Web orientation and value chain evolution in the tourism industry

Università degli Studi Dipartimento didi Brescia Economia Aziendale

Dicembre 2005

Paper numero 51

Elisabetta CORVI - Michelle BONERA

WEB ORIENTATIONAND VALUE CHAIN EVOLUTION

IN THE TOURISM INDUSTRY

Università degli Studi di BresciaDipartimento di Economia AziendaleContrada Santa Chiara, 50 - 25122 Bresciatel. 030.2988.551-552-553-554 - fax 030.295814e-mail: [email protected]

AR

TI G

RA

FIC

HE

AP

OLL

ON

IO

WEB ORIENTATION

AND VALUE CHAIN EVOLUTION IN THE TOURISM INDUSTRY

di Elisabetta CORVI

Professore Associato Università degli Studi di Brescia

e

Michelle BONERA Dottore di Ricerca in Economia Aziendale

Università degli Studi di Brescia

Index

1. Introduction................................................................................................ 5

2. Literature review ........................................................................................ 5

3. Members of the value chain: roles and responsibilities ........................... 10

3. Emerging trends and their implications on the tourism industry ............. 14

4. Methodology of the study ........................................................................ 16

5. Data presentation and analysis ................................................................. 18

6. Conclusion ............................................................................................... 23

References .................................................................................................... 25

Web orientation and value chain evolution in the tourism industry

Web orientation and value chain evolution in the tourism industry 1

1. Introduction

The advent of the Internet in the late 1990s has had a strong impact on the tourism industry. Technology has had an important role in the touristic phenomenon as a growth facilitating factor and as a way to improve and guarantee the positive experience of the tourists. The Internet is a growing channel for commerce. While the opportunities afforded by this phenomenon seem readily apparent, there is still much debate on exactly how the use of the Internet and in particular the World Wide Web will affect the industry. In this article we investigate the value chain of the tourism industry. We examine the roles played by intermediaries in the distribution chain and investigate the threats and opportunities that the emergence of the virtual channel, and other associated trends, present for the industry.

First some brief background information will be provided regarding tourism and e-commerce. Moreover, the problem discussion leading to the purpose and research questions will be presented. Finally, demarcations and the outline of the thesis will be put forth.

2. Literature review

This part is intended to provide a background to the area of research. Four decades ago, Alderson (1958) summarized the importance of distribution, stating that the goal of marketing is the matching of segments of supply and demand; and 30, years later, Stern and El-Ansary (1988) defined a distribution channel as “sets of independent organizations involved in the process of making a product or service available for use or consumption”. Quite simply, the purpose of a distribution channel is to make the right quantities of the right product or service available at the right place, at the right time. What makes distribution strategy different from other marketing mix decisions is that it depends almost entirely on physical location. Alderson (1958) argued that intermediaries provide economies of distribution by increasing the efficiency of the process. They do this by creating time, place, and possession. He maintained that intermediaries fulfill three basic functions, which Stern and El-Ansary (1988) have distilled into the following three essential purposes of distribution channels:

1 Il lavoro è frutto dello sforzo congiunto dei due autori; tuttavia in sede di relazione

finale i paragrafi 1 e 2 sono da attribuire a E. Corvi e i paragrafi 3, 4 e 5 a M. Bonera.

5

Elisabetta Corvi – Michelle Bonera

1. they adjust the discrepancy of assortment through the processes of sorting, accumulation, allocation;

2. they minimize distribution costs through routinising and standardizing transactions, which makes the exchange more efficient and effective;

3. finally, intermediaries facilitate the searching process of both buyers and sellers by structuring the information essential to both parties, providing a place for both parties to meet each other and reducing uncertainty (Pitt et al., 1999).

Sellers are searching for buyers and buyers are searching for sellers; at the simplest level, intermediaries provide a place for these parties to find each other. Producers are not sure about customers’ needs and customers are not sure their needs can be satisfied. Intermediaries reduce this uncertainly for both parties.

A number of authors have attempted to identify and classify the potential benefits and implications of doing business on the Internet (e.g. Verity and Hoff, 1994; Quelch and Klein, 1996; Berthon et al., 1996). What seems clear is that the Internet as a new medium undermines many of the key assumptions on which traditional distribution philosophies are based and that it has the potential to transform and even obliterate some distribution channels. For example, no longer does a consumer have to wait for a retailer (who does not carry a good inventory of the latest products) to open, drive there, attempt to find a salesperson who is generally ill-informed, and then pay over the odds to purchase a product. Rayport and Sviokla (1994) distinguish between the physical value chain and the virtual value chain and introduce the concept of the “Market space”, a virtual realm where products and services exist as digital information and can be delivered through information based channels. They contend that managers who understand how to master both their physical and virtual value chains will be able to extract value in the most efficient and effective manner.

