European Online Journal of Natural and Social Sciences 2013; www.european-science.

com
vol.2, No.3 (s), pp. 566-573 ISSN 1805-3602

E-Tourism: The role of ICT in tourism industry

Alireza Farkhondehzadeh 1, Mahmod Reza Robat Karim 2, Mehdi Roshanfekr 3, Jamshid Azizi 3, Farrokh Legha Hatami 4
1
Educational Administration, University of Shiraz, Iran; 2 Arvandan University; 3 Educational Administration, University of
Yasuj, Iran; 4 Payame-Noor University, Yasuj, Iran

Abstract we described some innovative ways of using ICT,

among others, to expand an actor’s business.
One of the major limitations of all of the in-
formation distribution channels in tourism indus- Keywords: E-Tourism, ICT, GDS
try is that they, for the most part, all ultimately flow
through the GDSs. Of course, this has several im- Introduction
plications in terms of cost, audience and informa-
tion content. As a result, many tourism suppliers Tourism is reputed to be the world’s largest in-
would like to bypass the GDS route and use elec- dustry. Its revenues support a significant propor-
tronic distribution to sell directly to the consumer. tion of the economies of many nations and it is one
With the phenomenal growth in the use of the In- of the largest employers worldwide. Its contribution
ternet and the World Wide Web both in the home to gross national product, employment and region-
and in the workplace, and the opportunities pre- al development are well documented and, unlike
sented by falling hardware and communications many other sectors, it is forecast to grow in impor-
costs, the potential now exists for tourism suppli- tance in the coming decades as leisure time increas-
ers to both distribute information to and process es. Tourism is acknowledged to be very information
reservations from customers directly. In his paper intensive. Tourists need information before going
by considering some of the trends shaping modern on a trip to help them plan and choose between op-
business strategies such as the mass customization tions, and also increasingly need information dur-
of services, the interactive design of products with ing the trip as the trend towards more independent
customers, the service envelope around the most travel increases. In modern societies, time has be-
basic products and the increasing information in- come a scarce commodity. Therefore, for many
tensity of products, we illustrated how such trends consumers their annual holiday represents a major
apply to the tourism industry and describes the way emotional investment that cannot easily be replaced
ICT can support or enable such strategies. Then, if something goes wrong. Therefore, since travellers
we analysed the role of ICT in tourism industry by cannot pre-test the product or easily get their mon-
introducing a framework to classify and analyze re- ey back if the trip does not meet up to their expec-
lated organisations around three dimensions, dis- tations, access to accurate, reliable, timely and rel-
tinguishing what happens (1) at the boundary of the evant information is essential to help them make an
firms, (2) in their relations with their customers and appropriate choice. It is notable that the greater the
suppliers and (3) on the markets they reach. The ac- degree of perceived risk in a pre-purchase context,
tors that we primarily considered were the follow- the greater the consumer propensity to seek infor-
ing: (1) the service providers (hotels, airlines, con- mation about the product.
gress organizers, etc.), the travel agencies, and other This need for information is heightened by cer-
intermediaries, (2) the final customers (both cor- tain characteristics of the tourism product. Fore-
porate and individual), and (3) the countries (of- most among these is its intangibility- unlike man-
ten represented by their tourism offices). Finally, ufactured goods, the tourism product cannot be

Corresponding author: Alireza Farkhondehzadeh, Educational Administration, University of Shiraz, Iran.

E-mail: [email protected].

