IMPACT OF E-COMMERCE ON BUSINESS

PERFORMANCE: A STUDY WITH RESPECT TO TRAVEL

INDUSTRY

Dissertation Submitted to the

D.Y.Patil University, Navi Mumbai

School of Management

In partial fulfillment of the requirement for the award of The Degree of

MASTER OF PHILOSOPHY

IN

BUSINESSMANAGEMENT

Submitted by:

Mr. MURTAZA ADENWALA

ENROLLMENT NO: DYP-M.Phil-126090001

Research Guide:
PROF DR. R. GOPAL

DIRECTOR & HEAD OF THE DEPARTMENT

D.Y. Patil University, Navi Mumbai

School of Management

Sector 4, CBD Belapur, Navi Mumbai 400614

November 2014
 DECLARATION

I hereby declare that the thesis titled “IMPACT OF E-COMMERCE ON

BUSINESS PERFORMANCE: A STUDY WITH RESPECT TO TRAVEL

INDUSTRY.” submitted for the Award of Master of Philosophy (M.Phil) in

Business Management at D.Y. Patil University, Navi Mumbai, School of

Management is my Original Work and the thesis has not formed the basis for the

award of any degree, associate-ship, fellowship or any other similar titles.

The material borrowed from other sources and incorporated in this thesis has been

duly acknowledged.

I understand that I myself could be held responsible for plagiarism, if any detected

later on.

The research papers published based on the research conducted out of and in the

course of study are also based on the study and not borrowed from other sources.

Place: Navi Mumbai Signature of the Student

Date: Enrolment No: DYP-M.Phil-126090001

ii
 CERTIFICATE

This is to certify that the thesis entitled “IMPACT OF E-COMMERCE BUSINESS

ON BUSINESS PERFORMANCE: A STUDY WITH RESPECT TO TRAVEL

INDUSTRY” and submitted by MrMurtaza Adenwala is the bonafide research

work for the award of the Master of Philosophy in Business Management at the D.Y.

Patil University, Navi Mumbai, School of Management in partial fulfillment of the

requirements for the award of the degree of Master of Philosophy in Business

Management and that the thesis has not formed the basis of the award previously of

any degree, diploma, associate ship, fellowship or any other similar title of any

university or institution.

Also it is certified that the thesis represents an independent work on the part of the

candidate.

Place: Navi Mumbai

Date:

Dr. R. Gopal
(Director and Head of the Department, Signature of the Guide

D.Y.Patil University, Navi Mumbai,

School of Management)

iii
 ACKNOWLEDGMENT

I am greatly indebted to D.Y.Patil University School of Management, which has

accepted me for the M.Phil. program and provided me with an excellent opportunity

to carry out the present research work.

I thank Dr. R.GOPAL, Director, D.Y.Patil University School of Management, for

giving me his valuable guidance for the project. Without his help it would have been

impossible for me to complete the dissertation.

I would also like to thank the various types of travel related organizations who have

contributed in providing vital information related to the “impact of structuring of the

e-commerce business on business performance” via a structured questionnaire without

which the research could not have been completed.

I would be failing in my duty if I did not acknowledge with a deep sense of gratitude

to my family and friends for their endless love, prayers and encouragement.

Place: Mumbai Signature of the student

Date: (MURTAZA ADENWALA)

iv
 TABLE OF CONTENTS

Chapter No Particulars Page No

Declaration ii

Certificate iii

Acknowledgement iv

Table Of Contents v & vi

List Of Figures vii

List Of Tables viii

List Of Abbreviation‟s ix

Executive Summary x

1 Introduction 1

2 Literature Review & Research Gap 11

3 Objective & Research Methodology 20

3.1 Purpose Of The Study 21

3.2 Scope Of The Study 22

3.3 Limitation Of The Study 23

3.4 Research Methodology 24

4 Tourism Sector – Global Scenario 28

5 Tourism Sector – Indian Scenario 43

6 Adventure Tourism 61
Internet Usage, Online Travel Industry In India, Key Success
7 74
Factors When Applying E-Commerce To Travel Industry

7.1 Internet Usage In India 75

v
7.2 Scenario Of Online Travel Industry In India 78

Key Factors When Applying E-Commerce To The Travel

7.3 81
Industry

7.4 Traveler‟s Trip Planning Behaviour 82

7.5 The Future Of E-Commerce In Travel 90

7.6 The Effect Of E-Commerce In Travel 91

7.7 E-Commerce In Airline Business 92

7.8 E-Commerce Impact On The Travel Agency Industry

97
7.9 Information Technology In The Tourism And Travel Industry 98

8 Travel Industry‟s Guide To Mobile Advertising 104

9 Customer Acquisition Channels For Hotels 117

10 Data Analysis& Findings 131

11 Conclusion 202

12 Suggestion & Recommendation 205

Reference Section

Annexure 1 – Bibliography 208

Annexure 2 – Webliography 210

Annexure 3 – Questionnaire 211

vi
 LIST OF FIGURES

Figure No Topic Page No

Digital Commerce Market Size From 2009 To
Figure no 1 8
2013
Figure no 2&3 Market Size of Product Categories 8&9

Figure no 4 Foreign Exchange Earnings From Tourism 50

Figure no 5 Adventure Tourism 54

Figure no 6 Profile of Respondents 64

Figure no 7 Implications For Marketers 68

Figure no 8 Purpose Of The Internet Access In Urban India 76

Figure no 9 Purpose Of The Internet Access In Rural India 78

Figure no 10 Scenario of Online Travel Industry in India 80

Figure no 11 & 12 Profile Of Leisure And Business Travellers 88 & 89

Figure no 13 &14 Travel Inspiration And Planning 89 & 90

Figure no 15 Agency Services By Travel Category 102

Figure no 16 Online Travel Services 103

Figure no 17 The Mobile Opportunity for Travel 109

Figure no 18 Multi-Screen Approach For Multiple Touch Points 114

Figure no 19 Customer Acquisition Channels for Hotels 117

Measuring The Value Of Email Marketing For The

Figure no 20 & 21 167 & 168
Travel Industry

vii
 LIST OF TABLES

Table No Topic Page No

Table no 1 Sampling Design Process 26

Table no 2 Customer Perspective 41

viii
 LIST OF ABBREVATIONS

OTA – Online Travel Agent

CAGR – Compound Annual Growth Rate

GDP – Gross Domestic Product

IAMAI – Internet and Mobile Association of India

IMRB – India Market Research Bureau

ROI – Return on Investment

PE – Private Equity

VC – Venture Capitalist

ROI – Return on Investment

GDS – Global Distribution System

TAFI – Travel Agents Federation of India

IATA – International Air Transport Association

CRS – Computer Reservation System

UNWTO – World Tourism Organization

FAM – Familiarization Trip

CCID - China Center for Information Industry Development

CNTA - China National Tourism Administration

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Executive Summary

Online transactions in the travel and tourism industry are continuously increasing

despite tough economic problems in this arena and fewer travelers overall. This

industry is the leading application in the B2C (business-to-consumer) arena. Whereas

other industries are displaying a stronger hold to traditional processes, the tourism

industry is witnessing an acceptance of ecommerce to the extent that the entire

industry structure is changing. The Web is used not only for information gathering,

but also for ordering services. A new type of user is emerging, one who acts as his or

her own travel agent and builds a personalized travel package. Tourism is an

information-based industry it is one of the natural leading industries on the Internet).

It is anticipated that most, if not all, sectors in the travel and tourism industry

throughout the world will have sites on the Internet; showing the suitable marriage of

two of the world‟s fastest growing industries: information technology and tourism. E-

travel is the leading and fastest growing category of e-commerce. In order to exploit these

opportunities in the market environment, tourism businesses have developed and

implemented several business models. Table below shows the most frequently used

models in the tourism industry

Business models used in the tourism and travel industry:

Brokerage

Brokers are market makers; they bring buyers and sellers together and facilitate

transactions (Law & Huang, 2003). Brokerage models include the following forms:

Marketplace Exchange: offers a full range of services covering the transaction

process, from market assessment to negotiation and fulfillment (example: Orbitz)

(Law, 2002b).

x
Demand Collection System: it is the "name-your-price" model pioneered by

Priceline.com. Prospective buyer makes a final (binding) bid for a specified good or

service, and the broker arranges fulfillment.

Auction Broker: conducts auctions for sellers. Broker charges the seller a listing fee

and commission scaled with the value of the transaction (examples: eBay and

Skyauction.com)

Advertising Model

The web-advertising model is a Portal;usually a search engine that may include varied

content or services. A high volume of user traffic makes advertising profitable and

permits further diversification of site services. A personalized portal allows

customization of the interface and content to the user. (Example: Yahoo.com)

Infomediary Model

Firms function as infomediaries (information intermediaries) assisting buyers and/or

sellers understand a given market. Travel infomediaries are globally branded „virtual

businesses‟ on the Internet that collect and sell information about a specific sector of a

market and create a convenient platform (Cyber marketplace) on which buyers and

sellers can gain information and do business (examples: Expedia; Travelocity;

BargainHolidays and Travelselect).

E-tailing

Business operating exclusively in electronic retailing. This model might take three

forms

E-store: a single tourism shop

E-mail: consisting of many electronic stores

E-broker: simply provides aid to customers searching for products and

business. It gains a commission from the businesses

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Valuable insights are provided into the Priceline.com model. It offers products

for sale in two categories: a travel service that offers airline tickets, hotel rooms,

rental cars, packaged vacations and cruises; and a personal finance service that

offers home mortgages, refinancing and home equity loans through an

independent licensee. Priceline.com has pioneered a unique new type of e-

commerce known as a "demand collection system" that enables consumers to

use the Internet to save money on a wide range of products and services while

enabling sellers to generate incremental revenue. Priceline.com is the world's

first buying service through which consumers name the price they are willing to

pay. Priceline.com licenses its business model to independent licensees.

Orbitz.com has implemented the Marketplace Exchange model. It is a leading

online travel company that enables travellers to search for and purchase a broad

array of travel products, including airline tickets, accommodation, rental cars,

cruises and vacation packages.

Researchers have attempted to approach and analyse the critical success factors

in electronic tourism business initiatives. Evidence indicates that these factors

include Value/ Product; Marketing Uses; Supporting Systems; Service

Provision; ICT Infrastructure. Apparently, the most important factor for a

successful Web site is its ability to focus on customer needs. The key is how to

satisfy travelers‟ individual needs precisely and conveniently. Additionally, the

Web presence must be used efficiently; that is to say for marketing purposes.

Web sites have to be dynamic interactive relationship marketing tools rather

than electronic brochures.

This paper attempts to study how e-commerce in travel related organizations

impacts overall company‟s growth.

xii
E-commerce in travel and tourism is growing day by day which provide

opportunity to this industry to groom and grow. Due to change in Information

technology, e commerce is emerged in this industry and companies are now

heading toward e-business through website, internet and different online

software. Moving from traditional business way to e-commerce way is quite

challenging and various factors are standing as a barrier for companies to adapt

e-commerce. There several advantages and disadvantages of e-commerce in

travel and tourism industry. To adapt e-commerce, this industry's main

challenge is to transform traditional buyers to e-commerce buyers. The purpose

of this literature review is to give short introduction on travel and tourism

industry along with the impact on this industry after adaption of ecommerce.

What will be benefits after adapting e-commerce and what are the barriers,

which stop firms to enter in e-business? A short description on consumer

behavior on e-commerce is also gazed on this review.

Tourism and the Internet are ideal partners. For consumers, when they are

planning a trip to a new destination, they face the problem of making a costly

purchase without being able to see the product. The Internet provides them with

the means to gain immediate access to relevant information of greater variety

and depth than has been available previously, about destinations throughout the

world; and to book quickly and easily.

For tourism destinations and businesses, it offers the potential to make

information and booking facilities available to large numbers of consumers at

relatively low cost; it enables them to make large-scale savings on the

production and distribution of print and on other traditional activities (e.g. call

centres and information centres); and it provide a tool for communication and

xiii
relationship development with tourism suppliers and market intermediaries, as

well as end-consumers.

Tourism has a key difference from most other sectors of e-commerce – its

consumer goes and collects the product at the point of production – i.e. the

destination. Thus the tourism sector avoids the need to deliver products around

the world - a task that faces real logistical problems that have been a major

source of customer dissatisfaction.

These factors, taken together, have resulted in the travel and tourism sector

taking a larger and larger share of e-commerce globally. As a result, the Internet

is revolutionizing the distribution of tourism information and sales. Not only

does it provide tourism destinations and businesses with direct access to end

consumers, but also it is becoming the primary channel for business to business

communication. The tourism market demand is growing and nearly all tourism

firms have invested in the construction of e-commerce. The business world is

being gradually changed to an e-economy by the ever-increasing global

competition, increased information availability, knowledgeable consumers,

changing relationships, rapid innovations, and increasingly complex products.

As a result of which, no industry is left untouched in today‟s consumer-centric

e-marketplace. Going by the preliminary findings it can be easily summarized

that e-commerce can indeed emerge as a major business opportunity and

contribute to the overall success of the organization. The study of E-Commerce

in the tourism industry has emerged as a „frontier area‟ for information

technology. E-commerce deals with the process of buying and selling or

exchanging products, services and information via computer network including

the Internet. We focus on a number of ways in which the structure and

xiv
performance of the tourism industry is being influenced by the adoption and

development of information communication technology. The typical value chain

in tourism consists of four components: travel services provider, travel operator,

travel agent and traveler. The travel services provided by travel service

providers can be distributed by the joint operation of travel operator and travel

agent, or just by travel operator to traveler. On the intermediary level, normally

the travel operator plays the role as a wholesaler of travel service, which

integrates a number of different travel services and offers them as a packaged

service through travel agent. Here, travel agent is the retailer of travel service,

which ties prospective travelers and service providers together by controlling

the information flow among the different participants in the value chain, and

selling the information to travelers. The value chain is based on the co-operation

among travel service provider, travel operator and travel agent. In developing

countries the intermediary function of travel operator is weaker compared to

that of travel agent and most travel agents take the responsibilities of the travel

operators. The proposed research has been undertaken to gain a better

understanding of the aspects that have to be taken into account during the

implementation of the e-commerce business in travel related organizations. The

research also aims to Identify potential success factors, which make ecommerce

business profitable, barriers and challenges faced by ecommerce business in

travel related organizations, what are the performance measurement metrics

measured to derive ROI, methods and practices adopted to structure the e-

commerce business in travel industry related organizations, factors that are

detrimental to the growth of e-commerce business in travel industry related

organizations. Primary data was collected from travel agents, tour operators,

xv
airlines, travel meta search engine, GDS (Global distribution system).

Quantitative survey was conducted in this study to investigate the perceptions of

the travel related organizations like the traditional travel agents & tour

operators, Online travel agents, hotels, travel meta search engines, global

distribution system with respect to the impact of e-commerce on business

performance in the travel industry. The target population for this study is drawn

from members of Travel Agents Federation of India (TAFI) in Mumbai

commercial capital of India. There are 1400 members in the association.

Members of TAFI fall in categories of aviation, hotels, IATA approved agents,

e-commerce digital agencies managing travel clients. The samples for this study

is drawn from TAFI and primarily focus on the travel industry related

organizations in the Mumbai, Delhi & Bangalore market. Primary data was

collected from 33travel related organizations, which fall in different categories

of TAFI via a structured questionnaire. The respondents are selected on the

basis of their designation &profile in the organization. Travel related

organizations are classified into two categories:

Organizations who own inventory to be sold through intermediaries and their

own websites (hotels, airlines)

Organizations who display inventory by connecting with the systems of the

organizations who own inventory (OTA‟s, traditional travel agents, travel

meta search engine, global distribution system)

Secondary sources of information was gathered from e-journals, e-articles, e-

commerce related cases studies, online e-commerce research reports produced by

Internet and Mobile Association of India providing up-to-date insights on the growth

of e-commerce in India.

xvi
The questionnaire is designed on a five-point likert scale in order to gather insights on

what according to the e-commerce practitioners in the travel industry related

organizations are the methods & practices followed to structure the e-commerce

business, what are the critical success factors that make e-commerce business

profitable, what are the factors that are detrimental to the growth of the e-commerce

business, what are the factors which will have an impact on overall business

performance as a result of the structuring of e-commerce business in the travel

industry related organizations

T test is applied to determine if two sets of data are significantly different from

each other while comparing the level of importance each data set lays over

selected factors. The two sets of data categorized are a) Organizations who own

inventory to be sold through intermediaries and their own websites (hotels,

airlines) b) Organizations who display inventory by connecting with the systems

of the organizations who own inventory (OTA‟s, traditional travel agents, travel

meta search engine, global distribution system). The t-test looks at the t-statistic,

t-distribution and degrees of freedom to determine a p value (probability) that

can be used to determine whether the population means differ. The mean of the

sample is applied to find out the most critical success factor that would make e-

commerce business profitable in travel industry related organization, the most

important method and practice to be adopted in structuring the e-commerce

business in travel related organization, the most important factor that will have a

impact on the overall business performance as a result of the structuring of e-

commerce business in travel related organization and finally most important

factor that is detrimental to the growth of the e-commerce business in travel

xvii
related organization. Travel related organizations place high importance on

competitive pricing. Pricing needs to be set that creates value. Create a value

statement that clearly articulates why customers should purchase their product

over competitors‟ offerings. Value adding is adding features to your product

that enhance the perceived value. In comparison to discounting, value-adding

can create a competitive edge and attract a greater market share. It can also help

to prevent business fluctuations for products subject to regular peaks and

troughs. There are various price positioning strategies – Match, undercutting

competition rates in some category or products. To match, set one rate

comparable to the competition and another slightly higher. This allows you to

stay competitive for a larger pool of customers, yet doesn‟t undercut the

competition. Under cutting competition is likely to drive more cost-conscious

travelers. Setting pricing for tourism businesses is a strong mix of marketing

strategy and financial analysis. In determining the rate for your product, you

need to consider your operating costs, profit margin and distribution network

costs (often referred to as commissions).Additional pricing factors to consider

when pricing your Products are: competition, demand, target market,

seasonality. Discounts are often applied in the off-season or to assist with yield

management and can also be useful in gaining immediate business on websites

Usually, discounted pricing does not differentiate a product from the

competition – as it can be quickly matched by competitors. Disguised pricing,

generally discounted package components, such as accommodation, meals,

entry fees, transport, are presented as one upfront cost. This method disguises

the exact cost of individual components and also the extent of discount provided

xviii
by individual operators. In general, a minimum of three elements should be

included to disguise pricing.

Technology is a driving force of change that presents opportunities for

greater efficiencies and integration for improved guest services. Technology has

become a tourism business activity in development of strategic resources and is

considered as a tool to increase competitiveness. Effective use of information

technology can make significant operational improvements. Advanced software

and communication tools allow enlarging operational efficiency, for example,

orders may be made better, faster and cheaper. In addition, decision-making

through decision support tools, databases and modelling tools assist the

manager‟s job.

The introduction of smart phones represents one of the most significant

technological developments of recent years, and it is having a major impact on

the travel industry, due to the mobile nature of travellers.

In the mobile travel era, travellers expect real time answers wherever they are

and at any time, before, during and after the trip. These include booking

capabilities when on the go.

Moreover, as a result of the intersection between the mobile and social

dimensions, and of the creation of geo-social media – aware of users‟

geographical location – travellers expect a higher level of customization of

services based on their stored preferences and current location.

One of the key trends for 2013 is expected to be tour operators expanding their

tailor-made holiday offerings in response to growing consumer demand for

more flexible itineraries but still with all the security and benefits of a package.

With global travel becoming more common, consumers are looking for more

xix
individual holiday experiences that their friends/family might not have done.

Additionally, as holidaymakers become more widely travelled they may have a

clearer idea of what kind of sights and activities interest them and want to

ensure that they get the most value out of their holidays by doing and seeing the

things that really appeal.

While tailor-made tours used to be just for the luxury end of the market there

are now many tour operators offering more affordable options due to the growth

in popularity of this kind of holiday.

The rise of multi-centre holidays where holidaymakers may combine two or

more destinations in their trip are also growing in popularity and fuelling the

trend for tailor-made holidays. This is particularly the case for longer haul

holidays where travellers look to make the most out of their journeys. The

emergency of the Internet and technology is raised dramatically. It appears in

various types of business and operations. Firms are adopted in Internet and

technology to assist an improve their business' performances. Due to the rapid

change and high competitive of the world market today, firms are imperatively

to conduct business in the modern and easy way in order to remain competitive

and profitable. Electronic commerce (e-commerce) is a popular way of conduct

business. Most firms are adopted e-commerce initiative into their operations n

order to improve quality of service, lower cost and reduce time to market.

However, there are many failure in adopting e-commerce initiative, those failure

are significantly concern with the strategy, both the corporate strategy and e-

commerce strategy. The tourism industry has proved particularly suitable for the

adoption of information technology because of its dependence upon the supply

and exchange of information throughout the production and distribution chain.

xx
As an extremely information intensive industry, tourism is undergoing rapid and

radical modern changes. A wide range of opportunities discover on daily basis

through the use of information and communication technology. Now

information technology is being used for a variety of functions in the tourism

industry, ranging from an internal organization role to external communication

between different parts of the industry. The continuous development of

information technology has profound implications for the whole tourism

industry. Today, a wide range of tourism sectors is taking the advantage of the

information superhighway. Technology facilitates the speed and efficiency with

which information of the tourism industry is processed, stored, retrieved,

distributed and otherwise manipulated. Information technology can reduce costs

of information handling, increase speed of information transfer and retrieval and

increase customer involvement in the control of transactions. It has flexibility of

product specifications and greater reliability of information transferred. The

advancement of the Internet has deeply affected the way tourism and travel

intermediaries perform their business. The development of vertical portals like

has redefined the travel business. This has led to the formation of various last

minute online travel portals, which effectively organize and distribute distressed

tourism inventories to the clients. Tourism suppliers like British Airways have

started applying ecommerce applications thereby allowing their customers to

directly access the reservations systems. Hence, a customer is able to make a

flight search and go through the various options available and finally take a

purchase decision. The Internet has made it possible for customers to access

high quality information within a short time. Also it has made service

expectations as consumers expect to be served 24 hrs / 365 days. Nowadays,

xxi
customers expect to be served at all times rather than the office hours of the

tourism providers. Thus it has been seen that the travel and tourism industry has

revolutionized their travel plans and strategies with the help of improved

information technology solutions. They are resorting to customer focused travel

solutions and are aiming to provide a one stop solution for all travel related

services through information technology. Travel and tourism providers need to

work in collaboration with each other to provide a one point platform to all its

clients. Hence, they must embrace newly developed and effective information

technology solutions to run travel operations smoothly and efficiently. At the

same time, the prime focus should be on providing excellent customer service.

For all these, the only answer is to embrace best and updated information

technology. The advent and application of mobile technologies have further

impacted the tourism and travel industry. This has been possible due to the

development in ecommerce. It is now possible for customers to view and choose

various travel and tourism options by surfing the internet through their mobile

phones. Short messaging services also provide a lot of information as the

booking confirmation can simply be presented to the airline or the hotel and one

is allowed to enjoy the service. The emergence of new and high tech mobile

phones has again stirred a revolution in mobile technology. This is especially

helpful as these phones allow a user to access internet and book services online.

Hence, one can also book tour packages and other travel related services

through the mobile.Travel industry related organizations place high importance

on having flights and hotel both as a independent product on their website. The

advantage of having flights and hotels makes the travel website one stop

destination for key travel needs.

xxii
 Chapter 1

Introduction

Tourism Industry is one of the backbones of economy in developed, developing

and underdeveloped countries and one of the major sources of foreign

exchequer. This industry is growing very rapidly and millions of people are

directly and indirectly associated with this Industry. This industry represents

accounts for 9.9 percent of global GDP, 10.9 percent of world exports, and 9.4

percent of world investment. (World Economic Forum, 2009). The use of

internet is rapidly growing day by day and as per International

Telecommunication union (2009), around 2 billion people will be online by end

of 2010. Hence, internet will be effective tool to promote and open up new

opportunities for travel and tourism industry sector though e-commerce. "E-

commerce is defined as the process of buying and selling or exchanging

products, services and information via computer networks including

theinternet.‖ There are various advantages of using internet in tourism as it is

fast and easy to access destination, receive price, search popular destinations

and get information about destination etc. as well as it generates income for

many people around the globe. However, it has some limitations as some

information may not be correct, outdated, portrayed and we have seen several

online fraud case too. In a nutshell, due to its various benefits rather than some

limitations, it is essential for travel and tourism industry to adopt e-commerce

for their growth and success.With rise of internet usage on people's daily life,

tourism industries aretapping business through e-commerce. E-commerce refers

1
both financial and informational transaction through electronic media between

on organization, between people or to third party (Chaffey et.al, 2006). Through

e-commerce, these industries are trying to reach global population to enhance

their business through different e-commerce tools and ad there will be more and

more challenge to these sectors in coming days for adopting e-commerce.

Digital commerce in India has evolved over the past decade in terms of

magnitude. Total digital commerce market of India was valued at INR 47,349

Crores* in December 2012 and is expected to grow by 33% and reach INR

62,967 Crores by year 2013.

Out of the total transactions done on the PC as well as mobile: -

Travel transactions have proved to be the primary fueling factor of the digital

commerce industry. As of 2012, among Internet users, online travel leads the

pack with 73% share in Digital Commerce (INR 34,544 Crores). This segment

is estimated to show 30% growth by the end of year 2013 and reach to INR

44,907 Crores. As a whole, the Non-Travel Industry segment is expected to

mature by 41% and reach up to INR 18,060 Crores by December 2013.

The thesis deals with what is the impact of structuring the e-commerce business

on business performance with respect to the travel industry and how e-

commerce businesses can drive competitive advantage, enhance brand imagery

and maximize Return on Investment. Though the scope of the study extends to

many service organizations, emphasis has been laid down on the study of

various service organizations in the Travel industry. The research focuses on

seeking insights from the organizations in the travel industry in four key areas

major steps make up the structuring phase for new e-business projects using

2
existing products and services, processes and markets: (1) Critical Success

Factors that make e-commerce business profitable in the travel industry related

organizations (2) Methods & practices to structure the e-commerce business in

the travel industry related organizations (3) Factors which will have a impact on

overall business performance as a result of the structuring of e-commerce

business in the travel industry related organizations and (4) Factors that are

Detrimental to the growth of the e-commerce business in the travel industry

related organizations. In addition to the structuring phase, the e-business

development process also includes phases for feasibility analysis,

implementation, testing, deployment and performance review. The overall

process can be set within a development life cycle spanning all these phases.

Increasingly we have observed that travel and tourism are not influenced by

advertisements but by word-of-mouth and references. In addition to the

traditional channels of referencing and word-of-mouth, the current traveler is

more than ever reading and sharing travel-related content online which has been

created and posted by peers rather than by travel service providers.

Understanding who these consumers are, how they determine whether content is

credible, and what motivates them to post reviews is one of the most valuable

input for any marketing initiative by the travel industry including aggregated

service providers and travel companies. India is the most dynamic and fast

growing online travel market in the APAC region. Online travel contributes

70% of all e-commerce activities globally. Private equity players have made

huge investments in the online travel agency (OTA) segment in the past two

years. With the Indian holiday season on the horizon, Hitwise India conducted a

study to understand trip-planning behavior exhibiting how internet is used as

3
information source for planning pleasure trips. The study highlights that Search

Engines are the point of origin for initiating activities. They act as ‗Home Page‘

of the digital world and the point of U-turn. It also outlines strategies to increase

traffic from search engines through Hitwise Search Intelligence, which includes

how people search for travel related information using various search term

variations e.g. ‗Flight tickets‘, ‗hotels in Goa‘. The search term ‗Hotels in Goa‘

is the most searched term in the accommodation segment. ‗Flight tickets‘ is the

most searched term variation in the Airline segment recently, increasing number

of travelers use the internet for travel planning. Indeed, searching for travel-

related information is one of the most popular online activities. Advertisers need

to conduct careful research into variations of keyword phrases their target

audience will enter into search engines thus increasing relevance and being

present when and where it matters. Non-air ticket booking segment is growing

fast with the entry of Indian Railways in the online space and many OTA‘s

providing online bus and train bookings. Demand for tour packages have

increased among both domestic and international tourists.

The study indicates that the typical Indian traveler does not like to makes

spontaneous decisions and plans the trip in advance. An evolved traveler starts

planning the trip 3 months in advance by visiting travel related blogs, forums,

travel related video‘s/photographs, travel review sites. Online travel reviews are

traveler‘s experience which helps travelers learn about a travel destination and

narrow down their choices. The study identifies that an online traveler evaluates

his holiday destination options and then initiates the trip booking process by

visiting the OTA‘s and accommodation sites to evaluate, compare and book.

Thus indicating that most travel purchases take place well after a consumer‘s

4
initial search. The study indicates that the Indian internet consumer uses emails

after visiting airline websites. The study also indicates Social Media is now a

marketing tool used by marketers to engage with the target audience through

online communities to generate exposure, opportunity and sales. Social

networking sites helps users plan their trips by getting tips from users, by

browsing photos and video‘s, suggestion on itineraries. We are now at a stage

where the target channel for marketing is social media. Selling happens more

and more in the virtual world. Travel companies are increasingly targeting

consumers directly on Twitter and Facebook. Hyatt was the first major hotel

group to offer a global 24/7 ‘Twitter Concierge.‘ Almost every major travel

brand offers customer service via social media, but Hyatt was the first to

specifically name it and create a separate account (@HyattConcierge). They‘re

now asking guests to use it to book spa appointments, dinner reservations, etc.

and make special requests. Behavior of Indian traveler is quite different when he

makes purchase of an air ticket and a hotel room night. Unlike purchase of air

ticket, Indian traveler always looks for bargain opportunities while

purchasing/booking a room night.

Top 5 Trends

• Online travel going mobile changing e-travel to m-travel

• Religious travel is becoming a hot segment in online travel

• Meta search engine is the latest innovation in online travel. They help

people find the best travel choices easily by searching the data from hundreds

of travel sites at once

5
• Competition in online booking is moving away from air to non-air segment

• Social media will exert greater influence on travel planning and purchasing

Players Overview

• Makemytrip, Yatra, Cleartrip and Travelocity are the leading players in the

OTA segment.

• IXIGO, Ezeego1 and Zoomtra are the leading meta search engines in Online

travel

• Club Mahindra Resorts, Taj Hotels and Resorts and Palaces and

Intercontinental Resorts are the leading players in the Accommodation Segment

From the emerging trends, the clear message that emerges is that not only would

it be prudent to focus on the domestic travel market, but it would also be

necessary to keep a finger on the pulse of the ever dynamic travel industry.

Describe Ecommerce

As the e-commerce definitions given by various sources differ significantly, it is

important to adopt a clear and consistent definition of e-commerce.

From a communication perspective, e-commerce is the delivery of goods,

services, information, or payments over computer networks or by any other

electronic means.

6
From a business process perspective, e-commerce is the application of

technology toward the automation of business transactions and

workflow.

From a service perspective, e-commerce is a tool that addresses the

desire of firms, consumers, and management to cut service costs while

improving the quality of goods and increasing the speed of service

delivery

From an online perspective, e-commerce provides capability of buying

and selling products and information on the Internet and other online

service.

Digital-Commerce Market Size From 2009 To 2013

Digital Commerce industry has seen a significant increase from INR

19,249 Crores in the year 2009 to INR 47,349 Crores in 2012. This

growth has been mainly driven by the Online Travel industry, which

contributes 71% to the total Digital Commerce industry in India today.

In 2013, the market is estimated to mature and reach INR 62,967 Crores

showing a year-on-year CAGR of 34% since 2009.

Travel transactions have proved to be the primary fueling factor of the

digital commerce industry. As of 2012, among Internet users, online

travel leads the pack with 73% share in Digital Commerce (INR 34,544

Crores). This segment is estimated to show 30% growth by the end of

year 2013 and reach to INR 44,907 Crores.

7
 The figure, below, illustrates the growth in the market size since 2009.

Figure no. 1

Market Size Of Product Categories

Figure no. 2
Online travel industry has on an average grown by 32% from INR 14,953

Crores in 2009 to INR 34,544 Crores in 2012 and is estimated to grow by

another 30% and be valued at INR 44,907 Crores by the end of December 2013.

Changing the trend from the past year, at present, out of total Online Travel

market, domestic air tickets contribute 50% i.e., INR 17,335 Crores followed by
8
railway tickets contribute 39% i.e. INR 13,639 Crores. Others such as

international air travel (INR 1,926 Crores) Hotel bookings (INR 700 Crores),

Bus tickets (INR 641 Crores), Tour packages & travel insurance (INR 303

Crores) contribute balance 10% to the total online travel market.

Figure no. 3

Non-travel transactions contribute to the remaining 27% (INR 12,805 Crores).

As a whole, the Non-Travel Industry segment is expected to mature by 41% and

reach up to INR 18,060 Crores by December 2013.ETailing takes first position

with nearly 50% share (INR 6,454 Crores). Financial Services stands second

with 23% share (INR 2,886 Crores). Classifieds segment amounts to 18% of the

whole Non-Travel Industry pie (INR 2,354 Crores). Other Online Services

contribute to the remaining 9% (INR 1,110 Crores). Of the market size of INR

47,349 Crores; online travel, which includes booking rail, air, bus tickets, hotel

accommodations and tour packages comprised a major 71% of the whole

Digital-Commerce pie. E-Tailing which includes purchases of various consumer

products/services such as electronics, apparels, footwear, jewellery and other

such as home & kitchen appliances, consumer durables, furnishings constitute

16% of the overall share. Conducting transactions of various types of financial

services such as paying insurance premiums and renewals, paying utility and

9
mobile bills, trading shares and securities amounts to 6% of the overall share.

