web that consumers can view without difficulty?’ to “What can you do to make your presentation and communication more effective?”

8. 10.2 New Technology Trends (cont.) • MOBILITY AND ACCESSIBILITY • Mobility and accessibility are key in meeting the needs of the consumers. • Wireless and satellite communication provides such a solution to solve the problem. • Handheld devices, such as PDAs (personal digital assistants) and cell phones will take the market lead in the years to come. • location-based technology will enable travelers who either know their location or where they are headed input their address or the destination address.

9. 10.2 New Technology Trends (cont.) • location-based technology will enable travelers who either know their location or where they are headed input their address or the destination address. • find restaurants, stores, theaters, and so on for the traveler. • provide interactive functions that permit people in different locations to communicate via IM (instant messaging), or play tic-tac-toe together • view restaurant listings together to decide where to meet.

10. 10.2 New Technology Trends (cont.) • INSTANT MESSAGING (IM) • IM is a live chat and e-mail service that enables you to find your friends when they are online and send messages or talk via a private chat room. • With IM, each user has a private list of instant messaging addresses, and the instant messaging system can be set to alert you when someone on your list is online. • Hospitality and tourism e-commerce can use this technology to send customized information ranging from travel conditions to flight cancellation.

11. 10.2 New Technology Trends (cont.) • Convergence Of Technologies • The convergence of all communications media through the Web. • Convergence refers to the integration of voice, data, and video into a single, IP-based network. • The Web will serve as a central communication platformwhere means of communications merge with each other to create the most powerful and convenient information distribution, communication, and e-commerce channels.

12. 10.2 New Technology Trends (cont.) • Evidence of this convergence • Destination marketing organizations (DMOs) begin to use the Internet as a central platform for streamlining functions of marketing, travel information distribution and customer service. • Hotels’ property management systems (PMS) are not only transformed by the use of Intranet, but also become accessible to customers by way of extranet, providing 24/7 customer service.

13. 10.2 New Technology Trends (cont.) • Benefits of convergence • Save revenue by reducing the total cost of ownership • business empowerment, which includes increasing organizational speed and efficiency, flexibility, and better support for a mobile workforce. • with the same IP network, companies can run video over the network for teleconferencing, a feature that can potentially accrue tremendous savings in travel.

14. 10.2 New Technology Trends (cont.) • Integration Of Business And E-commerce Technologies • Reasons for the integration • The development of new technologies has made it possible for businesses to use Internet technologies to transform their old business technology solutions into an integrated system. • The drive to cut costs in the adoption of new technologies.

15. 10.2 New Technology Trends (cont.) • Voice Recognition • With voice recognition, travelers can free up their hands while driving or doing fun things by speaking to voice recognition devices, such as handheld computers, instead of typing on a keypad • Through a voice command service, a traveler can use a wireless device (either a handheld computer or a PDA), get e-mail and have it read or receive a response, and get headlines and make reservations.

16. 10.2 New Technology Trends (cont.) • Tracking Technologies • These technologies are needed by e-commerce companies to get users to visit their sites, allow shoppers to easily find and buy the products they need and enable electronic customer relationship management (e-CRM) by customization and personalization.

17. 10.2 New Technology Trends (cont.) • Wireless Communications • Key wireless technology applications • location based services (the ability to locate cell phones to send information) • voice command service (basic voice recognition technology) • multimedia (viewing short videos, like trailers for movies and videos taken on vacation), speed (faster wireless networking—an Ethernet connection at 11 megabytes per second that can match the speed of broadband), and interoperability (improving the ability to talk to one another).

18. 10.2 New Technology Trends (cont.) • point of access ( for all sorts of information, such as news, sports, maps, entertainment (e.g., music), graphics and games, communications (e.g., e-mail) • instant messaging • SMS(short messaging service) • transactions such as banking, shopping, and reservations.