Copyright © Alireza Farkhondehzadeh et al., 2013

European Online Journal of Natural and Social Sciences; vol.2, No. 3 (s), pp. 566-573

566
 Social science section

inspected prior to purchase and therefore it is al- ed this information in the form of print-based me-
most completely dependent on representations and dia such as brochures or flyers, and through listings
descriptions to help consumers make a purchase published in local or regional guides. However, de-
decision. It is also fixed geographically, and thus veloping and distributing such promotional materi-
the customer must travel-and thus in effect con- al is costly, time-consuming and labour-intensive.
sume the product- in order to experience what they In addition, such information is static, while much
are buying. Two other characteristics are its com- of the data needed to make a booking (such as, for
plexity and its interdependence. Individual tourism example, availability and rates) changes frequent-
products are diverse, and in many cases it is this ly, particularly as the reservation date approaches.
heterogeneity which makes them attractive in the As a result, consumers usually have to contact the
first place. In addition, tourism products are rarely supplier directly to ensure that the product is avail-
bought individually, and the endless combinations able and to confirm the rate at which it will be sold.
and permutations of alternative travel routes, trans- Again, access to timely and accurate information is
portation modes, time and lodging accommoda- important at this stage. Tourism products are vola-
tion make travel decisions difficult even for the ini- tile in that if they are not sold, they represent lost
tiated. Suppliers, therefore, face a challenge, which revenue. Therefore, as their ‘use by date approach-
is described as trying to gain identity with untold es, information about them tends to change fre-
millions of potential customers covering the whole quently as suppliers manipulate their price in an at-
spectrum of incomes, interests, knowledge, sophis- tempt to ensure that they are all sold. Current rates
tication and needs. Even the simplest trip means must therefore be made available to both interme-
trying to match the expectations of diverse travel- diaries and direct buyers. Information also has to
lers to the bewildering array of choices and options be able to flow in the opposite direction as, in order
provided by millions of tourism suppliers, each try- to make a booking, the customer’s contact and pay-
ing to differentiate themselves from their competi- ment details have to be communicated to the ap-
tors. Given that millions of people travel every day, propriate tourism suppliers, and thus an effective
it can be seen that the communication of accurate, and efficient method of communication is needed.
current and relevant information is essential to the
efficient operation of the tourism industry The Role of Information and Communication
Travellers can acquire information from a wide Technology (ICT)
variety of sources, including directly from the tour- Development of Information and Communica-
ism supplier. However (perhaps because of the time tion Technologies (ICT) has transformed the con-
pressure mentioned earlier), many choose to use temporary business environment. It has led to new
the services of an intermediary. These take different information economy which is digital in nature. ICT
forms. The travel agent acts as both a search-and- is a broad terminology referring to multiple com-
book service and as an advisor for the customer, re- munication technologies which range from sim-
lieving them of much of the burden of searching for ple and complex namely Cell Phone applications
suitable products, and also using their knowledge (SMS), Digital Cameras, Internet, Wireless (WiFi
and experience to help match customers with trav- and WiMAN), VOIP, GPS, GIS, Convergence (data,
el experiences. Tour operators act as consolidators, voice, media), Digital radio, These technologies are
packaging different travel components together and creating a new global market place, which is more
marketing them as a single seamless product. Some competitive. With e-commerce and e business the
government tourism organizations also act as inter- market has more opportunities and possibilities than
mediaries, distributing information and brochures ever before. The ability to reach a global audience,
for tourism suppliers in their region. The primary obtain instant market information and conduct elec-
role of each of these intermediaries is to facilitate tronic business transactions has increased economic
the purchasing process, and information exchange efficiency and has opened markets for goods and ser-
is key to this function. As such, tourism suppliers vices from the developing world.
must provide each one of these intermediaries with E- commerce is expected to benefit economic
information in an appropriate format to assist them development in several ways:
in the sales process (O’Connor, 1999). 1. Through allowing local business access to
Tourism suppliers have traditionally provid- global markets

