The Concept of Travel and Tourism Marketing - Essay Example

Lastminute.com Introduction Travel & Tourism is the world's biggest industry, accounting for nearly 200 million jobs, and over 10 per cent of world GDP. According to VisitBritain.com, Tourism is one of the largest industries in the UK, accounting for 3.4% of the UK economy and worth approximately 74.2 billion in 2003. The 27.8 million overseas visitors who came in 2004 spent 13 billion in the UK. Total visits for 2004 are 27.8 million, a 12% increase compared with 2003, and an increase of 10% in spending to 13 billion. In 2004, the UK ranked sixth in the international tourism earnings league behind the USA, Spain, France, Italy and Germany. The travel, tourism and hospitality industry has been growing steadily at a rapid pace. Technology has accelerated growth in entirely different ways in the travel industry. With the Internet explosion, globalization and more people willing to travel, this industry has been evolving rapidly to cater to the customers. Information Communication Technologies and the Internet continue to revolutionize the industry. They are now being touted as major distribution agent for the entire sector. Companies are now utilizing this tool to expand their market and increase their market share by trying to better their relationship with the customer and manage it effectively. With the increasing competitiveness in the industry, mergers and acquisitions are leading the way consolidating the industry players. This paves the way for more aggressive and sustained efforts to upgrade and innovate, altering their entire business model as well if need be, to stay abreast of the competition. Successful organizations thus use technologies to add value to their existing products and to enhance profitability. Technology and its influence on the travel, tourism, hospitality and leisure sector Growth of communication systems Man has always travelled from bygone days and his curiosity of the unknown was the basis of the enormous travel industry today. Since means of communication plays a vital part in travel and tourism industry, modern communications systems, with special reference to computer technology, have changed the concept of travel and tourism marketing. The advents of travel agencies and streamlined retail marketing and sales networks have played their part in empowering this massive industry to move forward. Technological advances in household appliances and gadgets have offered great amounts of leisure. All these have influenced tourism by enabling people to travel more. Explosion of internet In 2003, corporate travel bookings made on the Internet compared to the conventional direct bookings by telephone, fax or through the traditional travel agent was at only 12 per cent. Nevertheless, research consultancy marketSHARE predicts that this number will skyrocket to 28 per cent by 2008. Recent industry research shows that over 64% of the population comprising over 38 million people in the UK became Internet users as of 2005. Over eighty per cent of the adult population in this country has now visited the World Wide Web. These figures put the internet usage in the UK and penetration percentages equivalent to key market like the US, where web users now represent over 80 per cent of the adult population, and ahead of Germany and France in Europe. Data Statistics can be viewed at the website Growth of online travel booking users A recent survey of more than 450 travellers in the United Kingdom by consulting firm Accenture, revealed that business travellers are becoming increasingly dependent on the Internet with some 53 per cent of the respondents booking their trips online, 90 per cent of them using the Internet to search flight times and availability, and two-thirds checking-in online. More spending online UK online shopping revenues increased by 50 percent last year and for the first time, more goods and services will be bought using credit card and debit cards than cash, according to a report published by the Association for Payment Clearing Services (APACS) on Wednesday. APACS's, The Way We Pay report found that last year, online spending increased to 200m. Although this is still a fraction of overall spending, the figure is expected to grow over the coming years as Internet security improves and users gain confidence in e-commerce systems. News article from website E-commerce in business The most important aspect of e-commerce in business has been the reduction of layers in the commercial transactions leading to significantly higher productivity by using electronic networks to create, buy, sell, provide and distribute products and services. Airline tickets sold over the Internet are lower priced due to reduced overheads, the cost of acquiring a customer is lower and once companies pass on that cost saving to the customer and this causes more patrons to use it as well. Better customer base The Internet never sleeps and the product or service offered is available 24/7, 365 days a year. This in turn makes it available to people in all time zones and since travel is all about conquering the time zones, technology