E-Business and IT Applications for Tourism BSM076

Executive Summary:

This paper on reevaluation of business by the introduction and development of Internet

and the impact of online technologies on tourism management highlights on the
development of Internet, the general impact of usage of Internet and other related
technologies on the current growing business arena and particularly focuses on the
development and growth of the tourism industry by applying various online technologies
and how to improve the industry further with the help of the available technologies and
the growing technologies on the horizon.

Introduction:
The new revolution the Internet has thrown a spell bound on the way that many
businesses are being carried out today. This new technology that has been a buzzword
for quite few years around the world has made a profound impact on the field of business
too. The Internet has now become a very critical tool to carry out commerce that has
outraged the traditional method of doing business. Internet has got vested interest
throughout the world becomes it provides unlimited potentials for buyers and sellers to
access information, goods and services (UNESCAP, 2009) and wipes away the barrier
and limitation on geographical locations. Internet the global world has got many
subsidiary tools that can enhance communication and business and today’s business
environment have started utilizing the Internet for a variety of transaction ranging from
emails to order processing online.

Impact of Internet on Business:

The introduction of computer and communication technology has brought about
unprecedented changes in the growth of businesses and the approach adopted by the
business units. There is a significant impact on the Business-to-Business
communications from mid 1970s tending towards inter-organizational transactions
online. This concentration of Business-to-Business organizations has greatly improved
their market growth potential greatly increasing their revenue around $43 billion from
1998 (E-Procurement, 2000) and thereafter follows a steady growth. The use of this
technology is not restricted based on the size of the business but its application ranging
from industrial giants to very micro, small and medium sized enterprises.

The introduction of Internet technology has thrilled the business world with the promises
and prospects of efficiency, effectiveness and innovation that could be used appropriately
to overcome the barriers of time and location and to build inter-organizational
relationship by reducing cost with the help of timely actions and faster transactions,
reduction in inventory, easier and faster access to global markets and introduction of new
suppliers and products available worldwide and efficient management of the entire
supply chain management process (Sung-Yeon Park & Gi Woong Yun, 2004). The EDI
(Electronic Data Interchange) system has contributed towards the success of worldwide
retail chain Wal_Mart by efficiently organizing and coordinating its pool of suppliers to
operate on a common platform without much investment to conduct trades online by
reducing cost and maximizing profit.

Forces Driving the Internet and Communication Technology:

The Internet and Communication Technologies growth has been continuously appended
with changes and its being shaped by a number of interrelated forces that includes:
developments in technology and technology supportive devices and tools, convergence of
telecommunications, broadcasting and multimedia with more sophisticated technologies,
globalization and internationalization of markets and business organizations and
emergence of advanced, economic, efficient and faster broadband services (UNESCAP,
2009).

The Tourism Industry:

Tourism is nothing but traveling for recreational or leisure purposes and The World
Tourism Organization (WHO) internationally standardizes it. According to The World
Tourism Organization tourists are people who “travel to and stay in places outside their
usual environment for not more than one consecutive year for leisure, business and other
purposes not related to the exercise of an activity remunerated from within the place
visited” (WHO, 2007). Presently tourism is one of the world’s fastest growing industries
and is a great and major source of foreign exchange earning and employment for many of
the developing countries. The demand for world tourism have started exceeding
expectations and has become vital to the well being of many countries because of the
income earned and the consumables of product and services enhanced by the foreign
tourists giving better employment opportunity and economic advancement. The tourism
industry comprises of many different components bonded together to offer rich
experience to its customers. A few important components of the tourism industry are
transport, accommodation, attraction, activity, and marketing and government
regulations. The tourist industry is heterogeneous and fragmented. It involves many
different players, both private and public. Small and medium-sized enterprises (SMEs)
play a very important role in tourism.

Internet and Tourism Industry:

Over decades the tourism industry was following a traditional method of marketing its
service until the invention of the fastest development of information and communication
technologies to the world business market and this new introduction has brought changes
in the industrial standard and structures around the world for the past 30 years and
particularly in the tourism industry and this keeps continuing in the future too.
Information and Communication Technologies (ICT) was first applied in the tourism
industry in airlines starting in the early 1950s with the advent of automated reservation
process call the Computer Reservation System (CRS) and slowly started transiting from
this old system into the Global Distribution System (GDS) around 1980s (Jennifer
Xiaoqiu Ma Dimitrios Buhalis, 2003). This was the beginning of introduction of
technologies into the tourism sector and this was later followed by other systems like the
hotel property management systems, hotel booking system to enhance interconnectivity
and interoperability. Though these systems were supporting the ease of operation it was
only with the development and introduction of the Internet that brought a revolutionary
change in the operational structure of the industry by giving an opportunity to all the
industry based components a freedom to sell their products and services directly. This
had an adverse effect on the travel agents who were acting as intermediaries between the
suppliers and consumers of the service. E-Customers are becoming more and more
accustomed to the use of new technologies. They are also able to use a more dynamic
tool to contact suppliers directly, to choose travel destinations, to obtain on-line travel
information, to compare prices, and to proceed to online booking and purchasing.
Consumers can interact online in specially designated areas created by the electronic
intermediaries to exchange views and travel experiences and to publicize travel reviews.
According to the studies conducted by eTForecasts in 2001, Internet users tend to be
wealthy, well educated and interested in independent travel. The Internet user relates very
well to some or all of the target markets of many destinations.

Impact of Online Technologies on Tourism Industry:

The introduction of Internet provides a bridge for peer business entities for easier and
faster communication, they also provide the tourism industries of all sizes with multitude
of options and opportunities to offer virtual tourism product to enhance relationship with
their customers thereby contributing to the regional economies. Usage of electronic
commerce (e-commerce) for data exchange and transactions through the Internet and
networked technologies depends not on the size of the firm but the perception,
affordability and opportunity of the firm (OECD, 1998). If the numbers of parties using
this system are more then the potential benefits offered by the system is also high
(Rogers, 1997). Due to the advent of latest networked technologies and exposure
towards globalization an extraordinary pressure has been imposed on the tourism industry
to completely depend on the Internet for marketing travel and tourist products and
services online (Dr Patrice Braun, n.d.)

Any tourism business unit should possess a website or a homepage. Websites or

homepages are the starting point for e-business providing instant information regardless
of geographical locations. It is the juncture of Information revolution of the networked
world with Internet as the medium of business holding all the necessary information for a
successful business operation. The introduction of ecommerce has become a myriad
having a direct or indirect impact on individuals and business organizations breaking the
barriers of time, distance and physical reachability. The tourism industry makes the best
usage of the Internet and a major advantage of this industry when compared to other
industries in applying ecommerce is that the consumer collects the product or services at
the production point and it does not involve major problems like goods delivery and
logistics management that leads to customer dissatisfaction (Rania Deimezi & Buhalis,
2003). The Internet provides the industry with a good B2C opportunity where the
business firm can directly sell its products or services to Consumers without any
intermediaries and to develop their customer base and customer relationships.
Commercial travel offers new market entrants coming from information technology
rather than the tourism industry. There are a few mega websites like Expedia and
travelocity offering the users services like online car booking, hotel booking, air booking
and travel packages and also provide customers with attractive offers and discounts and
maintenance of customer profiles (Bernstein & Awe, 1999).
.
E-Tourism:

With the advent of Internet and other networked technologies both wired and wireless
there are lots of subsidiary developments in the tools that are offered for the corporate
sector. E-tourism is such a tool that is developed to offer potential advantage for both the
provider and the consumer the ease to carry out business. E-tourism allows customers
with information and booking facilities online at a very low cost. This helps the tourism
sector to make large savings on the production and distribution of their products and
services. E-tourism also provides a tool for communication and relationship development
between end-users, agents, suppliers and intermediaries. This approach gives a global
perspective to the tourism sector that in major comprises of more micro and small-scale
enterprises. Internet is now becoming the primary channel for business to business
communication and business to customer communication bypassing the necessity of
intermediaries and increasing the revenue base (Labidi Myriam, 2005). The industry also
demands newer models that enhance their relationship with intermediaries and their
valuable customers and e-CRM provides an opportunity to merge e-business with
customer relationship management.
E-CRM is an enhancement of e-business where the existing techniques are used for
finding the customers in the electronic environment. The needs of the customers are
clearly identified and products are services are customized according to the need of the
customers. This methodology helps business to retain their customer’s loyalty and attend
the needs for information and support in the use of tourism products. E-CRM and ICTs
adoption is key to the e-tourism growth and should be considered as a new business
model to meet the competitive world to attain competitive advantage that could enhance
customer centric culture within destination organization (Labidi Myriam, 2005).

