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IT and Internet's Impact on Tourism and Hospitality Industry: Implementations of technologies for
Hilton Hotels Group.
Demonstrate critical and evaluative interpretation and application of theoretical IT/ e-business
concepts to a current tourism and hospitality maret situation in order to build sustainable
competitive advantage.
I Introduction
&ccompanying the technological revolution of the +,,"s there are many new opportunities and challenges for the
tourism and hospitality industries. -ince tourism, global industry information is its life-blood and technology has
become fundamental to the ability of the industry to operate effectively and competitively. .oon /+,,01 suggests that
the whole system of information technologies is being rapidly diffused throughout the tourism industry and no player
will escape information technologies impacts.
The report below gives an insight into the importance of application of information technologies and the use of
Internet in tourism and hospitality industries. Two given strategic frameworks provide the analysis of the Internet and
its impact on these sectors. This paper also aims to show how technological innovations and information systems can
be beneficial for the hotel companies, by using the e*ample of 2ilton 2otels $roup.
II I!"#$T%&'( #) T('H&#*#G+ I& T#,$I-! %&D H#-"IT%*IT+ -('T#$-
3arket wisdom today suggests that hospitality companies must embrace technology to compete against traditional
competitors, as well as entrants that build their businesses with the latest technology. In this changing environment,
new models of distribution must be designed to lead the charge. & strategic information management function should
facilitate the business mission of its enterprise through managed information, managed processes, and managed
Information Technology /IT1.
4roadly, current applications of computer technology in the hospitality and tourism industries can be grouped into
three main areas, operational, guest services and management information. The overall functionality of these
applications is similar across a range of different hospitality organisations though the technology used to support
them may vary. 5arge, city-centre hotels, for instance, tend to use minicomputers for their property management
system /.3-1 work. 3icrocomputers are employed elsewhere.
The diffusion of the system of information technologies in tourism will increase the efficiency, uality and fle*ibility
with which travel services are supplied. It has already led to the generation of new services, such as online brochures
and interactive videote*t. Technology has the greatest impact on the marketing and distribution of travel but leaves
relatively untouched the human-intensive areas of guest-host relations and supplier-consumer relationships.
Information technologies applied to the tourism system will increase the efficiency and uality of services provided
and leads to new combinations of tourism services. &ll this could not be achieved without changing the manifest
human high touch content of travel. It is the systematic use of the system of information technologies by all tourism
suppliers, together with its profound impact on the travel industry, which creates the foundation for a new tourism best
practice and a total system of wealth creation.
Information and communication technology can be used not only for operational purposes, but also for tactical and
strategic management. This empowers tourism and hospitality enterprises to communicate directly and more
efficiently with prospective customers and suppliers as well as to achieve competitive advantage.
6ne of the most established ways to analy7e and develop comple* systems /such as e-business1 is to organi7e them
in a meaningful structure. The four .s model provided in &ppendi* & fully addresses the Internet product in relation to
the shifting consumer e*pectations.
III I!"%'T #) I&T($&(T #& T#,$I-! %&D H#-"IT%*IT+ I&D,-T$I(-: -T$%T(GI'
)$%!(.#$/-
#ith the advent of the Internet, marketers have access to the technology to customi7e products and communicate
directly with smaller target markets. The Internet is now firmly established as a marketing tool. It serves as an integral
part of the marketing mi*, serving as a digital distribution channel as well as an electronic storefront.
8onsumers in the Internet medium are more than 9ust passive recipients in the marketing process. The Internet is an
interactive medium as opposed to traditional marketing which usually allows only one-way communication from
marketer to consumer
0.1 "(-T %&%*+-I-
0.0 "#*ITI'%* / *(G%*
$overnment policies can have a dramatic effect on the Internet and its potential development, by introducing new
policies and limitations. The privacy and security issues are also very significant. Therefore, Internet providers have
to consider ethical matters and the usage of personal data stored within the networks. :or the full commercial
potential of electronic commerce and Internet to be e*ploited by the tourism industry and its consumers, several
issues have to be considered, which include an increase of security of transmissions, copyright issues, reduction of
user confusion and dissatisfaction, establishment of pricing structures for distribution of information and reservations
and enhancement of the standardisation of information and reservation procedures. 8redibility and accountability of
the information needs to be secured and eual access for smaller and larger partners should be developed.