19. 10.3 New Paradigms • Empowerment of the consumers through freedom of choice • Empowerment of businesses to gather information from travelers so as to understand their needs and wants • Empowerment of marketers to market directly to consumers

20. 10.3 New Paradigms (cont.) • The reasons for a new information paradigm • Customer information has become part of a business’ assets. • E-CRM (electronic customer relationship management): Once we use the terms assets and investment to refer to customer information, we are accepting the idea that a long-term relationship with customers is more important than any temporary gain.

21. 10.3 New Paradigms • Personalization And Customization Is King • In the Internet age, mass marketing and commercialization are out, and personalization, customization, and target marketing are in. • The challenge is to customize the information for the end user, delivering high touch in a high-tech world. • Personalization and customization make up the future of e-commerce.

22. 10.3 New Paradigms • The Web Site As A 24/7 Office • A business Web site must serve as a 24/7 office or an extension branch of the business. • Only when visitors can find what they need quickly and easily and when their visiting experience is satisfactory will they become repeat visitors and therefore possible customers.

23. 10.3 New Paradigms • Be ready to respond to customer needs and questions. • One way is to try to understand these visitors as soon as they come to your site and give them what they want, which requires a high degree of personalization and customization, discussed in the previous section. • A second way is through the design of the Web site, that is, anticipating the needs and wants and providing the needed information in an easy-to-find and easy-to-understand manner. • Another way is to create as many interactive communication channels as possible so that visitor questions can be responded to and answered instantly and satisfactorily.

24. 10.3 New Paradigms • Permission Marketing Is Everything • The sensitivity of customers to privacy and consumer rights also increases. • Hospitality and tourism e-commerce businesses must make sure that they get consumers’ explicit permission to send marketing or any type of information. • Furthermore, they will need to provide an option for consumers to opt out in case they decide not to continue the relationship.

25. 10.3 New Paradigms • Disintermediation And Re-intermediation • This process of cutting off the middlemen is what has been referred to as disintermediation. • The Internet also creates a new platform for introducing new e-commerce businesses to fill the void left by traditional middlemen. This process is referred to as re-intermediation.

26. 10.4 New Strategies • New technologies and new paradigms require that hospitality and tourism e-commerce businesses adopt new strategies

27. 10.4 New Strategies (cont.) • Service Orientation • A customer-and-service-oriented company tries to understand the customer needs and find solutions to meet their needs. • A product-oriented company tries to sell features of its products and lets customers decide what they want.

28. 10.4 New Strategies (cont.) • Building Virtual Communities • Viral marketingrefers to a process in which consumers voluntarily spread a message about a company, a product, or a service based on their own experience. It is the Internet version of word-of-mouth marketing. • This is made possible because passing information on the Internet is much easier and more convenient than through any traditional means.

29. 10.4 New Strategies (cont.) • Partnership • In e-commerce, partnership is assuming its old role and in the meantime taking a new name. • Thanks to the pressure of cutting cost, consolidation is happening in every sector of the hospitality and tourism industry, especially in the travel information distribution sector. • Another new dimension of partnership is being made possible by Internet technologies: The affiliate loyalty program, or affiliate marketing, discussed in Chapter 6.

30. 10.4 New Strategies (cont.) • Multichannel Communications • Multichannel communications means the utilization of a combination of traditional media and Internet technologies in marketing and customer service. • You need to realize that not all your customers have the same technological skills and may not prefer to use the same communication vehicle. • In addition, technology does break down, but today’s consumers are notoriously impatient.

31. 10.4 New Strategies (cont.) • Building Brand With Trust • The Internet has made trust an overriding factor in the consumer’s choice of services and products. • The old rule that if you build it, they will come, does not apply to e-commerce. • Another old rule of e-commerce in the age of dot-com boom, “He who comes first will win”, is no longer true with today’s sophisticated online travelers. • Earning the trust of consumers will become a vital strategy for successful e-commerce businesses.

32. 10.5 Issues, Problems, And Barriers • Issues • Cost: The cost of adopting new technologies becomes a big issue. • Outsourcing: Related to the cost issue is that of deciding on managing technologies in house or out of house, that is, outsourcingto technology companies. • Standardization: Standardization of technologies

33. 10.5 Issues, Problems, And Barriers (cont.) • Barriers • Online payment methods. • Reliability • Security