How Tourism Services Are Being Impacted by Information Technology and Emerging Online Technologies - Term Paper Example

Table of Contents Executive Summary Introduction……………………………………………………. 2 Aims & Objectives…………………………………………….. 2 Impact of IT on Tourism …………………………………….. 2 Information Technology and Components of Tourism Role of Information Technology in Transportation Intermediaries and the Role of Information Technology Impact of Internet on Tourism………………………………..5 What Is E-Tourism Emerging Online Technologies & Tourism The Changing Business Network …………………………… 8 Reasons for Change Conclusions & Recommendations……………………………10 References………………………………………………………12 Executive Summary Tourism is a booming industry and one of the fastest growing sectors of the world economy. It has significant impact on the international GDP and employment. As tourism is information intensive industry, it has been at the forefront in adopting new technologies. Today, Information Technology and various Online Technologies are playing a crucial role in tourism industry and these technologies have more visible impact on tourism than any other industry. The main areas of e-business adoption are marketing and sales. Online technologies are being used for marketing and distributing the tourism products more effectively. Internet has become a major distribution channel for tourism services. The emerging online technologies such as social networking sites, travel communities, travel blogs are helping the travelers in doing research about a destination in a more effective way. The booking of travel online is growing at an exponential rate. The most affected sub-sectors of tourism are intermediaries (tour operators, travel agencies), aviation industry and accommodation. The online technologies have radically altered the various processes of tourism such as: communications, marketing, transactions, and delivery of services. The suppliers of the tourism services have clear advantages due to low investment, global presence and lesser costs. Online technologies are helping the suppliers in fulfilling the growing expectations of their customers. The consumers are finding online technologies more user-friendly and fast. They are getting more choices than ever before. Introduction Tourism is one of the crucial industries both for developed and developing nations and it has significant impact on the international GDP. According to World Travel & Tourism Council (WTTC), tourism is one of the worlds biggest industries. Tourism ranks fourth as an export income generation industry (QFinance, n.d.). World Tourism industry contributed more than 9 % of global GDP in 2008. It provided employment to more than 230 million people worldwide generating 8.4% of total employment (World Travel & Tourism Council: Tourism Impact Data and Forecasts, n.d.). The number of international travelers will surpass the one billion mark in 2010 (The West Australian News, Feb 9, 2010). This significant growth in tourism activity put the tourism industry on the top of international trade. Aims & Objectives The present study aims to evaluate How tourism services are being impacted by information technology and emerging online technologies. The reasons for e-business adoption in tourism. Impact of IT on Tourism Before the advent of information technology, pamphlets, brochures, tour guides etc. were the main sources of information for the customers. As tourism is information intensive industry so information technology has opened up immense possibilities for tourism. Tourism is a unique industry as consumers cannot test the product in advance. It depends solely on interaction of consumer and supplier. Distributors are constantly finding new ways to distribute and market their travel products and services and consumers are always seeking fastest and convenient methods for planning and booking their trips. Thus Travel and Tourism has been one of the foremost industries to embrace new technologies (Cristiana, n.d., para 1) The e-commerce technologies were developed over a number of years. In 1970, Computer Reservation System (CRS) was introduced. It is a computerized system that stores the information and conduct transactions. Initially its use was limited to air travels only but later it was extended to travel agencies, hotels, car rentals companies also. Computer Reservation System (CRS) allows travel agencies and tourism information offices to check availability, book and print tickets electronically. In 1980, Global Distribution System (GDS) became popular. In 1990’s, internet was opened for commercial use. In 2000, many travel companies started selling their services via World Wide Web (Web). Today all of these methods are being used by consumers and suppliers for accessing and distributing the travel services electronically. The use of CRS and GDS is declining overtime due to emergence of various online technologies. Information Technology and Components of Tourism There are three key components of tourism industry. Service Providers: It includes airlines, hotels and transportation companies. Distributors: The various intermediaries such as travel agents, tour operators who provides services such as reservation of airplane ticket or hotel rooms, passport processing or currency conversion etc. Travelers: The end users who go on trips and avail the services. The Information Technology and Internet has drastically and positively changed all these components of tourism but the most affected sub-sectors of tourism are intermediaries (tour operators, travel agencies), aviation and accommodation sectors. Role of Information Technology in Transportation Transportation is the crucial element of tourism. Transportation facilitates the movement of tourists. It carries the traveler from his/her original place to the destination area. Transportation includes air, water and road transport. The information technology is playing a vital role in all types of transportation. The air travel is essential for international tourists. The application of information and communications technologies in aviation sector is vital. Airlines are among early adopters of information technology. Airlines were one of the foremost sectors to create worldwide electronic network for distribution of its services to the customers. In an airplane the information regarding weather, altitude is communicated to passengers and the pilot via information technology equipment. Previously, in airplane the only source of entertainment for passengers was looking out the window. Today, there are various