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 Social science section

2. By providing new opportunities to export a facing tourism industry and outlines the nexus be-
wider range of goods and services tween tourism and ICT. He traces the rapid shift-
3. By improving the internal efficiency with in taking place between ‘traditional tourism sector’ and
the firms. ‘new tourism industry’. Technology has a strategic
First, e-commerce allows business to reach a role in reshaping the value chain in the industry and
global audience. In Africa, for example, the tourism in the process, consumers are gradually adapting to
and handicrafts industries are realizing their abil- the new values, lifestyles and new tourism products,
ity to deliver their product information directly to which has re-engineered by the new technologies.
consumers. Tourist lodges, hotels, and governments Although some of the technologies described are
across the continent now maintain sophisticated now obsolete, the implicit message is relevant and
websites advertising their unique features, handling gives an overall review of the changing face of the
booking order, and promoting specials to interested tourism industry. Inkpen (1998) and Sheldon (1997)
consumers. Similarly, small manufacturers of tra- have examined the main characteristics of the indus-
ditional handicrafts are discovering how ICTs can try structure and the operation of the new technolo-
assist the marketing and distribution of their wares. gies in it. ICT applications in different sectors like
Secondly opportunities created by e-commerce and airlines, hotels, tour operators, road and rail trans-
its predecessor technologies is that ICTs can cre- port etc is dealt in detail with informative case stud-
ate digital market places to manage supply chains ies. Some of the world’s largest GDS (Global Dis-
and automate transaction, increasing efficiency tribution System) namely Sabre, Galileo, Amadeus
and opening previously closed markets to firms in and Worldspsan are examined. Besides analyzing the
developing countries. Thirdly, e-commerce is im- telecommunication technologies in the industry,
proving the culture of business. There are now bet- the hospitality sector, entertainment sector, trans-
ter intra-firm communications, cost savings proce- port sector, management sector and other inter-
dures, and reductions in the inventory costs leading mediaries have been diligently explored. Werthner
to better management. Thus ICTs are the backbone (1999) provides a more detailed and logical under-
of the capital accumulation. They are connected stating of the industry’s structure by focusing on the
with new business opportunities, increased trade concepts, definitions, consumer behavior, economic
and investment although they are risks involved aspect, market transactions, etc.
sometimes. It suggests a positive relationship be- Information Technology ( hardware & software
tween ICT development and economic growth. In- developments), information management, intelli-
deed an often cited achievements of Indian econo- gent applications and system integration etc are ex-
my during the last decade has been the emergence amined carefully. Additional information on busi-
of an ICT sector which has shown remarkably vi- ness strategy exploring the relationship between
brancy in terms of output and export growth. How- ICT, strategy and organization is also articulated.
ever, the contribution of ICT to an economy can be Buhalis (2003) also stressed on strategic manage-
viewed at two different levels. They are contribu- ment in his book providing a comprehensive over-
tion on account on ICT growth and contribution on view of both operational and strategic management.
account of ICT diffusion. While the former refers Buhalis and Laws (2001) deals with the theory,
to the contribution in output, employment, export practice and issues related to tourism distribution.
earning etc on account of the production of ICT re- The distribution strategies and approaches from a
lated goods and services, the later refers to ICT in- destination point of view is explored and discuss-
duced development through enhanced productivity, es the possible future research in tourism distribu-
competitiveness, growth and human welfare on ac- tion channels. It needs to be noted that the distribu-
count of the diffusion of this technology to the dif- tional structures are mainly from Europe, UK and
ferent sectors of the economy and society. (Karmer other western nations and hence may or may not
and Derick, 1992). be useful for developing country’s strategies. Con-
nor‘s (1999) work serves as a textbook on electron-
Nexus between ICT and Tourism: A Review ic distribution with its logical explanation and case
Recent Studies on ICT and tourism has revealed studies. GDS, CRS and DMS are analyzed with ex-
the transition in the industry as a result of ICT im- ample of cases from across the western world. The
pact and have explored its possibility and potential. growing phenomenon of travel distribution through
Poon (1993) analyses some of the major challenges Internet and its impact on distribution channels

