Advantages and Disadvantages of Travel Trade on the Internet - Article Example

Advantages and Disadvantages of Travel Trade on the Internet   Problem ment: If, a proper planning is not adopted then Travel Trade business on the Internet can lead the owner to a great deal of trouble. Drastic progress in the field of information technology has changed the conventional ideas about conducting business. The main advantage of the Internet business is that it introduces a businessman to the global market. Thanks to the benefits of Internet technologies, the person will be able to sell his products freely in the international market. On the other hand there are certain disadvantages in the system also. First, there is always a risk that a venture will fail because of the huge competition that it will face. Second, as there will be several competitors, it is really tough for a person to draw attention of customers by rightly focusing on the uniqueness of his products. Third, it is not always certain that even after delivering products a person would be able to receive the right amount of payment. Advantages and disadvantages of travel trade business on the Internet are manifold. Challenges/Opportunities: Challenges: Since last few years the Internet has emerged as one of the most powerful mediums when it comes to marketing the facilities that a travel-tourism organization is providing to its clients. Not only the private sector organizations but also government tourism departments are using the Internet as one of the most effective means to cater their services to the people. However, even just a decade back most of the websites of such organizations used to contain few descriptions about the products they are offering and a “reservation booking engine” (Thomases, 17th September 2005) but post globalization business competition has led those such situation, where those companies, for the sake of their survival, have been compelled to introduce new technologies on their websites with the intention of making task of the customers as much easy as possible- “The travel industry is quickly recognizing that building a web site with a reservation booking engine is simply not enough. The Web is one of the most powerful marketing vehicles known to travel, tourism and hospitality entities.” (Thomases, 17th September 2005) This situation becomes even more challenging for the travel and tourism based organizations as, according to a research of Forrester Research, in the year 2002, 70% of all the Fortune 1000 companies were keen on initiating their own booking procedure so that their business travelers do not have to face any problems while adopting the online booking system. (Starkov and Price, 2nd march, 2003) In this context we need to remember that revenue generated from business travel is one of the major sources of profit for the travel and tourism sector across the globe. Such observation receives a further stronger foundation as we come across estimation of the Jupiter Media Matrix “…that the US online managed corporate travel bookings will grow from $12 billion in 2002 to $32.8 billion in 2005.” (Starkov and Price, 2nd march, 2003) Such information is definitely quite encouraging for the tourism sector but on the other hand, if the business organizations initiate their own booking system then the situation will be quite crucial for the organizations as those will surely lose a major part of their client base. Thus, retaining the corporate sector customer base is definitely one of the major concerns for the travel and tourism industry. Another challenge that the Internet based travel tourism industry often encounters is proper measurement of the ROI or Return of Investment. Hollis Thomases observes, “…prospective travelers tend to begin their online research significantly far in advance of when they actually book their travel. For online travel advertisers, this could mean nearly a month before true conversion rates and ROI can be measured.” (Thomases, 17th September 2005) The 2002 report of the Nielsen-Netratings has clearly laid down that “the travel category was the fourth largest web advertiser in May 2002, with 5.4 billion purchased impressions, and eMarketer reported that 32 percent of U.S. travelers have used the Internet to book travel arrangements during 2002.” (Thomases, 17th September 2005) Such abundance of advertisements often creates a major problem in measuring the true amount of ROI. The only way to solve the problem is to track the advertisement campaigns “beyond their initial delivery”; otherwise such “delayed impact can significantly distort ROI measurement.” (Thomases, 17th September 2005) According to the opinion of Paul Serff, President and CEO of TIA Foundation, “Return on investment—or ROI — is considered one of the standard methods of measuring the worth of a project. Whether you use ROI, equity, assets or any other formula, its validity still relies on the accuracy of information you include in the equation and the values you put on the different types of return.” (Serff, 2007, p.15) As the ROI