Travel & Tourism Industry, Essay Example

Information and Communication Technology (ICT) has been a business driven tool for the travel and tourism industry since the 1970s. The ICT has been a major channel of connectivity that provide travel customers with the “Internet Power” and quick accessibility to information just like an travel agent while providing the travel industry with a greater option to market their product to more customers. The emergence of ICTs has encouraged travel consumers to pinpoint, tailor and purchase travel packages while integrating global platforms that provide tools for developing, managing and distributing offerings worldwide (Buhalis & O’Connor,2005).

The ICT has changed the travel industry forever bringing new Internet technology and connectivity like never before. The beginning of this ICT technology started in the early 1970s and throughout the years, it evolved and transformed itself into a more advanced tool, known as the Global distribution system. This history began in the 1960s when the Second World War was over and people were starting to travel overseas. (Copeland & Mckenney, 1998. This essay is going to illustrate the evolution of the ICTs development from the 1960s to the 1990s explaining how it had a major effect on the travel and tourism industry. Secondly, it will also include the major impact that the internet had on the Global Distribution System (GDS) and how they converted their business to suit the modern practice.

ICT Impact on Intermediaries

The ICT impact has some major impacts on the intermediaries in the T&T industry. The ICT has provide a new technology such as the Internet, Wireless devices, digital, voice and cell phone applications (SMS) (Shanker, 2008). The overall effects of the ICT impact of intermediaries are far reaching making a profound positive effect on the social and economic development of the T&T industry. These innovative ICT advance technologies allow the intermediaries to connect the globally business market with the T&T customers anywhere in the world. In addition, new opportunities to deliver travel packages to T&T customers providing a much wider range of travel products.

The intermediaries have enjoyed the innovations of the ICT because the T&T market was passing by the businesses that could not keep up with the demand from the new technology consumers. In addition, the customers were demanding the convenience of the hotel, airlines and car rental packages for a smoother transition during travel. The historical invention of ICT different technologies the intermediaries did not have to invest heavily in the T&T industry Research and Development (R&D) for new capable devices. The everyday forever-changing target with new technological products affects the intermediaries interact with the vendors and suppliers. The vendors, airlines, intermediaries, and the T&T customers feel the impacts of new technologies when the platforms change applications or platforms.

Influences of ICT on Intermediaries

The ICT influences on intermediaries changed the way the T&T customers went about making travel arraignments. In the 1960s, the travel and tourism industry conducted business recording the customers profile with paper profile cards. This process was outdated causing more opportunities for the travel experience to become unpredictable and faulty. The positive impact of the ICT on intermediaries help facilitate and distribute travel packages with speed has contributed and inducing growth of the travel industries by 4.3% from 1995 to 2008(Bethapudi, 2013).

Global Distribution System (GDS)

The early days of the airlines traditionally reserve empty seats selling more seat than available to ensure the airlines a guaranteed profit margin. However, the customer experience suffered because the traveling experience was uncomfortable experience and time consuming. In addition, to the massive workforce required to accommodate the T&T industry. The old way of travel was time consuming and not cost efficient. In 1952, American Airlines had an innovated but simple system, which stored, gathered, and retrieve data using electromagnetic drums. (Copeland & Mckenney, 1998) The drum became the Global Distribution System (GDS) that is still used in today’s market and it is the foundation of all ICTs technology.

In the 1970s, the Computerized Reservation System (CRS) industry made a market-changing move that combined their systems to create a worldwide distribution chain named the Global Distribution System (GDS). This was paradigm shift changing the primary form of reservations improved automation delivering a fast and more effective platform (Merten, 2007). This distribution change by the airlines created a platform to store information directly to a GDS; narrowed down all the variety of CRS and put it in one search engine for better efficiency. This also included other related bookings such as on ground transportations, hotels, and activities. (Bethapudi, 2013)

Since this internet tool presented an extraordinary opportunity for the exchange of multimedia information and connectivity between suppliers and the end consumer through websites, the airlines have begun to develop their IDSs to replace GDS and avoid paying GDS fees and travel agency commissions. (Wang, 2009) As GDS revenue continue dropping and reached to the lower booking fees, the airlines have decided to sell their shares considering this (GDS) is no longer an attractive investment. (Wang, 2009) Nevertheless, some private enterprises thought the business were still manageable and could be potentially feasible in future; they bought the GDS companies and re-established them with a newer practice. Although the airlines believes GDS are less important now where there is better supplement (internet) but since GDS had been the priority distribution channel for over 30 years and there is no doubt that GDS was still the incredible centers of profit; they controlled the majority of airline distribution. (Wang, 2009)