B2B and B2C Classifieds (jobs, matrimony, car, real estate etc.) contribute to

5%, whereas other online services such as online entertainment ticketing, online

food delivery, buying discounts/deals/vouchers etc. form 2 % of the overall

market.

Internetusage in India has gone up with more and more InternetUsers using the

Internet on a regular basis. In June2013, India had 190 Million Internet Users.

Of this 130 Millionbelonged to Urban India and the rest 60 Million werefrom

Rural India. In October, the number of internet usersreached 205 Million and is

estimated to reach 213 Millionby December 2013. The number of internet users

inurban India is 137 Million in October 2013 and is estimatedto touch 141

Million by December 2013. In Rural India,there are 68 Million Internet users in

October 2013 andwill reach 72 Million by December 2013. Mobile Internet,too,

has garnered a huge base among the Active InternetUsers. In India, there were

91 Million users accessing theInternet on Mobile devices in June. In Urban

India, there were 70.2 Million Mobile Internet users in June 2013.This number

rose to 85 Million in October and is estimated grow by 47% and reach 103

Million by December 2013. Rural India is not that far behind in this regard with

a base of 21Million Mobile Internet Users in June 2013. It reached 25 Million

inOctober 2013 and will touch 27 Million by December 2013.Internet users can

be divided in two major segments: Claimed Internetusers and Active Internet

Users based on the frequency of Internetusage. Claimed Internet users are not so

frequent users of the Internet,whereas Active Internet users access the Internet at

least once amonth.

10
 Chapter 2

Literature Review& Research Gap

Many researchers or scholars have done various researches about e-commerce in

travel and tourism industry. Many of them have pointed positive impact of e-

commerce in travel and tourism and some have pointed challenges for adopting

e-commerce and barriers of e-commerce in travel and tourism industry. E-

commerce in travel and tourism industries are continuously increasing despite of

tough economic problems. As per them, this industry is adopting application of

B2B (business to business) and B2C (business to consumer). This industry has

changed the ways of do business for traditional ways to modern way, i.e. e-

commerce via web and other online transaction software where as other

industries are still adopting the traditional way. Web is changing the behaviour

of consumers are well as they are becoming less loyal, take less time for

choosing and consuming the tourism products. As this industry is service

oriented business industry, companies are implementing various new techniques

to satisfy consumer needs and providing information to them through web and

different value generating strategies like value extraction, value capture, value

addition value creation. Travel and tourism is information based service

orientated business and the product is termed as "confidence good" and prior

comprehensive assessment of quality is impossible however due to use of e-

commerce feeds backs from consumers can be obtained in short span of time

and this services can be enhanced accordingly. Due to adoption of e-commerce

in travel and tourism industry consumers are becoming more powerful players

as they can choose their destination and sites in few minutes whereas travel

11
agents, travel websites etc. see diminishing power in sales however they are

providing new market functionality using new technologies to attract more

consumers. Many tour operator, travel agents, online travel agents are using

these strategy to attract more consumers however using more high-tech

technologies needs huge investments, need more high skill human resource etc.

There are various factors, which are considered that travel and tourism will

adapt ecommerce strategy. There are main two factors for conducting successful

e-commerce strategy which are security of the e-commerce system and user-

friendly Web interface. Security means not only securing own system but also

providing security assurance to users who are using the sites or online software.

User friendly web interface give consumer trust and it's easy to convenience for

customers. Beside these factors other factors are also essential to succeed which

are top management support, IT infrastructure, and customer acceptance. Top

management support plays vital role as they are the decision makers and their

support and decision will direct the company to use the strategy. Further, he also

explained that without proper IT structure and skilled human resources, e-

commerce strategy will fail. One of the factors he explained is customer

acceptance; customer acceptance means the way customer accepts the web or

online software of the company and it should have very rich contents and very

easy to use. These factors will decide whether business will get more customers.

Customers intend to use research website quality due to content richness and

ease of use. (Law and Bai, 2008). Law and Bai on their research paper

mentioned there are two types of customers who use travel companies websites,

those are buyers and browsers. Buyers are those people who actually intend to

buy the services whereas browsers are those who intend to surf and get

12
information only. Those browsers can be converted to buyers by improving the

website contents, making it attractive, provided very rich in contents and very

user friendly to use. As more and more travel companies are applying these

strategies, the increase in percentage of website buyers and browsers are also

increasing day by day. This is due to adaption of e-commerce technology in

travel and tourism industry.

There are various benefits for small and medium sized tourism enterprise to use

e-commerce. Few benefits of using e-commerce in tourism which are as

follows; -

Providing easy access to information on tourism products and services

Providing better information on tourism products and services

Providing convenience for customers

Expanding choices by customers

Creating new markets

Establishing interactive relationship with customers

Improving customer services

Improving image and public recognition of the small & medium sized

tourism enterprises

Saving time for providing tourism services

Providing customized & specialized tourism products & services

Reducing operating cost

Simplifying the process business

Interacting with business partners

Founding new business partners

13
Due to adopting of e-commerce by small and medium enterprises are beneficial

in various aspects. In Kim research, he explained by adopting e-commerce

companies can interact with customers frequently which will enhance their

customer service and use of ecommerce also reduce their operating costs as lots

of human resource is not needed and new opportunity of finding new agents,

creating new markets etc. Due to use of ecommerce by small and medium

enterprises they can save time as well.

E-Commerce is huge lap in travel and tourism industry moving from traditional

way to technological way and there are various barriers for travel and tourism

companies to adapt e-commerce in their business, include 'limited knowledge of

available technology,' 'lack of awareness,' 'cost of initial investment,' 'lack of

confidence in the benefits of e-commerce,' and 'cost of system maintenance.'

These barriers also include 'shortage of skilled human resources,' and 'resistance

to adoption of e-commerce.' Further he mentioned 'insufficient e-commerce

infrastructure,' and 'small e-commerce market size' might be barrier factors

depending upon the market size. Moving from traditional way to technological

way is not easy so in order to adapt e-commerce huge investment on

Information Technological (IT) have to done along with this staffs have to be

trained accordingly. It is not always possible for small and medium size

companies to invest huge amount and get skill human resource people. Some

countries have different rules and regulation for e-commerce business rather

than traditional ways. Government rules and regulation also plays a vital role for

adapting e-commerce. Further, websites and software must be rich in contents

very easy to use, updated time to time. If these factors are ignored than these

factors will be barrier of e-commerce in tourism.There are several challenges to

14
adopt e-commerce in travel and tourism industry. The behaviour of customers is

changing and due to e-commerce they swap agency in few minutes if they are

not happy with them. Customers expect the same service, same treatment as

offered by travel agencies through their outlet or through the web. Different

customers have different ways of surfing internet as per their level of internet

knowledge as well user friendly website and website's rich contents. To adapt e-

commerce by company, they have to focus on their detailed of services, product

availability, special offers, personalized information which are important factors

consumers search on web for the product. He further mentioned "Individual e-

commerce customers have been known to be demanding and unforgiving". As

such, regular maintenance, upgrade of technologies and continuous

improvement of customer service are the core factors for enhancing business

and attracting more customers. Consumers these days are far more demanding

and want convenience, speed and a seamless buying experience. Main

challenges is to create awareness among customers about product, make them

loyal.Due to drastic change in technology, Internet, mobile and handheld portals

available, consumers access the Internet for travel planning and companies have

to grasp these technologies and move as per the change in technology which of

course is expensive and need skilled human resource manpower. Some countries

have weak Information technology structure and people from these countries

might have problems for using e-commerce. One of the main challenge is t that

adaptation of e-commerce in travel and tourism is to build trust of people in

internet system so that they could choose e-commerce instead of tradition

way.To build the trust among people, companies can try to capture a part of the

traditional travel agent client market by focusing on different advertisement,

15
emphasizing online agents' knowledge. Companies can lure their customers via

providing personalized service through email, web texts customized web sites

that are built "on the fly" based on users' specific profiles and needs. The main

theme of writers is to gain customer confidence and trust toward the website.

"The challenge is determining how a web site can exude trust and good service".

To build customer trust, Wolfe et al have suggested online travel agencies have

to give telephone numbers or e-mail contact information. This phone numbers

and email address can be useful for customers who want proper information

about destination, services and some specific questions. An e-mail reply or

telephone call allows companies to respond more inquiries with politeness in a

professional way which of course provide sense of postal mail. In this way a

browser may be transformed to buyer.Similarly, to attract more consumers,

website should provide virtual tour of the destination. Virtual tour means

description of the destination by through audio and visual mode by sharing

videos, photo, destination details with pictures etc. (Cho et. al, 2002). Cho et. al

have mentioned that virtual tour attracts customers as it give the picture of the

destination, hotel details where they are suppose to go ,stay and enjoy . Virtual

tour enables tourists to become more confident about their trip, they can choose

the destination which leads them more satisfaction rather than booking the

product through tradition way. At least, they can picture destination, hotel,

transportation system etc about the destination before their travel date. Browsing

through variety of journals, articles, thesis & dissertation its has been observed

that companies focus is on how Ecommerce as a business channel can add

business value in travel related organizations and aims at providing the reader an

overall idea about the nature and activities of electronic commerce. The

16
literature review reveals several gaps in knowledge with respect to how firms

structure their e-commerce business function and what are the factors that will

have a impact on overall business performance as a result of the structuring of e-

commerce business in the travel industry related organizations.One of the

studies investigated the critical success factors for e-commerce. The dissertation

addressed four research questions: (1) Regardless of industry, what are the

critical success factors relevant to all companies engaged in e-commerce? (2)

What are key requirements that all e-commerce companies must have in order to

enter the industry? (3) What is the company‘s ecommerce business model? (4)

How is the company‘s business performance?

In one of the thesis ―THE IMPACT OF E-COMMERCE ON BUSINESS

VALUE IN SERVICE ORGANISATIONS‖ the findings focus on the impact of

eCommerce in the following areas:

Brand Image

Customer service

Product promotion

Time to market

An article on ―Critical Factors Classification for Firm Adoption of E-

Commerce‖ emphasizes on the factors affecting eCommerce adoption decisions

by firms. The categorization resultedin two main Categories: internal and

external factors. Internal factors are within the firm while external factors are

mainly environmental.

Analyzing the Effects of Social Media on the Hospitality Industry was

conducted to explore the areas and functions hospitality businesses use social

17
media for, and understand how consumers perceive these new vehicles of

communication. The study brought out a consumer‘s perspective of the

advantages of social media over traditional marketingmethods.

Potential E-Business Development in Tourism

E-business is the use of information and communications technologies in all

activities of a firmboth internally and in relation to its outside partners. The

tourism industry consists of manycompanies dabbling in various activities,

ranging from (1) tour operators (2) travel agents (3) tourist guide services (4)

airlines (5) transportation (6) hotels and guesthouses (10) tourism education and

training institutions; (11) local touristoffices.ICTs are seen asmajor tools with

the potential to fundamentally change business behavior and company

strategies.The adoption of ICT in the tourism industry can provide detailed up-

to-dateinformation on the availability and prices of products and booking, which

could also contribute toincreased sales volume and profits.However, there exists

other literature, which report on the benefit of e-business to tourism. E-

Commerce experts have noted, ―despite all the benefits that can be achieved by

ICT, many small and micro-tourism businesses have failed to embrace ICT and

the Internet‖. One of the major arguments is management‘s perception of the

internal organizational readiness to adopt e-business. Organizational barriers

among non-adopters include the lack of technological and financial resources,

the negative

attitude of management (lack of their support and less risk taking propensity),

and the lack of ITknowledge.

Online marketing has become very important over the years as a more cost

effectivemethod of doing business. However inspite of the obvious advantages

18
of internettraditional marketing continues to be used by majority of the

businesses. More and morecustomers are using the internet to research products

and services online which they laterbuy offline. Most customers compare

product features, attributes and prices to get thebest product at the best price.

Online search helps in this process. So online and offlinestrategies integration is

a very important factor for the strategic success of any business.

An attempt has been made to identify areas in the existing studies, which are yet

to be addressed, which will form as research questions to be answered through

the proposed study.

The gaps identified are as follows:

Critical Success Factors that make e-commerce business profitable in the

travel industry related organizations
Factors which will have a impact on overall business performance as a
result of the structuring of e-commerce business in the travel industry
related organizations
Analyze the impact of e-commerce on brand imagery
Methods & practices to structure the e-commerce business in the travel
industry related organizations
How can one sustain competitive advantage in Web commerce?
How does one measure e-commerce business success (or 'derive ROI‘)
Barriers and challenges e-commerce business face during the

implementation and growth

19
 Chapter 3

Objective & Research Methodology

3.1 Purpose Of The Study

3.2 Scope Of The Study

3.3 Limitation Of The Study

3.4 Research Methodology

20
 Chapter 3

Objective & Research Methodology

3.1 Purpose Of The Study

From the above little introduction, we can simply say that e-commerce is

bringing various opportunities in travel and tourism sectors. Many industries on

this field had already adopted e-commerce and some are on the way to adopt it

to enhance their services and better facilitate their customers however these

developments have certain impacts on the behaviour of customers as well in

industry.

My prime focus on this research paper is to find out the impact and challenge of

e-commerce in travel and tourism industry and reviewing it through different

academic journals. Through those journals I will be able to answer, how will be

travel and tourism industry benefit if they adopt e-commerce, what are the

customers' perceptions on travel and Tourism Company which adopts e-

commerce and what are the benefits and limitations of e-commerce in travel and

tourism. Further my main objectives of research are to find out following: -

To identify the methods & practices to structure the e-commerce

business in the travel industry related organizations

To identify the critical success factors that make e-commerce business

profitable & identify factors that are detrimental to the growth of the e-

commerce business in the travel industry related organizations

21
 To identify the factors which will have a impact on overall business

performance as a result of the structuring of e-commerce business in the

travel industry related organizations

3.2 Scope Of The Study

The internet‘s global reach, interactivity, and information-rich context have

redefined the travel industry. Online travel commerce has evolved significantly

from the initial sales of less complex products like airline tickets,

accommodation and car rentals to include more complex products like vacation

packages and cruises. Several studies have revealed that online travel rates

among the top three products and services purchased online. The goal of this

dissertation is to assess the methods and practices adopted to structure the e-

commerce business in the travel related organizations and the factors that define

the success of e-commerce business in the travel related organizations. The

dissertation also focuses on factors that are detrimental to the growth of e-

commerce business in travel related organizations. The study draws attention

towards the changing patterns in travelers trip planning behavior. The study

highlights the advertising channels used for brand awareness and customer

acquisition. The dissertation dwells deep into how travel and tourism have used

information technology to enable business growth. It also aims to analyze some

of the most critical IT developments and to demonstrate how they influence the

tourism industry and significantly enhance competitive advantage. Tourism is

inevitably influenced by the business process re-engineering experienced due to

the technological revolution. As information is the life-blood of the travel

industry, effective use of ITs is pivotal. Hence, "a whole system of ITs is being

22
rapidly diffused throughout the tourism industry and no player will escape its

impacts". Unlike durable goods, intangible tourism services cannot be

physically displayed or inspected at the point of sale before purchasing. They

are bought before the time of their use and away from the place of consumption.

Hence they depend exclusively upon representations and descriptions, provided

by the travel trade, (e.g. information in brochures), for their ability to attract

consumers. Timely and accurate information, relevant to consumers' needs, is

often the key to satisfaction of tourist demand. Therefore, ITs provide the

information backbone that facilitates tourism.

3.3 Limitation Of The Study

The scope of the study was limited to how e-commerce as a business channel is

established in the travel and tourism industry. Other industries are not included

in this study. The study is based on opinions e-commerce practitioners have

given with respect to how e-commerce can be set-up in travel related

organizations. Sample selection is limited to only 3 metro cities of India and

would limit the ability to draw generalization in this study. Main concern comes

from the fact that though travel industry has been the first adopters of e-

commerce however they are slow in adopting the new methods and practices

emerging in the e-commerce space related to the travel industry. Finally,

although the number of respondents was sufficient to conduct this study,

however, a larger samplesize would have strengthened the results obtained.

23
3.4 Research Methodology

This research aims to explore the impact of structuring the e-commerce business

on the overall business performance in the travel industry. The data is collected

from travel agents, tour operators, airlines, travel meta search engine, GDS

(Global distribution system). Quantitative survey was conducted in this study to

investigate the perceptions of the travel related organizations like the traditional

travel agents & tour operators, Online travel agents, hotels, travel meta search

engines, global distribution system with respect to structuring of the e-

commerce business in the travel industry. The travel related organizations were

asked to judge critical success factors that make e-commerce business

profitable, Factors which will have a impact on overall business performance as

a result of the structuring of e-commerce business in the travel industry related

organizations, Methods & practices to structure the e-commerce business in the

travel industry related organizations, Factors that are detrimental to the growth

of the e-commerce business in the travel industry related organizations. The

research exercise was focused on educating the travel industry with regards to

what all areas are critical and need to be implemented in order to structure the e-

commerce division which will lead to profitable results and impact the over all

business process. T test is applied to determine if two sets of data are

significantly different from each other. The t-test looks at the t-statistic, t-

distribution and degrees of freedom to determine a p value (probability) that can

be used to determine whether the population means differ.

24
 Sampling Design Process

This study is based on the exploratory & causal research design, which

included both secondary and primary information sources. The target

population for this study is drawn from members of Travel Agents

Federation of India (TAFI) in Mumbai commercial capital of India. There

are 1400 members in the association. Members of TAFI fall in categories of

aviation, hotels, IATA approved agents, e-commerce digital agencies

managing travel clients. The samples for this study is drawn from TAFI and

primarily focus on the travel industry related organizations in the Mumbai +

Delhi + Bangalore market. Primary data is proposed to be collected from 33

travel industry related organizations, which fall in different categories of

TAFI via a structured questionnaire. The respondents will be selected on the

basis of their designation, profile and tenure in the organization. 3 hotels, 8

airlines, 8 online travel agent, 3 tour operators, 8 travel agent, 2 travel meta

search engine and one global distribution system participate in the study.

Travel related organizations are classified into two categories:

Organizations who own inventory to be sold through intermediaries and their

own websites (hotels, airlines)

Organizations who display inventory by connecting with the systems of the

organizations who own inventory (OTA‘s, traditional travel agents, travel meta

search engine, global distribution system)

25
Type Of Organization

Frequency Percent
Hotel 3 9.1
Airline 8 24.2
Online Travel Agent 8 24.2
Tour Operator 3 9.1
Valid
Travel Agent 8 24.2
Travel Meta Search Engine 2 6.1
Global Distribution Systems 1 3.0
Total 33 100.0

Table no 1
Sampling Procedure

For the purpose of this study, a probability sampling method will be used.

Stratified sampling, followed by simple random sampling will be used in this

study. The reason for selecting Stratified sampling technique is that the sampling

frame of the study is divided into subgroups, strata, and the sampling process will

be performed separately on each stratum. The different categories of the TAFI in

the study compiled the different strata.

Data Collection Procedure

In regards to the primary sources, data would be collected in form of a structured

questionnaire through face-to-face, email and telephone interviews with the e-

commerce practitioners. Questionnaires would be sent beforehand to the

respondents, so that they could prepare prior to the interview.

26
 Secondary Data

Secondary sources of information was gathered from e-journals, e-articles, e-

commerce related cases studies, online e-commerce research reports produced by

Internet and Mobile Association of India providing up-to-date insights on the

growth of e-commerce in India.

Questionnaire Design

The questionnaire is designed on a five-point likert scale in order to gather insights

on what according to the e-commerce practitioners in the travel industry related

organizations are the methods & practices followed to structure the e-commerce

business, what are the critical success factors that make e-commerce business

profitable, what are the factors that are detrimental to the growth of the e-

commerce business, What are the factors which will have an impact on overall

business performance as a result of the structuring of e-commerce business in the

travel industry related organizations. The questionnaire was designed in line with

the research objectives. The questionnaire was circulated among the e-commerce

practitioners within the travel and tourism industry.

27
 Chapter 4

Tourism Sector – Global Scenario

The travel and tourism industry is one of the world‘s largest industries with a

global economic contribution (direct, indirect and induced) of almost seven

trillion U.S. dollars in 2013. The direct economic impact of the industry,

including accommodation, transportation, entertainment and attractions, was

approximately 2.2 trillion U.S. dollars that year. A number of countries, such as

France and the United States, are consistently popular tourism destinations, but

other, less well-known countries are quickly emerging in order to reap the

economic benefits of the industry. Worldwide, the tourism industry has

experienced steady growth almost every year. International tourist arrivals

increased from 528 million in 2005 to 1.09 billion in 2013. Each year, Europe

receives the most international tourist arrivals. It also produces the most

travelers: with just fewer than 566 million outbound tourists in 2013, the region

had more than double that of the second largest tourist origin, the Asia Pacific

region. In 2013, global international tourism revenue reached approximately

1.16 trillion U.S. dollars, having almost doubled since 2005. That year, China

had the largest international tourism expenditure, followed by the United States

and Germany. The leading city in international visitor spending was London,

where tourists spent more than 19 billion U.S. dollars in 2014.

For tourism-dependent countries and destinations, tourism‘s share of GDP can

exceed twice the world average. Today, international tourism receipts exceed $1

billion per year in some 90 nations. Worldwide, domestic tourism is typically

28
several times larger. Tourism truly has become a global economic and social

force. Travel is costly. Historically, only wealthy individuals could afford to

travel abroad, and they tended to travel to affluent countries with quality tourism

infrastructure and services. Not surprisingly, Europe and North America have

been the largest sources and recipients of international tourists. But this, too, is

changing. In recent decades, tourist arrivals in emerging countries have grown

much faster than in developed ones. The Asia-Pacific region has seen—and will

continue to see—the fastest growth.

The Travel and Tourism (T&T) industry directly contributes about 3.6% of the

world‘s Gross Domestic Product (GDP) and indirectly contributes about 10.3%

to it. As one of the biggest contributors to the global GDP, this industry directly

employs nearly 77 million people worldwide, which comprises about 3% of the

world‘s total employment. The T&T industry also contributes to indirect

employment generation to the tune of 234 million or 8.7 % of the total

employment implying that one in every twelve jobs in the world is in the

tourism industry. The industry also represents about 12% of the total world

exports.Global market trends indicate that long-haul travel, neighbouring

country tourism, rural and ethnic tourism, wellness and health holidays, cultural

tourism, spiritualism, ecotourism, sports and adventure holidays, and coastal

tourism and cruises are a few emerging areas of tourist interest. From a

geographic viewpoint, there has been a remarkable rise in Asian tourists,

particularly from China and East Asian countries. Further, the average age of the

international tourist has also been reducing representing a growing segment of

young tourists who would typically travel to take a break from increasingly

stressful professional lives

29
Statistics and facts on the travel and tourism industry in the U.S.

The travel and tourism industry is one of the largest industries in the United

States, making a total contribution of 1.42 trillion U.S. dollars to GDP in 2013.

The industry was forecasted to contribute more than 2.5 trillion U.S. dollars by

2024. In 2014, U.S. travel and tourism entered the spotlight when President

Barak Obama took on a campaign to promote the industry and make the airport

entry process easier in order to attract more international visitors. The campaign

focused on increasing international travel spending within the country, creating

more jobs for U.S. residents as a result. There were 69 million non-resident

visitors to the United States in 2013, with New York City often proving the

most popular city destination. Of those visitors, travelers from Canada

contributed the most to international travel spending at 27 billion U.S. dollars.

Visitors from Japan and the United Kingdom also spent generously. However,

international travel spending was dwarfed by domestic travel spending – U.S.

residents spent 748 billion U.S. dollars traveling their homeland in 2013. The

number of outbound tourists from the U.S. is much smaller than the number of

international visitors arriving on an annual basis. When asked which destination

they would choose if they could go anywhere in the world, the most popular

choice for U.S. travelers was their own state of Hawaii. Many Americans prefer

beach locations for their vacations but cruises are also well liked – in 2014, over

half of the passengers of the global cruise industry came from the U.S.

Statistics and facts on the travel agency industry in the U.S

In 2013, the travel agency industry in the United States generated 33 billion U.S.

dollars in revenue, approximately three quarters of which was made up by

30
commission and the rest by service fees. In 2014, over half of travel agent users

in the U.S reported that travel experiences planned by agents were better than

those that they planned themselves. That said, many leisure and business

travelers admitted that they did not use travel agents because they liked

researching and planning their trips themselves. While many in the travel

industry have declared the era of travel agents to be over, recent research shows

that travel agents in the United States are reporting an increase in business. In

2013, over half of travel agents reported an increase in revenue. The share of

travel agents reporting a decrease in sales dropped from 80 percent in 2008 to

just 14 percent in 2012. Sales of tour and group holidays increased the most in

2013, followed by sales of travel insurance and cruise holidays. Many of these

sales could have been made over the internet. Travel management, like many

things, is becoming increasingly web-based. In 2012, travel e-commerce sales

amounted to 103 billion U.S. dollars. In the same year, Expedia was the online

travel agent with the largest share of pages views at 31.6 percent. However, in

January 2014, only 14.3 percent of people said they used online travel agencies

to plan their travel. A much larger share of people, 44.3 percent, preferred to use

social media when planning, so it is unsurprising that almost 60 percent of travel

agents use social media for general promotion and advertising and to generate

new business.

Statistics and facts on the Business Travel Industry

The travel and tourism industry is one of the largest industries in the United

States. Despite being one of the first industries to suffer greatly in the aftermath

of the September 11 terrorist attacks in 2001, it was quick to recover and, by

31
2013, made a total contribution to GDP of over 1.4 trillion U.S. dollars.

Business travel makes up a sizeable portion of this industry, contributing 274.7

billion U.S. dollars directly to GDP in 2013 – 29.2 percent of travel and

tourism‘s overall direct contribution. This is likely to increase year on year with

domestic business trips predicted to reach 480.5 million by 2016 – and more

business travel means more business travel spending. Business travel spending

is expected to increase by 5.9 percent in the United States in 2014. In terms of

the global outlook, however, it is Brazil (15.9%), Russia (8.2%), India (13%)

and China (16.8%) who are expected to see the biggest increases in business

travel spending in 2014. The average cost of business travel in the U.S. amounts

to 293 U.S. dollars per day. In San Francisco, the most expensive U.S. city for

business travel, this figure is much higher and average costs per day can reach

444.66 U.S. dollars. With such large amounts of money being invested in this

growing industry, how are companies choosing to manage travel?

In 2012, Travel Leaders Group was the most successful travel management

company in the world in terms of air ticket transactions, making over 2.1 million

transactions. However, in the same year, a global footprint was one of the least

important considerations for business travel buyers when choosing a travel

supplier: the most important factor was finding the lowest negotiable rate,

followed by finding the highest level of service. But this could all change within

the next two years according to business travel managers. In 2013, 50 percent of

business travel managers thought health and well-being was a mega-trend that

would affect travel management over the next two years, and 49 percent thought

environmental awareness would. As well as this, travel management has become

much more mobile in recent years. By 2012, more people than ever were using

32
smartphones and tablets to book travel and, in 2013, 54 percent of U.S.

companies either had, or were developing a mobile communications strategy for

travel.

B2c E-Commerce Development In Tourism Industry In China

Abstract

E-commerce has significantly changed the distribution channels of travel

products in the world including China. Online channels are growing important

in travel service distribution. This paper sheds lights on the B2C e-commerce

development in China. It explores this issue from the three different participants

in the B2C e-commerce model intourism industry - consumer, travel agent and

travel service provider. The paper also identifies the barriers in the B2Carena

and discusses the possible approaches to develop B2C in tourism industry in

China. The results in this study revealthat B2C development in tourism largely

depends on the change of Chinese customers‘ behavior. The findings of thestudy

are expected to assist travel organizations to better understand current B2C e-

commerce development in China andexpand their B2C e-commerce market in

China in the near future.

Introduction

With the Internet as a commercial medium, new ways of conducting business

have developed in almost every sector. In tourism industry, new and efficient

Internet business models, including both B2B and B2C, have gained a strong

foothold and the travel industry is ranked as the prime sector in e-commerce

33
(Heung 2003). Online transactions in the travel and tourism industry are

continuously growing with the proliferation of e-commerce (Werthner and Ricci

2004). The Internet has become an important service booking channel

for individual customers, which impels B2C e-commerce development in tourism

industry. In China tourism industry has been developed rapidly with the

economic development, which has attracted travel service providers to develop

their market through the Internet in order to achieve more business benefits and

keep competitiveness. Some researches have been conducted on the B2B e-

commerce model in travel industry in China, but the B2C e-commerce

development in tourism industry in China has not been explored. This paper

sheds lights on the B2C e-commerce development in China. It explores this issue

from the three different participants in the B2C e-commerce model in tourism

industry - consumer, travel agent and travel service provider. The paper also

identifies the barriers in the B2C arena and discusses the possible approaches to

develop B2C in tourism industry in China. The results in this study reveal that

B2Cdevelopment in tourism largely depends on the change of Chinese customers’

behavior. The findings of the study are expected to assist travel organizations to

better understand current B2C e-commerce development in China and expand

their B2C e-commerce market in China in the near future.

E-Commerce Development In China

To contextualize e-tourism development in China, an examination of e-

commerce development in China is required. In the past several years, with the

rapid growth of the population of Internet users in China, e-commerce has

expanded rapidly in China. According to the survey conducted by China Internet

34
Network Information Centre (CNNIC), the number of Internet users in China

has arrived at 210 million until the endof 2007, and Internet penetration rate in

China has arrived at 16.0% (CNNIC 2007). E-commerce in China is multiplying

almost as fast as the number of Internet users in China. According to the report

from the Research in China (RIC), in 2006 the revenue generated in e-

commerce was about $138.4 billion in China, and the e-commerce market will

continue to expand in China (RIC 2006). The e-commerce market in China will

be perhaps totally as much as $654.3 billion by 2010. According to the survey

conducted by iResearchcentre in China, the revenue generated in Business-to-

Business (B2B) e-commerce in China has arrived at $169 billion in 2006, which

takes nearly 95% of the total e-commerce avenue in China in 2006, and B2C

takes a small size in the e-market in China (iResearch, 2007). The Chinese-

commerce market will continue to expand and perhaps total as much as $654.3

billion by 2010 (CCID, 2006). Compared to e-commerce development in

developed countries, the adoption of e-commerce is still in its infancy.

E-Tourism In China

China’s tourism industry has developed quickly in the past 20 years. In

China since 1999 the government has put effort on further pushing tourism

development by establishing three “Golden weeks” holidays, which has

impelled both the domestic and international tourism development in

China. According to the statistics released by China National Tourism

Administration (CNTA) in 2006, the number of inbound travelers in China

has arrived at about 124.9 million, the number of outbound travelers has

arrived at 345.2 million, and the number of domestic travelers has arrived

35
at 1.39 billion (CNTA, 2006). World Tourism Organization (UNWTO) also

predicts that China's tourism industry will take up to 8.6 percent of world

market share and become the world’s top tourism industry by 2020 (CNTA

2007).The e-commerce development and the expansion of electronic

market in China bring opportunities to travel organizations in tourism

industry to perform marketing online, which can help travel organizations

to reduce business cost since there will be less intermediaries in the new

value chain in e-tourism. Mean while, travel organizations are facing great

challenges in the Internet times. Although the Internet has become an

important travel service delivery channel, e-tourism in China is still at its

initial stage. Compared to the application of the Internet in other sectors in

China, Internet adoption in tourism has developed much better. In China,

more and more travel organizations have begun to perform business online

and according to the statistics released by the Chine Internet Network

Information Center, about 8.6% of Internet users in China are using the

Internet to book travel service. Travel organization are attempting to get

benefits from their online service channels, and at the same time keeping

their off line service channels to keep competitive in the market. Travel

organizations in China can not completely rely on the modern online

channels since online travel service booking in China has not been popular

compared tosome other developed countries. In 2006 the Chinese

government has started the Golden Tourism project, which aims at pushing

e-tourism development in China

36
B2C E-Commerce Model In Tourism Industry In China

The increased penetration of online service and home computing has resulted in

more consumers‘ home-shopping. The Internet makes it available for travel

service suppliers to sell their products to consumers directly and omit the

traditional travel retailer – travel agency. The Internet has been considered

ideally suited as a medium for travel service delivery since the travel industry is

largely information-driven. Online travel services have developed into one

of the largest e-commerce domains in the world.

Online travel service delivery helps travel service providers to establish direct

promotion to targeted potential customers and to send them tailor-made

information at the appropriate time. In China B2C e-commerce developed in a

different model compared with its development in other developed countries.

There are three different travel service distribution channels in the B2C model.

First, travel service providers can deliver travel service to customers through the

Internet directly, which is the main goal of travel service providers are expected

to achieve in their B2C e-commerce development. Second, travel services are

delivered to customers by travel agents through the Internet, which is based on

the corporation between travel service providers and travel agents, which is

based on the traditional travel service delivery channel. Third, travel service

providers offer online booking service to customers, and the services are finally

delivered to customers by travel agents.

It is a popular channel in China because of its advantage in solving payment

barriers and security risks. Ctrip and Elong, the two big online travel companies

in China, have achieved big success in its B2C business based on the third

channel in the B2C e-commerce model in China.

37
Method

This research aims to explore the issue on the B2C e-commerce development

model in China. The study issue is investigated based on the data collected from

the three different participants in the B2C model in tourism industry in China:

travel service provider, travel agent and customer.In this study interviews were

conducted to explore the perceptions of B2C e-commerce development on both

travel service providers and travel agents perspectives. Some qualitative data

were collected from interviews conducted in 9 companies - 1 airline company

and 8 travel agencies. Totally 15 interviews were conducted - 6 in the airline

company and 9 in travel agencies. A quantitative survey was conducted in this

study to investigate customer‘s attitude towards online travel service in the B2C

model, in the survey a questionnaire was developed to collect empirical data.

