eTourism

Information technology for strategic

tourism management

Dimitrios Buhalis
University of Surrey
Contents

List of figures, tables and case studies xv

Foreword xix
Acknowledgements xx
About the author xxiii
Preface xxiv

Part A
The information and communication technologies revolution
and strategic management: issues - challenges - trends 1

1. Information and communication technologies: evolution and revolution 5

Chapter objectives
1.1 Introduction 5
1.2 Defining ICTs, information systems, information management and their
interrelation ships 6
1.3 The stages of ICT evolution 11
1.4 ICTs and new business tools 13
1.5 Networking and the information superhighway : the Intranet, intranets and
extranets 15
1.6 Technological convergence and new ICT developments 20
1.7 A new wave of technological evolution 22
1.8 Conclusions 25
Chapter questions 25
Further reading 26
Websites 26

2. Implications of the ICT revolution for business and strategy 29

Chapter objectives
2.1 Introduction 30
2.2 Implications for business and strategy 30
2.3 The impact of the ICT revolution and the information society 33
2.4 Value chains and the influence of CTs 35
2.5 The development of the information marketplace,. eCommerce
and Cyber-markets 38
 2.6 Strategic management and competitive advantage 42
2.6.1 Defining strategy and strategic management 43
2.6.2 Strategic management processes and tools 44
2.6.3 Competitive strategy, competitive advantage and competitiveness 49
2.7 ICTs, strategic management and competitiveness 51
2.7.1 Using ICTs to achieve generic strategies and strategic competitive
advantage 52
2.7.2 Using ICTs to support strategic initiatives 54
2.7.3 Conditions for optimal use of ICTs 56
2.8 Prerequisites for achieving competitive advantage through IT 57
2.9 ICTs in the contemporary competitive arena: business re-engineering
and paradigm shift 60
2.10 The virtual corporation: concepts and definitions 63
2.11 ICTs and innovation as the nucleus of organizational
processes and strategy 67
2.12 A multidimensional framework for strategic
management and marketing 69
2.13 Conclusions: ICT info-structure and strategic management 71
Chapter questions 71
Further reading 72
Websites 72

3. eTourism : the dynamic interaction of ICTs and tourism 75

Chapter objectives 75
3.1 Introduction 76
3.2 The impact of ICTs on tourism 76
3.3 The transformation of best operational practices in tourism by ICTs 78
3.4 The tourism system and ICTs 80
3.5 The use of hardware and software in tourism organizations 83
3.6 Applications of ICT in tourism and hospitality 87
3.7 Telecommunications and networking in the tourism industry 89
3.8 The evolution of Computer Reservation Systems 93
3.9 Multi-integration of ICTs for the tourism industry and destinations 96
3.9.1 Technological integration and convergence 96
3.9.2 Tourism industry integration and collaboration 98
3.9.3 Local economy and society integration and coordination 98
3.10 A multidimensional framework for ICTs in tourism 99
3.10.1 Intra-organizational functions (using intranets) 101
3.10.2 Inter-organizational functions through extranets (and the Internet) 101
3.10.3 Consumer and stakeholder interaction over the Internet 102
3.11 Dynamic partnerships and constant movement 104
3.12 Conclusions: the tourism info-structure and organizational performance 105
Chapter questions 106
Further reading 106
Websites 107

4. Demand-driven eTourism
Chapter objectives
4.1 Introduction 110
4.2 Leisure vs business travel demand and the Internet implications 110
 4.3 Quantitative growth of tourism demand and on-line population 113
4.3.1 On-line population and on-line tourism demand 115
4.3.2 Demand for tourism on-line and eCommerce 121
4.4 Barriers and catalysts for on-line consumers and travellers 125
4.5 Qualitative growth of tourism demand 127
4.6 The ICT revolution and tourist satisfaction 132
4.7 Conclusions: the rapid growth of on-line population and travel demand 134
Chapter questions 135
Further reading 135
Websites 135

5. Supply-driven eTourism 137

Chapter objectives 137
5.1 Introduction 138
5.2 eTourism and the requirements of the tourism industry 138
5.3 ICTs and SMTEs vs larger tourism organizations 140
5.4 Strategic aims and objectives for tourism suppliers 144
5.4.1 Private and for-profit tourism organizations 144
5.4.2 Public and not-for-profit tourism organizations and destinations 146
5.5 ICT-empowered strategic management in the tourism industry 147
5.5.1 Monitoring the environment and dynamic response
proactive management and neural organizations 149
5.5.2 Building and maintaining competitive disadvantage using ICTs 151
5.5.3 Using ICTs for sustainable competitive advantage 160
5.5.4 Using ICTs to avoid competitive disadvantage 161
5.6 ICT-empowered strategic decisions and directions 163
5.6.1 ICT-empowered strategic alliances and partnerships 163
5.6.2 ICT-empowered scope of operations: expansion
and portfolio management 165
5.6.3 ICT-empowered distribution strategies 165
5.6.4 ICT-empowered building and protecting of brands on-line 167
5.6.5 ICT-empowered customer relationship management
and dynamic marketing (loyalty boosters) 169
5.7 Conclusions: eTourism empowers tourism management 171
Chapter questions 171
Further reading 172
Websites 172

PartB
ICTs for strategic and operational management in the various
sectors of the tourism industry

6. Operational management and distribution in eTourism 173

Chapter objectives 177
6.1 Introduction 178
6.2 Tourism distribution mechanisms and practice 178
6.3 ICT tools for managing the digital tourism organization 182
6.3.1 Internet-supported eTourisrn management 183
6.3.2 Internal systems and intranet-supported eTourism management 183
6.3.3 Partner systems and extranet-supported eTourism management 186
 6.4 Conclusions: managing eTourism sectors through ICTs 189
Chapter questions 190
Further reading 190
Websites 190