sources of in-flight entertainment (IFE) such as video games, video films etc. Live TV offers passengers to see current location of their flight through live flight trackers. Information technology is playing a vital role in in-flight entertainment area. (Egziabher, n.d.) . Information Technology has also positively impacted the road transport. The communication system in buses and taxis has become more efficient and fast through installation of radio communication systems and global positioning systems (GPS). Intermediaries and the Role of Information Technology Intermediaries such as travel agencies, tour operators are central part of tourism industry. They help in distributing and marketing the tourists’ services. Information technology plays a crucial role for intermediaries also. Intermediaries take the help of Computer Reservation Systems (CRS) and Global Distribution Systems (GDS) for performing their tasks. Travel agents interact with airliners, hotels and car rental companies through Computer Reservation Systems. Global Distribution System is also an important part of the travel distribution system. Global Distribution System is a computer based distribution system that connects multiple Computer Reservation Systems (CRS). There are four main Global Distribution Systems (GDS) - Amadeus, Galileo, Sabre and Worldspan. Global Distribution Systems connect the systems of suppliers (hotels, airlines, car rentals etc.) on one side and travel agencies on the other side. Impact of Internet on Tourism The internet has become an inseparable part of daily lives. It has such a huge impact on the lives of people that it is hard to think life without internet. Today there are 1.5 billion of internet users across the world (Internet Usage Statistics, 2009). Internet has emerged as a great source of information, an effective platform for businesses, and a medium for social interaction clearly integrating the diverse capabilities. The internet and the World Wide Web have changed the ways the business is being conducted today. These are offering huge opportunities for tourism sector and have almost reinvented the various processes of tourism industry. Internet is being used for a variety of functions in the tourism industry. As travel services cannot be examined before buying so the customers’ dependence on information increases. The customers need fast and accurate information. Internet is full of information that can be easily accessed by the customers from the comfort of their homes. What Is E-Tourism? Internet provides a powerful and interactive medium for accessing tourism services. Web has become a major distribution channel. Today web has about 224 million websites (Netcraft Web Server Survey, 2009) and it has emerged as a global information space. The fast adoption of internet has resulted in Internet-based tourism services called e-tourism. E-tourism can be defined as accessing and distributing various tourism services via internet. For example, e-booking of hotels and airline tickets etc. Emerging Online Technologies & Tourism Tourism is becoming a leading market in Business –to- Consumer (B2C) arena. A whole new generation of online intermediaries and users is entering the tourism sector. There are many virtual tourism services on the internet and growing number of people are preferring internet services to traditional travel agents. Expedia, Travelocity, Priceline are finest examples of online travel intermediaries. These online travel intermediaries are covering virtually every aspect of tourism and help the customer in planning, choosing the destination, booking the airplane seats, hotels rooms and cars etc. The websites of these companies provide detailed information about thousands of flights, hotel rooms, car rentals etc. and allow customers to compare travel packages of various companies for free. People are using internet not only for research and gathering information but also for booking the trips. Use of internet for booking trips is growing at an exponential rate. One massive survey of 12,621 consumers revealed that 29 % of people book all parts of their trips online without the help of travel agents and more than 45 % of consumers book at least one part ( i.e. accommodation or car rental or air ticket etc.) of their holiday via internet ( TravelMole, 2009). The use of internet for booking hotels (survey included top 30 hotel brands) showed a significant increase of 6.6 percent in 2009 over 2008 (TravelClick: eTRAK Report, 2009). More than 50 % of users conduct research on internet and compare prices before booking their trips. There are many other emerging online technologies that help the potential customer. Some of these are: social networking sites, travel communities, travel blogs, wikis, and micro blogs. People share their travel experiences by posting travel pictures, videos, critiques etc. on blogs and social networking sites. The user generated content is in great demand by travelers. Social Networking Sites (SNSs) are growing rapidly around the world with some of these sites now among the most visited websites globally. Travellerspoint Travel Community, for instance, is a social networking site connecting more than 150,000 travelers worldwide. According to one survey more than 70 % of people visit travel blogs to know customer feedback about particular destination (TravelMole, 2009). With the advent of wireless technology, tourists are increasingly using mobile devices to access internet for travel information. There is growing trend towards mobile internet. Hotels are offering Wi-Fi access and travelers can go online while sitting in their hotel rooms. Mobile devices such as smart phones support many enhanced applications such as city guides, traffic and weather conditions etc. Many mobile applications such as Google’s ‘Near Me Now”, ‘Yelp’ are helping travelers find a nearby coffee shop, restaurants and many other relevant places in a matter of seconds. Mobile devices are providing new methods for tourists for staying connected with family and friends while on move. Tourists can get immediate access to relevant information. Various technologies such as GPS, cellular, WiFi, RFID has made it possible to identify the location of various mobile devices such as mobile phones or laptops. Many location awareness applications are cropping up rapidly. For example: ‘Loopt’ enables sharing of location with friends. ‘ULocate’ also provide various location aware widgets. ‘EveryBlock’, ‘Yelp’ helps to keep track city news simply by entering address. Based on the