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 Social science section

structure and functionality is explored with rig- This point mainly addresses the retail commerce.
or. Carter & Bedard (2001)and Carter & Richer • State: the public authorities which often are
(1999) have focused on the operators in the tour- partners in the trade or commerce processes. This
ism industry. Developments of the e commerce and aspect mainly refers to the role of public authorities.
DMO (Development Management Organizations) We cross this dimension with a second one which is
and their changing value chains are analyzed in- a 3-step maturity model. This model suggests three
telligently and clearly so that importance of inter- kinds of generic activities in trade and commerce
net presence for consumers, intermediaries, trav- which can be supported and improved by ICT:
el media and other players in the industry is noted • Boundary: an enterprise can use ICTs to
and understood through their works. Marcussen improve its information gathering capability and
(1999) attempts to provide an overview of innova- better interact with its environment by getting and
tive developments in distribution of travel and tour- sending information outside its boundaries (in or-
ism services in Europe. It documents the wealth of der to target some new trade opportunities more
statistical data on travel and related transactions quickly, for example)
in the European tourism industry. However, most • Relation: an enterprise can use ICTs to
of the experiences are based on the western devel- support and improve its cooperative relations when
oped world, which could possibly a limitation while making transactions with its partners (i.e. supplier,
trying to understand the nexus of ICT and Tour- customer, consumer, value-added provider, third-
ism in an Indian context. Jennifer et al (2003) have parties)
examined the way ICT and Internet have gradually • Market: a group of companies (competi-
changed the tourism industry in China. They have tors, buyers and sellers) can use technologies to
used the existing theoretical framework on ICT and improve their global efficiency or competitiveness
e-tourism developments in other parts of the world when reaching their markets.
namely Europe and America to examine their im-
pact of ICT application in the tourism industry Business-to-business trade
contemporary China. There have been tremendous The traditional view of the enterprise with clear
developments at the destinations levels in the recent boundaries, limited relations with partners and sta-
years. Internet, Intranet etc have been extensive- ble markets is evolving. Today ICT can leverage a re-
ly employed by the (DMOs) which has integrated design of the interorganizational relations allowing
the functioning process and made the system more the enterprises to (a) get better at gathering infor-
efficient. Studies like (Poon 1993, Sheldon 1997, mation about their out-of-boundary environment,
Werthner & Klein 1999, Alford 2000, Werthner and and (b) share electronic platforms and markets with
Klein 1999, Alford 2000, WTO, 2001) have revealed their competitors (Bloch & Pigneur, 1995).
that Internet and strategic implementation of IT is
now critical for companies to survive in the global Reaching the consumers
economy. However, not many efforts are made to Firms communicate with their customers
study e-tourism developments in India and other through various media. For several years, the ICTs
developing countries. have been deeply altering the traditional view of
marketing, shopping and retailing media.
Analysing the role of ICT in E-Tourism The computer-mediated environments such as
In order to analyze the role of ICT in helping the Minitel, Compuserve, and particularly the In-
the tourism industry confronted to these changes in ternet allow another way of reaching consumers
the economy react, we adopted a framework, illus- and online marketers plan to increase their online
trated as follows. spending in order to be (a) better at communicat-
The first dimension of this framework is the ing with their customers, (b) more efficient in their
type of actors or partners an enterprise deals with. selling relations with their customers, and (c) more
We distinguish the following actors: attractive on their consumer markets, especially the
• Business: the other businesses or enterpris- new electronic or information mall. An informa-
es making transactions with the enterprise. This is- tion mall could be considered as an on-line place
sue deals with business-to-business trade where a large number of on¬line buyers and sellers
• Consumer: the final customer or consumer can easily congregate and where commerce can be
buying the products or the services of the enterprise. centered (Inkpen, 1994).

