Tourism Management
E-Business and IT: Applications for Tourism
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Word Count: 2, 529
Abstract
E-business and ICT offers a number of benefits to industries and individual business firms including efficiency, effectiveness, cost savings, and other benefits. These benefits comprise areas of competitive advantage. These tools are important in the tourism sector to support competitiveness especially since the industry is fiercely competitive and dynamic. A look at the uptake of e-business and ICT in different countries or regions shows that areas with better technological infrastructure leads to higher engagement in these tools and the experience of more benefits relative to other areas. Case studies of business firms engaging these tools also explain the rationale and benefits of e-business and ICT in the tourism industry.
Table of Contents
Abstract
Table of Contents
I. Introduction
II. E-Business and ICT for Tourism
III. E-Business and ICT in the Tourism Industry of Different Countries
IV. E-Business and ICT in Individual Tourism Firms
V. Conclusion
References
I. Introduction
The global economy has increased the importance of e-business and information technology as key components of effective business strategy. These components refer to competencies, processes, and structures that operate through the Internet technology. E-business models and ICT has fostered enhanced productivity and reduced costs. In addition, e-business and ICT also allowed small and medium firms the tool to operate internationally resulting to greater competitiveness and more options for consumers. (Li 2006) As such, the tourism industry is more vibrant and dynamic with e-business and ICT.
II. E-Business and ICT for Tourism
E-business operates by utilising ICT to enhance the business covering all processes operating through compute-mediated networks. The integration of e-business and ICT leads to the transformation of the business firm’s processes in delivering higher customer value by utilising developments in computing technology and philosophy. (Li 2006)
Engaging in e-business leads to the enhancement of three processes. First are production processes covering ordering, procurement and replenishment of resource stocks, processing of payment or other financial transactions, establishing linkages with suppliers, developing control processes in production, and other similar sub-processes. Second are customer-focused processes including selling via the Internet, promoting and marketing in the virtual market, processing and fulfilling the orders and purchases of customers, processing payments, providing customer support, and other similar processes. Third are management processes encompassing identifying areas of service delivery, training employees, sharing of information among the departments, enhancing communications through tools such as video-conferencing, and recruiting people online. Online applications improve the flow of information between the production and sales group to enhance overall productivity. Communications tools also enhance efficiency by improving the flow of information and feedback from frontline employees to top management and vice versa. (Li 2006)
E-business fits the changing characteristic of the global tourism industry for a number of reasons. One, the tourism industry caters to an international market because of developments in transportation and opening of economies to the international market. This means that tourism firms need tools to allow them to reach out to consumers worldwide and fulfil service and value offerings to consumers through online purchases and customer service. Another, the tourism industry is highly competitive so that the ability to offer greater value and better convenience to consumer worldwide constitutes a source of competitive advantage. E-business is an important tool in achieving competitiveness. Lastly, the tourism industry is very dynamic requiring individual tourism firms to be flexible in adjusting to changes in demand as well as in the business environment. E-business supports flexibility by making it easier to coordinate and achieve changes in the production, marketing, and management strategies across the entire organisation. (World Tourism Organization 2001)
Utilising information and communications technology involves the alignment of three factors, which are physical ICT infrastructure, business framework, and conduct of business or commerce. Physical ICT infrastructures include computer hardware and software to support networking and Internet connection. Business framework involves the integration of ICT in basic processes such as computerised or online service delivery that necessitates ICT competence of employees. Commerce refers to the nature and extent of relationships established by the firm using ICT tools and processes and the manner of conducting business. There are various means of conducting business and establishing relationships, including business-to-business or B2B, business-to-consumer or B2C, business-to-government or B2G, consumer-to-consumer or C2C, and mobile commerce or m-commerce. Business firms can engage in one or the other as well as combine and extend frameworks such as by using a business-to-business-to-consumer framework indicating partnership between firms in fulfilling service delivery. Although e-business and e-commerce are interrelated but different concepts, the utilisation of ICT encompasses both. (Li 2006)