We chose some passengers of the interviewed airline company in our study to

investigate the customer‘s perceptions of online travel service distribution. The

passengers were asked to report on their current use of the Internet to book

travel service or search travel information, and their future intentions on online

travel service booking. The survey was conducted by the airline company

onboard. In the study totally 190 copies were received, and 169 copies are

usable.

Data Analysis

Travel Service Provider Perspective

The B2C e-commerce development in China was discussed with the

interviewees from the airline company, which helps to understand the travel

38
service providers‘ perceptions on B2C e-commerce development models in

travel service providers‘ perspective in China. According to the

interviewees‘ opinion they are attempting to develop both B2B and B2C e-

commerce in their business, and B2C is what they are eager to develop. In

fact its B2C business has not achieved great improvement compared to its

B2B business. B2C e-commerce in their company is just at the beginning,

and it still have to rely on the travel agencies and their sales office in China

to promote flight tickets to individual customers though they have made it

available for individual customers to book ticket online. They agreed that

some barriers have impacted their B2C development, including security

risks and restriction of reimbursement system in China. In addition,

individual customers prefer call to travel agencies to book travel service.

They keep their previous consumption habits, and it is hard to make them

change their habits. Its B2C development depends largely on the individual

customer‘s change of consumption habits. Currently, the travel agencies are

still its main ticket sales channel in China. Even in its B2C business,

cooperation with travel agencies is also needed to deliver traditional paper

invoices to individual customers for reimbursement after their online

booking, which is the third B2C model.

Travel Agents Perspective

Travel agents, mainly travel agencies, are always important intermediaries in

the value chain of tourism. Nowadays, travel agencies have adopted both

B2B and B2C in their e-commerce development, which tie the travel service

providers and customers. Travel agencies can offer customers personalized

39
service through online or offline channels, which is their advantages

compared to the services offered by travel service providers. The

interviewees from different travel agencies agree that travel agencies in

China are still the main intermediaries of travel service providers in China.

Travel agencies offer travel services by both the traditional offline channels

and online channels. At present, 7 travel agencies focuses their e-commerce

mainly on B2B, and only 1 travel agency focuses on both of them since B2C

model in China has not achieved great success in tourism industry. They

expect that B2C business can achieve good development in their business in

the near future with the mature of e-commerce development in Chinese

market. In B2C business, travel agencies rely on their traditional channel to

help travel service providers deliver traditional invoices to individual

customer, which is a new cooperation trend between them with the adoption

of B2C.In the discussion the interviewees illustrated their barriers in

developing B2C in China. Among the interviewees, 6 of them agreed that

security risk is the main barrier, and 4 of them stated that payment is another

barrier.

Customer Perspective

The customers are investigated on their online travel service booking

experience, online travel service searching and online booking for future

travel service in the B2C arena. Among the 169 respondents, most of them

(97.2 %) are Internet-users. And 99 of them have booked travel service

online, accounting for 58.8% of all the respondents. As regards to travel

information search, based on means comparison, travel agencies are ranked

40
 as the most important travel information-searching channel and the Internet

is not so important (See Table 2)

Table no 2. Travel information search channels

Mean Std. Deviation
Travel agency 1.99 1.322
Friends 2.04 1.145
Experience, habit 2.29 1.486
Internet 2.31 1.316
Advertisement 3.24 1.522

For their future travel service booking, travel agencies are still more important

than the Internet, 45.6% of the respondents are intended to use travel agency to

book travel service and 33.1% of them will use the Internet to book their future

trips.

Summary

Though tourism industry is quite fit for e-commerce in China e-tourism is in

its initial stage. The research findings in this study reveal that in China B2C

business model is not so popular because of the obstacles existed in its

development, including payment, security risks and restriction of

reimbursement system. According to the customers‘ perception, travel

agencies keep the main intermediaries in tourism in China, though the

Internet has become an important travel service-booking channel. Travel

agencies take the combined business model to offer travel services to

customer – through both the traditional offline and the popular online

service. The intensive travel services offered by travel agencies in the

combined business model are not what travel service providers can offer to

41
customers through their direct online sales. The results in the study state that

half of the investigated customers will still book travel services from travel

agencies, which is much higher than that of the Internet bookers for future

trip. Even in B2C business, travel service providers have to rely on travel

agencies to complete its business process. The role of travel agency as the

middleman in travel value chain keeps important. Based on the discussion

we can arrive at the conclusion that B2C e-commerce in China has a

great potential for travel service providers. B2C development largely

depends on the change of Chinese customers‘ behavior. To accept electronic

invoices in the reimbursement system in China is very important for

the betterment of B2C development. In addition, travel organization can also

attract individual customers to book service online by offering them cheaper

price or some other promotions strategies. The primary limitation of the

study is that the empirical data collected is based on a small size

of respondent, which is used to represent the general perceptions of

customers in China with a large size of population. This study has provided

an in-depth knowledge about the B2C e-commerce development in China,

and offered some valuable guideline for travel organizations. Future study

should take into consideration of the strategies to realize betterment of B2C

development in China.

42
 Chapter 5

Tourism Sector – Indian Scenario

Tourism is not only a growth engine but also an employment generator.

According to the Economic Survey 2011-12, the sector has the capacity to

create large-scale employment both direct and indirect, for diverse sections in

society, from the most specialized to unskilled workforce. It provides 6-7 per

cent of the world‘s total jobs directly and millions more indirectly through the

multiplier effect as per the UN‟ s World Tourism Organization (UNWTO).

The importance of tourism as a creator of job opportunities can be understood

from the fact that in India every one million invested in tourism creates 47.5

jobs directly and around 85-90 jobs indirectly. In comparison, agriculture

creates only 44.6 jobs and manufacturing a mere 12.6 jobs. Moreover tourism is

the third largest foreign exchange earner after gems and jewellery and ready-

made garments.

Tourism Outlook – India

Given the Global Tourism perspective, buoyancy in the Indian Economy and

growth in the related ancillary industries like Infrastructure and Aviation, the

Tourism Industry is expected to be on an upswing in India. Foreign Tourist

arrivals to India have been showing an increasing trend, it being estimated at

4.43 million in 2006, up 13% from 2005 (3.92 million). Taking into account

the fact that these figures exclude the NRIs visiting India, the total number

of international tourist arrivals in 2006 is estimated to be over 7 million.

43
India‘s outbound travel is twice the volume of inbound, and destinations in

the Asia-Pacific region are expected to receive continuous growth in tourist

arrivals from India. In terms of the growing travel and tourism economy and

the real growth rate of travel market, India is the number one country in

Asia-Pacific region.

The Travel & Tourism Industry in India is expected to grow and generate

US $ 128 billion by 2016. The Total Demand is expected to grow by 8% per

annum, in real terms, between 2007 and 2016. In the year 2006, India

represented 0.8 % of the world market share.

India‘s rich cultural and geographic diversity provides the basis of a wide

range of tourist products and experiences, which include among others -

leisure, culture, adventure, spirituality, eco-tourism and wellness & health.

Apart from acknowledging the traditionally recognized advantages of

developing tourism for promotion of people to people understanding,

earning of the foreign exchange, vast employment generation, it can play a

major role in furthering the socio-economic objectives of the nation.

India Tourism – Global Recognition

The last few years have been highly successful for India Tourism. The

‗Incredible India‘ campaign has enabled the destination to penetrate global

market and reach the ultimate consumer through electronic, print and

internet media. On account of the spurt that India has witnessed in tourist

arrivals in the recent times and given the unique and immense potential the

country has as a ‗vacation destination‘, The World Travel and Tourism

44
 Council has identified India as one of the foremost tourism growth centers in

the world, in the coming decade. Integrated endeavors of the Ministry of

Tourism, Government of India have led to India winning the following

international acclaims: -

Conde Nast Traveller, the worlds‘ leading travel and tourism journal

has ranked India amongst the top 4 preferred holiday destinations of

the world

India amongst the top 5 favorite destinations – Lonely Planet in a

survey of 167 countries

ABTA (Association of British Travel Agency) has ranked India as

No. 1 amongst top 50 places for 2006

The Incredible India campaign has been the winner of PATA Gold

Award for best Print Ad Campaign and PATA Gold Award for Best

Destination Marketing Campaign

The Incredible India Campaign has been ranked as the ‗Highest

Recall Advertisement worldwide by Travel and Leisure World

Travel Awards received for a) Asia‘s Leading Destination b)

World‘s leading Travel Destination Television Commercial c)

Worlds‘ Leading Responsible Tourism Project, for Endogenous

Tourism Project and d) Asia's leading tourism and convention

bureau.

Increasingly, Tourism as a sector seems to be emerging to be one of the main

driving engines of the Indian Economy.

Though there are many definitions for tourism, it could be simply defined as a

―travel and stay of a non-resident‖. In order to travel to a particular area there

45
must be a reason. For example a person may travel for leisure, business, visiting

friends and relatives, health, education etc. He/she chooses a destination for one

or the other reason. Transport is necessary to travel and accommodation to stay

at the destination. So, tourism as an industry has three major components:

Attraction, Accommodation and Transport. In the developed world, today, all

these components have reached at their zenith in satisfying their customers‘

needs aided by modern technology. These components have also came a long

way to offer a range of products which suit the needs of multitude tourists

around the world, and are still working hard to cater to an ever changing test of

them. Tourism is ranking the top ahead of all other categories of international

trade. This growth of tourism activity clearly marks tourism as one of the most

remarkable economic and social phenomena in the world.

The Tourism Industry Components and Requirements of

the Tourists

As indicated above the tourism industry is made up of three major

components: namely,

Attraction sector which comprises manmade and natural attractions

which are developed to satisfy visitors educational, recreational,

aesthetic needs etc.

Advertising sector, which includes advertising through mass media and

the internet.

Accommodation sector, all types of establishments that offer lodging to

visitors

Transport sector, which includes air, water and surface transport.

46
 Attraction Sector

In the case of attractions both manmade and natural attraction owners need

to communicate or inform their customers and potential customers about

their production. Information about the kind of attraction, where they are

located and how to get there is of vital importance. The attraction owners

particularly the national tourists offices discharge their duty of promoting

country‘s tourist attractions using the information technology products.

Information through promotional videos, Internet web sites, television

advertisements and travel documentaries are the main information

dissemination tools.

Accommodation Sector

In the accommodation sector also the contribution of information technology

is prominent. Any individual or group wishing to travel to any part of the

world now has an easy access to the accommodation service providers. A

visitor can access information about the kind of hotels at the destination,

their ranges of product, the price and other relevant information without

leaving his/her office. What one has to do is ring up a travel agency and get

the expert advice.

This will help any visitor greatly as to where to stay during any kind of away

from home. Here the information can be obtained aided by still or moving

pictures in order to give exact feature of an accommodation, facilities and

services of ones choice. At a destination also visitors are at ease during their

stay in every respect, in getting information about their business, family or

47
other information back home. They are also at ease to relax with the videos

and television entertainment programs, which now days are part and parcel

of many accommodation units.

Advertising Sector

Travel and tourism fit especially well with interactive media because they

are an information intensive industry where transactions can be made online,

and current web users are heavy users of travel and tourism products and

services. Interactive media call for interactive marketing. The essence of

interactive marketing is the use of information from the customer rather than

about the customer. It differs from traditional marketing since it is based on

a dialogue instead of one-way communication and it deals with individual

consumers instead of mass markets. According to parsons the success

factors for marketing on web are

Attracting users

Engaging users interest and participation

Retaining users and ensuring they return

Learning about user preferences

Relating back to users to provide customized interactions

Transport Sector

Transport provides the essential link between tourism origin and destination

areas and facilitates the movement of holidaymakers, business travellers,

48
people visiting friends and relatives and those undertaking educational and

health tourism. Before setting out on a journey of any kind, every traveler

makes sure which transport company has a good safety record.

To this effect airplanes coaches and even taxis in many countries with

developed tourism business, they are equipped with radio communication

systems for various uses. For e.g. the driver or the tour guide updates the

tour company headquarters about the progress of the tour throughout the

touring period. This communication ensures the safety of tourists. Fast and

easy information flow is of paramount importance to build confidence in the

traveling public. In recent years, the confidence built due to use of modern

IT has been demonstrated by a tremendous increase in the number of

travelers worldwide.

Foreign Tourist Arrivals (FTAs)

During 2011 FTAs in India were 6.31 million with a growth of 9.2% over

2010. FTAs during 2012 were 6.65 (provisional) million with a growth of

5.4%, as compared to the FTAs of 6.31 million during 2011.

Foreign Exchange Earnings (FEE) from Tourism

Tourism is an important sector of Indian economy and contributes

substantially in the country‘s Foreign Exchange Earnings. FEEs from

tourism, in rupee terms, during 2011 was Rs.77,591crore (provisional), with

a growth of 19.6%, as compared to the FEEs of Rs.64,889 crore

(provisional) during 2010.

During 2012, the Foreign Exchange Earnings (FEEs) from tourism

registered a growth of 21.8% from Rs.77,591 to Rs.94,487

49
crore(provisional) when compared to FEEs during 2011. A statement giving

FTAs in India and FEEs from tourism fro the years 2000 to 2012 is given

below:

Figure no 4

Domestic Tourism

The domestic tourist visits during the year 2011 are estimated to be 851

million, showing a growth of 13.8% over 2010.

Visa on Arrival (VoA)

Considering the importance of Visa facilities in enhancing tourist inflow, the

facility of Long Term Tourist Visas‟ of five years duration with multiple

entry, carrying a stipulation of 90 days for each visit, has been introduced on

a pilot basis for the nationals of the 18 selected countries.

50
The findings of an evaluation study conducted by this Ministry have

reinforced the belief that the presence of the facility of ―Visa on Arrival‖

(VoA) significantly influences the tourists‟ travel plans to any country.

During 2012, a total number of 16,084 VoAs (Visa on Arrival) were issued

as compared to 12,761 VoAs during the corresponding period of 2011,

thereby showing a growth of 26%. Efforts are on to extend the VoA facility

for the nationals of more countries.

Publicity And Marketing Strategy

As part of its domestic and global publicity and marketing strategy to

promote tourism and create social awareness through the print and electronic

media, the Ministry of Tourism launched campaigns on Clean India,

AtithiDevoBhava and Hunar Se Rozgaar through radio channels. Campaigns

highlighting the tourism potential of North-East and J&K were also carried

out through Doordarshan. Campaigns were also taken up for ―Incredible

India‖ branding on TV during 2nd Formula Grand Prix and London

Olympics, 2012, during the International Film Festival of India (IFFI) held

in Goa, and during the International India Film Academy (IIFA) Awards

2012 in Singapore.

The Ministry had participated in major international Travel Fairs and

Exhibitions in important tourist generating markets the world over, as well

as in emerging and potential markets, to showcase and promote the tourism

products of the country. These included Arabian Travel Market (ATM) in

Dubai, International Trade Business (ITB-Asia) in Singapore, World Travel

51
Market (WTM) in London, International Meetings Exhibitions (IMEX) in

Frankfurt, International Tourism Trade Fair (FITUR) in Madrid, etc.

To showcase and project the Buddhist Heritage of India, an International

Buddhist Conclave was organized by the Ministry of Tourism in Varanasi in

September 2012 and attended by 132 international delegates from around 30

countries. The delegates were taken for a visit to Sarnath and Bodh Gaya.

For the first time, an International Tourism Mart was held at Guwahati in

January, 2013 to showcase the largely untapped tourism potential of the

north-Eastern region in the domestic and international markets.79

International Buyers and media delegates from 23 countries and hundreds of

tour operators from different parts of India participated in the Mart and

engaged in one-to-one meetings with sellers from the North East Region and

West Bengal. The international delegates were taken on Familiarization

Tours of the North Eastern Region.

Niche Tourism Products

The Ministry of Tourism has also taken the initiative of identifying,

diversifying, developing and promoting the nascent/upcoming niche

products of the tourism industry. This is done in order to overcome the

aspect of „seasonality‟ to promote India as a 365 days destination, attract

tourists with specific interests and to ensure repeat visits for the products in

which India has comparative advantage. Accordingly, the following Niche

Products have been identified by the Ministry of Tourism for development

and Promotion:

52
 Cruise

Adventure

Medical

Wellness

Golf

Polo

Meetings Incentives Conferences and Exhibitions (MICE)

Eco- Tourism

Film Tourism

Cruise Tourism

“Cruise Shipping is one of the most dynamic and fastest growing

components of the leisure industry worldwide. India with its vast and

beautiful coastline, virgin forests and undisturbed idyllic islands, rich

historical and cultural heritage, can emerge as an attractive tourist

destination for cruise tourists.

Central financial assistance for Cruise Tourism project of Rs. 1450.00 lakh

was sanctioned by the Ministry of Tourism for development of Tourism

Infrastructure in Willing Island, Cochin Port, during the year 2008-09. An

amount of Rs. 491.53 lakh had been sanctioned and Rs. 245.77 lakh released

during 2011-12 to Cochin Port Trust for the development of Cruise

Passenger facilitation center at Cochin Port.

53
 Adventure Tourism

Adventure tourism involves travel to remote, exotic areas, for exploration as

for undertaking activities, which test the endurance of both a person and his

equipment. Adventure tourism is rapidly growing in popularity as tourists

seek different kinds of vacations. Central Financial Assistance is being

extended to State Governments/Union Territory Administrations for

development of tourism infrastructure in destinations including adventure

tourism destinations. These include facilities for trekking, rock climbing,

mountaineering, aero-sports, winter/water related sports, trekker huts,

wildlife viewing facilities, etc. Financial assistance to State Governments is

also provided for the purchase of water sports equipments consisting of

kayaks, canoes, paddleboats, fibre glass boats, hovercrafts, water scooters,

etc. This year, the Ministry of Tourism has sanctioned an amount of

Rs.220.76 lakh to the Indian Institute of Skiing & Mountaineering; Gulmarg

(IISM) for conduct of adventure courses as follows:

Figure no. 5

54
 Medical Tourism

Medical tourism (also called medical travel, health tourism or global

healthcare) is a term used to describe the rapidly-growing practice of

traveling across international borders to obtain health care. Services

typically sought by travelers include elective procedures as well as complex

specialized surgeries such as joint replacement (knee/hip), cardiac surgery,

dental surgery, and cosmetic surgeries. Besides India, there are several

Asian destinations like Singapore, Malaysia and Thailand that are offering

Medical care facilities and promoting medical tourism. India excels among

them for the following reasons: -

State of the Art Medical facilities

Reputed health care professionals

Quality nursing facilities

No waiting time for availing the medical services

India‘s traditional healthcare therapies like Ayurveda and Yoga combined

with allopathic treatment provide holistic wellness. Financial support as per

guidelines and availability of funds under the Market Development

Assistance Scheme (MDA) is provided to following approved Medical

Tourism Service Providers:

Representatives of Hospitals accredited by Joint Commission

International (JCI) and the National Accreditation Board of

Hospitals and Healthcare Services (NABH).

Medical Tourism facilitators (travel agents/tour operators) approved

by Ministry of Tourism, Government of India.

55
 Wellness Tourism

Wellness Tourism is about traveling for the primary purpose of achieving,

promoting or maintaining maximum health and a sense of well-being.

Health Tourism holds immense potential for India. The Indian systems of

medicine, that is Ayurveda, Yoga, Panchakarma, Rejuvenation Therapy,

etc., are among the most ancient systems of medical treatment, in the world.

India can provide medical and health care of international standard at

comparatively low cost. Most of the hotels/resorts are coming up with

Ayurveda Centres. The leading tour operators have included Ayurveda in

their brochures.

Wellness Tourism is about traveling for the primary purpose of achieving,

promoting or maintaining maximum health and a sense of well-being.

Health Tourism holds immense potential for India. The Indian systems of

medicine, that is Ayurveda, Yoga, Panchakarma, Rejuvenation Therapy,

etc., are among the most ancient systems of medical treatment, in the world.

India can provide medical and health care of international standard at

comparatively low cost. Most of the hotels/resorts are coming up with

Ayurveda Centres. The leading tour operators have included Ayurveda in

their brochures.

Golf Tourism

Sports Tourism in India is gaining interest. One of the latest trends in golf

tourism is the fact that there has been a recent surge in the interest levels

amongst youth the world over. India has several golf courses of international

56
standards. Further, golf events held in India also attract domestic and

international tourists.

Recognizing this potential to develop Golf as a niche tourism product for

attracting both international and domestic tourists, the Ministry of Tourism

had organized a one day Workshop on ―Promotion of Golf Tourism‖ on 21

January 2011. The objective of this workshop was to evolve a road map for

formulating strategies for development and promotion of golf tourism in

India.

Polo Tourism

India has rich historical ties with many of the sporting traditions including

Polo. The game of Polo originated in India and India is one of the few

countries in the world where this game is still preserved and practiced. The

Kolkata Polo Club is the oldest Polo club in the world and is 150 years old.

Therefore, Polo can rightly be termed as ―Heritage Sports‖ of India.

The Ministry of Tourism had sanctioned an amount of Rs.5 Lakh to the

Government of Manipur for organizing the 6th International Polo Festival

2012, held at Imphal from 22-29 November, 2012, coinciding with the

Sangai festival.

Meetings Incentives Conferences and Exhibitions (MICE)

In order to promote India more effectively as a convention destination, the

travel industry had, under the patronage of the Ministry of Tourism, set up

the India Convention Promotion Bureau (ICPB) in 1988, a non-profit

57
organization, with members comprising of national airlines, hotels, travel

agents, tour operators, tourist transport operators, conference organizers, etc.

The important objectives of ICPB are as under:

To promote India as a venue for International Congresses and

Conventions.

To undertake a continuing programme of creating awareness of the role

and benefits of Congress and Conventions in the context of national

objectives.

To undertake research on the international conference market for

development of India‟ s conference industry.

To diffuse knowledge to conference industry personnel through

educational programmes, seminars, group discussions, courses of study

and exchange of visits with India Associations/Organizations.

Eco-Tourism

Eco-tourism means making as little environmental impact as possible and

helping to sustain the indigenous populace, thereby encouraging the

preservation of wildlife and habitats when visiting a place. This is

responsible form of tourism and tourism development, which encourages

going back to natural products in every aspect of life. It is also the key to

sustainable ecological development.Eco-tourism focuses on local cultures,

wilderness adventures, volunteering, personal growth and learning new ways

to live on our vulnerable planet. It is considered the fastest growing market

in the tourism industry, according to the World Tourism Organization with

an annual growth rate of 5% worldwide and representing 6% of the world

58
Gross Domestic Product, 11.4% of all consumer spending.Eco- Tourism in

India is still at a very nascent stage, but there are conscious efforts to save

the fragile Himalayan Eco System and culture and heritage of the indigenous

people, which is probably the largest concentration in the world.

Film Tourism

The Ministry of Tourism has recognized films as powerful tool for the

development and promotion of destinations under Niche Tourism Product.

The Ministry of Tourism has taken following steps to promote Film Tourism

in the country:

Signing of a Memorandum of Understanding with the Ministry of

Information and Broadcasting in 2012;

Joint participation with the Ministry of Information and Broadcasting in

the Cannes Film Festival and Market, International Film Festival of

India (IFFI, Goa), and European Film Market, Berlin;

Institution of a National Tourism Award in 2012 in the category ―Most

Film Promotion Friendly State/UT‖ to encourage the State Governments

and Union Territories to facilitate filming in their region;

The Ministry of Tourism has formulated guidelines for extending

financial support to State Governments/Union Territory Administrations

for promotion of Film Tourism. As per these guidelines, Central

Financial Assistance of Rs.2 lakh per film will be given to each of the

State Governments/UT Administrations during each financial year.

59
 Conclusion

To sum up, Indian tourism has vast potential for generating employment and

earning large sums of foreign exchange besides giving a flip to the country‘s

overall economic and social development. Much has been achieved by way

of increasing air seat capacity, increasing trains and railway connectivity to

important tourist destinations, four-laning of roads connecting important

tourist centers and increasing availability of accommodation by adding

heritage hotels to the hotel industry and encouraging paying guest

accommodation. But much more remains to be done. Since tourism is a

multi-dimensional activity, and basically a service industry, it would be

necessary that all wings of the Central and State governments, private sector

and voluntary organizations become active partners in the endeavour to

attain sustainable growth in tourism if India is to become a world player

inthe tourist industry. India the second largest tourism market in Asia after

China, the country was also ranked in the twenty fastest-growing tourism

destinations worldwide by the World Travel and Tourism Council. Placed

eleventh in the list, the direct contribution of travel and tourism to GDP in

India is expected to grow an average of 6.4 percent annually between 2014

and 2024. In 2013, there were 6.85 million international tourist arrivals in

India. This was a large increase from the 2.65 million seen just 13 years

earlier in 2000. The largest source market for visitors to India was the

United States, followed by the United Kingdom. Outbound travel from India

is also on the rise: approximately 860 thousand Indian nationals traveled to

the U.S. in 201

60
 Chapter 6

Adventure Tourism

Adventure travelers often seek unique or new travel destinations and activities.

It is often believed that a percentage of this sector is willing to accept limited

tourism infrastructure with the promise of an exceptional, authentic experience.

Given their penchant for exploring new destinations and seeking new

experiences they are frequently coveted by emerging destinations at the early

stages of tourism development and also in more mature destinations that have

protected and/or developed appropriate product.

Although adventure tourism is recognized as an important, growing tourism

segment, primary research to quantify the size and scope of this market in the

U.S. or internationally (Schneider 2006) has been lacking. For this reason,

George Washington University, along with its partners, the Adventure Travel

Trade Association (ATTA) and Xola Consulting, sought to better understand the

adventure traveler. This study‘s focus area was limited to three major markets:

Europe, Latin Americaand North America, which comprise 70% of overall

international departures, according to the UNWTO.

The study focused on previous (actual) and anticipated (intended) travel

behavior, as well as psychographic and demographic information. This report

provides a detailed examination of adventure travelers in these three areas,

including: number of travelers, spending, and a snapshot of predicted future

trends. The information in this report may provide guidance for destination

management organizations and firms involved in marketing as well as product

development. It may be especially useful to destination management

61
organizations or state/regional tourism offices seeking to build or enhance their

adventure offerings or adventure tourism operators seeking to understand their

target market.

Methodology

This study of the adventure travel market was conducted in late 2009.

Adventure travel is an inherently subjective activity: what is adventure to

one person may not be to another. Therefore, for the purpose of this study, a

broad definition of adventure tourism was adopted: any domestic or

international trip that includes at least two of the following three aspects:

physical activity, interaction with nature and cultural learning or exchange.

Respondents were provided with a list of possible activities. They were

asked to choose what activities they had participated in. These activities

were categorized into either hard or soft adventure activities or ―other‖

tourism activities. This use of this classification system is based on

previously established research in this field. This categorization has its

foundation in academic literature and has been confirmed by previous

surveys of consumers.

Utilizing an on-line survey instrument, zoomerang.com, the survey was sent

to a representative sample of residents. The survey was completed by 855

respondents in six countries, in the following three regions: Europe, North

America and Latin America, representing about 73% of global expenditures

or 68.7% of international departures (UNWTO, 2009). Respondents choice

of activity were separated as ―hard‖ or ―soft‖ adventure building.

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Adventure Travel Expenditures

Adventure travel is resilient and is trending upwards even in difficult

economic times;

Adventure is expanding into a broader range of activities;

The ―soft‖ adventurer spends the most per trip, (excluding airfare);

The value of the global adventure market is $89billion;

All adventure travelers spend significant amounts of money on

equipment & apparel pre-trip.

Behaviors, Psychographics and Demographics

Adventure travelers are equally likely to be single or married, and male

or female. The majority are between 35-47 years old. Industry followers

familiar with research from the Adventure Travel Trade Association may

expect a higher percentage of baby boomer travelers. However, this

study reflects not only consumers of tours but adventure travelers in

general; it includes people who organize their own trips and therefore

more likely to be younger with more time to plan.

After ―local newspapers,‖ the most widely read publication by adventure

travelers in North America was People Magazine, followed by National

Geographic.

Compared to ―other travelers,‖ adventure travelers place importance on

exploring new places and meeting and engaging with local cultures

while on vacation; this confirms earlier research by ATTA which found

that travelers were craving more cultural interaction on trips (ATTA,

2006).
63
 Compared to other forms of pre-trip research, the majority of adventure

travelers (35%) conduct research online, but they also consult friends

and family.

Profile of Respondents

Who are adventure travelers? They are fairly evenly split male to female,

even within in category of ―hard‖ adventure sports. Soft adventurers skew

slightly more female, but not as much as other types of travelers who are

predominantly female (62.3%). The average age of an adventure traveler is

35 (again, this may seem low from the perspective of adventure travel tour

operators, however, this number reflects the overall adventure traveler, not

just consumers of tours), slightly younger than the ―other‖ traveler who is on

average 42.Adventure travelers are more likely to be single or married; less

than 10% are divorced or separated. They are also more highly educated

than other types of travelers, with 70% of hard adventures having

postsecondary education and 63% of soft adventurers having post-secondary

education. 47% of other travelers have a two year degree or higher.

Considering these demographic trends, it is unsurprising that adventure

travelers also have higher levels of household income.

Figure no. 6

64
Interestingly, while many hard adventure travelers clearly view international

travel as important (75% have valid passports), among soft adventure

travelers, only 56.5% have valid passports. From this we can theorize that

among soft adventurers, many are engaging in activities domestically. The

table below shows the percentage of adventure travelers who hold valid

passports.

Size of Adventure Market

In the past, the definition of what constitutes an adventure trip or adventure

travel has been ill-defined; with influential and respectable entities

disagreeing on what to include or exclude in the definition. This study‘s

definition is based on past literature that classified specific activities into

two segments: hard adventure and soft adventure. In certain instances, they

have been combined in ―all adventure.‖

The central question is — how many people are taking adventure trips?

Applying a strict definition based on activities done while on vacation,

allows an answer to this question to emerge.

Hard Adventure

Hard adventure includes trekking, climbing (mountain, rock and ice) and

caving. These activities are high risk and require a high level of specialized

skill. Unsurprisingly, these represented small percentages of the population

but still uncovered a sizable market. The trend over the past three years

65
indicates that the number of hard adventure trips has held steady, at around

2% of the population. However, respondents in Latin America and Europe

indicated that they intended to take a hard adventure trip for their next

vacation. In North America, the trend was opposite, and the percent of

people expressing the intention to take a hard adventure vacation dipped

slightly.

Soft Adventure

The number of soft adventure departures represents a substantial percentage

of trips worldwide. Interestingly, compared to North Americans and

Europeans, Latin Americans are taking the most adventure trips at 35% of

total outbound travelers. On average, 25% of international trips taken from

all three regions are soft adventure trips. Soft adventurers are an important

market for destinations, gear companies and tour operators. They are more

likely to try different activities and destinations than hard adventurers. They

are also more likely to respond to targeted marketing.

In all three regions — Latin America, North America and Europe — soft

adventure increased steadily over the traveler‘s past three trips and

continued to do so with future travel intentions. Around 43% of Europeans

indicated that for their next vacation they would take a soft adventure trips.

66
 Adventure Activities (Risk/Satisfaction)

Adventure, by definition, involves an element of risk. Past literature on

adventure travel has suggested that location can be an indicator of adventure

based on the perceived or real riskiness involved in that place. However, this

survey finds that the perceived level of risk associated with the activity

performed while on vacation is much more significant to travelers.

Adventure travelers rated the level of risk associated with their activities

higher than other types of tourists, but did not extend this assessment of risk

to their destinations. Perhaps adventure travelers are aware of the safety of

their activities but less sensitive to destination safety; this is an area for

further research.

Implications for Marketers

Findings indicate that adventure travel is diffusing in the market. More

people, who in the past chose to engage in other types of travel, are

indicating that on their next trip they will be more adventurous in their

activity and destination choice. Product developers and marketers should

capitalize on these dreamers and create soft options to ease them into the

world of adventure travel. This will mean catering to their trip length and

expectations at the destination. Marketers should also appeal more to

mainstream travelers, and advertise or generate editorial coverage in

publications such as People Magazine.

67
Adventure travelers are early adopters: they are more likely to go to a new

destination or try new products before most people. But they still take their

cues from sources such as magazines, tour operators or even social media

blogs and networks. However, messages need to be specific and speak to

what this market is truly seeking: meaningful connections with the place and

authenticity. These messages can be placed where travelers least expect

them — at their yoga studios and their organic supermarkets.

One example comes from Thai tourism, which has disseminated tourism

brochures throughout many Thai restaurants in the U.S. Destinations and

operators may consider putting more effort into press FAM trips. Reading

story in a magazine or newspaper produces higher engagement than

traditional advertising print media. Online ads can be targeted more

effectively, however some research (eMarketer.com) suggests that online

users are beginning to ignore them, so choose the forum carefully.

Figure no. 7
As for seasoned adventure travelers, they are passionate about and dedicated

to this mode of travel. They are always searching for new destinations and

value online reviews or comments (even by strangers) and the opinions of

friends and family. They often use official websites. Destinations and
68
operators should invest in understanding keywords and optimizing their sites

for searches in the key engines. Ensuring that a website is findable in all

languages that travelers may be searching in is an important consideration.

Segmentation

There are many ways to segment the adventure travel market. Recognizing

increasing specialization in the tourism industry along with the shared values

of adventure travelers, many industry players have moved to a

psychographic segmentation approach. This means organizing adventure

travelers by their specialized interests such as kayakers or birdwatchers.

