impact of e-commerce on business performance: a · pdf file · 2015-05-15impact of...
Post on 09-Mar-2018
238 Views
Preview:
TRANSCRIPT
IMPACT OF E-COMMERCE ON BUSINESS
PERFORMANCE: A STUDY WITH RESPECT TO TRAVEL
INDUSTRY
Dissertation Submitted to the
D.Y.Patil University, Navi Mumbai
School of Management
In partial fulfillment of the requirement for the award of The Degree of
MASTER OF PHILOSOPHY
IN
BUSINESSMANAGEMENT
Submitted by:
Mr. MURTAZA ADENWALA
ENROLLMENT NO: DYP-M.Phil-126090001
Research Guide:
PROF DR. R. GOPAL
DIRECTOR & HEAD OF THE DEPARTMENT
D.Y. Patil University, Navi Mumbai
School of Management
Sector 4, CBD Belapur, Navi Mumbai 400614
November 2014
ii
DECLARATION
I hereby declare that the thesis titled “IMPACT OF E-COMMERCE ON
BUSINESS PERFORMANCE: A STUDY WITH RESPECT TO TRAVEL
INDUSTRY.” submitted for the Award of Master of Philosophy (M.Phil) in
Business Management at D.Y. Patil University, Navi Mumbai, School of
Management is my Original Work and the thesis has not formed the basis for the
award of any degree, associate-ship, fellowship or any other similar titles.
The material borrowed from other sources and incorporated in this thesis has been
duly acknowledged.
I understand that I myself could be held responsible for plagiarism, if any detected
later on.
The research papers published based on the research conducted out of and in the
course of study are also based on the study and not borrowed from other sources.
Place: Navi Mumbai Signature of the Student
Date: Enrolment No: DYP-M.Phil-126090001
iii
CERTIFICATE
This is to certify that the thesis entitled “IMPACT OF E-COMMERCE BUSINESS
ON BUSINESS PERFORMANCE: A STUDY WITH RESPECT TO TRAVEL
INDUSTRY” and submitted by MrMurtaza Adenwala is the bonafide research
work for the award of the Master of Philosophy in Business Management at the D.Y.
Patil University, Navi Mumbai, School of Management in partial fulfillment of the
requirements for the award of the degree of Master of Philosophy in Business
Management and that the thesis has not formed the basis of the award previously of
any degree, diploma, associate ship, fellowship or any other similar title of any
university or institution.
Also it is certified that the thesis represents an independent work on the part of the
candidate.
Place: Navi Mumbai
Date:
Dr. R. Gopal
(Director and Head of the Department, Signature of the Guide
D.Y.Patil University, Navi Mumbai,
School of Management)
iv
ACKNOWLEDGMENT
I am greatly indebted to D.Y.Patil University School of Management, which has
accepted me for the M.Phil. program and provided me with an excellent opportunity
to carry out the present research work.
I thank Dr. R.GOPAL, Director, D.Y.Patil University School of Management, for
giving me his valuable guidance for the project. Without his help it would have been
impossible for me to complete the dissertation.
I would also like to thank the various types of travel related organizations who have
contributed in providing vital information related to the “impact of structuring of the
e-commerce business on business performance” via a structured questionnaire without
which the research could not have been completed.
I would be failing in my duty if I did not acknowledge with a deep sense of gratitude
to my family and friends for their endless love, prayers and encouragement.
Place: Mumbai Signature of the student
Date: (MURTAZA ADENWALA)
v
TABLE OF CONTENTS
Chapter No Particulars Page No
Declaration ii
Certificate iii
Acknowledgement iv
Table Of Contents v & vi
List Of Figures vii
List Of Tables viii
List Of Abbreviation‟s ix
Executive Summary x
1 Introduction 1
2 Literature Review & Research Gap 11
3 Objective & Research Methodology 20
3.1 Purpose Of The Study 21
3.2 Scope Of The Study 22
3.3 Limitation Of The Study 23
3.4 Research Methodology 24
4 Tourism Sector – Global Scenario 28
5 Tourism Sector – Indian Scenario 43
6 Adventure Tourism 61
7 Internet Usage, Online Travel Industry In India, Key Success
Factors When Applying E-Commerce To Travel Industry 74
7.1 Internet Usage In India 75
vi
7.2 Scenario Of Online Travel Industry In India 78
7.3 Key Factors When Applying E-Commerce To The Travel
Industry 81
7.4 Traveler‟s Trip Planning Behaviour 82
7.5 The Future Of E-Commerce In Travel 90
7.6 The Effect Of E-Commerce In Travel 91
7.7 E-Commerce In Airline Business 92
7.8 E-Commerce Impact On The Travel Agency Industry
97
7.9 Information Technology In The Tourism And Travel Industry 98
8 Travel Industry‟s Guide To Mobile Advertising 104
9 Customer Acquisition Channels For Hotels 117
10 Data Analysis& Findings 131
11 Conclusion 202
12 Suggestion & Recommendation 205
Reference Section
Annexure 1 – Bibliography 208
Annexure 2 – Webliography 210
Annexure 3 – Questionnaire 211
vii
LIST OF FIGURES
Figure No Topic Page No
Figure no 1 Digital Commerce Market Size From 2009 To
2013 8
Figure no 2&3 Market Size of Product Categories 8 & 9
Figure no 4 Foreign Exchange Earnings From Tourism 50
Figure no 5 Adventure Tourism 54
Figure no 6 Profile of Respondents 64
Figure no 7 Implications For Marketers 68
Figure no 8 Purpose Of The Internet Access In Urban India 76
Figure no 9 Purpose Of The Internet Access In Rural India 78
Figure no 10 Scenario of Online Travel Industry in India 80
Figure no 11 & 12 Profile Of Leisure And Business Travellers 88 & 89
Figure no 13 &14 Travel Inspiration And Planning 89 & 90
Figure no 15 Agency Services By Travel Category 102
Figure no 16 Online Travel Services 103
Figure no 17 The Mobile Opportunity for Travel 109
Figure no 18 Multi-Screen Approach For Multiple Touch Points 114
Figure no 19 Customer Acquisition Channels for Hotels 117
Figure no 20 & 21 Measuring The Value Of Email Marketing For The
Travel Industry 167 & 168
viii
LIST OF TABLES
Table No Topic Page No
Table no 1 Sampling Design Process 26
Table no 2 Customer Perspective 41
ix
LIST OF ABBREVATIONS
OTA – Online Travel Agent
CAGR – Compound Annual Growth Rate
GDP – Gross Domestic Product
IAMAI – Internet and Mobile Association of India
IMRB – India Market Research Bureau
ROI – Return on Investment
PE – Private Equity
VC – Venture Capitalist
ROI – Return on Investment
GDS – Global Distribution System
TAFI – Travel Agents Federation of India
IATA – International Air Transport Association
CRS – Computer Reservation System
UNWTO – World Tourism Organization
FAM – Familiarization Trip
CCID - China Center for Information Industry Development
CNTA - China National Tourism Administration
x
Executive Summary
Online transactions in the travel and tourism industry are continuously increasing
despite tough economic problems in this arena and fewer travelers overall. This
industry is the leading application in the B2C (business-to-consumer) arena. Whereas
other industries are displaying a stronger hold to traditional processes, the tourism
industry is witnessing an acceptance of ecommerce to the extent that the entire
industry structure is changing. The Web is used not only for information gathering,
but also for ordering services. A new type of user is emerging, one who acts as his or
her own travel agent and builds a personalized travel package. Tourism is an
information-based industry it is one of the natural leading industries on the Internet).
It is anticipated that most, if not all, sectors in the travel and tourism industry
throughout the world will have sites on the Internet; showing the suitable marriage of
two of the world‟s fastest growing industries: information technology and tourism. E-
travel is the leading and fastest growing category of e-commerce. In order to exploit these
opportunities in the market environment, tourism businesses have developed and
implemented several business models. Table below shows the most frequently used
models in the tourism industry
Business models used in the tourism and travel industry:
Brokerage
Brokers are market makers; they bring buyers and sellers together and facilitate
transactions (Law & Huang, 2003). Brokerage models include the following forms:
Marketplace Exchange: offers a full range of services covering the transaction
process, from market assessment to negotiation and fulfillment (example: Orbitz)
(Law, 2002b).
xi
Demand Collection System: it is the "name-your-price" model pioneered by
Priceline.com. Prospective buyer makes a final (binding) bid for a specified good or
service, and the broker arranges fulfillment.
Auction Broker: conducts auctions for sellers. Broker charges the seller a listing fee
and commission scaled with the value of the transaction (examples: eBay and
Skyauction.com)
Advertising Model
The web-advertising model is a Portal;usually a search engine that may include varied
content or services. A high volume of user traffic makes advertising profitable and
permits further diversification of site services. A personalized portal allows
customization of the interface and content to the user. (Example: Yahoo.com)
Infomediary Model
Firms function as infomediaries (information intermediaries) assisting buyers and/or
sellers understand a given market. Travel infomediaries are globally branded „virtual
businesses‟ on the Internet that collect and sell information about a specific sector of a
market and create a convenient platform (Cyber marketplace) on which buyers and
sellers can gain information and do business (examples: Expedia; Travelocity;
BargainHolidays and Travelselect).
E-tailing
Business operating exclusively in electronic retailing. This model might take three
forms
E-store: a single tourism shop
E-mail: consisting of many electronic stores
E-broker: simply provides aid to customers searching for products and
business. It gains a commission from the businesses
xii
Valuable insights are provided into the Priceline.com model. It offers products
for sale in two categories: a travel service that offers airline tickets, hotel rooms,
rental cars, packaged vacations and cruises; and a personal finance service that
offers home mortgages, refinancing and home equity loans through an
independent licensee. Priceline.com has pioneered a unique new type of e-
commerce known as a "demand collection system" that enables consumers to
use the Internet to save money on a wide range of products and services while
enabling sellers to generate incremental revenue. Priceline.com is the world's
first buying service through which consumers name the price they are willing to
pay. Priceline.com licenses its business model to independent licensees.
Orbitz.com has implemented the Marketplace Exchange model. It is a leading
online travel company that enables travellers to search for and purchase a broad
array of travel products, including airline tickets, accommodation, rental cars,
cruises and vacation packages.
Researchers have attempted to approach and analyse the critical success factors
in electronic tourism business initiatives. Evidence indicates that these factors
include Value/ Product; Marketing Uses; Supporting Systems; Service
Provision; ICT Infrastructure. Apparently, the most important factor for a
successful Web site is its ability to focus on customer needs. The key is how to
satisfy travelers‟ individual needs precisely and conveniently. Additionally, the
Web presence must be used efficiently; that is to say for marketing purposes.
Web sites have to be dynamic interactive relationship marketing tools rather
than electronic brochures.
This paper attempts to study how e-commerce in travel related organizations
impacts overall company‟s growth.
xiii
E-commerce in travel and tourism is growing day by day which provide
opportunity to this industry to groom and grow. Due to change in Information
technology, e commerce is emerged in this industry and companies are now
heading toward e-business through website, internet and different online
software. Moving from traditional business way to e-commerce way is quite
challenging and various factors are standing as a barrier for companies to adapt
e-commerce. There several advantages and disadvantages of e-commerce in
travel and tourism industry. To adapt e-commerce, this industry's main
challenge is to transform traditional buyers to e-commerce buyers. The purpose
of this literature review is to give short introduction on travel and tourism
industry along with the impact on this industry after adaption of ecommerce.
What will be benefits after adapting e-commerce and what are the barriers,
which stop firms to enter in e-business? A short description on consumer
behavior on e-commerce is also gazed on this review.
Tourism and the Internet are ideal partners. For consumers, when they are
planning a trip to a new destination, they face the problem of making a costly
purchase without being able to see the product. The Internet provides them with
the means to gain immediate access to relevant information of greater variety
and depth than has been available previously, about destinations throughout the
world; and to book quickly and easily.
For tourism destinations and businesses, it offers the potential to make
information and booking facilities available to large numbers of consumers at
relatively low cost; it enables them to make large-scale savings on the
production and distribution of print and on other traditional activities (e.g. call
centres and information centres); and it provide a tool for communication and
xiv
relationship development with tourism suppliers and market intermediaries, as
well as end-consumers.
Tourism has a key difference from most other sectors of e-commerce – its
consumer goes and collects the product at the point of production – i.e. the
destination. Thus the tourism sector avoids the need to deliver products around
the world - a task that faces real logistical problems that have been a major
source of customer dissatisfaction.
These factors, taken together, have resulted in the travel and tourism sector
taking a larger and larger share of e-commerce globally. As a result, the Internet
is revolutionizing the distribution of tourism information and sales. Not only
does it provide tourism destinations and businesses with direct access to end
consumers, but also it is becoming the primary channel for business to business
communication. The tourism market demand is growing and nearly all tourism
firms have invested in the construction of e-commerce. The business world is
being gradually changed to an e-economy by the ever-increasing global
competition, increased information availability, knowledgeable consumers,
changing relationships, rapid innovations, and increasingly complex products.
As a result of which, no industry is left untouched in today‟s consumer-centric
e-marketplace. Going by the preliminary findings it can be easily summarized
that e-commerce can indeed emerge as a major business opportunity and
contribute to the overall success of the organization. The study of E-Commerce
in the tourism industry has emerged as a „frontier area‟ for information
technology. E-commerce deals with the process of buying and selling or
exchanging products, services and information via computer network including
the Internet. We focus on a number of ways in which the structure and
xv
performance of the tourism industry is being influenced by the adoption and
development of information communication technology. The typical value chain
in tourism consists of four components: travel services provider, travel operator,
travel agent and traveler. The travel services provided by travel service
providers can be distributed by the joint operation of travel operator and travel
agent, or just by travel operator to traveler. On the intermediary level, normally
the travel operator plays the role as a wholesaler of travel service, which
integrates a number of different travel services and offers them as a packaged
service through travel agent. Here, travel agent is the retailer of travel service,
which ties prospective travelers and service providers together by controlling
the information flow among the different participants in the value chain, and
selling the information to travelers. The value chain is based on the co-operation
among travel service provider, travel operator and travel agent. In developing
countries the intermediary function of travel operator is weaker compared to
that of travel agent and most travel agents take the responsibilities of the travel
operators. The proposed research has been undertaken to gain a better
understanding of the aspects that have to be taken into account during the
implementation of the e-commerce business in travel related organizations. The
research also aims to Identify potential success factors, which make ecommerce
business profitable, barriers and challenges faced by ecommerce business in
travel related organizations, what are the performance measurement metrics
measured to derive ROI, methods and practices adopted to structure the e-
commerce business in travel industry related organizations, factors that are
detrimental to the growth of e-commerce business in travel industry related
organizations. Primary data was collected from travel agents, tour operators,
xvi
airlines, travel meta search engine, GDS (Global distribution system).
Quantitative survey was conducted in this study to investigate the perceptions of
the travel related organizations like the traditional travel agents & tour
operators, Online travel agents, hotels, travel meta search engines, global
distribution system with respect to the impact of e-commerce on business
performance in the travel industry. The target population for this study is drawn
from members of Travel Agents Federation of India (TAFI) in Mumbai
commercial capital of India. There are 1400 members in the association.
Members of TAFI fall in categories of aviation, hotels, IATA approved agents,
e-commerce digital agencies managing travel clients. The samples for this study
is drawn from TAFI and primarily focus on the travel industry related
organizations in the Mumbai, Delhi & Bangalore market. Primary data was
collected from 33travel related organizations, which fall in different categories
of TAFI via a structured questionnaire. The respondents are selected on the
basis of their designation &profile in the organization. Travel related
organizations are classified into two categories:
Organizations who own inventory to be sold through intermediaries and their
own websites (hotels, airlines)
Organizations who display inventory by connecting with the systems of the
organizations who own inventory (OTA‟s, traditional travel agents, travel
meta search engine, global distribution system)
Secondary sources of information was gathered from e-journals, e-articles, e-
commerce related cases studies, online e-commerce research reports produced by
Internet and Mobile Association of India providing up-to-date insights on the growth
of e-commerce in India.
xvii
The questionnaire is designed on a five-point likert scale in order to gather insights on
what according to the e-commerce practitioners in the travel industry related
organizations are the methods & practices followed to structure the e-commerce
business, what are the critical success factors that make e-commerce business
profitable, what are the factors that are detrimental to the growth of the e-commerce
business, what are the factors which will have an impact on overall business
performance as a result of the structuring of e-commerce business in the travel
industry related organizations
T test is applied to determine if two sets of data are significantly different from
each other while comparing the level of importance each data set lays over
selected factors. The two sets of data categorized are a) Organizations who own
inventory to be sold through intermediaries and their own websites (hotels,
airlines) b) Organizations who display inventory by connecting with the systems
of the organizations who own inventory (OTA‟s, traditional travel agents, travel
meta search engine, global distribution system). The t-test looks at the t-statistic,
t-distribution and degrees of freedom to determine a p value (probability) that
can be used to determine whether the population means differ. The mean of the
sample is applied to find out the most critical success factor that would make e-
commerce business profitable in travel industry related organization, the most
important method and practice to be adopted in structuring the e-commerce
business in travel related organization, the most important factor that will have a
impact on the overall business performance as a result of the structuring of e-
commerce business in travel related organization and finally most important
factor that is detrimental to the growth of the e-commerce business in travel
xviii
related organization. Travel related organizations place high importance on
competitive pricing. Pricing needs to be set that creates value. Create a value
statement that clearly articulates why customers should purchase their product
over competitors‟ offerings. Value adding is adding features to your product
that enhance the perceived value. In comparison to discounting, value-adding
can create a competitive edge and attract a greater market share. It can also help
to prevent business fluctuations for products subject to regular peaks and
troughs. There are various price positioning strategies – Match, undercutting
competition rates in some category or products. To match, set one rate
comparable to the competition and another slightly higher. This allows you to
stay competitive for a larger pool of customers, yet doesn‟t undercut the
competition. Under cutting competition is likely to drive more cost-conscious
travelers. Setting pricing for tourism businesses is a strong mix of marketing
strategy and financial analysis. In determining the rate for your product, you
need to consider your operating costs, profit margin and distribution network
costs (often referred to as commissions).Additional pricing factors to consider
when pricing your Products are: competition, demand, target market,
seasonality. Discounts are often applied in the off-season or to assist with yield
management and can also be useful in gaining immediate business on websites
Usually, discounted pricing does not differentiate a product from the
competition – as it can be quickly matched by competitors. Disguised pricing,
generally discounted package components, such as accommodation, meals,
entry fees, transport, are presented as one upfront cost. This method disguises
the exact cost of individual components and also the extent of discount provided
xix
by individual operators. In general, a minimum of three elements should be
included to disguise pricing.
Technology is a driving force of change that presents opportunities for
greater efficiencies and integration for improved guest services. Technology has
become a tourism business activity in development of strategic resources and is
considered as a tool to increase competitiveness. Effective use of information
technology can make significant operational improvements. Advanced software
and communication tools allow enlarging operational efficiency, for example,
orders may be made better, faster and cheaper. In addition, decision-making
through decision support tools, databases and modelling tools assist the
manager‟s job.
The introduction of smart phones represents one of the most significant
technological developments of recent years, and it is having a major impact on
the travel industry, due to the mobile nature of travellers.
In the mobile travel era, travellers expect real time answers wherever they are
and at any time, before, during and after the trip. These include booking
capabilities when on the go.
Moreover, as a result of the intersection between the mobile and social
dimensions, and of the creation of geo-social media – aware of users‟
geographical location – travellers expect a higher level of customization of
services based on their stored preferences and current location.
One of the key trends for 2013 is expected to be tour operators expanding their
tailor-made holiday offerings in response to growing consumer demand for
more flexible itineraries but still with all the security and benefits of a package.
With global travel becoming more common, consumers are looking for more
xx
individual holiday experiences that their friends/family might not have done.
Additionally, as holidaymakers become more widely travelled they may have a
clearer idea of what kind of sights and activities interest them and want to
ensure that they get the most value out of their holidays by doing and seeing the
things that really appeal.
While tailor-made tours used to be just for the luxury end of the market there
are now many tour operators offering more affordable options due to the growth
in popularity of this kind of holiday.
The rise of multi-centre holidays where holidaymakers may combine two or
more destinations in their trip are also growing in popularity and fuelling the
trend for tailor-made holidays. This is particularly the case for longer haul
holidays where travellers look to make the most out of their journeys. The
emergency of the Internet and technology is raised dramatically. It appears in
various types of business and operations. Firms are adopted in Internet and
technology to assist an improve their business' performances. Due to the rapid
change and high competitive of the world market today, firms are imperatively
to conduct business in the modern and easy way in order to remain competitive
and profitable. Electronic commerce (e-commerce) is a popular way of conduct
business. Most firms are adopted e-commerce initiative into their operations n
order to improve quality of service, lower cost and reduce time to market.
However, there are many failure in adopting e-commerce initiative, those failure
are significantly concern with the strategy, both the corporate strategy and e-
commerce strategy. The tourism industry has proved particularly suitable for the
adoption of information technology because of its dependence upon the supply
and exchange of information throughout the production and distribution chain.
xxi
As an extremely information intensive industry, tourism is undergoing rapid and
radical modern changes. A wide range of opportunities discover on daily basis
through the use of information and communication technology. Now
information technology is being used for a variety of functions in the tourism
industry, ranging from an internal organization role to external communication
between different parts of the industry. The continuous development of
information technology has profound implications for the whole tourism
industry. Today, a wide range of tourism sectors is taking the advantage of the
information superhighway. Technology facilitates the speed and efficiency with
which information of the tourism industry is processed, stored, retrieved,
distributed and otherwise manipulated. Information technology can reduce costs
of information handling, increase speed of information transfer and retrieval and
increase customer involvement in the control of transactions. It has flexibility of
product specifications and greater reliability of information transferred. The
advancement of the Internet has deeply affected the way tourism and travel
intermediaries perform their business. The development of vertical portals like
has redefined the travel business. This has led to the formation of various last
minute online travel portals, which effectively organize and distribute distressed
tourism inventories to the clients. Tourism suppliers like British Airways have
started applying ecommerce applications thereby allowing their customers to
directly access the reservations systems. Hence, a customer is able to make a
flight search and go through the various options available and finally take a
purchase decision. The Internet has made it possible for customers to access
high quality information within a short time. Also it has made service
expectations as consumers expect to be served 24 hrs / 365 days. Nowadays,
xxii
customers expect to be served at all times rather than the office hours of the
tourism providers. Thus it has been seen that the travel and tourism industry has
revolutionized their travel plans and strategies with the help of improved
information technology solutions. They are resorting to customer focused travel
solutions and are aiming to provide a one stop solution for all travel related
services through information technology. Travel and tourism providers need to
work in collaboration with each other to provide a one point platform to all its
clients. Hence, they must embrace newly developed and effective information
technology solutions to run travel operations smoothly and efficiently. At the
same time, the prime focus should be on providing excellent customer service.
For all these, the only answer is to embrace best and updated information
technology. The advent and application of mobile technologies have further
impacted the tourism and travel industry. This has been possible due to the
development in ecommerce. It is now possible for customers to view and choose
various travel and tourism options by surfing the internet through their mobile
phones. Short messaging services also provide a lot of information as the
booking confirmation can simply be presented to the airline or the hotel and one
is allowed to enjoy the service. The emergence of new and high tech mobile
phones has again stirred a revolution in mobile technology. This is especially
helpful as these phones allow a user to access internet and book services online.
Hence, one can also book tour packages and other travel related services
through the mobile.Travel industry related organizations place high importance
on having flights and hotel both as a independent product on their website. The
advantage of having flights and hotels makes the travel website one stop
destination for key travel needs.
1
Chapter 1
Introduction
Tourism Industry is one of the backbones of economy in developed, developing
and underdeveloped countries and one of the major sources of foreign
exchequer. This industry is growing very rapidly and millions of people are
directly and indirectly associated with this Industry. This industry represents
accounts for 9.9 percent of global GDP, 10.9 percent of world exports, and 9.4
percent of world investment. (World Economic Forum, 2009). The use of
internet is rapidly growing day by day and as per International
Telecommunication union (2009), around 2 billion people will be online by end
of 2010. Hence, internet will be effective tool to promote and open up new
opportunities for travel and tourism industry sector though e-commerce. "E-
commerce is defined as the process of buying and selling or exchanging
products, services and information via computer networks including
theinternet.‖ There are various advantages of using internet in tourism as it is
fast and easy to access destination, receive price, search popular destinations
and get information about destination etc. as well as it generates income for
many people around the globe. However, it has some limitations as some
information may not be correct, outdated, portrayed and we have seen several
online fraud case too. In a nutshell, due to its various benefits rather than some
limitations, it is essential for travel and tourism industry to adopt e-commerce
for their growth and success.With rise of internet usage on people's daily life,
tourism industries aretapping business through e-commerce. E-commerce refers
2
both financial and informational transaction through electronic media between
on organization, between people or to third party (Chaffey et.al, 2006). Through
e-commerce, these industries are trying to reach global population to enhance
their business through different e-commerce tools and ad there will be more and
more challenge to these sectors in coming days for adopting e-commerce.
Digital commerce in India has evolved over the past decade in terms of
magnitude. Total digital commerce market of India was valued at INR 47,349
Crores* in December 2012 and is expected to grow by 33% and reach INR
62,967 Crores by year 2013.
Out of the total transactions done on the PC as well as mobile: -
Travel transactions have proved to be the primary fueling factor of the digital
commerce industry. As of 2012, among Internet users, online travel leads the
pack with 73% share in Digital Commerce (INR 34,544 Crores). This segment
is estimated to show 30% growth by the end of year 2013 and reach to INR
44,907 Crores. As a whole, the Non-Travel Industry segment is expected to
mature by 41% and reach up to INR 18,060 Crores by December 2013.
The thesis deals with what is the impact of structuring the e-commerce business
on business performance with respect to the travel industry and how e-
commerce businesses can drive competitive advantage, enhance brand imagery
and maximize Return on Investment. Though the scope of the study extends to
many service organizations, emphasis has been laid down on the study of
various service organizations in the Travel industry. The research focuses on
seeking insights from the organizations in the travel industry in four key areas
major steps make up the structuring phase for new e-business projects using
3
existing products and services, processes and markets: (1) Critical Success
Factors that make e-commerce business profitable in the travel industry related
organizations (2) Methods & practices to structure the e-commerce business in
the travel industry related organizations (3) Factors which will have a impact on
overall business performance as a result of the structuring of e-commerce
business in the travel industry related organizations and (4) Factors that are
Detrimental to the growth of the e-commerce business in the travel industry
related organizations. In addition to the structuring phase, the e-business
development process also includes phases for feasibility analysis,
implementation, testing, deployment and performance review. The overall
process can be set within a development life cycle spanning all these phases.
Increasingly we have observed that travel and tourism are not influenced by
advertisements but by word-of-mouth and references. In addition to the
traditional channels of referencing and word-of-mouth, the current traveler is
more than ever reading and sharing travel-related content online which has been
created and posted by peers rather than by travel service providers.
Understanding who these consumers are, how they determine whether content is
credible, and what motivates them to post reviews is one of the most valuable
input for any marketing initiative by the travel industry including aggregated
service providers and travel companies. India is the most dynamic and fast
growing online travel market in the APAC region. Online travel contributes
70% of all e-commerce activities globally. Private equity players have made
huge investments in the online travel agency (OTA) segment in the past two
years. With the Indian holiday season on the horizon, Hitwise India conducted a
study to understand trip-planning behavior exhibiting how internet is used as
4
information source for planning pleasure trips. The study highlights that Search
Engines are the point of origin for initiating activities. They act as ‗Home Page‘
of the digital world and the point of U-turn. It also outlines strategies to increase
traffic from search engines through Hitwise Search Intelligence, which includes
how people search for travel related information using various search term
variations e.g. ‗Flight tickets‘, ‗hotels in Goa‘. The search term ‗Hotels in Goa‘
is the most searched term in the accommodation segment. ‗Flight tickets‘ is the
most searched term variation in the Airline segment recently, increasing number
of travelers use the internet for travel planning. Indeed, searching for travel-
related information is one of the most popular online activities. Advertisers need
to conduct careful research into variations of keyword phrases their target
audience will enter into search engines thus increasing relevance and being
present when and where it matters. Non-air ticket booking segment is growing
fast with the entry of Indian Railways in the online space and many OTA‘s
providing online bus and train bookings. Demand for tour packages have
increased among both domestic and international tourists.
The study indicates that the typical Indian traveler does not like to makes
spontaneous decisions and plans the trip in advance. An evolved traveler starts
planning the trip 3 months in advance by visiting travel related blogs, forums,
travel related video‘s/photographs, travel review sites. Online travel reviews are
traveler‘s experience which helps travelers learn about a travel destination and
narrow down their choices. The study identifies that an online traveler evaluates
his holiday destination options and then initiates the trip booking process by
visiting the OTA‘s and accommodation sites to evaluate, compare and book.
Thus indicating that most travel purchases take place well after a consumer‘s
5
initial search. The study indicates that the Indian internet consumer uses emails
after visiting airline websites. The study also indicates Social Media is now a
marketing tool used by marketers to engage with the target audience through
online communities to generate exposure, opportunity and sales. Social
networking sites helps users plan their trips by getting tips from users, by
browsing photos and video‘s, suggestion on itineraries. We are now at a stage
where the target channel for marketing is social media. Selling happens more
and more in the virtual world. Travel companies are increasingly targeting
consumers directly on Twitter and Facebook. Hyatt was the first major hotel
group to offer a global 24/7 ‘Twitter Concierge.‘ Almost every major travel
brand offers customer service via social media, but Hyatt was the first to
specifically name it and create a separate account (@HyattConcierge). They‘re
now asking guests to use it to book spa appointments, dinner reservations, etc.
and make special requests. Behavior of Indian traveler is quite different when he
makes purchase of an air ticket and a hotel room night. Unlike purchase of air
ticket, Indian traveler always looks for bargain opportunities while
purchasing/booking a room night.
Top 5 Trends
• Online travel going mobile changing e-travel to m-travel
• Religious travel is becoming a hot segment in online travel
• Meta search engine is the latest innovation in online travel. They help
people find the best travel choices easily by searching the data from hundreds
of travel sites at once
6
• Competition in online booking is moving away from air to non-air segment
• Social media will exert greater influence on travel planning and purchasing
Players Overview
• Makemytrip, Yatra, Cleartrip and Travelocity are the leading players in the
OTA segment.
• IXIGO, Ezeego1 and Zoomtra are the leading meta search engines in Online
travel
• Club Mahindra Resorts, Taj Hotels and Resorts and Palaces and
Intercontinental Resorts are the leading players in the Accommodation Segment
From the emerging trends, the clear message that emerges is that not only would
it be prudent to focus on the domestic travel market, but it would also be
necessary to keep a finger on the pulse of the ever dynamic travel industry.
Describe Ecommerce
As the e-commerce definitions given by various sources differ significantly, it is
important to adopt a clear and consistent definition of e-commerce.
From a communication perspective, e-commerce is the delivery of goods,
services, information, or payments over computer networks or by any other
electronic means.
7
From a business process perspective, e-commerce is the application of
technology toward the automation of business transactions and
workflow.
From a service perspective, e-commerce is a tool that addresses the
desire of firms, consumers, and management to cut service costs while
improving the quality of goods and increasing the speed of service
delivery
From an online perspective, e-commerce provides capability of buying
and selling products and information on the Internet and other online
service.
Digital-Commerce Market Size From 2009 To 2013
Digital Commerce industry has seen a significant increase from INR
19,249 Crores in the year 2009 to INR 47,349 Crores in 2012. This
growth has been mainly driven by the Online Travel industry, which
contributes 71% to the total Digital Commerce industry in India today.
In 2013, the market is estimated to mature and reach INR 62,967 Crores
showing a year-on-year CAGR of 34% since 2009.
Travel transactions have proved to be the primary fueling factor of the
digital commerce industry. As of 2012, among Internet users, online
travel leads the pack with 73% share in Digital Commerce (INR 34,544
Crores). This segment is estimated to show 30% growth by the end of
year 2013 and reach to INR 44,907 Crores.
8
The figure, below, illustrates the growth in the market size since 2009.
Figure no. 1
Market Size Of Product Categories
Figure no. 2
Online travel industry has on an average grown by 32% from INR 14,953
Crores in 2009 to INR 34,544 Crores in 2012 and is estimated to grow by
another 30% and be valued at INR 44,907 Crores by the end of December 2013.
Changing the trend from the past year, at present, out of total Online Travel
market, domestic air tickets contribute 50% i.e., INR 17,335 Crores followed by
9
railway tickets contribute 39% i.e. INR 13,639 Crores. Others such as
international air travel (INR 1,926 Crores) Hotel bookings (INR 700 Crores),
Bus tickets (INR 641 Crores), Tour packages & travel insurance (INR 303
Crores) contribute balance 10% to the total online travel market.
Figure no. 3
Non-travel transactions contribute to the remaining 27% (INR 12,805 Crores).
As a whole, the Non-Travel Industry segment is expected to mature by 41% and
reach up to INR 18,060 Crores by December 2013.ETailing takes first position
with nearly 50% share (INR 6,454 Crores). Financial Services stands second
with 23% share (INR 2,886 Crores). Classifieds segment amounts to 18% of the
whole Non-Travel Industry pie (INR 2,354 Crores). Other Online Services
contribute to the remaining 9% (INR 1,110 Crores). Of the market size of INR
47,349 Crores; online travel, which includes booking rail, air, bus tickets, hotel
accommodations and tour packages comprised a major 71% of the whole
Digital-Commerce pie. E-Tailing which includes purchases of various consumer
products/services such as electronics, apparels, footwear, jewellery and other
such as home & kitchen appliances, consumer durables, furnishings constitute
16% of the overall share. Conducting transactions of various types of financial
services such as paying insurance premiums and renewals, paying utility and
10
mobile bills, trading shares and securities amounts to 6% of the overall share.
