Transcript Chapter 7

E-commerce and Information
Technology in Hospitality and Tourism
Chapter 7
E-marketing And Information Distribution
Copyright 2004 by Zongqing Zhou, PhD
Niagara University
Learning Objectives
After you complete your study of this chapter, you
should be able to:
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Understand the Internet’s impact on travel
suppliers.
Know how the Internet impacts intermediaries.
Understand the Internet’s impact on destination
marketers.
Understand the Internet’s impact on traditional
brochure information distribution.
Be acquainted with the emerging e-commerce
marketplace.
7.1 Introduction
The hospitality and tourism industry has probably been
the most affected industry by the Internet.
2. The industry depends on the distribution of
information about its products and services.
3. Hospitality and tourism suppliers have been looking
for new ways to expand channels of distribution so that
they can reach target travelers in a more efficient and
effective way.
1.
7.1 Introduction (cont.)
4. Travel agents are an effective (but not
efficient) way to reach customers.
5. Reducing the cost of information
distribution and service has been a
tempting proposition from the
suppliers’ point of view.
6. The advent of the Internet has made it
possible.
7.2 The Impact On Suppliers
Airlines
Cruise lines
Lodging
Rental car industry
Airlines
For decades, airlines have been heavily
dependent on travel intermediaries
The Internet has changed everything, enabling
airlines to find a way to bypass intermediaries to
reach their customers directly and save money at
the same time.
Their first move was to cut commissions they paid
to the travel agents
Airlines Cont’d
The airlines use strategies such as online pricing
and incentives to lure travelers to book and plan
travel on their sites.
Today, almost all major airlines own their own
Web sites that are capable of taking reservations
online as well as conducting other travel services.
In fact, all major airlines are aggressively
investing in the e-commerce, using all kinds of
marketing strategies to lure customers to book
and shop at their Web sites.
At the heart of the popularity of online booking
and reservations is the idea of customization of
travel products and services.
Airlines Cont’d
These online booking capabilities reduce costs
by eliminating transactional fees and providing
real-time reporting tools for travel managers.
Before the Internet online reservation, this
customization process was done through the
travel agents, airline products and services are
not that complicated to customize and therefore
the Internet becomes a perfect channel of
distribution of airline travel products and services.
Cruise Lines
Cruise lines industry has witnessed a boom in its
business partly because of the economic
prosperity of the US economy and partly because
of cruise lines’ successful marketing efforts. They
resisted the temptation of online booking.
Cruises are designed to replicate the many
variety of amenities and activities available at the
world’s leading land resorts. To book a cruise
requires the consumer to make a variety of major
decisions that can include elements of three
major travel categories, airlines, hotel and
cruises.
Cruise Lines (cont.)
With the emergence of Internet e-commerce in the
travel industry, the cruise lines were tempted several
times to follow the airlines in offering direct online
marketing and reservations.
But they have not gone so far because their products
are much more difficult to customized online
However, in 1997, cruise lines sought to control
distribution costs by eliminating or restricting bonus
payments, keeping the base commission intact.
1998, Renaissance Cruises announced the “Quik
Pay” policy-a flat commission of $500 per cabin for all
agent bookings.
Cruise Lines (cont.)
By 1999, nearly every cruise line had its own Web site
(Hughes 1999). Both agents and consumers could book
online with Carnival Cruise Lines, and consumers could do
so with Renaissance Cruises.
For now, the cruise lines are walking a thin line between
their online direct booking and avoiding losing the support
of travel agents.
Cruise lines will keep their partnership with the travel
agents for some time to come, even with the Internet’s
direct booking capability.
Amadeus, a leading global distribution system (GDS)
and technology provider, launched Amadeus Cruise in
2000, an advanced cruise-booking technology for travel
agents and cruise providers.
Lodging
The lodging sector of the travel industry,
though starting late in e-commerce, is fast
catching up.
hotel industry room nights and revenue
booked electronically in 2001 by travel agents
and consumers grew at a rapid rate.
This growth was spurred by GDS booking
both by consumers directly and through
third-party travel Web sites such as
Travelocity.com and Expedia.com
Lodging (cont.)
Today, all major lodging chains have invested
in e-commerce and information technology to
various degrees.
These investments include in-room highspeed Internet connections, online direct
booking Web sites, and online procurement of
services and products.
Small bed-and-breakfast properties, too, are
either setting up their own Web sites or
joining major bed-and-breakfast marketing
sites.
A survey of Major Lodging Websites.
Company and URL
WHAT CAN YOU DO?
Online
Booking
The Four Seasons Hotel
www.fourseasons.com
Picture links to vacation getaways, business travel and
rates, availability, residential properties.
Yes
The Ritz Carlton Hotel
www.ritzcarlton.com
Reservations and explore the hotels. Each different
hotel link has extensive information on all hotel
services, packages.
Yes
Embassy Suites
www.hilton.com/en
Reservations, check rates, find a hotel, special offers,
hotel locator, by city, state, country.
Yes
Marriott Hotel
www.marriott.com
Find a hotel, reservations, hotel directories, route
planner, frequent visitors, links to all Marriott Properties.
Yes
The Adams Mark Hotel
www.adamsmark.com
Choosing a location of an Adams Mark Hotel,
reservations; search rates & availability by city, state,
country.