From there, specific marketing tactics can be developed with the addition of

demographic segmentation. From a demographic perspective, there are two

main categories of adventure travelers:

The younger generations, GenY (people aged between 18 and 30) and

GenX (people aged between 31 and 44). These people have often

traveled throughout their youth, studied abroad during college and are

adept at navigating the Internet to find good deals and new destinations.

This segment can further be broken down into two groups that are of

interest to the adventure tourism industry:

High disposable income, time poor.This group is already in the

workforce and has a limited amount of vacation time each year. They

will seek to fill as much as possible into their vacation time, often

splurging on what they view as once in-a-lifetime opportunities, such as

hiking Mt. Kilimanjaro. This group is more likely to book through a tour
69
operator. They are mostly likely reached through social media —

destinations and companies should monitor the online conversations

taking place around their brands to capitalize on this trend.

Smaller budget, extensive time.This group engages with the

communities and places they go. Many young people take the

opportunity to travel for an extensive period of time after two or three

years in the workforce. With low budgets and big dreams, they travel

deeply in the communities they visit. Seeking authentic experiences,

they are more likely to go trekking or take long train journeys, such as

the cross-Siberian railway. Budget and value will be the key selling

points for this group, although sustainability/responsibility plays a

surprisingly high role in decision-making.

The ―baby boomer‖ (people aged between 45 and 64) adventure traveler

is frequently awakening (or re-awakening) to the adventure travel

experience later in life. Many find themselves with extra time and money

as their children have moved from the house or they enter retirement

with good health and a curiosity to do things they couldn‘t during their

working years. They have large budgets and value adventures combined

with a cultural experience. They also book through tour operators and

ma take two to three international trips a year. Increasingly, they are

bringing grandchildren along. This group is inspired by their reading

material, television series (Survivor, Amazing Race) and especially

stories from friends and families. Offering something unique and

difficult to attain will be key with this group. ―Experience‖ and

―authenticity‖ are keywords/concepts that resonate with this group.

70
 Conclusion

The findings of this study support the notion that adventure travelers

represent a significant, growing market. This research indicates that the

value of the global adventure market is $89 billion. Adventure tourism does

not appear to be a trend specific to any one geographic area, as the results

indicate similar findings in North America, Europe and Latin America,

where increasingly, travelers continue to explore deeper into communities

and seek to connect with nature. Even in the midst of growth, we found

some adventure travelers do not hold valid passports and are not necessarily

traveling farther from home to get an adventure experience.

Various trends around adventure tourism are positive: more people intend to

take adventure trips and these people intend to spend more than they have on

their previous vacation. Adventure travelers are specialty travelers and thus

spend more than the average traveler on a trip.

Destinations and marketers should position their marketing and branding to

attract this growing and lucrative segment. Product development and

branding should speak to their desire to have natural, cultural and active

experiences, and to engage more deeply with local communities.

We encourage marketers to also focus on the ―Other Travel‖ market, which

is moving towards more adventurous travel. They may return to the same

countries that they have previously visited on a less adventurous vacation,

but this time try more adventurous activities (safaris, visiting cultural sites).

This market offers tour operators the opportunity to re-position themselves

to the market. Engage in niche marketing or develop cross marketing

71
between tour operators, specifically targeting past clients. This also speaks

to the opportunity for adventure operators to partner with mass tourism

outlets such as resorts, hotels, cruise lines to offer smaller day trips to entice

travelers with something interesting and outside the bubble. Key

characteristics for this group will be shorter trips, perception of safety, and

unusual opportunities.

Interestingly, over the course of their past three trips, respondents have

participated in the same type of activities on their vacations. They indicate

that they intend and desire to become more adventurous, but it remains to be

seen if they will in fact select a more adventurous option when it comes time

to planning their next vacation. This presents an opportunity to marketers to

capitalize on these travel aspirations. This study illustrates that the adventure

market is sizable, at 26% of the traveling population. In addition to revealing

the actual size of this market, this study calls into question the often,

generally accepted industry profile of the adventure traveler. A common

assertion from within the adventure industry is that the typical adventure

traveler today is likely to be over 50, with a secure income and desire to

explore and experience new places. Based on this research and others,

however, we find the average adventure traveler age might be closer to 40,

and although these people engage in adventure activities, they might not be

paying tour operators and guides for their experiences, and hence not

recognized, or served as an important market segment by the industry.

Adventure travel operators and destinations may use this information to

consider domestic and regional market potential. During the current

economic situation, the cost of an international flight may make travel cost

72
prohibitive to some people, thus domestic or regional, closer to home

adventure travel may provide an attractive alternative for many and also

provide as an introduction to an experience they may want to try abroad in

the future.

Destinations may wish to also consider how the adventure traveler is

defined. People who engage in a broad variety of activities consider

themselves to be adventure travelers even if they are not participating in

adventure activities each day of their trip. For many countries, the size of

this market is probably more significant than currently estimated.

Overall, this piece of research provides further insight into the size and

shape of the adventure travel industry. The findings support the notion that

the adventure travel market constitutes an important, contributive, growing

niche within the economic powerhouse that is travel and tourism.

Adventure tourism involves visiting a region almost unaffected by human

impact, with specific features for engaging in risky sports that require

physical effort relatively high performance and greater risk taking.

Adventure travel is associated with that tourists could discover new things.

Therefore, they did travel the world to be so large that it knows the existence

of other people, to discover continents, peoples. In a journey the tourist

knows he is willing to maximum responsiveness, has around strangers, new

places and begin to analyze, observe everything to teach and protect, so

travel is a form of knowledge, complicity and transparency. It is a method of

self-recovery, reconciliation and restoration, learning and accumulation.

73
 Chapter 7

Internet Usage, Online Travel Industry In India, Key Success Factors

When Applying E-Commerce To Travel Industry

7.1 Internet Usage In India

7.2 Scenario Of Online Travel Industry In India

7.3 Key Success Factors When Applying E-Commerce To The Travel

Industry

7.4 Traveler‘s Trip Planning Behavior

7.5 The Future Of E-Commerce In Travel

7.6 The Effect Of E-Commerce In Travel

7.7 E-Commerce In Airline Business

7.8 E-Commerce‘s Impact On The Travel Agency Industry

7.9 Information Technology In The Tourism And Travel Industry

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 Chapter 7

Internet Usage, Online Travel Industry In India, Key Success Factors

When Applying E-Commerce To Travel Industry

7.1 Internet Usage In India

The latest round of I-Cube, a research conducted by IAMAI and IMRB

International in June 2013, indicates that the Internet usage in India has gone up

with more and more Internet Users using the Internet on a regular basis. In

June2013, India had 190 Million Internet Users. Of this 130 Million belonged to

Urban India and the rest 60 Million were from Rural India. In October, the

number of internet users reached 205 Million and is estimated to reach 213

Million by December 2013. The number of internet users in urban India is 137

Million in October 2013 and is estimated to touch 141 Million by December

2013. In Rural India, there are 68 Million Internet users in October 2013 and

will reach 72 Million by December 2013. Mobile Internet, too, has garnered a

huge base among the Active Internet Users. In India, there were 91 Million

users accessing the Internet on Mobile devices in June. In Urban India, there

were 70.2 Million Mobile Internet users in June 2013. This number rose to 85

Million in October and is estimated grow by 47% and reach 103 Million by

December 2013. Rural India is not that far behind in this regard with a base of

21 Million Mobile Internet Users in June 2013. It reached 25 Million in October

2013 and will touch 27 Million by December 2013.

75
Purpose Of The Internet Access In Urban India

Of all the Active Internet Users surveyed, it has emerged that for close to 90%

of the respondents the prime use of Internet is Online Communication and under

this e-mail communication commands the lion‘s share of 78%. Social use the

Internet for Entertainment. Apart from Networking continues to be the rage with

75% of the users engaging in it actively. 69% now listening to songs and

watching videos online, sizeable numbers are downloading mobile VAS. Online

shopping has also picked up in a big way. Every second active internet user

claims to have bought something or the other over the Internet.

Figure no. 8
Purpose Of The Internet Access In Rural India

For the Rural Active Internet User, Entertainment is observed to be the main

purpose of Internet access and a huge 84% of them have used it primarily for

entertainment. Majority of the users like to access Music/ Videos/ Photos and

Movies for Entertainment. This is followed by downloads of various Mobile

Value Added Services as a source of entertainment. Online Communication is

76
observed to be the second most important purpose of accessing internet for

Rural India. Within the Online Communication category, E-mail continues to be

the most important reason for using the Internet with 43% using it. Number of

users engaging in text chat has also gone up significantly compared to last year

and is used by 22% of them. Compared to last year, the awareness levels of

Online Services and Social Networking is observed to be higher in 2013. The

usage also subsequently has increased over 2012 with 62% and 52% of them

having used Online Services and Social Networking respectively. Further, over

half of the rural population is observed accessing Internet for social networking

purpose. Also, maintaining last year‘s trend, most of the users are seen availing

online services related to job search on the Internet. This is followed by online

news. Although the awareness of e-commerce is moderate, we do not see much

usage primarily because of lack of knowledge. Although a low overall share,

Railway Ticket Booking is the most performed activity when it comes to Online

Shopping, which has also seen a significant growth over the last year. With a

very low awareness level, Online Transaction is still an area about which the

population needs to be educated. Thus, even though there is awareness, there is

a pressing need to educate and inform the user of the benefits of the internet

services to drive growth in internet usage

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 Figure no. 9
7.2 Scenario Of Online Travel Industry In India

The report begins with an introduction to the e-commerce market in India and

offers information regarding the market size and growth. It also gives a break-up

of the revenue for the e-commerce market. It goes on to explain the market

structure of the e-commerce market and also provides an overview of the factors

which drive this market. In the market overview section the structure of the

online travel market is explained. Market size, growth and the break-up of the

revenue generated is also provided for the online travel market. Increasing share

of online travel market as well as the prevailing commission structure has been

highlighted. Porter's five forces analysis gives an overall picture of the online

travel industry and helps to understand the major influencers. The business

model explains the role of global distribution systems and their role in the online

travel industry. This section also explains the various incentives provided by the

OTA's to attract more customers and the operational edge OTAs have over the

traditional tour operators. Drivers include factors such as proliferation of the

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internet, especially broadband, which has increased online traffic considerably.

Rising disposable income has also acted as a driver for online travel portals.

Indian railways online portal has proved to be extremely efficient and user

friendly, instilling confidence among people to book tickets online. Other

drivers identified include rise in low cost airlines, which has paved a way to

travel by air for the large middle class segment in India thus increasing traffic to

these online portals. Secure payment mechanisms have given people the desired

confidence to carry out transactions online. On the other hand tremendous rise

in medical tourism has led to influx of foreign travelers to India which again

gives rise to increased traffic. Challenges identified include stiff competition

coupled with low margin and high operating costs which has caused profit

margins to shrink. In addition, limited awareness about portals adds to the woes.

Trends identified are emergence of value added services among various OTAs

including discount vouchers to woo customers and gather a large market share.

Emergence of corporate packages is another trend identified. Many OTAs are

following a hybrid model constituting online and offline stores to penetrate the

market even further. OTAs are also moving towards better technology so as to

cater to the increased traffic and offer a user-friendly experience to its clients.

They are also becoming more responsible and addressing customer queries and

complaints swiftly through social media interfaces. It has been identified that

OTAs are also a means of information verification and cross checking among

customers. One more trend identified includes an increase in PE/VC

investments in this sector.

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Figure no. 10

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7.3 Key Success Factors When Applying E-Commerce To The

Travel Industry

As the Internet has developed, more and more consumers can now find travel

information or even purchase travel through the Internet due to its convenience

and capacity for huge information, and this has led to many traditional travel

agencies introducing e-commerce. The companies can combine technology and

the characteristics of the travel industry well, and can make the best of the

Internet and handle their relationship with consumers precisely, effectively

enhancing the advantage of competition. However, travel agencies face large-

scale key success factors when developing e-commerce for the travel industry,

which means the agencies can‘t focus on the important things, and this can

cause disorder and inefficiency. Therefore, these key success factors should be

classified in a proper way and an index of these factors should be established

according to their importance. These can be referred to when a company draws

up a plan, helping the company allocate their resources rationally, enabling them

to meet their consumers‘ demands efficiently and increase profits. Nine key

success factors for e-commerce in the travel industry, including enterprise

culture, e-commerce team, increasing customer value, internal processes,

information appliance, product planning, supplier system, website content

planning, and physical and virtual channels.

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7.4 Traveler’s Trip Planning Behavior

Travel provides people with an escape from their everyday life. In fact, this

notion of escape is a need of travelers that is continually revealed. A German

research project asked about vacation motives. The answer ―to relax‖ was given

by 71.7 percent of respondent and ―to escape from daily routines‖ was stated by

66.9 percent. In addition, a Canadian study found that one of three common

factors motivating travel was ―the need to escape, followed by ―To experience

new and different cultures‖ and ―jetsetting, prestige seeking.‖ The big question

is how are the goals that consumers want to achieve from their travels translated

into decision-making? With tourism being a highly competitive industry,

product differentiation that can offer travelers the experience they have longed

for is a key factor. There is very little differentiation in the actual travel product

– the offerings of tour operators, travel agents and other travel professionals can

often be interchangeable So, the key is to hit on some psychological need or

motivator that sets a particular product offering apart, i.e. added psychological

value. Many travel professionals may think, rightly so, that making a trip as

luxurious as possible is the way to the travelers‘ heart. Adding value is

something that travel professionals are always striving to do in order to gain a

competitive advantage. A more luxurious hotel, first-class airfare, private dining

options are all value-added options that consumers are offered on a regular

basis. In many cases, this strategy can be very successful. The Psychology of

Travel takes a look at general consumer behavior and how that affects peoples

desire to travel. The area of consumer behavior is highly researched and studied

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as marketers continually review consumer behavior and how it affects purchase

decisions.

The actual psychology behind consumer behavior is based on several factors –

ego involvement, loyalty and commitment, family decision-making, influence of

friends and relatives and novelty seeking. All of these factors have been studied

by psychologists to better understand the forces behind these behaviors.

Ego Involvement

The largest portion of psychological research on travel and tourism is in the area

of ego Involvement. As stated in an earlier section, tourists are often highly

involved in the decisions surrounding their travel experiences. With today‘s

access to information, the industry is facing arguably the most informed

consumers ever. Acquiring knowledge and being an active participant is an ego

boost for consumers. They want the product providers to know that they are

smart, informed and will not be sold something that they do not want. One great

example which most tour operators, tour suppliers and destinations are keenly

aware is the rise in travel planning and booking over the Internet. Sites like

Expedia, Travelocity and others have placed the product out there –at often

incredible prices –and put the consumer in control. Often times this even turns

into gamesmanship among the traveling public. Consumers are interested in the

price that others paid for the same flight, hotel room, cruise and will compare

the deal they got to those of their fellow travelers –priding themselves on

finding the better price or vowing to do more research and get a better deal the

next time. One can see that the majority of consumers not only think of

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themselves as well informed and in charge their life, they also believe they are

smarter than most other people. This is a huge psychological consideration when

working with and selling to these consumers. Their ego and belief in their own

instincts and intelligence is very important –and very high! This should not be

compromised or depleted by the travel professional‘s treatment of them as an

informed consumer.

Loyalty and Commitment

Price loyalty, in many respects, is replacing brand loyalty. Consumers want to

participate in the creation of product, no longer a ―one size fits all‖ world. They

also want to turn existing brands into their own and control the transaction. All

of this has been influenced by the amount of information supplied today via the

Internet. In the travel industry, loyalty clubs such as frequent flyer/traveler

programs are designed to create this commitment from consumers. This is

related to the above statement of price loyalty replacing brand. Consumers will

go with the best deal, not necessarily the same airline, hotel or tour operator they

used last time. Therefore, companies attempt to hold customers by making it too

expensive for them to switch. For example, if a traveler earns points or rewards

by staying at a particular hotel or traveling with a certain company, a price

difference of $50 or $100 is not enough to lose the perceived value they have

within the rewards program. Therefore, the company keeps the consumer not so

much for the loyalty to their brand but more to the rewards the consumer will

ultimately receive. There are a number of strategies that can be employed to

obtain loyalty from consumers. As all business people know, it is cheaper to

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keep a customer than to get a new one. However, loyalty in today‘s competitive

environment is hard to come by. By studying psychological factors that play

into a consumer‘s loyalty and commitment to a company and its product,

programs to garner that loyalty have a better chance of succeeding. Everyone is

very aware of the rewards programs developed by airlines and hotels. However,

tour operators could consider similar loyalty programs. Rewarding repeat

travelers with discounts or a points system whereby the traveler can earn points

toward extra amenities or prizes like digital cameras, travel books, etc. can be as

effective as expensive mailings or other marketing campaigns designed to retain

customers. While many tour suppliers already have programs, those that do not

could follow these models to develop a loyalty program.

Friends, Family Influence

As destinations, tour operators and tour suppliers spend millions of dollars to

influence buying decisions, it is always smart to keep in mind that advice from

family or friends is a huge influencer in buying decisions. These are people who

are trusted by the consumer and, in turn, their suggestions are valued.

While most research on family decision-making as it relates to travel focuses

more on how travel brings a family together and how to make trips ―kid

friendly‖ to attract the family market, it would be smart for travel professionals

to understand that kids today have influence and more of a voice in decisions

than ever before. Therefore, studying the psychological motivators of children

and their demographic is as necessary as studying that of their parents. Not only

does a company have to be concerned with influencing the buyer directly, they

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must also overcome any objections or previous bad perceptions that any number

of friends and family members may have. However, if these influencers are

identified and considered in the equation, the company will have a better shot at

understanding the buying behavior and overcoming some obstacles.

Novelty Seeking

This aspect of consumer behavior is probably the most well known to travel

professionals. It is no shock that the search for new experiences is a key

motivator in the reason people travel. Researchers have also stated that

vacationers taking novel trips (those to places that are not familiar) seek more

advice on the destination and spend more time and money during the trip than

do travelers who take more commonplace trips. This is in an attempt to provide

information that will help tour operators design more creative itineraries and

look for unique destinations and attractions. All of this will add to the novelty of

a travel package and pique the interest of travelers, especially with the arrival of

the Baby Boomers into today‘s new senior market and the generations behind

them that have disposable income and are emerging as the new consumer. These

groups do not want to take the same vacation every year –a majority of them are

well traveled from years of family vacations and work-related activities that

have taken them to any number of destinations. Therefore, they must find

motivations in new, unique experiences.

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 What does this mean to me?

Understanding consumer behavior is one of the top jobs for all marketers. To

sell product, one must understand their consumer and what motivates them.

There are any number of factors that affect a consumer‘s decision making.

Travel professionals not only have to appeal to the ego of the consumer with a

product that makes them feel important and in control, they must also deal with

outside influencers –like friends, family, co-workers and others. Additionally,

loyalty today may be more fleeting than in the past with consumers often

looking at price over brand. With that being the case, there are ways to make

your company a bigger part of the consumer‘s life. The number one way to

accomplish this is through loyalty programs. While tour suppliers have been the

ones to really incorporate this strategy, tour operators could utilize these models

and develop a customer loyalty program that could prove to be extremely

successful.

Profile Of Leisure And Business Travellers

Leisure travellers seek travel inspiration online, anticipate more family travel,

and want to stay connected while traveling. Below graph shows the key

parameters that leisure travellers consider while selecting a travel destination.

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 Figure no. 11
When it comes to business travellers, they continue to prioritize brand sites,

price and convenience. 65% of business travellers book travel directly on brand

sites more often than via OTAs, this is a 11% increase from 2012. For business

travellers, the top three key requirements when selecting travel include:

Air travel

Price

Most convenient departure/arrival times

Fewer stops, better connections

Lodging

Price

Most convenient location

Past experience with establishment

Car Rental

Price

Past experience

Reward/travel points

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Apparently, business travellers are more inclined (compared to leisure

travellers) towards loyalty program memberships while booking their travel.

Figure no. 12
Travel Inspiration And Planning

Internet remains as a key channel for both trip inspiration and planning. In case

of trip inspiration, close connections like family/friends/colleagues take the top

spot.

Figure no. 13

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Travel review websites take the sixth and seventh place among leisure and

business travellers respectively

Figure no. 14

7.5 The Future Of E-Commerce In Travel

Many opinions were being suggested about what the future of e-commerce in

tourism sector could become in few years, greater percentage explained that the

conventional commerce may not exist anymore in couple of years because of the

recent awareness especially almost all the youth of nowadays are able operate

computer at average level and also the sound educated and informed tourists

seem to have new types of attitudes and tastes. Those mentioned are the groups

that make use of internet more thoroughly than the other groups, so therefore

with them data and information will become factors for the tourism industry just

because customers will make verdicts hinge on information and moreover

information this becomes more transparent. Reports showed that in the nearest

future the advance of information and communication technology (ICT) will

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lead to a market expansion, resulting in a change in the arrangement of the

tourism industry which will see the emanation of online tourism, destruction of

conventional travel agencies and also business alliances distributing information

and resources. Very soon, the request for diversification will be all over in the

travel tourism world and also to be noted is the personalization and

apportionment of the tourism consumer groups therefore the service-based

travel e-commerce will provide the personalized and value-added service that

could also enhance the quality of tourism distribution, which can quickly turn

tourism to emerge as a fast economic growth area in the range of national

economy. Travel e-commerce is becoming popular nowadays and still remains

the future since the internet, computer, electronic communication technologies

development are improving yearly because travel e-commerce is the only means

that participates in a commercial enterprise whose main objectives are

information publishing, electronic data exchange, online ordering, e-accounts

and online payment services regarding tourism enterprises. It remains a key

growth point in tourism economy.

7.6 The Effect Of E-Commerce In Travel

Travel e-commerce is a new method of commercial enterprises, which

practically Involves publishing, electronic data transfer, online ordering,

electronic accounts and online payment services which are related to tourism

enterprises. This kind of e-commerce has brought tremendous changes to

nations in the 21st century, and has since turned a new growth point of tourism

economy in key nations.

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Travel e-commerce application is the continuity process of logistics, customer

succession and information run in tourism-related industries, in which all

attendants have a different focus in relation to business investment and access

gain. It is also an area of e-commerce that mainly enhances internal and external

connectivity of travel associates by advanced information technology. This

equally means within different tourism establishments, suppliers and tourists, an

effective communication and purchases could be augment. Interestingly at the

same moment, the internal processes of the enterprises and knowledge

distribution could also be bolstering. Tourism e-commerce has got back in shape

after ten years of continual development, however it has seriously affected the

traditional tourism enterprises especially in the developed world, but today not

many of the traditional merchants have realized the need for internet marketing

while a high percentage still pays attention to offline advertisement modes, such

as newspaper and distribution of travel brochure to various target groups which

require a high expenditure, which has been a difficulty to the firm‘s good sales

performances. With the lack of network understanding many of the traditional

travel companies still prefer managing internal business with the usage of

manual measurement, even though a couple of the agencies recognize the

importance of network usage, it is quite preferable to many of these companies

to stay in the primary stage with limitation to easy data processing and report

processing which does not near advantages of network.

7.7 E-Commerce In Airline Business

In the business world, airlines could be the biggest winner of the Internet, or e-

commerce, with or without the involvement of a ―government.‖ This is due to

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the nature of airline business and its cost structure. An airline‘s costs usually

consist of two parts: direct operating costs and indirect operating costs. Direct

operating costs — such as aircraft, fuel, and salaries — make up about 60% of

the total cost, and indirect operating costs — such as distribution costs — about

40%. Direct operating costs are more or less ―fixed‖ and there is not much an

airline can do to cut them down. So most airlines would focus their cost-saving

efforts on reducing indirect costs. It is in this aspect that e-commerce could

potentially play an important role. A major part of an airline‘s indirect cost is its

distribution cost, and it has the following components:

Reservation system cost

Sales offices (stations) cost

Advertising and sales promotion cost

Agent fees and commissions

Ticketing fees

Traditionally, airlines pay 3-25% commissions to travel agents who sell their

tickets, in addition to spending a huge amount of money and resources on

selling and issuing tickets of their own. To reduce distribution costs, airlines

would have to turn to e-commerce, or e-distribution channels, to limit the

number of their sales offices and to reduce their dependency on Computer

Reservation Systems (CRS) and sales agents. At least in the USA, big airlines

have already been doing that. They have set up on-line sales networks, and

almost every airline‘s web site offers on-line booking functionality. Some

airlines jointly set up on-line booking sites to offer B-B, B-C, and other travel-

related services.

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Travel websites (such as Priceline) and Internet booking engines (such as

Expedia) also offer convenient on-line bookings.

Airlines sell their product at different prices. The same seat in the same airplane

can fetch different prices depending on when and where it is sold. Generally

speaking, the earlier you buy a ticket, the cheaper it is. Moreover, airline seats

are time-sensitive and perishable—seats that are not sold at time of departure

become ―spoiled‘.‘ On the other hand, seats sold too early at discount prices

may dilute revenue. In order to prevent late-coming high-yielding passengers

from buying low-fare tickets, airlines impose conditions or ―limits‖ on different

low-fare tickets depending on a number of factors, including:

Length of stay—for example, whether or not there is a Saturday-night

stay.

Advance purchase, or how early the ticket is purchased. Usually a

fourteen-day advance purchase is required in order to get a discount

ticket.

Frequent Flyer Membership status—if you fly a certain airline

frequently, you receive certain special treatment including getting free

tickets.

Alliance/Code share deals—more and more airlines have entered

―alliances‖ or are sharing their inventory over certain routes to reduce or

avoid competition.

Point of sale (POS)—the price of an air ticket differs depending on

where you purchase it.

Group price—groups usually get a discount.

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 Booking agents‘ special offers—certain travel agents get special offers

from the airline & sell these tickets at a lower price to the passengers.

These conditions change from season to season and from market to market, as

air traffic demands fluctuate from time to time and from market to market. The

fact is most airlines do not have the technology to handle all these ―conditions‖

fast enough to accommodate Internet bookings. As said earlier, airline inventory

is time-sensitive and quantity-limited. If the airline sells them too cheaply, it

loses revenue; if the fares are too high, they may remain unsold when the plane

departs. Without knowing when to sell a ticket at what price under what

conditions, an airline cannot price the tickets on line correctly.

In order to fully realize the benefit of e-commerce and to avoid the potential

revenue dilution, airlines are turning for help to new tools such as revenue

management systems and Internet distribution systems. Revenue management is

also called revenue optimization or yield management. It uses computerized

system to analyze historical booking trends and current bookings to forecast

passenger traffic demand for each flight and each market segment. In other

words, it forecasts passengers‘ willingness to pay at each price level. Based on

the forecast and given fares of the booking class, it recommends an optimal

number of seats to be allocated to each booking class in order to maximize

revenue.

Many airlines are using revenue management systems for such a purpose. But to

transmit the recommendations of the revenue management systems on-line

requires an automatic distribution mechanism. Such a mechanism should

instantly determine the flights, itineraries, prices, and number of seats to put on

the web, as well as to monitor market/competitive activities. Only under these

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circumstances would the airline be able to dynamically, optimally and

proactively price all seats in response to requests that may come at any second.

Only in this way can Internet bookings prevent revenue dilution and

tremendously save distribution costs and transaction costs, as well as generate

customer satisfaction.

Admittedly, e-commerce has the potential to change consumer behavior or

customer culture, and to bring about a commercial revolution at least in the

airline industry. But at the moment, e-commerce brings greater benefits to the

consumers than to the airlines, which explains why many airlines are reluctant

to take their business on-line. Other industries may differ from the airline

industry, and their e-commerce practitioners may not have to deal with as many

complicated factors. But it is safe to say that any industry will have its own

problems, and that the promise of the Internet is almost always mixed with

certain risks. We cannot expect e-commerce to grow as fast as the Internet age

seems to promise.

One of the risks of e-commerce is that it increases the chance of making wrong

decisions. If something goes wrong, the damage would be huge and swift. This

destructive power of technology, yet to be emphasized, has been learned by

some companies at high cost. Another risk is the impact it may have on the

existing organizations and business patterns. Once e-commerce is implemented,

the airline would have to change its business procedures, even its organizational

structures, accordingly. These changes could be painful.

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7.8 E-Commerce’s Impact On The Travel Agency Industry

The travel agency industry‘s response to E-commerce offers insight into how

other mature industries populated with small businesses will react to E-

commerce developments. In particular, industries that can complete transactions

electronically and are served by numerous small outlets share two key

characteristics of the travel agency industry. One possible example of a similar

industry would be the insurance industry.

E-commerce combined with new communication technologies, changing market

demographics, and ongoing travel industry developments, is reducing the need

for intermediaries in the distribution of travel services. E-commerce enables

travel providers to directly transact business with millions of individual travelers

who are increasingly more experienced at using the Internet and other new

communication technologies.

The traditional travel agency industry still accounts for the majority of total

travel sales. Airlines continue to acknowledge this fact that most of their ticket

revenues are generated through the travel agency channel.

In addition to distributing travel services, travel agencies provide other value-

added services such as making travel recommendations, managing corporate

travel accounts, and in general, aiding customers with a variety of issues related

to the purchase of travel services. These services are providing an increasingly

important source of fee-based revenue to offset declining airline commission

revenues. However, technology advances have begun reducing travel agencies

exclusive role in providing many of these value-added services. Online

corporate travel management programs are now duplicating services previously

provided by travel agencies. Similarly, the Internet‘s information exchange

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capabilities give travelers wide access to travel recommendations, reviews,

travel guides, and even interactive multi-media promotions of travel

destinations. One key question for these agencies to consider is whether the cost

of website development and advertising is a onetime investment, or if these

costs will remain a significant and ongoing cost of conducting business online.

With the huge amount of information on the Internet, search has become

increasingly important in traveler‘s use of internet for travel planning. Online

search engines provide the means for travelers to access travel products in a

comprehensive way. E-commerce is bringing new business opportunities to the

global travel and tourism industry. Tourism-related institutions and Internet

companies are joining to tap the potential market created by e-commerce. This

paper is an historical analysis of penetration of e-commerce in the travel and

tourism industry. The analysis identifies a number of consistent customer

experience across different channels, among airlines, and involving both

international and domestic travel in emerging economies with limited internet

access. It is argued, from this analysis, that there area number of emerging new

technologies such as mobile devices and global positioning systems which need

to be taken into account and effects systematically assessed. The paper

concludes that a major challenge facing the industry is to assess the impact of

these technologies on different aspects of the travel industry and to find out how

much value-added services they actually provide to consumers.

7.9 Information Technology In The Tourism And Travel Industry

Information is the key element in the tourism industry. Tourists want to know in

advance about the attractions and the facilities of a particular destination. The

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tourist also wants to know other related information of his/her visit to make the

same safe, secured and enjoyable. As a result, dissemination of information on

travel and tourism-related products and services are highly important. Using of

information technology to create trust between tourists and entrepreneurs,

developing e-commerce capacity, marketing, and promoting the authorities to be

the e-marketplace for tourism is the need. The most important benefit associated

with the new technologies is the supply of information. The role of ICT in

tourism industry cannot be underestimated and it is a crucial driving force in the

current information driven society.

Information technology has introduced e-commerce through the development of

the Internet and the World Wide Web. These developments have impacted both

consumer and industry behaviors in the areas of travel and tourism. Consumers

have more options regarding vacation and budget planning. 95 per cent of web

users have searched the Internet to gather travel related information. 93 per cent

visited destination web sites and nearly one half used e-mail to gather travel-

related information. Almost three- fourths of online travel buyers used search

engines prior to making their purchases. In addition to the Internet, technology

gadgets such as GPS 's, mobile phones, smart phones and hand-held devices

have improved consumers' tourism and travel experiences. Information

accessibility regarding travel, destination, bookings, payments, hotels,

attractions, and the quality of maps are areas for improvement.

Information and Communication Technologies (ICT) have affected the travel

and tourism industry for at least 50 years, particularly in the areas of automation

and networking of distribution channels. Local travel agents that used the global

distribution system have adjusted marketing strategies and expanded services in

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order to realize increased competitive advantage. Local tourism business

comprehension and utilization of the Internet has permitted increased visibility

in additional market segments. Businesses have increased services globally by

registering with online travel agents, online advertising agents, and inter-

organizational reservation systems. In addition, many businesses have

developed websites which offer planning, booking and payment services online

for added consumer convenience. Businesses that have not made use of the

Internet cannot compete and therefore they must grasp the opportunity before

they are out-competed by those that have.

Information technology has played a central role in the growth and improvement

of the travel and tourism industry. The lasting effects of technology are

improved information accessibility, a higher level of competition, and a larger

market of consumers and businesses around the globe. During the pre-

computerized time, the role of the travel agent was to advise clients on travel

destinations and to act as an intermediary in the complicated process of

arranging travel bookings. Even as late as the early 1990's, consumers booked

cruise travel and tourism through travel agents as many companies did not offer

direct bookings. There were two waves of information technology that have had

a major impact on the industry. The first of these is the development of the

direct reservation systems, such as the American Airlines SABRE system. The

second is the development of online sales channels via the Internet. Tourism still

remains the major strength of every developed and also developing nations

based on the number of employees in the sector, because without tourism sector

it would have been impossible for all other important sectors to play a key role

in the everyday development of the global market. The hotel and airline

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industries are the ones who cannot survive without the use of e-commerce in

developed nation especially because online access makes it easy for them to

deliver quickly to various customers than sticking just to the conventional

method which is only person to person mode of business since the world of

today has tremendously expanded through the medium of electronic commerce

and still growing to every continents of the planet.