has encouraged, aided this industry, and allowed it to thrive. Lastminute.com We have discussed the advent of technology and its influence on the parameters that aid the travel and hospitality industry. Let us now understand lastminute.com as a company how its business model has enormously benefited by the growth in technology and thrived due to it. Overview Brent Hoberman and Martha Lane Fox, to cater to the customer demand of last minute deals started lastminute.com. Lastminute.com is Europe's leading travel and leisure website. Based on the idea of matching supply and demand, it offers consumers literally at the last minute, opportunities to acquire airline tickets, hotel rooms, package holidays, entertainment tickets, restaurant reservations and home delivery, specialty services, gifts and auctions. They started out in the UK and expanded beyond European market. They became a public company in March 2000, raising 120 million that helped consolidate the leadership position in Europe. Today they are the pan European e-commerce leader in travel and leisure. Brent Hoberman attributes his survival and success to innovation and the ability to capture the consumers' imagination. This has been demonstrated most recently with lastminute's vast expansion into the lifestyle entertainment arena and their recent acquisition of Holiday Autos. Brent Hoberman has witnessed his brainchild grow from standing start to budding stock market sensation, and as it has evolved, lastminute.com has increasingly become a reliable brand in which consumers trust. Interview available at website Products and services Lastminute.com on its website states that it aims at creating the one-stop shop for all last minute needs. To achieve this it is of utmost importance to deepen the inventory sourced from high quality suppliers across the entire range of goods and services. Suppliers Lastminute.com on its website lists having over 13,600 suppliers, including international scheduled airlines, hotels, package tour operators, theatre, sports and entertainment promoters, specialty service providers, gift suppliers and car hire, both in the UK and internationally. Supplier relationships include Lufthansa, Air France, Alitalia, bmi British midland, United Airlines, Virgin Atlantic Airways, Starwood Hotels and Resorts Worldwide, The Savoy Group, Sol Melia, Six Continents, JMC, Disneyland Paris, Kempinski Hotels, English National Ballet, The Royal Albert Hall, The Way Ahead Box Office and Conran Restaurants. Lastminute.com also owns and operates online brands holidayautos.com, travelprice.com, degriftour.com, travelselect.com, travel4less.co.uk, eXhilaration.co.uk, medhotels.com, first-option.co.uk, gemstonetravel.com, onlinetravel.com and lastminute.de. Branding Lastminute.com seeks to differentiate itself by generating some of the lowest prices for many travel and entertainment deals, and by packaging and delivering products and services, such as restaurant reservations, entertainment tickets and gifts, in convenient, novel and distinctive ways. It also aims to inspire its customers to try something different. Since 1998, the company believes that it has developed a distinctive brand, which communicates spontaneity and a sense of adventure, attracting a loyal community of registered subscribers From website < http://hugin.info/131840/R/925314/125915.pdf> Business model Lastminute.com aims to be the global marketplace for all last minute services and transactions. On its corporate history, it conveys its business model of using the Internet to match suppliers and consumers at short notice, works with a range of suppliers in the travel, entertainment and gift industries and is dedicated to bringing its customers attractive products and services. Lastminute.com carries almost no inventory risk, selling perishable inventory for its suppliers, and, where appropriate, protects suppliers' brand names until after purchase much akin to the US provider Priceline.com who was a pioneer providing similar services. By leveraging existing technology and capabilities, lastminute.com has developed a framework for rapid expansion. When it expands into new countries, it establishes multinational supplier relationships, which benefit not only its operations in those countries, but also its existing operations. Furthermore, each local site benefits from shared supply and technological infrastructure, product development and marketing expenditure across borders. This growing multinational presence will give the company the ability to develop and further strengthen the lastminute.com brand. Expansion and diversification- future plans Lastminute.com continues to expand exponentially. The analyst expectations are over 800 million in gross bookings. About forty percent of its revenues come from package travel deals. Lastminute.com believes that alternative distribution platforms such as interactive digital television, mobile telephone and personal digital assistants are ideally suited to offer last minute deals. To date lastminute.com has focused on companies in the interactive television, mobile telephone and personal digital assistant