ICT has catalysed major changes in tourism by restructuring the industry in the previous decades. Intermediation is a form of B2B or B2B2C that refers to the provision of service by tourism firms via intermediaries. Hotels and transportation firms utilise travel agencies as intermediaries by allowing travel agencies to book and make arrangements for consumers to stay at specific hotels and use particular airlines. However, with the emergence of ICT, hotels and transportation firms can now provide service directly to consumers through online and telephone booking and customer service. This led to dis-intermediation or the cutting of intermediation partnership between business firms to create other forms of intermediation or re-intermediation. New forms of intermediation led to the partnerships with tourism and travel websites to provide information and reviews on tourist destinations, hotels and restaurants, transportation services, and other areas of the tourism industry. Website hosting is also another form of intermediation. Re-intermediation involves the engagement of travel agencies in electronic business allowing them to regain intermediary relationships by augmenting the direct service offering and delivery of firms. (World Tourism Organization 2001)
ICT in tourism offers a number of benefits to business firms. One is improved efficiency of business firms by allowing sharing of information among business units in real time especially for business units operating in different regions. Efficiency happens by allowing fast sharing of information to support speedy and responsive decision-making and support provision among business units. Another is improved consumer experience since online service delivery and customer service allows greater convenience and options to consumers in planning travels or vacations and booking reservations. Last is added value offering to consumers by improving diversifying services and improving service delivery. Enhanced competition results to continuous efforts at improvement and innovation that enhanced business operations and consumers experience. (World Tourism Organization 2001; Li 2006)
The integration of e-business and ICT targets business efficiency to ensure customer satisfaction and competitiveness. These benefits accrue not only to large but also to small firms, especially since ICT is cost-effective making it accessible to firms regardless of capitalisation (Li 2006). These benefits have been experienced in the tourism industries of many countries and regions as well as individual business firms as discussed in the succeeding sections.
III. E-Business and ICT in the Tourism Industry of Different Countries
In the European Union countries, e-business and ICT enhance and support various business activities of the tourism industry. All Business firms within the tourism industry in Europe use computers in various processes, almost all have Internet access, most have intranet and local area networking systems, and majority have wide area networking capabilities. (European Commission 2003) The uses of these e-business and ICT infrastructures are diverse.
First use is e-marketing by providing tourism firms with a new venue and new tools of introducing the firm and its services to the global market and drawing the interest of consumers to the firm relative to its competitors. The online venue increased the opportunity for tourism firms to increase market share, sales volume, and service quality. E-marketing happens through online sales and trading through the development of websites that offers online inquiries, bookings or reservations for the different areas of operation in the tourism industry. Most air transportation companies offer online sales options and so do hotels making it more convenient for consumers to coordinate and place vacations or travels. It is very possible to use search engines to learn information about different alternative tourism destinations and search for transportation and accommodation. Most large firms and innovative small and medium firms also created their own websites offering information on service description, rates and promotions together with options to make online arrangements by email, customer service toll free hotlines, or onsite transactions. (European Commission 2003; Lassnig & Markus 2007)
Second is the development of e-processes to support e-business including online collaboration in the design of product and services, online monitoring of capacity and inventory, online exchanges of documents with firm suppliers, and online exchanges of documents or papers with customers. One third of business firms in the tourism industry in Europe engage in electronic exchanges of documents, ten percent engage in collaboration for the design of products or services, and less then ten percent use electronic tools in monitoring capacity and inventory. This means that there is a wide room for greater e-business and ICT engagement of tourism firms in Europe to maximise the benefits and optimise the advantages of an online business model. (European Commission 2003)
Third is establishment of e-integration that operates by using e-business and ICT to link the different stages of the supply chain from the development of services to procurement of resources, to service delivery and after sales services. (European Commission 2003; Lassnig & Markus 2007)
Fourth is enhanced inter and intra-business connectivity at reasonable costs. Online infrastructures support better organisational communication to link the operation of the different departments or business units to ensure connectivity such as through a single website or customer service centre covering global operations through different business units. (European Commission 2003; Lassnig & Markus 2007)
These benefits also comprise the benefits experienced by tourism industries in different developed countries of regions with well developed e-business and ICT infrastructures. Key areas requiring improvement in the tourism industry in developed regions is the more widespread uptake of these tools and greater use of electronic systems to maximise the benefits and effectively provide efficient global services.