Positive Impact

The ICT has created a positive affect causing the innovative integration of the Internet, automation and networking of distribution channels for tourism internationally. The ICT has single handedly pioneered a historical paradigm-shift that changed from an agent drive market to advance platforms called Global Distribution Systems (GDS). The primary benefits of the GDS to the travel industry is providing an virtual backbone that assists with making travel services accessible to the buyers such as flight schedules, hotels, airlines service and car rental systems. The implementation and growth of the GDS allows the T&T industry to display their services to a social networking global Internet audience. The GDS is a primary resource for the hotels and resorts to increase profits and gain massive online market exposure. The GDS makes the travel reservation online process a better delivery of the travel package (Rezstream.com, 2008). The most positive impact of the ICT on the intermediaries is new technology platforms that are built for the consumers that the cost is not passed on to the intermediaries. The intermediaries can save the major advertising dollars by utilizing the social network platforms and cell phone accessible applications.

Practical changes

One the best practical changes and influences of the ICT with the intermediaries is the innovation allowing the consumer free access to these Internet platforms choosing a multitude of travel products at their own leisure. The major impact to the intermediaries they can deliver a virtual product that has an affordable marketing channel to allow direct access to the same T&T customers (Mihajlovic, 2012). It was a natural process over the next 15 years that ICTs contribution would achieve a plateau never achieved in the 1960s such building a global bridge that fosters news to bring about new distribution channels for the intermediaries.

Internet Impact

The advent of the Internet Distribution System that arrived in 1990, known as World Wide Web it transformed the T&T industry entirely. This phenomenon providing the struggling airline industry to become a major player again in the T&T industry. This was a savior for the airline industry that was sinking the majority of their profits on marketing, reservations, and distribution. The alternative way of delivering Internet travel packages saved the airlines billions in marketing dollars. The distribution channel for the airlines was now cost effective allowing them to spend more dollars on other advancing technologies. In addition, the usage of online platform and internet timing was perfect for the growing T&T market and accordingly led to the advent of numerous complementary distribution channels and new intermediaries. (Rao, 1999).

The power of presenting and linking the information that is dispersed across the internet are seen as more valuable than the GDSs. Moreover, the IDS organized internet information into a series of interrelated pages, which eventually can be viewed by using a web browser. (Lawler, 1998) Its abilities are formidable and as result, a disintermediation situation appeared. According to Palmer and McCole (1999), disintermediation is determined as “wherein principals bypass the intermediary and sell directly to end-users.” These changes rise to new opportunities but in the same time threatens all wholesalers that participated in the distribution process.

Challenges

The challenges will be keeping pace with the new technology to meet the technology driven T&T customers. The T&T intermediaries has a dynamic and positive effect on the T & T distribution channels because they continue to keep the market growing and evolving to meet the customer’s needs. However, new application and customer choice of media is evolving from the Internet to Cell phones applications to smart phone airline delivery of the travel packages. The direct integration and spreading of direct communication and data links between the customers and the suppliers improved the speed of the distribution channels creating a powerful infrastructure (Kanellou, 2005). The continued existence of this unique integrated packing platform that presented the customer with complementary travel services that increased the consumer’s usage. The travel customer because accustomed to the advance technology with the intelligence to meet the needs of the travel industry.  The intermediaries will need to evolve and change with the new technology changing every day.

The secondary challenge will be the intermediaries’ ability to provide solutions that are adaptable to the Internet versus the cell phone applications. The technology customers’ needs and choices of delivery change each month, each year, and each day depending on the new application or technology. The intermediaries have to be educated on which technology they should invest because the change in choices of the T&T customer could change overnight.

Internet Marketing Tool

The Internet allows the intermediaries to market directly to the T& T with a number of platforms such as cell phones, social networking, IPhones, Laptops, notebooks, and mobile devices. The ICT technology helps the intermediaries with operational and marketing platforms that allow interactive between global Internet suppliers, vendors, airlines, travel agency agents, car rental, and hotel via virtual marketing tools. (Waghmode & Jamsandekar, 2013). The Internet has provide a major advantage to the T&T industry and the T&T customers because the intermediaries can deliver the travel packages in many different formats and forms.

