Abstract
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 behaviour on e-commerce is also gazed on this review.
Introduction:
Tourism Industry is one of the back bones 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 the internet."(Turban et. al, 2000). 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 However, it has some limitations as some information may not be correct, outdated, portrayed and we have seen several online fraud case too.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 are tapping business through e-commerce. E-commerce refers 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.
Objectives:
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. (Mamaghaini, 2009)
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:-
Overall impact of e-commerce in travel and tourism industry
Customers' perceptions of e-commerce in travel and tourism industry
Benefits and limitations of e-commerce in travel and tourism industry
Major challenges in adopting e-commerce in travel and tourism industry
Literature review:
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.
As per Werthner H. and Ricci F., e-commerce in travel and tourism industries are continuously increasing despite of tough economic problems. (Werthner H., Ricci F., 2004). 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(Werthner H., Ricci F., 2004). Travel and tourism is information based service orientated business and the product is termed as "confidence good" (Werthner H., Ricci F., 2004) 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 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. As per Kim (2004), 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 per Kim 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 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. In journal of Kim (2004), he pointed 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
(Kim, 2004)
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. As mentioned by Kim (2004), 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 (Kim, 2004).
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 adopt e-commerce in travel and tourism industry. As per Mamaghani (2009), 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 that "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 as per Mamaghani 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 as per Mamaghaini 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, emphasizing online agents' knowledge. (Wolfe et. al, 2004). Wolfe et. al have mentioned that 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.
Conclusion and recommendation:
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, 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, I have found many things in common. All writers have found out 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.
I 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 behaviour 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.
Bibliography:
Chaffy D., Chadwick E. F., Johnston K, Mayer R., 2006, Internet Marketing Strategy, Implementation and Practice, FT Prentice Hall, V (3), 10-11
Cho Y-H., Wang Y., Fesenmaier D.R., 2002, Searching for Experiences: The Web –Based Virtual Tour in Tourism Marketing, Journal of Travel & Tourism Marketing, Haworth Press, V.12 (4), 1-14
Kim, C. (2004), "E-Tourism: An Innovative Approach for the Small and Medium-Sized Tourism Enterprises (SMTES) in Korea", OECD Publishing
Law R., Bai B., (2008), "How do the preferences of online buyers and browsers differ on the design and content of travel websites?" International Journal of Contemporary Hospitality Management, V. 20 (4), 388 – 400
Mamaghaini F., 2009, Impact of E-commerce on Travel and Tourism: An Historical Analysis, International Journal of Management, V. 26 (3), 365-375
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Wolfe K., Hsu C. H. C., Kang S.K, 2004, Buyer Characteristics Among Users of Various Travel Intermediaries, Journal of Travel & Tourism Marketing, V.17 (2), 51-62,
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