B2B and B2C Classifieds (jobs, matrimony, car, real estate etc.) contribute to
5%, whereas other online services such as online entertainment ticketing, online
food delivery, buying discounts/deals/vouchers etc. form 2 % of the overall
market.
Internetusage in India has gone up with more and more InternetUsers using the
Internet on a regular basis. In June2013, India had 190 Million Internet Users.
Of this 130 Millionbelonged to Urban India and the rest 60 Million werefrom
Rural India. In October, the number of internet usersreached 205 Million and is
estimated to reach 213 Millionby December 2013. The number of internet users
inurban India is 137 Million in October 2013 and is estimatedto touch 141
Million by December 2013. In Rural India,there are 68 Million Internet users in
October 2013 andwill reach 72 Million by December 2013. Mobile Internet,too,
has garnered a huge base among the Active InternetUsers. In India, there were
91 Million users accessing theInternet on Mobile devices in June. In Urban
India, there were 70.2 Million Mobile Internet users in June 2013.This number
rose to 85 Million in October and is estimated grow by 47% and reach 103
Million by December 2013. Rural India is not that far behind in this regard with
a base of 21Million Mobile Internet Users in June 2013. It reached 25 Million
inOctober 2013 and will touch 27 Million by December 2013.Internet users can
be divided in two major segments: Claimed Internetusers and Active Internet
Users based on the frequency of Internetusage. Claimed Internet users are not so
frequent users of the Internet,whereas Active Internet users access the Internet at
least once amonth.
11
Chapter 2
Literature Review& Research Gap
Many researchers or scholars have done various researches about e-commerce in
travel and tourism industry. Many of them have pointed positive impact of e-
commerce in travel and tourism and some have pointed challenges for adopting
e-commerce and barriers of e-commerce in travel and tourism industry. E-
commerce in travel and tourism industries are continuously increasing despite of
tough economic problems. As per them, this industry is adopting application of
B2B (business to business) and B2C (business to consumer). This industry has
changed the ways of do business for traditional ways to modern way, i.e. e-
commerce via web and other online transaction software where as other
industries are still adopting the traditional way. Web is changing the behaviour
of consumers are well as they are becoming less loyal, take less time for
choosing and consuming the tourism products. As this industry is service
oriented business industry, companies are implementing various new techniques
to satisfy consumer needs and providing information to them through web and
different value generating strategies like value extraction, value capture, value
addition value creation. Travel and tourism is information based service
orientated business and the product is termed as "confidence good" and prior
comprehensive assessment of quality is impossible however due to use of e-
commerce feeds backs from consumers can be obtained in short span of time
and this services can be enhanced accordingly. Due to adoption of e-commerce
in travel and tourism industry consumers are becoming more powerful players
as they can choose their destination and sites in few minutes whereas travel
12
agents, travel websites etc. see diminishing power in sales however they are
providing new market functionality using new technologies to attract more
consumers. Many tour operator, travel agents, online travel agents are using
these strategy to attract more consumers however using more high-tech
technologies needs huge investments, need more high skill human resource etc.
There are various factors, which are considered that travel and tourism will
adapt ecommerce strategy. There are main two factors for conducting successful
e-commerce strategy which are security of the e-commerce system and user-
friendly Web interface. Security means not only securing own system but also
providing security assurance to users who are using the sites or online software.
User friendly web interface give consumer trust and it's easy to convenience for
customers. Beside these factors other factors are also essential to succeed which
are top management support, IT infrastructure, and customer acceptance. Top
management support plays vital role as they are the decision makers and their
support and decision will direct the company to use the strategy. Further, he also
explained that without proper IT structure and skilled human resources, e-
commerce strategy will fail. One of the factors he explained is customer
acceptance; customer acceptance means the way customer accepts the web or
online software of the company and it should have very rich contents and very
easy to use. These factors will decide whether business will get more customers.
Customers intend to use research website quality due to content richness and
ease of use. (Law and Bai, 2008). Law and Bai on their research paper
mentioned there are two types of customers who use travel companies websites,
those are buyers and browsers. Buyers are those people who actually intend to
buy the services whereas browsers are those who intend to surf and get
13
information only. Those browsers can be converted to buyers by improving the
website contents, making it attractive, provided very rich in contents and very
user friendly to use. As more and more travel companies are applying these
strategies, the increase in percentage of website buyers and browsers are also
increasing day by day. This is due to adaption of e-commerce technology in
travel and tourism industry.
There are various benefits for small and medium sized tourism enterprise to use
e-commerce. Few benefits of using e-commerce in tourism which are as
follows; -
Providing easy access to information on tourism products and services
Providing better information on tourism products and services
Providing convenience for customers
Expanding choices by customers
Creating new markets
Establishing interactive relationship with customers
Improving customer services
Improving image and public recognition of the small & medium sized
tourism enterprises
Saving time for providing tourism services
Providing customized & specialized tourism products & services
Reducing operating cost
Simplifying the process business
Interacting with business partners
Founding new business partners
14
Due to adopting of e-commerce by small and medium enterprises are beneficial
in various aspects. In Kim research, he explained by adopting e-commerce
companies can interact with customers frequently which will enhance their
customer service and use of ecommerce also reduce their operating costs as lots
of human resource is not needed and new opportunity of finding new agents,
creating new markets etc. Due to use of ecommerce by small and medium
enterprises they can save time as well.
E-Commerce is huge lap in travel and tourism industry moving from traditional
way to technological way and there are various barriers for travel and tourism
companies to adapt e-commerce in their business, include 'limited knowledge of
available technology,' 'lack of awareness,' 'cost of initial investment,' 'lack of
confidence in the benefits of e-commerce,' and 'cost of system maintenance.'
These barriers also include 'shortage of skilled human resources,' and 'resistance
to adoption of e-commerce.' Further he mentioned 'insufficient e-commerce
infrastructure,' and 'small e-commerce market size' might be barrier factors
depending upon the market size. Moving from traditional way to technological
way is not easy so in order to adapt e-commerce huge investment on
Information Technological (IT) have to done along with this staffs have to be
trained accordingly. It is not always possible for small and medium size
companies to invest huge amount and get skill human resource people. Some
countries have different rules and regulation for e-commerce business rather
than traditional ways. Government rules and regulation also plays a vital role for
adapting e-commerce. Further, websites and software must be rich in contents
very easy to use, updated time to time. If these factors are ignored than these
factors will be barrier of e-commerce in tourism.There are several challenges to
15
adopt e-commerce in travel and tourism industry. The behaviour of customers is
changing and due to e-commerce they swap agency in few minutes if they are
not happy with them. Customers expect the same service, same treatment as
offered by travel agencies through their outlet or through the web. Different
customers have different ways of surfing internet as per their level of internet
knowledge as well user friendly website and website's rich contents. To adapt e-
commerce by company, they have to focus on their detailed of services, product
availability, special offers, personalized information which are important factors
consumers search on web for the product. He further mentioned "Individual e-
commerce customers have been known to be demanding and unforgiving". As
such, regular maintenance, upgrade of technologies and continuous
improvement of customer service are the core factors for enhancing business
and attracting more customers. Consumers these days are far more demanding
and want convenience, speed and a seamless buying experience. Main
challenges is to create awareness among customers about product, make them
loyal.Due to drastic change in technology, Internet, mobile and handheld portals
available, consumers access the Internet for travel planning and companies have
to grasp these technologies and move as per the change in technology which of
course is expensive and need skilled human resource manpower. Some countries
have weak Information technology structure and people from these countries
might have problems for using e-commerce. One of the main challenge is t that
adaptation of e-commerce in travel and tourism is to build trust of people in
internet system so that they could choose e-commerce instead of tradition
way.To build the trust among people, companies can try to capture a part of the
traditional travel agent client market by focusing on different advertisement,
16
emphasizing online agents' knowledge. Companies can lure their customers via
providing personalized service through email, web texts customized web sites
that are built "on the fly" based on users' specific profiles and needs. The main
theme of writers is to gain customer confidence and trust toward the website.
"The challenge is determining how a web site can exude trust and good service".
To build customer trust, Wolfe et al have suggested online travel agencies have
to give telephone numbers or e-mail contact information. This phone numbers
and email address can be useful for customers who want proper information
about destination, services and some specific questions. An e-mail reply or
telephone call allows companies to respond more inquiries with politeness in a
professional way which of course provide sense of postal mail. In this way a
browser may be transformed to buyer.Similarly, to attract more consumers,
website should provide virtual tour of the destination. Virtual tour means
description of the destination by through audio and visual mode by sharing
videos, photo, destination details with pictures etc. (Cho et. al, 2002). Cho et. al
have mentioned that virtual tour attracts customers as it give the picture of the
destination, hotel details where they are suppose to go ,stay and enjoy . Virtual
tour enables tourists to become more confident about their trip, they can choose
the destination which leads them more satisfaction rather than booking the
product through tradition way. At least, they can picture destination, hotel,
transportation system etc about the destination before their travel date. Browsing
through variety of journals, articles, thesis & dissertation its has been observed
that companies focus is on how Ecommerce as a business channel can add
business value in travel related organizations and aims at providing the reader an
overall idea about the nature and activities of electronic commerce. The
17
literature review reveals several gaps in knowledge with respect to how firms
structure their e-commerce business function and what are the factors that will
have a impact on overall business performance as a result of the structuring of e-
commerce business in the travel industry related organizations.One of the
studies investigated the critical success factors for e-commerce. The dissertation
addressed four research questions: (1) Regardless of industry, what are the
critical success factors relevant to all companies engaged in e-commerce? (2)
What are key requirements that all e-commerce companies must have in order to
enter the industry? (3) What is the company‘s ecommerce business model? (4)
How is the company‘s business performance?
In one of the thesis ―THE IMPACT OF E-COMMERCE ON BUSINESS
VALUE IN SERVICE ORGANISATIONS‖ the findings focus on the impact of
eCommerce in the following areas:
Brand Image
Customer service
Product promotion
Time to market
An article on ―Critical Factors Classification for Firm Adoption of E-
Commerce‖ emphasizes on the factors affecting eCommerce adoption decisions
by firms. The categorization resultedin two main Categories: internal and
external factors. Internal factors are within the firm while external factors are
mainly environmental.
Analyzing the Effects of Social Media on the Hospitality Industry was
conducted to explore the areas and functions hospitality businesses use social
18
media for, and understand how consumers perceive these new vehicles of
communication. The study brought out a consumer‘s perspective of the
advantages of social media over traditional marketingmethods.
Potential E-Business Development in Tourism
E-business is the use of information and communications technologies in all
activities of a firmboth internally and in relation to its outside partners. The
tourism industry consists of manycompanies dabbling in various activities,
ranging from (1) tour operators (2) travel agents (3) tourist guide services (4)
airlines (5) transportation (6) hotels and guesthouses (10) tourism education and
training institutions; (11) local touristoffices.ICTs are seen asmajor tools with
the potential to fundamentally change business behavior and company
strategies.The adoption of ICT in the tourism industry can provide detailed up-
to-dateinformation on the availability and prices of products and booking, which
could also contribute toincreased sales volume and profits.However, there exists
other literature, which report on the benefit of e-business to tourism. E-
Commerce experts have noted, ―despite all the benefits that can be achieved by
ICT, many small and micro-tourism businesses have failed to embrace ICT and
the Internet‖. One of the major arguments is management‘s perception of the
internal organizational readiness to adopt e-business. Organizational barriers
among non-adopters include the lack of technological and financial resources,
the negative
attitude of management (lack of their support and less risk taking propensity),
and the lack of ITknowledge.
Online marketing has become very important over the years as a more cost
effectivemethod of doing business. However inspite of the obvious advantages
19
of internettraditional marketing continues to be used by majority of the
businesses. More and morecustomers are using the internet to research products
and services online which they laterbuy offline. Most customers compare
product features, attributes and prices to get thebest product at the best price.
Online search helps in this process. So online and offlinestrategies integration is
a very important factor for the strategic success of any business.
An attempt has been made to identify areas in the existing studies, which are yet
to be addressed, which will form as research questions to be answered through
the proposed study.
The gaps identified are as follows:
Critical Success Factors that make e-commerce business profitable in the
travel industry related organizations
Factors which will have a impact on overall business performance as a
result of the structuring of e-commerce business in the travel industry
related organizations
Analyze the impact of e-commerce on brand imagery
Methods & practices to structure the e-commerce business in the travel
industry related organizations
How can one sustain competitive advantage in Web commerce?
How does one measure e-commerce business success (or 'derive ROI‘)
Barriers and challenges e-commerce business face during the
implementation and growth
20
Chapter 3
Objective & Research Methodology
3.1 Purpose Of The Study
3.2 Scope Of The Study
3.3 Limitation Of The Study
3.4 Research Methodology
21
Chapter 3
Objective & Research Methodology
3.1 Purpose Of The Study
From the above little introduction, we can simply say that e-commerce is
bringing various opportunities in travel and tourism sectors. Many industries on
this field had already adopted e-commerce and some are on the way to adopt it
to enhance their services and better facilitate their customers however these
developments have certain impacts on the behaviour of customers as well in
industry.
My prime focus on this research paper is to find out the impact and challenge of
e-commerce in travel and tourism industry and reviewing it through different
academic journals. Through those journals I will be able to answer, how will be
travel and tourism industry benefit if they adopt e-commerce, what are the
customers' perceptions on travel and Tourism Company which adopts e-
commerce and what are the benefits and limitations of e-commerce in travel and
tourism. Further my main objectives of research are to find out following: -
To identify the methods & practices to structure the e-commerce
business in the travel industry related organizations
To identify the critical success factors that make e-commerce business
profitable & identify factors that are detrimental to the growth of the e-
commerce business in the travel industry related organizations
22
To identify the factors which will have a impact on overall business
performance as a result of the structuring of e-commerce business in the
travel industry related organizations
3.2 Scope Of The Study
The internet‘s global reach, interactivity, and information-rich context have
redefined the travel industry. Online travel commerce has evolved significantly
from the initial sales of less complex products like airline tickets,
accommodation and car rentals to include more complex products like vacation
packages and cruises. Several studies have revealed that online travel rates
among the top three products and services purchased online. The goal of this
dissertation is to assess the methods and practices adopted to structure the e-
commerce business in the travel related organizations and the factors that define
the success of e-commerce business in the travel related organizations. The
dissertation also focuses on factors that are detrimental to the growth of e-
commerce business in travel related organizations. The study draws attention
towards the changing patterns in travelers trip planning behavior. The study
highlights the advertising channels used for brand awareness and customer
acquisition. The dissertation dwells deep into how travel and tourism have used
information technology to enable business growth. It also aims to analyze some
of the most critical IT developments and to demonstrate how they influence the
tourism industry and significantly enhance competitive advantage. Tourism is
inevitably influenced by the business process re-engineering experienced due to
the technological revolution. As information is the life-blood of the travel
industry, effective use of ITs is pivotal. Hence, "a whole system of ITs is being
23
rapidly diffused throughout the tourism industry and no player will escape its
impacts". Unlike durable goods, intangible tourism services cannot be
physically displayed or inspected at the point of sale before purchasing. They
are bought before the time of their use and away from the place of consumption.
Hence they depend exclusively upon representations and descriptions, provided
by the travel trade, (e.g. information in brochures), for their ability to attract
consumers. Timely and accurate information, relevant to consumers' needs, is
often the key to satisfaction of tourist demand. Therefore, ITs provide the
information backbone that facilitates tourism.
3.3 Limitation Of The Study
The scope of the study was limited to how e-commerce as a business channel is
established in the travel and tourism industry. Other industries are not included
in this study. The study is based on opinions e-commerce practitioners have
given with respect to how e-commerce can be set-up in travel related
organizations. Sample selection is limited to only 3 metro cities of India and
would limit the ability to draw generalization in this study. Main concern comes
from the fact that though travel industry has been the first adopters of e-
commerce however they are slow in adopting the new methods and practices
emerging in the e-commerce space related to the travel industry. Finally,
although the number of respondents was sufficient to conduct this study,
however, a larger samplesize would have strengthened the results obtained.
24
3.4 Research Methodology
This research aims to explore the impact of structuring the e-commerce business
on the overall business performance in the travel industry. The data is collected
from travel agents, tour operators, airlines, travel meta search engine, GDS
(Global distribution system). Quantitative survey was conducted in this study to
investigate the perceptions of the travel related organizations like the traditional
travel agents & tour operators, Online travel agents, hotels, travel meta search
engines, global distribution system with respect to structuring of the e-
commerce business in the travel industry. The travel related organizations were
asked to judge critical success factors that make e-commerce business
profitable, Factors which will have a impact on overall business performance as
a result of the structuring of e-commerce business in the travel industry related
organizations, Methods & practices to structure the e-commerce business in the
travel industry related organizations, Factors that are detrimental to the growth
of the e-commerce business in the travel industry related organizations. The
research exercise was focused on educating the travel industry with regards to
what all areas are critical and need to be implemented in order to structure the e-
commerce division which will lead to profitable results and impact the over all
business process. T test is applied to determine if two sets of data are
significantly different from each other. The t-test looks at the t-statistic, t-
distribution and degrees of freedom to determine a p value (probability) that can
be used to determine whether the population means differ.
25
Sampling Design Process
This study is based on the exploratory & causal research design, which
included both secondary and primary information sources. The target
population for this study is drawn from members of Travel Agents
Federation of India (TAFI) in Mumbai commercial capital of India. There
are 1400 members in the association. Members of TAFI fall in categories of
aviation, hotels, IATA approved agents, e-commerce digital agencies
managing travel clients. The samples for this study is drawn from TAFI and
primarily focus on the travel industry related organizations in the Mumbai +
Delhi + Bangalore market. Primary data is proposed to be collected from 33
travel industry related organizations, which fall in different categories of
TAFI via a structured questionnaire. The respondents will be selected on the
basis of their designation, profile and tenure in the organization. 3 hotels, 8
airlines, 8 online travel agent, 3 tour operators, 8 travel agent, 2 travel meta
search engine and one global distribution system participate in the study.
Travel related organizations are classified into two categories:
Organizations who own inventory to be sold through intermediaries and their
own websites (hotels, airlines)
Organizations who display inventory by connecting with the systems of the
organizations who own inventory (OTA‘s, traditional travel agents, travel meta
search engine, global distribution system)
26
Type Of Organization
Frequency Percent
Valid
Hotel 3 9.1
Airline 8 24.2
Online Travel Agent 8 24.2
Tour Operator 3 9.1
Travel Agent 8 24.2
Travel Meta Search Engine 2 6.1
Global Distribution Systems 1 3.0
Total 33 100.0
Table no 1
Sampling Procedure
For the purpose of this study, a probability sampling method will be used.
Stratified sampling, followed by simple random sampling will be used in this
study. The reason for selecting Stratified sampling technique is that the sampling
frame of the study is divided into subgroups, strata, and the sampling process will
be performed separately on each stratum. The different categories of the TAFI in
the study compiled the different strata.
Data Collection Procedure
In regards to the primary sources, data would be collected in form of a structured
questionnaire through face-to-face, email and telephone interviews with the e-
commerce practitioners. Questionnaires would be sent beforehand to the
respondents, so that they could prepare prior to the interview.
27
Secondary Data
Secondary sources of information was gathered from e-journals, e-articles, e-
commerce related cases studies, online e-commerce research reports produced by
Internet and Mobile Association of India providing up-to-date insights on the
growth of e-commerce in India.
Questionnaire Design
The questionnaire is designed on a five-point likert scale in order to gather insights
on what according to the e-commerce practitioners in the travel industry related
organizations are the methods & practices followed to structure the e-commerce
business, what are the critical success factors that make e-commerce business
profitable, what are the factors that are detrimental to the growth of the e-
commerce business, What are the factors which will have an impact on overall
business performance as a result of the structuring of e-commerce business in the
travel industry related organizations. The questionnaire was designed in line with
the research objectives. The questionnaire was circulated among the e-commerce
practitioners within the travel and tourism industry.
28
Chapter 4
Tourism Sector – Global Scenario
The travel and tourism industry is one of the world‘s largest industries with a
global economic contribution (direct, indirect and induced) of almost seven
trillion U.S. dollars in 2013. The direct economic impact of the industry,
including accommodation, transportation, entertainment and attractions, was
approximately 2.2 trillion U.S. dollars that year. A number of countries, such as
France and the United States, are consistently popular tourism destinations, but
other, less well-known countries are quickly emerging in order to reap the
economic benefits of the industry. Worldwide, the tourism industry has
experienced steady growth almost every year. International tourist arrivals
increased from 528 million in 2005 to 1.09 billion in 2013. Each year, Europe
receives the most international tourist arrivals. It also produces the most
travelers: with just fewer than 566 million outbound tourists in 2013, the region
had more than double that of the second largest tourist origin, the Asia Pacific
region. In 2013, global international tourism revenue reached approximately
1.16 trillion U.S. dollars, having almost doubled since 2005. That year, China
had the largest international tourism expenditure, followed by the United States
and Germany. The leading city in international visitor spending was London,
where tourists spent more than 19 billion U.S. dollars in 2014.
For tourism-dependent countries and destinations, tourism‘s share of GDP can
exceed twice the world average. Today, international tourism receipts exceed $1
billion per year in some 90 nations. Worldwide, domestic tourism is typically
29
several times larger. Tourism truly has become a global economic and social
force. Travel is costly. Historically, only wealthy individuals could afford to
travel abroad, and they tended to travel to affluent countries with quality tourism
infrastructure and services. Not surprisingly, Europe and North America have
been the largest sources and recipients of international tourists. But this, too, is
changing. In recent decades, tourist arrivals in emerging countries have grown
much faster than in developed ones. The Asia-Pacific region has seen—and will
continue to see—the fastest growth.
The Travel and Tourism (T&T) industry directly contributes about 3.6% of the
world‘s Gross Domestic Product (GDP) and indirectly contributes about 10.3%
to it. As one of the biggest contributors to the global GDP, this industry directly
employs nearly 77 million people worldwide, which comprises about 3% of the
world‘s total employment. The T&T industry also contributes to indirect
employment generation to the tune of 234 million or 8.7 % of the total
employment implying that one in every twelve jobs in the world is in the
tourism industry. The industry also represents about 12% of the total world
exports.Global market trends indicate that long-haul travel, neighbouring
country tourism, rural and ethnic tourism, wellness and health holidays, cultural
tourism, spiritualism, ecotourism, sports and adventure holidays, and coastal
tourism and cruises are a few emerging areas of tourist interest. From a
geographic viewpoint, there has been a remarkable rise in Asian tourists,
particularly from China and East Asian countries. Further, the average age of the
international tourist has also been reducing representing a growing segment of
young tourists who would typically travel to take a break from increasingly
stressful professional lives
30
Statistics and facts on the travel and tourism industry in the U.S.
The travel and tourism industry is one of the largest industries in the United
States, making a total contribution of 1.42 trillion U.S. dollars to GDP in 2013.
The industry was forecasted to contribute more than 2.5 trillion U.S. dollars by
2024. In 2014, U.S. travel and tourism entered the spotlight when President
Barak Obama took on a campaign to promote the industry and make the airport
entry process easier in order to attract more international visitors. The campaign
focused on increasing international travel spending within the country, creating
more jobs for U.S. residents as a result. There were 69 million non-resident
visitors to the United States in 2013, with New York City often proving the
most popular city destination. Of those visitors, travelers from Canada
contributed the most to international travel spending at 27 billion U.S. dollars.
Visitors from Japan and the United Kingdom also spent generously. However,
international travel spending was dwarfed by domestic travel spending – U.S.
residents spent 748 billion U.S. dollars traveling their homeland in 2013. The
number of outbound tourists from the U.S. is much smaller than the number of
international visitors arriving on an annual basis. When asked which destination
they would choose if they could go anywhere in the world, the most popular
choice for U.S. travelers was their own state of Hawaii. Many Americans prefer
beach locations for their vacations but cruises are also well liked – in 2014, over
half of the passengers of the global cruise industry came from the U.S.
Statistics and facts on the travel agency industry in the U.S
In 2013, the travel agency industry in the United States generated 33 billion U.S.
dollars in revenue, approximately three quarters of which was made up by
31
commission and the rest by service fees. In 2014, over half of travel agent users
in the U.S reported that travel experiences planned by agents were better than
those that they planned themselves. That said, many leisure and business
travelers admitted that they did not use travel agents because they liked
researching and planning their trips themselves. While many in the travel
industry have declared the era of travel agents to be over, recent research shows
that travel agents in the United States are reporting an increase in business. In
2013, over half of travel agents reported an increase in revenue. The share of
travel agents reporting a decrease in sales dropped from 80 percent in 2008 to
just 14 percent in 2012. Sales of tour and group holidays increased the most in
2013, followed by sales of travel insurance and cruise holidays. Many of these
sales could have been made over the internet. Travel management, like many
things, is becoming increasingly web-based. In 2012, travel e-commerce sales
amounted to 103 billion U.S. dollars. In the same year, Expedia was the online
travel agent with the largest share of pages views at 31.6 percent. However, in
January 2014, only 14.3 percent of people said they used online travel agencies
to plan their travel. A much larger share of people, 44.3 percent, preferred to use
social media when planning, so it is unsurprising that almost 60 percent of travel
agents use social media for general promotion and advertising and to generate
new business.
Statistics and facts on the Business Travel Industry
The travel and tourism industry is one of the largest industries in the United
States. Despite being one of the first industries to suffer greatly in the aftermath
of the September 11 terrorist attacks in 2001, it was quick to recover and, by
32
2013, made a total contribution to GDP of over 1.4 trillion U.S. dollars.
Business travel makes up a sizeable portion of this industry, contributing 274.7
billion U.S. dollars directly to GDP in 2013 – 29.2 percent of travel and
tourism‘s overall direct contribution. This is likely to increase year on year with
domestic business trips predicted to reach 480.5 million by 2016 – and more
business travel means more business travel spending. Business travel spending
is expected to increase by 5.9 percent in the United States in 2014. In terms of
the global outlook, however, it is Brazil (15.9%), Russia (8.2%), India (13%)
and China (16.8%) who are expected to see the biggest increases in business
travel spending in 2014. The average cost of business travel in the U.S. amounts
to 293 U.S. dollars per day. In San Francisco, the most expensive U.S. city for
business travel, this figure is much higher and average costs per day can reach
444.66 U.S. dollars. With such large amounts of money being invested in this
growing industry, how are companies choosing to manage travel?
In 2012, Travel Leaders Group was the most successful travel management
company in the world in terms of air ticket transactions, making over 2.1 million
transactions. However, in the same year, a global footprint was one of the least
important considerations for business travel buyers when choosing a travel
supplier: the most important factor was finding the lowest negotiable rate,
followed by finding the highest level of service. But this could all change within
the next two years according to business travel managers. In 2013, 50 percent of
business travel managers thought health and well-being was a mega-trend that
would affect travel management over the next two years, and 49 percent thought
environmental awareness would. As well as this, travel management has become
much more mobile in recent years. By 2012, more people than ever were using
33
smartphones and tablets to book travel and, in 2013, 54 percent of U.S.
companies either had, or were developing a mobile communications strategy for
travel.
B2c E-Commerce Development In Tourism Industry In China
Abstract
E-commerce has significantly changed the distribution channels of travel
products in the world including China. Online channels are growing important
in travel service distribution. This paper sheds lights on the B2C e-commerce
development in China. It explores this issue from the three different participants
in the B2C e-commerce model intourism industry - consumer, travel agent and
travel service provider. The paper also identifies the barriers in the B2Carena
and discusses the possible approaches to develop B2C in tourism industry in
China. The results in this study revealthat B2C development in tourism largely
depends on the change of Chinese customers‘ behavior. The findings of thestudy
are expected to assist travel organizations to better understand current B2C e-
commerce development in China andexpand their B2C e-commerce market in
China in the near future.
Introduction
With the Internet as a commercial medium, new ways of conducting business
have developed in almost every sector. In tourism industry, new and efficient
Internet business models, including both B2B and B2C, have gained a strong
foothold and the travel industry is ranked as the prime sector in e-commerce
34
(Heung 2003). Online transactions in the travel and tourism industry are
continuously growing with the proliferation of e-commerce (Werthner and Ricci
2004). The Internet has become an important service booking channel
for individual customers, which impels B2C e-commerce development in tourism
industry. In China tourism industry has been developed rapidly with the
economic development, which has attracted travel service providers to develop
their market through the Internet in order to achieve more business benefits and
keep competitiveness. Some researches have been conducted on the B2B e-
commerce model in travel industry in China, but the B2C e-commerce
development in tourism industry in China has not been explored. This paper
sheds lights on the B2C e-commerce development in China. It explores this issue
from the three different participants in the B2C e-commerce model in tourism
industry - consumer, travel agent and travel service provider. The paper also
identifies the barriers in the B2C arena and discusses the possible approaches to
develop B2C in tourism industry in China. The results in this study reveal that
B2Cdevelopment in tourism largely depends on the change of Chinese customers’
behavior. The findings of the study are expected to assist travel organizations to
better understand current B2C e-commerce development in China and expand
their B2C e-commerce market in China in the near future.
E-Commerce Development In China
To contextualize e-tourism development in China, an examination of e-
commerce development in China is required. In the past several years, with the
rapid growth of the population of Internet users in China, e-commerce has
expanded rapidly in China. According to the survey conducted by China Internet
35
Network Information Centre (CNNIC), the number of Internet users in China
has arrived at 210 million until the endof 2007, and Internet penetration rate in
China has arrived at 16.0% (CNNIC 2007). E-commerce in China is multiplying
almost as fast as the number of Internet users in China. According to the report
from the Research in China (RIC), in 2006 the revenue generated in e-
commerce was about $138.4 billion in China, and the e-commerce market will
continue to expand in China (RIC 2006). The e-commerce market in China will
be perhaps totally as much as $654.3 billion by 2010. According to the survey
conducted by iResearchcentre in China, the revenue generated in Business-to-
Business (B2B) e-commerce in China has arrived at $169 billion in 2006, which
takes nearly 95% of the total e-commerce avenue in China in 2006, and B2C
takes a small size in the e-market in China (iResearch, 2007). The Chinese-
commerce market will continue to expand and perhaps total as much as $654.3
billion by 2010 (CCID, 2006). Compared to e-commerce development in
developed countries, the adoption of e-commerce is still in its infancy.
E-Tourism In China
China’s tourism industry has developed quickly in the past 20 years. In
China since 1999 the government has put effort on further pushing tourism
development by establishing three “Golden weeks” holidays, which has
impelled both the domestic and international tourism development in
China. According to the statistics released by China National Tourism
Administration (CNTA) in 2006, the number of inbound travelers in China
has arrived at about 124.9 million, the number of outbound travelers has
arrived at 345.2 million, and the number of domestic travelers has arrived
36
at 1.39 billion (CNTA, 2006). World Tourism Organization (UNWTO) also
predicts that China's tourism industry will take up to 8.6 percent of world
market share and become the world’s top tourism industry by 2020 (CNTA
2007).The e-commerce development and the expansion of electronic
market in China bring opportunities to travel organizations in tourism
industry to perform marketing online, which can help travel organizations
to reduce business cost since there will be less intermediaries in the new
value chain in e-tourism. Mean while, travel organizations are facing great
challenges in the Internet times. Although the Internet has become an
important travel service delivery channel, e-tourism in China is still at its
initial stage. Compared to the application of the Internet in other sectors in
China, Internet adoption in tourism has developed much better. In China,
more and more travel organizations have begun to perform business online
and according to the statistics released by the Chine Internet Network
Information Center, about 8.6% of Internet users in China are using the
Internet to book travel service. Travel organization are attempting to get
benefits from their online service channels, and at the same time keeping
their off line service channels to keep competitive in the market. Travel
organizations in China can not completely rely on the modern online
channels since online travel service booking in China has not been popular
compared tosome other developed countries. In 2006 the Chinese
government has started the Golden Tourism project, which aims at pushing
e-tourism development in China
37
B2C E-Commerce Model In Tourism Industry In China
The increased penetration of online service and home computing has resulted in
more consumers‘ home-shopping. The Internet makes it available for travel
service suppliers to sell their products to consumers directly and omit the
traditional travel retailer – travel agency. The Internet has been considered
ideally suited as a medium for travel service delivery since the travel industry is
largely information-driven. Online travel services have developed into one
of the largest e-commerce domains in the world.
Online travel service delivery helps travel service providers to establish direct
promotion to targeted potential customers and to send them tailor-made
information at the appropriate time. In China B2C e-commerce developed in a
different model compared with its development in other developed countries.
There are three different travel service distribution channels in the B2C model.
First, travel service providers can deliver travel service to customers through the
Internet directly, which is the main goal of travel service providers are expected
to achieve in their B2C e-commerce development. Second, travel services are
delivered to customers by travel agents through the Internet, which is based on
the corporation between travel service providers and travel agents, which is
based on the traditional travel service delivery channel. Third, travel service
providers offer online booking service to customers, and the services are finally
delivered to customers by travel agents.
It is a popular channel in China because of its advantage in solving payment
barriers and security risks. Ctrip and Elong, the two big online travel companies
in China, have achieved big success in its B2C business based on the third
channel in the B2C e-commerce model in China.
