Electronic commerce (e-commerce)
allows for information to flow through the Internet on a worldwide
basis with virtually no entry barriers. The e-commerce route
is an advantage to all companies around the world in most industries
because it allows for tremendous cost savings. According to a
survey conducted by Industry Week, 76% of respondents sited
e-commerce as a key strategy with the Internet as one of the most
important growth drivers.
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Statistics
indicate that online travel sales are expected to grow to
US$8.9 billion by the year 2002 which includes air tickets,
hotel, car rental, and advertising on travel related sites.
Hotel and car rental sales alone will increase from $31
million in 1996 to $2.2 billion in 2002. The actual
direct sales by suppliers are predicted to increase from 22%
in 1997 to 30% of online sales in 2002. This will reduce
the commissions paid to travel intermediaries, as suppliers
will be directly linked to customers. |
Further statistics indicate a
substantial rise in Internet usage for online travel bookings.
According to one Hotel Online report, 20% of all business travelers
utilize the Internet in booking flights and hotels (7% increase from
1998). Although many customers prefer the “hand-holding”
travel agent, a survey of frequent travelers indicated some changes.
Results revealed that 56% use agents for air travel and 37% for
hotel information (a 3-4% decrease from 1997). The current
trend suggests that the US customer is concerned primarily with
price and quickness when shopping on the web.
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The players in the
hospitality and tourism industry must follow the Internet
trend for future long-term growth and competitive advantage.
The first portion of this paper will focus on the general
trends in the industry with emphasis on Information Technology
(IT). Examples will highlight the major hoteliers that
are focusing on the Internet trend. |
Information Technology Trends in
Hospitality
The technological era of the 1990s
was known as “the network era” which can be defined as the
intra- and inter-organizational networking generated by local and
wide area networks. The development of the Internet, Intranets
and extranets evolved as the most efficient means of communicating
and as a primary business necessity. The 1990s also marked an
era changing the competitiveness of companies on a global level.
The location and size in the product delivery process was reduced
significantly because of the IT tools available.
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Today technology
is providing tools for management and marketing that enhance
the capabilities of organizations. Computers are now
faster and more reliable allowing for quicker results at a
lower cost. Marketing managers have been taking
advantage of data warehousing via IT, which has allowed them
to target specific market segments and develop competitive
marketing strategies. Perhaps networking is one of the
most significant parts of the Information Technology era.
The Internet, Intranets and Extranets have enabled employees,
units, organizations, external partners and customers to share
an endless amount of information. This has allowed for
significant cost savings due to the sharing of information on
a worldwide basis. Further, IT has facilitated in the
relationship building process due to the vast amount of
information that can be transferred through the Internet in a
matter of no time. |
Software, hardware, information
management, and telecommunications systems have allowed for the
processing and flow of information among organizations in the travel
industry. Many sources claim that the way in which tourism
organizations take advantage of IT tools will determine their future
success in the marketplace. The tourism industry and the World
Tourism Organization (WTO) must consider the importance of the IT
trend by implementing an effective IT system for marketing,
distribution, promotion and co-ordination of the industry as a
whole. It is crucial that tourism enterprises take
advantage of the emerging technologies in order to improve
management abilities and develop sound business plans focusing on
the most efficient means of delivering value added products/services
to customers. In this respect, tourism organizations
will be able to maintain a competitive advantage over those who are
not technologically advanced.
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The increase in
travelers over the years has prompted a demand for top quality
IT with an emphasis on “servicing” the customer by
offering high quality products at low costs. The success
of the tourism industry will depend upon the abilities to
recognize and respond quickly to current and prospective
customer needs. IT is beginning to play a major role in
“servicing” customers. IT has been a significant
challenge for tourism organizations because it requires
efficiency in internal and external communications. The
initial cost of IT will be quite high in a financial sense,
and the tremendous cost savings in the long-term will depend
upon the efficiency of the IT during its crucial
implementation stages. |
Consequently, customers feel
empowered by IT while at the same time are distancing suppliers.
The customer enjoys having the power to identify products of
preference at the right price, place, and time frame. It is
important that service providers understand customer needs in
building relationships and developing the best products at the
lowest prices. The online companies that provide a full
packaged travel experience at a low price will be successful in the
long-term.
By
Bernd Peters
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