Yes
Hyatt Hotels
www.hyatt.com
Rates & reservations, special offers, Gold Passport
Program, Hyatt Resorts, Hyatt Extra Email Subscription
Search for Hyatt worldwide hotels.
Yes
Rental Car Industry
With its quiet start in the early 20th century, the rental
car industry has gone a long way toward embracing
technology.
Beginning in the 1990s, the industry started to adopt
technology to improve its reservation systems
Online booking and marketing of vehicles has helped
rental companies streamline their business, increase
its reach and efficiency and at the same time better
serve the customers’ needs and wants.
Rental car companies are targeting their Web
strategies not only at leisure travel customers but
also at the corporate travel market.
Rental Car Industry (cont.)
In June 2000, Avis rolled out an Internet-based
information system called Avis InterActive
(www.avisinteractive.com), which was updated in
2001 with its Avis InterActive with Release 2.0
Alamo has already introduced a system called
QuickRent®. This system allows online travelers to
complete the entire rental process online.
A future development in the rental car industry will be
to develop an online rental system that streamlines
the rental process, including reservations, changes of
schedule, signing agreements, checking in, and
payment.
Rental Car Industry (cont.)
With QuickRent®, online travelers can
bypass the counter by choosing all their
options online, signing the rental agreement
online, or using one of the ATM-style kiosks at
one of the 36 Alamo rental locations in the
United States.
This type of system differs from those of the
past, when online travelers were required to
complete the rental transaction at the counter
unless they were a special club member or
frequent travel member.
Major Timeline for Rental Car
Industry Development
1939: Hertz begins to offer vehicles with automatic
transmissions. The company was founded in 1918 by
Walter Jacobs as Rent-A-Ford.
In 1923, the company was purchased by John Hertz.
1947: National Car Rental is founded as an
association called the National Car Rental system.
1958: Thrifty Car Rental is founded by L. G. Crane,
with one location in Tulsa, Oklahoma.
1958: Budget Rent-a-Car is founded by Morris Mirkin
in a storefront in Los Angeles. Mirkin offers rental
rates as low as $4 per day and 4 cents per mile.
Major Timeline for Rental Car
Industry Development
1962: Avis Rent-a-Car introduces the “We Try
Harder” campaign, which is still used today.
1966: Dollar Rent-a-Car is founded by Henry
Caruso.
1972: Avis introduces the Wizard computer
system.
1973: Payless Rent-a-Car is launched.
1974: Alamo Rent-a-Car opens for business.
Major Timeline for Rental Car
Industry Development
1980: Avis introduces the Wizard II system.
1984: Hertz introduces computerized driving
directions for its rental customers.
1989: Thrifty Car Rental introduces
FASTRAC.
1990: Alamo introduces its frequent-renter
program, Alamo Express.
7.3 The Impact on Travel Agents
The deepest impact of the Internet and ecommerce is on travel agents since almost all
travel suppliers are marketing directly to travelers
The impact is so deep that many two-year travel
schools that used to be a good employment source
for travel agencies are closing their doors or are
forced to revise their curricula to meet the needs
of the employment market.
7.3 The Impact on Travel Agents
(cont.)
With increased interest by travelers in online
travel information research and booking and
the aggressive marketing efforts of travel
suppliers to sell tickets online, travel agencies
are being squeezed from all sides.
Suppliers, led by the airlines, began to cut
their commissions as early as in 1997, which
turned out to be a deadly blow to travel
agencies.
Travel agencies have used various strategies
to cope with the new reality.
7.4 The Impact on Traditional
Brochure Information Distribution
If we add those who will use both print
brochures and the Internet and those who will
only use the Internet, we come up with a
figure as large as 58 percent.
The biggest impact on the travel and
hospitality industry is in the area of travel
information search and planning.
Online brochures have many advantages,
more accurate because it can be updated
around the clock. Can be customized to the
customer a lot easier.
7.4 The Impact on Traditional Brochure
Information Distribution (cont.)
Traditionally, travelers rely heavily on print
brochures to obtain information on destinations and
travel products and services.
With the increasing popularity of the Internet, the
reliance on the print brochure as a major marketing
tool is now in question.
Nearly 60% of people will use the Internet either as a
sole source of information or as a complementary
source of travel information.
Convention and visitor bureaus and other destination
marketing organizations are shifting their focus to the
Internet.
7.4 The Impact on Traditional Brochure
Information Distribution (cont.)
Online travel brochures have several advantages
over traditional print ones.
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First, they are more accurate since their information can be
updated around the clock
Second, they can be customized according to the needs of
an individual online visitor
Third, information can be accessed 24/7, anywhere in the
world.
In the future, travelers will have a walking brochure (a
Web-based wireless device) in their hand wherever they
travel.
Finally, online information distribution breaks the barrier of a
brochure, which can carry only a limited amount of
information.
7.5 The Travel E-commerce
Marketplace
Online-only travel Web sites have loomed large in travel
information distribution and travel reservation
Some of these players are trying to establish themselves as
a one-stop shopping portal for travel needs, supplying
travel information as well as booking for all types of
services, ranging from lodging to airlines and from
entertainment to transportation.
This e-commerce marketplace is still in its development
and, in fact, is going through some rapid changes.
The winners of this intense competition are consumers