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 Social science section

The role of the public sector rizations and feeding automated statistics collect-
In most countries, governments clearly play a ing systems. The system would allow for the gen-
significant role in electronic commerce and elec- eral specification of the required trip (time, place
tronic markets as they did for previous infrastruc- and specific constraints). Connections to external
ture developments (such as railroad, aviation and partners would be used to send completed requests
highways). In its various roles as regulator, educa- to a travel agency. Based on each traveler’s profile
tor and promoter, government and public admin- and on the company’s policy, the agency would then
istrations can use ICT to establish the rules and the fill in the details (specific place, rental car type and
incentive structure that will help determine private company, etc.) and pass the actual reservations and
sector choices (Konsynski, 1995). orders.
The public sector has many incentives to pro- It is obvious that with the development of such
mote and sustain electronic market solutions for its automated systems, intermediaries such as trav-
own rationalization but also to help the enterprises el agencies will find their added value increasingly
leverage the best of these new technologies in the harder to justify. With the increasing intelligence of
global information-based society. travel systems, they will be able to contact the sup-
The public authorities can use ICT in order to pliers systems directly and book segments without
(a) widely dispatch information collected and struc- needing a travel agency. Printing the tickets will not
tured to help their local businesses reach new mar- be necessary anymore as the trend towards ticket-
kets, and (b) create and sustain electronic platforms less travel expands. The supplier’s system will re-
and markets. turn confirmation numbers that will be used to
print a trip confirmation on any printer. Such au-
Innovative applications of ICT tomation will be driven by the trend towards the re-
On the basis of the previous discussions, our duction of distribution costs: it is currently the third
goal in this section is to describe three innovative cost in order of importance for airline companies,
applications of ICT for the tourism industry. These and the most easily targeted. The current commis-
applications target three large segments of the in- sion cap in the United States is a proof of that trend.
dustry: corporate customers and business trav- The expense reporting part will also be auto-
el, individual customers and leisure travel, as well mated through the same facilities. The credit card
as groups of people traveling to congresses and ex- institutions will increasingly deliver their credit
hibitions. They leverage extended enterprise tech- charge data through automated delivery channels,
nologies to improve the level of service offered to and the downloaded charge data will form the basis
customers and the competitiveness of the actors se- for the fulfillment of an expense report. The travel
lecting them. management system will complete it, and include
recurrent charges (such as the private car trip to the
A business travel process management application airport and parking) before triggering the workflow
for corporate customers system to circulate the expense report for approval.
Most companies around the world look criti- Once approved, a link with the internal accounting
cally at their business travel management processes. system will make sure the credit card company or
The goal is double: to use process redesign meth- the traveler is reimbursed.
odologies to streamline these processes and lower
their cost (sometimes, processing an airline tick- A travel mall for individual customers and leisure
et request or a cash advance costs more than 50$) travel
on one side, and leverage technology, enforce poli- A traveler who would decide to use the Internet
cies and start collecting consolidated data on travel today to help prepare a trip to some holiday loca-
management in order to negotiate future discounts tion would find many sources of information. The
with suppliers on the other side (McKenna, 1996). World-Wide-Web is a support to multiple servers
We anticipate to shortly see integrated travel describing the offerings of countries, tourist regions
management applications emerge, leveraging work- and travel suppliers (airlines, cruise lines, hotels,
flow technologies and connections to open net- rental car companies, etc.) Nevertheless, access-
works. The workflow system would be used inter- ing this information requires knowledge (to know
nally to circulate travel requests and expense reports where the servers are located), time (to access each
around the company, collecting the required autho- server independently) and perseverance (each serv-