E-business is the use of information and communications technologies in all

activities of a firm both internally and in relation to its outside partners. The

tourism industry consists of many companies dabbling in various activities,

ranging from tour operators to cafes and restaurants. The companies include

SMEs and the types of enterprises that comprise the tourism industry are: (1)

tour operators (2) travel agents (3) tourist guide services (4) airlines (5)

transportation (6) restaurants and cafes (7) hotels and guesthouses (8) museums

and historical sites and buildings (9) nature reserve services (10) tourism

education and training institutions; (11) local tourist offices. Within the

discourse on the information society and the e-economy, ICTs are seen as major

tools with the potential to fundamentally change business behavior and company

strategies. The Internet has provided a new business environment in which

virtual business can be conducted. The adoption of ICT in the tourism industry

can provide detailed up-to-date information on the availability and prices of

products and booking which could also contribute to increased sales volume and

profits.

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Competition

Examples of companies competing in the distribution of travel services

include:

Traditional Travel Agencies – American Express, Carlson, Independent

Agencies.

In-house Corporate Travel Office – Corporations booking their own

travel

Online Travel Agencies – Travelocity, Expedia.

Consolidators and wholesalers – Priceline, Hotwire, Cheap Tickets
Travel service provider direct sales – Airlines, Hotels, Auto Rental Companies

Agency Services By Travel Category

Figure no. 15

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While online travel sites have certain advantages in providing these services,

characteristics that may help traditional agencies differentiate from online travel

agencies include:

Travel agent‘s personal knowledge and expertise;

Face-to-face customer service during trip planning;

Personally monitoring & notifying customers of price or schedule

changes;

Personal follow-up after travel is completed; and

Personal Relationship.

Online Travel Services

The Internet and new technologies have provided online travel agencies the

tools to duplicate the five ―R‘s‖ of service provided by offline travel agencies.

Figure no. 16

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 Chapter 8

The Travel Industry’s Guide To Mobile Advertising

Travel companies can leverage a properly crafted and executed mobile

advertising strategy to:

Increase travel bookings and sales

Simplify travel planning and reservations

Drive brand loyalty and engagement

Enhance multichannel campaign efforts

Improve customer service

Acquire and retain customers

Simulate word-of-mouth and social media engagements

Mobile is making it more convenient for both business and leisure travelers to

find places nearby to visit, receive last minute travel alerts, make travel

arrangements and use their mobile browsers to enhance their travel experiences.

An Introduction To Mobile Advertising For Travel

Mobile advertising is the practice of placing a marketing message, promotion or

sponsorship call-to-action within various media properties that make up the

mobile channel, including mobile web, search, applications, text messaging

(SMS), multimedia messaging (MMS), email, voice, Bluetooth and content.

A Forrester study found that 54 percent of online business travelers and 48

percent of online leisure travelers who have Web-enabled mobile devices have

used the channel to look up travel-related information such as a flight‘s on-time

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status, driving directions, or hotel room information.

The most common methods of mobile advertising are:

Display – the inclusion of static, animated and rich media banners within

mobile web sites, multimedia messages, video feeds and applications

Search – the placing of a travel company‘s sponsored search listing in

the mobile web or application at the point of consumer-expressed need

Messaging – the inclusion of text ad within an SMS, MMS, email or

Bluetooth message

Voice – the inclusion of audio ads within automated voice services

This white paper looks at the use of mobile in the travel industry through four

categories – transportation, hospitality, tourism/entertainment and online travel

agencies – and shows how each benefit from the use of mobile advertising to

drive sales and customer loyalty.

Transportation

The transportation category – e.g. cruises, buses, trains, airlines, car rental

companies and taxi services – uses mobile advertising to:

Simplify reservation and booking processes

Drive interest for selected travel destinations

Improve customer service

Drive consumers to check schedules and fares on mobile desti-

nations (e.g. mobile sites and applications)

Increase brand awareness and recognition

In addition, transportation companies are using mobile display, search and

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messaging alert advertising to sell and promote their perishable inventory. These

ads expose consumers to great deals on transportation services that will soon be

missed, thus driving up sales that otherwise would be lost.

In addition, transportation companies are using mobile devices to improve

customer satisfaction through loyalty programs. For example, Delta Airlines is

one of a handful of airlines that offer passengers the option to check-in via their

mobile phone or to use digital boarding passes displayed on their mobile device

to board the plane.

A Forrester study found that 24 percent of business travelers and 18 percent of

leisure travelers looked up a flight‘s on-time status using their mobile device.

Additionally, 31 percent of business travelers and 29 percent of leisure travelers

looked up driving directions on their mobile phone.Targeting these consumers

with deals for future travel or things to do while they are away is a great way to

delight consumers and increase sales.

Hospitality

The hospitality category, which consists of hotels, resorts and inns, uses mobile

advertising to:Drive sales of products, services and events on property locations

by keeping guests within their venue for more than just lodging

Encourage people to book reservations via mobile web and apps

Keep guests updated on special events and concerts

Drive consumers to participate in loyalty programs and to redeem

their points

Travelers are using their Web-enabled handsets to interact with the hospitality

industry. According to a Forrester study, 18 percent of business travelers and 15

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percent of leisure travelers researched hotel availability on their mobile devices

in the past year.

In addition, mobile advertising is being used the hospitality industry to build

permission-based databases. These databases are used to deliver special deals

and coupons to consumers resulting in higher repeat and referral sales. Many of

these mobile campaigns include promotional Web landing pages that are mobile

commerce-enabled, allowing for a transaction right on the spot.

They are also using mobile advertising and mobile-enabled multi-channel

promotions that encourage their guests to stay on property and to frequent

related establishments and events.

Tourism/Entertainment

The tourism/entertainment category, which includes restaurants, amusement

parks, museums and sight-seeing tours, uses mobile advertising to:

Enhance the travel experience of consumers by driving them to relevant

mobile destinations

Drive sales of goods, services, dinners and tickets at entertainment

venues

Distribute brochures, menus, maps and information that will ultimately

bring consumers to them

Enhance brand awareness and loyalty

The tourism/entertainment category is finding success with mobile advertising

to drive consumers to their locations with special mobile coupon offers and

deals. According to Forrester, 21 percent of business travelers and 18 percent of

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leisure travelers looked up dining/ restaurant information on their mobile phone

within the past year.

Restaurants, casinos and amusement parks are using mobile advertising to stay

on top of consumers‘ minds while they are on vacation. These entertainment

venues are using mobile advertising to invite consumers to opt-in for future

communications from them so that they may promote and share complimentary

offerings to visitors during their travel experience.

Online Travel Agencies

Online travel agencies such as Make My Trip, Clear Trip, Yatra, Trip Advisor,

Travelocity and Kayak, use mobile advertising to:

Drive sales of vacations packages, flights and car rentals

Drive traffic to mobile destinations such as mobile web sites and

applications Promote specific destinations and drive visits through

coupons and special deals

Increase brand awareness and engagement

Online travel agencies are leveraging mobile advertising to drive consumers to

their mobile destinations, as this is where the sales process begins.

According to Forrester, 20 percentof business travelers and 16 percentof leisure

travelers looked up flightschedules using their mobile devices in the past year.

The opportunity to target these travel-minded consumers with advertising is

immense.

Display and search advertising creative with special deals and offers are proving

to be most effective, helping online travel agencies acquire and retain

customers.

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The Mobile Opportunity For Travel

Targeted mobile display, search and text ads are helping travel companies such

as Continental Airlines, MGM Grand, Walt Disney World, and Expedia build

brand awareness and turn purchase intent into sales with their target audience.

Targeted mobile display, search and text ads are helping travel companies such

as Continental Airlines, MGM Grand, Walt Disney World, and Expedia build

brand awareness and turn purchase intent into sales with their target audience.

Figure no. 17
With 65 percentof all mobile Internet users making airline, hotel or car rental
purchases in the past six months, it is clear that there is an important intersection of
mobile and travel.
Mobile is both media (to promote advertising messages) and a channel to sell

and transact. Consumers are using their mobile devices to stay connected using

various media services:

Mobile web – Consumers are using the mobile sites of travel companies to plan

their trips and enhance their travel experience. Travel companies such as

airlines, car rental companies, tour services and travel agencies should consider

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having mobile commerce-enabled sites as an additional revenue stream.

For example, STA Travel, a global travel specialist for students and young

people, used mobile advertising on the mobile web to promote flights to its key

global destinations. The ads drove consumers to STA Travel‘s mobile site.

In addition, 20 percent of mobile consumers are using the mobile Internet

regularly and if they have a smartphone – for example, a phone running

Microsoft Windows Mobile, BlackBerry, iPhone and Android – this number

increases to more than 85 percent.

Search – Consumers are using their mobile devices for local search with

increased frequency. When consumers search for information, travel companies

need to ensure they are present at the time of the consumer‘s expressed need;

that is, at the top of the search results.

Applications –There are numerous application stores with hundreds of

thousands of applications generating billions of application downloads.

HotelsByMe, for example, launched iPhone and Android applications that use

the mobile device‘s geolocation services to help travelers find nearby hotels.

The applications sort the list by distance from the user‘s current location and

plot the hotel location on an integrated map.

Users can also access more than 44,000 hotel properties worldwide, search by

city or landmark and also view photos of the hotel. Coupons can be included

within applications, driving consumers to redeem special offers.

Mobile Advertising Insights For Travel

According to ROI Research‘s ―The Future of Mobile‖ Study, November, 2009,

mobile Internet:

Make travel arrangements – 27 percent of consumers use the mobile web once

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a week or more to make travel arrangements.

Book travel reservations - 17 percent of smart phone users have booked travel

reservations in the past year.

Click on travel mobile ads – 12 percent of consumers surveyed by Microsoft

have clicked on a travel ad on their mobile phone. Additionally, 9 percent have

made a travel purchase (online or offline) as a result of seeing an ad on their

mobile phone.

Compare transportation, hotel and tourism prices – 46 percent of smart

phone users use their handset to compare prices. Three percent use their mobile

phone to compare prices while shopping for travel related purchases.

Additionally, 44 percent store information on their phones for later viewing.

Collect and store coupons and engage in related incentives – 17 percent of

smart phone users use handsets to search for coupons. Additionally, four in 10

are more likely to shop at travel outlets offering digital travel coupons/deals.

Buy goods and services - A quarterly study by Compete found that 37 percent

of smart phone owners have purchased something non-mobile with their handset

in the past six months. Additionally, feature-rich devices (smartphones)

continue to drive travel-related purchases to mobile. Smartphone growth is up

63 percent year-over-year (comScore, August, 2009).

Mobile Search To Drive Downloads And Revenue

Travel brands and service providers are also using mobile search to drive

consumers to mobile sites and to download their applications.

Ongoing mobile search campaigns are helping these companies ensure that they

are easily discovered in application stores and through the mobile web. For

travel companies (such as airlines and hotels) with a mobile commerce site, this

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has become a proven approach to drive additional revenue. Mobile search is

important as it enables key travel trends. According to ROI Research, four in 10

mobile Internet users conducted mobile searches at least once per day.

Additionally, mobile search is actively used in the purchase process – nearly 40

percent of mobile Internet users indicated they were willing to shop at travel

outlets offering digital travel coupons/deals.

Travelers searching with a location-based mobile phone are most likely looking

for something nearby or seeking to buy something. Travel service providers and

brands would be wise to revamp their mobile search efforts to make sure that

consumers who are traveling can find and buy from them on mobile.

Mobile web search engine optimization follows many of the same technical

rules as that of Web Search Engine Optimization. Importance is placed on page

structure, use of headers, keywords and titles, along with various types of

browser support.

Mobile advertising puts your brand in the hands of your audience and enables

immediate and engaging interaction that leads to measurable results.

Multi-Screen Approach For Multiple Touch Points

Travel companies are using mobile display, text and search advertising

simultaneously with other marketing (print, online, direct mail, gaming and out-

of-home) to acquire new customers, diversify their user base and drive

incremental revenue.

In this digital age, reliance on online resources in booking travel is undoubtedly

high – the tourism industry has already seen the impact of this with the decline

of the traditional high street agent in favour of online travel agencies and

independent booking. However, despite the technology being available, mobile

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travel booking has been slower to catch on and still significantly lags behind

mobile travel research. So, whether it‘s because of fears about security or simply

having better functionality with a traditional mouse and keyboard, it looks like

mobile technology‘s impact on the booking stage will not be as revolutionary in

the short-term. But with a growing number of mobile-optimized sites and

enhanced search engines, industry experts expect to see mobile bookings nudge

ahead of traditional channels by 2016. One area where we will see mobile make

an impact in the meantime is the growing trend for on-the-go bookings.

A multichannel approach-involving mobile can deliver compelling results. For

example, Continental Airlines achieved strong results from a multi-channel

campaign it ran targeting Hispanics, a demographic that tends to be heavy users

of wireless devices (Mobile Marketer, October 29, 2009). In this case, mobile

ads were five-to-ten times more effective than the online component of the

campaign. Continental reached out to consumers on television, online banners

and search, out-of-home, radio and mobile – both SMS and the mobile web. For

the mobile web aspect of the campaign, consumers who clicked mobile banners

ads were directed to a mobile site which achieved an average of 1.4 page views

per visitor. For the SMS mobile aspect of the campaign, TV, radio and out-of-

home ads urged Hispanic consumers to text one of two keywords - VOLVER or

VIAJAR - to the short code 88188 to participate. Out of the total audience that

entered the mobile-site, driven to it by SMS media, 7.51 percent provided their

name, email address and phone number to enter the contest. Voting components

and SMS forwarding created a viral effect, in effect giving Continental Airlines

more bang for its buck. Consumers are using their mobile devices for a wide-

range of travel-related activities as reported by Forrester Research, Inc., July

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2009 in the figure below:

Figure no. 18

Mobile Advertising Best Practices For The Travel Industry

There are numerous best practices that travel industry players should consider

when embracing mobile advertising:

Use location and related data to be relevant. Remember, your message is

relevant when the consumer is traveling, and often is no longer relevant once the

consumer is back at home. Location also serves a convenience factor. If a

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customer is nearby, it is more convenient for her to redeem your offer.

Consider the person’s situation to tailor and target your message.Is she

shopping, sightseeing or dining? Is the weather hot or cold, raining or sunny? Is

the trip for business or pleasure? Tailor mobile advertising messages based on

these and related situational data points. Targeted and relevant messages will

increase the response rate of any campaign.

Make the purchase and booking process easy on the mobile device. The less

clicks the better. There is nothing worse than losing a customer because she gets

annoyed due to an overly complex purchase process.

Use specials and promotions. Specials and promotions within mobile search

and banner advertising can be used to sell perishable inventory such as show

tickets, flights, hotel rooms and vacation packages for specific dates.

Use a multichannel mobile approach. Use various mobile channels to get the

word out on deals and package offers (e.g. mobile coupons, alerts, etc.).

Make use of customer loyalty. Use your mobile advertising to encourage

consumers to join and manage their customer loyalty programs.

Leverage on-device media. Build a permission-based mobile database so that

you can send consumers offers for airfare, entertainment and related offers.

Always include an opt-in option on the landing page or in the ad creative.

Consumers who are willing and eager to hear from you are a prized possession,

so compile a database of interested consumers. Double opt-ins in mobile is very

important and should be in place before the start of an acquisition campaign.

Collaborate with mobile partners. Choose appropriate mobile partners that

can help you leverage the power of the various mobile media and mobile

advertising practices. Ask for references from successful campaigns. Find a

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vendor that aligns with your needs.

Adopt the Mobile Marketing Association’s guidelines. The Mobile Marketing

Association (http://www.mmaglobal.com ) is an industry-leading global trade

association focused on helping marketers and travel companies effectively

engage consumers with mobile marketing and advertising practices.

The MMA‘s guidelines help marketers and travel companies support the rights

and privacy of consumers, stay compliant with industry best practices and

regulations, and get the most out of the practice of mobile advertising.

Keep your program calls-to-action clear and simple. Remember that

simplicity works. Consumers should not have to think about your ad‘s

key message. The call-to-action should be clear and easily understood.

Think past the click. Once consumers respond to your advertisement,

what next? Will they receive a message, be taken to a mobile site, or

invited to download an application? Consider the complete 360-degree

experience and make sure the total experience is consistent and on point

with campaign objectives and message.

Track, measure and analyze. Mobile advertising is extremely

measurable. Be sure to continuously track, measure and analyze the

results of a program and make adjustments as necessary throughout the

life of your mobile advertising campaign. Do this and you will see

improved results.

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 Chapter 9

Customer Acquisition Channels For Hotels

There was once a time when hotel marketing focused on brochures, newspaper

listings, magazine ads, banners, and lots of printed paper. Things have changed,

and print media is less effective at driving new bookings as it once was. Today,

it can be hard for hoteliers to learn how to acquire new guests aside from turning

on a flickering ‗vacancy‘ light in the window.

This problem is exacerbated as guests move away from more traditional

hospitality customer acquisition channels, in favor of more accessible digital

channels. In this whitepaper, we will explore the primary acquisition channels

used today by the most successful hoteliers and hotel marketers around the

world.

Figure no. 19
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Digital vs. Traditional

Traditionally, hoteliers have used non-digital customer acquisition channels, like

print advertisements, to build brand awareness and find new guests. This form

of marketing is becoming less effective with each year. In the first half of 2012,

the Newspaper Association of America reported that newspapers lost $798

million in print advertising, while gaining only $32 million in digital

advertising. That means for every $25 they lost in print ad revenue, they gained

only $1 in digital ad revenue. This shows that advertising with newspapers—

digital or in print—fails to produce.

TV is not in as bad of shape—it gained 4.5% in ad revenue in 2012 compared to

2011—but even it is dwarfed by the rise in online ad spending, which grew

21.7% from 2011, outpacing TV spending by over 17%.

Radio, magazines and other mediums are now dwarfed by digital online

marketing in terms of ad spend. eMarketer predicts that by 2016, $62 billion

will be spent on digital advertising ($39.5b in 2012) compared to only $32

billion in all of print advertising ($35b today—that‘s a loss of 8.5% over four

years).

One can only conclude that productive customer acquisition channels are almost

exclusively digital, and the disparity between traditional and digital channels

where guests are concerned will only increase. Therefore, though there are other

customer acquisition marketing channels that are possible to consider, such as

walk-in customers, billboards, magazines, newsletters and so on, we will focus

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primarily on digital marketing channels and hospitality exclusive channels that

offer digital marketing.

3rd Party Resellers - OTA – Online Travel Agency

OTAs are consumer-facing web interfaces for travel bookings many are familiar

with due to their far-reaching advertisement campaigns. OTAs include Orbitz,

Expedia, Priceline, Travelocity, Make My Trip, Clear Trip, Yatra and others.

OTAs were created to give travelers the ability to book their own travel plans

without need of traditional travel agencies. OTAs communicate with many

Global Distribution Systems (GDSs) in order to process reservations, but they

also use their own proprietary software.

OTAs typically drive a great percentage of online reservations to hotels, but

they claim a substantial chunk of each transaction—upwards of 25-30%. They

can help sell a hotel‘s vacant inventory, but the cost of this partnership can

cause a hotel to lose an undesirable portion of its profits. Hotel owners usually

prefer that guests book travel directly through their own booking engines instead

of OTAs, and then list their room inventory with OTAs and GDSs when they

expect it to otherwise go unsold.

Guests are increasingly booking travel directly from hotel websites, due to the

attractive user experience of trip planning using search engines like Google, and

due to the billboard effect—a phenomenon whereby guests discover hotels

through OTAs, then in the course of doing independent research using search

engines, book travel directly from the hotel website.

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It will be important for hotels to partner with OTAs for the foreseeable future

due to their popularity. Many guests prefer to purchase package deals, including

airfare, car rentals and accommodations, which is the benefit of using an OTA,

since it communicates directly with GDSs. However, it is becoming increasingly

important to have an alternative direct booking option for guests who prefer to

book directly with the hotel.

PROS:

Hotels can sell more inventory that would otherwise go unsold.

It is easy to list inventory with an OTA with minimal up-front costs.

CONS:

OTAs take a significant commission on each room sold.

Some OTAs will not accept inventory unless the hotel meets its price

requirements, thus forcing hotels to sell their rooms for cheaper than

they want to—on top of the commission the OTA takes.

It requires substantial back-end infrastructure to communicate with

OTAs. This usually necessitates hiring an external 3rd party Central

Reservation Systems (CRS) to own the hotel‘s conversion engine. It can

be done by manual submission that necessitates a lengthy verification

process.

GDS

There are four major GDSs in the world today: Worldspan, Amadeus, Galileo,

and Sabre, and many other minor ones. GDSs are used to make reservations for

multiple airlines, hotels, car rentals, and other vendors. The airline industry first

created GDSs to save time on manually inputting and processing flight

reservation data. GDSs are today used by various entities, including airlines,
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travel agencies, OTAs, car rentals, hotels and more to manage and process

reservations.

GDSs run on legacy systems, meaning that they are powered by outdated code

and methods. This is a large problem for the travel industry for many reasons.

Old code can only run on old hardware, which is becoming hard to repair and

replace. Those who knew how to repair and adapt legacy systems retired or

forgot how to use them, and the information was lost with them.

For these reasons, it is important to own or use a CRS powered by updated

technology. The best solution is to use a SaaS CRS that is updated over time as

technology advances, to prevent future incompatibilities and system failures.

Today, GDSs are still used in one way or another by airlines, hotels, and OTAs

all over the world. For the time being, it is still important to integrate an

independent hotel CRS with GDSs in order to benefit from the additional

transactions they provide.

PROS:

Listing inventory with a GDS can ensure your rooms are seen by

resellers around the world.

CONS:

As with OTAs, sometimes hotels have to lower their prices to be

accepted by the GDS.

GDSs are built on legacy systems and may not be compatible with

modern CRSs and IBEs.

GDSs take a commission from each sale.

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 Not all CRSs and booking engines can integrate with GDSs.

Directories

Directories like TripAdvisor, Yelp, and Google‘s Hotel Finder serve as

databases of hotels guests can explore to find what they are looking for. Instead

of going directly to the hotel‘s website, they browse the directory and filter

results by dates, amenities and other trip requirements.

Instead of communicating with the GDS and managing the guest‘s transaction,

directories simply display the desired results and provide price comparisons and

links to OTAs and hotels. Many directories are free and make money on ads.

Some directories make their money by charging hotels for privileged placement

on the directory. The hotel that pays the most gets the highest placement for

their desired search terms.

Hotels pay certain Directories for a prominent directory listing, or to advertise

on that directory so that guests can find the hotel. While some directories like

TripAdvisor are used frequently by guests, most directories are never used by

actual guests and are therefore not valuable marketing channels. The ones that

take payments for prominent listings also take payments from OTAs. It‘s

possible for a hotel to pay a directory for a sponsored placement only to be

outspent by an OTA selling the hotel‘s own inventory, thereby costing the hotel

a listing fee on top of an OTA commission.

PROS:

Can place your hotel before the eyes of guests who are accustomed to

trip planning using certain directories.

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CONS:

Can cost money for better visibility.

Lack of control over property information.

Lack of control over guest reviews.

Often-thick competition from competing hotels for prominent placement.

Franchises & Flags

Franchises and flags give hoteliers access to established clientele, identifiable

brand familiarity, services, and existing marketing channels. Guests know what

they‘re getting when they book with a franchise. They know exactly the style,

the amenities, the service, and character to expect from a franchise.

This allows guests to make a purchase decision quickly, and to seek out specific

franchises where they have stayed in the past, enjoyed their stay, and therefore

know what to expect. Additionally, many frequent travelers, particularly

business travelers, are members of loyalty programs for flights, car rentals, and

hotels. Guests who are part of these programs often seek out and stay at a

specific hotel brands time and time again in order to build up points.

Running a franchise hotel takes away some of the cost and hassle of providing

additional services for guests. Many franchises provide organizational and

promotional services for the franchisee, including some forms of marketing,

partnerships with taxis and airport transport, food service providers and catering,

insurance companies, maintenance, and so on, removing the necessity for hotels

to form these new business relationships themselves. Hoteliers who run a

franchise can reap the benefit of pre-existing business relationships made with
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the franchise brand. The combination of lack of surprises, expected standards,

widespread national coverage, and loyalty programs gives large branded

franchise hotels a compelling built-in customer base that is very attractive.

Hoteliers often choose to run a branded franchise hotel in order to take

advantage of these benefits. In exchange, the franchise brand takes a percentage

of the hotel‘s profits.

PROS:

Hotels gain frequent guests who are loyal to the franchise brand.

Hotels gain access to the loyalty programs, web conversion engines,

online digital marketing partnerships, and other extant marketing

channels run by the franchise brand.

Hotels can take advantage of extant services provided by, and business

relationships made with, the brand.

CONS:

Some brands take a percentage of the hotel‘s profit, in exchange for the

hotel having use of the brand. Others charge annual brand and franchise

fees.

Some franchise owners have pricing flexibility, but many others are

restricted by the brand franchise and cannot alter their rates.

Direct Channel

The direct channel is the most straight-forward and intuitive marketing channel,

but it sometimes comes with costs necessary to work well, including the costs of

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time, money, and hotel resources. The most prevalent manifestation of the direct

channel is a hotel website complete with reservation capture system. From the

website, guests book rooms directly from the hotel. This removes the need for a

middleman who charges additional fees. That said, it is often challenging to

properly market and maintain the direct channel. The following are some

considerations hoteliers need to think about when creating and publishing their

direct channel marketing presence.

Website

A hotel website is the heart and soul of the direct channel. It is the destination to

which all other marketing activities funnel traffic, and acts as a ―conversion

engine‖. Hoteliers need a web presence that serves as a digital representation of

their property that guests can use to make inquiries and book rooms. It can be

relatively inexpensive to publish a simple hotel website. However, technology

evolves quickly, faster than any other industry, and websites published

yesterday are out of date tomorrow. For example, websites published five years

ago—and never kept up-to-date—currently can‘t support mobile and social

visitors and interactions.

It can be an expensive, tedious and time-consuming process for hoteliers to stay

on top of web technologies as they emerge, and keep their digital marketing up-

to-date. It is possible to find services that do this for the hotelier, each with its

own range of fees.

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Online Reservation Capture (Internet Booking Engines, or

IBEs)

Many smaller hotels opt to have a simple contact form on their website. When a

reservation inquiry comes in, they open their email, record the information, and

process the credit card. This is a manual process that works best for small

properties with a handful of rooms. For larger hotels, they need a more robust,

automated booking engine that can deliver updated availability to guests when

they make web queries.

Additionally, it is often impossible for hoteliers to list their excess inventory on

OTAs or with the GDS on their own. Thus, it is often necessary for hoteliers to

purchase or subscribe to a 3rd-party reservation system, or CRS. Hoteliers have

a plethora of options, however, many CRSs take a commission fee for every

transaction that passes through their CRS.

Search Engine Optimization (SEO)

Search engines will continue to be a valuable source of traffic and online

reservations for some time. Having a solid SEO plan in place allows a hotel‘s

website to convert at peak performance. However, since search engine

algorithms are volatile, changing daily, implementing any SEO strategy can be

risky.

For example, implementing an SEO strategy popular five years ago could cost a

hotel its search engine ranking, causing it to be penalized by Google. Some of

what was once acceptable SEO is no longer acceptable by Google. A business

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could become completely invisible on search engines if it contracts

unscrupulous or ill-informed SEO agencies.

While having a prominent listing on Google can be incredibly lucrative, it can

take an enormous amount of research and effort to keep a website up-to-date

with Google‘s SEO best practices.

Social Media

The goal of social media is to point guests and fans to a direct marketing

channel in order to capture their online reservation. It is very hard to do social

media correctly. More often than not, hoteliers will create their social media

profiles, speak to an empty room for a few weeks, and then give up.

In order to use social media correctly, hoteliers and hotel marketers need to

invest time and passion into the network before it will ever bear fruit. This time

can be costly and exhausting, and may not deliver results for weeks, months or

even years.

Search Engine Marketing (SEM) and Pay Per Click Ads (PPC)

Traditional billboard, newspaper and magazine advertisements have been

superseded by web advertising. SEM and PPC advertising accounts for the

majority of all advertising revenue generated in the world today—Google

advertising alone has made more money each year than all print advertising

combined since 2007.

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Anyone can start an SEM or PPC campaign, but the learning curve to execute

such a strategy effectively can be steep. It is very easy to quickly waste a year‘s

marketing budget in a month, if one does not take care. It takes good intuition

and experience to choose the right advertising targets, place the correct bids and

manage a monthly budget.

For these reasons and more, many hotels hire agencies to perform SEM and PPC

services for them. This compounds costs, levying the cost of the campaigns and

the agency fee upon the hotel. It can be very difficult to see positive return on

investment (ROI) concerning paid online advertising.

Mobile

Mobile devices are increasingly being used to make travel related planning and

purchases, including hotel bookings. Google predicts that guests will be booking

travel from mobile devices more than they do from desktop or laptop PCs by

2013. It is therefore important that hotels optimize their direct conversion

channels for mobile devices by purchasing a mobile optimized website.

Mobile optimization entails crafting a new website with fewer scripts, larger

buttons and text, and smaller images in order to improve load speed over

wireless networks and aid swipe navigation. Good mobile optimized hotel

websites come complete with a mobile optimized booking engine. It can be

expensive to optimize for mobile, but the cost has been going down

precipitously as mobile need has risen. It is very easy, however, to purchase a

mobile optimization package ‗done wrong‘—that is, hosted on a 3rd-party

domain, or within a directory, or without an included mobile redirect, and so on.

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Email

Online deal services like Groupon, Living Social and Amazon Local have

millions of subscribers who are looking for good deals. Joining one of the

services and offering their members a substantial discount is a quick way to fill

empty inventory.

One drawback of using deal services is that many of them won‘t accept a

proposed deal unless the hotel offers a significant discount--so significant that

the hotel might not make much money. However, the brand exposure is a great

opportunity for a hotel to snag repeat customers and future online bookings. The

risks and rewards need to be weighed heavily before embarking on this strategy.

PROS:

It can be cost effective to pick one or two direct marketing activities and

excel at them.

CONS:

It can be expensive and tedious to try to excel at all direct marketing

activities, and very challenging for all of them to pay off.

Unless the hotel has purchased a digital marketing subscription, the

hotel‘s online marketing will age quickly as soon as it is purchased.

It is challenging to be successful with the direct channel without

significant investment in one or more digital marketing strategies.

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Summary

A little knowledge can help hoteliers understand their options and select

marketing channels to pursue, but it takes hard, constant work to keep up with

them in order to make them profitable. SaaS seeks to solve this problem by

placing the hassles of research, time and expertise in the hands of industry

professionals, reducing the cost of high-converting digital marketing and saving

time for hoteliers to spend managing their hotels.

Customer acquisition channels have evolved so much over the years that to

ignore the digital channel is a business crippling decision. Hoteliers should start

with a new, modern website and mobile optimized website hosted in the cloud

and optimized for search engines. From there, hoteliers should choose the

customer acquisition channels that work best for their own goals. buuteeq‘s

Cloud DMS is an affordable SaaS solution designed specifically for hotels.

Contact us to learn more. As current and emerging intermediaries take

advantage of an active digital travel market, they will wield substantial influence

as gatekeepers, imposing fees and charges for directing the consumer traffic to

the hotel. Growth in digital travel shopping will expand the transparency of

hotel pricing structures putting additional competitive pressure on rates. The

combination of the higher booking volumes passing through intermediaries, the

costs imposed for intermediation and the pressure on rates will challenge the

hotel owner and manager to maintain profit levels

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 Chapter 10

Data Analysis & Findings

Critical Success Factors that make e-commerce business profitable in

the travel industry related organizations (In order of Importance)
(All type of organizations)
N Mean Std.
Deviation
A11c. Competitive pricing 33 4.85 .364
A2. Technological infrastructure that supports the dynamic
33 4.82 .392
business demand
A11b. Prompt customer service 33 4.79 .415
A9a. Products that are of most interest / most importance to travel
related organizations to increase business performance - a) Flight 33 4.67 .479
+ Hotels
A1. Commitment (Commitment and support from top management
33 4.64 .603
in term of strategy and implementation)
A11a. Differentiated products & services - a) Exciting holiday
33 4.55 .617
itinerary
A10c. Deal sites 33 4.52 .712
A4. Promotions to drive incremental business 33 4.48 .619
A3. Online media marketing budgets 33 4.48 .619
A7. Multi-Channel Marketing 33 4.45 .666
A9c. Flight + Hotels + Car Rental + holiday package 33 4.33 1.137
A9b. Flight + Hotels + Car Rental 33 4.33 .990
A8. Partnership/Alliance to expand the product offering 33 4.30 .728
A10b. Tourism sites 33 4.27 .839
A5. Customer purchase patterns and tailor products according to
33 4.12 .820
the purchase patterns
A10a. Widen the travel product distribution system - a) E-Tailing
33 4.09 .765
sites
A10d. Tour operators brochures & websites 33 4.03 .883
A6. Customer retention through customer loyalty 33 3.97 1.015

Competitive pricing is the most important success factor that creates product

differentiation. Pricing plays a very important role in creating competitive edge

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for the organizations products. Prices are to be set that captures the value of the

product. The right way to set prices involves capturing the value that customers

place on a product by ―thinking like a customer. Understand that customers have

different pricing needs. In virtually every facet of business (product

development, marketing, distribution), companies develop strategies based on

the truism that customers differ from each other. However, when it comes to

pricing, many companies behave as though their customers are identical by

setting just one price for each product. The key to developing a comprehensive

pricing strategy involves embracing (and profiting from) the fact that customers‘

pricing needs differ in three primary ways: pricing plans, product preferences,

and product valuations. The travel industry, like many others, relies on

advertising to promote its products and services. Price is usually a major

consideration when consumers are buying travel or planning their holidays. This

means that close attention is paid to any price representations made in

advertisements, whether they appear on the television, in a brochure or

newspaper or on a website. Advertising correctly represents the product for sale,

including its price and any inclusions or exclusions. It applies equally to all

types of travel—from a five-star luxury holiday to a budget backpacker travel

package. This enables consumers to make informed purchasing decisions when

making travel arrangements and purchasing a holiday, including the choice of

upgrades, airfares, duration of the trip, any tours, transfers or other inclusions,

fees, charges, terms and conditions—and the total price.

