Ebusiness And Its Impact On Hospitality Industry

Published Date: 02 Nov 2017

The term ‘e-business’ relates to business activities that are carried out using the internet (the web and email). It encompasses e-commerce, which relates to buying and selling, but also includes servicing customers (i.e. business to consumer) and collaborating with business partners (business to business).

The application of the Internet in the business world has become a major trend in practice and generated a hot stream of research in the recent literature. The Internet, as a collection of interconnected computer networks, provides free exchanging of information. Over 400 millions of computers on more than 400,000 networks worldwide today are communicating with each other. This new virtual marketplace allows small companies competing with business giants by just having a better web presentation of their products/services. Under the same wave, online customers can enjoy a wider choice of products or services, more competitive prices, and being able to buy their favourite items/services from the sellers located thousands miles away. It provides communication between consumers and companies and through Electronic Data Interchange (EDI) buyers and sellers can exchange standard business transactions such as invoices remarkably easy.

The Internet and e-commerce give consumers an opportunity - through the easy on-line information gathering and convenient online shopping - to be better prepared to purchase the right product (or service) at the right time. New entrepreneurs and traditional small to medium sized businesses are the pioneers exploring on the forefront of e-commerce. According to a published survey, more than 90% of new entrepreneurs and starting businesses are using the Internet - to either enhance their existing business operations or to explore new business opportunities. Numerous studies have been reported about the Internet applications in business – including the application in the service operations, such as: the health care industry (e.g., web MD), banks and financial institutions (e.g., e-banking), and the hospitality & tourism industry (e.g., e-booking of hotel/motel rooms, airline tickets, etc.). Those Internet applications have attracted a great amount of attention from industrial practitioners and academic researchers, due to the fact that the information exchanging and sharing is a key part of those business operations, where the use of Internet will provide an advantage in the related information flow.

E-business is having a huge impact on the hospitality industry, an impact that looks set to continue. An increasing number of people are booking and viewing restaurants and hotel rooms online, and they are working with the smartest time-saving electronic systems. Businesses are using the internet to communicate better with suppliers, and are increasingly bypassing intermediaries in order to communicate directly with customers.

BENEFITS OF E – BUSINESS

E-BUSINESS IN HOSPITALITY INDUSTRY

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-travelling" referring to all travel related business transactions now completing through Internet applications. Some key issues addressed in the recent literature about the e-travelling include: customer acceptance and satisfaction, services rendered, value added for the travel businesses and consumers, privacy concerns, profitability, operational risks, and competition from traditionally non-travelling firms. Smaller travelling agencies, among others, are more interested in the application of Internet to gain certain competitive edges over their larger counterparts.

The hospitality industry covers a wide range of establishments providing hospitality services in the form of accommodation, food and beverage, casinos and tourism. The industry is very global and so large that it is worth over 3.5 trillion dollar within the global economy. Nonetheless, the industry is cyclical and it is dictated by the fluctuations that occur with an economy every year. In the past, travel agents were used for not only travel plans but they also sold transports, tours and accommodation for suppliers. Travel agents were the most common source for booking hotel rooms and any other travel components. It is believed that only budget minded travelers did their own research and contacted the suppliers directly. Nonetheless, as time passed by and technology advanced; we reached the digital age, also known as the information age. It was the global economy's shift in focus away from the production of tangible goods, towards the manipulation of information. The internet emerged and the World Wide Web was invented, linking the world into one global network. The emergence of the internet had a great impact on all businesses including the hospitality industry.

E- BUSINESS AND ITS IMPACT ON HOSPITALITY INDUSTRY

Impact on customers:

increased choice

speed

greater independence

more information eg services, appearance, location, virtual room tours

ability to compare prices

increase in direct booking, less use of intermediaries

Impact on businesses:

better communication with suppliers and customers

ability to bypass intermediaries marketing opportunities

effect on prices (increased transparency, downward pressure)

costs of meeting technological requirements for e-business

RECENT TRENDS IN HOSPITALITY INDUSTRY

E- BOOKING

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. An online hotel room booking has been increased by six times just during last four years (from 1999 to 2002) from $1.1 billion in 1999 to $6.3 billion 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

There certainly are some challenges and issues in the application of Internet technology in the hospitality industry (including e-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.

The application of the Internet in the travelling booking industry has attracted a great amount of attention by both industrial practitioners and academic researchers. One key issue for the e-business application in service operations is about the possibility of online delivery of the services customers ordered - as not all types of services (or products) can be delivered online. The travel booking industry is one of several services - which can be checked, inquired, and ordered online easily, and conveniently communicated and delivered electronically via the Internet.

BARRIERS TO THE DEVELOPMENT OF E- BUSINESS IN HOSPITALITY BUSINESSES

technological barriers for business and customers e.g. slow connections, inadequate hardware, slow download times, staff resistance to change, lack of staff training, requirements for web maintenance

inflexibility of business structure

lack of business planning e.g. cash flow forecasting, marketing strategy

poor website design

security for payments (perceived and real)

OVERCOMING BARRIERS

Organisational issues e.g. business planning, staff development, recruiting new staff; customer education and awareness campaign; support issues e.g. government support, support for web design, dedicated technical support

CONCLUSION

The emergence of the internet has significantly changed the way hospitality business operates; this not negatively but more positively. The internet as aforementioned plays a significant role in online bookings and reservations, online marketing and online recruitment in the hospitality industry. These services are not only beneficial to the hospitality industry itself but also the customers as they provide more efficiency and saves time for bookings and are able to attract more customers as well as career seekers.

The hospitality industry has taken great advantage of the internet which has helped with catch up with time and with consumers' needs and wants. The future for the industry seems rather bright.

And last but not least, we need to realize that no matter how much technology advances, it cannot solely replace human resources. In the end there will always be a need for traditional travel agents who will help customers who do not wish to spend their own time and energy looking for travel information on the internet.