38
Method
This research aims to explore the issue on the B2C e-commerce development
model in China. The study issue is investigated based on the data collected from
the three different participants in the B2C model in tourism industry in China:
travel service provider, travel agent and customer.In this study interviews were
conducted to explore the perceptions of B2C e-commerce development on both
travel service providers and travel agents perspectives. Some qualitative data
were collected from interviews conducted in 9 companies - 1 airline company
and 8 travel agencies. Totally 15 interviews were conducted - 6 in the airline
company and 9 in travel agencies. A quantitative survey was conducted in this
study to investigate customer‘s attitude towards online travel service in the B2C
model, in the survey a questionnaire was developed to collect empirical data.
We chose some passengers of the interviewed airline company in our study to
investigate the customer‘s perceptions of online travel service distribution. The
passengers were asked to report on their current use of the Internet to book
travel service or search travel information, and their future intentions on online
travel service booking. The survey was conducted by the airline company
onboard. In the study totally 190 copies were received, and 169 copies are
usable.
Data Analysis
Travel Service Provider Perspective
The B2C e-commerce development in China was discussed with the
interviewees from the airline company, which helps to understand the travel
39
service providers‘ perceptions on B2C e-commerce development models in
travel service providers‘ perspective in China. According to the
interviewees‘ opinion they are attempting to develop both B2B and B2C e-
commerce in their business, and B2C is what they are eager to develop. In
fact its B2C business has not achieved great improvement compared to its
B2B business. B2C e-commerce in their company is just at the beginning,
and it still have to rely on the travel agencies and their sales office in China
to promote flight tickets to individual customers though they have made it
available for individual customers to book ticket online. They agreed that
some barriers have impacted their B2C development, including security
risks and restriction of reimbursement system in China. In addition,
individual customers prefer call to travel agencies to book travel service.
They keep their previous consumption habits, and it is hard to make them
change their habits. Its B2C development depends largely on the individual
customer‘s change of consumption habits. Currently, the travel agencies are
still its main ticket sales channel in China. Even in its B2C business,
cooperation with travel agencies is also needed to deliver traditional paper
invoices to individual customers for reimbursement after their online
booking, which is the third B2C model.
Travel Agents Perspective
Travel agents, mainly travel agencies, are always important intermediaries in
the value chain of tourism. Nowadays, travel agencies have adopted both
B2B and B2C in their e-commerce development, which tie the travel service
providers and customers. Travel agencies can offer customers personalized
40
service through online or offline channels, which is their advantages
compared to the services offered by travel service providers. The
interviewees from different travel agencies agree that travel agencies in
China are still the main intermediaries of travel service providers in China.
Travel agencies offer travel services by both the traditional offline channels
and online channels. At present, 7 travel agencies focuses their e-commerce
mainly on B2B, and only 1 travel agency focuses on both of them since B2C
model in China has not achieved great success in tourism industry. They
expect that B2C business can achieve good development in their business in
the near future with the mature of e-commerce development in Chinese
market. In B2C business, travel agencies rely on their traditional channel to
help travel service providers deliver traditional invoices to individual
customer, which is a new cooperation trend between them with the adoption
of B2C.In the discussion the interviewees illustrated their barriers in
developing B2C in China. Among the interviewees, 6 of them agreed that
security risk is the main barrier, and 4 of them stated that payment is another
barrier.
Customer Perspective
The customers are investigated on their online travel service booking
experience, online travel service searching and online booking for future
travel service in the B2C arena. Among the 169 respondents, most of them
(97.2 %) are Internet-users. And 99 of them have booked travel service
online, accounting for 58.8% of all the respondents. As regards to travel
information search, based on means comparison, travel agencies are ranked
41
as the most important travel information-searching channel and the Internet
is not so important (See Table 2)
Table no 2. Travel information search channels
Mean Std. Deviation
Travel agency 1.99 1.322
Friends 2.04 1.145
Experience, habit 2.29 1.486
Internet 2.31 1.316
Advertisement 3.24 1.522
For their future travel service booking, travel agencies are still more important
than the Internet, 45.6% of the respondents are intended to use travel agency to
book travel service and 33.1% of them will use the Internet to book their future
trips.
Summary
Though tourism industry is quite fit for e-commerce in China e-tourism is in
its initial stage. The research findings in this study reveal that in China B2C
business model is not so popular because of the obstacles existed in its
development, including payment, security risks and restriction of
reimbursement system. According to the customers‘ perception, travel
agencies keep the main intermediaries in tourism in China, though the
Internet has become an important travel service-booking channel. Travel
agencies take the combined business model to offer travel services to
customer – through both the traditional offline and the popular online
service. The intensive travel services offered by travel agencies in the
combined business model are not what travel service providers can offer to
42
customers through their direct online sales. The results in the study state that
half of the investigated customers will still book travel services from travel
agencies, which is much higher than that of the Internet bookers for future
trip. Even in B2C business, travel service providers have to rely on travel
agencies to complete its business process. The role of travel agency as the
middleman in travel value chain keeps important. Based on the discussion
we can arrive at the conclusion that B2C e-commerce in China has a
great potential for travel service providers. B2C development largely
depends on the change of Chinese customers‘ behavior. To accept electronic
invoices in the reimbursement system in China is very important for
the betterment of B2C development. In addition, travel organization can also
attract individual customers to book service online by offering them cheaper
price or some other promotions strategies. The primary limitation of the
study is that the empirical data collected is based on a small size
of respondent, which is used to represent the general perceptions of
customers in China with a large size of population. This study has provided
an in-depth knowledge about the B2C e-commerce development in China,
and offered some valuable guideline for travel organizations. Future study
should take into consideration of the strategies to realize betterment of B2C
development in China.
43
Chapter 5
Tourism Sector – Indian Scenario
Tourism is not only a growth engine but also an employment generator.
According to the Economic Survey 2011-12, the sector has the capacity to
create large-scale employment both direct and indirect, for diverse sections in
society, from the most specialized to unskilled workforce. It provides 6-7 per
cent of the world‘s total jobs directly and millions more indirectly through the
multiplier effect as per the UN‟ s World Tourism Organization (UNWTO).
The importance of tourism as a creator of job opportunities can be understood
from the fact that in India every one million invested in tourism creates 47.5
jobs directly and around 85-90 jobs indirectly. In comparison, agriculture
creates only 44.6 jobs and manufacturing a mere 12.6 jobs. Moreover tourism is
the third largest foreign exchange earner after gems and jewellery and ready-
made garments.
Tourism Outlook – India
Given the Global Tourism perspective, buoyancy in the Indian Economy and
growth in the related ancillary industries like Infrastructure and Aviation, the
Tourism Industry is expected to be on an upswing in India. Foreign Tourist
arrivals to India have been showing an increasing trend, it being estimated at
4.43 million in 2006, up 13% from 2005 (3.92 million). Taking into account
the fact that these figures exclude the NRIs visiting India, the total number
of international tourist arrivals in 2006 is estimated to be over 7 million.
44
India‘s outbound travel is twice the volume of inbound, and destinations in
the Asia-Pacific region are expected to receive continuous growth in tourist
arrivals from India. In terms of the growing travel and tourism economy and
the real growth rate of travel market, India is the number one country in
Asia-Pacific region.
The Travel & Tourism Industry in India is expected to grow and generate
US $ 128 billion by 2016. The Total Demand is expected to grow by 8% per
annum, in real terms, between 2007 and 2016. In the year 2006, India
represented 0.8 % of the world market share.
India‘s rich cultural and geographic diversity provides the basis of a wide
range of tourist products and experiences, which include among others -
leisure, culture, adventure, spirituality, eco-tourism and wellness & health.
Apart from acknowledging the traditionally recognized advantages of
developing tourism for promotion of people to people understanding,
earning of the foreign exchange, vast employment generation, it can play a
major role in furthering the socio-economic objectives of the nation.
India Tourism – Global Recognition
The last few years have been highly successful for India Tourism. The
‗Incredible India‘ campaign has enabled the destination to penetrate global
market and reach the ultimate consumer through electronic, print and
internet media. On account of the spurt that India has witnessed in tourist
arrivals in the recent times and given the unique and immense potential the
country has as a ‗vacation destination‘, The World Travel and Tourism
45
Council has identified India as one of the foremost tourism growth centers in
the world, in the coming decade. Integrated endeavors of the Ministry of
Tourism, Government of India have led to India winning the following
international acclaims: -
Conde Nast Traveller, the worlds‘ leading travel and tourism journal
has ranked India amongst the top 4 preferred holiday destinations of
the world
India amongst the top 5 favorite destinations – Lonely Planet in a
survey of 167 countries
ABTA (Association of British Travel Agency) has ranked India as
No. 1 amongst top 50 places for 2006
The Incredible India campaign has been the winner of PATA Gold
Award for best Print Ad Campaign and PATA Gold Award for Best
Destination Marketing Campaign
The Incredible India Campaign has been ranked as the ‗Highest
Recall Advertisement worldwide by Travel and Leisure World
Travel Awards received for a) Asia‘s Leading Destination b)
World‘s leading Travel Destination Television Commercial c)
Worlds‘ Leading Responsible Tourism Project, for Endogenous
Tourism Project and d) Asia's leading tourism and convention
bureau.
Increasingly, Tourism as a sector seems to be emerging to be one of the main
driving engines of the Indian Economy.
Though there are many definitions for tourism, it could be simply defined as a
―travel and stay of a non-resident‖. In order to travel to a particular area there
46
must be a reason. For example a person may travel for leisure, business, visiting
friends and relatives, health, education etc. He/she chooses a destination for one
or the other reason. Transport is necessary to travel and accommodation to stay
at the destination. So, tourism as an industry has three major components:
Attraction, Accommodation and Transport. In the developed world, today, all
these components have reached at their zenith in satisfying their customers‘
needs aided by modern technology. These components have also came a long
way to offer a range of products which suit the needs of multitude tourists
around the world, and are still working hard to cater to an ever changing test of
them. Tourism is ranking the top ahead of all other categories of international
trade. This growth of tourism activity clearly marks tourism as one of the most
remarkable economic and social phenomena in the world.
The Tourism Industry Components and Requirements of
the Tourists
As indicated above the tourism industry is made up of three major
components: namely,
Attraction sector which comprises manmade and natural attractions
which are developed to satisfy visitors educational, recreational,
aesthetic needs etc.
Advertising sector, which includes advertising through mass media and
the internet.
Accommodation sector, all types of establishments that offer lodging to
visitors
Transport sector, which includes air, water and surface transport.
47
Attraction Sector
In the case of attractions both manmade and natural attraction owners need
to communicate or inform their customers and potential customers about
their production. Information about the kind of attraction, where they are
located and how to get there is of vital importance. The attraction owners
particularly the national tourists offices discharge their duty of promoting
country‘s tourist attractions using the information technology products.
Information through promotional videos, Internet web sites, television
advertisements and travel documentaries are the main information
dissemination tools.
Accommodation Sector
In the accommodation sector also the contribution of information technology
is prominent. Any individual or group wishing to travel to any part of the
world now has an easy access to the accommodation service providers. A
visitor can access information about the kind of hotels at the destination,
their ranges of product, the price and other relevant information without
leaving his/her office. What one has to do is ring up a travel agency and get
the expert advice.
This will help any visitor greatly as to where to stay during any kind of away
from home. Here the information can be obtained aided by still or moving
pictures in order to give exact feature of an accommodation, facilities and
services of ones choice. At a destination also visitors are at ease during their
stay in every respect, in getting information about their business, family or
48
other information back home. They are also at ease to relax with the videos
and television entertainment programs, which now days are part and parcel
of many accommodation units.
Advertising Sector
Travel and tourism fit especially well with interactive media because they
are an information intensive industry where transactions can be made online,
and current web users are heavy users of travel and tourism products and
services. Interactive media call for interactive marketing. The essence of
interactive marketing is the use of information from the customer rather than
about the customer. It differs from traditional marketing since it is based on
a dialogue instead of one-way communication and it deals with individual
consumers instead of mass markets. According to parsons the success
factors for marketing on web are
Attracting users
Engaging users interest and participation
Retaining users and ensuring they return
Learning about user preferences
Relating back to users to provide customized interactions
Transport Sector
Transport provides the essential link between tourism origin and destination
areas and facilitates the movement of holidaymakers, business travellers,
49
people visiting friends and relatives and those undertaking educational and
health tourism. Before setting out on a journey of any kind, every traveler
makes sure which transport company has a good safety record.
To this effect airplanes coaches and even taxis in many countries with
developed tourism business, they are equipped with radio communication
systems for various uses. For e.g. the driver or the tour guide updates the
tour company headquarters about the progress of the tour throughout the
touring period. This communication ensures the safety of tourists. Fast and
easy information flow is of paramount importance to build confidence in the
traveling public. In recent years, the confidence built due to use of modern
IT has been demonstrated by a tremendous increase in the number of
travelers worldwide.
Foreign Tourist Arrivals (FTAs)
During 2011 FTAs in India were 6.31 million with a growth of 9.2% over
2010. FTAs during 2012 were 6.65 (provisional) million with a growth of
5.4%, as compared to the FTAs of 6.31 million during 2011.
Foreign Exchange Earnings (FEE) from Tourism
Tourism is an important sector of Indian economy and contributes
substantially in the country‘s Foreign Exchange Earnings. FEEs from
tourism, in rupee terms, during 2011 was Rs.77,591crore (provisional), with
a growth of 19.6%, as compared to the FEEs of Rs.64,889 crore
(provisional) during 2010.
During 2012, the Foreign Exchange Earnings (FEEs) from tourism
registered a growth of 21.8% from Rs.77,591 to Rs.94,487
50
crore(provisional) when compared to FEEs during 2011. A statement giving
FTAs in India and FEEs from tourism fro the years 2000 to 2012 is given
below:
Figure no 4
Domestic Tourism
The domestic tourist visits during the year 2011 are estimated to be 851
million, showing a growth of 13.8% over 2010.
Visa on Arrival (VoA)
Considering the importance of Visa facilities in enhancing tourist inflow, the
facility of Long Term Tourist Visas‟ of five years duration with multiple
entry, carrying a stipulation of 90 days for each visit, has been introduced on
a pilot basis for the nationals of the 18 selected countries.
51
The findings of an evaluation study conducted by this Ministry have
reinforced the belief that the presence of the facility of ―Visa on Arrival‖
(VoA) significantly influences the tourists‟ travel plans to any country.
During 2012, a total number of 16,084 VoAs (Visa on Arrival) were issued
as compared to 12,761 VoAs during the corresponding period of 2011,
thereby showing a growth of 26%. Efforts are on to extend the VoA facility
for the nationals of more countries.
Publicity And Marketing Strategy
As part of its domestic and global publicity and marketing strategy to
promote tourism and create social awareness through the print and electronic
media, the Ministry of Tourism launched campaigns on Clean India,
AtithiDevoBhava and Hunar Se Rozgaar through radio channels. Campaigns
highlighting the tourism potential of North-East and J&K were also carried
out through Doordarshan. Campaigns were also taken up for ―Incredible
India‖ branding on TV during 2nd Formula Grand Prix and London
Olympics, 2012, during the International Film Festival of India (IFFI) held
in Goa, and during the International India Film Academy (IIFA) Awards
2012 in Singapore.
The Ministry had participated in major international Travel Fairs and
Exhibitions in important tourist generating markets the world over, as well
as in emerging and potential markets, to showcase and promote the tourism
products of the country. These included Arabian Travel Market (ATM) in
Dubai, International Trade Business (ITB-Asia) in Singapore, World Travel
52
Market (WTM) in London, International Meetings Exhibitions (IMEX) in
Frankfurt, International Tourism Trade Fair (FITUR) in Madrid, etc.
To showcase and project the Buddhist Heritage of India, an International
Buddhist Conclave was organized by the Ministry of Tourism in Varanasi in
September 2012 and attended by 132 international delegates from around 30
countries. The delegates were taken for a visit to Sarnath and Bodh Gaya.
For the first time, an International Tourism Mart was held at Guwahati in
January, 2013 to showcase the largely untapped tourism potential of the
north-Eastern region in the domestic and international markets.79
International Buyers and media delegates from 23 countries and hundreds of
tour operators from different parts of India participated in the Mart and
engaged in one-to-one meetings with sellers from the North East Region and
West Bengal. The international delegates were taken on Familiarization
Tours of the North Eastern Region.
Niche Tourism Products
The Ministry of Tourism has also taken the initiative of identifying,
diversifying, developing and promoting the nascent/upcoming niche
products of the tourism industry. This is done in order to overcome the
aspect of „seasonality‟ to promote India as a 365 days destination, attract
tourists with specific interests and to ensure repeat visits for the products in
which India has comparative advantage. Accordingly, the following Niche
Products have been identified by the Ministry of Tourism for development
and Promotion:
53
Cruise
Adventure
Medical
Wellness
Golf
Polo
Meetings Incentives Conferences and Exhibitions (MICE)
Eco- Tourism
Film Tourism
Cruise Tourism
“Cruise Shipping is one of the most dynamic and fastest growing
components of the leisure industry worldwide. India with its vast and
beautiful coastline, virgin forests and undisturbed idyllic islands, rich
historical and cultural heritage, can emerge as an attractive tourist
destination for cruise tourists.
Central financial assistance for Cruise Tourism project of Rs. 1450.00 lakh
was sanctioned by the Ministry of Tourism for development of Tourism
Infrastructure in Willing Island, Cochin Port, during the year 2008-09. An
amount of Rs. 491.53 lakh had been sanctioned and Rs. 245.77 lakh released
during 2011-12 to Cochin Port Trust for the development of Cruise
Passenger facilitation center at Cochin Port.
54
Adventure Tourism
Adventure tourism involves travel to remote, exotic areas, for exploration as
for undertaking activities, which test the endurance of both a person and his
equipment. Adventure tourism is rapidly growing in popularity as tourists
seek different kinds of vacations. Central Financial Assistance is being
extended to State Governments/Union Territory Administrations for
development of tourism infrastructure in destinations including adventure
tourism destinations. These include facilities for trekking, rock climbing,
mountaineering, aero-sports, winter/water related sports, trekker huts,
wildlife viewing facilities, etc. Financial assistance to State Governments is
also provided for the purchase of water sports equipments consisting of
kayaks, canoes, paddleboats, fibre glass boats, hovercrafts, water scooters,
etc. This year, the Ministry of Tourism has sanctioned an amount of
Rs.220.76 lakh to the Indian Institute of Skiing & Mountaineering; Gulmarg
(IISM) for conduct of adventure courses as follows:
Figure no. 5
55
Medical Tourism
Medical tourism (also called medical travel, health tourism or global
healthcare) is a term used to describe the rapidly-growing practice of
traveling across international borders to obtain health care. Services
typically sought by travelers include elective procedures as well as complex
specialized surgeries such as joint replacement (knee/hip), cardiac surgery,
dental surgery, and cosmetic surgeries. Besides India, there are several
Asian destinations like Singapore, Malaysia and Thailand that are offering
Medical care facilities and promoting medical tourism. India excels among
them for the following reasons: -
State of the Art Medical facilities
Reputed health care professionals
Quality nursing facilities
No waiting time for availing the medical services
India‘s traditional healthcare therapies like Ayurveda and Yoga combined
with allopathic treatment provide holistic wellness. Financial support as per
guidelines and availability of funds under the Market Development
Assistance Scheme (MDA) is provided to following approved Medical
Tourism Service Providers:
Representatives of Hospitals accredited by Joint Commission
International (JCI) and the National Accreditation Board of
Hospitals and Healthcare Services (NABH).
Medical Tourism facilitators (travel agents/tour operators) approved
by Ministry of Tourism, Government of India.
56
Wellness Tourism
Wellness Tourism is about traveling for the primary purpose of achieving,
promoting or maintaining maximum health and a sense of well-being.
Health Tourism holds immense potential for India. The Indian systems of
medicine, that is Ayurveda, Yoga, Panchakarma, Rejuvenation Therapy,
etc., are among the most ancient systems of medical treatment, in the world.
India can provide medical and health care of international standard at
comparatively low cost. Most of the hotels/resorts are coming up with
Ayurveda Centres. The leading tour operators have included Ayurveda in
their brochures.
Wellness Tourism is about traveling for the primary purpose of achieving,
promoting or maintaining maximum health and a sense of well-being.
Health Tourism holds immense potential for India. The Indian systems of
medicine, that is Ayurveda, Yoga, Panchakarma, Rejuvenation Therapy,
etc., are among the most ancient systems of medical treatment, in the world.
India can provide medical and health care of international standard at
comparatively low cost. Most of the hotels/resorts are coming up with
Ayurveda Centres. The leading tour operators have included Ayurveda in
their brochures.
Golf Tourism
Sports Tourism in India is gaining interest. One of the latest trends in golf
tourism is the fact that there has been a recent surge in the interest levels
amongst youth the world over. India has several golf courses of international
57
standards. Further, golf events held in India also attract domestic and
international tourists.
Recognizing this potential to develop Golf as a niche tourism product for
attracting both international and domestic tourists, the Ministry of Tourism
had organized a one day Workshop on ―Promotion of Golf Tourism‖ on 21
January 2011. The objective of this workshop was to evolve a road map for
formulating strategies for development and promotion of golf tourism in
India.
Polo Tourism
India has rich historical ties with many of the sporting traditions including
Polo. The game of Polo originated in India and India is one of the few
countries in the world where this game is still preserved and practiced. The
Kolkata Polo Club is the oldest Polo club in the world and is 150 years old.
Therefore, Polo can rightly be termed as ―Heritage Sports‖ of India.
The Ministry of Tourism had sanctioned an amount of Rs.5 Lakh to the
Government of Manipur for organizing the 6th International Polo Festival
2012, held at Imphal from 22-29 November, 2012, coinciding with the
Sangai festival.
Meetings Incentives Conferences and Exhibitions (MICE)
In order to promote India more effectively as a convention destination, the
travel industry had, under the patronage of the Ministry of Tourism, set up
the India Convention Promotion Bureau (ICPB) in 1988, a non-profit
58
organization, with members comprising of national airlines, hotels, travel
agents, tour operators, tourist transport operators, conference organizers, etc.
The important objectives of ICPB are as under:
To promote India as a venue for International Congresses and
Conventions.
To undertake a continuing programme of creating awareness of the role
and benefits of Congress and Conventions in the context of national
objectives.
To undertake research on the international conference market for
development of India‟ s conference industry.
To diffuse knowledge to conference industry personnel through
educational programmes, seminars, group discussions, courses of study
and exchange of visits with India Associations/Organizations.
Eco-Tourism
Eco-tourism means making as little environmental impact as possible and
helping to sustain the indigenous populace, thereby encouraging the
preservation of wildlife and habitats when visiting a place. This is
responsible form of tourism and tourism development, which encourages
going back to natural products in every aspect of life. It is also the key to
sustainable ecological development.Eco-tourism focuses on local cultures,
wilderness adventures, volunteering, personal growth and learning new ways
to live on our vulnerable planet. It is considered the fastest growing market
in the tourism industry, according to the World Tourism Organization with
an annual growth rate of 5% worldwide and representing 6% of the world
59
Gross Domestic Product, 11.4% of all consumer spending.Eco- Tourism in
India is still at a very nascent stage, but there are conscious efforts to save
the fragile Himalayan Eco System and culture and heritage of the indigenous
people, which is probably the largest concentration in the world.
Film Tourism
The Ministry of Tourism has recognized films as powerful tool for the
development and promotion of destinations under Niche Tourism Product.
The Ministry of Tourism has taken following steps to promote Film Tourism
in the country:
Signing of a Memorandum of Understanding with the Ministry of
Information and Broadcasting in 2012;
Joint participation with the Ministry of Information and Broadcasting in
the Cannes Film Festival and Market, International Film Festival of
India (IFFI, Goa), and European Film Market, Berlin;
Institution of a National Tourism Award in 2012 in the category ―Most
Film Promotion Friendly State/UT‖ to encourage the State Governments
and Union Territories to facilitate filming in their region;
The Ministry of Tourism has formulated guidelines for extending
financial support to State Governments/Union Territory Administrations
for promotion of Film Tourism. As per these guidelines, Central
Financial Assistance of Rs.2 lakh per film will be given to each of the
State Governments/UT Administrations during each financial year.
60
Conclusion
To sum up, Indian tourism has vast potential for generating employment and
earning large sums of foreign exchange besides giving a flip to the country‘s
overall economic and social development. Much has been achieved by way
of increasing air seat capacity, increasing trains and railway connectivity to
important tourist destinations, four-laning of roads connecting important
tourist centers and increasing availability of accommodation by adding
heritage hotels to the hotel industry and encouraging paying guest
accommodation. But much more remains to be done. Since tourism is a
multi-dimensional activity, and basically a service industry, it would be
necessary that all wings of the Central and State governments, private sector
and voluntary organizations become active partners in the endeavour to
attain sustainable growth in tourism if India is to become a world player
inthe tourist industry. India the second largest tourism market in Asia after
China, the country was also ranked in the twenty fastest-growing tourism
destinations worldwide by the World Travel and Tourism Council. Placed
eleventh in the list, the direct contribution of travel and tourism to GDP in
India is expected to grow an average of 6.4 percent annually between 2014
and 2024. In 2013, there were 6.85 million international tourist arrivals in
India. This was a large increase from the 2.65 million seen just 13 years
earlier in 2000. The largest source market for visitors to India was the
United States, followed by the United Kingdom. Outbound travel from India
is also on the rise: approximately 860 thousand Indian nationals traveled to
the U.S. in 201
61
Chapter 6
Adventure Tourism
Adventure travelers often seek unique or new travel destinations and activities.
It is often believed that a percentage of this sector is willing to accept limited
tourism infrastructure with the promise of an exceptional, authentic experience.
Given their penchant for exploring new destinations and seeking new
experiences they are frequently coveted by emerging destinations at the early
stages of tourism development and also in more mature destinations that have
protected and/or developed appropriate product.
Although adventure tourism is recognized as an important, growing tourism
segment, primary research to quantify the size and scope of this market in the
U.S. or internationally (Schneider 2006) has been lacking. For this reason,
George Washington University, along with its partners, the Adventure Travel
Trade Association (ATTA) and Xola Consulting, sought to better understand the
adventure traveler. This study‘s focus area was limited to three major markets:
Europe, Latin Americaand North America, which comprise 70% of overall
international departures, according to the UNWTO.
The study focused on previous (actual) and anticipated (intended) travel
behavior, as well as psychographic and demographic information. This report
provides a detailed examination of adventure travelers in these three areas,
including: number of travelers, spending, and a snapshot of predicted future
trends. The information in this report may provide guidance for destination
management organizations and firms involved in marketing as well as product
development. It may be especially useful to destination management
62
organizations or state/regional tourism offices seeking to build or enhance their
adventure offerings or adventure tourism operators seeking to understand their
target market.
Methodology
This study of the adventure travel market was conducted in late 2009.
Adventure travel is an inherently subjective activity: what is adventure to
one person may not be to another. Therefore, for the purpose of this study, a
broad definition of adventure tourism was adopted: any domestic or
international trip that includes at least two of the following three aspects:
physical activity, interaction with nature and cultural learning or exchange.
Respondents were provided with a list of possible activities. They were
asked to choose what activities they had participated in. These activities
were categorized into either hard or soft adventure activities or ―other‖
tourism activities. This use of this classification system is based on
previously established research in this field. This categorization has its
foundation in academic literature and has been confirmed by previous
surveys of consumers.
Utilizing an on-line survey instrument, zoomerang.com, the survey was sent
to a representative sample of residents. The survey was completed by 855
respondents in six countries, in the following three regions: Europe, North
America and Latin America, representing about 73% of global expenditures
or 68.7% of international departures (UNWTO, 2009). Respondents choice
of activity were separated as ―hard‖ or ―soft‖ adventure building.
63
Adventure Travel Expenditures
Adventure travel is resilient and is trending upwards even in difficult
economic times;
Adventure is expanding into a broader range of activities;
The ―soft‖ adventurer spends the most per trip, (excluding airfare);
The value of the global adventure market is $89billion;
All adventure travelers spend significant amounts of money on
equipment & apparel pre-trip.
Behaviors, Psychographics and Demographics
Adventure travelers are equally likely to be single or married, and male
or female. The majority are between 35-47 years old. Industry followers
familiar with research from the Adventure Travel Trade Association may
expect a higher percentage of baby boomer travelers. However, this
study reflects not only consumers of tours but adventure travelers in
general; it includes people who organize their own trips and therefore
more likely to be younger with more time to plan.
After ―local newspapers,‖ the most widely read publication by adventure
travelers in North America was People Magazine, followed by National
Geographic.
Compared to ―other travelers,‖ adventure travelers place importance on
exploring new places and meeting and engaging with local cultures
while on vacation; this confirms earlier research by ATTA which found
that travelers were craving more cultural interaction on trips (ATTA,
2006).
64
Compared to other forms of pre-trip research, the majority of adventure
travelers (35%) conduct research online, but they also consult friends
and family.
Profile of Respondents
Who are adventure travelers? They are fairly evenly split male to female,
even within in category of ―hard‖ adventure sports. Soft adventurers skew
slightly more female, but not as much as other types of travelers who are
predominantly female (62.3%). The average age of an adventure traveler is
35 (again, this may seem low from the perspective of adventure travel tour
operators, however, this number reflects the overall adventure traveler, not
just consumers of tours), slightly younger than the ―other‖ traveler who is on
average 42.Adventure travelers are more likely to be single or married; less
than 10% are divorced or separated. They are also more highly educated
than other types of travelers, with 70% of hard adventures having
postsecondary education and 63% of soft adventurers having post-secondary
education. 47% of other travelers have a two year degree or higher.
Considering these demographic trends, it is unsurprising that adventure
travelers also have higher levels of household income.
Figure no. 6
65
Interestingly, while many hard adventure travelers clearly view international
travel as important (75% have valid passports), among soft adventure
travelers, only 56.5% have valid passports. From this we can theorize that
among soft adventurers, many are engaging in activities domestically. The
table below shows the percentage of adventure travelers who hold valid
passports.
Size of Adventure Market
In the past, the definition of what constitutes an adventure trip or adventure
travel has been ill-defined; with influential and respectable entities
disagreeing on what to include or exclude in the definition. This study‘s
definition is based on past literature that classified specific activities into
two segments: hard adventure and soft adventure. In certain instances, they
have been combined in ―all adventure.‖
The central question is — how many people are taking adventure trips?
Applying a strict definition based on activities done while on vacation,
allows an answer to this question to emerge.
Hard Adventure
Hard adventure includes trekking, climbing (mountain, rock and ice) and
caving. These activities are high risk and require a high level of specialized
skill. Unsurprisingly, these represented small percentages of the population
but still uncovered a sizable market. The trend over the past three years
66
indicates that the number of hard adventure trips has held steady, at around
2% of the population. However, respondents in Latin America and Europe
indicated that they intended to take a hard adventure trip for their next
vacation. In North America, the trend was opposite, and the percent of
people expressing the intention to take a hard adventure vacation dipped
slightly.
Soft Adventure
The number of soft adventure departures represents a substantial percentage
of trips worldwide. Interestingly, compared to North Americans and
Europeans, Latin Americans are taking the most adventure trips at 35% of
total outbound travelers. On average, 25% of international trips taken from
all three regions are soft adventure trips. Soft adventurers are an important
market for destinations, gear companies and tour operators. They are more
likely to try different activities and destinations than hard adventurers. They
are also more likely to respond to targeted marketing.
In all three regions — Latin America, North America and Europe — soft
adventure increased steadily over the traveler‘s past three trips and
continued to do so with future travel intentions. Around 43% of Europeans
indicated that for their next vacation they would take a soft adventure trips.
67
Adventure Activities (Risk/Satisfaction)
Adventure, by definition, involves an element of risk. Past literature on
adventure travel has suggested that location can be an indicator of adventure
based on the perceived or real riskiness involved in that place. However, this
survey finds that the perceived level of risk associated with the activity
performed while on vacation is much more significant to travelers.
Adventure travelers rated the level of risk associated with their activities
higher than other types of tourists, but did not extend this assessment of risk
to their destinations. Perhaps adventure travelers are aware of the safety of
their activities but less sensitive to destination safety; this is an area for
further research.
Implications for Marketers
Findings indicate that adventure travel is diffusing in the market. More
people, who in the past chose to engage in other types of travel, are
indicating that on their next trip they will be more adventurous in their
activity and destination choice. Product developers and marketers should
capitalize on these dreamers and create soft options to ease them into the
world of adventure travel. This will mean catering to their trip length and
expectations at the destination. Marketers should also appeal more to
mainstream travelers, and advertise or generate editorial coverage in
publications such as People Magazine.
68
Adventure travelers are early adopters: they are more likely to go to a new
destination or try new products before most people. But they still take their
cues from sources such as magazines, tour operators or even social media
blogs and networks. However, messages need to be specific and speak to
what this market is truly seeking: meaningful connections with the place and
authenticity. These messages can be placed where travelers least expect
them — at their yoga studios and their organic supermarkets.
One example comes from Thai tourism, which has disseminated tourism
brochures throughout many Thai restaurants in the U.S. Destinations and
operators may consider putting more effort into press FAM trips. Reading
story in a magazine or newspaper produces higher engagement than
traditional advertising print media. Online ads can be targeted more
effectively, however some research (eMarketer.com) suggests that online
users are beginning to ignore them, so choose the forum carefully.
Figure no. 7
As for seasoned adventure travelers, they are passionate about and dedicated
to this mode of travel. They are always searching for new destinations and
value online reviews or comments (even by strangers) and the opinions of
friends and family. They often use official websites. Destinations and
69
operators should invest in understanding keywords and optimizing their sites
for searches in the key engines. Ensuring that a website is findable in all
languages that travelers may be searching in is an important consideration.
Segmentation
There are many ways to segment the adventure travel market. Recognizing
increasing specialization in the tourism industry along with the shared values
of adventure travelers, many industry players have moved to a
psychographic segmentation approach. This means organizing adventure
travelers by their specialized interests such as kayakers or birdwatchers.
