Component-I (A) Personal details: E-Tourism. Tourism in India. Prof. P. Bhaskar Reddy Sri Venkateswara University, Tirupati.

Transcription

1 Component-I (A) Personal details: Tourism in India E-Tourism Prof. P. Bhaskar Reddy Sri Venkateswara University, Tirupati. Dr. E. Sivanagi Reddy Former Director, NITHM. Mr. Ravi Sankar Landu Tourism Software Professional, CA Technologies Mr. G Mahender Reddy, Assistant Professor Prof. P Narayana Reddy REVA University, Bangalore. 1

2 Component-I (B) Description of module: Subject Name Paper Name Module Name/Title Indian Culture Tourism in India E-Tourism Module Id IC / TI / 05 Pre requisites Objectives Keywords Introduction to E-Tourism, Scope and Importance, Applications To study about E-Tourism, its components and business models and its importance in tourism E-tourism, Information Technology, E-commerce, Applications E-Text (Quadrant-I): 1. Introduction: Tourism is traveling, mainly for recreational purposes or utilizing the leisure or to know and experience different cultures and heritage. Tourism is the fastest growing industry with a huge potential to generate employment for people and revenue for the government. Emergence of Information & Communication Technology (ICT) and internet transformed the way business is done worldwide. Tourism industry is one of the early adopter of ICT and internet. Ever since internet emerged, people predominantly used internet for travel planning (e.g., travel information search and booking). With internet penetration growing more and more, importance of ICT in tourism is also growing more and more. ICT and internet have been rapidly applied and diffused through tourism sectors. This is where E- Tourism comes into picture. ICT is one of the external environment elements for tourism, travel & hospitality. It offers the interface between consumers & suppliers globally. This module gives introduction to E-Tourism and gives insights into history and evolution of E-Tourism. It briefly lists the functions of E-Tourism, and explains the components of E- Tourism and different business models of it. Finally, the limitations of E-Tourism are studied. 1.1 Definition of Information & Communication Technologies (ICTs): According to Dimitrios Buhalis (2003), ICTs include the entire range of electronic tools, which facilitate the operational and strategic management of organizations by enabling them to manage their information, functions and processes, as well as to communicate interactively with their stakeholders for achieving their mission and objectives. Thus, ICT consists of hardware and software which facilitate in the management of different departments in an organization. ICTs emerge as an integrated system of networked equipment and software, which enables effective data processing and communication for organizational benefit, towards transforming organizations to e-businesses. 1.2 Definition of E-Tourism: According to Dimitrios Buhalis (2003), E-Tourism is the digitization of all the processes and value chains in the tourism, travel, hospitality and catering industries that enable organizations to maximize their efficiency and effectiveness. 2

3 At the tactical level, E-Tourism includes e-commerce, ERP, eprocurement and other such ICT functions which facilitate data processing and communication. At the strategic level, E-Tourism revolutionizes all business processes, the entire value chain as well as the strategic relationships of tourism organizations with all their stakeholders. E- tourism applies ICTs to maximize efficiency and effectiveness of the tourism organization through faster data processing and better communication. E-tourism is critical for the competitiveness of the tourism industry in the longer term. 1.3 Significance of E-Tourism: In order to serve increasing number of tourists, information has to flow quickly and accurately among the customers, intermediaries and tourism suppliers. As a result, ICT has become an inseparable feature of the tourism industry. Internet has become the leading source of information for tourists across the world. ICTs are now critical for strategic management of tourism organizations as they allow: Quicker expansion into new markets Empowering of employees with software tools to cater to more tourists Enhancing distribution online Reducing costs of operation by increasing the throughput Ease of information access to tourists, travel agencies, tour operators and all other stakeholders. ICTs assist the reduction of operation & communication costs of tourism business by: Integrating different operational systems with quicker and accurate transfer of information Maximizing the internal efficiencies with increased throughput Decreasing the number of people required for back office jobs Reducing the amount of face to face or telephone communications Enabling consumers to have access to all information 2. History and Evolution of E-Tourism: Like any other technology, E-Tourism also evolved over multiple stages starting from simple system to Destination Management Systems. The stages in E-Tourism evolution are: First Stage (1970s) - Emergence of Computer Reservation System (CRS) Second Stage (1980s) - CRS emerged into Global Distribution System (GDS) Third Stage (Since 1990s) - Internet Distribution System (IDS) & Destination Management System (DMS) 2.1 First Stage (1970s): Emergence of Computer Reservation System (CRS) Advent of Computer Networks and Electronic Distribution helped the emergence of Computer Reservation System in 1970s. CRS consists of a database to manage inventory of tourism organization, and this database could be accessed by remote sales offices, partners and intermediaries to make reservations. Thus, the reservation offices will have online live data available. Tourists can go to these reservation offices and book their tickets. CRS formulated a new marketing and distribution system in travel and tourism industry. 3