Positive Affects

The ICT has many positive effects on the intermediaries, who are responsible for delivering the travel package through communication channels primarily the Internet. The primary role of the intermediaries is the facilitator that delivers a travel package at the convenience of the T &T customers. The T&T industry has experience booming growth because of the innovation from intermediaries. The intermediaries continue to find innovative ways to package trips and new ways to market the travel packages in a matter of seconds. In addition, another major effect on the industry from intermediaries is helping the airline industry free up resources that was spent on reservations of T&T customers.
New Generation/Future

The new generation has already began to use new devices as they are introduced into the market. The cell phone and IPhone industry is setting the trend for the new generations demands that want their applications on the televisions, game devices, watches, laptops, PC’s, Internet, and new virtual options that can be utilize with an application on the phone. These new applications allow the new generation customer to purchase a ticket on cell and pick up the ticket using their cell phone. The intermediaries will have to stay connected to the preferred methods of the T&T customers that are evolving every day. It may be time for the T&T intermediaries to starting their own Facebook or Twitter accounts to reach the new age generation. The future impact will cause the intermediaries to evolve along with the advance technology to continue to market success to the T&T customers.

Intermediaries Reactions

The advance technology is steadily evolving with the new generation of gamers and IPhone driven markets. The intermediaries have already began reacting to new generation. The T&T customer can make changes, add, or alter a travel package right from the comfort of their cell phone while on the way to the airport. The new devices that enter the market on the application side of the cell phone have already convinced the intermediaries to have their own proprietary applications to meet the needs the new generation travel customers.

Conclusions

In conclusion, ICT is a necessitate tool for tourism; not only from its accessibility to various information but also its comprehensiveness that has sufficiently satisfy customer’s need. Starting from the ICT to the Intermediaries to the GDS development, there are numerous changes that heavily affected the industry as a whole. Although the consistently changing environment is one of the factors that hindering their path to success but within correct decision and reinforcement, they were still able to facilitate all the need this industry need. Ultimately, the innovative investment had a positive result and it benefited every associates and customers that are in the area of tourism.

References

Bethapudi, A. (2013).The role of ICT in tourism industry. Journal of Applied Economics and Business: National Institute of Tourism and Hospitality Management.Vol.1, Issue 4, pp.67-79.

Buhalis, D. & O’Connor. (2005).Information communication technology: 30th Annervisary, Tourism Recreation Research. Vol. 30(3). 7-16.

Copeland, D. G., & McKenney, J. L. (1988). Airline reservations systems: Lessons from history. MIS Quarterly, 12(3), 353-370.

Kanellous, D. (2005).The IPTS report: The new role of intermediaries in travel and tourism distribution channel. European Commission Joint Research Centere. Retrieved from http://www.researchgate.net/profile/Despina_Kanellou/publication/259694663_The_New_Role_of_Intermediaries_in_Travel_and_Tourism_Distribution_Channels/links/00b4952d5e3918fa7b000000.pdf

Merten, P., S. (2007). The transformation of the distribution process in the airline industry empowered by information and communication technology. In W. Pease, M. Rowe, & M. Cooper (Eds.), Information and communication technologies in support of the tourism industry (pp. 76–113). Hershey, PA:  doi:10.4018/978-1-59904-159-9.ch004.

Mihajlovic, I. (2012).The impact of information and communication technology (ICT) as a key factor of tourism development on the role of Croatian travel agencies. International Journal of Business and Science.Vol.3 No 24,151-159

Rao, B. (1999). The Internet and the revolution in distribution: A cross-industry examination. Institute for Technology and Enterprise: Technology in Society. 21, 287-306.

Rezstream.com (2008).How to get the most out of Global Distribution System. Retrieved from http://www.rezstream.com/blog/getting-the-most-out-of-gds

Shanker, D. (2008) .ICT, and tourism: Challenges and opportunities. Humanities and Social Sciences, Indian Institute of Technology: Part I-Tourism Strategy. Part I, pg. 51-58

Waghmode, M. & Jamsandekar, P. (2013).Role of the ICT tourism. ASM International E-Journal of Ongoing Research in Management and IT. E-ISSN-2320-0065.

Wang, Y. (2009).Examining the tourism distribution channel: Evolution and transformation. Rosen College of Hospitality Management. Retrieved from http://www.researchgate.net/profile/Youcheng_Wang/publication/228381202_Examining_the_tourism_distribution_channel_evolution_and_transformation/links/0deec52c5a05c02982000000.pdf