Tourism distribution on the internet

Changing channels?See Cooper and Lewis in Buhalis and Laws

• New media– disintermediation?– new virtual travel agents?– budget airlines and hotels as an alternative to

the traditional package– or the same vertically integrated operators

offering mass customisation

Internet penetration globally

• In US, Japan and Northern Europe around 70% of the population is already on-line

• The growth is likely to come from – Brazil 15%– Russia 20%– India 7%– China 9%

www.internetworldstats.com

The Impact of the Internet UK

• 61% of the population have access (Mintel 2006)– 75%+ for ABC1s under 55 years

• Half of these have browsed holiday/travel sites– 35.1% of consumers booked their last holiday on the

internet in 2005, an increase of 12% points from 2000.

• Better informed customers

• Dis-intermediation or Re-intermediation?

European online market

The top fifteen travel sites Europe 2005

• Expedia• Viamichelin• TUI• Lastminute• SNCF• Trip Network• Deutsche Bahn• Easyjet• Opodo • Ryanair

• Hotels.com• Ebookers.com• Thomascook.com• Travelocity• Yahoo Travel

New gateways for travel and tourism information and bookings

• Airlines: – individual airline sites – their affiliate networks easyjet.com– Sites owned by airline consortia – opodo, orbitz

• Hotel sites sites of individual hotels, groups or consortia • Bed banks hotel booking companies – Utell, Hotel

Connect, Hotelopia• Destinations sites run by national, regional or local tourist

offices• On-line travel agencies: Expedia, Travelocity• Review sites Tripadvisor• Late booking sites – lastminute.com, Cheap Flights

New entrants offering travel booking

• Portals travel pages of internet service provider portals – Yahoo, Orange

• Vortals* travel pages of specialist portals – tennis.com, igolf.com

• News media On-line newspapers and other media – telegraph, guardian, cnn

• Auction sites eBay, Qxl• Social networks Facebook, mySpace, WAYN

Adapted from Buhalis 2003

So much choice- who do you trust?

The big brands?

• The traditional tour operators – Thomas Cook?

• The ones that spend most on advertising – Expedia?

• The ones linked to a brand you know?– Affiliate networks – white-labelling– Including content from another provider on

webpages with your brand Easyjet

Or your mates?

• User-generated content (Web 2.0)

• Harnessing the collective intelligence (O’Reilly)

• Websites relying on users, not businesses or experts, to provide the material

• YouTube, Wikipedia

Tripadvisor

• 15 million travel reviews

• 25 million users a month

• an affiliate network of leading on-line travel agencies, tour operators, airlines and hotel groups.

• TripAdvisor is owned by on-line travel agency Expedia, Inc.

Social networks

• On-line communities created by ‘viral’ recommendations

• Often linked by some shared value– Communities of consumption (Cova)– E.g. Facebook travel groups

WAYN

• Where are you now?

• Community-based website where you can log your trips, see who’s there and make new friends

• 11.4 million members

• Travel companies can advertise on WAYN or use WAYN information on their sites

A new distribution network

On-lineagency

DestinationManagementSystem

Hotels

Attractions

AirlinesGlobal Distribution System

Maps fromGoogle Earth

Youtubevideos

Tripadvisorreviews

Socialnetwork

Friends

Satnavs

SMS

Customer

‘Aggregated content’

• How do the traditional operators fight back?

Dynamic Packaging

• Dynamic packaging is a travel industry term for a more flexible way of booking a holiday. Instead of offering customers a set package off the page of a brochure, the agent or operator assembles the elements of the holiday to meet the customer's requirements.

• By using 'bed-banks' - companies that offer a database of hotel rooms at a discounted rate - the agents can match the prices of traditional tour operators while achieving better profit margins for themselves.

• For an example of a bed-bank company • see www.travelberry.co.uk

Why the tour operators will survive

• Customers with busy lives value the convenience of a ‘one-stop-shop’ for all their travel purchases

• Faced with a bewildering choice, consumers value the reassurance provided by a well-known brand

• Suppliers value the efficient access to wide consumer markets provided by intermediaries

• The purchasing power and marketing spend of the large consolidated companies continues to give them a competitive advantage over their smaller rivals

On-line marketing

The uses of cyberspaceAngehrn 1997

Virtual Information Space Virtual Communication Space

Virtual Transaction Space Virtual Distribution Space

Web pagesProduct infoPriceAvailability

E-commerceOrdersPayments

Downloads

File transfersFulfillmentOrder-tracking

AdvertisingEmailMessage boards

Search engine marketing• Keyword analysis

– what words do potential customers use?– optimise the site design to ensure high listing

• Paid placement

• Pay per click– bidding against competitors for highest listing

• Domain namessee www.webgravity.co.uk

Web site designwww.insites.be in Pelsmacker

How do you judge a good website?

• Content productivity– relevant, up-to-date, meeting needs

• Browse efficiency– ease of navigation

• Design efficiency– interpreted and understood correctly

• Exchange level– interactivity

• Emotional attractiveness– entertainment value

Relationships on-line• Communication

– information– dialogue

• Differentiation– exclusive content and services for subscribers

• Personalisation– using cookies to recognise and personalise

• Reward

On-line communitiese.g.user forum, message board

• Customer to customer communication

• added value for the website user

• Viral marketing

• feedback

• PR vehicle not an advertising medium

Effects on the value chain

• Disintermediation

• Depersonalisation

• Commoditisation

• Customer control of contact and content

or re-intermediation

or customisation

or value-added differentiation

or customer contact management

• De Pelsmacker et al (2001) Marketing Communications Prentice Hall• Cooper and Lewis in Buhalis and Laws Tourism Distribution Channels