E Business Application In Hospitality Industry

Published Date: 02 Nov 2017

E-business (electronic business), derived from such terms as "e-mail" and "e-commerce," is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners. One of the first to use the term was IBM, when, in October, 1997, it launched a thematic campaign built around the term. Today, major corporations are rethinking their businesses in terms of the Internet and its new culture and capabilities. Companies are using the Web to buy parts and supplies from other companies, to collaborate on sales promotions, and to do joint research. Exploiting the convenience, availability, and world-wide reach of the Internet, many companies, such as Amazon.com, the book sellers, have already discovered how to use the Internet successfully.

Electronic business, commonly referred to as "e-business", is defined as the application of information and communication technologies in support of all the activities of business. Commerce constitutes the exchange of products and services between businesses, groups and individuals and can be seen as one of the essential activities of any business. Electronic commerce focuses on the use of ICT to enable the external activities and relationships of the business with individuals, groups and other businesses.

Electronic business methods enable companies to link their internal and external data processing systems more efficiently and flexibly, to work more closely with suppliers and partners, and to better satisfy the needs and expectations of their customers. Firms use more private and hence more secure networks for more effective and efficient management of their internal functions.

In practice, e-business is more than just e-commerce. While e-business refers to more strategic focus with an emphasis on the functions that occur using electronic capabilities, e-commerce is a subset of an overall e-business strategy. E-commerce seeks to add revenue streams using the World Wide Web or the Internet to build and enhance relationships with clients and partners. Often, e-commerce involves the application of knowledge management systems.

E-business involves business processes spanning the entire value chain: electronic purchasing and supply chain management, processing orders electronically, handling customer service, and cooperating with business partners. Special technical standards for e-business facilitate the exchange of data between companies. E-business software solutions allow the integration of intra and inter firm business processes. E-business can be conducted using the Web, the Internet, intranets, extranets, or some combination of these.

E-BUSINESS APPLICATION IN HOSPITALITY INDUSTRY

E-business applications are designed for businesses to conduct activities electronically or on the Internet. These applications comprise the infrastructure of online business, providing electronic ways to deliver products and services to customers. Some applications also offer other business benefits, such as assisting a business in collecting and maintaining financial records and responding to customer service requests.

Demand for Online Business Applications

An e-business application helps a business to establish its business presence online, but it might not be designed just for online businesses. Traditional businesses can also establish one or more parts of their business online while still maintaining their regular activities. For example, a doughnut shop might create an online presence to inform customers about special offers and product information, such as new flavors being sold at the shop. It might need an e-business application to sell gift certificates to customers online.

It might also assist a business in different purposes, such as information gathering. When a customer creates a profile and begins shopping at an online store, a business application can collect and store information about a customer's preferences and transactions. Then when the same customer returns, as is the case with the Amazon.com business model, the website will suggest products and services based on his previous history.

E-business applications also help customers to make other kinds of business transactions besides just buying goods and services. For example, in the hospitality industry, customers can use a hotel chain's website to search for room availability and to make a reservation online. This type of application does not involve a sale, but a customer might provide a credit card or debit card number to guarantee a reservation.

E-business applications also help businesses to market to potential consumers and services. For example, an e-business application can help a business to send out targeted emails and advertisements to consumers in different markets. If a consumer responds to a marketing effort, such as by clicking on a link in a targeted email and visiting the business's website, an e-business application might track how a consumer learned about the company. This kind of information tracking enables a company to focus resources on its most successful e-marketing strategies, including sending future communications to existing customers.

Given the competition from powerful traditional businesses, a successful e-business can only occur if this business can satisfy its consumers' needs better than those traditional business approaches and provide consumers with at least one of the following advantages:

(a) lower price,

(b) wider selection,

(c) better choices,

(d) superior services, and

(e) more convenient.

The growing importance of e-commerce in the modern hospitality industry has created an urgent need for simple solutions to manage companies' online presence.

The hospitality industry has followed the trend of Internet application in recent years, and sometimes even gaining its own name of Internet application - called "e-traveling" referring to all travel related business transactions now completing through Internet include: customer acceptance and satisfaction, services rendered, value added for both the travel businesses and consumers, privacy concerns, profitability, operational risks, and competition from traditionally non-traveling firms. Smaller traveling agencies, among others, are more interested in the application of Internet to gain certain competitive edges over their larger counterparts.

Smart hoteliers need to keep a sharp focus on the fundamental shift in ways customers are seeking information and channels that drive maximum return on investment.

E-BOOKING RECENT TRENDS IN HOSPITALITY INDUSTRY

It has been reported that the online booking in the hospitality industry (including hotel/motel, airlines, travel packages, etc.) is increasing at a very rapid speed recently, especially at the lower rate end. Online hotel room bookings has been increased by six times just during last four years (from 1999 to 2002) from $1.1 billions in 1999 to $6.3 billions in 2002. As a result, its percentage as of total annual bookings is increased over 400% - from about 2% in 1999 to 9% in 2002. It has been projected a more rapid jump in the online hotel room bookings for the next few years – reaching $15.8 billions in 2005 and account for 20% of total annual bookings.

More significantly, the groups who are now going online bookings are those of business travelers and above-the-average vacationers – who are traveling more frequently than the average publics. Targeting great deals while still in control of their search process, those online bookers claim that more than often they are able to book a hotel room at much lower rate online comparing traditional phone reservation systems or old styled travel agents (e.g., to book a high end hotel room in New York city under $200/night).

The hotel industry is certainly full aware of this trend and fully willing to contribute its share in this effort. While the pressure to sell their inventory rooms online will be continuing, the industry has developed its new online strategy striving to get a better grip on this emerging marketing channel.

While the e-booking of airline tickets has reached about 26% of total annual sales in 2002, the online hotel room booking is just account for half of that proportion – 13% to total annual hotel room bookings. As every two out of three hotel rooms are currently booked through traditional telephone reservation systems, the industry has predicted more quick increase in online room bookings during next few years – as the Internet technology becomes more popular and the access to the Internet becomes more easy and convenient to the public. As a result, a clear trend is that the hotel room bookings through both traditional (in-house) travel agency and traditional hotel telephone reservation systems has been declining year after year. Both hotel chains and existing online travel agencies have seen those potentials and prepared for the coming competition.

The competition among all online travel agencies has been intensified during the past years. As the end of 2002, current major players in the e-booking business include: Hotels.com, Expedia, WorldRes, Travelocity, Priceline, and Orbitz.com, and their market shares in 2002. As a pioneer, Hotels.com is the current market share leader (with 34%), followed by Expedia (30%), and Travelocity (15%).

CHALLENGES FACED IN ONLINE BOOKING

One major obstacle addressed most in the practice is the security concern. Customers are certainly concerned of giving their personal financial information (e.g., a credit card numbers) online, and many old-fashioned customers somehow afraid to pay an invoice through Internet. Another issue challenged to the online booking is the quality of delivered service - including both delivery speed (i.e., short advance time required in ordering) and delivery reliability (i.e., the rooms booked are available on check-in times). It has been predicted that in the travel industry to be successful in long-term, the operations of an online booking business must compete in a more creative way comparing to those traditional business counterparts. That is, the strategic positioning decision of an online booking business must establish its own unique competitive advantages over its traditional business competitors as well as its online business counterparts.