is not properly measured most of the time, there is always a high risk that there will not be any proper estimation of expenditure that has been done on different sectors of travel and tourism. In case of Internet travel and tourism business proper estimation of ROI is very important so that owner of a business can keep a track of his investment and how much return he is getting from such investment. Otherwise there is always a high probability that investment would exceed profit and that will finally cause loss to the organization. Incidents of such type are becoming increasingly common in today’s travel and tourism business sector. The third challenge that travel trade business on the Internet faces is solving questions of the customers as they plan for their trip or solving their queries related to services offered by the tourism organization. It is quite normal that people will search for the best comfort level according to their respective affordability. Thus, they look forward to the website of the organization so that they receive the perfect information to solve their queries. In this context, it is very important that website of an organization needs to be updated on a regular basis. Failure to do so will surely put the organization in an unfavorable condition compared to its competitors. The only way to counter the challenge is to upgrade the website on a regular basis so that a customer receives the impression that the organization is always ready to provide the best service with its diversified service offerings. Opportunities: In the post globalization era e marketing is one of the most powerful weapons for a travel tourism organization for rightly marketing its products to the customers in global arena. If an organization adopts the right kind of marketing strategy even amidst such global level competition, it will be easy for it to sell its services to customers across the globe. E-marketing strategies offer an organization ample opportunity to cater its services in the market through several avenues, namely, email marketing, banner advertising, blog marketing, social network marketing and affiliate marketing. (“e-Marketing and Tourism”, 14th March, 2007) According to the latest estimation of the Miniwatts Marketing Group, across the world, total number of Internet users is 1,596,270,108. (“TOP 20 COUNTRIES WITH THE HIGHEST NUMBER OF INTERNET USERS”, 2009) This very statistic is self explanatory that if proper marketing policies can be adopted then a company can reach such a huge customer base. Selling its products accordingly to these people will surely help the company in establishing itself as an unacknowledged leader in the field of travel tourism business in the global context. Consequently, surviving as well as prospering against the tremendous global competition automatically makes the company subject to considerable goodwill. Thus, it automatically becomes first choice for many consumers, though on certain occasions, it offers comparatively higher price rate to its customers. Hossein Bidgoli observes, “The travel and tourism industry has a very complex structure, with a large percentage of the organizations classified as small businesses.” (Bidgoli, 2004, p.463) Once an organization gets into this business it becomes important for it to monitor such complex structure and all sorts of developments that are happening in the global context so that it can also upgrade its products accordingly to remain in the competitive market. Another opportunity of the travel trade business on the Internet is that it empowers a company to obtain a close watch over the condition of the market in the global context. To start a business investment often becomes a major obstacle for the small and medium sized tourism houses. Compared to the titans of travel tourism business, these organizations do not contain sufficient capital to compete with those in terms of publicizing their services. Apart from that, due to brand appeal of such big business houses people often trend to ignore offers of the small ones and that often becomes a strong set back for such business organizations. As Internet provides the opportunity to start a new venture almost with no investment and there is always opportunity to earn a great deal of profit, travel trade business on Internet definitely acts as a source of great inspiration for the small and medium size business ventures. In this context Chulwon Kim reflects, “…SMTEs with well-developed and innovative Web sites can now have “equal Internet access” to international tourism markets” (Organization for Economic Co-operation and Development 2006, p.136). This implies equal access to telecom infrastructure, as well as to marketing management and education. According to a UN report (2001), “it is not the cost of being there, on the on-line market place, which must be reckoned with, but the cost of not being there.” (Organization for Economic Co-operation and Development 2006, p.136) It is certain that embracing digital communication and information technology is no longer an