Tourism organi7ations deploying IT and Internet for competitive advantage can also face legal risks due to possible
violation of anti-trust laws and violation of privacy. .olicies and procedures should be created to promote the
understanding of potential legal risks. This understanding will encourage organi7ations to obtain help from legal
e*perts to design controls to subdue such risks.
6ther political changes, for instance increasing unemployment, competition laws and planning policies, would only
have an impact on tourism and hospitality organi7ations if they are using technological advances and Internet
distribution channels.
0.2 ('#&#!I'
The Internet is not severely sensitive to the economic cycles. 2owever, it is considered that the tourism or hotel sales
from the Internet will be much affected by economic changes in those countries, from which the customers are
booking or reserving the product. These include changes in economic growth, interest rates, inflation or currency
fluctuations that can eliminate tourism organisation;s cost advantage and can have an adverse affect on the margins.
0.3 -#'I%* / ',*T,$%*
<emographic changes and changes in customers; attitudes towards new technology and Internet, in particular, will
have a direct impact on Internet and hospitality and tourism industries respectfully. 'owadays customers are
becoming more skilled and advanced in the use of technology. The social system dimension must include the larger
social and political processes through which the interests of the different social groups interact with one another and
with the technology.
0.4 T('H&#*#GI'%*
The computerised networks and electronic distribution systems developed in the +,="s led to dramatic structural
changes within the tourism industry. &ccording to )lein and >uelch /+,,?1 & 8R- is essentially a database that
enables a tourism organisation to manage its inventory and improve accessibility to information within and between
its partners. &irlines pioneered the 8R- technology in the +,@"s, by e*panding geographical coverage and
integrating hori7ontally and vertically to embrace the entire range of intermediaries and principals. Individual product
suppliers became aware that systems integration, and the subseuent creation of a Ashop windowB that allowed
products to be displayed and purchased anywhere in the world, would be a crucial determining factor in the
competitiveness and profitability of operations. &s a result, the vast, new all-encompassing $<-s matured from their
original development as airline 8R-s. $<-s are one of the ma9or drivers of information technologies in tourism and
hospitality industries, as well as being the backbone of these industries. $<-s are the single most important
facilitator of the globalisation of ITs.
<evelopments in $<-s were complemented by the introduction and e*pansion in the mid-+,,"s of the Internet.
/.eters, +,,=1 This development facilitated an unprecedented opportunity for distribution of multimedia information
and interactivity between principals and consumers. This is especially so given the Internet;s interlinking structure
which enables the provision and packaging of themed information, products and services. The information on the
Internet, however, is chaotic and loosely structured, mainly due to its immaturity and the lack of any type of
standardisation.
It is anticipated that eventually $<-s will take advantage of the openness of the #orld #ide #eb /###1 and
develop suitable interfaces for consumers and the industry. -abre has already launched Travelocity, an electronic
travel agency, while other $<-s have announced similar actions or cooperations with travel providers on the Internet.
These include #orldspan with (*pedia and &madeus with the Internet Travel 'etwork.
IT and the Internet have transformed distribution of the tourism product to form an electronic market-place where
access to information is instantly achievable. .rincipals and consumers continue to e*perience unprecedented
interactivity. The dramatic ongoing development of the Internet has resulted in the re-engineering of the entire
production and distribution process for tourism products. &s a conseuence of this technological e*plosion, the
packaging of tourism is becoming much more individualistic, leading inevitably to a certain degree of channel
disintermediation, a process that will offer new opportunities and threats to all tourism partners.
2.1 "#$T($'- )I5( )#$'(- %&%*+-I-
2.0 TH$(%T #) &(. (&T$%&T-
'ew entrants tend to bring new capacity, the desire to gain market share and substantial resources. The seriousness
of the threat of entry depends on the barriers present and on the reaction from the e*isting providers. The Internet as
a distribution source has relatively high entry barriers, constraining all new comers.