Pitt et al. (1999) identify three related macro effects of the new technologies on the distribution activities in the value chain that flow from the notion of a virtual market space. Products and prices can be compared on the Web and lots of information can quite easily be gleaned. If one supplier is out of stock or too expensive, there is no need to drive miles to a competitor (competitors abound and all are equidistant a mere mouse click away). The “Death of Distance” describes how the Internet can eliminate the barriers caused by distance while the “Homogeneity of Time” refers to the ability of virtual businesses to operate 24 hours a day 365 days a year, overcoming both the limitations of human working hours and geographical time zones. Finally, the “Irrelevance of Location” concept shows how the

6


inherently global market space challenges conventional ideas on physical location.

Ghosh (1998) highlighted the opportunity that the Internet presents for an organization to control the electronic channel. He argues that the traditional reasons for having numerous suppliers in an industry are not relevant on the Internet and contends that the Web is a natural concentrating medium and that an organization can control the channel by becoming the site that can provide the customers with everything they could want. He uses the term “magnet” to describe an organization that controls its particular channel and believes that a given industry can only support a few such magnets. He further notes that new companies have no existing value chains to protect and can thus set up their businesses to take full advantage of the Internet.

This is relevant to the tourism industry, since many of the issues identified above are applicable. Some authors highlight the channel system in tourism in the light of the impact of recent developments in technology. The changes in the tourism channel system are discussed in terms of demand and supply and how information technology is affecting the marketing distribution channel for tourism producers. Unlike most other industries, the physical distance between tourists and their destinations cannot be changed. So by being absolute, physical distance has always been beyond the control of the destinations. However, to a large extent, the physical distance between suppliers and consumers has been instrumental in the development of the value chain and its numerous small and specialized intermediaries. Inbound tour operators needed to be close to the supplier, travel agents were close to the customer and the outbound tour operators provided the link across geographical boundaries. In the virtual realm there is no concept of geographical location. A travel site on the Web is as close to a customer in every part of the world. This implies that a single intermediary can undertake all activities in the virtual value chain.

Tourism-related services have emerged as a leading product category to be promoted and distributed to consumer markets through the Internet. The nature of consumers' search activity, involving multiple choice of suppliers and comparison of facilities, prices and availability is facilitated by the search capabilities of the Internet. Increasingly, information intermediaries are able to profile consumers and provide a selection that is based on their needs.

Electronic commerce offers great flexibility for tourism suppliers operating in volatile markets. The promotional message can be changed much more quickly than is the case where the need to print documents leads to long lead times between a policy decision being made and the implementation of that decision. Electronic commerce is very good at handling clearance of perishable capacity close to the time of use and for

7


managing yields effectively (Wolff, 1997; Connolly et al., 1998). Customers benefit from such channels by gaining immediate gratification of their requests, greater choice, multi-sensory, accurate and up-to-date information and an easy to use interface (Pollock, 1996). Similarly, the costs of obtaining information are reduced for customers and travel agents and the wide diversity of information can be represented on one terminal, which further reduces the information search costs for potential tourists (Bakos, 1991).

Touristic products are suitable for the Internet also because the multimedia and hyper textual on line communication is ideal to describe such complex products. The Web allows the creation of a stable relation between the tourism organization and the customer. It is possible to send periodical newsletters to keep in touch with him and to answer to the questions or requests he makes. The Internet can be an inexpensive and effective way to carry out market research and get to know the client’s preferences and opinions (Franch, 1999).

Furthermore, if we assume that new intermediaries in the new channel will be purely virtual organizations that concentrate information, reduce search costs and facilitate transactions, we see that there are very few constraints on the growth of such an organization2. One of the reasons for the complex nature of the traditional distribution chain was the varying needs and buying behaviors of tourists. However, in the virtual realm, it is possible to customize the buying process to the needs of each customer. Provided the intermediary offers an integrated booking system, a customer who wishes to arrange his/her entire tour on his/her own could select each part of his/her vacation as if he/she were specifying the components of a computer at Dell Online, or filling his/her shopping basket at a virtual department store. This would probably entail visiting each destination’s page, browsing the information on that sub-site and then comparing prices, before paying for the selection in a single transaction. Likewise, a customer with less time could search for packaged tours, visit the pages of the relevant tour operators and select the most appropriate pre-arranged tour. A single intermediary would have the added advantage of being able to build up a customer database, since customers would make all their travel arrangements through the same site. Hence they would eventually be able to suggest appropriate holidays to the customers and ensure that the travel arrangements suited the particular needs of the customer. This relationship marketing would build customer loyalty and switching costs that no other

2 Once the basic transaction system has been designed, the customer database created,

and the initial links made to suppliers, the only obvious constraint on the growth rate of the organization is its ability to build up the network of destinations.

8


industry player could achieve. Similarly, customers will prefer to arrange all their travel at one single site than have to visit different sites for different types of holidays. The information on each destination or tour operator would be presented in the same format.

Where traditional intermediaries specialized in particular types of holidays, the Internet will allow a single intermediary to cover the entire spectrum, since there is no limitation on scope. Bloch (1996) draws similar conclusions, identifying the Internet shopping malls (e.g. Travelocity, Expedia) as the future industry magnets. These organizations have both evolved from computer reservation systems. In so doing the Internet could render many distribution intermediaries obsolete, while simultaneously creating new channels and new intermediaries.