option, but a necessity. Thus, one of the most important characteristics of electronic commerce is the opportunity and promise it holds for SMTEs to extend their capabilities and grow.” (Kim, 2004, pp.1-2) Management Solution: The discussion above clearly focuses over the fact that major challenges that travel trade business on Internet face are inaccurate measurement of ROI or Return of Investment and updating the websites accordingly. Accurate measurement of the ROI is definitely a great barrier for the companies. The management solution to solve this problem is to use ratios like “performance analysis and benchmarking.” (Tassiopoulos, 2009, p.161) In order to execute the process properly, “The business can compare results internally over different time periods, looking for positive or negative trends. The business can also measure key ratios by benchmarking externally against industry norms. Both methods have a place in the successful management of a tourism business” (Tassiopoulos, 2009, p.161) The next challenge is to keep updating the website of a company. The main problem with a static website is that a customer never receives adequate information. In the global market scenario, as the website is only way to maintain communication between the company and clients, unless the website is regularly updated, it becomes impossible for the client to receive latest news about range of products and services of the company. In case of small and medium size organization such a process becomes more important as they have to attract customers by offering lucrative offers. However, conveying information of such offer is not possible if the website is not regularly updated. Thus, even if a company has capacity to offer excellent services to its customers but due to lack of its competence regarding website updates, it can easily lose its potential customer base. (Vallée, 1999, p.263) Thus, management of the company must ensure that the website is updated regularly, containing all information about latest offerings of the organization. Lessons learned/Business Care: Reflecting over the whole situation it becomes clear that though it is quite simple to initiate a travel trade business on Internet but it is quite tough to retain it in the highly competitive business environment. The Internet definitely provides an owner adequate resources to cater its products. It is important for him to learn to use these resources effectively. If tourism business over the Internet can be properly used, it is definitely a source of infinite profit and prosperity but failure to do so will surely lead the whole venture to futility. Why I care? Despite several challenges in the Internet based tourism business over the Internet these challenges can be overcome easily if proper planning is done. I care because proper utilization of the Internet resource would not only help the giant organizations but small and medium size organizations will receive a stronger establishment. Consequently, more numbers of people will receive the opportunity of self-employment and the whole process will surely contribute to the development of the nation’s economic structure.              References   1. Bidgoli, H., (2004), The Internet encyclopedia, Volume 3, Edition: 1, New York: John Wiley and Sons 2. “e-Marketing and Tourism”, (14th march, 2007), UNCTAD, available at: http://www.unctadxi.org/sections/SITE/etourism/docs/TaarifShahPresentation.pdf, accessed on: 23rd Sept. 2009 3. Kim, C., (2004), “E-TOURISM: AN INNOVATIVE APPROACH FOR THE SMALL AND MEDIUM-SIZED TOURISM ENTERPRISES (SMTES) IN KOREA”, OECD, available at: http://www.oecd.org/dataoecd/56/13/34268048.pdf, accessed on: 23rd Sept. 2009 4. Organization for Economic Co-operation and Development (2006) Innovation and growth in tourism, OECD Publishing 5. Price, J., Starkov, M., (2nd March, 2003), “New Challenges in Online Business Travel”, Published on: 22nd September, 2009, available at: http://www.hotelmarketing.com/index.php/content/article/new_challenges_in_online_business_travel/, accessed on: 23rd Sept. 2009 6. Serff, P., (2007), “Measuring Travel and Tourism’s Return on Investment”, Reprinted from "Tourism Works for America, Travel Industry Snapshots 2007", available at: http://www.tia.org/resources/PDFs/PowerofTravel/ROI_Iceberg_Article_2007.pdf, accessed on: 23rd Sept. 2009 7. Tassiopoulos, D., (2009), New Tourism Ventures: An Entrepreneurial and Managerial Approach, Lansdowne: Juta and Company Limited 8. Thomases, H., (17th September, 2005), “Travel, Tourism & Hospitality – The Challenges of Online Marketing, Tracking, & Measuring ROI”, available at: http://www.webadvantage.net/webadblog/travel-tourism-hospitality-the-challenges-of-online-marketing-tracking-measuring-roi-566, accessed on: 23rd Sept. 2009 9. “TOP 20 COUNTRIES WITH THE HIGHEST NUMBER OF INTERNET USERS” (2009), Miniwatts Marketing Group, available at: http://www.internetworldstats.com/top20.htm, accessed on: 23rd Sept. 2009 10. Vallée, D., (1999), Leading your business into the future with the internet, New York: CRC Press Read More