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 Social science section

er presents information in a different form, through termediary to build entry barriers for its competi-
different search mechanisms and with different lev- tion, through higher switching costs for customers.
els of detail). It is often not possible to book trav- This system is similar to what is currently known as
el directly on-line and certainly not possible to buy a Computer Reservation System (CRS, now often
the separate parts of a trip through the same suppli- called a Global Distribution System (GDS).
er (e.g. airline and hotel). Nevertheless, the envisioned system should le-
What is needed to facilitate the “shopping ex- verage new ICTs such as the Internet (or other open
perience” of these customers, and ultimately to al- networks) and open access systems, such as the
low the take-off of this new form of retailing, is the World-Wide-Web. Therefore, they would gain maxi-
creation of integrated travel malls. These would mum exposure and a broad user base. These systems
be virtual collections of shops selling travel-relat- should also offer added-value services to customers,
ed products, through a common virtual space, and such as information-based services (weather infor-
employing similar mechanisms to search through mation for your destination, visa requirements, ex-
information, present, order and deliver it. We envi- periences of past travelers through discussions using
sion a customer coming in the mall and first being conferencing systems, etc.) These services are often
asked for the way he wants to shop: through specif- available today in one form or another but need to
ic queries, because he knows what he looks for, or be standardized and integrated.
through assisted search, as he’s looking for creative The underlying architecture which need to be
ideas to spend his free time. created to support these systems will require common
The first way of browsing would allow the cus- formats for the data and common functions (such as
tomer to specify his destination, the way he wants reserving, ordering, paying, etc.) This will probably
to go there (e.g. by air (maybe specifying a carrier), be achieved through industry standardization efforts,
by car, etc), what he wants to do there (hotel only, under the lead of a GDS or a consortium of travel
sports activities, local excursions, etc). The sec- agencies. Such systems are certainly a way for travel
ond way would have the customer to express gen- agencies targeted at leisure travelers to redefine their
eral interests and some demographic information. role in the upcoming information world, and regain
In both cases, based on the provided information, leadership they’re currently losing to GDS and di-
the system would then propose various destinations rect travel suppliers sales. In our opinion, the added
(through multimedia illustrations) with options and value customers would gain from such services would
allow people to book their travel. be sufficient to have them switch from their current
One might envision a trip to be constituted of distribution habits, and come back again and again,
specific modules (plane trip, rental car, stay at a even more so as these systems progressively learn
hotel, sightseeing excursion, etc.) which would be about their habits and preferences (Steiner, 1994).
combined together. The system would make sure
there is no discrepancy between the selected mod- An integrated travel environment for congress
ules (e.g. car rental at a different place than the ar- organizers
rival of the plane, missing hotel night, etc.) It could The last of our descriptions of the use of tech-
also proactively propose modules, based on the ones nology to improve travel distribution practices is
already selected. targeted to the organizers of exhibitions and con-
The whole system should be customized for a gresses. The context we use for our example is a
specific customer. Based on a customer’s profile, conference with multiple breakout sessions running
which is created from demographic information in parallel, and a large exhibition with various com-
the customer enters, but also from his past purchas- panies presenting their products.
es, the system gets to know the customer’s prefer- Planning to go to these events includes two
ences and to propose him suitable alternatives. For components: buying travel products and planning
instance, some customers prefer non-smoking ho- the conference itself. We envision a travel mall mod-
tel rooms, travel with a limited budget, try to maxi- eled around the first system described. Any partic-
mize their frequent-flyers miles on a specific air- ipant will find there descriptions of the different
line, etc. The system should enforce these choices, ways to join the congress city, the different accom-
wherever possible. At the same time, this knowledge modation available there and the various leisure ac-
represents an investment customers make with a tivities possible. On-line presentation and ordering
particular intermediary, and as such allow this in- will be possible.

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 Social science section

In addition to that, the various sessions the par- • Customization: a travel mall should not
ticipant can attend will be listed, and the system will simply be a list of possible travel products; it should
assist the customer in choosing the sessions which take advantage of technology to map as closely as
better match its interests. On top of that, a map of possible the interests of the customer. As such, it
the exhibition will be available. Upon selection of should track each customer’s profile, and present
the most interesting places to visit, the system will only the most relevant information. Each custom-
print out a customized map of the best route to see er’s interaction with the system should be used to
everybody in a minimum time. increase the relevance of the relation
Such a system should help enhance the prep- • Pro-activity: instead of simply waiting for
aration of the trip and maximize the added value customers to “drop-in”, these systems should strive
for the participant. It will also help the organizer to create travel needs. For instance, by presenting
streamline its customer relation service, and help information on attractive sports, customers could
differentiate it from the competition. On a macro- be enticed to buy a sports travel package, or by mak-
economic level, it would reinforce the position of a ing available information relevant to professionals,
city or a region on the global marketplace. As such, they would be attracted by conferences in similar
and following our introductory remarks, it could be fields. Electronic mail could also be used to regu-
an area where local government action would be fa- larly update customers on specific offers, close to
vorable (Schmid, 1994). their tastes or previous purchases

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