From there, specific marketing tactics can be developed with the addition of
demographic segmentation. From a demographic perspective, there are two
main categories of adventure travelers:
The younger generations, GenY (people aged between 18 and 30) and
GenX (people aged between 31 and 44). These people have often
traveled throughout their youth, studied abroad during college and are
adept at navigating the Internet to find good deals and new destinations.
This segment can further be broken down into two groups that are of
interest to the adventure tourism industry:
High disposable income, time poor.This group is already in the
workforce and has a limited amount of vacation time each year. They
will seek to fill as much as possible into their vacation time, often
splurging on what they view as once in-a-lifetime opportunities, such as
hiking Mt. Kilimanjaro. This group is more likely to book through a tour
70
operator. They are mostly likely reached through social media —
destinations and companies should monitor the online conversations
taking place around their brands to capitalize on this trend.
Smaller budget, extensive time.This group engages with the
communities and places they go. Many young people take the
opportunity to travel for an extensive period of time after two or three
years in the workforce. With low budgets and big dreams, they travel
deeply in the communities they visit. Seeking authentic experiences,
they are more likely to go trekking or take long train journeys, such as
the cross-Siberian railway. Budget and value will be the key selling
points for this group, although sustainability/responsibility plays a
surprisingly high role in decision-making.
The ―baby boomer‖ (people aged between 45 and 64) adventure traveler
is frequently awakening (or re-awakening) to the adventure travel
experience later in life. Many find themselves with extra time and money
as their children have moved from the house or they enter retirement
with good health and a curiosity to do things they couldn‘t during their
working years. They have large budgets and value adventures combined
with a cultural experience. They also book through tour operators and
ma take two to three international trips a year. Increasingly, they are
bringing grandchildren along. This group is inspired by their reading
material, television series (Survivor, Amazing Race) and especially
stories from friends and families. Offering something unique and
difficult to attain will be key with this group. ―Experience‖ and
―authenticity‖ are keywords/concepts that resonate with this group.
71
Conclusion
The findings of this study support the notion that adventure travelers
represent a significant, growing market. This research indicates that the
value of the global adventure market is $89 billion. Adventure tourism does
not appear to be a trend specific to any one geographic area, as the results
indicate similar findings in North America, Europe and Latin America,
where increasingly, travelers continue to explore deeper into communities
and seek to connect with nature. Even in the midst of growth, we found
some adventure travelers do not hold valid passports and are not necessarily
traveling farther from home to get an adventure experience.
Various trends around adventure tourism are positive: more people intend to
take adventure trips and these people intend to spend more than they have on
their previous vacation. Adventure travelers are specialty travelers and thus
spend more than the average traveler on a trip.
Destinations and marketers should position their marketing and branding to
attract this growing and lucrative segment. Product development and
branding should speak to their desire to have natural, cultural and active
experiences, and to engage more deeply with local communities.
We encourage marketers to also focus on the ―Other Travel‖ market, which
is moving towards more adventurous travel. They may return to the same
countries that they have previously visited on a less adventurous vacation,
but this time try more adventurous activities (safaris, visiting cultural sites).
This market offers tour operators the opportunity to re-position themselves
to the market. Engage in niche marketing or develop cross marketing
72
between tour operators, specifically targeting past clients. This also speaks
to the opportunity for adventure operators to partner with mass tourism
outlets such as resorts, hotels, cruise lines to offer smaller day trips to entice
travelers with something interesting and outside the bubble. Key
characteristics for this group will be shorter trips, perception of safety, and
unusual opportunities.
Interestingly, over the course of their past three trips, respondents have
participated in the same type of activities on their vacations. They indicate
that they intend and desire to become more adventurous, but it remains to be
seen if they will in fact select a more adventurous option when it comes time
to planning their next vacation. This presents an opportunity to marketers to
capitalize on these travel aspirations. This study illustrates that the adventure
market is sizable, at 26% of the traveling population. In addition to revealing
the actual size of this market, this study calls into question the often,
generally accepted industry profile of the adventure traveler. A common
assertion from within the adventure industry is that the typical adventure
traveler today is likely to be over 50, with a secure income and desire to
explore and experience new places. Based on this research and others,
however, we find the average adventure traveler age might be closer to 40,
and although these people engage in adventure activities, they might not be
paying tour operators and guides for their experiences, and hence not
recognized, or served as an important market segment by the industry.
Adventure travel operators and destinations may use this information to
consider domestic and regional market potential. During the current
economic situation, the cost of an international flight may make travel cost
73
prohibitive to some people, thus domestic or regional, closer to home
adventure travel may provide an attractive alternative for many and also
provide as an introduction to an experience they may want to try abroad in
the future.
Destinations may wish to also consider how the adventure traveler is
defined. People who engage in a broad variety of activities consider
themselves to be adventure travelers even if they are not participating in
adventure activities each day of their trip. For many countries, the size of
this market is probably more significant than currently estimated.
Overall, this piece of research provides further insight into the size and
shape of the adventure travel industry. The findings support the notion that
the adventure travel market constitutes an important, contributive, growing
niche within the economic powerhouse that is travel and tourism.
Adventure tourism involves visiting a region almost unaffected by human
impact, with specific features for engaging in risky sports that require
physical effort relatively high performance and greater risk taking.
Adventure travel is associated with that tourists could discover new things.
Therefore, they did travel the world to be so large that it knows the existence
of other people, to discover continents, peoples. In a journey the tourist
knows he is willing to maximum responsiveness, has around strangers, new
places and begin to analyze, observe everything to teach and protect, so
travel is a form of knowledge, complicity and transparency. It is a method of
self-recovery, reconciliation and restoration, learning and accumulation.
74
Chapter 7
Internet Usage, Online Travel Industry In India, Key Success Factors
When Applying E-Commerce To Travel Industry
7.1 Internet Usage In India
7.2 Scenario Of Online Travel Industry In India
7.3 Key Success Factors When Applying E-Commerce To The Travel
Industry
7.4 Traveler‘s Trip Planning Behavior
7.5 The Future Of E-Commerce In Travel
7.6 The Effect Of E-Commerce In Travel
7.7 E-Commerce In Airline Business
7.8 E-Commerce‘s Impact On The Travel Agency Industry
7.9 Information Technology In The Tourism And Travel Industry
75
Chapter 7
Internet Usage, Online Travel Industry In India, Key Success Factors
When Applying E-Commerce To Travel Industry
7.1 Internet Usage In India
The latest round of I-Cube, a research conducted by IAMAI and IMRB
International in June 2013, indicates that the Internet usage in India has gone up
with more and more Internet Users using the Internet on a regular basis. In
June2013, India had 190 Million Internet Users. Of this 130 Million belonged to
Urban India and the rest 60 Million were from Rural India. In October, the
number of internet users reached 205 Million and is estimated to reach 213
Million by December 2013. The number of internet users in urban India is 137
Million in October 2013 and is estimated to touch 141 Million by December
2013. In Rural India, there are 68 Million Internet users in October 2013 and
will reach 72 Million by December 2013. Mobile Internet, too, has garnered a
huge base among the Active Internet Users. In India, there were 91 Million
users accessing the Internet on Mobile devices in June. In Urban India, there
were 70.2 Million Mobile Internet users in June 2013. This number rose to 85
Million in October and is estimated grow by 47% and reach 103 Million by
December 2013. Rural India is not that far behind in this regard with a base of
21 Million Mobile Internet Users in June 2013. It reached 25 Million in October
2013 and will touch 27 Million by December 2013.
76
Purpose Of The Internet Access In Urban India
Of all the Active Internet Users surveyed, it has emerged that for close to 90%
of the respondents the prime use of Internet is Online Communication and under
this e-mail communication commands the lion‘s share of 78%. Social use the
Internet for Entertainment. Apart from Networking continues to be the rage with
75% of the users engaging in it actively. 69% now listening to songs and
watching videos online, sizeable numbers are downloading mobile VAS. Online
shopping has also picked up in a big way. Every second active internet user
claims to have bought something or the other over the Internet.
Figure no. 8
Purpose Of The Internet Access In Rural India
For the Rural Active Internet User, Entertainment is observed to be the main
purpose of Internet access and a huge 84% of them have used it primarily for
entertainment. Majority of the users like to access Music/ Videos/ Photos and
Movies for Entertainment. This is followed by downloads of various Mobile
Value Added Services as a source of entertainment. Online Communication is
77
observed to be the second most important purpose of accessing internet for
Rural India. Within the Online Communication category, E-mail continues to be
the most important reason for using the Internet with 43% using it. Number of
users engaging in text chat has also gone up significantly compared to last year
and is used by 22% of them. Compared to last year, the awareness levels of
Online Services and Social Networking is observed to be higher in 2013. The
usage also subsequently has increased over 2012 with 62% and 52% of them
having used Online Services and Social Networking respectively. Further, over
half of the rural population is observed accessing Internet for social networking
purpose. Also, maintaining last year‘s trend, most of the users are seen availing
online services related to job search on the Internet. This is followed by online
news. Although the awareness of e-commerce is moderate, we do not see much
usage primarily because of lack of knowledge. Although a low overall share,
Railway Ticket Booking is the most performed activity when it comes to Online
Shopping, which has also seen a significant growth over the last year. With a
very low awareness level, Online Transaction is still an area about which the
population needs to be educated. Thus, even though there is awareness, there is
a pressing need to educate and inform the user of the benefits of the internet
services to drive growth in internet usage
78
Figure no. 9
7.2 Scenario Of Online Travel Industry In India
The report begins with an introduction to the e-commerce market in India and
offers information regarding the market size and growth. It also gives a break-up
of the revenue for the e-commerce market. It goes on to explain the market
structure of the e-commerce market and also provides an overview of the factors
which drive this market. In the market overview section the structure of the
online travel market is explained. Market size, growth and the break-up of the
revenue generated is also provided for the online travel market. Increasing share
of online travel market as well as the prevailing commission structure has been
highlighted. Porter's five forces analysis gives an overall picture of the online
travel industry and helps to understand the major influencers. The business
model explains the role of global distribution systems and their role in the online
travel industry. This section also explains the various incentives provided by the
OTA's to attract more customers and the operational edge OTAs have over the
traditional tour operators. Drivers include factors such as proliferation of the
79
internet, especially broadband, which has increased online traffic considerably.
Rising disposable income has also acted as a driver for online travel portals.
Indian railways online portal has proved to be extremely efficient and user
friendly, instilling confidence among people to book tickets online. Other
drivers identified include rise in low cost airlines, which has paved a way to
travel by air for the large middle class segment in India thus increasing traffic to
these online portals. Secure payment mechanisms have given people the desired
confidence to carry out transactions online. On the other hand tremendous rise
in medical tourism has led to influx of foreign travelers to India which again
gives rise to increased traffic. Challenges identified include stiff competition
coupled with low margin and high operating costs which has caused profit
margins to shrink. In addition, limited awareness about portals adds to the woes.
Trends identified are emergence of value added services among various OTAs
including discount vouchers to woo customers and gather a large market share.
Emergence of corporate packages is another trend identified. Many OTAs are
following a hybrid model constituting online and offline stores to penetrate the
market even further. OTAs are also moving towards better technology so as to
cater to the increased traffic and offer a user-friendly experience to its clients.
They are also becoming more responsible and addressing customer queries and
complaints swiftly through social media interfaces. It has been identified that
OTAs are also a means of information verification and cross checking among
customers. One more trend identified includes an increase in PE/VC
investments in this sector.
80
Figure no. 10
81
7.3 Key Success Factors When Applying E-Commerce To The
Travel Industry
As the Internet has developed, more and more consumers can now find travel
information or even purchase travel through the Internet due to its convenience
and capacity for huge information, and this has led to many traditional travel
agencies introducing e-commerce. The companies can combine technology and
the characteristics of the travel industry well, and can make the best of the
Internet and handle their relationship with consumers precisely, effectively
enhancing the advantage of competition. However, travel agencies face large-
scale key success factors when developing e-commerce for the travel industry,
which means the agencies can‘t focus on the important things, and this can
cause disorder and inefficiency. Therefore, these key success factors should be
classified in a proper way and an index of these factors should be established
according to their importance. These can be referred to when a company draws
up a plan, helping the company allocate their resources rationally, enabling them
to meet their consumers‘ demands efficiently and increase profits. Nine key
success factors for e-commerce in the travel industry, including enterprise
culture, e-commerce team, increasing customer value, internal processes,
information appliance, product planning, supplier system, website content
planning, and physical and virtual channels.
82
7.4 Traveler’s Trip Planning Behavior
Travel provides people with an escape from their everyday life. In fact, this
notion of escape is a need of travelers that is continually revealed. A German
research project asked about vacation motives. The answer ―to relax‖ was given
by 71.7 percent of respondent and ―to escape from daily routines‖ was stated by
66.9 percent. In addition, a Canadian study found that one of three common
factors motivating travel was ―the need to escape, followed by ―To experience
new and different cultures‖ and ―jetsetting, prestige seeking.‖ The big question
is how are the goals that consumers want to achieve from their travels translated
into decision-making? With tourism being a highly competitive industry,
product differentiation that can offer travelers the experience they have longed
for is a key factor. There is very little differentiation in the actual travel product
– the offerings of tour operators, travel agents and other travel professionals can
often be interchangeable So, the key is to hit on some psychological need or
motivator that sets a particular product offering apart, i.e. added psychological
value. Many travel professionals may think, rightly so, that making a trip as
luxurious as possible is the way to the travelers‘ heart. Adding value is
something that travel professionals are always striving to do in order to gain a
competitive advantage. A more luxurious hotel, first-class airfare, private dining
options are all value-added options that consumers are offered on a regular
basis. In many cases, this strategy can be very successful. The Psychology of
Travel takes a look at general consumer behavior and how that affects peoples
desire to travel. The area of consumer behavior is highly researched and studied
83
as marketers continually review consumer behavior and how it affects purchase
decisions.
The actual psychology behind consumer behavior is based on several factors –
ego involvement, loyalty and commitment, family decision-making, influence of
friends and relatives and novelty seeking. All of these factors have been studied
by psychologists to better understand the forces behind these behaviors.
Ego Involvement
The largest portion of psychological research on travel and tourism is in the area
of ego Involvement. As stated in an earlier section, tourists are often highly
involved in the decisions surrounding their travel experiences. With today‘s
access to information, the industry is facing arguably the most informed
consumers ever. Acquiring knowledge and being an active participant is an ego
boost for consumers. They want the product providers to know that they are
smart, informed and will not be sold something that they do not want. One great
example which most tour operators, tour suppliers and destinations are keenly
aware is the rise in travel planning and booking over the Internet. Sites like
Expedia, Travelocity and others have placed the product out there –at often
incredible prices –and put the consumer in control. Often times this even turns
into gamesmanship among the traveling public. Consumers are interested in the
price that others paid for the same flight, hotel room, cruise and will compare
the deal they got to those of their fellow travelers –priding themselves on
finding the better price or vowing to do more research and get a better deal the
next time. One can see that the majority of consumers not only think of
84
themselves as well informed and in charge their life, they also believe they are
smarter than most other people. This is a huge psychological consideration when
working with and selling to these consumers. Their ego and belief in their own
instincts and intelligence is very important –and very high! This should not be
compromised or depleted by the travel professional‘s treatment of them as an
informed consumer.
Loyalty and Commitment
Price loyalty, in many respects, is replacing brand loyalty. Consumers want to
participate in the creation of product, no longer a ―one size fits all‖ world. They
also want to turn existing brands into their own and control the transaction. All
of this has been influenced by the amount of information supplied today via the
Internet. In the travel industry, loyalty clubs such as frequent flyer/traveler
programs are designed to create this commitment from consumers. This is
related to the above statement of price loyalty replacing brand. Consumers will
go with the best deal, not necessarily the same airline, hotel or tour operator they
used last time. Therefore, companies attempt to hold customers by making it too
expensive for them to switch. For example, if a traveler earns points or rewards
by staying at a particular hotel or traveling with a certain company, a price
difference of $50 or $100 is not enough to lose the perceived value they have
within the rewards program. Therefore, the company keeps the consumer not so
much for the loyalty to their brand but more to the rewards the consumer will
ultimately receive. There are a number of strategies that can be employed to
obtain loyalty from consumers. As all business people know, it is cheaper to
85
keep a customer than to get a new one. However, loyalty in today‘s competitive
environment is hard to come by. By studying psychological factors that play
into a consumer‘s loyalty and commitment to a company and its product,
programs to garner that loyalty have a better chance of succeeding. Everyone is
very aware of the rewards programs developed by airlines and hotels. However,
tour operators could consider similar loyalty programs. Rewarding repeat
travelers with discounts or a points system whereby the traveler can earn points
toward extra amenities or prizes like digital cameras, travel books, etc. can be as
effective as expensive mailings or other marketing campaigns designed to retain
customers. While many tour suppliers already have programs, those that do not
could follow these models to develop a loyalty program.
Friends, Family Influence
As destinations, tour operators and tour suppliers spend millions of dollars to
influence buying decisions, it is always smart to keep in mind that advice from
family or friends is a huge influencer in buying decisions. These are people who
are trusted by the consumer and, in turn, their suggestions are valued.
While most research on family decision-making as it relates to travel focuses
more on how travel brings a family together and how to make trips ―kid
friendly‖ to attract the family market, it would be smart for travel professionals
to understand that kids today have influence and more of a voice in decisions
than ever before. Therefore, studying the psychological motivators of children
and their demographic is as necessary as studying that of their parents. Not only
does a company have to be concerned with influencing the buyer directly, they
86
must also overcome any objections or previous bad perceptions that any number
of friends and family members may have. However, if these influencers are
identified and considered in the equation, the company will have a better shot at
understanding the buying behavior and overcoming some obstacles.
Novelty Seeking
This aspect of consumer behavior is probably the most well known to travel
professionals. It is no shock that the search for new experiences is a key
motivator in the reason people travel. Researchers have also stated that
vacationers taking novel trips (those to places that are not familiar) seek more
advice on the destination and spend more time and money during the trip than
do travelers who take more commonplace trips. This is in an attempt to provide
information that will help tour operators design more creative itineraries and
look for unique destinations and attractions. All of this will add to the novelty of
a travel package and pique the interest of travelers, especially with the arrival of
the Baby Boomers into today‘s new senior market and the generations behind
them that have disposable income and are emerging as the new consumer. These
groups do not want to take the same vacation every year –a majority of them are
well traveled from years of family vacations and work-related activities that
have taken them to any number of destinations. Therefore, they must find
motivations in new, unique experiences.
87
What does this mean to me?
Understanding consumer behavior is one of the top jobs for all marketers. To
sell product, one must understand their consumer and what motivates them.
There are any number of factors that affect a consumer‘s decision making.
Travel professionals not only have to appeal to the ego of the consumer with a
product that makes them feel important and in control, they must also deal with
outside influencers –like friends, family, co-workers and others. Additionally,
loyalty today may be more fleeting than in the past with consumers often
looking at price over brand. With that being the case, there are ways to make
your company a bigger part of the consumer‘s life. The number one way to
accomplish this is through loyalty programs. While tour suppliers have been the
ones to really incorporate this strategy, tour operators could utilize these models
and develop a customer loyalty program that could prove to be extremely
successful.
Profile Of Leisure And Business Travellers
Leisure travellers seek travel inspiration online, anticipate more family travel,
and want to stay connected while traveling. Below graph shows the key
parameters that leisure travellers consider while selecting a travel destination.
88
Figure no. 11
When it comes to business travellers, they continue to prioritize brand sites,
price and convenience. 65% of business travellers book travel directly on brand
sites more often than via OTAs, this is a 11% increase from 2012. For business
travellers, the top three key requirements when selecting travel include:
Air travel
Price
Most convenient departure/arrival times
Fewer stops, better connections
Lodging
Price
Most convenient location
Past experience with establishment
Car Rental
Price
Past experience
Reward/travel points
89
Apparently, business travellers are more inclined (compared to leisure
travellers) towards loyalty program memberships while booking their travel.
Figure no. 12
Travel Inspiration And Planning
Internet remains as a key channel for both trip inspiration and planning. In case
of trip inspiration, close connections like family/friends/colleagues take the top
spot.
Figure no. 13
90
Travel review websites take the sixth and seventh place among leisure and
business travellers respectively
Figure no. 14
7.5 The Future Of E-Commerce In Travel
Many opinions were being suggested about what the future of e-commerce in
tourism sector could become in few years, greater percentage explained that the
conventional commerce may not exist anymore in couple of years because of the
recent awareness especially almost all the youth of nowadays are able operate
computer at average level and also the sound educated and informed tourists
seem to have new types of attitudes and tastes. Those mentioned are the groups
that make use of internet more thoroughly than the other groups, so therefore
with them data and information will become factors for the tourism industry just
because customers will make verdicts hinge on information and moreover
information this becomes more transparent. Reports showed that in the nearest
future the advance of information and communication technology (ICT) will
91
lead to a market expansion, resulting in a change in the arrangement of the
tourism industry which will see the emanation of online tourism, destruction of
conventional travel agencies and also business alliances distributing information
and resources. Very soon, the request for diversification will be all over in the
travel tourism world and also to be noted is the personalization and
apportionment of the tourism consumer groups therefore the service-based
travel e-commerce will provide the personalized and value-added service that
could also enhance the quality of tourism distribution, which can quickly turn
tourism to emerge as a fast economic growth area in the range of national
economy. Travel e-commerce is becoming popular nowadays and still remains
the future since the internet, computer, electronic communication technologies
development are improving yearly because travel e-commerce is the only means
that participates in a commercial enterprise whose main objectives are
information publishing, electronic data exchange, online ordering, e-accounts
and online payment services regarding tourism enterprises. It remains a key
growth point in tourism economy.
7.6 The Effect Of E-Commerce In Travel
Travel e-commerce is a new method of commercial enterprises, which
practically Involves publishing, electronic data transfer, online ordering,
electronic accounts and online payment services which are related to tourism
enterprises. This kind of e-commerce has brought tremendous changes to
nations in the 21st century, and has since turned a new growth point of tourism
economy in key nations.
92
Travel e-commerce application is the continuity process of logistics, customer
succession and information run in tourism-related industries, in which all
attendants have a different focus in relation to business investment and access
gain. It is also an area of e-commerce that mainly enhances internal and external
connectivity of travel associates by advanced information technology. This
equally means within different tourism establishments, suppliers and tourists, an
effective communication and purchases could be augment. Interestingly at the
same moment, the internal processes of the enterprises and knowledge
distribution could also be bolstering. Tourism e-commerce has got back in shape
after ten years of continual development, however it has seriously affected the
traditional tourism enterprises especially in the developed world, but today not
many of the traditional merchants have realized the need for internet marketing
while a high percentage still pays attention to offline advertisement modes, such
as newspaper and distribution of travel brochure to various target groups which
require a high expenditure, which has been a difficulty to the firm‘s good sales
performances. With the lack of network understanding many of the traditional
travel companies still prefer managing internal business with the usage of
manual measurement, even though a couple of the agencies recognize the
importance of network usage, it is quite preferable to many of these companies
to stay in the primary stage with limitation to easy data processing and report
processing which does not near advantages of network.
7.7 E-Commerce In Airline Business
In the business world, airlines could be the biggest winner of the Internet, or e-
commerce, with or without the involvement of a ―government.‖ This is due to
93
the nature of airline business and its cost structure. An airline‘s costs usually
consist of two parts: direct operating costs and indirect operating costs. Direct
operating costs — such as aircraft, fuel, and salaries — make up about 60% of
the total cost, and indirect operating costs — such as distribution costs — about
40%. Direct operating costs are more or less ―fixed‖ and there is not much an
airline can do to cut them down. So most airlines would focus their cost-saving
efforts on reducing indirect costs. It is in this aspect that e-commerce could
potentially play an important role. A major part of an airline‘s indirect cost is its
distribution cost, and it has the following components:
Reservation system cost
Sales offices (stations) cost
Advertising and sales promotion cost
Agent fees and commissions
Ticketing fees
Traditionally, airlines pay 3-25% commissions to travel agents who sell their
tickets, in addition to spending a huge amount of money and resources on
selling and issuing tickets of their own. To reduce distribution costs, airlines
would have to turn to e-commerce, or e-distribution channels, to limit the
number of their sales offices and to reduce their dependency on Computer
Reservation Systems (CRS) and sales agents. At least in the USA, big airlines
have already been doing that. They have set up on-line sales networks, and
almost every airline‘s web site offers on-line booking functionality. Some
airlines jointly set up on-line booking sites to offer B-B, B-C, and other travel-
related services.
94
Travel websites (such as Priceline) and Internet booking engines (such as
Expedia) also offer convenient on-line bookings.
Airlines sell their product at different prices. The same seat in the same airplane
can fetch different prices depending on when and where it is sold. Generally
speaking, the earlier you buy a ticket, the cheaper it is. Moreover, airline seats
are time-sensitive and perishable—seats that are not sold at time of departure
become ―spoiled‘.‘ On the other hand, seats sold too early at discount prices
may dilute revenue. In order to prevent late-coming high-yielding passengers
from buying low-fare tickets, airlines impose conditions or ―limits‖ on different
low-fare tickets depending on a number of factors, including:
Length of stay—for example, whether or not there is a Saturday-night
stay.
Advance purchase, or how early the ticket is purchased. Usually a
fourteen-day advance purchase is required in order to get a discount
ticket.
Frequent Flyer Membership status—if you fly a certain airline
frequently, you receive certain special treatment including getting free
tickets.
Alliance/Code share deals—more and more airlines have entered
―alliances‖ or are sharing their inventory over certain routes to reduce or
avoid competition.
Point of sale (POS)—the price of an air ticket differs depending on
where you purchase it.
Group price—groups usually get a discount.
95
Booking agents‘ special offers—certain travel agents get special offers
from the airline & sell these tickets at a lower price to the passengers.
These conditions change from season to season and from market to market, as
air traffic demands fluctuate from time to time and from market to market. The
fact is most airlines do not have the technology to handle all these ―conditions‖
fast enough to accommodate Internet bookings. As said earlier, airline inventory
is time-sensitive and quantity-limited. If the airline sells them too cheaply, it
loses revenue; if the fares are too high, they may remain unsold when the plane
departs. Without knowing when to sell a ticket at what price under what
conditions, an airline cannot price the tickets on line correctly.
In order to fully realize the benefit of e-commerce and to avoid the potential
revenue dilution, airlines are turning for help to new tools such as revenue
management systems and Internet distribution systems. Revenue management is
also called revenue optimization or yield management. It uses computerized
system to analyze historical booking trends and current bookings to forecast
passenger traffic demand for each flight and each market segment. In other
words, it forecasts passengers‘ willingness to pay at each price level. Based on
the forecast and given fares of the booking class, it recommends an optimal
number of seats to be allocated to each booking class in order to maximize
revenue.
Many airlines are using revenue management systems for such a purpose. But to
transmit the recommendations of the revenue management systems on-line
requires an automatic distribution mechanism. Such a mechanism should
instantly determine the flights, itineraries, prices, and number of seats to put on
the web, as well as to monitor market/competitive activities. Only under these
96
circumstances would the airline be able to dynamically, optimally and
proactively price all seats in response to requests that may come at any second.
Only in this way can Internet bookings prevent revenue dilution and
tremendously save distribution costs and transaction costs, as well as generate
customer satisfaction.
Admittedly, e-commerce has the potential to change consumer behavior or
customer culture, and to bring about a commercial revolution at least in the
airline industry. But at the moment, e-commerce brings greater benefits to the
consumers than to the airlines, which explains why many airlines are reluctant
to take their business on-line. Other industries may differ from the airline
industry, and their e-commerce practitioners may not have to deal with as many
complicated factors. But it is safe to say that any industry will have its own
problems, and that the promise of the Internet is almost always mixed with
certain risks. We cannot expect e-commerce to grow as fast as the Internet age
seems to promise.
One of the risks of e-commerce is that it increases the chance of making wrong
decisions. If something goes wrong, the damage would be huge and swift. This
destructive power of technology, yet to be emphasized, has been learned by
some companies at high cost. Another risk is the impact it may have on the
existing organizations and business patterns. Once e-commerce is implemented,
the airline would have to change its business procedures, even its organizational
structures, accordingly. These changes could be painful.
97
7.8 E-Commerce’s Impact On The Travel Agency Industry
The travel agency industry‘s response to E-commerce offers insight into how
other mature industries populated with small businesses will react to E-
commerce developments. In particular, industries that can complete transactions
electronically and are served by numerous small outlets share two key
characteristics of the travel agency industry. One possible example of a similar
industry would be the insurance industry.
E-commerce combined with new communication technologies, changing market
demographics, and ongoing travel industry developments, is reducing the need
for intermediaries in the distribution of travel services. E-commerce enables
travel providers to directly transact business with millions of individual travelers
who are increasingly more experienced at using the Internet and other new
communication technologies.
The traditional travel agency industry still accounts for the majority of total
travel sales. Airlines continue to acknowledge this fact that most of their ticket
revenues are generated through the travel agency channel.
In addition to distributing travel services, travel agencies provide other value-
added services such as making travel recommendations, managing corporate
travel accounts, and in general, aiding customers with a variety of issues related
to the purchase of travel services. These services are providing an increasingly
important source of fee-based revenue to offset declining airline commission
revenues. However, technology advances have begun reducing travel agencies
exclusive role in providing many of these value-added services. Online
corporate travel management programs are now duplicating services previously
provided by travel agencies. Similarly, the Internet‘s information exchange
98
capabilities give travelers wide access to travel recommendations, reviews,
travel guides, and even interactive multi-media promotions of travel
destinations. One key question for these agencies to consider is whether the cost
of website development and advertising is a onetime investment, or if these
costs will remain a significant and ongoing cost of conducting business online.
With the huge amount of information on the Internet, search has become
increasingly important in traveler‘s use of internet for travel planning. Online
search engines provide the means for travelers to access travel products in a
comprehensive way. E-commerce is bringing new business opportunities to the
global travel and tourism industry. Tourism-related institutions and Internet
companies are joining to tap the potential market created by e-commerce. This
paper is an historical analysis of penetration of e-commerce in the travel and
tourism industry. The analysis identifies a number of consistent customer
experience across different channels, among airlines, and involving both
international and domestic travel in emerging economies with limited internet
access. It is argued, from this analysis, that there area number of emerging new
technologies such as mobile devices and global positioning systems which need
to be taken into account and effects systematically assessed. The paper
concludes that a major challenge facing the industry is to assess the impact of
these technologies on different aspects of the travel industry and to find out how
much value-added services they actually provide to consumers.
7.9 Information Technology In The Tourism And Travel Industry
Information is the key element in the tourism industry. Tourists want to know in
advance about the attractions and the facilities of a particular destination. The
99
tourist also wants to know other related information of his/her visit to make the
same safe, secured and enjoyable. As a result, dissemination of information on
travel and tourism-related products and services are highly important. Using of
information technology to create trust between tourists and entrepreneurs,
developing e-commerce capacity, marketing, and promoting the authorities to be
the e-marketplace for tourism is the need. The most important benefit associated
with the new technologies is the supply of information. The role of ICT in
tourism industry cannot be underestimated and it is a crucial driving force in the
current information driven society.
Information technology has introduced e-commerce through the development of
the Internet and the World Wide Web. These developments have impacted both
consumer and industry behaviors in the areas of travel and tourism. Consumers
have more options regarding vacation and budget planning. 95 per cent of web
users have searched the Internet to gather travel related information. 93 per cent
visited destination web sites and nearly one half used e-mail to gather travel-
related information. Almost three- fourths of online travel buyers used search
engines prior to making their purchases. In addition to the Internet, technology
gadgets such as GPS 's, mobile phones, smart phones and hand-held devices
have improved consumers' tourism and travel experiences. Information
accessibility regarding travel, destination, bookings, payments, hotels,
attractions, and the quality of maps are areas for improvement.
Information and Communication Technologies (ICT) have affected the travel
and tourism industry for at least 50 years, particularly in the areas of automation
and networking of distribution channels. Local travel agents that used the global
distribution system have adjusted marketing strategies and expanded services in
100
order to realize increased competitive advantage. Local tourism business
comprehension and utilization of the Internet has permitted increased visibility
in additional market segments. Businesses have increased services globally by
registering with online travel agents, online advertising agents, and inter-
organizational reservation systems. In addition, many businesses have
developed websites which offer planning, booking and payment services online
for added consumer convenience. Businesses that have not made use of the
Internet cannot compete and therefore they must grasp the opportunity before
they are out-competed by those that have.
Information technology has played a central role in the growth and improvement
of the travel and tourism industry. The lasting effects of technology are
improved information accessibility, a higher level of competition, and a larger
market of consumers and businesses around the globe. During the pre-
computerized time, the role of the travel agent was to advise clients on travel
destinations and to act as an intermediary in the complicated process of
arranging travel bookings. Even as late as the early 1990's, consumers booked
cruise travel and tourism through travel agents as many companies did not offer
direct bookings. There were two waves of information technology that have had
a major impact on the industry. The first of these is the development of the
direct reservation systems, such as the American Airlines SABRE system. The
second is the development of online sales channels via the Internet. Tourism still
remains the major strength of every developed and also developing nations
based on the number of employees in the sector, because without tourism sector
it would have been impossible for all other important sectors to play a key role
in the everyday development of the global market. The hotel and airline
101
industries are the ones who cannot survive without the use of e-commerce in
developed nation especially because online access makes it easy for them to
deliver quickly to various customers than sticking just to the conventional
method which is only person to person mode of business since the world of
today has tremendously expanded through the medium of electronic commerce
and still growing to every continents of the planet.