Many tourism destination marketing organizations have developed Websites with varying levels of interactivity. An interactive Website provides a good opportunity for the multiple suppliers involved in a tourism destination to uniquely fashion together the specific components of a destination offer which are sought by individual visitors. Co-operation through networking in the tourism channel system provides the key to gaining a competitive advantage in the tourism industry.

A crucial role is played by methods of guiding individuals through the enormous range of destination options available. In this sense the Internet is no different to traditional marketing in that consumers seek to simplify their choice by using a combination of intermediaries, trusted brand names and established business relationships. Within the tourism sector, the role of tour operators has simplified the purchase process of tourism buyers by prepackaging the elements of a vacation that would otherwise be difficult to assemble individually. The use of trusted brand name tour operators and the emergence of branded virtual intermediaries has reduced the riskiness of a purchase. Tourist destinations can benefit from the Internet by developing a coherent position in the marketplace; increasing their market share by getting closer to customers (actual and potential); and subsequently by providing greater customer satisfaction (Sussmann and Baker, 1996). The role of information integration and brokerage is especially applicable to destination marketing organizations (state tourism departments, national tourism offices, and city convention and visitor bureau) as they rarely have a product of their own to sell. Instead, their role is to match buyers with sellers, demand with supply and producers with consumers by positioning and promoting a place as a tourism destination brand (Pollock, 1995).

The issue of simplifying consumers' choice process raises two important concerns in the adaptation of electronic commerce. First, the ability of electronic commerce to learn about the needs of individual consumers, and secondly the ability of individual tourism suppliers to link together their

9


Websites to present a complete virtual tourism experience which is appropriate to individuals' needs. Many tourism destination marketing groups have achieved success in representing diverse business interests through the media of exhibitions, advertising and joint promotional brochures. A new challenge for tourism groups is to develop co-operation in a way that is meaningful for electronic commerce through business-led strategies.

Hotlinks out of a company's site have the potential to take potential business away from a company, but there can be no guarantee that such a hotlink will be reciprocated by other organizations. While self-interest may initiate many marketing exchange relationships, reciprocity is instrumental in sustaining those relationships.

Tourism destinations present an ideal scenario for the development of virtual organizations, linked together by information technology. It should be possible for all businesses within a tourist destination to link their Websites so that a visitor to one site would easily be able to find out about related facilities at other companies' Websites.

3. Members of the value chain: roles and responsibilities

Tourism is one of the world’s largest industries and has historically been an early adopter of new technologies (Bloch, 1996). The development of the Internet and in particular its application to the tourism industry distribution chain thus raises two critical questions. Will the Internet lead to mass disintermediation? Secondly, will the Internet lead to many small intermediaries, or a few powerful ones that control the channel? This article analyses the value chain of the tourism industry, it examines the roles played by intermediaries in the distribution chain and the threats and opportunities that the Internet presents for the industry and concludes by assessing the implications of these changes on the control of the electronic channel.

In its simplest form, the chain members include the destination service providers, the inbound tour operators, the outbound tour operators and the local travel agents (Figure 1).

Figure 1 - Tourism industry value chain

destinations service providers

inbound tour operators outbound tour operators travel agents toursts

10


Destinations and final service providers3

These are the suppliers and producers of tourism products and services. They include hotel and B&B operators, restaurants, safari lodges and game parks, theatres, museums, rafting operators, bus operators, airlines and car hire companies. In broader terms, we define these as the organizations that manage the interactions and the experiences of individual tourists with each tourist attraction. Typically, final service providers are characterized by small and medium enterprises with little technological infrastructure, financial power or marketing expertise. They generally cater to only a few of the needs of a tourist’s holiday and each only captures a small part of the revenue. Until the advent of the Internet, they had little ability to directly contact the customer. Many will cater to local tastes as well as those of foreign tourists. Some may not even consider themselves as part of the tourism industry, yet derive a significant part of their incomes from foreign tourists (e.g. theatres, restaurants) and form an important part of each tourist’s experience. The activities of the service providers are inherently physical.

Inbound tour operators These constitute the first intermediary in the value chain. They are also

small and medium sized enterprises. A typical inbound tour operator will specialize in a particular segment of the industry and often a specific geographical region. In this way they reduce search costs for other players in the value chain, and through regular use of certain destinations, they facilitate the routinisation of transactions between destinations and other players. Finally, they facilitate reassortment and sorting by packaging many activities into a single tour. The activities of the inbound tour operator are partly physical and partly information based. They exist because tour groups in foreign countries do not have the detailed knowledge of the local market and customs to make all the necessary arrangements, and because there is a need for tour groups to have an organization in the host country to ensure that everything runs smoothly and to whom they can turn to sort out unanticipated problems.

3 A tourism destination typically comprises numerous autonomous suppliers, yet

consumers make purchase and repurchase decisions based on the totality of the experience available at a destination.

11


Outbound tour operators These make up the second intermediary. A typical outbound tour

operator is based in a developed country and will offer packaged tours to many destination countries. Usually these organizations will be strong in the marketing department and will often be the largest player in the value chain. They are often the main source of promotional information for the prospective visitor as they publish brochures containing details and comparisons on all their destinations. They fulfill all the functions of the intermediary. In general they do not make arrangements directly in the destination country, but will work through several local inbound tour operators, who will arrange tours on their behalf. By offering many different types of tours all over the world, they reduce the searching costs of the tourist.

