Presentation on theme: "Developments in Digital Business (G53DDB )"— Presentation transcript:
1 Developments in Digital Business (G53DDB ) Guest Lecture on E-TourismByProfessor Leo Jago
2 Lecture Outline Role of ICT E-Tourism Characteristics of Tourism DefinitionsOutcomesCharacteristics of TourismHistory of ICT in tourismBenefits of E-TourismIssues with E-Tourism
3 Role of ICTICTs are now critical for strategic management of organisations as they allow:Expansion into new marketsEmpowering of employeesLowering of costsEnhancing distributionGates (1999) said that business now conducted at speed of thoughtICTs great for time poor but cash rich consumers
4 Increasing Speed of Uptake of Technology 35 years for radio to reach 50 million13 years for television to reach 50 million5 years for internet to reach 50 million1 year for ipods to reach 50 million6 months for facebook to reach 100 million
5 DefinitionE-tourism is the digitisation of all the processes and value chains in the tourism, travel, hospitality and catering industries that enable organisations to maximise their efficiency and effectiveness.(Buhalis 2003)
6 E-tourism Includes All Business Functions E-commerce and E-marketingE-finance and E-accountingE-HRME-ProcurementE-StrategyE-PlanningE-Management
7 Outcomes of E-tourism (Buhalis 2003) It revolutionises all business processes, the entire value chain as well as the strategic relationships of tourism organisations with all their stakeholdersIt takes advantage of intranets for reorganising internal processes, extranets for developing transactions with trusted partners and the internet for the interacting with all its stakeholders
8 Outcomes (Cont)E-tourism increasingly determines the competitiveness of the organisation and therefore it is critical for the competitiveness of the industry in the longer term.
9 Characteristics of Tourism IntangibleCan’t be physically displayed or inspected before purchasingSeparation between purchase & consumptionPerishable inventoryHigh riskPsychological and financialOften involve the whole familyInformation intensive activity
10 Characteristics (Cont) Dominated by small enterpriseHistory of lengthy supply chains based on commissionsProduct suppliersConsolidatorsWholesalersRetailersConsumers
11 Problems with Traditional Approach Small operators totally dependent on conditions set by large companies in the supply chainOften too small to participate in opportunitiesPricing and other conditions locked down for up to 2 yearsVery limited ability to access the market directly
12 Christel DeHann Tourism and Travel Research Institute E-Tourism“e-Business requires a customer-centric view and a shift away from mass production to mass customisation and from selling to relationship-building.”Victor Garland(Head of IT at Aer Lingus, 2001)Christel DeHann Tourism and Travel Research Institute
13 Drivers for e-Business in Tourism Economic necessityRapid advancements in technologyReduced costEase of accessRising consumer expectationsTime poorOvercame fears regarding security
14 History of ICTs in Tourism Central Reservation Systems (CRSs)Introduced by airlines in 1960sHotels then came onboardDominated the industryAirline computer reservations systems emerged to become global distribution systems (GDSs)Incorporated a wide range of services and products for the entire industryExamples included Amadeus, Sabre & GalileoOwners charged commissions and participation feesTransaction costs too high for small operators
15 History (Cont)Until mid 1990s, over half the world’s electronic transactions were in tourismLargely airlinesDestination management systems (DMS) then emergedInformation on locally available attractions and productsUseful for helping to overcome seasonality problems by spreading and balancing tourism demand
16 History (Cont) For many years, industry based on: Traditional supply chainBrochuresFree-sale allocationTelex confirmationsTelex to fax toAccess to funds internationally – replace travellers chequesChanged travel behaviourAs SME dominated, ICT had slower uptake.Uptake pushed by consumers
17 E-Business and Industry Value Chains SuppliersTransporters(Supply Chain Management Systems)Manufacturers(Inventory Management Systems)Distributors(Efficient Customer Response Systems)RetailersAlternative DirectChannel (e.g.The Web)CustomersSource: Laudon and Traver (2002)
20 Benefits of ICTs for Tourism Allow small businesses to compete internationallyDispose of unwanted inventoryEg: wotif.com and lastminute.comThese systems pose problems as wellConsumer can now package their own product but does require effort hence agents still used. Also someone to blame if there are problems.
21 Benefits of ICTs for Tourism (Cont) Changed the structure of the industryMany intermediaries have gone or have been swallowed up as part of vertical integrationInternet great for brand enforcement, enlargement and expansionClutter now becoming a problem.Can set price in real time to help manage demand
22 Benefits of ICTs for Tourism (Cont) Sophisticated yield management to maximise profitsInitially only airlinesThen hotelsNow open to smaller operatorUnderpin strategic alliances for airlines
23 Benefits of ICTs for Tourism (Cont) Sophisticated ICTs allow organisations to predict and target consumer needsDifferentiate product for different consumer groupsFoster relationship management & marketingLoyalty programs
24 Frequent Flyer Programs Club concept with rewards for loyaltyDevelopment linked to ability to capture sophisticated customer dataHigher returns, from repeat sales over timeHigher costs associated with attracting new customers than keeping existing customersScope for cross-sellingLoyal customers recommend by WoMPromotional costs to acquire new business reduced
25 Issues Online pricing compared to other pricing Bundling product LCCs push onlineFull service carriers use consolidators and intermediaries to sell their discounted seats to protect the brandBundling productOnce the role of intermediaries but now consumers
26 Issues (Cont) Survival of travel agents Commission versus service feeTourist information & tour guidingMobile phone technologySmart websites and search enginesConsumer preferences
27 Issues (Cont) How do we get the various databases to communicate? Harmonise Project (EU project in tourism)Allows the reconciliation of different standards and provides the minimum ontology to formally describe the domain of reference.It will allow providers and users to communicate, while keeping their proprietary data formats.Growth of blogs (Consumer generated content)Will virtual travel replace real travel?
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