E-business is the use of information and communications technologies in all
activities of a firm both internally and in relation to its outside partners. The
tourism industry consists of many companies dabbling in various activities,
ranging from tour operators to cafes and restaurants. The companies include
SMEs and the types of enterprises that comprise the tourism industry are: (1)
tour operators (2) travel agents (3) tourist guide services (4) airlines (5)
transportation (6) restaurants and cafes (7) hotels and guesthouses (8) museums
and historical sites and buildings (9) nature reserve services (10) tourism
education and training institutions; (11) local tourist offices. Within the
discourse on the information society and the e-economy, ICTs are seen as major
tools with the potential to fundamentally change business behavior and company
strategies. The Internet has provided a new business environment in which
virtual business can be conducted. The adoption of ICT in the tourism industry
can provide detailed up-to-date information on the availability and prices of
products and booking which could also contribute to increased sales volume and
profits.
102
Competition
Examples of companies competing in the distribution of travel services
include:
Traditional Travel Agencies – American Express, Carlson, Independent
Agencies.
In-house Corporate Travel Office – Corporations booking their own
travel
Online Travel Agencies – Travelocity, Expedia.
Consolidators and wholesalers – Priceline, Hotwire, Cheap Tickets
Travel service provider direct sales – Airlines, Hotels, Auto Rental Companies
Agency Services By Travel Category
Figure no. 15
103
While online travel sites have certain advantages in providing these services,
characteristics that may help traditional agencies differentiate from online travel
agencies include:
Travel agent‘s personal knowledge and expertise;
Face-to-face customer service during trip planning;
Personally monitoring & notifying customers of price or schedule
changes;
Personal follow-up after travel is completed; and
Personal Relationship.
Online Travel Services
The Internet and new technologies have provided online travel agencies the
tools to duplicate the five ―R‘s‖ of service provided by offline travel agencies.
Figure no. 16
104
Chapter 8
The Travel Industry’s Guide To Mobile Advertising
Travel companies can leverage a properly crafted and executed mobile
advertising strategy to:
Increase travel bookings and sales
Simplify travel planning and reservations
Drive brand loyalty and engagement
Enhance multichannel campaign efforts
Improve customer service
Acquire and retain customers
Simulate word-of-mouth and social media engagements
Mobile is making it more convenient for both business and leisure travelers to
find places nearby to visit, receive last minute travel alerts, make travel
arrangements and use their mobile browsers to enhance their travel experiences.
An Introduction To Mobile Advertising For Travel
Mobile advertising is the practice of placing a marketing message, promotion or
sponsorship call-to-action within various media properties that make up the
mobile channel, including mobile web, search, applications, text messaging
(SMS), multimedia messaging (MMS), email, voice, Bluetooth and content.
A Forrester study found that 54 percent of online business travelers and 48
percent of online leisure travelers who have Web-enabled mobile devices have
used the channel to look up travel-related information such as a flight‘s on-time
105
status, driving directions, or hotel room information.
The most common methods of mobile advertising are:
Display – the inclusion of static, animated and rich media banners within
mobile web sites, multimedia messages, video feeds and applications
Search – the placing of a travel company‘s sponsored search listing in
the mobile web or application at the point of consumer-expressed need
Messaging – the inclusion of text ad within an SMS, MMS, email or
Bluetooth message
Voice – the inclusion of audio ads within automated voice services
This white paper looks at the use of mobile in the travel industry through four
categories – transportation, hospitality, tourism/entertainment and online travel
agencies – and shows how each benefit from the use of mobile advertising to
drive sales and customer loyalty.
Transportation
The transportation category – e.g. cruises, buses, trains, airlines, car rental
companies and taxi services – uses mobile advertising to:
Simplify reservation and booking processes
Drive interest for selected travel destinations
Improve customer service
Drive consumers to check schedules and fares on mobile desti-
nations (e.g. mobile sites and applications)
Increase brand awareness and recognition
In addition, transportation companies are using mobile display, search and
106
messaging alert advertising to sell and promote their perishable inventory. These
ads expose consumers to great deals on transportation services that will soon be
missed, thus driving up sales that otherwise would be lost.
In addition, transportation companies are using mobile devices to improve
customer satisfaction through loyalty programs. For example, Delta Airlines is
one of a handful of airlines that offer passengers the option to check-in via their
mobile phone or to use digital boarding passes displayed on their mobile device
to board the plane.
A Forrester study found that 24 percent of business travelers and 18 percent of
leisure travelers looked up a flight‘s on-time status using their mobile device.
Additionally, 31 percent of business travelers and 29 percent of leisure travelers
looked up driving directions on their mobile phone.Targeting these consumers
with deals for future travel or things to do while they are away is a great way to
delight consumers and increase sales.
Hospitality
The hospitality category, which consists of hotels, resorts and inns, uses mobile
advertising to:Drive sales of products, services and events on property locations
by keeping guests within their venue for more than just lodging
Encourage people to book reservations via mobile web and apps
Keep guests updated on special events and concerts
Drive consumers to participate in loyalty programs and to redeem
their points
Travelers are using their Web-enabled handsets to interact with the hospitality
industry. According to a Forrester study, 18 percent of business travelers and 15
107
percent of leisure travelers researched hotel availability on their mobile devices
in the past year.
In addition, mobile advertising is being used the hospitality industry to build
permission-based databases. These databases are used to deliver special deals
and coupons to consumers resulting in higher repeat and referral sales. Many of
these mobile campaigns include promotional Web landing pages that are mobile
commerce-enabled, allowing for a transaction right on the spot.
They are also using mobile advertising and mobile-enabled multi-channel
promotions that encourage their guests to stay on property and to frequent
related establishments and events.
Tourism/Entertainment
The tourism/entertainment category, which includes restaurants, amusement
parks, museums and sight-seeing tours, uses mobile advertising to:
Enhance the travel experience of consumers by driving them to relevant
mobile destinations
Drive sales of goods, services, dinners and tickets at entertainment
venues
Distribute brochures, menus, maps and information that will ultimately
bring consumers to them
Enhance brand awareness and loyalty
The tourism/entertainment category is finding success with mobile advertising
to drive consumers to their locations with special mobile coupon offers and
deals. According to Forrester, 21 percent of business travelers and 18 percent of
108
leisure travelers looked up dining/ restaurant information on their mobile phone
within the past year.
Restaurants, casinos and amusement parks are using mobile advertising to stay
on top of consumers‘ minds while they are on vacation. These entertainment
venues are using mobile advertising to invite consumers to opt-in for future
communications from them so that they may promote and share complimentary
offerings to visitors during their travel experience.
Online Travel Agencies
Online travel agencies such as Make My Trip, Clear Trip, Yatra, Trip Advisor,
Travelocity and Kayak, use mobile advertising to:
Drive sales of vacations packages, flights and car rentals
Drive traffic to mobile destinations such as mobile web sites and
applications Promote specific destinations and drive visits through
coupons and special deals
Increase brand awareness and engagement
Online travel agencies are leveraging mobile advertising to drive consumers to
their mobile destinations, as this is where the sales process begins.
According to Forrester, 20 percentof business travelers and 16 percentof leisure
travelers looked up flightschedules using their mobile devices in the past year.
The opportunity to target these travel-minded consumers with advertising is
immense.
Display and search advertising creative with special deals and offers are proving
to be most effective, helping online travel agencies acquire and retain
customers.
109
The Mobile Opportunity For Travel
Targeted mobile display, search and text ads are helping travel companies such
as Continental Airlines, MGM Grand, Walt Disney World, and Expedia build
brand awareness and turn purchase intent into sales with their target audience.
Targeted mobile display, search and text ads are helping travel companies such
as Continental Airlines, MGM Grand, Walt Disney World, and Expedia build
brand awareness and turn purchase intent into sales with their target audience.
Figure no. 17
With 65 percentof all mobile Internet users making airline, hotel or car rental
purchases in the past six months, it is clear that there is an important intersection of
mobile and travel.
Mobile is both media (to promote advertising messages) and a channel to sell
and transact. Consumers are using their mobile devices to stay connected using
various media services:
Mobile web – Consumers are using the mobile sites of travel companies to plan
their trips and enhance their travel experience. Travel companies such as
airlines, car rental companies, tour services and travel agencies should consider
110
having mobile commerce-enabled sites as an additional revenue stream.
For example, STA Travel, a global travel specialist for students and young
people, used mobile advertising on the mobile web to promote flights to its key
global destinations. The ads drove consumers to STA Travel‘s mobile site.
In addition, 20 percent of mobile consumers are using the mobile Internet
regularly and if they have a smartphone – for example, a phone running
Microsoft Windows Mobile, BlackBerry, iPhone and Android – this number
increases to more than 85 percent.
Search – Consumers are using their mobile devices for local search with
increased frequency. When consumers search for information, travel companies
need to ensure they are present at the time of the consumer‘s expressed need;
that is, at the top of the search results.
Applications –There are numerous application stores with hundreds of
thousands of applications generating billions of application downloads.
HotelsByMe, for example, launched iPhone and Android applications that use
the mobile device‘s geolocation services to help travelers find nearby hotels.
The applications sort the list by distance from the user‘s current location and
plot the hotel location on an integrated map.
Users can also access more than 44,000 hotel properties worldwide, search by
city or landmark and also view photos of the hotel. Coupons can be included
within applications, driving consumers to redeem special offers.
Mobile Advertising Insights For Travel
According to ROI Research‘s ―The Future of Mobile‖ Study, November, 2009,
mobile Internet:
Make travel arrangements – 27 percent of consumers use the mobile web once
111
a week or more to make travel arrangements.
Book travel reservations - 17 percent of smart phone users have booked travel
reservations in the past year.
Click on travel mobile ads – 12 percent of consumers surveyed by Microsoft
have clicked on a travel ad on their mobile phone. Additionally, 9 percent have
made a travel purchase (online or offline) as a result of seeing an ad on their
mobile phone.
Compare transportation, hotel and tourism prices – 46 percent of smart
phone users use their handset to compare prices. Three percent use their mobile
phone to compare prices while shopping for travel related purchases.
Additionally, 44 percent store information on their phones for later viewing.
Collect and store coupons and engage in related incentives – 17 percent of
smart phone users use handsets to search for coupons. Additionally, four in 10
are more likely to shop at travel outlets offering digital travel coupons/deals.
Buy goods and services - A quarterly study by Compete found that 37 percent
of smart phone owners have purchased something non-mobile with their handset
in the past six months. Additionally, feature-rich devices (smartphones)
continue to drive travel-related purchases to mobile. Smartphone growth is up
63 percent year-over-year (comScore, August, 2009).
Mobile Search To Drive Downloads And Revenue
Travel brands and service providers are also using mobile search to drive
consumers to mobile sites and to download their applications.
Ongoing mobile search campaigns are helping these companies ensure that they
are easily discovered in application stores and through the mobile web. For
travel companies (such as airlines and hotels) with a mobile commerce site, this
112
has become a proven approach to drive additional revenue. Mobile search is
important as it enables key travel trends. According to ROI Research, four in 10
mobile Internet users conducted mobile searches at least once per day.
Additionally, mobile search is actively used in the purchase process – nearly 40
percent of mobile Internet users indicated they were willing to shop at travel
outlets offering digital travel coupons/deals.
Travelers searching with a location-based mobile phone are most likely looking
for something nearby or seeking to buy something. Travel service providers and
brands would be wise to revamp their mobile search efforts to make sure that
consumers who are traveling can find and buy from them on mobile.
Mobile web search engine optimization follows many of the same technical
rules as that of Web Search Engine Optimization. Importance is placed on page
structure, use of headers, keywords and titles, along with various types of
browser support.
Mobile advertising puts your brand in the hands of your audience and enables
immediate and engaging interaction that leads to measurable results.
Multi-Screen Approach For Multiple Touch Points
Travel companies are using mobile display, text and search advertising
simultaneously with other marketing (print, online, direct mail, gaming and out-
of-home) to acquire new customers, diversify their user base and drive
incremental revenue.
In this digital age, reliance on online resources in booking travel is undoubtedly
high – the tourism industry has already seen the impact of this with the decline
of the traditional high street agent in favour of online travel agencies and
independent booking. However, despite the technology being available, mobile
113
travel booking has been slower to catch on and still significantly lags behind
mobile travel research. So, whether it‘s because of fears about security or simply
having better functionality with a traditional mouse and keyboard, it looks like
mobile technology‘s impact on the booking stage will not be as revolutionary in
the short-term. But with a growing number of mobile-optimized sites and
enhanced search engines, industry experts expect to see mobile bookings nudge
ahead of traditional channels by 2016. One area where we will see mobile make
an impact in the meantime is the growing trend for on-the-go bookings.
A multichannel approach-involving mobile can deliver compelling results. For
example, Continental Airlines achieved strong results from a multi-channel
campaign it ran targeting Hispanics, a demographic that tends to be heavy users
of wireless devices (Mobile Marketer, October 29, 2009). In this case, mobile
ads were five-to-ten times more effective than the online component of the
campaign. Continental reached out to consumers on television, online banners
and search, out-of-home, radio and mobile – both SMS and the mobile web. For
the mobile web aspect of the campaign, consumers who clicked mobile banners
ads were directed to a mobile site which achieved an average of 1.4 page views
per visitor. For the SMS mobile aspect of the campaign, TV, radio and out-of-
home ads urged Hispanic consumers to text one of two keywords - VOLVER or
VIAJAR - to the short code 88188 to participate. Out of the total audience that
entered the mobile-site, driven to it by SMS media, 7.51 percent provided their
name, email address and phone number to enter the contest. Voting components
and SMS forwarding created a viral effect, in effect giving Continental Airlines
more bang for its buck. Consumers are using their mobile devices for a wide-
range of travel-related activities as reported by Forrester Research, Inc., July
114
2009 in the figure below:
Figure no. 18
Mobile Advertising Best Practices For The Travel Industry
There are numerous best practices that travel industry players should consider
when embracing mobile advertising:
Use location and related data to be relevant. Remember, your message is
relevant when the consumer is traveling, and often is no longer relevant once the
consumer is back at home. Location also serves a convenience factor. If a
115
customer is nearby, it is more convenient for her to redeem your offer.
Consider the person’s situation to tailor and target your message.Is she
shopping, sightseeing or dining? Is the weather hot or cold, raining or sunny? Is
the trip for business or pleasure? Tailor mobile advertising messages based on
these and related situational data points. Targeted and relevant messages will
increase the response rate of any campaign.
Make the purchase and booking process easy on the mobile device. The less
clicks the better. There is nothing worse than losing a customer because she gets
annoyed due to an overly complex purchase process.
Use specials and promotions. Specials and promotions within mobile search
and banner advertising can be used to sell perishable inventory such as show
tickets, flights, hotel rooms and vacation packages for specific dates.
Use a multichannel mobile approach. Use various mobile channels to get the
word out on deals and package offers (e.g. mobile coupons, alerts, etc.).
Make use of customer loyalty. Use your mobile advertising to encourage
consumers to join and manage their customer loyalty programs.
Leverage on-device media. Build a permission-based mobile database so that
you can send consumers offers for airfare, entertainment and related offers.
Always include an opt-in option on the landing page or in the ad creative.
Consumers who are willing and eager to hear from you are a prized possession,
so compile a database of interested consumers. Double opt-ins in mobile is very
important and should be in place before the start of an acquisition campaign.
Collaborate with mobile partners. Choose appropriate mobile partners that
can help you leverage the power of the various mobile media and mobile
advertising practices. Ask for references from successful campaigns. Find a
116
vendor that aligns with your needs.
Adopt the Mobile Marketing Association’s guidelines. The Mobile Marketing
Association (http://www.mmaglobal.com ) is an industry-leading global trade
association focused on helping marketers and travel companies effectively
engage consumers with mobile marketing and advertising practices.
The MMA‘s guidelines help marketers and travel companies support the rights
and privacy of consumers, stay compliant with industry best practices and
regulations, and get the most out of the practice of mobile advertising.
Keep your program calls-to-action clear and simple. Remember that
simplicity works. Consumers should not have to think about your ad‘s
key message. The call-to-action should be clear and easily understood.
Think past the click. Once consumers respond to your advertisement,
what next? Will they receive a message, be taken to a mobile site, or
invited to download an application? Consider the complete 360-degree
experience and make sure the total experience is consistent and on point
with campaign objectives and message.
Track, measure and analyze. Mobile advertising is extremely
measurable. Be sure to continuously track, measure and analyze the
results of a program and make adjustments as necessary throughout the
life of your mobile advertising campaign. Do this and you will see
improved results.
117
Chapter 9
Customer Acquisition Channels For Hotels
There was once a time when hotel marketing focused on brochures, newspaper
listings, magazine ads, banners, and lots of printed paper. Things have changed,
and print media is less effective at driving new bookings as it once was. Today,
it can be hard for hoteliers to learn how to acquire new guests aside from turning
on a flickering ‗vacancy‘ light in the window.
This problem is exacerbated as guests move away from more traditional
hospitality customer acquisition channels, in favor of more accessible digital
channels. In this whitepaper, we will explore the primary acquisition channels
used today by the most successful hoteliers and hotel marketers around the
world.
Figure no. 19
118
Digital vs. Traditional
Traditionally, hoteliers have used non-digital customer acquisition channels, like
print advertisements, to build brand awareness and find new guests. This form
of marketing is becoming less effective with each year. In the first half of 2012,
the Newspaper Association of America reported that newspapers lost $798
million in print advertising, while gaining only $32 million in digital
advertising. That means for every $25 they lost in print ad revenue, they gained
only $1 in digital ad revenue. This shows that advertising with newspapers—
digital or in print—fails to produce.
TV is not in as bad of shape—it gained 4.5% in ad revenue in 2012 compared to
2011—but even it is dwarfed by the rise in online ad spending, which grew
21.7% from 2011, outpacing TV spending by over 17%.
Radio, magazines and other mediums are now dwarfed by digital online
marketing in terms of ad spend. eMarketer predicts that by 2016, $62 billion
will be spent on digital advertising ($39.5b in 2012) compared to only $32
billion in all of print advertising ($35b today—that‘s a loss of 8.5% over four
years).
One can only conclude that productive customer acquisition channels are almost
exclusively digital, and the disparity between traditional and digital channels
where guests are concerned will only increase. Therefore, though there are other
customer acquisition marketing channels that are possible to consider, such as
walk-in customers, billboards, magazines, newsletters and so on, we will focus
119
primarily on digital marketing channels and hospitality exclusive channels that
offer digital marketing.
3rd Party Resellers - OTA – Online Travel Agency
OTAs are consumer-facing web interfaces for travel bookings many are familiar
with due to their far-reaching advertisement campaigns. OTAs include Orbitz,
Expedia, Priceline, Travelocity, Make My Trip, Clear Trip, Yatra and others.
OTAs were created to give travelers the ability to book their own travel plans
without need of traditional travel agencies. OTAs communicate with many
Global Distribution Systems (GDSs) in order to process reservations, but they
also use their own proprietary software.
OTAs typically drive a great percentage of online reservations to hotels, but
they claim a substantial chunk of each transaction—upwards of 25-30%. They
can help sell a hotel‘s vacant inventory, but the cost of this partnership can
cause a hotel to lose an undesirable portion of its profits. Hotel owners usually
prefer that guests book travel directly through their own booking engines instead
of OTAs, and then list their room inventory with OTAs and GDSs when they
expect it to otherwise go unsold.
Guests are increasingly booking travel directly from hotel websites, due to the
attractive user experience of trip planning using search engines like Google, and
due to the billboard effect—a phenomenon whereby guests discover hotels
through OTAs, then in the course of doing independent research using search
engines, book travel directly from the hotel website.
120
It will be important for hotels to partner with OTAs for the foreseeable future
due to their popularity. Many guests prefer to purchase package deals, including
airfare, car rentals and accommodations, which is the benefit of using an OTA,
since it communicates directly with GDSs. However, it is becoming increasingly
important to have an alternative direct booking option for guests who prefer to
book directly with the hotel.
PROS:
Hotels can sell more inventory that would otherwise go unsold.
It is easy to list inventory with an OTA with minimal up-front costs.
CONS:
OTAs take a significant commission on each room sold.
Some OTAs will not accept inventory unless the hotel meets its price
requirements, thus forcing hotels to sell their rooms for cheaper than
they want to—on top of the commission the OTA takes.
It requires substantial back-end infrastructure to communicate with
OTAs. This usually necessitates hiring an external 3rd party Central
Reservation Systems (CRS) to own the hotel‘s conversion engine. It can
be done by manual submission that necessitates a lengthy verification
process.
GDS
There are four major GDSs in the world today: Worldspan, Amadeus, Galileo,
and Sabre, and many other minor ones. GDSs are used to make reservations for
multiple airlines, hotels, car rentals, and other vendors. The airline industry first
created GDSs to save time on manually inputting and processing flight
reservation data. GDSs are today used by various entities, including airlines,
121
travel agencies, OTAs, car rentals, hotels and more to manage and process
reservations.
GDSs run on legacy systems, meaning that they are powered by outdated code
and methods. This is a large problem for the travel industry for many reasons.
Old code can only run on old hardware, which is becoming hard to repair and
replace. Those who knew how to repair and adapt legacy systems retired or
forgot how to use them, and the information was lost with them.
For these reasons, it is important to own or use a CRS powered by updated
technology. The best solution is to use a SaaS CRS that is updated over time as
technology advances, to prevent future incompatibilities and system failures.
Today, GDSs are still used in one way or another by airlines, hotels, and OTAs
all over the world. For the time being, it is still important to integrate an
independent hotel CRS with GDSs in order to benefit from the additional
transactions they provide.
PROS:
Listing inventory with a GDS can ensure your rooms are seen by
resellers around the world.
CONS:
As with OTAs, sometimes hotels have to lower their prices to be
accepted by the GDS.
GDSs are built on legacy systems and may not be compatible with
modern CRSs and IBEs.
GDSs take a commission from each sale.
122
Not all CRSs and booking engines can integrate with GDSs.
Directories
Directories like TripAdvisor, Yelp, and Google‘s Hotel Finder serve as
databases of hotels guests can explore to find what they are looking for. Instead
of going directly to the hotel‘s website, they browse the directory and filter
results by dates, amenities and other trip requirements.
Instead of communicating with the GDS and managing the guest‘s transaction,
directories simply display the desired results and provide price comparisons and
links to OTAs and hotels. Many directories are free and make money on ads.
Some directories make their money by charging hotels for privileged placement
on the directory. The hotel that pays the most gets the highest placement for
their desired search terms.
Hotels pay certain Directories for a prominent directory listing, or to advertise
on that directory so that guests can find the hotel. While some directories like
TripAdvisor are used frequently by guests, most directories are never used by
actual guests and are therefore not valuable marketing channels. The ones that
take payments for prominent listings also take payments from OTAs. It‘s
possible for a hotel to pay a directory for a sponsored placement only to be
outspent by an OTA selling the hotel‘s own inventory, thereby costing the hotel
a listing fee on top of an OTA commission.
PROS:
Can place your hotel before the eyes of guests who are accustomed to
trip planning using certain directories.
123
CONS:
Can cost money for better visibility.
Lack of control over property information.
Lack of control over guest reviews.
Often-thick competition from competing hotels for prominent placement.
Franchises & Flags
Franchises and flags give hoteliers access to established clientele, identifiable
brand familiarity, services, and existing marketing channels. Guests know what
they‘re getting when they book with a franchise. They know exactly the style,
the amenities, the service, and character to expect from a franchise.
This allows guests to make a purchase decision quickly, and to seek out specific
franchises where they have stayed in the past, enjoyed their stay, and therefore
know what to expect. Additionally, many frequent travelers, particularly
business travelers, are members of loyalty programs for flights, car rentals, and
hotels. Guests who are part of these programs often seek out and stay at a
specific hotel brands time and time again in order to build up points.
Running a franchise hotel takes away some of the cost and hassle of providing
additional services for guests. Many franchises provide organizational and
promotional services for the franchisee, including some forms of marketing,
partnerships with taxis and airport transport, food service providers and catering,
insurance companies, maintenance, and so on, removing the necessity for hotels
to form these new business relationships themselves. Hoteliers who run a
franchise can reap the benefit of pre-existing business relationships made with
124
the franchise brand. The combination of lack of surprises, expected standards,
widespread national coverage, and loyalty programs gives large branded
franchise hotels a compelling built-in customer base that is very attractive.
Hoteliers often choose to run a branded franchise hotel in order to take
advantage of these benefits. In exchange, the franchise brand takes a percentage
of the hotel‘s profits.
PROS:
Hotels gain frequent guests who are loyal to the franchise brand.
Hotels gain access to the loyalty programs, web conversion engines,
online digital marketing partnerships, and other extant marketing
channels run by the franchise brand.
Hotels can take advantage of extant services provided by, and business
relationships made with, the brand.
CONS:
Some brands take a percentage of the hotel‘s profit, in exchange for the
hotel having use of the brand. Others charge annual brand and franchise
fees.
Some franchise owners have pricing flexibility, but many others are
restricted by the brand franchise and cannot alter their rates.
Direct Channel
The direct channel is the most straight-forward and intuitive marketing channel,
but it sometimes comes with costs necessary to work well, including the costs of
125
time, money, and hotel resources. The most prevalent manifestation of the direct
channel is a hotel website complete with reservation capture system. From the
website, guests book rooms directly from the hotel. This removes the need for a
middleman who charges additional fees. That said, it is often challenging to
properly market and maintain the direct channel. The following are some
considerations hoteliers need to think about when creating and publishing their
direct channel marketing presence.
Website
A hotel website is the heart and soul of the direct channel. It is the destination to
which all other marketing activities funnel traffic, and acts as a ―conversion
engine‖. Hoteliers need a web presence that serves as a digital representation of
their property that guests can use to make inquiries and book rooms. It can be
relatively inexpensive to publish a simple hotel website. However, technology
evolves quickly, faster than any other industry, and websites published
yesterday are out of date tomorrow. For example, websites published five years
ago—and never kept up-to-date—currently can‘t support mobile and social
visitors and interactions.
It can be an expensive, tedious and time-consuming process for hoteliers to stay
on top of web technologies as they emerge, and keep their digital marketing up-
to-date. It is possible to find services that do this for the hotelier, each with its
own range of fees.
126
Online Reservation Capture (Internet Booking Engines, or
IBEs)
Many smaller hotels opt to have a simple contact form on their website. When a
reservation inquiry comes in, they open their email, record the information, and
process the credit card. This is a manual process that works best for small
properties with a handful of rooms. For larger hotels, they need a more robust,
automated booking engine that can deliver updated availability to guests when
they make web queries.
Additionally, it is often impossible for hoteliers to list their excess inventory on
OTAs or with the GDS on their own. Thus, it is often necessary for hoteliers to
purchase or subscribe to a 3rd-party reservation system, or CRS. Hoteliers have
a plethora of options, however, many CRSs take a commission fee for every
transaction that passes through their CRS.
Search Engine Optimization (SEO)
Search engines will continue to be a valuable source of traffic and online
reservations for some time. Having a solid SEO plan in place allows a hotel‘s
website to convert at peak performance. However, since search engine
algorithms are volatile, changing daily, implementing any SEO strategy can be
risky.
For example, implementing an SEO strategy popular five years ago could cost a
hotel its search engine ranking, causing it to be penalized by Google. Some of
what was once acceptable SEO is no longer acceptable by Google. A business
127
could become completely invisible on search engines if it contracts
unscrupulous or ill-informed SEO agencies.
While having a prominent listing on Google can be incredibly lucrative, it can
take an enormous amount of research and effort to keep a website up-to-date
with Google‘s SEO best practices.
Social Media
The goal of social media is to point guests and fans to a direct marketing
channel in order to capture their online reservation. It is very hard to do social
media correctly. More often than not, hoteliers will create their social media
profiles, speak to an empty room for a few weeks, and then give up.
In order to use social media correctly, hoteliers and hotel marketers need to
invest time and passion into the network before it will ever bear fruit. This time
can be costly and exhausting, and may not deliver results for weeks, months or
even years.
Search Engine Marketing (SEM) and Pay Per Click Ads (PPC)
Traditional billboard, newspaper and magazine advertisements have been
superseded by web advertising. SEM and PPC advertising accounts for the
majority of all advertising revenue generated in the world today—Google
advertising alone has made more money each year than all print advertising
combined since 2007.
128
Anyone can start an SEM or PPC campaign, but the learning curve to execute
such a strategy effectively can be steep. It is very easy to quickly waste a year‘s
marketing budget in a month, if one does not take care. It takes good intuition
and experience to choose the right advertising targets, place the correct bids and
manage a monthly budget.
For these reasons and more, many hotels hire agencies to perform SEM and PPC
services for them. This compounds costs, levying the cost of the campaigns and
the agency fee upon the hotel. It can be very difficult to see positive return on
investment (ROI) concerning paid online advertising.
Mobile
Mobile devices are increasingly being used to make travel related planning and
purchases, including hotel bookings. Google predicts that guests will be booking
travel from mobile devices more than they do from desktop or laptop PCs by
2013. It is therefore important that hotels optimize their direct conversion
channels for mobile devices by purchasing a mobile optimized website.
Mobile optimization entails crafting a new website with fewer scripts, larger
buttons and text, and smaller images in order to improve load speed over
wireless networks and aid swipe navigation. Good mobile optimized hotel
websites come complete with a mobile optimized booking engine. It can be
expensive to optimize for mobile, but the cost has been going down
precipitously as mobile need has risen. It is very easy, however, to purchase a
mobile optimization package ‗done wrong‘—that is, hosted on a 3rd-party
domain, or within a directory, or without an included mobile redirect, and so on.
129
Online deal services like Groupon, Living Social and Amazon Local have
millions of subscribers who are looking for good deals. Joining one of the
services and offering their members a substantial discount is a quick way to fill
empty inventory.
One drawback of using deal services is that many of them won‘t accept a
proposed deal unless the hotel offers a significant discount--so significant that
the hotel might not make much money. However, the brand exposure is a great
opportunity for a hotel to snag repeat customers and future online bookings. The
risks and rewards need to be weighed heavily before embarking on this strategy.
PROS:
It can be cost effective to pick one or two direct marketing activities and
excel at them.
CONS:
It can be expensive and tedious to try to excel at all direct marketing
activities, and very challenging for all of them to pay off.
Unless the hotel has purchased a digital marketing subscription, the
hotel‘s online marketing will age quickly as soon as it is purchased.
It is challenging to be successful with the direct channel without
significant investment in one or more digital marketing strategies.
130
Summary
A little knowledge can help hoteliers understand their options and select
marketing channels to pursue, but it takes hard, constant work to keep up with
them in order to make them profitable. SaaS seeks to solve this problem by
placing the hassles of research, time and expertise in the hands of industry
professionals, reducing the cost of high-converting digital marketing and saving
time for hoteliers to spend managing their hotels.
Customer acquisition channels have evolved so much over the years that to
ignore the digital channel is a business crippling decision. Hoteliers should start
with a new, modern website and mobile optimized website hosted in the cloud
and optimized for search engines. From there, hoteliers should choose the
customer acquisition channels that work best for their own goals. buuteeq‘s
Cloud DMS is an affordable SaaS solution designed specifically for hotels.
Contact us to learn more. As current and emerging intermediaries take
advantage of an active digital travel market, they will wield substantial influence
as gatekeepers, imposing fees and charges for directing the consumer traffic to
the hotel. Growth in digital travel shopping will expand the transparency of
hotel pricing structures putting additional competitive pressure on rates. The
combination of the higher booking volumes passing through intermediaries, the
costs imposed for intermediation and the pressure on rates will challenge the
hotel owner and manager to maintain profit levels
131
Chapter 10
Data Analysis & Findings
Critical Success Factors that make e-commerce business profitable in
the travel industry related organizations (In order of Importance)
(All type of organizations)
N Mean Std.
Deviation
A11c. Competitive pricing 33 4.85 .364
A2. Technological infrastructure that supports the dynamic
business demand 33 4.82 .392
A11b. Prompt customer service 33 4.79 .415
A9a. Products that are of most interest / most importance to travel
related organizations to increase business performance - a) Flight
+ Hotels
33 4.67 .479
A1. Commitment (Commitment and support from top management
in term of strategy and implementation) 33 4.64 .603
A11a. Differentiated products & services - a) Exciting holiday
itinerary 33 4.55 .617
A10c. Deal sites 33 4.52 .712
A4. Promotions to drive incremental business 33 4.48 .619
A3. Online media marketing budgets 33 4.48 .619
A7. Multi-Channel Marketing 33 4.45 .666
A9c. Flight + Hotels + Car Rental + holiday package 33 4.33 1.137
A9b. Flight + Hotels + Car Rental 33 4.33 .990
A8. Partnership/Alliance to expand the product offering 33 4.30 .728
A10b. Tourism sites 33 4.27 .839
A5. Customer purchase patterns and tailor products according to
the purchase patterns 33 4.12 .820
A10a. Widen the travel product distribution system - a) E-Tailing
sites 33 4.09 .765
A10d. Tour operators brochures & websites 33 4.03 .883
A6. Customer retention through customer loyalty 33 3.97 1.015
Competitive pricing is the most important success factor that creates product
differentiation. Pricing plays a very important role in creating competitive edge
132
for the organizations products. Prices are to be set that captures the value of the
product. The right way to set prices involves capturing the value that customers
place on a product by ―thinking like a customer. Understand that customers have
different pricing needs. In virtually every facet of business (product
development, marketing, distribution), companies develop strategies based on
the truism that customers differ from each other. However, when it comes to
pricing, many companies behave as though their customers are identical by
setting just one price for each product. The key to developing a comprehensive
pricing strategy involves embracing (and profiting from) the fact that customers‘
pricing needs differ in three primary ways: pricing plans, product preferences,
and product valuations. The travel industry, like many others, relies on
advertising to promote its products and services. Price is usually a major
consideration when consumers are buying travel or planning their holidays. This
means that close attention is paid to any price representations made in
advertisements, whether they appear on the television, in a brochure or
newspaper or on a website. Advertising correctly represents the product for sale,
including its price and any inclusions or exclusions. It applies equally to all
types of travel—from a five-star luxury holiday to a budget backpacker travel
package. This enables consumers to make informed purchasing decisions when
making travel arrangements and purchasing a holiday, including the choice of
upgrades, airfares, duration of the trip, any tours, transfers or other inclusions,
fees, charges, terms and conditions—and the total price.