markets. Accordingly, it has entered into agreements with companies such as Cable and Wireless Communications, Telewest, BT Cellnet, Orange, AvantGo and Psion to offer its content using these new channels. The recent launch of a transactional voice recognition portal is a European first. Lastminute.com also intends to grow by introducing new products and services, expanding its network of suppliers and strategic partners and enhancing its technology. Data from website Email marketing campaigns Its email marketing campaigns are now being considered a success. Operating across multiple markets, lastminute.com has established approximately 13,600 supplier relationships and over 9.8 million subscribers to its weekly newsletter. It targets its mails to over 150 different segments, so combined with the fact that these are requests and that they have great product depth. In addition, these platforms bring in additional advertising revenues 3rd parties. Facts from website Lastminute.com has a business model that is based on the Internet platform. It is ably supported by its technology partners, Sun Microsystems and Informix. It is therefore certain that technology and its advances have encouraged it to grow. The Internet boom has brought it more online users and has served to widen its customer base. Business travellers on the Internet and technology on their trips can attribute the growth in online travel management by businesses to the increasing necessity and prevalence of business travel, and to the growing reliance. Lifestyle and travel are particularly well adapted to the online experience. They have databases reaching over a huge fragmentation of suppliers and that makes the customer experience better online than offline. This has worked in favour of lastminute.com and enabled it to thrive. Another main proposition is that prices to the end-user of the most tourist/travel products are lower than the same products being sold through traditional distribution channels. This aligns with the business model of lastminute.com that wants to sell cheaper deals to the customers and is primarily aimed at that target segment. Travel Technology for success According to Anite Travel Systems, "the routes open to travel providers seeking to distribute on the web are: Upgrade host systems with the creation of a web front-end, either handling the project in-house or outsourcing to a systems specialist Choosing an IT supplier's bridging system that integrates existing systems with the web Starting afresh with a new end-to-end reservations system offering real-time web distribution, sourced from a system supplier" (Complete details on website < http://www.eyefortravel.com/papers/etravel_how_to_start_the_revolution.pdf) Upgrading host systems with a web front-end is suitable for firms that are already well with highly evolved systems and are not beneficial when they have to be integrated with existing systems or starting afresh are not considered. However, when these systems were designed, this kind of Internet explosion was not expected and factored into it and there are many obstacles to continuing effectively with the e-commerce scenario and profiting from it. Another issue is extending existing interfaces to include web distribution. Many legacy systems interface to GDSs to source flights, and to third-party host systems to source ferry crossings, rail journeys and other components. To extend these interfaces to the web, enabling consumers to book holidays comprised of these components, can require a solution of considerable complexity. Customers who login often are lured to a purchase if there is a bookable web content that covers the entire travel package, similar to a one-stop-shop like a physical purchase. Starting afresh with a new and internet-enabled system may make sense if a company is struggling even to develop a host system that takes care of its current operational needs, or has yet to develop the necessary interfaces to legacy distribution channels. Hence a successful system will take the customer through the entire steps of a customized package tat will involve flight, hotel, car rental and event/attraction booking until the purchase of gifts or souvenirs if required. However, once again there a key issue is the small number of systems providers that have yet developed end-to-end reservations systems that include real-time web distribution and encompass all these levels. Anite Travel Systems Survey 2000 from website < http://www.eyefortravel.com/papers/etravel_how_to_start_the_revolution.pdf> Most travel providers are a long way off in delivering those kinds of distribution networks. Lastminute.com has an assured edge in the popularity of being a visible travel website ahead of its competitors. (See Survey). Having a state-of-the-art Travel Information System was obviously a step in the right direction to extend its market share. Lastminute.com started afresh to build systems from scratch using the internet to build an information system that bridges and combines the three approaches mentioned above. Management Information System There is no universally accepted definition for