Class 20 mar2015

20.Mar.2015 Travel e22 1
• Networking provided
infrastructure for both intra
and inter-organizational
cooperation.
• Electronic marketplace
emerged and most tourism
providers developed
Internet Interfaces to
communucate directly and
efficiently with their clients
& partners.
Dimitrios BUHALIS - Information Technology for strategic tourism management
• Supply side concentrates
on the use of ICTs in
private sector and
eloborates on how ICTs
can support the profitability
and competitiveness of
organization
• Development of Internet
revolutionized the usage of
ICTs in the tourism industry
and enhanced tourism
distribution.
Tourism
Dynamic interaction of ICTs and tourism.
SUPPLY-DRIVEN eTourism

Supply driven
• Combining loyalty clubs, guest histories and all
other information held in operation databases
provided airlines & hotel chains with powerful
information that enabled them to interact with their
existing and prospect clients.
• Networking era enabled easy access to information
and thus enhanced interactivity between
tourism providers (e.g.: airlines, hotels)
intermediaries (e.g.: tour operators, travel agencies)
and
consumers.
In addition, new breed of intermediaries eg.:
travel portals (eg: Expedia.com) and
auction specialists (eg.: Priceline.com) who
concentrate on selling distressed capacity.

Key STRATEGIC functions
• Enhance organizational efficiency & effectiveness,
improve quality of services.
• Follow up competition; diversify new products & services
for new markets..
• Easy penetrate existing & new markets; easy product
differenciation
• Personolize products and add value at all stages
• Reduce costs
• Create value for time
• Constantly re-invent new innovative business practices
• Develop easy partnerships

Key OPERATIONAL functions
• Front office (reservations, check in, payment, etc.) and
Back Office (accounting, billing, payroll, etc.) integration
& administration
• Communucate with customers and partners.
• Easy organization, management and control
• Dynamic adjustment of price & capacity
• Reduce costs
• Dynamic yield management ; adjust price & capacity
• Monitor performance and build feedback mechanisms
• Operational profit: eg: hotels need to maximize
Revenue per Available Room; achievece highest
possible average

• SMTEs (Small & Medium sized Tourism Enterprise) are
defined by European Commission as all enterprises with;
– fewer than 250 employees (0-50 small and 51-250 medium)
– less than 40 million Euro turnover
• SMTEs are independent, flexible, often family-owned
and managed.
• It is estimated that 90 % of hotels are SMTEs and are
run by families.
• Despite their sizes, SMTEs are extremely important for
offering great benefits for regional developments and
local economies.
• SMTEs also give tourists direct contact with the
character of the destination
• Rapid development of ICTs intoduce both
opportunities and threats for traditional SMTEs.
ICTs for Small Organizations (SMTE)

• SMTEs often lack expertise to take advantage of ICT
opportunities. This is often due to ICT illeteracy of their
entrepreneurs which increases their dependence on
trained staff!
• However, many innovative SMTEs fast adapted the
technology and and enhanced their positions by using
ICT tools.
• Regardless of their size and location, they started to
use Internet to increase their interactivity with the
clients and other stake-holders.
• Consequently, SMTEs have started investing heavily
on ICTs for online presence as major reason.

• SMTEs (Small & Medium sized Tourism
Enterprise) are extremely important for world
economy.
• In compare to larger org. with expertise & resources,
SMTEs are slow in adopting technology.
Push & Pull factors of ICTs for small tourism org.
marketing alliancesStrategic Partners
Consortia and
Enterprises
Global Competition
Travel trade
Tourism
ICT suppliers
Intranets, extranets
Medium sized
worldwide regulations
need for using Internet
Small and
Government and
Consumer DemandConsumer Demand
PULL FACTORSPUSH FACTORS
(SMTE)
Education and Training
shift
Accounting
Systems

IT and Strategic Management
• Early adopters incld. well-established and newly
founded travel enterprises, indentified a clear
opportunity. They invested highly in order to develop
their online brand name and capture a significant
market share.
• Pioneers such as American Airlines, Raynair, EasyJet,
which adopted internet from the early stages and even
painted their aircrafts with their website addresses.
• Hotel chains such as Mariott, Hilton, etc. launched their
websites before most other competitors.
• Major tour opeartors came later but not the least,
enhanced their distribution mechanism and electronic
presence. Eg: TUI, Thomas Cook, etc.
• However, a lot of suppliers particularly small & medium
sized, often have failed to follow developments. As a
result they are left our of current growth...

Maintaining Competitive Advantage
• ICTs enable organizations to differenciate theri products
or reduce their costs.
• In the past gaining higher profit with lower transactions,
but today lower profits with higher volume of
trasnactions. Internet is a perfecto distribuiton channel
for that.
• Besides, SHOPPING BASKETS make it easier to
differenciate products and services
• In order to achieve cost advantage using ICTs, a
comprehensive feasibility study based on rational
cost-and-benefits analaysis should be done.
• Besides, ICTS have encouraged mass tourism by
enabling and handling large amounts of information that
support large-scale operations.