133
Things to consider when setting your pricing strategy
How unique is your business? The more unique your tourism product
the more flexibility you will have to decide your pricing.
What value added services do you provide inclusive of the experience?
What market do you want to attract and what positioning in the market
do you want to establish?
For most tourism businesses setting prices will be more market based –
that is, what do competitors with similar products and services charge
within your market? Be careful however, you must be aware of your
own financial position (debt levels, cash flow etc) before you can decide
whether you should compete in this way. Ideally being competitive is
not price driven, it‘s product driven
Pricing Components
Your pricing strategy may be made up of the following components:
Rack Rates
All tourism businesses should have a rack rate – this is your ―full rate‖ before
any discounts are applied and typically is what is provided to wholesalers and
printed on brochures for the season ahead. For activity and attraction operators
their full rate is more likely to be charged all the time without any day to day
discounting, however accommodation operators – particularly those in the
middle of the market will be changing pricing almost daily for the month or 2
months ahead to fill gaps.
134
Seasonal Pricing
Using a mix of pricing throughout the year to cover low, high, and shoulder
seasons is a standard way for tourism businesses to cater for differing levels of
demand due to the time of year. Typically these will be the same date periods
each year but may also apply for school holiday dates and for local events where
the dates vary each year.
Last Minute Pricing
A common method for accommodation suppliers to fill those last minute gaps in
inventory availability, last minute pricing is basically discounting daily prices
according to forward bookings and promoted on last minute booking websites.
Common Pricing Types
Per Person pricing: A set price per person e.g Adult and Children
prices. Commonly used by activity/attraction and transport operators or
backpacker accommodation and camp sites. Options may include an adult,
child and senior citizen price.
Per Unit pricing: – A set price for 1 unit of the product e.g. Price per night, this
is the standard way to price accommodation, usually the advertised price is for 2
people so if the accommodation fits more than 2 guests it can have a mix of the
per person pricing with extra adult and extra child rates.
Single or double occupancy – common for B&B‘s there is a single rate and a
double rate (which is not double that of the single rate).
135
Discounting
While discounting has it‘s place, and often unavoidable in a competitive market
such as tourism, be very wary about continually discounting your prices to
stimulate demand – it can become a rocky road to reducing profitability or even
missing that vital break-even point. Be selective with last minute pricing deals –
don‘t make every day reduced, just select those where you really do need extra
bookings. Consider adding conditions to a discounted price like a minimum
stay or number of travellers in the booking. While a booking is better than no
booking at all, customers do become used to a certain price level and you
therefore run the risk of not only making it hard for you to charge your normal
rack rates, but it will also devalue your product – remember perception is
everything in tourism!
Package Deals
Developing packages with complimentary tourism partners in your area or with
value added components is a good way to stimulate demand without having to
discount. Strike up deals with local businesses to provide a full package and
share business with each other – you should be able to get their products or
services at a ―net‖ rate so the package pricing is better than if they had
purchased each component separately. Packaging can also be used to target
niche markets effectively e.g golf weekend, food and wine tours, pampering
packages etc.
136
Commissions
Many bookings will come via some sort of third party who will charge you a
commission such as a retail travel agent, wholesaler, inbound tour operator or
online travel agent (OTA).
Many tourism operators are tempted to add the value of the commission on to
the pricing for these providers but this should actually be considered in the
setting of your rack rates anyway – if you have different pricing across different
distribution channels it just confuses both travellers and can jeopardise industry
relationships, so keep it simple.
Air Travel Demand Elasticities
At the present time, the airline industry faces many cost pressures. The industry
has made remarkable achievements in improving its efficiency. But cost
pressures continue, from record high fuel prices to unjustified increases in
charges from monopolistic airports, to further taxes imposed by governments.
Higher costs inevitably lead to higher prices for airline passengers. Therefore, it
is crucial that reliable and appropriate estimates are available to assess how
higher prices impact on the level of demand for air travel. This impact will, of
course, differ according to the level and location at which prices are changed.
This report provides groundbreaking new research into the sensitivity of air
travel demand to changes in air travel prices and incomes. It provides clear
guidelines for the appropriate use of demand elasticities and robust and reliable
estimates of their value. Air transport provides economic benefits not just for its
passengers and cargo shippers, but also for the wider economy by connecting
137
businesses and individuals to global markets. Modern, just-in-time, global
supply chains and multinational businesses are made possible by global airline
networks. Yet governments often fail to recognise this and continue to
implement air transport policies that are not in the best interests of the aviation
industry and the wider economy. Monopolistic airports that raise charges but do
not improve the services they offer will see passengers quickly shift elsewhere.
Governments that impose new taxes on the industry are taking advantage of less
sensitive movements in demand at the national level to raise revenues at the
industry‘s expense.
The elasticity of air travel demand varies according to the coverage and location
of the market in which prices are changed and the importance of the air travel
price within the overall cost of travel. The appropriate elasticity to use will
depend on the type of question being asked. What is the price that is being
changed (e.g. an individual airline ticket price or prices within the market as a
whole)? What is the unit of demand that is being assessed (e.g. demand for an
individual airline or demand for total air travel)? Examining the traffic impact of
a price increase on a given route requires a different elasticity than when
examining the impact of an across-the-board price increase on all routes in a
country or region. Passengers are becoming increasingly sensitive to price, led
by the boom in low cost travel, the transparency brought by the Internet and the
intense competition on deregulated markets. But, passengers are also becoming
less sensitive to price, as increasingly lower air travel prices, in real terms mean
that the air travel price itself becomes a smaller and less important part of the
total cost of a typical journey.
138
Information Technology in tourism is the second most important success factor
after competitive pricing. The importance of information technology in tourism,
especially of the World Wide Web, has increased tremendously over the past
years and this trend will certainly continue. However, since the technology itself
is now available to almost everyone, its use alone does not necessarily bring a
competitive advantage anymore. The integration of IT into the organizational
fabric of the destination marketing organization (DMO) is an important key to
success. Integration means that technology, advertising strategy and overall
organizational mission/goals are coordinated to achieve the desired
effectiveness. Traditional advertising strategies should be reconfigured to reflect
the new realities (i.e., availability, interactivity, and research capabilities) of
Internet technologies and of the rapidly changing business environment.
It is difficult for most destination marketing organizations to keep pace with the
evolution of new technologies, the emergence of innovative advertising
strategies, the changes in the consumer market, and the growing competition
due to increasing globalization. They often have to struggle with limited
financial and human resources, a lack of technological expertise, and time
constraints. Accordingly, various high tech information and communication
technologies are in use in the tourism sector around the world. They are used for
tourism product development, marketing, distribution and training of tourism
sector personnel. These technologies are so indispensable in order to find out
and satisfy the ever-changing demands for tourism products. One of the unique
characteristics of tourism products is the need of the role played by the so-called
travel intermediaries. These travel intermediaries are travel agents, tour
139
operators, conference organizers booking agents etc. They are so important
because of the nature of the tourism product, perishablity and intangibility.
These travel agencies are performing this indispensable task of being
intermediary by the use of computers and computer reservation systems (CRS).
GDSs are systems, which distribute reservation, and information services to
sales outlets around the world. Unlike the CRSs used solely by an airline or
hotel chain, GDS distribute more than one CRS to users who are usually travel
agents.
Tourism and Information Technologies
Tourism is inevitably influenced by the business process re-engineering
experienced due to the technological revolution. As information is the life-blood
of the travel industry, effective use of ITs is pivotal. Hence, "a whole system of
ITs is being rapidly diffused throughout the tourism industry and no player will
escape its impacts". Unlike durable goods, intangible tourism services cannot be
physically displayed or inspected at the point of sale before purchasing.
They are bought before the time of their use and away from the place of
consumption. Hence they depend exclusively upon representations and
descriptions, provided by the travel trade, (e.g. information in brochures), for
their ability to attract consumers. Timely and accurate information, relevant to
consumers' needs, is often the key to satisfaction of tourist demand. Therefore,
ITs provide the information backbone that facilitates tourism. The revolution of
ITs has profound implications for the management of the tourism industry,
mainly by enabling efficient co-operation within the industry and by offering
140
tools for globalisation. In few other economic activities are the generation,
gathering, processing, application and communication of information as
important for day-to-day operations. The rapid development of both supply and
demand makes ITs an imperative partner and thus they increasingly play a more
critical role in tourism marketing, distribution, promotion and co-ordination.
The re-engineering of these processes generates a paradigm-shift altering the
structure of the entire industry. Thus, ITs have a dramatic impact on the travel
industry, because they force the sector to rethink the way in which it organises
its business, its values or norms of behaviour and the way in which it educates
its workforce.
Information Technologies And Tourism Demand
"The key to success lies in the quick identification of consumer needs and in
reaching potential clients with comprehensive, personalised and up-to-date
information". The rapid growth of both the volume and the quality requirements
of contemporary travellers, require powerful ITs for the administration of the
expanding traffic. Tourists become sophisticated and more demanding,
requesting high quality products and value for their money. Thus, destinations
and principals need new methods to serve the new types of demand. The usage
of ITs in the industry is driven by both the development of the size and
complexity of tourism demand, as well as by the rapid expansion and
sophistication of new tourism products, which address mini-market segments.
Increasingly, new, experienced, sophisticated, demanding travellers seek
information about more exotic destinations and authentic experiences, as well as
require to interact with suppliers in order to satisfy their specific needs and
141
wishes. The contemporary/connected consumer "is far less willing to wait or put
up with delays, to the point where patience is a disappearing virtue".
In order to satisfy tourism demand and survive in the long term there is no
choice but to incorporate technology and enhance the interactivity with the
marketplace. Increasingly, ITs enable travellers to access reliable and accurate
information as well as to undertake reservations in a fraction of time, cost and
inconvenience required by conventional methods. ITs improve the service
quality and contribute to higher guest/traveller satisfaction. Customer
satisfaction depends highly on the accuracy and comprehensiveness of specific
information on destinations' accessibility, facilities, attractions and activities.
This is because the gap between consumers‘ expectations and perceived
experiences is smaller and thus, unpleasant surprises from the destination or
principals are minimized. In addition, several other ITs facilitated factors
enhance consumer satisfaction, namely: consumers have more information and
enjoy a greater choice; a reduction of the bureaucracy and paper-work
effectively frees time for customer service; customising the product and
establishing ―one-to-one‖ marketing by using intelligence collected by loyalty
schemes (e.g. dietary requirements, product preferences); providing new
services, (e.g. as in-flight or in-room entertainment and information channels);
facilitating operational tasks (e.g. in-room TV checkout) ; personalised services
(e.g. telephone operator acknowledges guest by his name); and finally better
integration of departments and functions of organisations towards better service.
Computer Reservation Systems (CRSs) and increasingly Internet providers
satisfy the needs of consumer for convenient access to transparent and easy to
142
compare information. They cover the entire variety of choices of travel, lodging
and leisure services, destinations, holiday packages, as well as display the actual
prices and availability of such services. These services also provide immediate
confirmation and speedy documentation of reservations, allowing a greater
degree of flexibility and enabling prospective travellers to book at the "last
minute". Experienced travellers are therefore empowered by information and
booking systems and increase their personal efficiency by creating tailor-made
products independently. ITs also assist principals to understand consumer needs
through marketing research and loyalty/partnership schemes. Improved access
to information covering all aspects of tourist activities provides the framework
for offering personalised services at price levels comparable to those of standard
packages.
The revolutionary developments in ITs, which have been experienced through
the proliferation of the Internet and the World Wide Web since 1995, illustrate
that consumers increasingly rely on the Internet for travel information. They
utilise commercial and non-commercial Internet sites for planning, searching,
purchasing and amending their travel. Non-tourism organisations tend to seize
the emergent opportunity by utilising the ITs tools. This is already the case with
major ITs providers, (e.g. Microsoft developed Expedia, an electronic travel
agency) to satisfy tourism demand.
143
The emerging super highway - the Internet and the World Wide
Web
The Internet (or the "Information Superhighway") convergence media,
telecommunications, and information technology, increases the interactivity
between consumers and suppliers. Since the early 1990s, the World Wide Web
(WWW) has emerged as the fastest growing area of the Internet, enabling
distribution of multimedia information.
As textual data, graphics, pictures, video, and sounds are easily accessible
through the WWW, it soon became the flagship of the ITs' revolution and
instituted an innovative platform for efficient, live and timely exchange of both
ideas and products. Consequently, unprecedented and unforeseen implications
are drawn for the future of tourism marketing and consumer behaviour.
Although there is no accurate estimate of Internet users or sites, the pace of the
Web development demonstrates the role it will play in peoples' lives.
New practices such as home shopping, tele-entertainment, tele-working, tele-
learning and tele-banking are expected to change everyday activities. Eventually
consumers will live in "electronic houses" or "intelligent homes" and will be
served by "virtual enterprises" through a very interactive communication
framework. The Internet also influences political life, as it introduces a
democratic, transparent, uncontrollable and difficult to dominate way of
communication, where everyone is more or less able to broadcast their views
regardless of hierarchical rankings and political power. ―Business and
organisations world-wide are realising that marketing on the Web is multi-
144
dimensional content marketing that requires the following paradigm shifts: from
traditional advertising to interactive marketing; and from developing and
managing one way information flows to computer-mediated empowerment of
users, consumers, and entrepreneurs who will be engaged in electronic
commerce in the information age".
The Internet and the WWW provide unprecedented opportunities for the
industry as they bridge the gap between consumers and suppliers and empower
closer interaction. The WWW provides an extremely vital service by
incorporating similarly structured information and enabling the packaging of a
wide range of diverse products and services. ITs also provide the infrastructure
for inexpensive delivery of multimedia information, promotion and distribution
for both principals and destinations.
ITs also assist the provision of tailored made products in order to meet the needs
of individual consumers, and as a consequence, they are expected to become
instrumental in differentiating tourism supply.
The Internet can also strengthen the marketing and communication functions of
remote, peripheral and insular destinations as well as small and medium-sized
enterprises, by empowering their direct communication with prospective
customers as well as by assisting the distribution process. Hence, the rapid
development of the Internet and the WWW provide unprecedented and
affordable opportunities for the global representation and marketing of tourism.
Nevertheless, the information currently available on the Internet is often chaotic
and misleading, mainly due to its immaturity and lack of any type of
standardization. Several issues need to be addressed, namely: security of
145
transmissions; credibility of information; intellectual property and copyrights;
bandwidth and speed limitations; user confusion and dissatisfaction; lack of
adequate trained specialists; equal access and pricing.
Products that are of most important to the travel related
organizations to expand business: Flight & Hotels
Travel related organizations place utmost importance by providing flight and
hotels as key products to the consumers. Flight and hotels are key terms search
searched in the search engines. An airline usually connects with the computer
reservation systems of the hotels and displays the inventory on the airline sites.
This gives the consumer an option to book air and accommodation through the
airline website. The intermediaries like tour operators, travel agents, and online
travel agents provide the consumers not only with just flight and hotels but also
car rental and holiday packages. The integration between airline and hotels is
straightforward. Airlines before tying up with hotels discuss the % of
commission per room night, which the airlines will receive through the referrals.
Tracking mechanisms are implemented in order to track every hotel booking
which is brought through the airline website.
Prompt Customer service is of vital importance to all organizations in the
travel and tourism sector. Excellent customer service results in a high level of
satisfaction and encourages customers to return and to recommend the
organization to others. Many organizations in the travel and tourism sector offer
the same or similar products and services, and it is often the quality of the
customer service, which distinguishes one from another. Travel and tourism
organizations realize that consistently high standards of customer service will
146
ensure customer loyalty and improve business performance. This unit introduces
learners to the principles of customer service as they apply to travel and tourism.
The skills needed by an employee of a travel and tourism organisation are
developed in this unit. Aspects such as personal presentation, teamwork and
communication skills are all exceptionally important to the provision of
excellent service. Travel and tourism organisations are in the business of
providing information and selling products and services, and learners will have
the opportunity to develop and demonstrate these skills with customers in real or
simulated situations across different industries within the sector. Meeting the
specific needs of different customer types will be dealt with to ensure that all
learners appreciate the importance of treating customers as individuals. The
knowledge that learners gain from this unit will help to prepare them for
offering excellent customer service within any travel and tourism organisation.
Customer service is important because you must ensure that customers are so
pleased with doing business with you, they will keep returning to you. You have
to keep your customers away from your competitors. It costs five times as much
to win a new customer as it does to keep an existing one. Dissatisfied customers
tell others of their bad experiences and those people will avoid using your
organisation. Your organisation needs to be able to compete on value rather than
just price, i.e. customers are prepared to pay more for your product or service.
Your organisation needs to be secure and able to develop, and so do you. You
want the buzz you get out of providing excellent customer service. Some
organisations (for example, tour operators) integrate services vertically and
horizontally. This gives them control over each level of the products they
147
market but leads to an underlying consistency in customer service across that
integrated group. People operating small private companies may have a niche
market and know many of their clients as regular customers, which helps give a
more personal style of customer service. Large organisations may depend more
upon systems to help provide customer service but, with the right approach and
by selecting and training staff who have a real desire to provide excellent care to
their customers, such organisations can also provide a personal style of service.
Factors which will have an impact on overall business
performance as a result of the structuring of e-commerce
business in the travel industry related organizations (In order of
Importance) (All type of travel related organization)
N Mean Std.
Deviation
B9. Customer friendly website for consumers to easily locate
and book tr 33 5.00 .000
B6. Competitive pricing 33 4.73 .517
B4. Differentiated products & services from competition 33 4.73 .452
B5. Advance Technological infrastructure to meet the
dynamic consumer demands 33 4.70 .529
B2. Prompt response to customers' problems, suggestions,
and complaints. 33 4.67 .540
B3. Customer Loyalty & satisfaction 33 4.61 .659
B7. Efficient deals/packages/inventory distribution system 33 4.48 .566
B1. Customer-tailored marketing via customer profiling 33 4.33 .736
B8. Human resources skill set pertaining to travel industry 33 4.21 .781
Most important factor which will have an impact on the over all business
performance as a result of the structuring of e-commerce business in the travel
related organizations is seamless booking experience through a customer
friendly website.
148
Methods & practices to structure the e-commerce business in the
travel industry related organizations (In order of Importance)
(All type of travel related organization)
N Mean Std.
Deviation
C1. Customer friendly website for consumers to easily
locate and book travel related products 33 4.97 .174
C5. Advance Technological infrastructure to meet the
dynamic consumer demands & fasten business
operations
33 4.88 .415
C2. Regular updating the website with latest and correct
information for consumers to make informed decision 33 4.82 .392
C3. Prompt response to customers' problems,
suggestions, and complaints. 33 4.79 .485
C16. Multi-Channel Marketing 33 4.70 .529
C4. Investment in tablet and smart phone apps 33 4.70 .637
C11. Consistent Promotion design tailored according to
the consumer purchase patterns 33 4.61 .496
C8. Business alliance with white label products e.g.
hotels, flights, cab, insurance, holiday package 33 4.48 .667
C14. Improve Process efficiency - The time taken to
quote the offering & price 33 4.48 .566
C15. Engage with exciting content on social media to
encourage engagement between travel products and
consumers
33 4.42 .663
C9. Informed reports for forecasting and decision
making 33 4.39 .659
C6. Analytical tools to track consumer behavior &
transactions 33 4.36 .653
C7. Consistent offline and e-media advertising without
any blackout periods 33 4.27 1.153
C12. Innovative payment gateway features to enhance
consumer experience & increase business performance 33 4.27 .719
C10. Interactive feedback between customer and
business 33 4.27 .674
C13. Improve Process efficiency - streamline the time to
develop a custom itinerary 33 4.18 .727
149
Travel websites have to be regularly updated with latest deals, products,
services, promotions, and policies. One of the most common issues found with
websites is ―Build it and Forget it‖ syndrome. In simple terms, it‘s the website
that you build today and do not change a thing for the next few years. This
disease in websites is as prevalent as the common cold is in humans. It‘s cause
is simple: it‘s ―old web‖ thinking in a ―new web‖ world. In the old web (say
mid-1990‘s to early 2000,) the idea was simply to copy and paste the content
from your company‘s brochure into your website and then you were set. At that
point, you were fine to leave it for the next few years and many businesses did
just that. The new web is all about content, but not just any content… fresh
content. In the new web, the websites that get the most traffic are those where
the content is constantly changing, being added to, and improved. Users want
and expect to see or learn something new each time they visit your website and
they view those websites that do so as more valuable. Think about it, you
actually give them a reason to return!
3 quick reasons why you should consistently update your
website:
Search engines reward websites that update often by
moving them up the rankings
The value in search engines is that you can find just about anything you are
looking for on the web. But, we don‘t want to just find anything, we want to
find the ―right thing.‖ So in order to remain a valuable tool to users, search
engines needed a way to identify what listings are considered ―good stuff‖ and
150
what is not. One identifier, a term called ―frequency,‖ is used to determine how
often your website is updated. If a website is updated often, then search engines
consider it a consistent source of new information and awards it some points
that can help move its listing up in the search results. This is very beneficial as
it can bring more traffic to your website.
Think about it. If your local newspaper delivered this Sunday‘s edition, then
next Sunday they delivered exactly the same thing, then again the next Sunday
and so on and so forth, eventually you‘d just cancel your subscription. Why?
Because there is no longer anything of value. The content is exactly the same so
why would you want to keep receiving it? Its the same with your website in that
if it never changes, why would someone who has already read it want to come
back? Search engines know this and could penalize you by moving you down in
the rankings.
Giving your visitors a reason to come back will increase
the chance of closing transaction
This one actually builds off the previous reason. If search engines think your
website is outdated, then wouldn‘t you think the visitors to your website feel the
same? If I came to your website today, then came back next month and nothing
has changed, I would probably think that nothing is really happening with your
business. You must not be growing. You must not be innovating. You must not
be getting any customers. That leads me to start questioning if your product or
service is any good? Is there something wrong with you? Think about it this
way, seeing even simple changes like posting news and announcements shows a
151
visitor progress and progress is good at getting a prospect to realize why they
need to become a customer.
What does providing new content translate into? A better chance at closing a
transaction with a prospect who visits your website. They may not be ready the
first time they drop by, but by the second or third time they visit and read that
new announcement about ―special financing‖ or our ―great new service‖ it may
be just the thing they were waiting for.
Tracking what affect the changes have in your website’s
performance
We‘re big fans of making decisions based on data. Knowing what works and
what doesn‘t in terms of attracting traffic that can become customers is what
helps make a website successful. So, if the website never changes, then how do
you know if it is operating at its peak performance? Even with web statistics
software giving you data about who‘s coming to your website and how many,
it‘s not as valuable as knowing that you could get more traffic by simply
changing something or posting something new. How do you learn what that
is? Simple, analyze the data, make changes, and track the affect the change had
on performance. Who knows, that one piece of information that currently is not
on the website may draw in a whole new type of customer you never thought
about, but then again you‘ll never know if you never post it
Travel goes mobile: The Travel & Tourism sector has been one of the most
enthusiastic adopters of mobile technology. We see airlines issuing mobile
152
boarding passes; using mobile messaging as a CRM tool to keep passengers
informed about delays and cancellations; giving iPads to in-flight staff to enable
them to conduct appraisals 35,000 ft. off the ground; and of course creating
easy-to-use apps to enable passengers to book flights on the go.
Train and bus operators deploying mobile ticketing solutions to improve
efficiency for them, and the ticket-buying experience for their customers.
Tourist destinations producing mobile City Guides, often deploying Augmented
Reality to help travellers find their way around a strange city. And travel agents
producing companion apps to help their customers plan their holiday before they
leave, and make the most of it when they arrive at their destination.
Add to that the plethora of hotel- and tax-booking apps, underground maps and
bus and train timetable services, and it‘s clear that the Travel & Tourism sector
is ahead of the game when it comes to mobile marketing.
Since travelers invest so much more time using apps than mobile websites, it's
no surprise that the majority of purchases and bookings coming through mobile
devices occur in apps rather than mobile websites. In 2012, a full 20% of
smartphone owners used their device to book air travel or make a hotel
reservation, and 80% of these transactions were made with an app. Again, these
numbers are certain to rise as the market penetration of mobile devices increases
while barriers to mobile transactions continue to fall away.
Beyond the standalone benefit of increasing market access, mobile apps allow
travel businesses to target a very attractive type of audience: impulse buyers.
With the increasing number of travelers using their mobile devices, there are
outstanding opportunities for the travel industry predicated on the real time
ability to connect and interact with consumers at any time or place. The portable
153
media landscape of mobile offers a powerful medium to deliver content to
inform, influence and transact.
The opportunities are unlimited, from empowering mobile travelers to
improving travel efficiency and building ancillary revenues. Mobile offers the
traveling consumer the ability to research products and services, make instant
reservations, change bookings and check-in/check-out on the go. Through push
marketing, it provides rich opportunities to get consumers to respond to offers
engage in signups and buy on the spot. You can communicate information or
alerts, send coupons, offer distressed inventory, make timely offers and last
minute deals, up sell and cross sell ancillary products and services.
Airlines are leading the way by upgrading their mobile Web experience from
being mainly information driven to providing the ability to book and purchase
flights, join the standby list and upgrade seating. Hospitality brands are diving in
to the space with SMS call to action campaigns for promotions on discounts for
rooms, dining, amenities, etc. and creative concepts like a mobile concierge for
groups. On the operations side, booking confirmations can be cost effectively
and conveniently sent by text message, there‘s the ability for paperless ticketing
and creative means to improve customer feedback.
As more competitors move into the space, mobile is becoming a key
differentiator. In the continual quest to generate loyalty by delivering supreme
levels of customer service and create product differentiation, travel marketers
are looking to the channel to engage with customers at all stages of the
consumer buying cycle. The innovative use of mobile technology offers the
ability to differentiate a company in a highly competitive market. Keeping up
154
with customers on the go with messages on the move gives you the opportunity
for a unique one-on-one relation-ship with your target customer.
Creating a Mobile Web Site
Mobile users are just that, mobile. They don‘t have time to spend navigating and
deciphering, so you need to have a mobile version of your site and create a user
experience that is optimized for the mobile Web – one that is simple, quick,
friendly and easy to browse. Make sure contact information is easy to find and
keep it slim and trim with relevant information
Building an Opt-in Database
Mobile marketing is all about opt-in marketing. The key is to get consumers to
say ―yes ―to hearing from you and then enthusiastically take part in the mobile
marketing. To begin any conversation or send a text message, you need
permission. Since you can‘t purchase a mobile phone list, all subscribers must
go through an opt-in procedure.
To start the process and build a permission-based SMS audience, reach out to
existing customers through every touch point and ask if you can be in contact
with them on their mobile device. Promote your mobile services by leveraging
all your existing marketing channels and capture mobile numbers through
information queries and bookings. On the customer profile page of your Web
site, add a line for mobile numbers and provide a choice of different opt-in
options. By using mobile banner ads you can also drive consumers to your WAP
(Wireless Application Protocol) site and encourage them to opt in to your SMS
database. Once people have joined, you can let the interaction and value
proposition begin, be it news and alerts, deals and promotions, coupons,
contests, exclusive offers, upcoming events, new developments or product
155
information.
All text message communication should include a link to your mobile site to
drive users there. Have a special offers section on the mobile site where visitors
can get discounts, in addition to a click-to-call feature that automatically
connects consumers to a live person. Be sure to indicate that rates may apply,
and provide clear instructions on how to opt out if desired (i.e. text STOP to a
short code). As in any CRM strategy, be sure to deliver what they ask for. At the
end of the day, content has to be relevant, useful and valuable. The end game is
to engage with the consumer and build long-term relationship.
Text Message Marketing
Text message (SMS) marketing is the foundation of mobile marketing. In fact,
SMS is expected to generate $177 billion in global services revenues by 2013,
according to ABI Research, New York, and it will account for 83 percent of all
mobile messaging revenues through 2013.
It‘s an application most mobile users are familiar and comfortable with, and the
opportunities are endless. One way to build a mobile database and acquire new
customers is to offer ―text and win‖ sweepstakes, promotions or coupons and
include an opt-in SMS message after the entry. You can ask users to text a
keyword (also known as a mobile alias) to a short code, and those wanting to
participate in your mobile marketing will officially be part of your database, or
―mob.‖ The customer then gets a return text message which qualifies them for
the offer and they can become an opt-in member for future mobile marketing.
That keyword can be promoted in any number of ways, generally with an offer
that gives consumers a reason to want to join.
To create interactivity between print advertisements and mobile, an ad in a
156
travel magazine can offer consumers a free night or complimentary service by
texting your keyword (and joining your mob). When the consumer joins, they‘re
given a promotion code to use when making the booking. On an ongoing basis
you can provide additional offers, information and news of interest.
One of the greatest features of broadcast text messaging is the ability to create
time sensitive offers to fill need periods. A restaurant can send a message with
an offer to guests and locals before the lunch or dinner hour if business is slow.
A hotel can fill weekend space with a last minute offer. To increase internal
capture during a guests‘ stay, get them to opt in to receive offers on check-in if
they‘re not already enlisted. For example, if the spa has afternoon cancellations,
you can text to guests on property with a reduced rate on a service. And as a
final text to culminate the stay, the last message can be a thank you with a Web
link offering a discount to book a return trip.
Location Based Marketing
Brands are discovering the benefits of mobile as a location-enabling tool. One of
the most exciting opportunities in mobile marketing is the use of Location Based
Services (LBS), predicated on the concept that exact location is the basis for
delivering the right message to the right person at the right place and time.
Couple that with a detailed profile on a customer – their likes, interests and
personal data – and you can target that individual through text offers or mobile
couponing based on their preferences at the point of interaction. With the
enhanced use of proximity based interaction you can engage customers by
sending offers and discounts via mobile when they are within walking or driving
distance.
The myriad of location-based opportunities can dramatically enhance the
157
consumer experience and interaction with the brand. By accessing the mobile
Web or using downloaded applications, consumers can turn to their phone to
locate the nearest accommodations, restaurants, shops, attractions and points of
interest on the spot. Instead of powering up a laptop at the airport, stranded
passengers looking for the next flight can enter their destination and get every
airline‘s flight and gate information for the entire day, as well as call the airline
or connect to its Website. For the traveler on the go, the phone can be an
invaluable and condensed source of information, from mobile guide books and
maps to restaurants and reviews, GPS-driven walking tours and audio guides on
demand, powered either by mobile Web search or downloaded applications.
The plethora of mobile-enhanced sites and available applications are massive
(the iPhone alone offers more than 30,000 applications, with travel a dominant
category offering everything from product branded Web sites for destinations,
hotel companies and airlines to guide books, reviews, currency converters, voice
translations, maps and so much more).
For hospitality marketers, the medium offers the ability to locate guests prior to
arrival and send a text message to start the check in process. Having knowledge
of one‘s profile and interests enables you to customize their stay by pushing
activities and services of interest, such as information on local events, restaurant
menus and specials, spa options, attractions and more. For destination marketing
organizations and convention and visitors bureaus, mobile can provide the
means to deliver full destination guides with location based features and
services.
Regardless how large or small the mobile initiative, accountability and
measuring the effectiveness of mobile campaigns and activities are paramount.
158
The mobile environment offers a variety of measurement capabilities and
analytics that can report participation and demographics of your mobile database
in general and in response to a particular campaign. The key is to prepare to
capture the right kind of data, and use it once you have it to measure your
results.
Summary
What is clear is that it is becoming increasingly important for hospitality and
travel marketers to be deliberate about their forays into the mobile arena. A
mobile marketing plan can help you navigate through the hype to carefully
research and implement mobile marketing efforts that are integrated with the
elements of your existing marketing plans. Mobile marketing strategies,
working with your online efforts like paid search marketing, local search
marketing, and email marketing, can help you leverage and see synergistic
returns in awareness, interaction, and revenue.
Many would agree that mobile is indeed the new frontier. As the technology,
devices and applications become more affordable and accessible, those who
embrace some degree of mobile marketing will be well positioned to reap the
benefits of this burgeoning and potentially lucrative market. Whether you test
the waters by establishing a mobile Web site, start building your ‗mob‘ by
initiating simple text-based offers and promotions, or mount a widespread,
multitiered campaign, the smart marketer will let the engagement begin.
159
Multi-Channel Marketing:
Facebook Marketing For Tourism Organizations
Facebook offers travel brands the ability to identify prospective travelers,
communicate directly with users, engage with advocates and create branded
experiences through advertisements and custom-developed Facebook
applications. Facebook is the most powerful social media channel for travel
marketers because of the platform‘s flexibility and ability to drive awareness,
empower brand advocates and push consumers further into the travel purchasing
process.
Furthermore, Facebook users are passionate about sharing their travel
experiences. In 2012, Facebook reviewed the top stories people shared to their
Facebook timelines and discovered that the top story being shared by users was
travel experiences. 42% of stories shared to users Facebook timelines were
travel experiences, more than double that of the next category. In the evolving
digital marketing landscape, it is clear that consumers want to share their travels
with others and tourism marketers need to tap into this consumer behavior to
generate awareness, inspiration and visitation.