the term Management Information Systems (MIS). It "has become almost synonymous with computer based data processing" (Davis, G & Olson, M, 1984, p5-6). MIS is usually used within large organisations and is an integrated, user-machine system that converts data from internal and external sources into information that provides a full range of functions. These functions are associated with the design, development, enhancement and support of the information systems communications, hardware and software applications. It will match up this information to managers at all levels, in all functions, to facilitate them to make timely and valuable decisions for planning, directing and controlling the activities for which they are accountable. An organisation may have dozens of different information systems, some of which are useful for day-to-day operational decisions, and some of which are used in making calculated and planned decisions. MIS is responsible for managing and administrating information as well as developing and managing all networking and computer resources. A Travel Management Information system will do just that. It is used efficiently to process travel requests and process travel expenses, including the selection of the travel carrier, hotel and car rental as needed. Below is listed some of the exhaustive functions that a Travel Management Information System will be able to provide that will enable the increase in efficiency of the functioning of lastminute.com. High reliance levels of travel feed data. Receiving a travel request from a customer Ability to integrate travel and financial data from different source feeds into a single database for analysis Generating travel arrangements for the customer in response to the received travel request. Maintaining individual profiling and preferences which help in future plans Comprehensive report generation and flexibility in the report formats Supplier transactions and negotiations, with complete usage and spend data Scenarios for new travel policies Policy compliance reports Expenses tracked and vouchers generated Traditionally, in order to determine the availability of these services and make reservations, travel agents may access (from a remote location) one of a number of proprietary travel reservation systems. For example, in order to determine the availability of seating on a specific airline flight, Lastminute.com will use, since it was taken over by SABRE, its system, which is a computer reservation system (CRS) developed and marketed by American Airlines. When a complete set of travel arrangements need to be finalised for the customer, the agent has to access a system multiple times. In order to put together the complete customized package for the consumer, which will include, airline tickets, hotels, rental cars, events and attraction tickets and souvenir purchases, various systems have to be accessed at multiple times. For example, in order to arrange for a customer's airline travel, automobile rental, and hotel accommodations, a travel agent typically accesses the system to reserve airline seating and obtain prices and tickets, then again using different commands to obtain prices and reserve a rental car, and a third time to obtain prices and reserve a hotel room. Then the events and attractions tickets and then the souvenirs will be attended to at a separate access. Adopting this method decreases the productivity with increases in request processing time, as this current prevailing method of processing travel requests one after another is highly inefficient. Such inefficiencies result in increased operational costs and reduced profitability for the company. Additionally, sufficient training is needed to access the multitude of systems and therefore the training costs add up too. All this will serve to affect the lastminute.com cost structure of offering the lowest possible fares. A Travel Management Information System serves to do away with the repetitive processes, since it tries to integrate all the information into a single automated travel management information system that incorporates all available customer reservation service information into one database, including customer preference information. It maintains business entity profile and/or an individual profile for each agency customer, in a relational database. All the supplier and partner and alliance information are also stored in relational databases. In response to a customer's travel request, the system automatically retrieves, and displays for decision-making by an agent, all pertinent information retrieved from the customer's business entity profile and/or individual profile, and the appropriate computer reservation system(s). An important technical advantage of the present invention is that travel service information from a number of computer reservation systems is stored and readily available in a single database format. Access times are low, information-retrieving costs are less and cost structure is kept near to the ground. An additional significant procedural benefit of the current development is that customer preference information is also stored