In the case of a newly developed country such as China, the fast development of information and communication technology has also proven its importance in the tourism industry. The opening of China to the world market and the competitiveness of the international market has led many tourism firms to engage in e-business and ICT by establishing company websites offering services with some websites also providing online service delivery. However, the uptake is relative less and wrought with conflicts between the personal and social network-based business culture in China and the online relations through Internet-based networking. This means e-business and ICT adoption as means of improving internal processes and business operations but less as a means of establishing relationships and delivering service. There is also the tendency of the adoption of e-business and ICT by large firms and to a lesser degree by small family-operated firms. (Ma, Buhalis & Song 2003; Jin & Su 2007)
With regard to the tourism industries in developing countries in Africa, Asia, and Latin America, e-business and ICT depends on the existence of supporting infrastructures such as telecommunications and the Internet. The uptake is highest in tourism firms operating in urban areas or large tourism firms with the capitalisation and know-how to adopt e-business and ICT in business operations. Even so the extent of utilisation of these tools is more as a means of achieving efficiency in achieving simple processes such as computerised recording of production and sales information or providing online information about the firm and its services but service delivery remains manual. (Collyer et al. 2003)
The differences in experiences of the different developed, newly developed, and developing regions and countries with e-business and ICT indicates that greater involvement in these tools enables more benefits to support business goals and consumer demands. Business firms experience a boost in competitiveness by using these tools to achieve efficiency, cost-effectiveness, and effective service delivery.
IV. E-Business and ICT in Individual Tourism Firms
Many tourism firms have experienced the benefits of e-business and ICT and these firms are found in developing countries, which mean that better telecommunications and Internet infrastructures provide greater accessibility and more cost-savings on their engagement in e-business and ICT.
Ryanair is a low-cost air transportation firm based in Ireland. It has become the leader in low-cost air transportation in Europe by engaging in e-business and investing in ICT by developing a fully automated online booking system and e-ticketing providing direct service to consumers. This means that customers can book their flights online and get to the airport on the scheduled flight. All bookings are checked using an online database. In addition, the company also utilised ICT in coordinating internal communications to ensure a no frills and convenient service for consumers, containing costs, controlling and expanding routes, and promoting tourism destinations covered by its roots in exchange for endorsements by these tourism communities. As such, Ryanair increased passenger traffic and received recognition for excellent service performance relative to its competitors in the low-cost airline category. (European Commission, 2006)
London Taxi Point is a public transportation company offering taxi services on demand via short messaging service (SMS) or text using mobile phones. Orders are automatically processed by computers and request sent to taxi operators and drivers who then respond via SMS before giving the confirmation message to the customer. However, this took 30 seconds to finish resulting to the same period of waiting time for consumers. As such, the interactive voice response (IVR) system was introduced with a computer system automatically processing calls, coordinating with taxi operators and drivers, and sending a confirmation to customers in 20 seconds. Although there are problems such as the fulfilment and customer service of taxi drivers, the company was able to gain a sizable market share by offering a convenient booking service, a secure service delivery because parties, transactions and destinations are recorded, and reasonable cost because of standardised fares for different destinations minimising the risk of exploitation of unknowing tourists. The company has partnered with the largest international taxi service making the company able to tap into the international market and establish links with hotels, tourist communities, and other tourism firms. (European Commission 2005a)