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Things to consider when setting your pricing strategy

How unique is your business? The more unique your tourism product

the more flexibility you will have to decide your pricing.

What value added services do you provide inclusive of the experience?

What market do you want to attract and what positioning in the market

do you want to establish?

For most tourism businesses setting prices will be more market based –

that is, what do competitors with similar products and services charge

within your market? Be careful however, you must be aware of your

own financial position (debt levels, cash flow etc) before you can decide

whether you should compete in this way. Ideally being competitive is

not price driven, it‘s product driven

Pricing Components

Your pricing strategy may be made up of the following components:

Rack Rates

All tourism businesses should have a rack rate – this is your ―full rate‖ before

any discounts are applied and typically is what is provided to wholesalers and

printed on brochures for the season ahead. For activity and attraction operators

their full rate is more likely to be charged all the time without any day to day

discounting, however accommodation operators – particularly those in the

middle of the market will be changing pricing almost daily for the month or 2

months ahead to fill gaps.

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Seasonal Pricing

Using a mix of pricing throughout the year to cover low, high, and shoulder

seasons is a standard way for tourism businesses to cater for differing levels of

demand due to the time of year. Typically these will be the same date periods

each year but may also apply for school holiday dates and for local events where

the dates vary each year.

Last Minute Pricing

A common method for accommodation suppliers to fill those last minute gaps in

inventory availability, last minute pricing is basically discounting daily prices

according to forward bookings and promoted on last minute booking websites.

Common Pricing Types

Per Person pricing: A set price per person e.g Adult and Children

prices. Commonly used by activity/attraction and transport operators or

backpacker accommodation and camp sites. Options may include an adult,

child and senior citizen price.

Per Unit pricing: – A set price for 1 unit of the product e.g. Price per night, this

is the standard way to price accommodation, usually the advertised price is for 2

people so if the accommodation fits more than 2 guests it can have a mix of the

per person pricing with extra adult and extra child rates.

Single or double occupancy – common for B&B‘s there is a single rate and a

double rate (which is not double that of the single rate).

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Discounting

While discounting has it‘s place, and often unavoidable in a competitive market

such as tourism, be very wary about continually discounting your prices to

stimulate demand – it can become a rocky road to reducing profitability or even

missing that vital break-even point. Be selective with last minute pricing deals –

don‘t make every day reduced, just select those where you really do need extra

bookings. Consider adding conditions to a discounted price like a minimum

stay or number of travellers in the booking. While a booking is better than no

booking at all, customers do become used to a certain price level and you

therefore run the risk of not only making it hard for you to charge your normal

rack rates, but it will also devalue your product – remember perception is

everything in tourism!

Package Deals

Developing packages with complimentary tourism partners in your area or with

value added components is a good way to stimulate demand without having to

discount. Strike up deals with local businesses to provide a full package and

share business with each other – you should be able to get their products or

services at a ―net‖ rate so the package pricing is better than if they had

purchased each component separately. Packaging can also be used to target

niche markets effectively e.g golf weekend, food and wine tours, pampering

packages etc.

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Commissions

Many bookings will come via some sort of third party who will charge you a

commission such as a retail travel agent, wholesaler, inbound tour operator or

online travel agent (OTA).

Many tourism operators are tempted to add the value of the commission on to

the pricing for these providers but this should actually be considered in the

setting of your rack rates anyway – if you have different pricing across different

distribution channels it just confuses both travellers and can jeopardise industry

relationships, so keep it simple.

Air Travel Demand Elasticities

At the present time, the airline industry faces many cost pressures. The industry

has made remarkable achievements in improving its efficiency. But cost

pressures continue, from record high fuel prices to unjustified increases in

charges from monopolistic airports, to further taxes imposed by governments.

Higher costs inevitably lead to higher prices for airline passengers. Therefore, it

is crucial that reliable and appropriate estimates are available to assess how

higher prices impact on the level of demand for air travel. This impact will, of

course, differ according to the level and location at which prices are changed.

This report provides groundbreaking new research into the sensitivity of air

travel demand to changes in air travel prices and incomes. It provides clear

guidelines for the appropriate use of demand elasticities and robust and reliable

estimates of their value. Air transport provides economic benefits not just for its

passengers and cargo shippers, but also for the wider economy by connecting

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businesses and individuals to global markets. Modern, just-in-time, global

supply chains and multinational businesses are made possible by global airline

networks. Yet governments often fail to recognise this and continue to

implement air transport policies that are not in the best interests of the aviation

industry and the wider economy. Monopolistic airports that raise charges but do

not improve the services they offer will see passengers quickly shift elsewhere.

Governments that impose new taxes on the industry are taking advantage of less

sensitive movements in demand at the national level to raise revenues at the

industry‘s expense.

The elasticity of air travel demand varies according to the coverage and location

of the market in which prices are changed and the importance of the air travel

price within the overall cost of travel. The appropriate elasticity to use will

depend on the type of question being asked. What is the price that is being

changed (e.g. an individual airline ticket price or prices within the market as a

whole)? What is the unit of demand that is being assessed (e.g. demand for an

individual airline or demand for total air travel)? Examining the traffic impact of

a price increase on a given route requires a different elasticity than when

examining the impact of an across-the-board price increase on all routes in a

country or region. Passengers are becoming increasingly sensitive to price, led

by the boom in low cost travel, the transparency brought by the Internet and the

intense competition on deregulated markets. But, passengers are also becoming

less sensitive to price, as increasingly lower air travel prices, in real terms mean

that the air travel price itself becomes a smaller and less important part of the

total cost of a typical journey.

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Information Technology in tourism is the second most important success factor

after competitive pricing. The importance of information technology in tourism,

especially of the World Wide Web, has increased tremendously over the past

years and this trend will certainly continue. However, since the technology itself

is now available to almost everyone, its use alone does not necessarily bring a

competitive advantage anymore. The integration of IT into the organizational

fabric of the destination marketing organization (DMO) is an important key to

success. Integration means that technology, advertising strategy and overall

organizational mission/goals are coordinated to achieve the desired

effectiveness. Traditional advertising strategies should be reconfigured to reflect

the new realities (i.e., availability, interactivity, and research capabilities) of

Internet technologies and of the rapidly changing business environment.

It is difficult for most destination marketing organizations to keep pace with the

evolution of new technologies, the emergence of innovative advertising

strategies, the changes in the consumer market, and the growing competition

due to increasing globalization. They often have to struggle with limited

financial and human resources, a lack of technological expertise, and time

constraints. Accordingly, various high tech information and communication

technologies are in use in the tourism sector around the world. They are used for

tourism product development, marketing, distribution and training of tourism

sector personnel. These technologies are so indispensable in order to find out

and satisfy the ever-changing demands for tourism products. One of the unique

characteristics of tourism products is the need of the role played by the so-called

travel intermediaries. These travel intermediaries are travel agents, tour

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operators, conference organizers booking agents etc. They are so important

because of the nature of the tourism product, perishablity and intangibility.

These travel agencies are performing this indispensable task of being

intermediary by the use of computers and computer reservation systems (CRS).

GDSs are systems, which distribute reservation, and information services to

sales outlets around the world. Unlike the CRSs used solely by an airline or

hotel chain, GDS distribute more than one CRS to users who are usually travel

agents.

Tourism and Information Technologies

Tourism is inevitably influenced by the business process re-engineering

experienced due to the technological revolution. As information is the life-blood

of the travel industry, effective use of ITs is pivotal. Hence, "a whole system of

ITs is being rapidly diffused throughout the tourism industry and no player will

escape its impacts". Unlike durable goods, intangible tourism services cannot be

physically displayed or inspected at the point of sale before purchasing.

They are bought before the time of their use and away from the place of

consumption. Hence they depend exclusively upon representations and

descriptions, provided by the travel trade, (e.g. information in brochures), for

their ability to attract consumers. Timely and accurate information, relevant to

consumers' needs, is often the key to satisfaction of tourist demand. Therefore,

ITs provide the information backbone that facilitates tourism. The revolution of

ITs has profound implications for the management of the tourism industry,

mainly by enabling efficient co-operation within the industry and by offering

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tools for globalisation. In few other economic activities are the generation,

gathering, processing, application and communication of information as

important for day-to-day operations. The rapid development of both supply and

demand makes ITs an imperative partner and thus they increasingly play a more

critical role in tourism marketing, distribution, promotion and co-ordination.

The re-engineering of these processes generates a paradigm-shift altering the

structure of the entire industry. Thus, ITs have a dramatic impact on the travel

industry, because they force the sector to rethink the way in which it organises

its business, its values or norms of behaviour and the way in which it educates

its workforce.

Information Technologies And Tourism Demand

"The key to success lies in the quick identification of consumer needs and in

reaching potential clients with comprehensive, personalised and up-to-date

information". The rapid growth of both the volume and the quality requirements

of contemporary travellers, require powerful ITs for the administration of the

expanding traffic. Tourists become sophisticated and more demanding,

requesting high quality products and value for their money. Thus, destinations

and principals need new methods to serve the new types of demand. The usage

of ITs in the industry is driven by both the development of the size and

complexity of tourism demand, as well as by the rapid expansion and

sophistication of new tourism products, which address mini-market segments.

Increasingly, new, experienced, sophisticated, demanding travellers seek

information about more exotic destinations and authentic experiences, as well as

require to interact with suppliers in order to satisfy their specific needs and

140
wishes. The contemporary/connected consumer "is far less willing to wait or put

up with delays, to the point where patience is a disappearing virtue".

In order to satisfy tourism demand and survive in the long term there is no

choice but to incorporate technology and enhance the interactivity with the

marketplace. Increasingly, ITs enable travellers to access reliable and accurate

information as well as to undertake reservations in a fraction of time, cost and

inconvenience required by conventional methods. ITs improve the service

quality and contribute to higher guest/traveller satisfaction. Customer

satisfaction depends highly on the accuracy and comprehensiveness of specific

information on destinations' accessibility, facilities, attractions and activities.

This is because the gap between consumers‘ expectations and perceived

experiences is smaller and thus, unpleasant surprises from the destination or

principals are minimized. In addition, several other ITs facilitated factors

enhance consumer satisfaction, namely: consumers have more information and

enjoy a greater choice; a reduction of the bureaucracy and paper-work

effectively frees time for customer service; customising the product and

establishing ―one-to-one‖ marketing by using intelligence collected by loyalty

schemes (e.g. dietary requirements, product preferences); providing new

services, (e.g. as in-flight or in-room entertainment and information channels);

facilitating operational tasks (e.g. in-room TV checkout) ; personalised services

(e.g. telephone operator acknowledges guest by his name); and finally better

integration of departments and functions of organisations towards better service.

Computer Reservation Systems (CRSs) and increasingly Internet providers

satisfy the needs of consumer for convenient access to transparent and easy to

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compare information. They cover the entire variety of choices of travel, lodging

and leisure services, destinations, holiday packages, as well as display the actual

prices and availability of such services. These services also provide immediate

confirmation and speedy documentation of reservations, allowing a greater

degree of flexibility and enabling prospective travellers to book at the "last

minute". Experienced travellers are therefore empowered by information and

booking systems and increase their personal efficiency by creating tailor-made

products independently. ITs also assist principals to understand consumer needs

through marketing research and loyalty/partnership schemes. Improved access

to information covering all aspects of tourist activities provides the framework

for offering personalised services at price levels comparable to those of standard

packages.

The revolutionary developments in ITs, which have been experienced through

the proliferation of the Internet and the World Wide Web since 1995, illustrate

that consumers increasingly rely on the Internet for travel information. They

utilise commercial and non-commercial Internet sites for planning, searching,

purchasing and amending their travel. Non-tourism organisations tend to seize

the emergent opportunity by utilising the ITs tools. This is already the case with

major ITs providers, (e.g. Microsoft developed Expedia, an electronic travel

agency) to satisfy tourism demand.

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The emerging super highway - the Internet and the World Wide

Web

The Internet (or the "Information Superhighway") convergence media,

telecommunications, and information technology, increases the interactivity

between consumers and suppliers. Since the early 1990s, the World Wide Web

(WWW) has emerged as the fastest growing area of the Internet, enabling

distribution of multimedia information.

As textual data, graphics, pictures, video, and sounds are easily accessible

through the WWW, it soon became the flagship of the ITs' revolution and

instituted an innovative platform for efficient, live and timely exchange of both

ideas and products. Consequently, unprecedented and unforeseen implications

are drawn for the future of tourism marketing and consumer behaviour.

Although there is no accurate estimate of Internet users or sites, the pace of the

Web development demonstrates the role it will play in peoples' lives.

New practices such as home shopping, tele-entertainment, tele-working, tele-

learning and tele-banking are expected to change everyday activities. Eventually

consumers will live in "electronic houses" or "intelligent homes" and will be

served by "virtual enterprises" through a very interactive communication

framework. The Internet also influences political life, as it introduces a

democratic, transparent, uncontrollable and difficult to dominate way of

communication, where everyone is more or less able to broadcast their views

regardless of hierarchical rankings and political power. ―Business and

organisations world-wide are realising that marketing on the Web is multi-

143
dimensional content marketing that requires the following paradigm shifts: from

traditional advertising to interactive marketing; and from developing and

managing one way information flows to computer-mediated empowerment of

users, consumers, and entrepreneurs who will be engaged in electronic

commerce in the information age".

The Internet and the WWW provide unprecedented opportunities for the

industry as they bridge the gap between consumers and suppliers and empower

closer interaction. The WWW provides an extremely vital service by

incorporating similarly structured information and enabling the packaging of a

wide range of diverse products and services. ITs also provide the infrastructure

for inexpensive delivery of multimedia information, promotion and distribution

for both principals and destinations.

ITs also assist the provision of tailored made products in order to meet the needs

of individual consumers, and as a consequence, they are expected to become

instrumental in differentiating tourism supply.

The Internet can also strengthen the marketing and communication functions of

remote, peripheral and insular destinations as well as small and medium-sized

enterprises, by empowering their direct communication with prospective

customers as well as by assisting the distribution process. Hence, the rapid

development of the Internet and the WWW provide unprecedented and

affordable opportunities for the global representation and marketing of tourism.

Nevertheless, the information currently available on the Internet is often chaotic

and misleading, mainly due to its immaturity and lack of any type of

standardization. Several issues need to be addressed, namely: security of

144
transmissions; credibility of information; intellectual property and copyrights;

bandwidth and speed limitations; user confusion and dissatisfaction; lack of

adequate trained specialists; equal access and pricing.

Products that are of most important to the travel related

organizations to expand business: Flight & Hotels

Travel related organizations place utmost importance by providing flight and

hotels as key products to the consumers. Flight and hotels are key terms search

searched in the search engines. An airline usually connects with the computer

reservation systems of the hotels and displays the inventory on the airline sites.

This gives the consumer an option to book air and accommodation through the

airline website. The intermediaries like tour operators, travel agents, and online

travel agents provide the consumers not only with just flight and hotels but also

car rental and holiday packages. The integration between airline and hotels is

straightforward. Airlines before tying up with hotels discuss the % of

commission per room night, which the airlines will receive through the referrals.

Tracking mechanisms are implemented in order to track every hotel booking

which is brought through the airline website.

Prompt Customer service is of vital importance to all organizations in the

travel and tourism sector. Excellent customer service results in a high level of

satisfaction and encourages customers to return and to recommend the

organization to others. Many organizations in the travel and tourism sector offer

the same or similar products and services, and it is often the quality of the

customer service, which distinguishes one from another. Travel and tourism

organizations realize that consistently high standards of customer service will

145
ensure customer loyalty and improve business performance. This unit introduces

learners to the principles of customer service as they apply to travel and tourism.

The skills needed by an employee of a travel and tourism organisation are

developed in this unit. Aspects such as personal presentation, teamwork and

communication skills are all exceptionally important to the provision of

excellent service. Travel and tourism organisations are in the business of

providing information and selling products and services, and learners will have

the opportunity to develop and demonstrate these skills with customers in real or

simulated situations across different industries within the sector. Meeting the

specific needs of different customer types will be dealt with to ensure that all

learners appreciate the importance of treating customers as individuals. The

knowledge that learners gain from this unit will help to prepare them for

offering excellent customer service within any travel and tourism organisation.

Customer service is important because you must ensure that customers are so

pleased with doing business with you, they will keep returning to you. You have

to keep your customers away from your competitors. It costs five times as much

to win a new customer as it does to keep an existing one. Dissatisfied customers

tell others of their bad experiences and those people will avoid using your

organisation. Your organisation needs to be able to compete on value rather than

just price, i.e. customers are prepared to pay more for your product or service.

Your organisation needs to be secure and able to develop, and so do you. You

want the buzz you get out of providing excellent customer service. Some

organisations (for example, tour operators) integrate services vertically and

horizontally. This gives them control over each level of the products they

146
market but leads to an underlying consistency in customer service across that

integrated group. People operating small private companies may have a niche

market and know many of their clients as regular customers, which helps give a

more personal style of customer service. Large organisations may depend more

upon systems to help provide customer service but, with the right approach and

by selecting and training staff who have a real desire to provide excellent care to

their customers, such organisations can also provide a personal style of service.

Factors which will have an impact on overall business

performance as a result of the structuring of e-commerce

business in the travel industry related organizations (In order of

Importance) (All type of travel related organization)

N Mean Std.
Deviation
B9. Customer friendly website for consumers to easily locate
33 5.00 .000
and book tr
B6. Competitive pricing 33 4.73 .517
B4. Differentiated products & services from competition 33 4.73 .452
B5. Advance Technological infrastructure to meet the
33 4.70 .529
dynamic consumer demands
B2. Prompt response to customers' problems, suggestions,
33 4.67 .540
and complaints.
B3. Customer Loyalty & satisfaction 33 4.61 .659
B7. Efficient deals/packages/inventory distribution system 33 4.48 .566
B1. Customer-tailored marketing via customer profiling 33 4.33 .736
B8. Human resources skill set pertaining to travel industry 33 4.21 .781

Most important factor which will have an impact on the over all business

performance as a result of the structuring of e-commerce business in the travel

related organizations is seamless booking experience through a customer

friendly website.
147
Methods & practices to structure the e-commerce business in the

travel industry related organizations (In order of Importance)

(All type of travel related organization)

N Mean Std.
Deviation
C1. Customer friendly website for consumers to easily
33 4.97 .174
locate and book travel related products
C5. Advance Technological infrastructure to meet the
dynamic consumer demands & fasten business 33 4.88 .415
operations
C2. Regular updating the website with latest and correct
33 4.82 .392
information for consumers to make informed decision
C3. Prompt response to customers' problems,
33 4.79 .485
suggestions, and complaints.
C16. Multi-Channel Marketing 33 4.70 .529
C4. Investment in tablet and smart phone apps 33 4.70 .637
C11. Consistent Promotion design tailored according to
33 4.61 .496
the consumer purchase patterns
C8. Business alliance with white label products e.g.
33 4.48 .667
hotels, flights, cab, insurance, holiday package
C14. Improve Process efficiency - The time taken to
33 4.48 .566
quote the offering & price
C15. Engage with exciting content on social media to
encourage engagement between travel products and 33 4.42 .663
consumers
C9. Informed reports for forecasting and decision
33 4.39 .659
making
C6. Analytical tools to track consumer behavior &
33 4.36 .653
transactions
C7. Consistent offline and e-media advertising without
33 4.27 1.153
any blackout periods
C12. Innovative payment gateway features to enhance
33 4.27 .719
consumer experience & increase business performance
C10. Interactive feedback between customer and
33 4.27 .674
business
C13. Improve Process efficiency - streamline the time to
33 4.18 .727
develop a custom itinerary

148
Travel websites have to be regularly updated with latest deals, products,

services, promotions, and policies. One of the most common issues found with

websites is ―Build it and Forget it‖ syndrome. In simple terms, it‘s the website

that you build today and do not change a thing for the next few years. This

disease in websites is as prevalent as the common cold is in humans. It‘s cause

is simple: it‘s ―old web‖ thinking in a ―new web‖ world. In the old web (say

mid-1990‘s to early 2000,) the idea was simply to copy and paste the content

from your company‘s brochure into your website and then you were set. At that

point, you were fine to leave it for the next few years and many businesses did

just that. The new web is all about content, but not just any content… fresh

content. In the new web, the websites that get the most traffic are those where

the content is constantly changing, being added to, and improved. Users want

and expect to see or learn something new each time they visit your website and

they view those websites that do so as more valuable. Think about it, you

actually give them a reason to return!

3 quick reasons why you should consistently update your

website:

Search engines reward websites that update often by

moving them up the rankings

The value in search engines is that you can find just about anything you are

looking for on the web. But, we don‘t want to just find anything, we want to

find the ―right thing.‖ So in order to remain a valuable tool to users, search

engines needed a way to identify what listings are considered ―good stuff‖ and

149
what is not. One identifier, a term called ―frequency,‖ is used to determine how

often your website is updated. If a website is updated often, then search engines

consider it a consistent source of new information and awards it some points

that can help move its listing up in the search results. This is very beneficial as

it can bring more traffic to your website.

Think about it. If your local newspaper delivered this Sunday‘s edition, then

next Sunday they delivered exactly the same thing, then again the next Sunday

and so on and so forth, eventually you‘d just cancel your subscription. Why?

Because there is no longer anything of value. The content is exactly the same so

why would you want to keep receiving it? Its the same with your website in that

if it never changes, why would someone who has already read it want to come

back? Search engines know this and could penalize you by moving you down in

the rankings.

Giving your visitors a reason to come back will increase

the chance of closing transaction

This one actually builds off the previous reason. If search engines think your

website is outdated, then wouldn‘t you think the visitors to your website feel the

same? If I came to your website today, then came back next month and nothing

has changed, I would probably think that nothing is really happening with your

business. You must not be growing. You must not be innovating. You must not

be getting any customers. That leads me to start questioning if your product or

service is any good? Is there something wrong with you? Think about it this

way, seeing even simple changes like posting news and announcements shows a

150
visitor progress and progress is good at getting a prospect to realize why they

need to become a customer.

What does providing new content translate into? A better chance at closing a

transaction with a prospect who visits your website. They may not be ready the

first time they drop by, but by the second or third time they visit and read that

new announcement about ―special financing‖ or our ―great new service‖ it may

be just the thing they were waiting for.

Tracking what affect the changes have in your website’s

performance

We‘re big fans of making decisions based on data. Knowing what works and

what doesn‘t in terms of attracting traffic that can become customers is what

helps make a website successful. So, if the website never changes, then how do

you know if it is operating at its peak performance? Even with web statistics

software giving you data about who‘s coming to your website and how many,

it‘s not as valuable as knowing that you could get more traffic by simply

changing something or posting something new. How do you learn what that

is? Simple, analyze the data, make changes, and track the affect the change had

on performance. Who knows, that one piece of information that currently is not

on the website may draw in a whole new type of customer you never thought

about, but then again you‘ll never know if you never post it

Travel goes mobile: The Travel & Tourism sector has been one of the most

enthusiastic adopters of mobile technology. We see airlines issuing mobile

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boarding passes; using mobile messaging as a CRM tool to keep passengers

informed about delays and cancellations; giving iPads to in-flight staff to enable

them to conduct appraisals 35,000 ft. off the ground; and of course creating

easy-to-use apps to enable passengers to book flights on the go.

Train and bus operators deploying mobile ticketing solutions to improve

efficiency for them, and the ticket-buying experience for their customers.

Tourist destinations producing mobile City Guides, often deploying Augmented

Reality to help travellers find their way around a strange city. And travel agents

producing companion apps to help their customers plan their holiday before they

leave, and make the most of it when they arrive at their destination.

Add to that the plethora of hotel- and tax-booking apps, underground maps and

bus and train timetable services, and it‘s clear that the Travel & Tourism sector

is ahead of the game when it comes to mobile marketing.

Since travelers invest so much more time using apps than mobile websites, it's

no surprise that the majority of purchases and bookings coming through mobile

devices occur in apps rather than mobile websites. In 2012, a full 20% of

smartphone owners used their device to book air travel or make a hotel

reservation, and 80% of these transactions were made with an app. Again, these

numbers are certain to rise as the market penetration of mobile devices increases

while barriers to mobile transactions continue to fall away.

Beyond the standalone benefit of increasing market access, mobile apps allow

travel businesses to target a very attractive type of audience: impulse buyers.

With the increasing number of travelers using their mobile devices, there are

outstanding opportunities for the travel industry predicated on the real time

ability to connect and interact with consumers at any time or place. The portable

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media landscape of mobile offers a powerful medium to deliver content to

inform, influence and transact.

The opportunities are unlimited, from empowering mobile travelers to

improving travel efficiency and building ancillary revenues. Mobile offers the

traveling consumer the ability to research products and services, make instant

reservations, change bookings and check-in/check-out on the go. Through push

marketing, it provides rich opportunities to get consumers to respond to offers

engage in signups and buy on the spot. You can communicate information or

alerts, send coupons, offer distressed inventory, make timely offers and last

minute deals, up sell and cross sell ancillary products and services.

Airlines are leading the way by upgrading their mobile Web experience from

being mainly information driven to providing the ability to book and purchase

flights, join the standby list and upgrade seating. Hospitality brands are diving in

to the space with SMS call to action campaigns for promotions on discounts for

rooms, dining, amenities, etc. and creative concepts like a mobile concierge for

groups. On the operations side, booking confirmations can be cost effectively

and conveniently sent by text message, there‘s the ability for paperless ticketing

and creative means to improve customer feedback.

As more competitors move into the space, mobile is becoming a key

differentiator. In the continual quest to generate loyalty by delivering supreme

levels of customer service and create product differentiation, travel marketers

are looking to the channel to engage with customers at all stages of the

consumer buying cycle. The innovative use of mobile technology offers the

ability to differentiate a company in a highly competitive market. Keeping up

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with customers on the go with messages on the move gives you the opportunity

for a unique one-on-one relation-ship with your target customer.

Creating a Mobile Web Site

Mobile users are just that, mobile. They don‘t have time to spend navigating and

deciphering, so you need to have a mobile version of your site and create a user

experience that is optimized for the mobile Web – one that is simple, quick,

friendly and easy to browse. Make sure contact information is easy to find and

keep it slim and trim with relevant information

Building an Opt-in Database

Mobile marketing is all about opt-in marketing. The key is to get consumers to

say ―yes ―to hearing from you and then enthusiastically take part in the mobile

marketing. To begin any conversation or send a text message, you need

permission. Since you can‘t purchase a mobile phone list, all subscribers must

go through an opt-in procedure.

To start the process and build a permission-based SMS audience, reach out to

existing customers through every touch point and ask if you can be in contact

with them on their mobile device. Promote your mobile services by leveraging

all your existing marketing channels and capture mobile numbers through

information queries and bookings. On the customer profile page of your Web

site, add a line for mobile numbers and provide a choice of different opt-in

options. By using mobile banner ads you can also drive consumers to your WAP

(Wireless Application Protocol) site and encourage them to opt in to your SMS

database. Once people have joined, you can let the interaction and value

proposition begin, be it news and alerts, deals and promotions, coupons,

contests, exclusive offers, upcoming events, new developments or product

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information.

All text message communication should include a link to your mobile site to

drive users there. Have a special offers section on the mobile site where visitors

can get discounts, in addition to a click-to-call feature that automatically

connects consumers to a live person. Be sure to indicate that rates may apply,

and provide clear instructions on how to opt out if desired (i.e. text STOP to a

short code). As in any CRM strategy, be sure to deliver what they ask for. At the

end of the day, content has to be relevant, useful and valuable. The end game is

to engage with the consumer and build long-term relationship.

Text Message Marketing

Text message (SMS) marketing is the foundation of mobile marketing. In fact,

SMS is expected to generate $177 billion in global services revenues by 2013,

according to ABI Research, New York, and it will account for 83 percent of all

mobile messaging revenues through 2013.

It‘s an application most mobile users are familiar and comfortable with, and the

opportunities are endless. One way to build a mobile database and acquire new

customers is to offer ―text and win‖ sweepstakes, promotions or coupons and

include an opt-in SMS message after the entry. You can ask users to text a

keyword (also known as a mobile alias) to a short code, and those wanting to

participate in your mobile marketing will officially be part of your database, or

―mob.‖ The customer then gets a return text message which qualifies them for

the offer and they can become an opt-in member for future mobile marketing.

That keyword can be promoted in any number of ways, generally with an offer

that gives consumers a reason to want to join.

To create interactivity between print advertisements and mobile, an ad in a

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travel magazine can offer consumers a free night or complimentary service by

texting your keyword (and joining your mob). When the consumer joins, they‘re

given a promotion code to use when making the booking. On an ongoing basis

you can provide additional offers, information and news of interest.

One of the greatest features of broadcast text messaging is the ability to create

time sensitive offers to fill need periods. A restaurant can send a message with

an offer to guests and locals before the lunch or dinner hour if business is slow.

A hotel can fill weekend space with a last minute offer. To increase internal

capture during a guests‘ stay, get them to opt in to receive offers on check-in if

they‘re not already enlisted. For example, if the spa has afternoon cancellations,

you can text to guests on property with a reduced rate on a service. And as a

final text to culminate the stay, the last message can be a thank you with a Web

link offering a discount to book a return trip.

Location Based Marketing

Brands are discovering the benefits of mobile as a location-enabling tool. One of

the most exciting opportunities in mobile marketing is the use of Location Based

Services (LBS), predicated on the concept that exact location is the basis for

delivering the right message to the right person at the right place and time.

Couple that with a detailed profile on a customer – their likes, interests and

personal data – and you can target that individual through text offers or mobile

couponing based on their preferences at the point of interaction. With the

enhanced use of proximity based interaction you can engage customers by

sending offers and discounts via mobile when they are within walking or driving

distance.

The myriad of location-based opportunities can dramatically enhance the

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consumer experience and interaction with the brand. By accessing the mobile

Web or using downloaded applications, consumers can turn to their phone to

locate the nearest accommodations, restaurants, shops, attractions and points of

interest on the spot. Instead of powering up a laptop at the airport, stranded

passengers looking for the next flight can enter their destination and get every

airline‘s flight and gate information for the entire day, as well as call the airline

or connect to its Website. For the traveler on the go, the phone can be an

invaluable and condensed source of information, from mobile guide books and

maps to restaurants and reviews, GPS-driven walking tours and audio guides on

demand, powered either by mobile Web search or downloaded applications.

The plethora of mobile-enhanced sites and available applications are massive

(the iPhone alone offers more than 30,000 applications, with travel a dominant

category offering everything from product branded Web sites for destinations,

hotel companies and airlines to guide books, reviews, currency converters, voice

translations, maps and so much more).

For hospitality marketers, the medium offers the ability to locate guests prior to

arrival and send a text message to start the check in process. Having knowledge

of one‘s profile and interests enables you to customize their stay by pushing

activities and services of interest, such as information on local events, restaurant

menus and specials, spa options, attractions and more. For destination marketing

organizations and convention and visitors bureaus, mobile can provide the

means to deliver full destination guides with location based features and

services.

Regardless how large or small the mobile initiative, accountability and

measuring the effectiveness of mobile campaigns and activities are paramount.

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The mobile environment offers a variety of measurement capabilities and

analytics that can report participation and demographics of your mobile database

in general and in response to a particular campaign. The key is to prepare to

capture the right kind of data, and use it once you have it to measure your

results.

Summary

What is clear is that it is becoming increasingly important for hospitality and

travel marketers to be deliberate about their forays into the mobile arena. A

mobile marketing plan can help you navigate through the hype to carefully

research and implement mobile marketing efforts that are integrated with the

elements of your existing marketing plans. Mobile marketing strategies,

working with your online efforts like paid search marketing, local search

marketing, and email marketing, can help you leverage and see synergistic

returns in awareness, interaction, and revenue.

Many would agree that mobile is indeed the new frontier. As the technology,

devices and applications become more affordable and accessible, those who

embrace some degree of mobile marketing will be well positioned to reap the

benefits of this burgeoning and potentially lucrative market. Whether you test

the waters by establishing a mobile Web site, start building your ‗mob‘ by

initiating simple text-based offers and promotions, or mount a widespread,

multitiered campaign, the smart marketer will let the engagement begin.

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Multi-Channel Marketing:

Facebook Marketing For Tourism Organizations

Facebook offers travel brands the ability to identify prospective travelers,

communicate directly with users, engage with advocates and create branded

experiences through advertisements and custom-developed Facebook

applications. Facebook is the most powerful social media channel for travel

marketers because of the platform‘s flexibility and ability to drive awareness,

empower brand advocates and push consumers further into the travel purchasing

process.

Furthermore, Facebook users are passionate about sharing their travel

experiences. In 2012, Facebook reviewed the top stories people shared to their

Facebook timelines and discovered that the top story being shared by users was

travel experiences. 42% of stories shared to users Facebook timelines were

travel experiences, more than double that of the next category. In the evolving

digital marketing landscape, it is clear that consumers want to share their travels

with others and tourism marketers need to tap into this consumer behavior to

generate awareness, inspiration and visitation.