7. eAirlines 193
Chapter objectives 193
7.1 Introduction 194
7.2 From Computer Reservations Systems to Global Distribution Systems 194
7.3 Airline types and ICT utilization 198
7.4 Strategic and tactical roles of ICTs for airlines 198
7.4.1 Internal systems and intranets 199
7.4.2 Interconnecting partner systems and extranets 203
7.4.3 Connecting with all stakeholders through the Internet 206
7.5 ICT-empowered strategic alliances for airlines 209
7.6 Critical issues for the future success of airlines 211
7.7 Conclusions 213
Chapter questions 213
Further reading 214
Websites 215

8. eHospitality 219
Chapter objectives 219
8.1 Introduction 220
8.2 Accommodation establishment types and ICT utilization 220
8.3 Strategic and tactical role of ICTs for hotels 221
8.3.1 Internal systems and intranets 222
8.3.2 Interconnecting partner systems and extranets 225
8.3.3 Connecting with all stakeholders through the Internet 227
8.4 Larger vs smaller accommodation properties 231
8.5 Lessons and issues for the future of eHospitality 234
8.6 Conclusions 237
Chapter questions 237
Further reading 238
Websites 239

9. eTour operators 241

Chapter objectives 241
9.1 Introduction 242
9.2 Tour operator functions, types and structures 242
9.3 The use of videotext as an early leisure travel network 243
9.4 Strategic and tactical roles of ICTs for tour operators 244
9.4.1 internal systems and intranets 244
9.4.2 Interconnecting partners and extranets 246
9.4.3 Connecting with all stakeholders through the Internet 250
 2.3 Characteristics of virtual corporations 66
3.1 Software classification scheme 86
3.2 Computer reservation systems and global distribution systems as drivers
for the globalization of tourism and hospitality 96
4.1 Forecast of international tourist arrivals by region (in millions) 114
4.2 Forecasted growth of worldwide travel 1995-2010 114
4.3 Ranked top nations in Internet use in 2001 (by size of population) 116
4.4 Ranked top nations in Internet use in 2001 (by percentage of population) 116
4.5 Motivation factors for Europeans to purchase more products on-line 120
4.6 Mobile phone usage in European countries 121
8.1 Typologies and examples of hotel computer reservation systems 223
8.2 Hotel Internet reservations in 1997 and 2000 228
8.3 Internet opportunities for innovative SMTEs 232

List of case studies

1.1 Fidelio's OPERA hotel Property Management System 19
2.1 The Corisande Hotel in Cornwall and the www.cornwall-calling.co.uk website 31
3.1 Lonely Planet's Thorntree 103
4.1 Size of the German travel market in turnover and travel agencies 113
4.2 Internet population - catching a moving target 119
5.1 Hotel Segas 142
5.2 The Airtours business and strategic business units 166
6.1 The Biz2Biz Hospitality Marketplace 189
7.1 Amadeus, global travel distribution 196
7.2 The British Airways in-flight catering system extranet 205
7.3 WorldTracer - the mishandled baggage system 206
7.4 easyJet on-line 207
7.5 Southwest Airlines on the Internet 208
7.6 The Opodo travel portal 210
8.1 Active Hotels 224
8.2 Revenue management system at the MGM Grand Hotel, Las Vegas 226
8.3 Accor hotels on-line 229
8.4 worldres.com, the hotel reservation network 233
8.5 Six Continents Hotels use wireless devices 236
9.1 Anite's PowerRes system 245
9.2 The European Commission Harmonise project 248
9.3 Tapestry Holidays offers a virtual tour on its website 251
9.4 Thomson and World of TUI on-line in the UK 253
9.5 On-line and eCommerce for tour operators in Scandinavia 254
10.1 Via Voyager travel agency solution 266
10.2 Thomas Cook on-line 269
10.3 lastminute.com 273
11.1 The Australian portal australia.com 284
11.2 The Finnish Tourism Board info-structure 294
11.3 Cyber-squatting - the barcelona.com legal battle 299
11.4 Tiscover: development and growth 305
Foreword

Travel and tourism is one of the world's largest and most rapidly expanding industries,
contributing over ten per cent to global GDP and generating employment for 200
million people, according to annual research by the World Travel & Tourism Council
(WTTC). Travel and tourism can be part of the solution to world problems, such as
bridging the gap between the 'haves' and 'have-nots'. In many areas, it is one of the
few possibilities for economic activity. It can create jobs and opportunities for
entrepreneurs. It offers training in management skills, education and technology to
local people as well as increasing incomes in rural and remote economies. It can help
contribute to the alleviation of poverty in developing countries.
Technology plays a vital enabling role in travel and tourism and is crucial to the
expansion of the industry. It was to accelerate this enabling role that the WTTC
established the WTTC IT/eCommerce Task Force. The task force recommended a
transformation programme comprising seven major initiatives that suppliers and
intermediaries must jointly and independently execute:

 Intermediary infrastructure transformation

 Supplier integration and service transformation
 On-line systems transformation
 Off-line systems transformation
 Experience delivery transformation
 Revenue management transformation
 Distribution management transformation.

This book provides an insight into the tourism industry and the transformation taking
place in information and communication technologies. Dr Dimitrios Buhalis, who
contributed to the work of the WTTC IT/eCommerce Task Force, captures these trends
and offers a vision of how travel and tourism can expand through technology-enabled
and customer-focused distribution systems.

Jean-Claude Baumgarten
President
World Travel & Tourism Council

London, June 2002