Benefits of Internet and E-CRM in the tourism sector:

Today’s tourism industry is moving towards an information intensive industry with e
marketing as an ideal partner for the growth of the industry. Internet facilitates most
effective information exchange and promotion and distribution of tourism products
worldwide that are very essential for the industry and thereby coordinating different
service producers like airlines, tour operators, travel agencies, rental services together.
Tourism sector has become one of the first and leading industry to apply information
technology to conduct commerce online in the early 1960s with computerized reservation
and global distribution systems. Standard benefits yielded by applying this advanced
technology to the tourism sector include increased speed of information transmission,
enhanced quality of information delivery, reduction of cost to user and potential
interaction between e-customers worldwide.

Internet is considered as a valuable tool in the tourism sector because of the following
interesting features from the perspective of Customer Relationship Management (Labidi
Myriam, 2005).
• Interactivity between proactive e-customer and the service provider
• Flexibility in getting a wide and updated range of information
• Accessibility everywhere, anywhere and any time inspite of geographical location
with improved quality in service.
In addition to the above features generally quoting communication technology provides
not only the universal reach but online technologies for the tourism industry are
responsible for increased efficiencies in communications with customers, improvements
in research, marketing, financial transactions, and enterprise management. Moreover,
important implications can be found on communications and transactions between the
different parts of the industry, the industry and its regulators and facilitators, and even
different consumers for comprehensive state-of-the-industry overviews
(TraveldailyNews, 2003).

E-commerce and E-Tourism supportive tools:

One of the fastest growing tools of communication media when compared with radio
broadcasting and television broadcasting, Internet is considered to be the popular most
tool that has just taken 4 years to reach the audience. The technological transformation
from desktop computers to highly portable computers and the worldwide network of
computers and its accessibility has helped the tremendous growth of this technology.
This cutting edge technology also offers portability, speed and the expectations of the
consumer has grown to new heights with the expectation of enhanced high speed devices,
wireless access of information, handheld portable access by PDA or phone, location
driven global positioning through satellites, databases driven content organizers, video
streaming and much more (Leah Woolford, n.d.).

Similarly, E-tourism and E-CRM techniques have been already employed by tourism
industry using non-electronic methods. Intelligent agent technologies, linking call
centers to web sites and use of data warehousing techniques to cater and customize
customer needs are the new developments in the advancement of information and
communication technology.

The latest development of the information and communication technology in the tourism
sector is the IBM travel map application that includes information about IBM locations,
rental car locations, airports, restaurants and other points of interest on a navigable map
creating a convenient trip-planning aid for business travelers (Cherbakov et. al., 2007).
Barriers in development of tourism eCommerce:
It is a fact that the networked technology has revolutionized the world called the
information revolution there are still few undiscovered barriers of this technology in the
tourism sector. Tourism is a heterogeneous sector mostly dominated by the SME (Small
and Medium Enterprises). Since most of the SMEs are new to the virtual world without
any expertise they are in danger of not coping up with the current global market (Hutt et.
al. 2003). The problem with the tourism industry is according to a survey carried out in
the European market small tourism firms are not utilizing information technology for
eCommerce purposes (Dr Patrice Braun, n.d.) because of varying digital literacy and
understandability of potential strength of these interactive communication tools. With the
usage of networking worldwide there are a lot of opportunities that needs inclusion of
new ethos of connectivity between tourism SMEs that is not present in the existing
system. This practice has to be developed and followed by all SMEs to set and achieve
their goal in the growing global market. Other potential barriers that hinder the growth of
ICTs in the tourism sector are:

• Security of transmissions;
• Ensure credibility of information;
• Secure intellectual property and copyright issues;
• Enhance bandwidth and reduce speed limitations;
• Reduce user confusion and dissatisfaction;
• Provide adequately trained specialists;
• Develop equal access for smaller and larger partners;
• Establish pricing structures for distribution of information and reservations;
• Enhance the standardization of information and reservation procedures (Buhalis,
1998).
Challenges ahead for future tourism SMEs:

SMEs in the tourism industry lack in clear insight of customers and their needs. The
enterprise Ireland has developed a self-assessment statistical and diagnostic tool that
helps SMEs in assessing and prioritizing electronic business opportunities
(Travelandtourismnews.com, 2008).

Conclusion:

The study clearly focuses on the impact of Internet and its related technologies in the
tourism industry. It is necessary to understand that ICT in itself does not increase the
productivity and outcome of the industry but it is tourism principals that increase the
productivity of the business. Though ICT has a direct or indirect impact on the industry
and the way that the industry operates and its structure a clear understanding and
appropriate and timely utilization of the technology will make the tourism sector to
operate successfully on a long run.

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E-CRM and ICTs adoption are key to the e-tourism growth. Considering the fierce market competition it is a
competitive advantage and it must be seen as a new business model which enhance a customer centric culture
within destination organization.