SkiStar is a large tourism firm specialising in winter tourism by operating skiing resorts in Norway and Sweden. At present the company is operating five ski resorts in these countries and enjoying a 33 percent market share. To enhance its market position and competitiveness, the company wanted to establish uniform value offering and strong brand equity for the five ski resorts and other possible acquisitions in the future. However, the company is having problems with the lack of linkages among the IT systems of the ski resorts. As such, the company developed a network system supporting a single electronic database of customers that allows the firm to recognise regular customers and establish better relations with customers. The consolidated IT system led to savings in terms of maintenance cost and efficiency in managing bookings. (European Commission 2005b)
Accor Hotels is a global group engaged in the management of various hotels around the world from high-class or luxury hotels to small and medium hotels to inns and spa resorts. The diversity of the hotels it manages involved a wide range of computing capabilities and back-end system making it difficult to provide uniform services. As such, the company implemented a project that established a uniform IT infrastructure for its global operations that support integration. Programming interfaces was outsourced to Microsoft. Now, Accor Hotels has achieved a high degree of integration and improved efficiency by managing a single booking and reservation system via its website covering all the hotels and providing a centralised customer service centre linked to the different hotels for coordination. Accor remains a leading hotel chain in the world. (European Commission 2004)
V. Conclusion
The tourism industry has changed with the emergence of the global economy. Tourism firms not only contend with competition and service delivery in the home front but also in the international arena. To survive the fierce competition e-business and ICT are tools supporting competitive advantage as shown by the experiences of firms that integrated these tools in their operations.
References
COLLYER, J., KOCAK, A., ARITON, D., LEE, G. & EDWARDS, V., 2003. E-business in emerging economies: A comparison of Turkish and Romanian multimedia companies. European Commission’s IST Programme, available at http://www.cheshirehenbury.com/ebew/virtulahtml/collyer.html [Accessed 28th July 2008]
EUROPEAN COMMISSION, 2003. ICT & e-Business in the Tourism Sector. The European e-Business Market Watch Newsletter No.13, available from http://bibemp2.us.es/turismo/turismonet1/economia%20del%20turismo/economia%20del%20turismo/ICT%20and%20Business%20in%20tourism%20sector.pdf [Accessed on 28th July 2008]
EUROPEAN COMMISSION, 2004. Case study: ACCOR Hotels, available from http://www.ebusiness-watch.org/studies/case_studies/documents/Case%20Studies%202004/CS_SR07_Tourism_2-AccorHotels.pdf [Accessed 28th July 2008]
EUROPEAN COMMISSION, 2005a. Case study: London Taxi Point – A SMS based personalised taxi-on-demand service, United Kingdom, available from http://www.ebusiness-watch.org/studies/case_studies/documents/Case%20Studies%202005/CS_SR09_Tourism_3-London_Taxi_Point.pdf [Accessed 28th July 2008]
EUROPEAN COMMISSION, 2005b. Case Study: SkiStar – CRM for Four Skiing Destinations by Means of ICT, Sweden / Norway. E-Business Watch, available from http://www.ebusiness-watch.org/studies/case_studies/documents/Case%20Studies%202005/CS_SR09_Tourism_7-SkiStar.pdf [Accessed 28th July 2008]
EUROPEAN COMMISSION, 2006. Case Study: ICT-Deployment at the Low-cost Carrier Ryanair, Ireland. E-Business Watch, available from http://www.ebusiness-watch.org/studies/case_studies/documents/Case%20Studies%202006/CS_SR08_Tourism_6-Ryanair.pdf [Accessed 28th July 2008]
JIN, Y. & XU, X., 2007. On Chinese Tourism E-business Development on Current Stage. Boston: Springer.
LASSNIG, M. & MARKUS, M., 2007. Information and communication technologies in tourism 2007. Vienna: Springer.
LI, F., 2006. What is E-business: How the Internet Transforms Organizations. New York: Wiley-Blackwell.
MA, J. X., BUHALIS, D. & Song, H., 2003. ICTs and Internet Adoption in China’s Tourism Industry. International Journal of Information Management, vol. 23, no. 6, pp. 451-467.
WORLD TOURISM ORGANIZATION, 2001. E-Business for Tourism – Practical Guidelines for Destinations and Businesses. Madrid: UNWTO.
Credit:ivythesis.typepad.com
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