Facebook marketing goals
Brand awareness
Inspire visitation
Consumer engagement
Build brand advocates
Drive website referrals
160
Generate visitor leads
What Facebook Products Are Available
The heart of the Facebook marketing platform is Facebook Pages. Your
Facebook Page is your brand‘s storefront and where you will be able to
showcase your destination‘s most important news on your time line. Within
your Facebook page, you can brand your profile in name and images, select a
vanity URL, list your business details and link to your website. Facebook Pages
also allow you to list upcoming events, map your location and feature photo and
video galleries. Your Page is where you will generate connections and long-term
relationships with your brand advocates (residents and past visitors) and attract
potential visitors. Building a Facebook Page is simple, quick and free.
Facebook Ads are a paid advertising solution used to attract new fans, amplify
your message and expand the reach of your brand. Facebook Ads allow you to
hyper-target your audience based on a wide variety of triggers such as location,
demographics, interests and much more. Facebook advertising units include
Traditional Ads for brand awareness and to drive traffic to the website, page
post ads to promote Facebook page, sponsored stories to highlight users
connections with your Page and Promoted Posts to showcase your Page posts.
To incentivize users, generate conversions and expand co-op marketing,
Facebook Offers allow Facebook Pages to provide offers such as hotel deals that
can be redeemed online or in person. Custom Audiences is the newest
advertising targeting available and allows marketers to upload an existing
database of emails or phone numbers to target users.
161
Facebook Ads are a cost effective approach for generating awareness,
engagement and connections with users for your destination.
To develop more engaging brand experiences, tourism marketers can develop or
install Facebook Page Apps that will be located on a Facebook Page. Facebook
Page Apps are available from third party application developers or can be
custom developed to deliver highly engaging interactions. Popular Facebook
Page Apps for destination pages include sign up form for newsletters and
vacation guides, contests and sweepstakes, co-op programs and integration with
other social media channels. While some third party applications are available
for free, customized Page apps will require a web development investment.
Beyond Page apps Facebook provides Facebook Connect, Social Plugins,
Facebook Login and Open Graph as free tools for brands to develop
personalized website and application experiences.
How To Approach Facebook Marketing
In order to properly market your destination on Facebook, you will need to have
a sound understanding of who your core audience is by gender, age, geo
location and interests. Whether you have in-depth visitor studies readily
available to you or simply have website analytics to work with, be sure to utilize
the data you have available to clearly identify your audiences Facebook will also
serve as a consumer market research tool for your destination to gather user
insights, measure content engagement and crowd source ideas before bringing
them to market.
The first step in developing Facebook marketing strategy is clearly defining
objectives and goals. Ultimate goal is to drive traffic. However, consumers are
162
looking to your organization to help them decide where they should go and what
they. You will need to balance the goals of both your organization and your
prospective travelers to be effective on Facebook. Focus your efforts on
generating awareness, inspiration, word-of mouth, website visitation and online
conversions whether they are industry partner referrals, bookings or vacation
guide and email newsletter sign ups.
Strategic Approach To Facebook Marketing
Create a content strategy
Develop a Facebook Page
Target audiences with Facebook Ads
Inspire and incentivize users
Identify ambassadors and engage influencers
Generate word of mouth awareness
Drive audience further into travel planning process
The importance of making your content engaging cannot be over
overemphasized. 40% of Facebook users time is spent in the news Feed and the
more engaging your content is the more users you will reach, impressions you
will generate and the longer your post will be featured in the News Feed. To
achieve your goals and provide value to your Facebook audience, you will need
to next develop a communication strategy to define brand‘s voice, determine
message content and frequency of messaging. To steer your content strategy,
review your web analytics to understand what content consumers are searching
for and consuming.
163
With the knowledge of who your target audiences are, what information your
audiences are most interested in and what stories you want to tell, develop a
content matrix to match consumer segments to the messages you want to relay
and the landing to drive traffic to.
Seasonal Campaign Strategy
Seasonal Facebook campaigns are an excellent way to drive awareness,
engagement and visitation inspiration during pre-peak or need periods. By
increasing your Facebook Ads budgets and timing it with unique and innovative
campaigns your organization can make sure to differentiate itself and gain the
attention of travelers planning their next trip or vacation. To further incentivize
your audience and build your following, think about layering in a contest,
giveaway or sweepstakes.
Create a unique, experiential and one-of-a-kind offer that cannot be had
anywhere else to peak the most interest. When running a Facebook campaign
always be sure to collect email addresses and require entrants to like your
Facebook Page in order to create opportunities to drive engagement and web
traffic in the future.
Search Engine Use For Travel Planning
Search engines have become one of the primary tools for travel planning and, as
such, have become an important part of the Internet marketing strategy of
destination organizations. Recently, it has been demonstrated that because of the
dynamic relationships among the search engine providers, the tourism industry
and travellers, it is essential that destination-marketing organizations have a
substantial understanding of how search engines are used within the travel
planning process. Search engine marketing is emerging as one of the most
164
important components of an overall Internet marketing program. With the
growth of information on all facets of the tourism experience, general search
engines such as Google and Yahoo! have become the ―Hubble‖ of the Internet
galaxy, enabling travellers to navigate through this space so as to find
information that might be useful in the travel planning process. Indeed, recent
studies by the Travel Industry Association of America and others have shown
that the huge majority of U.S. travellers use search engines for vacation
planning. Additionally, the general search engines such as Google have
developed a variety of systems that enable destination marketing organizations
(DMOs) to identify the specific interests as well as the keywords used by
potential visitors. As a result, search engines have been recognized as the ―first
step‖ in a travel planning process, and therefore, are seen as a critical starting
point with which DMOs can communicate with existing and potential visitors.
There are three general components or stages of search engine use as related to
the travel planning process:
1. The pre-search conditions which is a form of knowledge representation that
reflects the integration of the information search process used to plan a trip and
the perceived usefulness of various travel planning tools available on the
Internet; 2. The search process which includes the frames used to evaluate
search results; and, 3. The evaluation of the overall search process which
culminates in attitude formation toward search engines and online travel
planning. Thus, within the context of online travel planning, it is argued that
these pre-search conditions reflect travellers‘ use of (or preference for) various
types of information as well as the perceived usefulness of the various travel
tools (i.e., types of websites) available on the Internet to find this information.
165
The second stage of the search process describes the basic strategies travellers
use to navigate through the Internet to find relevant information so that the
various travel decisions (i.e., destination, accommodations, attractions, routing,
etc) can be made. As such, these strategies act as ―frames‖ within which the
information accessed through use of search engines is evaluated. The third
stage, then, focuses on the overall evaluation of search engines within the travel
planning process. Importantly, this stage of search engine use not only results in
some sort of overall evaluation (i.e., satisfied vs. not satisfied), but also attitude
formation toward search engine use for travel planning. Finally, it is important
to note that this third stage sets the stage for future use of search engine for trip
planning, and therefore it is linked to Stage 1 in the overall process. Studies
have shown that the process of using a search engine consists of two major
cognitive steps including query formulation and search results evaluation.
Search queries have been studied extensively in fields such as information
sciences as well as travel and tourism. In travel and tourism, recent studies
indicate that travelers‘ questions tend to be short, consisting of less than four
keywords; and, most travelers do not go beyond the results provided on the
second page.
As a result, only a relatively small number of websites are visible to the traveler
though millions of potential web pages were found study also indicates that
searchers in the US usually focus on cities as the geographical boundary instead
of states or countries; and, travelers often combine their searches for
accommodations with other aspects of the trip, including dining, attractions,
destinations, or transportation.
166
Measuring The Value Of Email Marketing For The Travel
Industry
Email is a cultural and marketing phenomenon. In its relatively short lifetime,
email has become so wide-spread and so often used that it has firmly been
established as an integral part of a multi-channel marketing scheme surpassing
other channels in almost every dimension – volume, frequency, and ease of
execution just to name a few. As a marketing channel, email is often
underutilized, a last minute tactic to communicate a message because of the low
cost, speed and convenience of getting something into market. However, peer
deeper and you‘ll see that the medium has matured. Email is a vital link between
marketer and consumer that can provide companies with rich information about
their products and services. Email extends well beyond the boundaries of opens
and clicks, and must be optimized and measured as an important part of the
overall media mix. The receipt of permission-based email makes travel
consumers more likely to do business with a travel company, according to the
research. More than half of respondents have a favorable opinion of the travel
companies that send them email because of the communications they receive
and feel more loyal towards companies and products. Travel reflected better
loyalty than other categories in the study, with 63% of recipients of permission-
based email from travel companies more likely to buy from companies that send
them email. The travel industry was one of the first industries to enter the e-
commerce arena and therefore travel consumers have a high comfort level in
regards to multi-channel email and web marketing activities. With consumers
today more receptive to email opt-ins and more adept at Internet search, they are
accustomed to great deals and a number of options.
167
Instead of relying on one sole provider of travel information, respondents to the
survey on average subscribe to emails from up to three travel companies to learn
about sales, discounts and special offers. With advanced targeting and dynamic
content, travel companies can customize content for users based upon their past
purchases, preferences, and website activity. Email drives many online activities
as well as some that aren‘t measured by simply clicking on an email. Consumers
often take easily measurable actions such as booking travel online, clicking links
in email to learn more, and downloading/printing coupons as a direct result of
receiving an email from a travel company. However, there are other popular
activities that may not be measured by click-through rates and coupon
redemption codes. For example, a number of respondents often visit aggregator
sites, search for reviews, type/copy a URL directly into their browser or contact
their travel agent. Results show that emails influenced the recipients ‗purchase
of airfare and hotels most often, and to a lesser degree vacation packages, rental
cars, and cruises. In all cases the vast majority of those purchases took place
online.
Figure no. 20
168
Figure no. 21
Promotions Designed According To The Consumers Purchase
Patterns
Tourism organizations plan promotions to let customers know about their
products and services. To encourage customers to purchase more.To launch a
new product, service or special offer. Sales-Promotion tools are samples,
coupons, packages, patronage rewards, premiums, point-of-purchase, displays,
contests, sweepstakes, and games. Promotion is the communications part of
marketing. It is the way we tell the world our product. Promotion provides
consumers with information and knowledge in an informative and persuasive
manner. This, we hope, will sooner or later result in sales of our services or
products. The information and knowledge can be communicated using one or
more of the five promotional techniques - advertising, personal selling, sales
promotion, merchandising, and public relations. Taken together, these
techniques are referred to as the promotional mix.
169
The ultimate purpose of promotion is to modify behavior through
communication. This requires helping customers at the various buying process
stages so they eventually purchase or repurchase a particular service. Promotion
achieves this by informing, persuading, and reminding - the three principal goals
of promotion. Promotions usually fit into one of these categories; they are either
informative, persuasive, or reminders.
Informative promotions work best with new services or products (early
product-life-cycle stages) and with customers in early buying process stages
(need awareness and information search). These types of promotions tend to
communicate data or ideas about the key features of services.
Persuasive promotions are harder. They are aimed at getting customers to
select one particular company or ―brand‖ over those of competitors, and to
actually make the purchase. Advertisements that compare one company‘s
services to another, and most sales promotions, fit into this category. Persuasive
promotions work best in intermediate/late stages of product life cycle (growth
and maturity) and the buying process (evaluation of alternatives and purchase).
Reminder promotions are used to push customers‘ memories about advertising
they may have seen, and to stimulate repurchases. They are most effective in
the late product-life-cycle (maturity and decline) and buying process stages
(post purchase evaluation).
Each of the above promotional elements has capacity to achieve a different
promotional objective. Personal selling has high potential for achieving
170
communication objectives, however, only a small number of people can be
contacted. Therefore advertising is a better method of reaching a high number
of people at low cost. Public relations is more credible than advertising, but
there is more control over advertising messages and they can be repeated on a
regular basis.
When it is difficult to raise advertising budgets, public relations is a lower cost
alternative, but it is difficult to control the timing and consistency of PR
coverage. Sales promotion may produce an initial trial for a product, but this
type of promotion can only be used over a short period.
Each part of the promotion mix has its own strengths and weaknesses. While
these may include the factors of cost, ability to target different groups, and
control, there are other important considerations. On the following figure, they
are compared on the basis of the level of awareness of the communication, and
its comprehension (understanding, realization), as well as on whether it can
build conviction (confidence, certainty) and succeed in creating action.
Factors Affecting The Promotional Mix
Choosing a promotional program for a coming period requires very careful
research and planning. The stage of customers‘ decision processes and product
life cycle stages affect the promotional campaign decisions. However, there are
some other factors that also affect promotional mix decisions.
171
Target Markets
The effectiveness of the five promotional mix elements varies according to the
target market. For example, in promoting its convention/meeting facilities, a
lodging property might find that personal selling to key meeting planners is
much more effective than advertising. On the other hand, using personal selling
to attract individual pleasure travelers would not be feasible. The geographic
location of potential customers also has an impact. Where they are widely
dispersed, advertising may be the most efficient and effective way to reach
them.
Marketing Objectives
The promotional mix selected should flow directly from the objectives for each
target market. For example, if the objective is to build awareness by a certain
percentage, the emphasis may be placed on media advertising. If, on the other
hand, it is to build sales significantly in a short time period, the focus may be put
on sales promotion.
Competition And Promotional Practices
There is a distinct tendency in certain parts of the hospitality and travel industry
for most competitive organizations to use the same ―lead element‖ in
promotional mixes. Fast-food chains focus on heavy television advertising,
hotels and airlines focus on frequent-traveler award programs, and cruise lines
put a heavy emphasis on personal selling to travel agents. It is difficult and
extremely risky for one competitor to ―break from the pack‖ in this respect.
172
Promotional Budget Available
Obviously the funds available for promotion have a direct impact on choosing
promotional mix elements. Smaller organizations with more limited budgets
usually have to place greater emphasis on lower-cost promotions, including
publicity and sales promotions. Larger organizations can better afford to use
media advertising and personal selling.
Business Alliance With White Label Products (Hotels, Flights,
Car Rental, Holiday Packages)
The development and management of alliances is a critical strategic skill in
hospitality and tourism. The words strategic alliances, relationships, strategic
partnerships, and joint ventures all describe the coming together of two firms
into a deliberate association that has some synergistic strategic value.
They may assume the form of: (a) a buyer seller relationship as in the case of an
association meeting planner and a conference hotel, a restaurant and a single-
source wholesale supplier; (b) a supplier-distributor relationship as in the case of
airlines and retail travel agencies; (c) an alliance between two or more suppliers
like the United-Lufthansa-Air Canada-SAS alliance; and (d) a joint venture
between two companies like The SABRE Group and ABACUS International
joint venture. All of these alliances share a sufficient amount of common
elements that they can be treated as a basic unit of analysis. In the current
competitive environment where firms strive to become world-class competitors,
the motivation to partner, in one or all of these forms, is great. Many airline
websites offer the ability to make hotel and car reservation.
173
Factors that are detrimental to the growth of the e-commerce
business in the travel industry related organizations (All type of
travel related organization)
N Mean Std.
Deviation
D3. Lack of Advance Technological infrastructure to meet
the dynamic consumer demands 33 4.73 .517
D4. Slow time to market then competition 33 4.67 .645
D5. Brand lacks loyalty & satisfaction 33 4.64 .549
D6. Brand lacks consumer preference 33 4.61 .659
D2. Non Differentiated products & services from
competition 33 4.52 .795
D1.a Flight + Hotels 33 4.48 .834
D1c Flight + Hotels + Car Rental + holiday package 33 4.36 1.194
D1b Flight + Hotels + Car Rental 33 4.21 1.053
D7. Delay in payments of suppliers/partners leading to
suspension of business deals and advertising campaigns 33 4.15 1.034
Most important factor that is Detrimental to the growth of e-commerce
business is Lack of Advanced Technology Infrastructure and Least
important is Delay in payment of supplier
It is important that travel related organizations focus on proactive
approach rather than a reactive approach for e.g. price competition is a
major factor in travel industry. There is always a chance of price war. If
a competitor has dropped their price it is critical that other competitors
match the price. The systems should be capable enough to match the
price real time so that competition is unable to capture the entire share of
demand and consumers are provided with multiple options.
Time to market is the total amount of time it takes to develop and get a
product into the marketplace.
174
Why does time-to-market matter? How well a company does is often not
just related to how good its products are but how quickly they are gotten
to the market. Beating the competition to the markets by just a few
months can have a dramatic impact on the success of a new product. One
of the biggest benefits from reaching the marketplace first, is acquiring a
larger market share. once a company has an edge, it will often keep it.
Has any company really overtaken Sony for their Walkman products?
On the other side, IBM was a big part of the development of the personal
computer market, and then lost much of its market share to other
manufacturers.
One good reason for having a fast time to market is to allow a company
to start later on designs than the competition for a similar product. This
can allow for more feasibility studies and for the use of the latest
technology. Also a product that takes 3 years to design will almost
certainly have old technology by the time it is being sold. Quicker design
time means more up to date technology.
How does this relate to quality and cost? A quicker time to market
usually means lower development costs. But if a product is rushed to
market before it is ready, the quality may suffer and the customers will
not be willing to pay as much for it. As companies feel an increased need
to bring products to market faster, the need to get it right the first time is
becoming greater. This is causing more emphasis on design technique
and tools.
What causes slow time to markets?
Lack of thorough customer research
175
Poor execution of design; wasting of resources
Too many projects being worked on at the same time;
lack of focus
An unorganized design approach
Unempowered design team
Not fully equipped systems
Lack of strategy
How are time-to-markets being improved?
Strong market research
Focused product definition
Management support
Systematic design of products/services
Equipped systems
Systematic implementation approach
Product differentiation (or simply differentiation) is the process of
distinguishing a product or service from others, to make it more attractive to a
particular target market. This involves differentiating it from competitors'
products as well as a firm's own products. Among the travel products
organizations place utmost importance on flights and hotels as a key product
differentiator.
176
TESTS FOR SIGNIFICANCE (T-Test)
T-Test (Critical Success Factors that make e-commerce business
profitable in the travel industry related organizations)
Type of
Organization
N Mea
n
Std.
Deviati
on
Std.
Error
Mean
A1. Commitment (Commitment
and support from top management
in term of strategy and
implementation)
Hotels/Airlines 11 4.45 .820 .247
Agents/Tour
Op/Search
Engines/GDS
22 4.73 .456 .097
A2. Technological infrastructure
that supports the dynamic business
demand
Hotels/Airlines 11 4.73 .467 .141
Agents/Tour
Op/Search
Engines/GDS
22 4.86 .351 .075
A3. Online media marketing
budgets
Hotels/Airlines 11 4.36 .809 .244
Agents/Tour
Op/Search
Engines/GDS
22 4.55 .510 .109
A4. Promotions to drive
incremental business
Hotels/Airlines 11 4.45 .688 .207
Agents/Tour
Op/Search
Engines/GDS
22 4.50 .598 .127
A5. Customer purchase patterns
and tailor products according to the
purchase patterns
Hotels/Airlines 11 4.00 .894 .270
Agents/Tour
Op/Search
Engines/GDS
22 4.18 .795 .169
A6. Customer retention through
customer loyalty
Hotels/Airlines 11 4.00 .632 .191
Agents/Tour
Op/Search
Engines/GDS
22 3.95 1.174 .250
A7. Multi-Channel Marketing
Hotels/Airlines 11 4.45 .820 .247
Agents/Tour
Op/Search
Engines/GDS
22 4.45 .596 .127
A8. Partnership/Alliance to expand
the product offering
Hotels/Airlines 11 4.18 .874 .263
Agents/Tour
Op/Search
Engines/GDS
22 4.36 .658 .140
177
A9a. Products that are of most
interest / most importance to travel
related organizations to increase
business performance - a) Flight +
Hotels
Hotels/Airlines 11 4.64 .505 .152
Agents/Tour
Op/Search
Engines/GDS
22 4.68 .477 .102
A9b. Flight + Hotels + Car Rental
Hotels/Airlines 11 4.00 1.095 .330
Agents/Tour
Op/Search
Engines/GDS
22 4.50 .913 .195
A9c. Flight + Hotels + Car Rental
+ holiday package
Hotels/Airlines 11 4.09 1.221 .368
Agents/Tour
Op/Search
Engines/GDS
22 4.45 1.101 .235
A10a. Widen the travel product
distribution system - a) E-Tailing
sites
Hotels/Airlines 11 4.18 .751 .226
Agents/Tour
Op/Search
Engines/GDS
22 4.05 .785 .167
A10b. Tourism sites
Hotels/Airlines 11 4.18 .982 .296
Agents/Tour
Op/Search
Engines/GDS
22 4.32 .780 .166
A10c. Deal sites
Hotels/Airlines 11 4.73 .647 .195
Agents/Tour
Op/Search
Engines/GDS
22 4.41 .734 .157
A10d. Tour operators brochures &
websites
Hotels/Airlines 11 3.82 .982 .296
Agents/Tour
Op/Search
Engines/GDS
22 4.14 .834 .178
A11a. Differentiated products &
services - a) Exciting holiday
itinerary
Hotels/Airlines 11 4.45 .688 .207
Agents/Tour
Op/Search
Engines/GDS
22 4.59 .590 .126
A11b. Prompt customer service
Hotels/Airlines 11 4.64 .505 .152
Agents/Tour
Op/Search
Engines/GDS
22 4.86 .351 .075
A11c. Competitive pricing
Hotels/Airlines 11 4.91 .302 .091
Agents/Tour
Op/Search
Engines/GDS
22 4.82 .395 .084
178
Independent Samples Test
t-test for Equality of Means
t df Sig. (2-
tailed)
A1. Commitment (Commitment and
support from top management in term of
strategy and implementation)
-1.026 13.178 .323
A2. Technological infrastructure that
supports the dynamic business demand -.941 31 .354
A3. Online media marketing budgets -.681 14.098 .507
A4. Promotions to drive incremental
business -.196 31 .846
A5. Customer purchase patterns and tailor
products according to the purchase patterns -.594 31 .557
A6. Customer retention through customer
loyalty .119 31 .906
A7. Multi-Channel Marketing .000 31 1.000
A8. Partnership/Alliance to expand the
product offering -.670 31 .508
A9a. Products that are of most interest /
most importance to travel related
organizations to increase business
performance - a) Flight + Hotels
-.253 31 .802
A9b. Flight + Hotels + Car Rental -1.388 31 .175
A9c. Flight + Hotels + Car Rental +
holiday package -.863 31 .395
A10a. Widen the travel product
distribution system - a) E-Tailing sites .477 31 .637
A10b. Tourism sites -.434 31 .667
A10c. Deal sites 1.219 31 .232
A10d. Tour operators brochures &
websites -.975 31 .337
A11a. Differentiated products & services -
a) Exciting holiday itinerary -.592 31 .558
A11b. Prompt customer service -1.340 15.014 .200
A11c. Competitive pricing .670 31 .508
179
Definition of (t-test)
It can be used to determine if two sets of data are significantly different from
each other. Tests for statistical significance are used to address the question:
what is the probability that what we think is a relationship between two
variables is really just a chance occurrence? Tests for statistical significance tell
us what the probability is that the relationship we think we have found is due
only to random chance. They tell us what the probability is that we would be
making an error if we assume that we have found that a relationship exists. The
test statistic in the t-test is known as the t-statistic. The t-test looks at the t-
statistic, t-distribution and degrees of freedom to determine a p value
(probability) that can be used to determine whether the population means differ.
The t-test is one of a number of hypothesis tests.
Analysis
Travel agents, tour operators, meta search engines, global distribution
systems (GDS) perceive that commitment from the top management play
a crucial role in making the e-commerce business profitable as compared
to airlines and hotels
Travel agents, tour operators, meta search engines, global distribution
systems (GDS) perceive that technology is one of the key factors of
competitiveness as far as tourist markets and strategic tourism
management are concerned. Various high tech information and
communication technologies are in use in the tourism sector around the
world. They are used for tourism product development, marketing,
180
distribution and training of tourism sector personnel. These technologies
are so indispensable in order to find out and satisfy the ever-changing
demands for tourism products.
Travel agents, tour operators, meta search engines, global distribution
systems (GDS) perceive that Flight+Hotels+Carrentals+holiday
packages are products that are of most interest and importance as
compared to airlines & hotels.
Hotels and carriers place higher importance to deal sites as compared to
travel agents, tour operators, meta search engines, global distribution
system for distribution of travel products. Anyone in retail marketing
knows that coupons, deals, and rebates are indispensable tools to both
acquire first-time customers and retain existing ones. This fact accounts
for why deal sites have existed for so long and continue to have legs
under almost any economic circumstance. Since the early days of the
Internet, retailers could get their offers posted to all kinds of deal sites
without much difficulty (or the need for a professional media buyer).
With the advent of affiliates, many retailers didn't even need to post their
offers – their affiliates would do it for them or even develop whole deal
sites filled with nothing more than affiliate links. One of the most
apparent benefits is the affordable offers that these websites provide.
Everyone wants to get a way to preserve a few money on the products
that they may need or just want. Individuals may think that these offers
may be too deferential to be real, but in all reality these offers are
actually genuine. When searching for items on these websites, an
individual could find terrific presents for friends and close relatives. If
181
someone has a big family but does not necessarily have the disposable
income to buy presents for everyone, these websites can be extremely
beneficial. Gifts could be bought way in advance and put away for future
use. When surfing around through these websites, products can be
discovered that someone may not have even known about. Items can be
discovered that someone may not have seen or observed about in years.
Arriving across products like these can be extremely interesting.
Travel agents, tour operators, meta search engines, global distribution
systems place higher importance to tour operators brochures and
websites for distribution of travel products as compared to airlines and
hotels
Travel agents, tour operators, meta search engines, global distribution
systems place higher importance to prompt customer service as
compared to airlines and hotels. Thomascook.com the e-division of the
established high street agent captures customer data through online
registrations, sales and click streams. These data are used to extend
personalisation across a number of communication channels. On the site
users can register for email updates and are asked for a range of
information including contact details, date of birth, preferred holiday
activity and composition of travel party. With the customer‘s data held
on a database the information captured online is used by
Thomascook.com to improve the level of service offered by the call
centre staff. By accessing the customer‘s profile the call centre is able to
prioritize that customer and possibly explore up sell and cross sell
opportunities. Customer service is of vital importance to all
182
organisations in the travel and tourism sector. Excellent customer service
results in a high level of satisfaction and encourages customers to return
and to recommend the organisation to others.
T-Test (Methods & practices to structure the e-commerce
business in the travel industry related organizations
Type of
Organization
N Mean Std.
Deviatio
n
Std. Error
Mean
C1. Customer friendly
website for consumers to
easily locate and book
travel related products
Hotels/Airlines 11 4.91 .302 .091
Agents/Tour
Op/Search
Engines/GDS
22 5.00 .000 .000
C2. Regular updating the
website with latest and
correct information for
consumers to make
informed decision
Hotels/Airlines 11 4.82 .405 .122
Agents/Tour
Op/Search
Engines/GDS
22 4.82 .395 .084
C3. Prompt response to
customers' problems,
suggestions, and
complaints.
Hotels/Airlines 11 4.55 .522 .157
Agents/Tour
Op/Search
Engines/GDS
22 4.91 .426 .091
C4. Investment in tablet
and smart phone apps
Hotels/Airlines 11 4.55 .820 .247
Agents/Tour
Op/Search
Engines/GDS
22 4.77 .528 .113
C5. Advance
Technological
infrastructure to meet the
dynamic consumer
demands & fasten
business operations
Hotels/Airlines 11 4.91 .302 .091
Agents/Tour
Op/Search
Engines/GDS
22 4.86 .468 .100
C6. Analytical tools to
track consumer behavior
& transactions
Hotels/Airlines 11 4.27 .647
.195
Agents/Tour
Op/Search
Engines/GDS
22 4.41 .666 .142
183
C7. Consistent offline
and e-media advertising
without any blackout
periods
Hotels/Airlines 11 4.55 .522 .157
Agents/Tour
Op/Search
Engines/GDS
22 4.14 1.356 .289
C8. Business alliance
with white label products
e.g. hotels, flights, cab,
insurance, holiday
package
Hotels/Airlines 11 4.55 .688 .207
Agents/Tour
Op/Search
Engines/GDS
22 4.45 .671 .143
C9. Informed reports for
forecasting and decision
making
Hotels/Airlines 11 4.64 .505 .152
Agents/Tour
Op/Search
Engines/GDS
22 4.27 .703 .150
C10. Interactive
feedback between
customer and business
Hotels/Airlines 11 4.09 .701 .211
Agents/Tour
Op/Search
Engines/GDS
22 4.36 .658 .140
C11. Consistent
Promotion design
tailored according to the
consumer purchase
patterns
Hotels/Airlines 11 4.55 .522 .157
Agents/Tour
Op/Search
Engines/GDS
22 4.64 .492 .105
C12. Innovative
payment gateway
features to enhance
consumer experience &
increase business
performance
Hotels/Airlines 11 4.09 .831 .251
Agents/Tour
Op/Search
Engines/GDS
22 4.36 .658 .140
C13. Improve Process
efficiency - streamline
the time to develop a
custom itinerary
Hotels/Airlines 11 3.91 .701 .211
Agents/Tour
Op/Search
Engines/GDS
22 4.32 .716 .153
C14. Improve Process
efficiency - The time
taken to quote the
offering & price
Hotels/Airlines 11 4.36 .505 .152
Agents/Tour
Op/Search
Engines/GDS
22 4.55 .596 .127
C15. Engage with Hotels/Airlines 11 4.45 .688 .207
184
exciting content on
social media to
encourage engagement
between travel products
and consumers
Agents/Tour
Op/Search
Engines/GDS
22 4.41 .666 .142
C16. Multi-Channel
Marketing
Hotels/Airlines 11 4.64 .674 .203
Agents/Tour
Op/Search
Engines/GDS
22 4.73 .456 .097
Independent Samples Test
t-test for Equality of
Means
t df Sig. (2-
tailed)
C1. Customer friendly website for
consumers to easily locate and book travel
related products
-1.000 10.000 .341
C2. Regular updating the website with latest
and correct information for consumers to
make informed decision
.000 19.668 1.000
C3. Prompt response to customers'
problems, suggestions, and complaints. -2.143 31 .040
C4. Investment in tablet and smart phone
apps -.966 31 .342
C5. Advance Technological infrastructure to
meet the dynamic consumer demands &
fasten business operations
.292 31 .772
C6. Analytical tools to track consumer
behavior & transactions -.560 31 .580
C7. Consistent offline and e-media
advertising without any blackout periods .960 31 .345
C8. Business alliance with white label
products e.g. hotels, flights, cab, insurance,
holiday package
.364 31 .718
C9. Informed reports for forecasting and
decision making 1.526 31 .137
C10. Interactive feedback between customer
and business -1.099 31 .280
185
C11. Consistent Promotion design tailored
according to the consumer purchase patterns -.490 31 .627
C12. Innovative payment gateway features
to enhance consumer experience & increase
business performance
-1.028 31 .312
C13. Improve Process efficiency -
streamline the time to develop a custom
itinerary
-1.558 31 .129
C14. Improve Process efficiency - The time
taken to quote the offering & price -.867 31 .393
C15. Engage with exciting content on social
media to encourage engagement between
travel products and consumers
.183 31 .856
C16. Multi-Channel Marketing -.459 31 .649
Travel agents, tour operators, travel meta search engines, global
distribution systems place high importance on updating the websites
regularly and making the websites consumer friendly in order to find
travel products and book easily.
Travel agents, tour operators, travel meta search engines, global
distribution systems place high importance on prompt response to
consumer complaints.
Travel agents, tour operators, travel meta search engines, global
distribution systems place high importance on implementing mobile
technology for travel industry. Smartphone- and tablet-based searches
for hotel rooms and airline tickets are growing in the double- and triple-
digits in major markets. Travel companies have realized they need to
invest a great deal more in mobile apps and cloud services, and try to
out-innovate their competition on mobile. The rapid adoption rate of
mobile devices is driving a myriad of changes in how travelers access
information and plan their trips. And how the travel industry responds to
186
those needs. Mobile technology is also allowing people to book travel
closer to their trip start date and their destination.
Airlines and hotels place higher importance on integrated advertising
(offline and online advertising) as compared to travel agents, tour
operators, meta search engines and global distribution systems. The
conversion rate improves as a result of integrated advertising. The brand
image gets amplified across both offline and online advertising channels.
Integrated advertising results in reaching out to a wider audience base
and bring new customers to experience the travel products. Consistent
advertising amplifies brands promise of providing value to the
consumers by constant innovation in products and services that meet
consumer‘s needs. There‘s been much discussion on the strategies
between traditional marketing and digital marketing – mostly regarding
how effective one is over the other. The former practice consisted mostly
of dividing concentrations on online and offline strategies, but experts
now consider that melding the two together can reap better benefits, as
long as both campaigns are focused on a central message. Each
advertiser sells to a different segment of consumers, and each medium is
targeting a different audience. We characterize the competitive
equilibrium in the advertising markets and evaluate the implications of
targeting. An increase in targeting leads to an increase in the total
number of consumer-product matches, and hence in the social value of
advertising. We distinguish offline and online media by their targeting
ability: low versus high. As consumers‘ relative exposure to online
media increases, the revenues of offline media decrease, even though the
187
price of advertising might increase. he Internet has allowed many
advertisers to address a targeted audience beyond the reach of traditional
media. In fact, it has been argued that the distinguishing feature of
Internetadvertising is its ability to convey information to a targeted
audience. In particular, targeting improves the quality of the match
between the consumer and the advertisement message, and enables
smaller businesses to access advertising markets from which they were
previously excluded.
Airlines and hotels place higher importance on informed reports for
business forecasting and decision-making as compared to travel agents,
tour operators, meta search engines and global distribution systems.