5ashley and Rowson /!""C1 suggest that recent IT developments, offer new opportunities for tour operators. :or
instance, several tour operators distribute electronic brochures and booking forms through the Internet directly to
consumers. This approach provides a number of important benefits to tour operators. This includes concentration on
niche markets by offering customised packages and an ability for tour operators to update brochures regularly. It also
significantly reduces the costs of incentives, bonuses and educational trips for travel agencies.
$overnments policies for reducing buyers power and pricing wars can limit entry to this distribution sector with such
controls as license reuirements and limits on access to technical tools.
2.2 6%$G%I&I&G "#.($ #) -,""*I($-
In respect of tourism providers, the Internet provides an infrastructure for the global distribution and ine*pensive
delivery of tourism-related multimedia information. It also empowers the consumer though the provision of tailor-
made products which meet their individual needs, so bridging the gap between the consumer and destinationDsupply
in a fle*ible and interactive way. The Internet allows organi7ations to skip over parts of the value chain. & more
successful strategy would be to enter into 9oint ventures or e*pand a supplier;s website to offer competitors; products.
2.3 6%$G%I&I&G "#.($ #) ',-T#!($-
The Internet as a channel of distribution has become one of the most successful channels used by consumers to
research travel options, compare prices and make reservations for airline tickets, hotel rooms and car rental.
Therefore, the provision of online travel services is the single most successful business-to-consumer /4!81 segment
on the Internet.
8ollins, 4uhalis and .eters /!""01 state that the overall percentage of hotel rooms booked online grows
tremendously each year and will be increased by !" per cent in !""C. 3oreover, the Internet is also having a
profound effect on the internal and e*ternal operating procedures within the hospitality industry /8heng and .iccoli,
!""!1
The Internet helps to access new customers on a global basis and enables to streamline operating procedures.
Integrating daily operations such as sales, marketing and distribution as well as aggregating demand to drive down
prices on the procurement side are some of the ma9or benefits of the Internet. The ma9ority of large tourism and hotel
organi7ations are currently present in the global distribution systems /$<-s1. $<-s serve more than C",""" travel
agents world-wide /8ollins, 4uhalis and .eters, !""01. The Internet is one of the mains distribution channels, which
enable tourism and hospitality companies to overcome their challenge of being globally represented.
2.4 TH$(%T #) -,6-TIT,T( "$#D,'T- #) -($5I'(-
Travel agencies are the main substitute to the Internet sales, when it comes to buying hotel bedrooms or tourism
packages. <irect advertising and other sources of media also serve as a promotional or informative mean, which can
be used instead of the Internet. #ith the Internet it is possible to gain permission to discuss the products, as opposed
to interruption marketing, such as television commercials.
2.7 6%$G%I&I&G "#.($ #) '#!"(TIT#$-
The competitive environment of Internet and its impact on the hospitality and tourism industries is widely recogni7ed
as being comple*, dynamic, and highly segmented. Increasingly hotel chains are competing directly with one another
in the same locations. This is a notable change for an industry reliant on specific locations to limit the threat of
competition. &ll ma9or hotel chains are currently entering the Internet market of sales and communications. &s
organi7ations are dependent on their environments for resources, they will attempt to manage their dependency by
developing and maintaining strategies. 2otel groups are being forced to follow other sectors by implementing
marketing strategies, often based on product differentiation, growth in new markets, high value for money, or
emerging brands. -uch strategies are formulated and implemented within the conte*t of environmental uncertainty
and reuire an understanding of industry structure and environmental change.
I5 ())('TI5( I!"*(!(&T%TI#& #) IT/I- T# HI*T#& H#T(*- G$#,"
#hichever ma9or city you find yourself inE you have a big chance to come across a 2ilton 2otel. 2ilton International
$roup is a leading global hotel brand and the 8ompany, with an e*panding portfolio of hotels, mainly 2ilton 4rand
/own the rights to the trademark1, -candic, 8onrad and Fernon 2otels. The company operates 0@" hotels worldwide
and is represented in ?? countries. Its @",""" strong workforce looks after an average of @ million guests every year.
/&nnual Report, !""01.