By arranging package tours, they routinise all the activities associated with booking a holiday and effectively fulfill the assorting function. However, they do not cater for the independent traveler who wishes to simply arrive in a country and make his or her own arrangements, or for the business traveler, who will usually bypass the outbound tour operator. In conjunction with inbound tour operators, they will usually use their combined expert knowledge to customize tours for more discerning groups of tourists, but will do so for a premium. Many of the larger travel agencies also play the outbound tour operator role.

Travel agents Travel agents add value in several ways. They are geographically close to

the tourist and assist the customer by doing much of the searching on their behalf. Unlike the tour operators, they are better able to cater to the individual requirements of each tourist and can customize a holiday to suit each client.

They are able to cater to independent travelers, business visitors, holidaymakers and tour groups. Through access to the booking systems, they routinise transactions and payments and coupled with their experience and expert knowledge of the industry, facilitate searching. They are also aggregators in that they will stock the brochures of many outbound tour operators, so the customer can choose his or her particular holiday from a large number of different offerings. As the intermediary closest to the customer, they are in the best position to build relationships with customers. This is particularly true in the business travel market.

12


Reservation systems This is a relatively new intermediary in the global market and has not

been shown in either of the value chain diagrams (Figure 2). Known as computer reservation systems (CRS), they have evolved from the proprietary systems used by the major US airlines and travel agents to make flight bookings (e.g. SABRE), but are increasingly expanding into other sectors.

A computer reservations system, or CRS, is a computerized system used to store and retrieve information and conduct transactions related to travel. Originally designed and operated by airlines, they were later extended to travel agents as a sales channel; major CRS operations are also known as Global Distribution Systems (GDS). Airlines have divested most of their direct holdings to dedicated GDS companies, and many systems are now accessible to consumers through Internet gateways for hotel, rental cars, and other services as well as airline tickets. At its inception, the Global Distribution System (GDS) represented a closed, dedicated connection of terminals displaying travel information about airlines, hotels, car rentals, cruises and other travel products. Used almost exclusively by travel agents, the GDS created a distribution chain that was relatively linear, allowing each chain player to collect a portion of the transaction. Today, however, the GDS has been reduced to just one component of a much larger ecosystem of networked travel information with advances in communication and software.

Figure 2 – Tourism intermediaries

Destination serviceproviders: accomodations, carriers, attractionsecc.

Inbound and outboundtour operators

Travel agents

Tourists

CRSGDS

In reality, these functions are not clearly demarcated and many

transactions will bypass some of the intermediaries. Some tourists will do their own searching, but use a travel agent to do the bookings; others will try to search and make reservations on their own, while many will want complete advice and the security of a fully arranged tour. Business travelers might book through a travel agent, or, in the case of repeated travel,

13


negotiate corporate contracts directly with the final service providers. Business conventions might be organized by an inboard tour operator specializing in that sector. Those visiting friends and family might book their flights through a travel agent, but make the rest of their holiday arrangements only once in the destination country after consulting their relatives and/or relevant travel guides.

Likewise, many organizations exhibit an overlapping of roles. For example, an overland tour operator exhibits the characteristics of both the destination service provider and the inbound tour operator.

3. Emerging trends and their implications on the tourism industry

The tourism market is increasingly organized on a global level, with heightened competition being characterized by a network of interactions. Tourists are traveling more frequently, but for shorter periods. They increasingly request more specialized trips, and have increasing expectations in terms of convenience, value and customization. Consumers are becoming more knowledgeable, are becoming increasingly accustomed to automation and are developing a self-service mentality. They want global advice, service quality and market transparency. Yet they are increasingly making only last minute reservations (Bloch et al., 1996, Bloch and Segev, 1996). There have been two main trends in consumer marketing over the last few years. The first is a move towards relationship marketing4 and the introduction of the concept of customer equity. This has led to a focus on encouraging the customer to make repeat purchases through fully understanding the needs of the customer and customizing the offering to meet those needs. The second is towards experience marketing, where the customer becomes an integral part of the experience and the marketer attempts to engage and involve all five senses of the customer.

The tourism industry has become inherently global and this is reinforced by the use of the Internet, which is a medium that has no geographical boundaries.

Local players in the industry will have to fit into the new global structure. At the simplest level, the growth of the Internet provides a new distribution channel for the industry and facilitates the development of a virtual value chain. In light of the trends observed in the industry and the opportunities

4 Relationship Marketing uses the event-driven tactics of customer retention marketing,

but treats marketing as a process over time rather than single unconnected events. By molding the marketing message and tactics to the LifeCycle of the customer, the Relationship Marketing approach achieves very high customer satisfaction and is highly profitable.

14

http://www.jimnovo.com/CRM-Lifecycles.htm


presented by e-commerce, it is likely that the growth of the Internet as a medium in the tourism industry will have the following impacts. Firstly, the physical activities surrounding the tourist experience will not fundamentally change. Technology may be harnessed to improve the experience, reduce costs and improve efficiencies and service. Those firms that concentrate on providing good service and expertly managing the tourist experience will be the most successful. However, there will definitely be opportunities for suppliers to add new value in the virtual realm.