Informed reports helps in forecasting demand and creates dynamic and
systematic process that can be re-used. Forecasting based on informed
reports helps business predict future results. In many business situations,
there is a need to maximize revenue by selling a limited amount of a
product. For example, in selling seats for a flight, the number of seats is
fixed, they can be sold until the departure time, thereafter they simply
perish; given the fixed inventory of seats, airlines need to forecast
demand in order to set prices accordingly. Forecasting demand in
passenger airlines is a challenging task, because the knowledge about the
customers‘ preferences is limited, and many demand drivers does not
follow a regular repeating pattern. Forecasting future demand in the
lodging industry is crucial because it leads to an efficient planning for,
and decision making to all the departments, and most importantly it is
one of the drivers of pricing. The accuracy of the forecast is essential
188
because the forecast is the main driver of the pricing/room allocation
decisions; inaccurate forecasts or predictions will diminish the hotel's
revenues and profit margin. In fact, a 10% improvement in forecasting
accuracy translates into a 1.5 to 3% increase in revenue
T-Test (Factors that are detrimental to the growth of the e-
commerce business in the travel industry related organizations)
Type of
Organization
N Mean Std.
Deviation
Std.
Error
Mean
D1.a Flight + Hotels
Hotels/Airlines 11 4.45 .688 .207
Agents/Tour
Op/Search
Engines/GDS
22 4.50 .913 .195
D1b Flight + Hotels + Car
Rental
Hotels/Airlines 11 4.18 .874 .263
Agents/Tour
Op/Search
Engines/GDS
22 4.23 1.152 .246
D1c Flight + Hotels + Car
Rental + holiday package
Hotels/Airlines 11 4.09 1.221 .368
Agents/Tour
Op/Search
Engines/GDS
22 4.50 1.185 .253
D2. Non Differentiated
products & services from
competition
Hotels/Airlines 11 4.36 .674 .203
Agents/Tour
Op/Search
Engines/GDS
22 4.59 .854 .182
D3. Lack of Advance
Technological infrastructure to
meet the dynamic consumer
demands
Hotels/Airlines 11 4.55 .522 .157
Agents/Tour
Op/Search
Engines/GDS
22 4.82 .501 .107
D4. Slow time to market than
competition
Hotels/Airlines 11 4.73 .467 .141
Agents/Tour
Op/Search
Engines/GDS
22 4.64 .727 .155
D5. Brand lacks loyalty Hotels/Airlines 11 4.55 .522 .157
189
&satisfaction Agents/Tour
Op/Search
Engines/GDS
22 4.68 .568 .121
D6. Brand lacks consumer
preference
Hotels/Airlines 11 4.36 .809 .244
Agents/Tour
Op/Search
Engines/GDS
22 4.73 .550 .117
D7. Delay in payments of
suppliers/partners leading to
suspension of business deals
and advertising campaigns
Hotels/Airlines 11 4.00 1.000 .302
Agents/Tour
Op/Search
Engines/GDS
22 4.23 1.066 .227
Independent Samples Test
t-test for Equality of Means
t df Sig. (2-
tailed)
D1.a Flight + Hotels -.145 31 .885
D1b Flight + Hotels + Car Rental -.115 31 .909
D1c Flight + Hotels + Car Rental + holiday
package -.926 31 .362
D2. Non Differentiated products & services from
competition -.769 31 .448
D3. Lack of Advance Technological
infrastructure to meet the dynamic consumer
demands
-1.454 31 .156
D4. Slow time to market than competition .376 31 .709
D5. Brand lacks loyalty & satisfaction -.667 31 .510
D6. Brand lacks consumer preference -1.526 31 .137
D7. Delay in payments of suppliers/partners
leading to suspension of business deals and
advertising campaigns
-.589 31 .560
Travel agents, tour operators, travel meta search engines, GDS perceive
that it is important for travel related organizations to provide a wide
range of travel solutions not just selective travel solutions. Travel agents,
tour operators, travel meta search engines, GDS place high importance
on providing flights, hotels, car rental and holiday package to the
190
consumers to book on a single platform when the consumers visit.
Consumers need not go to different travel service provider platforms to
book different travel products. Multiple products under one roof invites
new customers and enhances brand image and hence brand preference
which ultimately leads to brand satisfaction and loyalty.
Travel agents, tour operators, travel meta search engines, GDS place
high importance that lack of advance technological infrastructure may be
detrimental for business growth as business would demand enhancement
in technology. Travel industry is highly dependent on technology as the
products are built with the help of technology. Technology trends in the
travel industry are complex – they involve cutting-edge content
aggregation, distribution, user engagement, intelligent agents, mobile
payments and more. Some new technologies are designed to improve the
user experience, others to contribute to business performance and service
delivery. But all innovations must work within the context of a rapidly
evolving technology environment in which consumers are changing the
way they interact with devices and suppliers can deliver new capability
faster and cheaper than ever before.
Travel agents, tour operators, travel meta search engines, GDS place
high importance that lack of brand preference in the consumers mind can
be detrimental for business growth. Most companies are running
programs that can estimate customer satisfaction levels and provide
more customer-oriented products and services. Because customer
satisfaction is a post hoc evaluation of consumption experience, it has
been regarded as a fundamental determinant of long-term consumer
191
behavior. Brands with a strong hold on consumer minds can capitalize
on that hold through brand extension. The new products get traction in
the market, at least in theory, on the strength of the brand name. A weak
brand name that lacks this hold on consumer minds cannot lend strength
to a new product to capture market share.
Organizations who own inventory to be sold through
intermediaries and their own websites (hotels, airlines)
Critical Success Factors that make e-commerce business
profitable in the travel industry related organizations (in order
of importance)
Descriptive Statistics
N Mean Std.
Deviation
A11c. Competitive pricing 11 4.91 .302
A10c. Deal sites 11 4.73 .647
A2. Technological infrastructure that supports the dynamic
business demand 11 4.73 .467
A11b. Prompt customer service 11 4.64 .505
A9a. Products that are of most interest / most importance to
travel related organizations to increase business performance -
a) Flight + Hotels
11 4.64 .505
A4. Promotions to drive incremental business 11 4.45 .688
A11a. Differentiated products & services - a) Exciting holiday
itinerary 11 4.45 .688
A7. Multi-Channel Marketing 11 4.45 .820
A1. Commitment (Commitment and support from top
management in term of strategy and implementation) 11 4.45 .820
A3. Online media marketing budgets 11 4.36 .809
A10b. Tourism sites 11 4.18 .982
A8. Partnership/Alliance to expand the product offering 11 4.18 .874
A10a. Widen the travel product distribution system - a) E-
Tailing sites 11 4.18 .751
A9c. Flight + Hotels + Car Rental + holiday package 11 4.09 1.221
192
A6. Customer retention through customer loyalty 11 4.00 .632
A5. Customer purchase patterns and tailor products according to
the purchase patterns 11 4.00 .894
A9b. Flight + Hotels + Car Rental 11 4.00 1.095
A10d. Tour operators brochures & websites 11 3.82 .982
Valid N (listwise) 11
Hotels and airlines perceive the following as key success factors that makes e-
commerce business profitable in order of importance.
Competitive pricing
Deal sites as an important distribution tool
Information technology
Booking of Flight and hotels as two independent product
Promotions to drive incremental business
Multi-channel marketing to create product and brand awareness
Factors that will have an impact on overall business
performance as a result of the structuring of e-commerce
business in the travel industry related organizations (in order of
importance)
Descriptive Statistics
N Mean Std.
Deviation
B9. Customer friendly website for consumers to easily
locate and book tr 11 5.00 .000
B6. Competitive pricing 11 4.64 .505
B2. Prompt response to customers' problems, suggestions,
and complaints. 11 4.64 .505
B4. Differentiated products & services from competition 11 4.55 .522
193
B5. Advance Technological infrastructure to meet the
dynamic consumer demands 11 4.45 .688
B7. Efficient deals/packages/inventory distribution system 11 4.36 .674
B1. Customer-tailored marketing via customer profiling 11 4.27 .786
B3. Customer Loyalty & satisfaction 11 4.27 .786
B8. Human resources skill set pertaining to travel industry 11 4.18 .874
Valid N (listwise) 11
Hotels and airlines perceive the following as key factors that will have an
impact on overall business performance in order of importance.
Customer friendly website which will create a superior booking
experience
Differentiated products and services from what competition offers
Efficient deals/packages that can be offered to the b2b and b2c markets
Tailor marketing communications based on consumer preferences
Methods & practices to structure the e-commerce business in the
travel industry related organizations (in order of importance)
Descriptive Statistics
N Mean Std. Deviation
C5. Advance Technological infrastructure to
meet the dynamic consumer demands & fasten
business operations
11 4.91 .302
C1. Customer friendly website for consumers to
easily locate and book travel related products 11 4.91 .302
C2. Regular updating the website with latest
and correct information for consumers to make
informed decision
11 4.82 .405
C9. Informed reports for forecasting and
decision making 11 4.64 .505
C16. Multi-Channel Marketing 11 4.64 .674
194
C8. Business alliance with white label products
e.g. hotels, flights, cab, insurance, holiday
package
11 4.55 .688
C7. Consistent offline and e-media advertising
without any blackout periods 11 4.55 .522
C4. Investment in tablet and smart phone apps 11 4.55 .820
C3. Prompt response to customers' problems,
suggestions, and complaints. 11 4.55 .522
C11. Consistent Promotion design tailored
according to the consumer purchase patterns 11 4.55 .522
C15. Engage with exciting content on social
media to encourage engagement between travel
products and consumers
11 4.45 .688
C14. Improve Process efficiency - The time
taken to quote the offering & price 11 4.36 .505
C6. Analytical tools to track consumer behavior
& transactions 11 4.27 .647
C10. Interactive feedback between customer
and business 11 4.09 .701
C12. Innovative payment gateway features to
enhance consumer experience & increase
business performance
11 4.09 .831
C13. Improve Process efficiency - streamline
the time to develop a custom itinerary 11 3.91 .701
Valid N (listwise) 11
Hotels and airlines perceive the following methods and practices required to
structure the e-commerce business in order of importance.
Advance technologies (mobile and web)
Customer friendly websites which creates superior booking experience
Regular updates on the websites to increase the ranking in search
engines results
Alliance partnerships to widen the product offering to the consumers
Consistent offline and online advertising for retention and new customer
acquisition
195
Prompt response to consumers complaints and improvise brands
reputation
Consistent promotion design based on consumption patterns
Improve process efficiency – time taken to develop the product and offer
the same in the market
Analytics to track the traffic, consumer behavior and transactions.
Derive trends.
Factors that are detrimental to the growth of the e-commerce
business in the travel industry related organizations (in order of
importance)
Descriptive Statistics
N Mean Std. Deviation
D4. Slow time to market than competition 11 4.73 .467
D5. Brand lacks loyalty & satisfaction 11 4.55 .522
D3. Lack of Advance Technological
infrastructure to meet the dynamic consumer
demands
11 4.55 .522
D1.a Flight + Hotels 11 4.45 .688
D6. Brand lacks consumer preference 11 4.36 .809
D2. Non Differentiated products & services
from competition 11 4.36 .674
D1b Flight + Hotels + Car Rental 11 4.18 .874
D1c Flight + Hotels + Car Rental + holiday
package 11 4.09 1.221
D7. Delay in payments of suppliers/partners
leading to suspension of business deals and
advertising campaigns
11 4.00 1.000
Valid N (listwise) 11
Hotels and airlines perceive the following factors are detrimental to the growth
of the e-commerce in order of importance
196
Slow time to market of a product then competition. A common
assumption is that Time To Market matters most for first-of-a-kind
products, but actually the leader often has the luxury of time, while the
clock is clearly running for the followers.
Brand lacks satisfaction and loyalty
Lack of advance technological infrastructure
Non- competitive pricing for flights and hotels as a product range
offering to consumers.
Organizations who display inventory by connecting with the
systems of the organizations who own inventory (Online travel
agents, tour operators, traditional travel agents, travel meta
search engines, Global Distribution Systems)
Critical Success Factors that make e-commerce business
profitable in the travel industry related organizations (in order
of importance)
Descriptive Statistics
N Mean Std.
Deviation
A11b. Prompt customer service 22 4.86 .351
A2. Technological infrastructure that supports the dynamic
business demand 22 4.86 .351
A11c. Competitive pricing 22 4.82 .395
A1. Commitment (Commitment and support from top
management in term of strategy and implementation) 22 4.73 .456
A9a. Products that are of most interest / most importance to travel
related organizations to increase business performance - a) Flight
+ Hotels
22 4.68 .477
197
A11a. Differentiated products & services - a) Exciting holiday
itinerary 22 4.59 .590
A3. Online media marketing budgets 22 4.55 .510
A4. Promotions to drive incremental business 22 4.50 .598
A9b. Flight + Hotels + Car Rental 22 4.50 .913
A7. Multi-Channel Marketing 22 4.45 .596
A9c. Flight + Hotels + Car Rental + holiday package 22 4.45 1.101
A10c. Deal sites 22 4.41 .734
A8. Partnership/Alliance to expand the product offering 22 4.36 .658
A10b. Tourism sites 22 4.32 .780
A5. Customer purchase patterns and tailor products according to
the purchase patterns 22 4.18 .795
A10d. Tour operators brochures & websites 22 4.14 .834
A10a. Widen the travel product distribution system - a) E-Tailing
sites 22 4.05 .785
A6. Customer retention through customer loyalty 22 3.95 1.174
Valid N (listwise) 22
Online travel agents, tour operators, traditional travel agents, travel meta search
engines, Global Distribution Systems perceive the following as key success
factors that makes e-commerce business profitable in order of importance.
Prompt customer service
Advance technology
Competitive pricing
Commitment from top management in terms of strategy and
implementation
198
Factors that will have an impact on overall business
performance as a result of the structuring of e-commerce
business in the travel industry related organizations (in order of
importance)
Descriptive Statistics
N Mean Std. Deviation
B9. Customer friendly website for consumers to easily locate and book tr 22 5.00 .000
B4. Differentiated products & services from competition 22 4.82 .395
B5. Advance Technological infrastructure to meet the dynamic consumer
demands 22 4.82 .395
B6. Competitive pricing 22 4.77 .528
B3. Customer Loyalty & satisfaction 22 4.77 .528
B2. Prompt response to customers' problems, suggestions, and complaints. 22 4.68 .568
B7. Efficient deals/packages/inventory distribution system 22 4.55 .510
B1. Customer-tailored marketing via customer profiling 22 4.36 .727
B8. Human resources skill set pertaining to travel industry 22 4.23 .752
Valid N (listwise) 22
Online travel agents, tour operators, traditional travel agents, travel meta search
engines, Global Distribution Systems perceive the following as key factors that
will have an impact on overall business performance in order of importance.
Customer friendly websites which creates superior booking experience
Differentiated products & services from competition
Advance technology infrastructure
Competitive pricing
199
Methods & practices to structure the e-commerce business in the
travel industry related organizations (in order of importance)
Descriptive Statistics
N Mean Std.
Deviation
C1. Customer friendly website for consumers to easily locate and
book travel related products 22 5.00 .000
C3. Prompt response to customers' problems, suggestions, and
complaints. 22 4.91 .426
C5. Advance Technological infrastructure to meet the dynamic
consumer demands & fasten business operations 22 4.86 .468
C2. Regular updating the website with latest and correct information
for consumers to make informed decision 22 4.82 .395
C4. Investment in tablet and smart phone apps 22 4.77 .528
C16. Multi-Channel Marketing 22 4.73 .456
C11. Consistent Promotion design tailored according to the consumer
purchase patterns 22 4.64 .492
C14. Improve Process efficiency - The time taken to quote the
offering & price 22 4.55 .596
C8. Business alliance with white label products e.g. hotels, flights,
cab, insurance, holiday package 22 4.45 .671
C6. Analytical tools to track consumer behavior & transactions 22 4.41 .666
C15. Engage with exciting content on social media to encourage
engagement between travel products and consumers 22 4.41 .666
C12. Innovative payment gateway features to enhance consumer
experience & increase business performance 22 4.36 .658
C10. Interactive feedback between customer and business 22 4.36 .658
C13. Improve Process efficiency - streamline the time to develop a
custom itinerary 22 4.32 .716
C9. Informed reports for forecasting and decision making 22 4.27 .703
C7. Consistent offline and e-media advertising without any blackout
periods 22 4.14 1.356
Valid N (listwise) 22
Online travel agents, tour operators, traditional travel agents, travel meta search
engines, Global Distribution Systems perceive the following methods and
practices required to structure the e-commerce business in order of importance.
200
Customer friendly websites which creates superior booking experience
Prompt response to consumer complaints
Advance technology infrastructure (web & mobile)
Regular updates on the websites to increase the ranking in search
engines results
Multi-Channel marketing to increase product and brand awareness
Consistent promotion to drive incremental revenues
Improve process efficiencies - time taken to develop the product and
offer the same in the market
Business alliances to expand the product range for the benefit of
consumers
Factors that are detrimental to the growth of the e-commerce
business in the travel industry related organizations (in order of
importance)
Descriptive Statistics
N Mean Std. Deviation
D3. Lack of Advance Technological infrastructure to meet the
dynamic consumer demands 22 4.82 .501
D6. Brand lacks consumer preference 22 4.73 .550
D5. Brand lacks loyalty & satisfaction 22 4.68 .568
D4. Slow time to market than competition 22 4.64 .727
D2. Non Differentiated products & services from competition 22 4.59 .854
D1c Flight + Hotels + Car Rental + holiday package 22 4.50 1.185
D1.a Flight + Hotels 22 4.50 .913
D7. Delay in payments of suppliers/partners leading to suspension
of business deals and advertising campaigns 22 4.23 1.066
D1b Flight + Hotels + Car Rental 22 4.23 1.152
Valid N (listwise) 22
201
Online travel agents, tour operators, traditional travel agents, travel meta search
engines, Global Distribution Systems perceive the following factors are
detrimental to the growth of the e-commerce in order of importance
Lack of advance technological infrastructure
Brand lacks satisfaction and loyalty
Slow time to market of a product then competition. A common
assumption is that Time To Market matters most for first-of-a-kind
products, but actually the leader often has the luxury of time, while the
clock is clearly running for the followers.
Lack of product and service differentiation from competition
Non-competitive pricing for flight, hotels, car rental and holiday package
as a product range offering to consumers.
Delay in payment to the suppliers can lead to suspension of business
deals and advertising campaigns. It weakens your organisation because it
harms your reputation, damages your supply sources and strains your
relations with suppliers, late payment is often taken as an indication that
the buyer is in difficulties. If you create this impression with your
suppliers you may find that their terms worsen. The way
purchasing/sales relationship is managed is important to the profit
margins. A commitment to prompt payment can be a powerful aid to
better buying; it will certainly produce closer, more co-operative
partnerships between the firm and suppliers. Delay in payment of
commission slabs to the travel agents result in either removing the
inventory from the OTA/B2B websites or retail travel agents stop
inclusion of the flight/hotel inventory in their
202
Chapter 11
Conclusion
Tourism is backbone of country's economy. Due to increment on people income, more
and more people are travelling and they are using various channels to purchase their
holiday, some are still using traditional ways buying tourism with the travel agents,
tour operators, hotels etc and some are using electronic way to book and buy tourism
product. Even many travel and tour companies are adapting e-commerce to boom their
business, they are moving from traditional ways to e-business ways to grasp markets
as people are using internet and other online software more often. E-commerce is the
new way for promoting and selling tourism products through web.It is not easy to
adapt e-commerce at once from traditional way, investment on information
technologies costs huge amount and further it need skill human resources. After the
adaption of e-commerce in business, it has to face many challenges; one of the main
challenges is to attract traditional buyers who prefer buying products from travel
agencies rather than booking through web. To lure these customers, awareness
towards e-commerce is necessary; website should be user friendly, informative,
should have very rich contents, if possible they should provide virtual tour of the
destination. There are several benefits as well as barriers for adaption of e-commerce
in travel and tourism, benefits are low operating costs, interaction with customers,
customer can choose products using internet, fast and speed in service, easy to find
new business partners, can communicate with customers during holidays in case of
any problems etc however key barriers for adopting e-commerce is huge investment,
consumer's loyalty, lack of human skill resources, government policies about e-
commerce, customer confidence etc. Due to e-commerce in travel and tourism,
203
behaviour of consumer is changed, they are less loyal toward the company and it's
easy for them to change the company in few seconds. To retain customer, companies
have to provide excellent services and offer loyalty programs to customers. While
going through the above literature have found many things in common. It has been
found that companies have to consider various things while adopting e-commerce
although it is beneficial for them as it reduces costs, save time, their brand presence
worldwide etc however they admired that companies can lose personal touch with
customers and their loyalty as it is very easy to switch companies due to variety of
choices offered to customers. E-Commerce has provided great advantages for both
demanders (consumers) and suppliers (businesses) of economic activities. With E-
commerce, consumers can search and compare a variety of products and services in
the global market, and then place their orders conveniently anytime and anywhere
without geographic limitations. This simplifies the buying process and provides more
selections to consumers than traditional businesses are able to. The Internet serves as a
new communication and distribution channel for travelers and suppliers of travel
services and products. Commercial websites have many attributes with different roles
and functions in company‘s marketing efforts. The websites with appropriate set of
attributes can influence satisfaction, affect consumers‘ online shopping behavior and
play a positive role in creating demand. Proper use of the attributes can increase
online transactions and repurchase intention judgments, not only consumers‘ current
purchases but also future purchase intentions. Therefore, it is important for companies
to better understand how online consumers evaluate these attributes and what makes
them remain on the websites. In contemporary travel agencies and tour operators
business, the Internet has shown to be a profitable medium of tourism promotion and
sales. The Internet represents an interesting and useful distribution channel for
204
collecting clients and it provides the ability to identify their desires. Promotional
visualization of tourism services and products through multimedia technology leaves
greater impression on potential customer than standard brochures, catalogues and
leaflets. Overbooking has become almost impossible because all communication
problems that may cause it are removed. The Internet allows the improvement of
travel agencies and tour operators by speeding up communication and providing all
the necessary information. Product distribution and services of agencies do not depend
on the quantity of printed catalogues anymore and information about them can reach
millions of the Internet users. The Internet provides selling services of travel agencies
on demand. As technology is evolving faster than ever before, it has made most
travellers around the world much more technology-savvy than in the past. The internet
has revolutionized the tourism industry more than any other factor in the last few
decades. Also, as more people are connected to each other, with access to the vast
pool of information available online, an increasing number of travelers are seeking
information via the internet prior to making any travel decisions. Hence, it has become
important for the tourism industry to adapt and uplift its practices and skills of the
workforce within in to meet changing customer behavior. Challenges to the expansion
of technology take-up by tourism businesses. The biggest challenge imposed upon the
tourism industry in adopting technology is the lack of accurate education of the ‗right‘
technology that is suitable for their business. There is a very big gap between the
tourism industry and the technology industry. Some organizations have been able to
tap into this gap and have turned into Online Travel Agents (OTA). However, it is not
every tourism business needs to become an OTA to successfully utilize technology. It
is more important to understand each business‘s competitive edge and adopt the
related technology in order to strengthen their competencies.
205
Chapter 12
Suggestion & Recommendation
Recommend that adaption of e-commerce is very fruitful to tour and travel
companies however along with adaption of e-commerce, companies have to
focus on changing behavior of customer as well, what customer expects while
booking and buying through the web. What will be customer perception using e-
commerce in travel and tourism? Research on customer perception, customer
exception, level of customer satisfaction, compensation in case of bad services,
secured online payment system etc. should be deeply researched while adapting
e-commerce in travel and tourism. In this competitive environment, business
decision makers need to know some guidelines for developing their e-commerce
presences. Understanding what is important to users is essential in
differentiating its website from the competitors‘, creating a more compelling e-
commerce experience, thereby potentially boosting profits. Client engagement
— both acquisition and retention — is the key to success in the travel industry.
Whether a boutique travel agency or large tour operator, travel industry
companies need to ensure they attain the right volumes of business by
consistently finding and retaining new clients. As disintermediation and
intensifying competition continue to commoditise travel packages and shrink
margins, both client acquisition and retention have become critical competitive
advantages. Yet how can travel industry companies communicate and engage
with large numbers of both prospective and existing clients in a way that is not
only personal and relevant enough to produce the right results, but is also cost-
effective? The answer is multichannel marketing.
206
Delivering on the promise of Customer Relationship Management, multichannel
marketing is intelligent, data-driven marketing in the online environment. As
more and more travel industry companies are discovering, multichannel
marketing is the key to winning more business and strengthening client
relationships through personalized, relevant communication. Multichannel
marketing means more sales by enabling you to continuously profile prospects
and find out more about them — what their changing travel likes, needs and
preferences are — multichannel marketing will help you:
Identify promotions and special offers that will appeal to the largest
number of clients;
Ensure promotions are always relevant — targeted at the right prospects;
Ensure promotions are delivered to each chosen prospect at the most
opportune time and in the preferred manner (web, mobile or email).
Multichannel marketing means strengthened client relationships
By enabling you to personalize your client communication, request feedback
and record client responses, multichannel marketing will help you:
Capitalize on client relationships by consistently anticipating their
specific needs;
Exploit the growing preference for self-service by presenting the right
value offering to each individual client at the right time;
Eliminate the frustration and cost caused by irrelevant messages sent at
inappropriate times.
207
Multichannel marketing means cost-efficient communication - By enabling
you to automate and schedule your client communication multichannel
marketing will help reduce the administrative burden and costs of regular or
routine communication tasks like monthly newsletters; take maximum
advantage of last minute specials by sending out personalised, high speed, high
volume messages to large, diverse audiences (bulk emails or SMS).
Two key areas for growth is predicted with regards to utilizing tourism
technology in the tourism industry correctly. The first area is the marketing of
the tourism destinations, products and services. Selling tourism products and
services online has changed from being just ―price-conscious‖ to being ―an
inspiration‖ to the viewer to travel. As the online user absorbs information from
a variety of sources, it is usually the site or information source that can best
stimulate the viewer to travel that will be remembered by the user. Digital
Marketing, Search Engine Marketing, Mobile and Location Based Marketing,
and a variety of other channels exist today for reaching the potential traveller.
However, it is the appeal of the content, combined with the right pricing that
will ultimately attract the user to your business. The second area is the
infrastructure of the organization, which determines the readiness to respond to
customer requirements. As more travelers are expect personalized products and
services to meet their demands, it is important for tourism businesses to have
tools that can store and monitor information in order to meet the individual
needs of their clients. The better you know your customer, the more likely you
will retain them for a longer period of time. Customer relationship management
and other fundamental information management systems are essential for
businesses to scale-up.
208
Annexure 1 - Bibliography
Chong, Sandy, Electronic Commerce Adoption By Small- And Medium-Sized
Enterprises In Australia: An Empirical Study Of Influencing Factors. Curtin
University of Technology, GPO Box U1987 Perth, Western Australia. 6845,
Australia, chongs@cbs.curtin.edu.au
AmitBasu and Steve Muylle. How to Plan E-Business Initiatives in Established
Companies.Mit Sloan Management Review, Fall 2007, Vol.49 No. 1
AlkaRaghunath&MurliDharPanga. Problem and Prospects of
Ecommerce.Medicaps Institute of Techno Management Indore, Volume 2,
Issue–1, 2013
MairajSalim, The Impact Of E-Commerce On Business Value In Service
Organisations, Aligarh Muslim University Aligarh (India), 2002.
KittipongLaosethakul, Critical Success Factors For E-Commerce In Thailand: A
Multiple Case Study, M.S., University Of Alabama In Huntsville, December 16,
2005
Andryce M. Zurick, E-Business Planning And Decision-Making Processes,
Capella University, September 2007
Lee, Sang Myung, Determinants of e-business model performance, ProQuest
Dissertations and Theses, 2005
209
Hassan M. Selim, Critical Factors Classification for Firm Adoption of E-
Commerce, College of Business & Economics, United Arab Emirates
University, Al Ain, United Arab Emirat
Gaurav Seth, Analyzing the Effects of Social Media on the Hospitality Industry,
University of Nevada, Las Vegas
Shahanur Islam, E-Business – A Tool to Enhance Tourism Industry: A Study on
Bangladesh, ASA University Bangladesh, Vol. 6 No. 1
Hsu-Kuan Jonathan Liu and Liwen Chen, The perception of travel agents in
Taiwan regarding travel website and training needs for adopting E-commerce,
African Journal of Business Management Vol.5 (26), pp. 10811-10820.
Mustafa Öz, A research to evaluate the airline companies‘ websites via a
consumer oriented approach, African Journal of Business Management Vol.
6(14), pp. 4880-4900
Mamaghani, Farrokh International Journal of Management , Vol. 26, No. 3
210
Annexure 2 – Webliography
www.google.com
www.wikipedia.com
www.tnooz.com
www.emarketer.com
www.questia.com
www.pioneerjournal.in
www.buuteeq.com
www.tourism.gov.in
www.gidb.org
www.statista.com
211
Annexure 3 – Questionnaire
Critical Success Factors that make e-commerce business profitable in the travel
industry related organization
1---- Strongly
Disagree
2---- Disagree
3---- Neutral
4---- Agree
5---- Strongly
Agree
Commitment (Commitment and support from top
management in term
of strategy and implementation)
1
2
3
4
5
Technological infrastructure that supports the
dynamic business demand
1
2
3
4
5
Online media marketing budgets
1
2
3
4
5
Promotions to drive incremental business
1
2
3
4
5
Customer purchase patterns and tailor products
according to the purchase patterns
1
2
3
4
5
Customer retention through customer loyalty
1
2
3
4
5
Multi-Channel Marketing
1
2
3
4
5
Partnership/Alliance to expand the product offering
1
2
3
4
5
Products that are of most interest / most importance
to travel related organizations to increase business performance
a) Flight + Hotels 1
2
3
4
5
b) Flight + Hotels + Car Rental 1
2
3
4
5
c) Flight + Hotels + Car Rental + holiday package 1
2
3
4
5
Widen the travel product distribution system
a) E-Tailing sites
1
2
3
4
5
b) Tourism sites
1
2
3
4
5
c) Deal sites
1
2
3
4
5
D) Tour operators brochures & websites
1
2
3
4
5
Differentiated products & services
a) Exciting holiday itinerary 1
2
3
4
5
b) Prompt customer service 1
2
3
4
5
c) Competitive pricing
1
2
3
4
5
1
212
Factors which will have a impact on overall business performance as a result of the
structuring of e-commerce business in the travel industry related organizations
1----
Strongly
Disagree
2----
Disagree
3----
Neutral
4----
Agree
5----
Strongly
Agree
Customer-tailored marketing via
customer profiling
1
2
3
4
5
Prompt response to customers
Problems, suggestions, and
complaints.
1
2
3
4
5
Customer Loyalty & satisfaction
1
2
3
4
5
Differentiated products & services
from competition
1
2
3
4
5
Advance Technological
infrastructure to meet the dynamic
consumer demands
1
2
3
4
5
Competitive pricing
1
2
3
4
5
Efficient deals/packages/inventory
distribution system
1
2
3
4
5
Human resources skill set
pertaining to travel industry
1
2
3
4
5
Customer friendly website for
consumers to easily locate and
book travel related products
1
2
3
4
5
213
Methods & practices to structure the e-commerce business in the travel industry
related organizations
1
1----
Strongly
Disagree
2----
Disagree
3----
Neutral
4----
Agree
5----
Strongly
Agree
Customer friendly website for consumers to easily locate and book travel related
products
1
2
3
4
5
Regular updation of the website with latest
and correct information for consumers to make informed decision
1
2
3
4
5
Prompt response to customers
Problems, suggestions, and complaints.
1
2
3
4
5
Investment in tablet and smartphone apps
1
2
3
4
5
Advance Technological infrastructure to meet the dynamic consumer demands &
fasten business operations
1
2
3
4
5
Analytical tools to track consumer behavior & transactions
1
2
3
4
5
Consistent offline and e-media advertising
without any blackout periods
1
2
3
4
5
Business alliance with white label
products e.g. hotels, flights, cab,
insurance, holiday package
1
2
3
4
5
Informed reports for forecasting and
decision making
1
2
3
4
5
Interactive feedback between customer
and business
1
2
3
4
5
Consistent Promotion design tailored
according to the consumer purchase
patterns
1
2
3
4
5
Innovative payment gateway features to
enhance consumer experience & increase
business performance
1
2
3
4
5
Improve Process efficiency - streamline
the time to develop a custom itinerary
1
2
3
4
5
Improve Process efficiency - The time
taken to quote the offering & price
1
2
3
4
5
Engage with exciting content on social
media to encourage engagement between
travel products and consumers
1
2
3
4
5
Multi-Channel Marketing
1
2
3
4
5
214
Factors that are detrimental to the growth of the e-commerce business in
the travel industry related organizations
1----
Strongly
Disagree
2----
Disagree
3----
Neutral
4----
Agree
5----
Strongly
Agree
Non – Competitive Pricing of
Products that are of most interest
/ most importance to travel
related organizations to increase
business performance
1
2
3
4
5
a) Flight + Hotels
1
2
3
4
5
b) Flight + Hotels + Car Rental
1
2
3
4
5
c) Flight + Hotels + Car Rental
+ holiday package
1
2
3
4
5
Non Differentiated products &
services from competition
1
2
3
4
5
Lack of Advance Technological
infrastructure to meet the
dynamic consumer demands
1
2
3
4
5
Slow time to market then
competition
1
2
3
4
5
Brand lacks loyalty &
satisfaction
1
2
3
4
5
Brand lacks consumer
preference
1
2
3
4
5
Delay in payments of
suppliers/partners leading to
suspension of business deals and
advertising campaigns
1
2
3
4
5
top related