4 However, CRS is limited to airlines tickets booking only. Also, CRS developed by each service provider will help booking of tickets of that service provider only. For example, a tourist cannot book a ticket of British Airways using American Airlines CRS. American Airlines Computer Reservation System developed by American Airlines is an example of Computer Reservation System. 2.2 Second Stage (1980s): Global Distribution System (GDS) CRS evolved into GDS as airlines expanded their geographical coverage by increasing the reservation offices worldwide. GDS incorporated a wide range of services and products for the entire industry. It integrates multiple airline systems horizontally. Thus, GDS helps in booking ticket of any airlines which are integrated to the GDS. In this case, a tourist can book ticket of both British Airways and American Airlines using the GDS. GDS vertically integrates services such as accommodation, car rentals, bus/train booking etc. This is another improvement with respect to CRS. Using GDS, not only airline tickets can be booked, but also accommodation, car rentals etc. can be booked. As several companies are connected to the GDS, it enabled the purchasing of the majority of tourism products online. Information search and ticket booking is done faster as all the systems are interconnected. Thus more customers are served in lesser time. Owners charged commissions and participation fees. Transaction costs are too high for small operators. Helped the standardization of processes as it interconnects most of the tourism organizations and intermediaries around the world. Thus a standard had to be defined in order to have uniform data communication. One example of standardization could be air ticket format/template. Amadeus, Galileo, Sabre, Abacus etc. are examples of Global Distribution System. 2.3 Third Stage (Since the last decade of the 20th century): Internet Distribution System (IDS) & Destination Management System (DMS) Internet Distribution System (IDS): IDS are virtual travel agents or online travel agents where there is no physical booking clerk available to book the ticket. Websites almost replaced the ticket booking clerks. IDS uses GDS systems internally, and leverage the internet to provide online services Virtual Travel Agents offer wide range of services and packages needed for tourism The major difference between the second stage and third stage is- in the third stage, websites replace the ticket booking offices and ticket booking clerks. Tourists and travelers are now empowered to search and book the ticket online. 4

5 Some examples of Internet Distribution System are yatra.com, tripadvisor.in, makemytrip.com, travelocity.com etc. Web page Travelocity.com Destination Management System (DMS): Figure 1 Destination Management System emerged after the Internet Distribution System. It consists of product database, customer database, and a mechanism to connect the two. DMS allows customers to create personal destination experience DMS provides information and undertakes some marketing activities through mass media advertising Provides advisory service for consumers and the travel trade with regular and efficient communication with customer Designs and distributes brochures, leaflets and guides online DMS provides additional information to tourists on locally available attractions and products and contributes immensely to tourism growth Helps to overcome seasonality problems by spreading and balancing tourism demand Customer experience is enhanced through customer relationship management using DMS. This is the main differentiator of DMS from its predecessor. 5

6 3. E-Tourism Mix: E-Tourism Mix is a combination of Tourism activities, business activities and Information and Communication Technologies. Thus, the E-Tourism mix consists of regular business functions like marketing and sales, finance, HRM, procurement, inventory management, and tourism activities such as transport, travel, hospitality, Leisure and the Information and Communication Technology used in maintaining and managing the tourism business. 4. E-Commerce and Industry Value Chain: Figure 2 In the traditional business value chain, the supply channel consists of many intermediaries, between Manufacturers and consumers, such as Distributors and Retailers, which not only increase the cost of the product and service, but increases time of delivery. The cost increases because of transport, inventory maintained at different levels and the commissions added at each level. In case of Ecommerce, the intermediaries are reduced, and the product and service is delivered directly from manufacturer / service provider to the customer. Thus, E-Tourism bypasses Distributors and Retailers to reach end customers, and thus saves cost on commissions, transport, inventory etc. Figure 3 6