Secondly, it is likely that all virtual activities will move to the new channel. The provision of information, the arranging of reservations and searching for destinations are all activities that can be done far more efficiently on the Internet than through printed brochures and current intermediaries. Free information will reduce the power of the current intermediaries and could remove the advantages of proprietary networks such as computer reservation systems (Bloch and Segev, 1996).

However, the Internet does not remove the need for intermediaries. Much of the hype around the Internet focuses on its ability to directly link suppliers and customers and hence the potential to cause mass disintermediation in the value chain. Indeed, the first actors to launch on line ventures were focused on disintermediation. However, the market is realizing that, just as in the physical world, consumers do not want to deal with the problems of contacting multiple suppliers to compare and shop. Some, if not most, will want and will be prepared to pay for the level of service that comes from dealing with an intermediary, who will offer them advice and save them time and money (Bloch and Segev, 1996).

Bloch et al. (1996) contend that potential tourists face a wide range of problems when trying to book directly with suppliers on the Internet. For example, they require knowledge of where to search for the destination sites, since conventional search engines are not effective. It also takes time to visit each destination site to view the information. Different servers typically present information in different formats and it requires perseverance to make valid comparisons. Often, it is not possible to book online, and in many instances, tourists cannot book separate parts of a trip through the same supplier (essentially, no supplier caters for all tourist segments). Moreover, individual destination service providers are not in a position to benefit from the ability the Internet provides to build up customer profiles, since most customers are first-time visitors. However, intermediaries can potentially build up very detailed customer profiles. If this is considered in relation to the earlier discussion on the original need for intermediation in the tourism industry, it should be clear that mass disintermediation is highly unlikely. Instead it is almost certain that new virtual intermediaries will develop.

15


In order to take advantage of the opportunities presented by the virtual channel and the trends in marketing and the industry, successful intermediaries will have to aggregate information and specialized knowledge in a single format at a single virtual destination. They will need to routines transactions by providing a single integrated reservation system that allows customers to book all parts of their holiday in a single transaction and facilitate customization by offering the customer the ability to create his or her own itinerary in whatever manner suits the customer. They will have to permit comparisons by offering information in a uniform layout, providing access to comments made by previous tourists, and operating a grading system. Since the Internet transcends location and political boundaries, new intermediaries will also have to transcend location. They will also have to offer comprehensive services that allow customers to make all their travel arrangements at one site and maintain a database that will allow the intermediary to build up an accurate profile of each tourist and use this to customize the services to each customer. Possibly the technically most difficult task in this list is the building of an integrated reservation system for the whole industry and hence the current CRS owners have a potential advantage to leverage their technology to become the core intermediary.

4. Methodology of the study

This paper reports on the findings of a study on the web strategy and efficacy of different kind of firms operating in the tourism industry. The study has been conducted considering European and American companies. The Internet is a growing channel for commerce. While the opportunities afforded by this phenomenon seem readily apparent, there is still much debate on exactly how the use of the Internet and in particular the World Wide Web will affect the industry. In this article we investigate the value chain of the tourism industry. We examine the roles played by intermediaries in the distribution chain and investigate the threats and opportunities that the emergence of the virtual channel, and other associated trends, present for the industry. The aim is to discover which organizations are the most prepared to use the real potential advantages offered by the web. Travel agencies are using the web site as a communication tool, and hotels are using it to market goods and services, to receive reservations, and to evacuate customer complaints/suggestions. Based on this, a profile is made for successful intermediaries and, finally, we assess the implications of this profile on the control of the electronic channel. In order to take advantage of the opportunities presented by the virtual channel and the

16


trends in marketing and the industry, successful intermediaries will have to offer information and specialized knowledge in a single format.

The first phase of the research was the sample selection of the tourism organization’s web sites using the Nielsen//NetRatings list of the most viewed ones in the 2004 a Databank study on tourism web sites and a survey conducted by The Economist. The analysis has been conducted on a sample of 426 web sites.

They were included in five different clusters:

1. tour operators, inbound and outbound; 2. traditional travel agents operating both on and off line; 3. virtual travel agents operating only through Internet; 4. hotel chains; 5. transportation providers (airlines, train companies).

Than we selected 104 items in order to evaluate the web sites quality and

efficacy. These items referred to the following categories: the corporate information, concerns for example the organization

chart, the company history, company mission and vision; the product information, related to the quantity and quality of the

information given; the number of languages used; the firm-customer services, like a newsletter, a chat with an

employer and the frequently asked questions; the customer care services, like the toll free number or the call

center; the customer-customer services, for example the guest-book or a

forum; products/offers consultation, it refers to the easiness of the process,

the time and the number of click needed; download time, related to the main information; clarity of the text contained; internet visibility, referring to the results of some keywords

researches made using Google’s research engine; navigability, given by the structure and paths of the web sites; services/gifts at disposal like screensaver, e-cards and electronic

games; value added services, such as weather information and currency

exchange rates; prices information and special offers;

17


services for the trade channel, for example tools to search the trade operators location; online budget, it provides the possibility to check the service

availability; on line booking service; transactions information and payment choice also related to its

safety; payment process; booking variations, it concerns the possibility to follow a standard

process to change the booking conditions; travel documents, can be delivered on or off line; after-sales services, like the customer care survey or the customer

evaluation of the service directly on the web site. The web sites observed in the analysis obtained two points for each

functioning item recognized, one point for the incomplete or not up-to-date items and zero points for the total absence of the items.