Facebook marketing goals

Brand awareness

Inspire visitation

Consumer engagement

Build brand advocates

Drive website referrals

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 Generate visitor leads

What Facebook Products Are Available

The heart of the Facebook marketing platform is Facebook Pages. Your

Facebook Page is your brand‘s storefront and where you will be able to

showcase your destination‘s most important news on your time line. Within

your Facebook page, you can brand your profile in name and images, select a

vanity URL, list your business details and link to your website. Facebook Pages

also allow you to list upcoming events, map your location and feature photo and

video galleries. Your Page is where you will generate connections and long-term

relationships with your brand advocates (residents and past visitors) and attract

potential visitors. Building a Facebook Page is simple, quick and free.

Facebook Ads are a paid advertising solution used to attract new fans, amplify

your message and expand the reach of your brand. Facebook Ads allow you to

hyper-target your audience based on a wide variety of triggers such as location,

demographics, interests and much more. Facebook advertising units include

Traditional Ads for brand awareness and to drive traffic to the website, page

post ads to promote Facebook page, sponsored stories to highlight users

connections with your Page and Promoted Posts to showcase your Page posts.

To incentivize users, generate conversions and expand co-op marketing,

Facebook Offers allow Facebook Pages to provide offers such as hotel deals that

can be redeemed online or in person. Custom Audiences is the newest

advertising targeting available and allows marketers to upload an existing

database of emails or phone numbers to target users.

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Facebook Ads are a cost effective approach for generating awareness,

engagement and connections with users for your destination.

To develop more engaging brand experiences, tourism marketers can develop or

install Facebook Page Apps that will be located on a Facebook Page. Facebook

Page Apps are available from third party application developers or can be

custom developed to deliver highly engaging interactions. Popular Facebook

Page Apps for destination pages include sign up form for newsletters and

vacation guides, contests and sweepstakes, co-op programs and integration with

other social media channels. While some third party applications are available

for free, customized Page apps will require a web development investment.

Beyond Page apps Facebook provides Facebook Connect, Social Plugins,

Facebook Login and Open Graph as free tools for brands to develop

personalized website and application experiences.

How To Approach Facebook Marketing

In order to properly market your destination on Facebook, you will need to have

a sound understanding of who your core audience is by gender, age, geo

location and interests. Whether you have in-depth visitor studies readily

available to you or simply have website analytics to work with, be sure to utilize

the data you have available to clearly identify your audiences Facebook will also

serve as a consumer market research tool for your destination to gather user

insights, measure content engagement and crowd source ideas before bringing

them to market.

The first step in developing Facebook marketing strategy is clearly defining

objectives and goals. Ultimate goal is to drive traffic. However, consumers are

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looking to your organization to help them decide where they should go and what

they. You will need to balance the goals of both your organization and your

prospective travelers to be effective on Facebook. Focus your efforts on

generating awareness, inspiration, word-of mouth, website visitation and online

conversions whether they are industry partner referrals, bookings or vacation

guide and email newsletter sign ups.

Strategic Approach To Facebook Marketing

Create a content strategy

Develop a Facebook Page

Target audiences with Facebook Ads

Inspire and incentivize users

Identify ambassadors and engage influencers

Generate word of mouth awareness

Drive audience further into travel planning process

The importance of making your content engaging cannot be over

overemphasized. 40% of Facebook users time is spent in the news Feed and the

more engaging your content is the more users you will reach, impressions you

will generate and the longer your post will be featured in the News Feed. To

achieve your goals and provide value to your Facebook audience, you will need

to next develop a communication strategy to define brand‘s voice, determine

message content and frequency of messaging. To steer your content strategy,

review your web analytics to understand what content consumers are searching

for and consuming.

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With the knowledge of who your target audiences are, what information your

audiences are most interested in and what stories you want to tell, develop a

content matrix to match consumer segments to the messages you want to relay

and the landing to drive traffic to.

Seasonal Campaign Strategy

Seasonal Facebook campaigns are an excellent way to drive awareness,

engagement and visitation inspiration during pre-peak or need periods. By

increasing your Facebook Ads budgets and timing it with unique and innovative

campaigns your organization can make sure to differentiate itself and gain the

attention of travelers planning their next trip or vacation. To further incentivize

your audience and build your following, think about layering in a contest,

giveaway or sweepstakes.

Create a unique, experiential and one-of-a-kind offer that cannot be had

anywhere else to peak the most interest. When running a Facebook campaign

always be sure to collect email addresses and require entrants to like your

Facebook Page in order to create opportunities to drive engagement and web

traffic in the future.

Search Engine Use For Travel Planning

Search engines have become one of the primary tools for travel planning and, as

such, have become an important part of the Internet marketing strategy of

destination organizations. Recently, it has been demonstrated that because of the

dynamic relationships among the search engine providers, the tourism industry

and travellers, it is essential that destination-marketing organizations have a

substantial understanding of how search engines are used within the travel

planning process. Search engine marketing is emerging as one of the most

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important components of an overall Internet marketing program. With the

growth of information on all facets of the tourism experience, general search

engines such as Google and Yahoo! have become the ―Hubble‖ of the Internet

galaxy, enabling travellers to navigate through this space so as to find

information that might be useful in the travel planning process. Indeed, recent

studies by the Travel Industry Association of America and others have shown

that the huge majority of U.S. travellers use search engines for vacation

planning. Additionally, the general search engines such as Google have

developed a variety of systems that enable destination marketing organizations

(DMOs) to identify the specific interests as well as the keywords used by

potential visitors. As a result, search engines have been recognized as the ―first

step‖ in a travel planning process, and therefore, are seen as a critical starting

point with which DMOs can communicate with existing and potential visitors.

There are three general components or stages of search engine use as related to

the travel planning process:

1. The pre-search conditions which is a form of knowledge representation that

reflects the integration of the information search process used to plan a trip and

the perceived usefulness of various travel planning tools available on the

Internet; 2. The search process which includes the frames used to evaluate

search results; and, 3. The evaluation of the overall search process which

culminates in attitude formation toward search engines and online travel

planning. Thus, within the context of online travel planning, it is argued that

these pre-search conditions reflect travellers‘ use of (or preference for) various

types of information as well as the perceived usefulness of the various travel

tools (i.e., types of websites) available on the Internet to find this information.

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The second stage of the search process describes the basic strategies travellers

use to navigate through the Internet to find relevant information so that the

various travel decisions (i.e., destination, accommodations, attractions, routing,

etc) can be made. As such, these strategies act as ―frames‖ within which the

information accessed through use of search engines is evaluated. The third

stage, then, focuses on the overall evaluation of search engines within the travel

planning process. Importantly, this stage of search engine use not only results in

some sort of overall evaluation (i.e., satisfied vs. not satisfied), but also attitude

formation toward search engine use for travel planning. Finally, it is important

to note that this third stage sets the stage for future use of search engine for trip

planning, and therefore it is linked to Stage 1 in the overall process. Studies

have shown that the process of using a search engine consists of two major

cognitive steps including query formulation and search results evaluation.

Search queries have been studied extensively in fields such as information

sciences as well as travel and tourism. In travel and tourism, recent studies

indicate that travelers‘ questions tend to be short, consisting of less than four

keywords; and, most travelers do not go beyond the results provided on the

second page.

As a result, only a relatively small number of websites are visible to the traveler

though millions of potential web pages were found study also indicates that

searchers in the US usually focus on cities as the geographical boundary instead

of states or countries; and, travelers often combine their searches for

accommodations with other aspects of the trip, including dining, attractions,

destinations, or transportation.

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Measuring The Value Of Email Marketing For The Travel

Industry

Email is a cultural and marketing phenomenon. In its relatively short lifetime,

email has become so wide-spread and so often used that it has firmly been

established as an integral part of a multi-channel marketing scheme surpassing

other channels in almost every dimension – volume, frequency, and ease of

execution just to name a few. As a marketing channel, email is often

underutilized, a last minute tactic to communicate a message because of the low

cost, speed and convenience of getting something into market. However, peer

deeper and you‘ll see that the medium has matured. Email is a vital link between

marketer and consumer that can provide companies with rich information about

their products and services. Email extends well beyond the boundaries of opens

and clicks, and must be optimized and measured as an important part of the

overall media mix. The receipt of permission-based email makes travel

consumers more likely to do business with a travel company, according to the

research. More than half of respondents have a favorable opinion of the travel

companies that send them email because of the communications they receive

and feel more loyal towards companies and products. Travel reflected better

loyalty than other categories in the study, with 63% of recipients of permission-

based email from travel companies more likely to buy from companies that send

them email. The travel industry was one of the first industries to enter the e-

commerce arena and therefore travel consumers have a high comfort level in

regards to multi-channel email and web marketing activities. With consumers

today more receptive to email opt-ins and more adept at Internet search, they are

accustomed to great deals and a number of options.

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Instead of relying on one sole provider of travel information, respondents to the

survey on average subscribe to emails from up to three travel companies to learn

about sales, discounts and special offers. With advanced targeting and dynamic

content, travel companies can customize content for users based upon their past

purchases, preferences, and website activity. Email drives many online activities

as well as some that aren‘t measured by simply clicking on an email. Consumers

often take easily measurable actions such as booking travel online, clicking links

in email to learn more, and downloading/printing coupons as a direct result of

receiving an email from a travel company. However, there are other popular

activities that may not be measured by click-through rates and coupon

redemption codes. For example, a number of respondents often visit aggregator

sites, search for reviews, type/copy a URL directly into their browser or contact

their travel agent. Results show that emails influenced the recipients ‗purchase

of airfare and hotels most often, and to a lesser degree vacation packages, rental

cars, and cruises. In all cases the vast majority of those purchases took place

online.

Figure no. 20

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 Figure no. 21

Promotions Designed According To The Consumers Purchase

Patterns

Tourism organizations plan promotions to let customers know about their

products and services. To encourage customers to purchase more.To launch a

new product, service or special offer. Sales-Promotion tools are samples,

coupons, packages, patronage rewards, premiums, point-of-purchase, displays,

contests, sweepstakes, and games. Promotion is the communications part of

marketing. It is the way we tell the world our product. Promotion provides

consumers with information and knowledge in an informative and persuasive

manner. This, we hope, will sooner or later result in sales of our services or

products. The information and knowledge can be communicated using one or

more of the five promotional techniques - advertising, personal selling, sales

promotion, merchandising, and public relations. Taken together, these

techniques are referred to as the promotional mix.

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The ultimate purpose of promotion is to modify behavior through

communication. This requires helping customers at the various buying process

stages so they eventually purchase or repurchase a particular service. Promotion

achieves this by informing, persuading, and reminding - the three principal goals

of promotion. Promotions usually fit into one of these categories; they are either

informative, persuasive, or reminders.

Informative promotions work best with new services or products (early

product-life-cycle stages) and with customers in early buying process stages

(need awareness and information search). These types of promotions tend to

communicate data or ideas about the key features of services.

Persuasive promotions are harder. They are aimed at getting customers to

select one particular company or ―brand‖ over those of competitors, and to

actually make the purchase. Advertisements that compare one company‘s

services to another, and most sales promotions, fit into this category. Persuasive

promotions work best in intermediate/late stages of product life cycle (growth

and maturity) and the buying process (evaluation of alternatives and purchase).

Reminder promotions are used to push customers‘ memories about advertising

they may have seen, and to stimulate repurchases. They are most effective in

the late product-life-cycle (maturity and decline) and buying process stages

(post purchase evaluation).

Each of the above promotional elements has capacity to achieve a different

promotional objective. Personal selling has high potential for achieving

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communication objectives, however, only a small number of people can be

contacted. Therefore advertising is a better method of reaching a high number

of people at low cost. Public relations is more credible than advertising, but

there is more control over advertising messages and they can be repeated on a

regular basis.

When it is difficult to raise advertising budgets, public relations is a lower cost

alternative, but it is difficult to control the timing and consistency of PR

coverage. Sales promotion may produce an initial trial for a product, but this

type of promotion can only be used over a short period.

Each part of the promotion mix has its own strengths and weaknesses. While

these may include the factors of cost, ability to target different groups, and

control, there are other important considerations. On the following figure, they

are compared on the basis of the level of awareness of the communication, and

its comprehension (understanding, realization), as well as on whether it can

build conviction (confidence, certainty) and succeed in creating action.

Factors Affecting The Promotional Mix

Choosing a promotional program for a coming period requires very careful

research and planning. The stage of customers‘ decision processes and product

life cycle stages affect the promotional campaign decisions. However, there are

some other factors that also affect promotional mix decisions.

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Target Markets

The effectiveness of the five promotional mix elements varies according to the

target market. For example, in promoting its convention/meeting facilities, a

lodging property might find that personal selling to key meeting planners is

much more effective than advertising. On the other hand, using personal selling

to attract individual pleasure travelers would not be feasible. The geographic

location of potential customers also has an impact. Where they are widely

dispersed, advertising may be the most efficient and effective way to reach

them.

Marketing Objectives

The promotional mix selected should flow directly from the objectives for each

target market. For example, if the objective is to build awareness by a certain

percentage, the emphasis may be placed on media advertising. If, on the other

hand, it is to build sales significantly in a short time period, the focus may be put

on sales promotion.

Competition And Promotional Practices

There is a distinct tendency in certain parts of the hospitality and travel industry

for most competitive organizations to use the same ―lead element‖ in

promotional mixes. Fast-food chains focus on heavy television advertising,

hotels and airlines focus on frequent-traveler award programs, and cruise lines

put a heavy emphasis on personal selling to travel agents. It is difficult and

extremely risky for one competitor to ―break from the pack‖ in this respect.

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Promotional Budget Available

Obviously the funds available for promotion have a direct impact on choosing

promotional mix elements. Smaller organizations with more limited budgets

usually have to place greater emphasis on lower-cost promotions, including

publicity and sales promotions. Larger organizations can better afford to use

media advertising and personal selling.

Business Alliance With White Label Products (Hotels, Flights,

Car Rental, Holiday Packages)

The development and management of alliances is a critical strategic skill in

hospitality and tourism. The words strategic alliances, relationships, strategic

partnerships, and joint ventures all describe the coming together of two firms

into a deliberate association that has some synergistic strategic value.

They may assume the form of: (a) a buyer seller relationship as in the case of an

association meeting planner and a conference hotel, a restaurant and a single-

source wholesale supplier; (b) a supplier-distributor relationship as in the case of

airlines and retail travel agencies; (c) an alliance between two or more suppliers

like the United-Lufthansa-Air Canada-SAS alliance; and (d) a joint venture

between two companies like The SABRE Group and ABACUS International

joint venture. All of these alliances share a sufficient amount of common

elements that they can be treated as a basic unit of analysis. In the current

competitive environment where firms strive to become world-class competitors,

the motivation to partner, in one or all of these forms, is great. Many airline

websites offer the ability to make hotel and car reservation.

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Factors that are detrimental to the growth of the e-commerce

business in the travel industry related organizations (All type of

travel related organization)

N Mean Std.
Deviation
D3. Lack of Advance Technological infrastructure to meet
33 4.73 .517
the dynamic consumer demands
D4. Slow time to market then competition 33 4.67 .645
D5. Brand lacks loyalty & satisfaction 33 4.64 .549
D6. Brand lacks consumer preference 33 4.61 .659
D2. Non Differentiated products & services from
33 4.52 .795
competition
D1.a Flight + Hotels 33 4.48 .834
D1c Flight + Hotels + Car Rental + holiday package 33 4.36 1.194
D1b Flight + Hotels + Car Rental 33 4.21 1.053
D7. Delay in payments of suppliers/partners leading to
33 4.15 1.034
suspension of business deals and advertising campaigns

Most important factor that is Detrimental to the growth of e-commerce

business is Lack of Advanced Technology Infrastructure and Least

important is Delay in payment of supplier

It is important that travel related organizations focus on proactive

approach rather than a reactive approach for e.g. price competition is a

major factor in travel industry. There is always a chance of price war. If

a competitor has dropped their price it is critical that other competitors

match the price. The systems should be capable enough to match the

price real time so that competition is unable to capture the entire share of

demand and consumers are provided with multiple options.

Time to market is the total amount of time it takes to develop and get a

product into the marketplace.

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Why does time-to-market matter? How well a company does is often not

just related to how good its products are but how quickly they are gotten

to the market. Beating the competition to the markets by just a few

months can have a dramatic impact on the success of a new product. One

of the biggest benefits from reaching the marketplace first, is acquiring a

larger market share. once a company has an edge, it will often keep it.

Has any company really overtaken Sony for their Walkman products?

On the other side, IBM was a big part of the development of the personal

computer market, and then lost much of its market share to other

manufacturers.

One good reason for having a fast time to market is to allow a company

to start later on designs than the competition for a similar product. This

can allow for more feasibility studies and for the use of the latest

technology. Also a product that takes 3 years to design will almost

certainly have old technology by the time it is being sold. Quicker design

time means more up to date technology.

How does this relate to quality and cost? A quicker time to market

usually means lower development costs. But if a product is rushed to

market before it is ready, the quality may suffer and the customers will

not be willing to pay as much for it. As companies feel an increased need

to bring products to market faster, the need to get it right the first time is

becoming greater. This is causing more emphasis on design technique

and tools.

What causes slow time to markets?

 Lack of thorough customer research

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  Poor execution of design; wasting of resources

 Too many projects being worked on at the same time;

lack of focus

 An unorganized design approach

 Unempowered design team

 Not fully equipped systems

 Lack of strategy

How are time-to-markets being improved?

 Strong market research

 Focused product definition

 Management support

 Systematic design of products/services

 Equipped systems

 Systematic implementation approach

Product differentiation (or simply differentiation) is the process of

distinguishing a product or service from others, to make it more attractive to a

particular target market. This involves differentiating it from competitors'

products as well as a firm's own products. Among the travel products

organizations place utmost importance on flights and hotels as a key product

differentiator.

175
TESTS FOR SIGNIFICANCE (T-Test)

T-Test (Critical Success Factors that make e-commerce business

profitable in the travel industry related organizations)

Type of N Mea Std. Std.

Organization n Deviati Error
on Mean
A1. Commitment (Commitment Hotels/Airlines 11 4.45 .820 .247
and support from top management Agents/Tour
in term of strategy and Op/Search 22 4.73 .456 .097
implementation) Engines/GDS
Hotels/Airlines 11 4.73 .467 .141
A2. Technological infrastructure
Agents/Tour
that supports the dynamic business
Op/Search 22 4.86 .351 .075
demand
Engines/GDS
Hotels/Airlines 11 4.36 .809 .244
A3. Online media marketing Agents/Tour
budgets Op/Search 22 4.55 .510 .109
Engines/GDS
Hotels/Airlines 11 4.45 .688 .207
A4. Promotions to drive Agents/Tour
incremental business Op/Search 22 4.50 .598 .127
Engines/GDS
Hotels/Airlines 11 4.00 .894 .270
A5. Customer purchase patterns
Agents/Tour
and tailor products according to the
Op/Search 22 4.18 .795 .169
purchase patterns
Engines/GDS
Hotels/Airlines 11 4.00 .632 .191
A6. Customer retention through Agents/Tour
customer loyalty Op/Search 22 3.95 1.174 .250
Engines/GDS
Hotels/Airlines 11 4.45 .820 .247
Agents/Tour
A7. Multi-Channel Marketing
Op/Search 22 4.45 .596 .127
Engines/GDS
Hotels/Airlines 11 4.18 .874 .263
A8. Partnership/Alliance to expand Agents/Tour
the product offering Op/Search 22 4.36 .658 .140
Engines/GDS

176
A9a. Products that are of most Hotels/Airlines 11 4.64 .505 .152
interest / most importance to travel
related organizations to increase Agents/Tour
business performance - a) Flight + Op/Search 22 4.68 .477 .102
Hotels Engines/GDS
Hotels/Airlines 11 4.00 1.095 .330
Agents/Tour
A9b. Flight + Hotels + Car Rental
Op/Search 22 4.50 .913 .195
Engines/GDS
Hotels/Airlines 11 4.09 1.221 .368
A9c. Flight + Hotels + Car Rental Agents/Tour
+ holiday package Op/Search 22 4.45 1.101 .235
Engines/GDS
Hotels/Airlines 11 4.18 .751 .226
A10a. Widen the travel product
Agents/Tour
distribution system - a) E-Tailing
Op/Search 22 4.05 .785 .167
sites
Engines/GDS
Hotels/Airlines 11 4.18 .982 .296
Agents/Tour
A10b. Tourism sites
Op/Search 22 4.32 .780 .166
Engines/GDS
Hotels/Airlines 11 4.73 .647 .195
Agents/Tour
A10c. Deal sites
Op/Search 22 4.41 .734 .157
Engines/GDS
Hotels/Airlines 11 3.82 .982 .296
A10d. Tour operators brochures & Agents/Tour
websites Op/Search 22 4.14 .834 .178
Engines/GDS
Hotels/Airlines 11 4.45 .688 .207
A11a. Differentiated products &
Agents/Tour
services - a) Exciting holiday
Op/Search 22 4.59 .590 .126
itinerary
Engines/GDS
Hotels/Airlines 11 4.64 .505 .152
Agents/Tour
A11b. Prompt customer service
Op/Search 22 4.86 .351 .075
Engines/GDS
Hotels/Airlines 11 4.91 .302 .091
Agents/Tour
A11c. Competitive pricing
Op/Search 22 4.82 .395 .084
Engines/GDS

177
 Independent Samples Test
t-test for Equality of Means
t df Sig. (2-
tailed)
A1. Commitment (Commitment and
support from top management in term of -1.026 13.178 .323
strategy and implementation)
A2. Technological infrastructure that
-.941 31 .354
supports the dynamic business demand
A3. Online media marketing budgets -.681 14.098 .507
A4. Promotions to drive incremental
-.196 31 .846
business
A5. Customer purchase patterns and tailor
-.594 31 .557
products according to the purchase patterns
A6. Customer retention through customer
.119 31 .906
loyalty
A7. Multi-Channel Marketing .000 31 1.000
A8. Partnership/Alliance to expand the
-.670 31 .508
product offering
A9a. Products that are of most interest /
most importance to travel related
-.253 31 .802
organizations to increase business
performance - a) Flight + Hotels
A9b. Flight + Hotels + Car Rental -1.388 31 .175
A9c. Flight + Hotels + Car Rental +
-.863 31 .395
holiday package
A10a. Widen the travel product
.477 31 .637
distribution system - a) E-Tailing sites
A10b. Tourism sites -.434 31 .667
A10c. Deal sites 1.219 31 .232
A10d. Tour operators brochures &
-.975 31 .337
websites
A11a. Differentiated products & services -
-.592 31 .558
a) Exciting holiday itinerary
A11b. Prompt customer service -1.340 15.014 .200
A11c. Competitive pricing .670 31 .508

178
Definition of (t-test)

It can be used to determine if two sets of data are significantly different from

each other. Tests for statistical significance are used to address the question:

what is the probability that what we think is a relationship between two

variables is really just a chance occurrence? Tests for statistical significance tell

us what the probability is that the relationship we think we have found is due

only to random chance. They tell us what the probability is that we would be

making an error if we assume that we have found that a relationship exists. The

test statistic in the t-test is known as the t-statistic. The t-test looks at the t-

statistic, t-distribution and degrees of freedom to determine a p value

(probability) that can be used to determine whether the population means differ.

The t-test is one of a number of hypothesis tests.

Analysis

Travel agents, tour operators, meta search engines, global distribution

systems (GDS) perceive that commitment from the top management play

a crucial role in making the e-commerce business profitable as compared

to airlines and hotels

Travel agents, tour operators, meta search engines, global distribution

systems (GDS) perceive that technology is one of the key factors of

competitiveness as far as tourist markets and strategic tourism

management are concerned. Various high tech information and

communication technologies are in use in the tourism sector around the

world. They are used for tourism product development, marketing,

179
distribution and training of tourism sector personnel. These technologies

are so indispensable in order to find out and satisfy the ever-changing

demands for tourism products.

Travel agents, tour operators, meta search engines, global distribution

systems (GDS) perceive that Flight+Hotels+Carrentals+holiday

packages are products that are of most interest and importance as

compared to airlines & hotels.

Hotels and carriers place higher importance to deal sites as compared to

travel agents, tour operators, meta search engines, global distribution

system for distribution of travel products. Anyone in retail marketing

knows that coupons, deals, and rebates are indispensable tools to both

acquire first-time customers and retain existing ones. This fact accounts

for why deal sites have existed for so long and continue to have legs

under almost any economic circumstance. Since the early days of the

Internet, retailers could get their offers posted to all kinds of deal sites

without much difficulty (or the need for a professional media buyer).

With the advent of affiliates, many retailers didn't even need to post their

offers – their affiliates would do it for them or even develop whole deal

sites filled with nothing more than affiliate links. One of the most

apparent benefits is the affordable offers that these websites provide.

Everyone wants to get a way to preserve a few money on the products

that they may need or just want. Individuals may think that these offers

may be too deferential to be real, but in all reality these offers are

actually genuine. When searching for items on these websites, an

individual could find terrific presents for friends and close relatives. If

180
someone has a big family but does not necessarily have the disposable

income to buy presents for everyone, these websites can be extremely

beneficial. Gifts could be bought way in advance and put away for future

use. When surfing around through these websites, products can be

discovered that someone may not have even known about. Items can be

discovered that someone may not have seen or observed about in years.

Arriving across products like these can be extremely interesting.

Travel agents, tour operators, meta search engines, global distribution

systems place higher importance to tour operators brochures and

websites for distribution of travel products as compared to airlines and

hotels

Travel agents, tour operators, meta search engines, global distribution

systems place higher importance to prompt customer service as

compared to airlines and hotels. Thomascook.com the e-division of the

established high street agent captures customer data through online

registrations, sales and click streams. These data are used to extend

personalisation across a number of communication channels. On the site

users can register for email updates and are asked for a range of

information including contact details, date of birth, preferred holiday

activity and composition of travel party. With the customer‘s data held

on a database the information captured online is used by

Thomascook.com to improve the level of service offered by the call

centre staff. By accessing the customer‘s profile the call centre is able to

prioritize that customer and possibly explore up sell and cross sell

opportunities. Customer service is of vital importance to all

181
 organisations in the travel and tourism sector. Excellent customer service

results in a high level of satisfaction and encourages customers to return

and to recommend the organisation to others.

T-Test (Methods & practices to structure the e-commerce

business in the travel industry related organizations

Type of N Mean Std. Std. Error

Organization Deviatio Mean
n
C1. Customer friendly Hotels/Airlines 11 4.91 .302 .091
website for consumers to Agents/Tour
easily locate and book Op/Search 22 5.00 .000 .000
travel related products Engines/GDS
C2. Regular updating the Hotels/Airlines 11 4.82 .405 .122
website with latest and
Agents/Tour
correct information for
Op/Search 22 4.82 .395 .084
consumers to make
Engines/GDS
informed decision
C3. Prompt response to Hotels/Airlines 11 4.55 .522 .157
customers' problems, Agents/Tour
suggestions, and Op/Search 22 4.91 .426 .091
complaints. Engines/GDS
Hotels/Airlines 11 4.55 .820 .247
C4. Investment in tablet Agents/Tour
and smart phone apps Op/Search 22 4.77 .528 .113
Engines/GDS
C5. Advance Hotels/Airlines 11 4.91 .302 .091
Technological
infrastructure to meet the Agents/Tour
dynamic consumer Op/Search 22 4.86 .468 .100
demands & fasten Engines/GDS
business operations

Hotels/Airlines 11 4.27 .647

C6. Analytical tools to .195
track consumer behavior Agents/Tour
& transactions Op/Search 22 4.41 .666 .142
Engines/GDS

182
C7. Consistent offline Hotels/Airlines 11 4.55 .522 .157
and e-media advertising Agents/Tour
without any blackout Op/Search 22 4.14 1.356 .289
periods Engines/GDS
C8. Business alliance Hotels/Airlines 11 4.55 .688 .207
with white label products
Agents/Tour
e.g. hotels, flights, cab,
Op/Search 22 4.45 .671 .143
insurance, holiday
Engines/GDS
package
Hotels/Airlines 11 4.64 .505 .152
C9. Informed reports for
Agents/Tour
forecasting and decision
Op/Search 22 4.27 .703 .150
making
Engines/GDS

Hotels/Airlines 11 4.09 .701 .211

C10. Interactive
Agents/Tour
feedback between
Op/Search 22 4.36 .658 .140
customer and business
Engines/GDS
C11. Consistent Hotels/Airlines 11 4.55 .522 .157
Promotion design
Agents/Tour
tailored according to the
Op/Search 22 4.64 .492 .105
consumer purchase
Engines/GDS
patterns
C12. Innovative Hotels/Airlines 11 4.09 .831 .251
payment gateway
features to enhance Agents/Tour
consumer experience & Op/Search 22 4.36 .658 .140
increase business Engines/GDS
performance
C13. Improve Process Hotels/Airlines 11 3.91 .701 .211
efficiency - streamline Agents/Tour
the time to develop a Op/Search 22 4.32 .716 .153
custom itinerary Engines/GDS
C14. Improve Process Hotels/Airlines 11 4.36 .505 .152
efficiency - The time Agents/Tour
taken to quote the Op/Search 22 4.55 .596 .127
offering & price Engines/GDS
C15. Engage with Hotels/Airlines 11 4.45 .688 .207

183
exciting content on
social media to Agents/Tour
encourage engagement Op/Search 22 4.41 .666 .142
between travel products Engines/GDS
and consumers
Hotels/Airlines 11 4.64 .674 .203
C16. Multi-Channel Agents/Tour
Marketing Op/Search 22 4.73 .456 .097
Engines/GDS

Independent Samples Test

t-test for Equality of
Means
t df Sig. (2-
tailed)
C1. Customer friendly website for
consumers to easily locate and book travel -1.000 10.000 .341
related products
C2. Regular updating the website with latest
and correct information for consumers to .000 19.668 1.000
make informed decision
C3. Prompt response to customers'
-2.143 31 .040
problems, suggestions, and complaints.
C4. Investment in tablet and smart phone
-.966 31 .342
apps
C5. Advance Technological infrastructure to
meet the dynamic consumer demands & .292 31 .772
fasten business operations
C6. Analytical tools to track consumer
-.560 31 .580
behavior & transactions
C7. Consistent offline and e-media
.960 31 .345
advertising without any blackout periods
C8. Business alliance with white label
products e.g. hotels, flights, cab, insurance, .364 31 .718
holiday package
C9. Informed reports for forecasting and
1.526 31 .137
decision making
C10. Interactive feedback between customer
-1.099 31 .280
and business

184
C11. Consistent Promotion design tailored
-.490 31 .627
according to the consumer purchase patterns
C12. Innovative payment gateway features
to enhance consumer experience & increase -1.028 31 .312
business performance
C13. Improve Process efficiency -
streamline the time to develop a custom -1.558 31 .129
itinerary
C14. Improve Process efficiency - The time
-.867 31 .393
taken to quote the offering & price
C15. Engage with exciting content on social
media to encourage engagement between .183 31 .856
travel products and consumers
C16. Multi-Channel Marketing -.459 31 .649

Travel agents, tour operators, travel meta search engines, global

distribution systems place high importance on updating the websites

regularly and making the websites consumer friendly in order to find

travel products and book easily.

Travel agents, tour operators, travel meta search engines, global

distribution systems place high importance on prompt response to

consumer complaints.

Travel agents, tour operators, travel meta search engines, global

distribution systems place high importance on implementing mobile

technology for travel industry. Smartphone- and tablet-based searches

for hotel rooms and airline tickets are growing in the double- and triple-

digits in major markets. Travel companies have realized they need to

invest a great deal more in mobile apps and cloud services, and try to

out-innovate their competition on mobile. The rapid adoption rate of

mobile devices is driving a myriad of changes in how travelers access

information and plan their trips. And how the travel industry responds to

185
those needs. Mobile technology is also allowing people to book travel

closer to their trip start date and their destination.

Airlines and hotels place higher importance on integrated advertising

(offline and online advertising) as compared to travel agents, tour

operators, meta search engines and global distribution systems. The

conversion rate improves as a result of integrated advertising. The brand

image gets amplified across both offline and online advertising channels.

Integrated advertising results in reaching out to a wider audience base

and bring new customers to experience the travel products. Consistent

advertising amplifies brands promise of providing value to the

consumers by constant innovation in products and services that meet

consumer‘s needs. There‘s been much discussion on the strategies

between traditional marketing and digital marketing – mostly regarding

how effective one is over the other. The former practice consisted mostly

of dividing concentrations on online and offline strategies, but experts

now consider that melding the two together can reap better benefits, as

long as both campaigns are focused on a central message. Each

advertiser sells to a different segment of consumers, and each medium is

targeting a different audience. We characterize the competitive

equilibrium in the advertising markets and evaluate the implications of

targeting. An increase in targeting leads to an increase in the total

number of consumer-product matches, and hence in the social value of

advertising. We distinguish offline and online media by their targeting

ability: low versus high. As consumers‘ relative exposure to online

media increases, the revenues of offline media decrease, even though the

186
price of advertising might increase. he Internet has allowed many

advertisers to address a targeted audience beyond the reach of traditional

media. In fact, it has been argued that the distinguishing feature of

Internetadvertising is its ability to convey information to a targeted

audience. In particular, targeting improves the quality of the match

between the consumer and the advertisement message, and enables

smaller businesses to access advertising markets from which they were

previously excluded.

Airlines and hotels place higher importance on informed reports for

business forecasting and decision-making as compared to travel agents,

tour operators, meta search engines and global distribution systems.