and readily available in a database. Consequently, an agent can take the customer preferences (e.g., restrictions) into account while making travel arrangements. All the supplier information is dealt with, transactions are recorded, electronic transfers make payments easier and inventories are maintained at a minimum. Lastminute.com conducts its whole business process on three key characteristics: capability to procure low cost deals at the last minute, ability to price it right for sale and hold minimal inventories to keep costs low. All of its transactions are done electronically and the whole movement of information is possible only because of technological advances. Therefore, as technology evolves, companies like lastminute.com stand to benefit. Organising the information flow and retrieval of the data as quickly and efficiently as possible is imperative for lastminute.com. To compete in the market, the two requisites are low cost and differentiation. For the differentiation of the brand, lastminute.com as stated on its website "encourages spontaneous, romantic and sometimes adventurous behaviour by offering people the chance to live their dreams at unbeatable prices!" To keep its cost low, it buys the unsold seats at the last minute, hotel accommodations and car rentals at deep discounted prices from the suppliers and passes on these discounts to the customers. The suppliers are benefited because their wastage of the unsold inventories is minimized and lastminute.com is benefited because it buys these inventories at very low prices that allow it to offer better deals to consumers. It also protects the suppliers name and at the same time, the customer is shielded from knowing the exact percentage since the supplier wants to keep the rates anonymous. Details on website < http://www.lastminute.com/lmn/aboutus/howwedoit.jhtml> Conclusion Lastminute.com has grown and reached its current expanse by fourteen acquisitions, holidayautos.com, being the most recent. It is also rapidly expanding in France, Germany and Spain and trying to unify the various synergies. In May 2005, Sabre Holdings announced it was acquiring the discount travel site lastminute.com in a deal valued at up to $1.08 billion. "This acquisition would bring together two well-regarded brands and two great teams to create the leading position in European online travel," said Michelle Peluso, president and CEO of Travelocity in a statement. "Lastminute.com's diverse mix of flights, holidays, hotels, car hire and non-travel ties closely with Travelocity's strategy of continuing to expand our range of offerings to consumers beyond basic air travel." (Kerner, Sean, from website http://www.ecommerce-guide.com/news/news/article.php/3505331) It is not hard to imagine the amount of consolidation of information that would need to be executed to run the merged entity. Technology will be its sole aid in accomplishing this project. To realize all this and keep its momentum going, with the massive amount of input data, transaction processes and report generation lastminute.com handles, it will be highly benefited by the integration and functionalities offered by a Travel Management Information System. Sources Kotadia, Munir 2004 UK online spending up 50 percent [Online] http://news.zdnet.co.uk/internet/ecommerce/0,39020372,39159884,00.htm 14 Jan. 2006. Internet Travel News 2003 lastminute Exclusive [Online] http://www.breakingtravelnews.com/article/20030915144723393 14 Jan. 2006. Asia-Pacific travel growth remains strong - Corporate travel moves online [Online] http://www.hoteljobresource.com/modules.phpop=modload&name=trends&file=detail&sid=19939 14 Jan. 2006. Sean Michael Kerner 2005 Online Travel Market Heats Up With LastMinute.com Deal [Online] http://www.ecommerce-guide.com/news/news/article.php/3505331 14 Jan. 2006. Davis, Gordon B and Olson, Margrethe (1985). Management Information Systems: Foundations, Structure, and Development, New York: McGraw-Hill Travel & Tourism - UK Residents: Visits to and from the UK continue to rise, [Online] http://www.statistics.gov.uk/cci/nugget.aspid=352 14 Jan. 2006. Key Tourism Facts 2003 [Online] http://www.visitbritain.com/corporate/factsfigures/index.aspx 14 Jan. 2006. Travel & Tourism - UK Residents: Visits to and from the UK continue to rise, [Online] http://www.statistics.gov.uk/cci/nugget.aspid=352 14 Jan. 2006. Wikipedia 2002 Definition of Management Information Systems [On-line] 2002 http://en.wikipedia.org/wiki/Management_information_systems 14 Jan. 2006. Patent Office 1998 Automated travel service management information system [Online] http://www.patentstorm.us/patents/5832451.html 14 Jan. 2006. Lastminute.com How we do it [Online] http://www.lastminute.com/lmn/aboutus/howwedoit.jhtml 14 Jan. 2006. Internet usage in Europe [Online] http://www.internetworldstats.com/stats4.htm 14 Jan. 2006. Online Travel Booking Survey: 2000 E-travel - How to start the Revolution [Online] http://www.eyefortravel.com/papers/etravel_how_to_start_the_revolution.pdf 14 Jan. 2006. Lastminute.com Analyst presentation 2003 [Online] http://hugin.info/131840/R/925314/125915.pdf 14 Jan 2006 Read More