5. Data presentation and analysis

Tour operators We noticed that in some cases, especially in the Italian market, the tour

operators choose not to cannibalize their off line distribution channel and use their web site only to give information or for branding purposes. They offer some on line services like the possibility to check the service availability but they don’t let the on line booking. In fewer cases, especially in the USA market, the tour operators use their web site as a direct selling channel.

The main purpose of these web sites is to provide information facilitating the choice process. Not many services are supplied showing the diffused inadequacy to create a long time relation with the customers.

18


Figure 3 – Tour operators’ web site features (%)

Corporate information 49Product information 46Languages 32Firm-customer services 29Customer care 27Customer-customer services 5Products/offers consultation 92Download time 61Clarity 59Internet visibility 73Navigability 53Services/gifts 9Value added services 39Prices information 75Trade services 42Online budget 48Booking 33Transactions information 27Payment 30Booking variations 14Travel documents 24After-sales services 5

Traditional travel agencies The Internet preparation is generally low. The marketing strategies and

policies used on line are similar to the off line ones. The information potential is even lower than the previous cluster.

19


Figure 4 – Traditional travel agencies’ web site features (%)


Virtual travel agencies

Obviously they seem to be more prepared and web oriented. The majority of the web sites considered are e-commerce sites and many of them adopt more aggressive marketing policies. For example some provide dynamic packaging and service personalization.

The services provided and the site interactivity lead to a tighter relation with the customers. Much attention is also paid to the Internet visibility.

20


Figure 5 – Virtual travel agencies’ web site features (%)


Hotels The hotel chains show great interest for the Internet selling channel and

adopt generally an active role. They know that disintermediation can be very profitable and try to invest in the on line and off line visibility.

Usually they use the Web to implement a low price policy but they also pay attention to the services provided.

21


Figure 6 – Hotels’ web site features (%)


Transportation providers For these organizations the main benefit of the Internet is the widespread

distribution of the tickets. Furthermore they tend to offer a wide range of related tourism services on their web sites that appear similar to tourism portals. In many cases they often permit the hotel research and booking.

Like the hotel’s chains they usually prefer a pull strategy to obtain a cost cut. At present the airlines companies are the better examples of low price policies.

22


Figure 7 – Carriers’ web site features (%)


6. Conclusion

Clearly, such developments imply significant threats for those organizations in the current value chain. Several commentators (Bloch, 1996, Verity, Hoff, 1994) have drawn similar conclusions for, and offered the same advice to, travel agents. They must refocus and leverage their strength: knowledge about their consumers, the travel market and supplier offerings.

They have the choice of attempting to become an industry magnet, which requires deep pockets, technical expertise and massive advertising, or

23


repositioning themselves as travel management consultants, who assist customers with personalized service and advice, and redesign business travel management processes. They can gain competitive advantage by improving the real world shopping experience.

Outbound tour operators are arguably the most endangered intermediaries. They must either attempt to become an industry magnet or join forces with one. Their activities are inherently virtual and as such are better suited to the Internet. Inbound tour operators and destination service providers will have to leverage their expertise of local markets and concentrate on their physical value chains. They will differentiate themselves by their quality of service and by creating memorable experiences. Trust is more than ever a central concern for travel purchasers. By nature, the product cannot be tried before purchase, and businesses on the Web must still overcome a healthy skepticism about the trustworthiness of the companies and offers they discover online. There is an important opportunity for "experts" to support decision-making about tourism purchases. Agents and intermediaries which add real value with their specialist expertise and personal service will remain relevant and successfully navigate the shifting roles in travel distribution.

They will gain greater benefit by joining an Internet travel mall than by trying to bypass the industry magnet. However, they should benefit from the reduced number of intermediaries, both because of the global reach of the Internet travel malls and the reduced transaction costs of the new medium.

24


REFERENCES

ADRIAN PALMER AND PATRICK MCCOLE (2000), “The role of electronic commerce in creating virtual tourism destination marketing organizations” International Journal of Contemporary Hospitality Management 12/3 198-204.

ALDERSON, W. (1958), “Factors governing the development of marketing channels”, in Clewett, R.M. (Ed.), Marketing Channels for Manufactured Products, Richard D. Irwin, Homewood, IL.

BERTHON, PIERRE AND PITT, Leyland and Watson, Richard T., (1996), “The world wide web as an Advertising Medium” Journal of Advertising Research, Jan/Feb., 43-55.

BLOCH, M. AND SEGEV, A. (1996), “The Impact of Electronic Commerce on the Travel Industry”. http://haas.berkley.edu/~citm.