The ability of computers to store, process, manipulate and distribute information has greatly improved the efficiency
of 2ilton hotels. 4y releasing staff time from the ordinary paper-pushing functions within the hotel, computers can
greatly enhance the opportunities for staff utilisation in the uality of service that hotels offer their guests can be
greatly improved.
T('H&#*#G+ ,-%G( I& HI*T#& H#T(*-
2ilton International use computers in their core-information processing centres of marketing and distribution, front-
office, back-office and food and beverage control. Information technologies are diffusing in eight key areas of hotel
operationsG
+. marketing, distribution, reservations and salesE
!. telecommunicationsE
0. guest accountingE
H. room managementE
C. back officeE
?. food and beverage controlE
=. energy managementE and
@. safety and security.
.roduct distribution is a critically important function of 2ilton International. Information technologies, such as
computerised reservations systems and video brochures, assist hotels in marketing and distributing their bed-nights.
:or 2ilton, the employment of information technologies to link together their front-office, back-office and off and
beverage departments may be necessary for the efficient and cost-effective delivery of their services. 2owever, it will
not be sufficient to guarantee the sale of hotel bed-nights. #ithout links to international marketing and distribution
networks, hotel bed-nights cannot be sold.
Reservations are a key to the sale of hotel bed-nights. Reservation systems, depending on the software and
sophistication, contain information and generate various reports on rooms availability, cancellations, etc. In addition,
the database can generate forecasts on e*pected arrivals, departures and rooms sold. Information contained in, and
generated by, hotel reservation systems is an invaluable source of marketing information and can generate mailing
lists, client profiles and preferences. It can also monitor hotel performance through the development and processing
of guest uestionnaires. Reservation systems also allow hotels to carry out travel-agency and tour-operator analyses
in order to determine which agencies and operators consistently generate business for the hotels.
There are two principal areas in which information technologies are helping hotels to improve their communications in
their internal inter-departmental communications and in their e*ternal links with agents, suppliers, reservation
systems and data networks. The internal inter-departmental links of the hotel are facilitated by computers and
communications technologies, which serve to integrate the front-office, back office and food-beverage operations.
This is facilitated through computer-to-computer communications. 8ooper and et al. /+,,,1 believe that the e*ternal
hotel communication links are necessary between hotel and head office, between hotels and their national
environment, such as stock market information.
8ommunications technologies used by 2ilton International include digital telephone systems, teleconferencing,
satellite broadcasting, videote*t and audiovisual information tools, image communication and various communication
networks for reservations and communications.
Telephone systems used at 2ilton 2otels have been substantially improved to incorporate features such as call
accounting systems. &utomatic call-accounting systems now help to transform their telephone calls into important
profit centres of the hotels. &s marketing techniue, for instance, hotels can offer long-distance telephone calls at
discount rates to their guests and still find it profitable. /8ooper and et al., +,,,E 5ockwood and 3edlik, !""+1
Room-management systems can give updated information on room occupancy and status and they assist in
scheduling housekeeper duties for ma*imum efficiency. Rooming lists, arrivals, stay-overs, e*tended stays,
departures and room preferences can all be handled by room-management systems.
(lectronic data interchange /(<I1 is an open and essentially cooperative technological infrastructure. #hile it is
possible to gain short-term competitive advantage from embracing (<I ahead of competing organisations, it is now
generally accepted that there is no scope within the inter-organisational system for the kinds of barriers to competition
suggested by the work of .orter and other. /.orter, +,@"1.
5arge hotel chains, as 2ilton 2otels $roup, have considerably more ability to control the way in which they implement
(<I. 8ooper /+,@,1 points that (<Is ability to support inter-organisational processes forming part of a multi-
organisational value chain as part of business process redesign. 3any companies tend to view (<I merely as a way
of transmitting formatted data across organisational boundaries.
The integration of computers and communication technologies allows hotels to control their internal operations and
e*ternal operations from a single integrated management system. /)andampully and <uddy, +,,,E &llen and
:9ermestad, !""+1 This comprehensive system of information management can become a very powerful toll for
wealth creation for the hotel industry. #ith a comprehensive system in place all levels of management are supposed
to be involved in it and to depend on it to inform most decision-making.