• ICTs enable organizations to differenciate theri products
or reduce their costs
• ICTs enable organizations to differenciate their products
or reduce their costs.
• In the past gaining higher profit with lower transactions,
but today lower profits with higher volume of
trasnactions. Internet is a perfecto distribuiton channel
for that.
• Besides, SHOPPING BASKETS make it easier to
differenciate products and services

It has been highlighted longstanding difficulties in achieving SMTE representationIt has been highlighted longstanding difficulties in achieving SMTE representation
in DMS including the reluctance of small firms to use ICT, their lack of training,in DMS including the reluctance of small firms to use ICT, their lack of training,
poor strategic management and marketing skills and the short term operationalpoor strategic management and marketing skills and the short term operational
focus of managers.focus of managers.
Lack of basic ICT infrastructure such as Property Management Systems (PMS)Lack of basic ICT infrastructure such as Property Management Systems (PMS)
has further translated in substantial connectivity problems for DMS operatorshas further translated in substantial connectivity problems for DMS operators
which often have to revert to costly and time consuming manual procedures towhich often have to revert to costly and time consuming manual procedures to
finalise a booking or to update/maintain inventory on behalf of the accommodationfinalise a booking or to update/maintain inventory on behalf of the accommodation
provider. SMTEs reluctance to allocate and or maintain adequate and up-to-dateprovider. SMTEs reluctance to allocate and or maintain adequate and up-to-date
room inventory to the system have also negatively impacted on the performanceroom inventory to the system have also negatively impacted on the performance
of DMS often presenting a distorted and incomplete picture of accommodationof DMS often presenting a distorted and incomplete picture of accommodation
availability at the destination. SMTEs reluctance to pay commission has also beenavailability at the destination. SMTEs reluctance to pay commission has also been
a constant chronic problem. These factors combined with the relative low value ofa constant chronic problem. These factors combined with the relative low value of
transactions exchanged in the system has made it very difficult to achieve viabletransactions exchanged in the system has made it very difficult to achieve viable
business models and revenue streams which would guarantee a DMS survival.business models and revenue streams which would guarantee a DMS survival.
VisitScotland.comVisitScotland.com

• Costs are likely to include the cost of purchasing
hardware, software and communucaiton packages
as well as training staff.
• Softwares and even hardwares need regular updates
which increase costs
• Designing and construction of webpages as well as
hosting the site at a secure server also add up as costs
• Developing a brand name needs online and offline
advertisement & promotion that costs alot.
• Development of online-presence also requires re-
engineering of all practices of organization. Eg.: Call
centers, 24 hour online support, etc.
• Online distribution is needed, therefore commissions or
listing fees for intermedieries: eg: Travelocity, etc.
COSTS

• Reduce administrative & labor costs
• Reduce mistakes
• Maximize efficiency by sharing DATA accross
organization• Client spend his OWN TIME, not your employee’s
• More facility to get direct bookings
• Easy cross marketing & cross sales with other org.
BENEFITS
• Realtime evaluation of effectiveness of ad & marketing
campaigns; establish a global brand name
• Ability to differenciate for niche markets
• Ability to offer last minute promotions
• Targeted mailings (one-to-one marketing)
• Interactivity with local partners & clients
• Ability to develop communites and coordinating their
activities interactively

• Sustaining competitive advantage over long term is one
of the most difficult challenges
• By applying mobile technology and interactive
interfaces new competitors can communucate constantly
with their clientele and become more responsive than
traditional firms
OBSTACLES
• Competitor tactics can increasingly be monitored online
& realtime. Needs continous training.
• Difficult to decide when to enter into arena?
• Tourism organizations will have to constantly re-invent
themselves
• Ignoring or underestimating power of technology will
make them vulnerable and therefore they have to
constantly monitor competitors technology and make
sure they outperform them.
• Needs commitment of top management

Quest for Travel Portals
The new-
era giants
of Travel &
Hospitality
Industry

Airtickets
Hotels
Main Components of Travel Portals
Rent-a-Car
Basically travel portals started
by selling budget airline
tickets over GDSs. Their
interfaces (API) softwares
connect to GDSs such as
AMADEUS, SABRE, and
make possible to check
availability online & real-
time..And therefore to sell..
Next, the giant hotel database
being sold inside the GDSs
became their hotels section!
And the same for rent-a-car
and all other providers, even
theater tickets!
In a very short time, it was clear that
those GDS rates of hotels & ren-a-
car companies were NOT
SELLABLE..
Now, Travel Portals start to establish
their own database of hotels, car
rental agencies, bus-train tickets, etc.
But this time, it is their OWN
database, and their OWN PRICES...
Meaning, no longer the AGENT
commissions...Now they are giant
TOUR OPERATORS on the web...
Package
Tours
Flight-hotel
packages

Travel Portals vs Traditional Giant Tour Operators
As Travel Portals get more and
more share out of vacations
market, giant tour operators of
ages start to look for solutions to
compete..
DIY (do it yourself)
packages. Dynamic
Packaging...
Basically, lets the internet user
to do his/her own packages, by
choosing the appropriate air,
hotel, transfer, car, etc. for
him/her. And putting them all
together and pay at once.
Just as their new-age rivals
Travel Portals...
Difference is, tour operators
providing DIY Packages on
their websites, MAKE THEIR
OWN RULES..
Meaning they do not have to get
flights from GDSs, they use their
own CHARTER seats
instead...They don’t have to
connect to hotel databases of
GDSs or others, they use their
own!

Class 20 mar2015

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