BLOCH, M., PIGNEUR, Y. AND STEINER, T. (1996), “The IT-enabled Extended Enterprise, Applications in the Tourism Industry”, http://haas.berkley.edu/~citm.

BUHALIS D. (2003), eTourism: Information Technology for Strategic Tourism Management, Harlow: Prentice Hall.

CASARIN F. (1996) Il marketing dei prodotti turistici. Specificità e varietà, Torino, G. Giappichelli Editore.

CONNOLLY, D.J., OLSEN, M.D. AND MOORE, R.G. (1998), “The Internet as a distribution channel”, Cornell Hotel and Restaurant Administration Quarterly, Vol. 8 No. 4, pp. 42-54.

GUERINI C., FRANCHINI A. (2000), “Il ruolo di Internet nel marketing dei servizi : verso il prodotto virtuale”, Liuc papers, Castellanza.

MANDELLI A., VESCOVI T. (2003), Le nuove frontiere del marketing digitale, Etas, Milano

MARTINI U. (2000), “L’impatto di Internet sulla struttura del mercato turistico leisure”, Technical Report DISA, Quaderno n. 36, Ottobre 2000.

MARTINI U., JACUCCI G., CALZÀ D., CATTANI C. (2000), “Mentoring Small Destinations into Destination Management towards Electronic Marketing”, in ENTER2000 Conference Proceedings, Vienna, SpringerComputerScience.

MILLMAN, H. (1998), “Online travel arrangements begin to catch on”, Infoworld, Vol. 20 No. 9, p. 78.

POLLOCK, A. (1995), “The impact of information technology on destination marketing”, EIU Travel and Tourism Analyst, No. 3, pp. 66-83.

25

http://haas.berkley.edu/%7Ecitm


QUELCH, J. A., AND KLEIN, L. R. (1996), “The Internet and International Marketing”, Sloan Management Review, Spring, 60-75.

RAYPORT, J.F. AND SVIOKLA, J.J. (1996), “Exploiting the virtual value chain”, The McKinsey Quarterly, No. 1.

STERN, LOUIS W. AND ADEL I. EL-ANSARY (1988), Marketing Channels, Englewood Cliffs, Prentice Hall, NJ.

STIPANUK D.M. (1993), “Tourism and Technology. Interactions and Implications”, in Tourism Management, August.

SUSSMANN, S. AND BAKER, M. (1996), “Responding to the electronic marketplace: lessons from destination management systems”, International Journal of Hospitality Management, Vol. 15 No. 2, pp. 99-112.

VERITY J. & HOF R. (1994), “The Internet : How it will change the way you do business” Business Week, 14 November.

26

DIPARTIMENTO DI ECONOMIA AZIENDALE PAPERS PUBBLICATI∗:

1. Arnaldo CANZIANI, La ricerca nelle scienze sociali: note metodologiche e pre-metodologiche, novembre 1998.

2. Daniela M. SALVIONI, Controllo di gestione e comunicazione nell’azienda pubblica, aprile 1999.

3. Arnaldo CANZIANI, Giovanni Demaria nei ricordi di un allievo, luglio 1999. 4. Rino FERRATA, Tecnologia e mercato: i criteri di scelta dei metodi di valutazione,

luglio 1999. 5. Giuseppe BERTOLI, Salvatore VICARI, L'impresa diversificata come organizzazione

che apprende, dicembre 1999. 6. Virna FREDDI, Attività economica e impresa nella concezione economicista, febbraio

2000. 7. Virna FREDDI, L'approccio Resource-based alla teoria dell'impresa: fattori interni e

competitività aziendale, febbraio 2000. 8. Maria MARTELLINI, Sviluppo, imprese e società, maggio 2000. 9. Arnaldo CANZIANI, Per la critica della teoresi zappiana, e delle sue forme di

conoscenza, dicembre 2000. 10. Giuseppe BERTOLI, Gabriele TROILO, L'evoluzione degli studi di marketing in

Italia. Dalle origini agli anni settanta, dicembre 2000. 11. Giuseppe BERTOLI, Profili di efficienza delle procedure concorsuali. Il concordato

preventivo nell’esperienza del tribunale di Brescia, dicembre 2000. 12. Daniele RONER, Domanda e offerta di beni economici. Rassegna critica

dall’irrealismo neoclassico alla differenziazione dei prodotti, marzo 2001. 13. Elisabetta CORVI, Le valenze comunicative del bilancio annuale. I risultati di

un'indagine empirica, luglio 2001. 14. Ignazio BASILE, Nicola DONINELLI, Roberto SAVONA, Management Styles of

