E-Commerce in Tourism

HFT3444
 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.
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.
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.
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/
Tourism Industry

• Travel agents are repositioning themselves as a consultant or

trusted, independent advisor…

Ching-biu Tse, 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
Introduction

• E-commerce: doing business over the

Internet

• Another way of doing business

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.
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
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.
Benefits to Buyers

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

• Builds customer relationships

• Reduces costs
• Quick and efficient
• Reduces communication costs
E-Commerce Domains

• B2C (business to consumer)

• B2B (business to business)
• C2B (consumer to business)
• C2C (consumer to consumer)
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
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
Legal and Ethical Issues
• Online Privacy and Security
• Online privacy is perhaps the
number-one e-commerce concern
• Identification theft and commercial
espionage are security fears of
consumers and companies alike
Some E-Commerce Business Models

• Advertising
• Auctioning
• E-markets
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
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
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”
 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
 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.
 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.
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.
 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
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
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.
A survey of Major Lodging Websites.

Company and URL WHAT CAN YOU DO? Online

Booking
The Four Seasons Hotel Picture links to vacation getaways, business travel and Yes
www.fourseasons.com rates, availability, residential properties.
The Ritz Carlton Hotel Reservations and explore the hotels. Each different Yes
www.ritzcarlton.com hotel link has extensive information on all hotel
services, packages.

Embassy Suites Reservations, check rates, find a hotel, special offers, Yes
www.hilton.com/en hotel locator, by city, state, country.
Marriott Hotel Find a hotel, reservations, hotel directories, route Yes
www.marriott.com planner, frequent visitors, links to all Marriott Properties.
The Adams Mark Hotel Choosing a location of an Adams Mark Hotel, Yes
www.adamsmark.com reservations; search rates & availability by city, state,
country.

Hyatt Hotels Rates & reservations, special offers, Gold Passport Yes
www.hyatt.com Program, Hyatt Resorts, Hyatt Extra Email Subscription
Search for Hyatt worldwide hotels.
 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.
Questions