5 'onclusion
It is beneficial for a hotel chain to integrate appropriate new IT into their entire operation. It is generally accepted that
IT and Internet should be treated as strategic tools than tactical issues, and as concerns of general management.
-enior management of the hotel chain must drive the process which determines the e*tent and direction of business
re-engineering and take responsibility for the implementation of the plan.
&dditionally, technology cannot be considered as acting alone. It is a product of societyE it is also part of a larger
environment in which other forces are at work. #e rely on information itself, not necessarily its facilitating
mechanisms, to assist decision making and guide actions. It is important to be knowledge base, so that to find a use
of information.
Internet provides unprecedented and affordable opportunities for the global representation and marketing for both
large and small tourism suppliers and for hotel operators as 2ilton 2otels $roup.
%""(&DI8 %
!%$/(TI&G !I8 %&%*+-I-
"roduct
& product is anything that can be offered to a market for attention, acuisition, use, or consumption that might satisfy
a want or need. In an e-commerce marketing strategy it is important to remember that information is now its own
viable product. The Internet can serve as a platform for new product innovations. 8ompanies can use the direct
access to consumers to collect information that will help them better develop products to meet the consumers; needs.
:or international hotel chains this can provide adaptations and customi7ations for local markets or create niche
products. 8ompanies can also leverage their reach to consumers to sell advertising during transactions.
8ollected Internet information would provide hotels with the ability to spot entirely new markets. 4y developing an
online customer base and ensure that its products are offered on sites that have all the products consumers want.
Information has become its own product on the Internet. The Internet serves as a platform for new product
innovations.
"lace
:or most companies the place aspects of the marketing mi* involve marketing channels. 3arketing channels can be
defined as interdependent organi7ations involved in the process of making a product or service available for use or
consumption. <ue to the si7e of its marketplace, the Internet will have the most profound effect on place in the
marketing mi*. (-commerce puts the purchase decision anywhere a connection to the Internet e*ists.
It is critical to uickly develop a large customer base in e-commerce. 4ersnstein and &we /+,,,1 claim that customer
loyalty must be first gained in the conte*t dimension. The first mover advantage is very important because Internet
standards could make the competitive advantages of a particular conte*t difficult to sustain. 4y their very nature,
standards will allow organi7ations to duplicate the design and features of competitors; #eb sites.
"rice
.rice is the only element of the marketing mi* to generate revenues. Internet pricing decisions will be 9ust as
important as they traditionally have been. The Internet will lead to increased price competition and the standardi7ation
of prices. )lein and >uelch /+,,?1 point out two counteracting effects of the Internet on price. :irst, a supplier can
use the technology to discriminate pricing between consumers, for e*ample, in different countries. 2owever, if they do
not take precautions the consumers may be able to uickly find out about the price discrimination and ob9ect to it.
6rgani7ations will have to employ new pricing models when selling over the Internet. The ability of technology to offer
services at a cheaper cost would make it difficult to determine the appropriate price for a consumer. Foicemail, for
e*ample, is solely an information-based service, which provides the consumers with a replacement for the traditional
answering machine. &ny hotel chains should be prepared to respond to increased price pressures on the Internet and
high level of competition.
"romotion
.romotion encompasses all the various ways an organi7ation undertakes to communicate its products; merits and to
persuade target customers to buy from them. &dvertising, research, sales, promotions, coupon distribution, and
customer support can all be done on the Internet. The Internet provides a low cost way to hospitality companies to
build a direct link with the consumer. Incumbents can use their traditional sources of consumer information /e.g.
product testing, focus groups1 in addition to the information that is easily collected from e-commerce sites /e.g. sales
information, customer demographics1.
<river /+,,,1 claims that the use of the Internet by airlines to communicate information is becoming prevalent. This
relates both to hard information, in the form of schedules and the availability of fare information, and to the softer
areas of more general company information. #eb presence is itself significant but the design of the site even more
important. :rom a consumer perspective it must be relevant and useful, with easy navigation features so that the time
spent on a visit is fruitful. 3oreover, the site should invite revisiting for there is a critical difference in the initial
motivation to visit and to contact again.
6I6*I#G$%"H+
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