7 5. Functions of E-Tourism: E-tourism includes business functions like E-Commerce, E-Marketing, E-Finance, E- Accounting, E-HRM & E-Procurement. The list of different functions are provided below: Management support Strategic planning Competition analysis Financial planning and control Accounting and finance Marketing research Marketing strategy & implementation Pricing decision and tactics Middle term planning & feedback Management statistics/reports Operational control management functions Communication between departments Business functions Networking & information exchange Human resources management Staff coordination Operational planning Accounting/billing Payroll Supplies management Communication and function with branches Coordination of operations Reports and budgeting Availability/prices/information requests from headquarters/administration Share of common resource databases for customer and operational information Links between partners Availability/prices inquiries Negotiations and bargaining Reservations & confirmations Receipts/documents Vouchers & tickets production Travelling facilitation Keep partners informed about plans Follow up progress Amend plans should unexpected developments arise 7

8 Feedback and clearing commissions Payment & commissions clearance Feedback & suggestions Complaint handling Building loyalty through data mining 6. Components of E-Tourism: The essential components of Tourism are Accessibility, Accommodation, Tour Operators, Travel Agencies, and Attraction. The corresponding components of E-Tourism are E- Airlines, E-Hospitality, E-Tour Operators, E-Travel Agencies, and E-Destination. Accessibility consists of transport which is managed using E-Airlines. Accommodation consists of hotels where tourists stay when they visit a destination, and it is managed using E-Hospitality. The traditional Tour Operators and Travel Agencies which have physical offices and booking clerks are assisted by E-Tour Operators and E-Travel Agencies. And finally, the important component of Tourism, Attraction has E-Destination as the corresponding component of E- Tourism. Though physical attraction can never be replaced with anything else, E-Destination helps in providing as much information as possible to the tourist about the destination. The information can be a combination of text, photos, videos etc. Thus the E-Tourism components assist and support the components of Tourism, and they do not replace the components of Tourism. Figure 4 8

9 6.1 E-Airlines: E-Airlines focusses on improving the accessibility and customer relationship using online services and data mining. It provides electronic bookings and online ticketing. Distribution of airline seats is done using ICT and internet. It also has E-Auctions for last minute deals, which enhance customer satisfaction. It makes the business operations efficient, quick, lowcost and accurate management of inventory. E-Airlines also help customize the services based on customers. Indigo, Spice Jet, Air Asia are some of the examples of e-airlines which customize the services to provide low cost fares to customers. Webpage of Spicejet.com 6.2 E-Hospitality: Figure 5 E-Hospitality helps manage inventory, automate frontend and backend operations using software. E-Hospitality maximizes revenue and profitability by reducing the cost of operations and enabling service of more customers in lesser time. Property Management Systems is an ICT application that help manage end-to-end operations of hotels. Distribution and Marketing is done using ICT in E-Hospitality. The cost of promotion is reduced with E- Hospitality. CAPA e-hospitality Inc. is an example for e-hospitality system. 9

10 Home page of CAPA Hospitality software. Source: capasoftware.com 6.3 E-Tour Operators: Figure 6 Using ICT, tour operators connect to the databases of travel agencies to book services for the customers. ICT improved productivity, capacity management and enhanced services to customers. Tour operators promote their products and attract customers using internet. The services can also be customized using E-Tour operators by providing packages which include transport and accommodation. E-Tour operators internally use Global Distribution System for making the bookings. Internet is extensively used by E-Tour operators to promote the products and services. Southern travels is a good example of domestic E-Tour operator. Webpage of southerntravelsindia.com Figure 7 10

11 6.4 E-Travel Agencies: E-Travel agencies operate reservation systems to check availability, prices and make reservations for tourism products. They offer services for booking air ticket, hotel, car, bus, train, cruise etc. E-Travel agencies act as intermediaries between consumers and principals. With ICT, it has become easier for E-Travel agencies to coordinate and control information among themselves and customers. Makemytrip, Travelocity, Cleartrip, Yatra are some examples of e-travel agencies operating in India. Web page of yatra.com 6.5 E-Destination: Figure 8 Destinations are a combination of tourism products, facilities, and services all under one brand. It applies ICT to do planning, management and coordination functions of destinations. Tourism organizations use ICT to facilitate the tourist experience before, during and after the visit. Before the visit, a tourist can search for detailed information about the destination, and also can make bookings to visit the destination. During the visit, E-Destination enhances customer experience by promptly resolving the customer complaints and providing any additional services as requested by the customer. Post visit, E-Destination seeks customer feedback and keeps informing the customer on the upcoming offers and also offers customer loyalty points. E-Destination helps coordinate with all partners involved in production and delivery of tourism. It provides detailed information of the destination such as location, attractions, amenities, accessibility etc. Most of the E-Destination websites provide multimedia content to provide a glimpse of the destination. Tourists can make informed decisions based on the information provided in the E-Destination websites. 11