Informed reports helps in forecasting demand and creates dynamic and

systematic process that can be re-used. Forecasting based on informed

reports helps business predict future results. In many business situations,

there is a need to maximize revenue by selling a limited amount of a

product. For example, in selling seats for a flight, the number of seats is

fixed, they can be sold until the departure time, thereafter they simply

perish; given the fixed inventory of seats, airlines need to forecast

demand in order to set prices accordingly. Forecasting demand in

passenger airlines is a challenging task, because the knowledge about the

customers‘ preferences is limited, and many demand drivers does not

follow a regular repeating pattern. Forecasting future demand in the

lodging industry is crucial because it leads to an efficient planning for,

and decision making to all the departments, and most importantly it is

one of the drivers of pricing. The accuracy of the forecast is essential

187
 because the forecast is the main driver of the pricing/room allocation

decisions; inaccurate forecasts or predictions will diminish the hotel's

revenues and profit margin. In fact, a 10% improvement in forecasting

accuracy translates into a 1.5 to 3% increase in revenue

T-Test (Factors that are detrimental to the growth of the e-

commerce business in the travel industry related organizations)

Type of N Mean Std. Std.

Organization Deviation Error
Mean
Hotels/Airlines 11 4.45 .688 .207
Agents/Tour
D1.a Flight + Hotels
Op/Search 22 4.50 .913 .195
Engines/GDS
Hotels/Airlines 11 4.18 .874 .263
D1b Flight + Hotels + Car Agents/Tour
Rental Op/Search 22 4.23 1.152 .246
Engines/GDS
Hotels/Airlines 11 4.09 1.221 .368
D1c Flight + Hotels + Car Agents/Tour
Rental + holiday package Op/Search 22 4.50 1.185 .253
Engines/GDS
Hotels/Airlines 11 4.36 .674 .203
D2. Non Differentiated
Agents/Tour
products & services from
Op/Search 22 4.59 .854 .182
competition
Engines/GDS
D3. Lack of Advance Hotels/Airlines 11 4.55 .522 .157
Technological infrastructure to Agents/Tour
meet the dynamic consumer Op/Search 22 4.82 .501 .107
demands Engines/GDS
Hotels/Airlines 11 4.73 .467 .141
D4. Slow time to market than Agents/Tour
competition Op/Search 22 4.64 .727 .155
Engines/GDS
D5. Brand lacks loyalty Hotels/Airlines 11 4.55 .522 .157

188
&satisfaction Agents/Tour
Op/Search 22 4.68 .568 .121
Engines/GDS
Hotels/Airlines 11 4.36 .809 .244
D6. Brand lacks consumer Agents/Tour
preference Op/Search 22 4.73 .550 .117
Engines/GDS
D7. Delay in payments of Hotels/Airlines 11 4.00 1.000 .302
suppliers/partners leading to Agents/Tour
suspension of business deals Op/Search 22 4.23 1.066 .227
and advertising campaigns Engines/GDS

Independent Samples Test

t-test for Equality of Means

t df Sig. (2-
tailed)
D1.a Flight + Hotels -.145 31 .885
D1b Flight + Hotels + Car Rental -.115 31 .909
D1c Flight + Hotels + Car Rental + holiday
-.926 31 .362
package
D2. Non Differentiated products & services from
-.769 31 .448
competition
D3. Lack of Advance Technological
infrastructure to meet the dynamic consumer -1.454 31 .156
demands
D4. Slow time to market than competition .376 31 .709
D5. Brand lacks loyalty & satisfaction -.667 31 .510
D6. Brand lacks consumer preference -1.526 31 .137
D7. Delay in payments of suppliers/partners
leading to suspension of business deals and -.589 31 .560
advertising campaigns

Travel agents, tour operators, travel meta search engines, GDS perceive

that it is important for travel related organizations to provide a wide

range of travel solutions not just selective travel solutions. Travel agents,

tour operators, travel meta search engines, GDS place high importance

on providing flights, hotels, car rental and holiday package to the

189
consumers to book on a single platform when the consumers visit.

Consumers need not go to different travel service provider platforms to

book different travel products. Multiple products under one roof invites

new customers and enhances brand image and hence brand preference

which ultimately leads to brand satisfaction and loyalty.

Travel agents, tour operators, travel meta search engines, GDS place

high importance that lack of advance technological infrastructure may be

detrimental for business growth as business would demand enhancement

in technology. Travel industry is highly dependent on technology as the

products are built with the help of technology. Technology trends in the

travel industry are complex – they involve cutting-edge content

aggregation, distribution, user engagement, intelligent agents, mobile

payments and more. Some new technologies are designed to improve the

user experience, others to contribute to business performance and service

delivery. But all innovations must work within the context of a rapidly

evolving technology environment in which consumers are changing the

way they interact with devices and suppliers can deliver new capability

faster and cheaper than ever before.

Travel agents, tour operators, travel meta search engines, GDS place

high importance that lack of brand preference in the consumers mind can

be detrimental for business growth. Most companies are running

programs that can estimate customer satisfaction levels and provide

more customer-oriented products and services. Because customer

satisfaction is a post hoc evaluation of consumption experience, it has

been regarded as a fundamental determinant of long-term consumer

190
 behavior. Brands with a strong hold on consumer minds can capitalize

on that hold through brand extension. The new products get traction in

the market, at least in theory, on the strength of the brand name. A weak

brand name that lacks this hold on consumer minds cannot lend strength

to a new product to capture market share.

Organizations who own inventory to be sold through

intermediaries and their own websites (hotels, airlines)

Critical Success Factors that make e-commerce business

profitable in the travel industry related organizations (in order

of importance)

Descriptive Statistics
N Mean Std.
Deviation
A11c. Competitive pricing 11 4.91 .302
A10c. Deal sites 11 4.73 .647
A2. Technological infrastructure that supports the dynamic
11 4.73 .467
business demand
A11b. Prompt customer service 11 4.64 .505
A9a. Products that are of most interest / most importance to
travel related organizations to increase business performance - 11 4.64 .505
a) Flight + Hotels
A4. Promotions to drive incremental business 11 4.45 .688
A11a. Differentiated products & services - a) Exciting holiday
11 4.45 .688
itinerary
A7. Multi-Channel Marketing 11 4.45 .820
A1. Commitment (Commitment and support from top
11 4.45 .820
management in term of strategy and implementation)
A3. Online media marketing budgets 11 4.36 .809
A10b. Tourism sites 11 4.18 .982
A8. Partnership/Alliance to expand the product offering 11 4.18 .874
A10a. Widen the travel product distribution system - a) E-
11 4.18 .751
Tailing sites
A9c. Flight + Hotels + Car Rental + holiday package 11 4.09 1.221
191
A6. Customer retention through customer loyalty 11 4.00 .632
A5. Customer purchase patterns and tailor products according to
11 4.00 .894
the purchase patterns
A9b. Flight + Hotels + Car Rental 11 4.00 1.095
A10d. Tour operators brochures & websites 11 3.82 .982
Valid N (listwise) 11

Hotels and airlines perceive the following as key success factors that makes e-

commerce business profitable in order of importance.

Competitive pricing

Deal sites as an important distribution tool

Information technology

Booking of Flight and hotels as two independent product

Promotions to drive incremental business

Multi-channel marketing to create product and brand awareness

Factors that will have an impact on overall business

performance as a result of the structuring of e-commerce

business in the travel industry related organizations (in order of

importance)

Descriptive Statistics
N Mean Std.
Deviation
B9. Customer friendly website for consumers to easily
11 5.00 .000
locate and book tr
B6. Competitive pricing 11 4.64 .505
B2. Prompt response to customers' problems, suggestions,
11 4.64 .505
and complaints.
B4. Differentiated products & services from competition 11 4.55 .522

192
 B5. Advance Technological infrastructure to meet the
11 4.45 .688
dynamic consumer demands
B7. Efficient deals/packages/inventory distribution system 11 4.36 .674
B1. Customer-tailored marketing via customer profiling 11 4.27 .786
B3. Customer Loyalty & satisfaction 11 4.27 .786
B8. Human resources skill set pertaining to travel industry 11 4.18 .874
Valid N (listwise) 11

Hotels and airlines perceive the following as key factors that will have an

impact on overall business performance in order of importance.

Customer friendly website which will create a superior booking

experience

Differentiated products and services from what competition offers

Efficient deals/packages that can be offered to the b2b and b2c markets

Tailor marketing communications based on consumer preferences

Methods & practices to structure the e-commerce business in the

travel industry related organizations (in order of importance)

Descriptive Statistics
N Mean Std. Deviation
C5. Advance Technological infrastructure to
meet the dynamic consumer demands & fasten 11 4.91 .302
business operations
C1. Customer friendly website for consumers to
11 4.91 .302
easily locate and book travel related products
C2. Regular updating the website with latest
and correct information for consumers to make 11 4.82 .405
informed decision
C9. Informed reports for forecasting and
11 4.64 .505
decision making
C16. Multi-Channel Marketing 11 4.64 .674

193
C8. Business alliance with white label products
e.g. hotels, flights, cab, insurance, holiday 11 4.55 .688
package
C7. Consistent offline and e-media advertising
11 4.55 .522
without any blackout periods
C4. Investment in tablet and smart phone apps 11 4.55 .820
C3. Prompt response to customers' problems,
11 4.55 .522
suggestions, and complaints.
C11. Consistent Promotion design tailored
11 4.55 .522
according to the consumer purchase patterns
C15. Engage with exciting content on social
media to encourage engagement between travel 11 4.45 .688
products and consumers
C14. Improve Process efficiency - The time
11 4.36 .505
taken to quote the offering & price
C6. Analytical tools to track consumer behavior
11 4.27 .647
& transactions
C10. Interactive feedback between customer
11 4.09 .701
and business
C12. Innovative payment gateway features to
enhance consumer experience & increase 11 4.09 .831
business performance
C13. Improve Process efficiency - streamline
11 3.91 .701
the time to develop a custom itinerary
Valid N (listwise) 11

Hotels and airlines perceive the following methods and practices required to

structure the e-commerce business in order of importance.

Advance technologies (mobile and web)

Customer friendly websites which creates superior booking experience

Regular updates on the websites to increase the ranking in search

engines results

Alliance partnerships to widen the product offering to the consumers

Consistent offline and online advertising for retention and new customer

acquisition

194
 Prompt response to consumers complaints and improvise brands

reputation

Consistent promotion design based on consumption patterns

Improve process efficiency – time taken to develop the product and offer

the same in the market

Analytics to track the traffic, consumer behavior and transactions.

Derive trends.

Factors that are detrimental to the growth of the e-commerce

business in the travel industry related organizations (in order of

importance)

Descriptive Statistics
N Mean Std. Deviation
D4. Slow time to market than competition 11 4.73 .467
D5. Brand lacks loyalty & satisfaction 11 4.55 .522
D3. Lack of Advance Technological
infrastructure to meet the dynamic consumer 11 4.55 .522
demands
D1.a Flight + Hotels 11 4.45 .688
D6. Brand lacks consumer preference 11 4.36 .809
D2. Non Differentiated products & services
11 4.36 .674
from competition
D1b Flight + Hotels + Car Rental 11 4.18 .874
D1c Flight + Hotels + Car Rental + holiday
11 4.09 1.221
package
D7. Delay in payments of suppliers/partners
leading to suspension of business deals and 11 4.00 1.000
advertising campaigns
Valid N (listwise) 11

Hotels and airlines perceive the following factors are detrimental to the growth

of the e-commerce in order of importance

195
 Slow time to market of a product then competition. A common

assumption is that Time To Market matters most for first-of-a-kind

products, but actually the leader often has the luxury of time, while the

clock is clearly running for the followers.

Brand lacks satisfaction and loyalty

Lack of advance technological infrastructure

Non- competitive pricing for flights and hotels as a product range

offering to consumers.

Organizations who display inventory by connecting with the

systems of the organizations who own inventory (Online travel

agents, tour operators, traditional travel agents, travel meta

search engines, Global Distribution Systems)

Critical Success Factors that make e-commerce business

profitable in the travel industry related organizations (in order

of importance)

Descriptive Statistics
N Mean Std.
Deviation
A11b. Prompt customer service 22 4.86 .351
A2. Technological infrastructure that supports the dynamic
22 4.86 .351
business demand
A11c. Competitive pricing 22 4.82 .395
A1. Commitment (Commitment and support from top
22 4.73 .456
management in term of strategy and implementation)
A9a. Products that are of most interest / most importance to travel
related organizations to increase business performance - a) Flight 22 4.68 .477
+ Hotels

196
A11a. Differentiated products & services - a) Exciting holiday
22 4.59 .590
itinerary
A3. Online media marketing budgets 22 4.55 .510
A4. Promotions to drive incremental business 22 4.50 .598
A9b. Flight + Hotels + Car Rental 22 4.50 .913
A7. Multi-Channel Marketing 22 4.45 .596
A9c. Flight + Hotels + Car Rental + holiday package 22 4.45 1.101
A10c. Deal sites 22 4.41 .734
A8. Partnership/Alliance to expand the product offering 22 4.36 .658
A10b. Tourism sites 22 4.32 .780
A5. Customer purchase patterns and tailor products according to
22 4.18 .795
the purchase patterns
A10d. Tour operators brochures & websites 22 4.14 .834
A10a. Widen the travel product distribution system - a) E-Tailing
22 4.05 .785
sites
A6. Customer retention through customer loyalty 22 3.95 1.174
Valid N (listwise) 22

Online travel agents, tour operators, traditional travel agents, travel meta search

engines, Global Distribution Systems perceive the following as key success

factors that makes e-commerce business profitable in order of importance.

Prompt customer service

Advance technology

Competitive pricing

Commitment from top management in terms of strategy and

implementation

197
 Factors that will have an impact on overall business

performance as a result of the structuring of e-commerce

business in the travel industry related organizations (in order of

importance)

Descriptive Statistics

N Mean Std. Deviation

B9. Customer friendly website for consumers to easily locate and book tr 22 5.00 .000
B4. Differentiated products & services from competition 22 4.82 .395
B5. Advance Technological infrastructure to meet the dynamic consumer
22 4.82 .395
demands
B6. Competitive pricing 22 4.77 .528
B3. Customer Loyalty & satisfaction 22 4.77 .528
B2. Prompt response to customers' problems, suggestions, and complaints. 22 4.68 .568
B7. Efficient deals/packages/inventory distribution system 22 4.55 .510
B1. Customer-tailored marketing via customer profiling 22 4.36 .727
B8. Human resources skill set pertaining to travel industry 22 4.23 .752
Valid N (listwise) 22

Online travel agents, tour operators, traditional travel agents, travel meta search

engines, Global Distribution Systems perceive the following as key factors that

will have an impact on overall business performance in order of importance.

Customer friendly websites which creates superior booking experience

Differentiated products & services from competition

Advance technology infrastructure

Competitive pricing

198
 Methods & practices to structure the e-commerce business in the

travel industry related organizations (in order of importance)

Descriptive Statistics
N Mean Std.
Deviation
C1. Customer friendly website for consumers to easily locate and
22 5.00 .000
book travel related products
C3. Prompt response to customers' problems, suggestions, and
22 4.91 .426
complaints.
C5. Advance Technological infrastructure to meet the dynamic
22 4.86 .468
consumer demands & fasten business operations
C2. Regular updating the website with latest and correct information
22 4.82 .395
for consumers to make informed decision
C4. Investment in tablet and smart phone apps 22 4.77 .528
C16. Multi-Channel Marketing 22 4.73 .456
C11. Consistent Promotion design tailored according to the consumer
22 4.64 .492
purchase patterns
C14. Improve Process efficiency - The time taken to quote the
22 4.55 .596
offering & price
C8. Business alliance with white label products e.g. hotels, flights,
22 4.45 .671
cab, insurance, holiday package
C6. Analytical tools to track consumer behavior & transactions 22 4.41 .666
C15. Engage with exciting content on social media to encourage
22 4.41 .666
engagement between travel products and consumers
C12. Innovative payment gateway features to enhance consumer
22 4.36 .658
experience & increase business performance
C10. Interactive feedback between customer and business 22 4.36 .658
C13. Improve Process efficiency - streamline the time to develop a
22 4.32 .716
custom itinerary
C9. Informed reports for forecasting and decision making 22 4.27 .703
C7. Consistent offline and e-media advertising without any blackout
22 4.14 1.356
periods
Valid N (listwise) 22

Online travel agents, tour operators, traditional travel agents, travel meta search

engines, Global Distribution Systems perceive the following methods and

practices required to structure the e-commerce business in order of importance.

199
 Customer friendly websites which creates superior booking experience

Prompt response to consumer complaints

Advance technology infrastructure (web & mobile)

Regular updates on the websites to increase the ranking in search

engines results

Multi-Channel marketing to increase product and brand awareness

Consistent promotion to drive incremental revenues

Improve process efficiencies - time taken to develop the product and

offer the same in the market

Business alliances to expand the product range for the benefit of

consumers

Factors that are detrimental to the growth of the e-commerce

business in the travel industry related organizations (in order of

importance)

Descriptive Statistics

N Mean Std. Deviation

D3. Lack of Advance Technological infrastructure to meet the

22 4.82 .501
dynamic consumer demands
D6. Brand lacks consumer preference 22 4.73 .550
D5. Brand lacks loyalty & satisfaction 22 4.68 .568
D4. Slow time to market than competition 22 4.64 .727
D2. Non Differentiated products & services from competition 22 4.59 .854
D1c Flight + Hotels + Car Rental + holiday package 22 4.50 1.185
D1.a Flight + Hotels 22 4.50 .913
D7. Delay in payments of suppliers/partners leading to suspension
22 4.23 1.066
of business deals and advertising campaigns
D1b Flight + Hotels + Car Rental 22 4.23 1.152
Valid N (listwise) 22

200
Online travel agents, tour operators, traditional travel agents, travel meta search

engines, Global Distribution Systems perceive the following factors are

detrimental to the growth of the e-commerce in order of importance

Lack of advance technological infrastructure

Brand lacks satisfaction and loyalty

Slow time to market of a product then competition. A common

assumption is that Time To Market matters most for first-of-a-kind

products, but actually the leader often has the luxury of time, while the

clock is clearly running for the followers.

Lack of product and service differentiation from competition

Non-competitive pricing for flight, hotels, car rental and holiday package

as a product range offering to consumers.

Delay in payment to the suppliers can lead to suspension of business

deals and advertising campaigns. It weakens your organisation because it

harms your reputation, damages your supply sources and strains your

relations with suppliers, late payment is often taken as an indication that

the buyer is in difficulties. If you create this impression with your

suppliers you may find that their terms worsen. The way

purchasing/sales relationship is managed is important to the profit

margins. A commitment to prompt payment can be a powerful aid to

better buying; it will certainly produce closer, more co-operative

partnerships between the firm and suppliers. Delay in payment of

commission slabs to the travel agents result in either removing the

inventory from the OTA/B2B websites or retail travel agents stop

inclusion of the flight/hotel inventory in their

201
 Chapter 11

Conclusion

Tourism is backbone of country's economy. Due to increment on people income, more

and more people are travelling and they are using various channels to purchase their

holiday, some are still using traditional ways buying tourism with the travel agents,

tour operators, hotels etc and some are using electronic way to book and buy tourism

product. Even many travel and tour companies are adapting e-commerce to boom their

business, they are moving from traditional ways to e-business ways to grasp markets

as people are using internet and other online software more often. E-commerce is the

new way for promoting and selling tourism products through web.It is not easy to

adapt e-commerce at once from traditional way, investment on information

technologies costs huge amount and further it need skill human resources. After the

adaption of e-commerce in business, it has to face many challenges; one of the main

challenges is to attract traditional buyers who prefer buying products from travel

agencies rather than booking through web. To lure these customers, awareness

towards e-commerce is necessary; website should be user friendly, informative,

should have very rich contents, if possible they should provide virtual tour of the

destination. There are several benefits as well as barriers for adaption of e-commerce

in travel and tourism, benefits are low operating costs, interaction with customers,

customer can choose products using internet, fast and speed in service, easy to find

new business partners, can communicate with customers during holidays in case of

any problems etc however key barriers for adopting e-commerce is huge investment,

consumer's loyalty, lack of human skill resources, government policies about e-

commerce, customer confidence etc. Due to e-commerce in travel and tourism,

202
behaviour of consumer is changed, they are less loyal toward the company and it's

easy for them to change the company in few seconds. To retain customer, companies

have to provide excellent services and offer loyalty programs to customers. While

going through the above literature have found many things in common. It has been

found that companies have to consider various things while adopting e-commerce

although it is beneficial for them as it reduces costs, save time, their brand presence

worldwide etc however they admired that companies can lose personal touch with

customers and their loyalty as it is very easy to switch companies due to variety of

choices offered to customers. E-Commerce has provided great advantages for both

demanders (consumers) and suppliers (businesses) of economic activities. With E-

commerce, consumers can search and compare a variety of products and services in

the global market, and then place their orders conveniently anytime and anywhere

without geographic limitations. This simplifies the buying process and provides more

selections to consumers than traditional businesses are able to. The Internet serves as a

new communication and distribution channel for travelers and suppliers of travel

services and products. Commercial websites have many attributes with different roles

and functions in company‘s marketing efforts. The websites with appropriate set of

attributes can influence satisfaction, affect consumers‘ online shopping behavior and

play a positive role in creating demand. Proper use of the attributes can increase

online transactions and repurchase intention judgments, not only consumers‘ current

purchases but also future purchase intentions. Therefore, it is important for companies

to better understand how online consumers evaluate these attributes and what makes

them remain on the websites. In contemporary travel agencies and tour operators

business, the Internet has shown to be a profitable medium of tourism promotion and

sales. The Internet represents an interesting and useful distribution channel for

203
collecting clients and it provides the ability to identify their desires. Promotional

visualization of tourism services and products through multimedia technology leaves

greater impression on potential customer than standard brochures, catalogues and

leaflets. Overbooking has become almost impossible because all communication

problems that may cause it are removed. The Internet allows the improvement of

travel agencies and tour operators by speeding up communication and providing all

the necessary information. Product distribution and services of agencies do not depend

on the quantity of printed catalogues anymore and information about them can reach

millions of the Internet users. The Internet provides selling services of travel agencies

on demand. As technology is evolving faster than ever before, it has made most

travellers around the world much more technology-savvy than in the past. The internet

has revolutionized the tourism industry more than any other factor in the last few

decades. Also, as more people are connected to each other, with access to the vast

pool of information available online, an increasing number of travelers are seeking

information via the internet prior to making any travel decisions. Hence, it has become

important for the tourism industry to adapt and uplift its practices and skills of the

workforce within in to meet changing customer behavior. Challenges to the expansion

of technology take-up by tourism businesses. The biggest challenge imposed upon the

tourism industry in adopting technology is the lack of accurate education of the ‗right‘

technology that is suitable for their business. There is a very big gap between the

tourism industry and the technology industry. Some organizations have been able to

tap into this gap and have turned into Online Travel Agents (OTA). However, it is not

every tourism business needs to become an OTA to successfully utilize technology. It

is more important to understand each business‘s competitive edge and adopt the

related technology in order to strengthen their competencies.

204
 Chapter 12

Suggestion & Recommendation

Recommend that adaption of e-commerce is very fruitful to tour and travel

companies however along with adaption of e-commerce, companies have to

focus on changing behavior of customer as well, what customer expects while

booking and buying through the web. What will be customer perception using e-

commerce in travel and tourism? Research on customer perception, customer

exception, level of customer satisfaction, compensation in case of bad services,

secured online payment system etc. should be deeply researched while adapting

e-commerce in travel and tourism. In this competitive environment, business

decision makers need to know some guidelines for developing their e-commerce

presences. Understanding what is important to users is essential in

differentiating its website from the competitors‘, creating a more compelling e-

commerce experience, thereby potentially boosting profits. Client engagement

— both acquisition and retention — is the key to success in the travel industry.

Whether a boutique travel agency or large tour operator, travel industry

companies need to ensure they attain the right volumes of business by

consistently finding and retaining new clients. As disintermediation and

intensifying competition continue to commoditise travel packages and shrink

margins, both client acquisition and retention have become critical competitive

advantages. Yet how can travel industry companies communicate and engage

with large numbers of both prospective and existing clients in a way that is not

only personal and relevant enough to produce the right results, but is also cost-

effective? The answer is multichannel marketing.

205
Delivering on the promise of Customer Relationship Management, multichannel

marketing is intelligent, data-driven marketing in the online environment. As

more and more travel industry companies are discovering, multichannel

marketing is the key to winning more business and strengthening client

relationships through personalized, relevant communication. Multichannel

marketing means more sales by enabling you to continuously profile prospects

and find out more about them — what their changing travel likes, needs and

preferences are — multichannel marketing will help you:

Identify promotions and special offers that will appeal to the largest

number of clients;

Ensure promotions are always relevant — targeted at the right prospects;

Ensure promotions are delivered to each chosen prospect at the most

opportune time and in the preferred manner (web, mobile or email).

Multichannel marketing means strengthened client relationships

By enabling you to personalize your client communication, request feedback

and record client responses, multichannel marketing will help you:

Capitalize on client relationships by consistently anticipating their

specific needs;

Exploit the growing preference for self-service by presenting the right

value offering to each individual client at the right time;

Eliminate the frustration and cost caused by irrelevant messages sent at

inappropriate times.

206
Multichannel marketing means cost-efficient communication - By enabling

you to automate and schedule your client communication multichannel

marketing will help reduce the administrative burden and costs of regular or

routine communication tasks like monthly newsletters; take maximum

advantage of last minute specials by sending out personalised, high speed, high

volume messages to large, diverse audiences (bulk emails or SMS).

Two key areas for growth is predicted with regards to utilizing tourism

technology in the tourism industry correctly. The first area is the marketing of

the tourism destinations, products and services. Selling tourism products and

services online has changed from being just ―price-conscious‖ to being ―an

inspiration‖ to the viewer to travel. As the online user absorbs information from

a variety of sources, it is usually the site or information source that can best

stimulate the viewer to travel that will be remembered by the user. Digital

Marketing, Search Engine Marketing, Mobile and Location Based Marketing,

and a variety of other channels exist today for reaching the potential traveller.

However, it is the appeal of the content, combined with the right pricing that

will ultimately attract the user to your business. The second area is the

infrastructure of the organization, which determines the readiness to respond to

customer requirements. As more travelers are expect personalized products and

services to meet their demands, it is important for tourism businesses to have

tools that can store and monitor information in order to meet the individual

needs of their clients. The better you know your customer, the more likely you

will retain them for a longer period of time. Customer relationship management

and other fundamental information management systems are essential for

businesses to scale-up.

207
Annexure 1 - Bibliography

Chong, Sandy, Electronic Commerce Adoption By Small- And Medium-Sized

Enterprises In Australia: An Empirical Study Of Influencing Factors. Curtin

University of Technology, GPO Box U1987 Perth, Western Australia. 6845,

Australia, chongs@cbs.curtin.edu.au

AmitBasu and Steve Muylle. How to Plan E-Business Initiatives in Established

Companies.Mit Sloan Management Review, Fall 2007, Vol.49 No. 1

AlkaRaghunath&MurliDharPanga. Problem and Prospects of

Ecommerce.Medicaps Institute of Techno Management Indore, Volume 2,

Issue–1, 2013

MairajSalim, The Impact Of E-Commerce On Business Value In Service

Organisations, Aligarh Muslim University Aligarh (India), 2002.

KittipongLaosethakul, Critical Success Factors For E-Commerce In Thailand: A

Multiple Case Study, M.S., University Of Alabama In Huntsville, December 16,

2005

Andryce M. Zurick, E-Business Planning And Decision-Making Processes,

Capella University, September 2007

Lee, Sang Myung, Determinants of e-business model performance, ProQuest

Dissertations and Theses, 2005

208
Hassan M. Selim, Critical Factors Classification for Firm Adoption of E-

Commerce, College of Business & Economics, United Arab Emirates

University, Al Ain, United Arab Emirat

Gaurav Seth, Analyzing the Effects of Social Media on the Hospitality Industry,

University of Nevada, Las Vegas

Shahanur Islam, E-Business – A Tool to Enhance Tourism Industry: A Study on

Bangladesh, ASA University Bangladesh, Vol. 6 No. 1

Hsu-Kuan Jonathan Liu and Liwen Chen, The perception of travel agents in

Taiwan regarding travel website and training needs for adopting E-commerce,

African Journal of Business Management Vol.5 (26), pp. 10811-10820.

Mustafa Öz, A research to evaluate the airline companies‘ websites via a

consumer oriented approach, African Journal of Business Management Vol.

6(14), pp. 4880-4900

Mamaghani, Farrokh International Journal of Management , Vol. 26, No. 3

209
Annexure 2 – Webliography

www.google.com

www.wikipedia.com

www.tnooz.com

www.emarketer.com

www.questia.com

www.pioneerjournal.in

www.buuteeq.com

www.tourism.gov.in

www.gidb.org

www.statista.com

210
 Annexure 3 – Questionnaire

Critical Success Factors that make e-commerce business profitable in the travel

industry related organization

1---- 2---- 3---- 4---- 5----

Strongly Disagree Neutral Agree Strongly
Disagree Agree
Commitment (Commitment and support from top
management in term
of strategy and implementation)

1 2 3 4 5
Technological infrastructure that supports the
dynamic business demand 1 2 3 4 5
Online media marketing budgets

1 2 3 4 5
Promotions to drive incremental business

1 2 3 4 5
Customer purchase patterns and tailor products
according to the purchase patterns
1 2 3 4 5
Customer retention through customer loyalty
1 2 3 4 5
Multi-Channel Marketing
1 2 3 4 5
Partnership/Alliance to expand the product offering
1 2 3 4 5
Products that are of most interest / most importance
to travel related organizations to increase business
performance
a) Flight + Hotels
1 2 3 4 5
b) Flight + Hotels + Car Rental
1 2 3 4 5
c) Flight + Hotels + Car Rental + holiday package
1 2 3 4 5
Widen the travel product distribution system
a) E-Tailing sites
1 2 3 4 5
b) Tourism sites
1 2 3 4 5
c) Deal sites
1 2 3 4 5
D) Tour operators brochures & websites
1 2 3 4 5
Differentiated products & services
a) Exciting holiday itinerary
1 2 3 4 5
b) Prompt customer service
1 2 3 4 5
c) Competitive pricing
1 2 3 4 5
1

211
 Factors which will have a impact on overall business performance as a result of the

structuring of e-commerce business in the travel industry related organizations

1---- 2---- 3---- 4---- 5----

Strongly Disagree Neutral Agree Strongly
Disagree Agree
Customer-tailored marketing via
customer profiling

1 2 3 4 5
Prompt response to customers
Problems, suggestions, and 1 2 3 4 5
complaints.
Customer Loyalty & satisfaction

1 2 3 4 5
Differentiated products & services
from competition

1 2 3 4 5
Advance Technological
infrastructure to meet the dynamic
consumer demands 1 2 3 4 5
Competitive pricing

1 2 3 4 5
Efficient deals/packages/inventory
distribution system 1 2 3 4 5
Human resources skill set
pertaining to travel industry

1 2 3 4 5
Customer friendly website for
consumers to easily locate and 1 2 3 4 5
book travel related products

212
 Methods & practices to structure the e-commerce business in the travel industry

related organizations

1---- 2---- 3---- 4---- 5----

Strongly Disagree Neutral Agree Strongly
Disagree Agree
Customer friendly website for consumers
to easily locate and book travel related 1 2 3 4 5
products
Regular updation of the website with latest
and correct information for consumers to 1 2 3 4 5
make informed decision
Prompt response to customers
Problems, suggestions, and complaints. 1 2 3 4 5

Investment in tablet and smartphone apps 1 2 3 4 5

Advance Technological infrastructure to
meet the dynamic consumer demands & 1 2 3 4 5
fasten business operations

Analytical tools to track consumer 1 2 3 4 5

behavior & transactions
Consistent offline and e-media advertising
without any blackout periods 1 2 3 4 5
Business alliance with white label
products e.g. hotels, flights, cab, 1 2 3 4 5
insurance, holiday package
Informed reports for forecasting and
decision making 1 2 3 4 5
Interactive feedback between customer
and business 1 2 3 4 5
Consistent Promotion design tailored
according to the consumer purchase 1 2 3 4 5
patterns
Innovative payment gateway features to
enhance consumer experience & increase 1 2 3 4 5
business performance
Improve Process efficiency - streamline
the time to develop a custom itinerary 1 2 3 4 5

Improve Process efficiency - The time

taken to quote the offering & price 1 2 3 4 5

Engage with exciting content on social

media to encourage engagement between 1 2 3 4 5
travel products and consumers

Multi-Channel Marketing
1 2 3 4 5

213
 Factors that are detrimental to the growth of the e-commerce business in

the travel industry related organizations

1---- 2---- 3---- 4---- 5----

Strongly Disagree Neutral Agree Strongly
Disagree Agree
Non – Competitive Pricing of
Products that are of most interest
/ most importance to travel
related organizations to increase
business performance
1 2 3 4 5
a) Flight + Hotels
1 2 3 4 5
b) Flight + Hotels + Car Rental
1 2 3 4 5
c) Flight + Hotels + Car Rental
+ holiday package
1 2 3 4 5
Non Differentiated products &
services from competition

1 2 3 4 5
Lack of Advance Technological
infrastructure to meet the
dynamic consumer demands 1 2 3 4 5
Slow time to market then
competition
1 2 3 4 5
Brand lacks loyalty &
satisfaction 1 2 3 4 5
Brand lacks consumer
preference

1 2 3 4 5
Delay in payments of
suppliers/partners leading to 1 2 3 4 5
suspension of business deals and
advertising campaigns

214