location of users, these applications have the capability to provide relevant information to the users. Thus these location awareness applications are facilitating easy information access to travelers. Another promising technology is Semantic web. Semantic Web is making the content and data on the web more useful and meaningful. Trustyou and Circos are the closest examples of the semantic web and these sites are helping the travelers in doing research about a destination in a more effective way. When customer enters the search on any of these websites, it analyzes millions of hotel reviews posted on the web. Based on those reviews, it recommends the best hotels to the potential travelers (Bommer, 2009). According to a survey conducted by PhoCusWright, these travel reviews have enormous impact on peoples travel decisions and actions. The Changing Business Network Today, many sectors of tourism are witnessing huge structural changes. These changes are largely driven by burgeoning e-commerce growth. Information technology and e-business has prominent impact on all the sectors of tourism industry i.e. suppliers, intermediaries, travelers. The marketing and distribution are two main processes of tourism and e-business adoption is picking up in these two areas. The e-marketing and online sales (e-ticketing) have become latest buzzword in the tourism industry. The exchange of information between supplier and consumer is essential part of tourism. Online technologies have significantly increased the speed and efficiency at which the information is exchanged between suppliers and customers (Saliu, 2008). The online technologies have radically changed the communications and delivery of services within the tourism sector. The information and product distribution system is changing. The relationship between supplier and consumer has also changed tremendously as tourists are booking their travel online. The reliance on traditional travel agents is decreasing as online sites like Expedia, Travelocity have become travel intermediary for millions of customers and are directing them towards best but economical airplane, hotel or car rental companies. Online tourism companies are substituting the traditional brick-and-mortar travel agencies (World Tourism Organization Business Council, 2001). Internet is offering new powerful tools to travelers. Web has become ‘one- stop- shop’ for gathering information, planning, choosing and booking the trips. Reasons for Change The new business model has many new entrants that operate in the virtual space. According to e-Business Watch report, various intermediaries such as travel agencies and tour operators are at the forefront in adopting e-business, followed by the accommodation sector. The significant drivers of e-business in tourism industry are high customer expectations and market competition. Smaller tourism companies are adopting e-business more actively as it increases the competitiveness of their business (e-business Watch, 2006). The online operators have clear advantages due to low investment, global presence and lesser costs. As growing number of travelers are booking their trips online and travel operators who do not have online presence are sure to lag behind (eTN News, Sept 9, 2009). On the other hand, e-tourism is providing the customer an easy and faster access to tourism services. The various online research tools have made the purchasing easier for the customer. Online technologies are providing much more choice to consumers and have minimized the delivery time to a great extent. Conclusions Tourism is one of the fastest growing sectors of the world economy and has been at the forefront in adopting new technologies. Today internet has become an inseparable part of tourism. The various online technologies are offering huge opportunities for tourism sector. Internet is being used for communicating, distributing and marketing the tourism products and services. Internet has emerged as a leading source of information for choosing, planning and booking the trips. On one hand, the online presence has significantly increased the geographic reach of tourism companies. The suppliers are adopting e-business as a cost- and time-effective solution for delivering the tourism services to potential customers. On the other hand, customers have been flooded with choices. They are finding the various online technologies as more user friendly and fast and are getting immediate access to relevant information. Recommendations The micro and small companies are dominant players in tourism industry. These firms need to improve e-business skills. Information and Communication Technology (ICT) systems need interoperability and standardization. E-tourism need more stringent security measures for building a secure and trustworthy system. Currently, the marketing and sales are the key adoption areas but the use of ICT and e-business solutions can be further extended to other internal areas such as digitising paper-based processes, Enterprise Resource Planning (ERP), Customer Relation Management (CRM), Supply Chain Management etc. References Bommer, I. (2009) Online Travel: The Internet is the Key Sales Channel for Tour Operators, ITB Berlin Special Press Release Cristiana, P. I. (n.d.) The Tourism Industry and the Use of Internet Egziabher, M.G. (n.d.) Information Technology: Its Uses in Tourism Industry eTN News ( Sept 9, 2008) Online Bookings: What this growing international trend means for the travel industry e-Business Watch Report ( 2006) ICT and e-Business in the Tourism Industry Internet Usage Statistics: The Internet Big Picture (2009) Internet World Stats Netcraft Web Server Survey, March 2009 PhoCusWright Consumer Technology Survey Abstract, Jan, 2010 The West Australian News (Feb 9, 2010) One billion Travellers to Boost Tourism Accessed on March 12, 2010 Retrieved from http://au.news.yahoo.com/thewest/travel/a/-/travel/6778609/one-billion-travellers-to-boost-tourism/ The World Travel & Tourism Council (n.d.) Tourism Impact Data and Forecasts TravelClick, eTRAK Report (2009) Hotel Bookings by Channel Accessed on March 12, 2010 Retrieved from TravelMole News (Jan 14, 2009) Survey of 12,600 Consumers Reveals 2009 Booking Trends Saliu, Y. S. (July 2, 2008) Tourisphere- The Role of Information Technology in Tourism Industry QFinance (n.d.) Tourism and Hotels: Major Industry Trends Accessed on March 12, 2010 Retrieved from World Tourism Organization Business Council (2001) E-Business for Tourism: Practical Guidelines for Tourism Destinations and Businesses Read More