Italian Equity Mutual Funds, agosto 2001. 15. Arnaldo CANZIANI, I processi competitivi fra economia e diritto, settembre 2001. 16. André Carlo PICHLER, L'Economic Value Added quale metodo di valutazione del

capitale economico e strumento di gestione aziendale, dicembre 2001. 17. Monica VENEZIANI, Economicità aziendale e capacità informativa del bilancio nelle

aziende cooperative agricole, dicembre 2001. 18. Pierpaolo FERRARI, La gestione del capitale nelle principali banche internazionali,

febbraio 2002. 19. Giuseppe BERTOLI, Bruno BUSACCA, Il valore della marca. Modello evolutivo e

metodi di misurazione, marzo 2002. 20. Paolo Francesco BERTUZZI, La gestione del rischio di credito nei rapporti

commerciali, aprile 2002. 21. Vincenzo CIOFFO, La riforma dei servizi a rete e l'impresa multiutility, maggio 2002. 22. Giuseppe MARZO, La relazione tra rischio e rendimento: proposte teoriche e ricerche

empiriche, giugno 2002. 23. Sergio ALBERTINI, Francesca VISINTIN, Corporate Governance e performance

innovativa nel settore delle macchine utensili italiano, luglio 2002. 24. Francesco AVALLONE, Monica VENEZIANI, Models of financial disclosure on the

Internet: a survey of italian companies, gennaio 2003.

∗ Serie depositata a norma di legge

27

25. Anna CODINI, Strutture organizzative e assetti di governance del non profit, ottobre 2003.

26. Annalisa BALDISSERA, L’origine del capitale nella dottrina marxiana, ottobre 2003. 27. Annalisa BALDISSERA, Valore e plusvalore nella speculazione marxiana, ottobre

2003. 28. Sergio ALBERTINI, Enrico MARELLI, Esportazione di posti di lavoro ed

importazione di lavoratori:implicazioni per il mercato locale del lavoro e ricadute sul cambiamento organizzativo e sulla gestione delle risorse umane, dicembre 2003.

29. Federico MANFRIN, Sulla natura del controllo legale dei conti e la responsabilità dei revisori esterni, dicembre 2003.

30. Rino FERRATA, Le variabili critiche nella misurazione del valore di una tecnologia, aprile 2004.

31. Giuseppe BERTOLI, Bruno BUSACCA, Co-branding e valore della marca, aprile 2004. 32. Arnaldo CANZIANI, La natura economica dell’impresa, giugno 2004. 33. Angelo MINAFRA, Verso un nuovo paradigma per le Banche Centrali agli inizi del

XXI secolo?, luglio 2004. 34. Yuri BIONDI, Equilibrio e dinamica economica nell’impresa di Maffeo Pantaleoni,

agosto 2004. 35. Yuri BIONDI, Gino Zappa lettore degli Erotemi di Maffeo Pantaleoni, agosto 2004. 36. Mario MAZZOLENI, Co-operatives in the Digital Era, settembre 2004. 37. Claudio TEODORI, La comunicazione via WEB delle imprese italiane quotate: un

quadro d’insieme, dicembre 2004. 38. Elisabetta CORVI, Michelle BONERA, La comunicazione on line nel settore della

distribuzione dell’energia elettrica, dicembre 2004. 39. Yuri BIONDI, Zappa, Veblen, Commons: azienda e istituzioni nel formarsi

dell’Economia Aziendale, dicembre 2004. 40. Federico MANFRIN, La revisione del bilancio di esercizio e l’uso erroneo degli

strumenti statistici, dicembre 2004. 41. Monica VENEZIANI, Effects of the IFRS on Financial Communication in Italy:

Impact on the Consolidated Financial Statement, gennaio 2005. 42. Anna Maria TARANTOLA RONCHI, Domenico CERVADORO, L’industria

vitivinicola di Franciacorta: un caso di successo, marzo 2005. 43. Paolo BOGARELLI, Strumenti economico aziendali per il governo delle aziende

familiari, marzo 2005. 44. Anna CODINI, I codici etici nelle cooperative sociali, luglio 2005. 45. Francesca GENNARI, Corporate Governance e controllo della Brand Equity

nell’attuale scenario competitivo, luglio 2005. 46. Yuri BIONDI, The Firm as an Entity: Management, Organisation, Accounting, agosto

2005. 47. Giuseppe BERTOLI, Bruno BUSACCA, Luca MOLTENI, Consumatore, marca ed

“effetto made in”: evidenze dall’Italia e dagli Stati Uniti, novembre 2005. 48. Pier-Luca BUBBI, I metodi basati sui flussi: condizioni e limiti di applicazione ai fini

della valutazione delle imprese aeroportuali, novembre 2005. 49. Simona FRANZONI, Le relazioni con gli stakeholder e la responsabilità d’impresa,

dicembre 2005. 50. Francesco BOLDIZZONI, Arnaldo CANZIANI, Mathematics and Economics: Use,

Misuse, or Abuse?, dicembre 2005.

28

Università degli Studi Dipartimento didi Brescia Economia Aziendale

Dicembre 2005

Paper numero 51

Elisabetta CORVI - Michelle BONERA

WEB ORIENTATIONAND VALUE CHAIN EVOLUTION

IN THE TOURISM INDUSTRY

Università degli Studi di BresciaDipartimento di Economia AziendaleContrada Santa Chiara, 50 - 25122 Bresciatel. 030.2988.551-552-553-554 - fax 030.295814e-mail: [email protected]

AR

TI G

RA

FIC

HE

AP

OLL

ON

IO

Web orientation and value chain evolution in the tourism industry

Documents

Transcript of Web orientation and value chain evolution in the tourism industry