12 are examples of E-Destinations. Webpage of etourism-india.com Figure 9 7. Business Models of E-Tourism: Depending on the parties involved in the transaction, E- Tourism can be classified into four business models: 1. Business-to-Business (B2B) 2. Business-to-Consumer (B2C) 3.Consumer-to-Consumer (C2C) 4. Consumer-to-Business (C2B) Figure 10 12

13 7.1 B2B Business Model: This involves transaction between two Businesses. A seller business (ex: supplier) sells its products to another business (ex: service agent). Figure 11 Online procurement (eprocurement) is an ICT application for B2B business model. In this, the procurement process is done over internet. E-Procurement reduces the cost of procurement. Jet Airways online procurement website is an example for B2B business model. 7.2 B2C Business Model This involves transaction between Business and Consumer. Here a business sells its products to consumers directly. Figure 12 13

14 ITDC hotel booking website and MakeMyTrip website are examples of B2C Tourism Business model. Webpage of theashokgroup.com 7.3 C2C Business Model Figure 13 This involves transaction between consumers. A consumer either sells or shares information to another consumer. ebay is a common example of online auction website. Figure 14 14

15 A C2C online community shares their travel experience through story telling or through the distribution of artefacts such as photographs and videos. Online feedback, blogs etc. also come under this category. is a good example where a consumer shares experience, information and feedback on different tourism destinations and services. Webpage of tripadvisor.in 7.4 C2B Business Model Figure 15 In this, the end consumers create products and services which are consumed by businesses and organizations. It is opposite to the B2C model where the companies make goods and services available to the end consumers. An example of C2B business model is where a consumer specifies a need and the various businesses compete or bid to fulfill that need. It uses reverse pricing models where the customer determines the prices of the product or services. There is increased emphasis on customer empowerment. 15

16 is a good example for C2B business model. Webpage of bid2travel.com 8. Limitations of E-Tourism: Figure 16 It might be difficult to integrate Internet and e-commerce software with some existing (especially legacy) applications and databases. Even if it can be done, it would be costly. Computer hardware and software are needed which add to the cost of e-commerce Security and privacy concerns deter customers from buying as it involves using credit card and bank account details online Lack of trust in e-commerce and in unknown sellers hinders buying. One reason is that sensitive financial information needs to be provided while buying and the other reason being not sure of the quality of product or service. Internet accessibility is still expensive and/or inconvenient E-Tourism is dependent on digital literacy Online fraud is increasing and this makes the customer sensitive financial information vulnerable to hackers Survival of travel agents is getting difficult with the advent of virtual travel agents. The basic question remains - Can virtual travel replace real travel? Since, E-Destinations can only provide information and multimedia content for the tourist, this does not by itself replace the actual Destination. 9. Summary: E-Tourism is applying ICT in Tourism business to provide various products and services to the tourists. E-Tourism helps service providers to cater to the needs of a huge number of tourists faster, with reduced cost and improved accuracy. Though there are many definitions of E-Tourism defined by many researchers, the popular definition is the one given by 16

17 Dimitrios Buhalis. Like many technologies and businesses, E-Tourism evolved from Computer Reservation Systems to Internet Distribution Systems and Destination Management Systems, effectively utilizing ICT and internet. E-Tourism reduces cost by directly selling products and services from service provider to the end tourist bypassing the intermediaries. Thus E-Tourism redefines the industry value chain by reducing the number of intermediaries. E-tourism includes business functions like E-Commerce, E-Marketing, E- Finance, E-Accounting, E-HRM & E-Procurement. The different components of E-Tourism such as E-Airlines, E-Hospitality, E-Tour Operators, E-Travel Agencies and E-Destination support the corresponding components of Tourism. The different business models of E- Tourism involve faster and accurate communication of information and delivery of products and services. Though buying products and services online has a bit of risk associated with respect to financial transactions, and quality of services from unknown sellers, E-Tourism enhances the customer experience by providing enough information online to make informed decisions and also make purchases. E-Tourism helps tourism organizations in enhancing customer relationship. Thus, for tourism organizations to compete and survive in today s world of internet, E-Tourism is a must. 17