Ebusiness Application In The Hospitality Industry

Published Date: 02 Nov 2017

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.

e-business may be defined as the conduct of industry,trade,and commerce using the computer networks.The term "e-business" was coined by IBM's marketing and Internet teams in 1996.

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.

Information and Communication Technologies (ICTs) have become an essential part of our lives. In the past decade, the use of ICT throughout societies started with the introduction of the internet. The internet started mainly as network for researchers that gave the opportunity to share information and ideas. An important step in the commercialization of the internet was the announcement of the World Wide Web (WWW) in 1991 by Tim Berners-Lee of European Organisation for Nuclear Research (CERN) (Kalakota and Whinston, 1996).

Today, the internet can facilitate the quick and efficient movement of information among trading partners at a greatly reduced cost to businesses via the internet and therefore electronic business has become one of the principal means of doing business (Ministry of Commerce, Barbados, 2005).

The world Trade Organization (WTO) defines E-business as the production, distribution, marketing, sale or delivery of goods and services by electronic means. Broadly defined, electronic business encompasses all kinds of commercial transactions that are concluded over an electronic medium or network, essentially, the internet. Electronic business is a new way of doing business. E-business is transacting or enabling the marketing, buying and selling of goods and or information through an electronic media especially the internet (Payne, 2003).

However, according to research conducted, companies and the private sector in Africa are not been active imitators of e-business. For example, a survey in Ghana (part of a Ghana SCAN-ICT study) revealed that about 65% of ICT companies do not have a presence on the internet and 84% reported that they were not involved in e-Business.

The service industry especially the hospitality industry are extending their national and regional coverage to be able to provide the needed hospitality service. In this development, it is expected that the use of the internet would facilitate the adoption of e-business in Ghana hospitality industry as a means of offering reliable, flexible and cost-effective ways of doing business as well as enhance their competitiveness. This especially as volume of trade increases in Ghana and other developed countries require fast transfers of monies, payment across continents and many other services that promote growth of business.

E-BUSINESS APPLICATION IN HOSPITALITY INDUSTRY

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 (Napier, Judd, Rivers, and Wagner, 2001).

Web sites are marketing tools designed to entice potential customers and prompt a positive buying decision. Once that decision has been made, your Web site can become an effective vehicle for reservations, other business transactions, ongoing communications, travel planning, cross-marketing, client services, and other revenue-generating or service-enhancing features.

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 favorite 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 or purchase orders with remarkably easy.

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.

Your budget will determine the features you can add, but here are some to think about:

Booking reservations booking activities Weather information

Local attractions Gift shop sales Restaurant

reservations

Maps and driving Product and Pictures and videos

directions service info

Personalized GM Personalized Extranet for

greeting travel pages group billing

Interesting links Referral links— Personalized offers cars, etc.

Event reservations Live action camera Customized group

Digital branding and why is it important in e-business initiatives in hospitality industry:

Digital branding is the translation of your unique brand values and personality into a "user experience" you create on a Web site, kiosk, or wireless application. A digital brand can consist of a collection of colors, images, fonts, and sounds that your customers identify with your property. As more consumers and suppliers interact with your company through e-business, it is critical to convey your digital brand through each of these channels to build customer awareness and loyalty.

E-business offers hospitality companies the opportunity to take control of the customer relationship in a deeper one-to-one manner. An increasing number of people expect to communicate directly with their chosen service providers (including hotels) in this manner. A strongly branded Web site that provides useful information and functionality will over time produce a significant return on investment and contribute to your success.

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, (Deegan& Horan, 2003). Online hotel room bookings have 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. It has been projected a more rapid jump in the online hotel room bookings for the next few years – reaching $15.8 billion in 2005 and account for 20% of total annual bookings.

The hotel industry is certainly full aware of this trend and fully willing to contribute its share in this effort. In fact, the industry has realized that during those early forays into cyberspace, the industry didn’t view e-booking strategically (many hotels simply considered online room bookings at the time as a way to pick up additional business by selling distressed inventory through those online travel agencies), and handed over too much control of inventory and pricing to those third party online travel agencies, and now the industry is in the unenviable position of trying to take back the reins after early shopping patterns have been established. 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.

First, now every hotel/motel chain has developed its own website in which bargain hunters can book their hotel rooms online – other than though an Internet travel agency. By 2002, over 51% of the total annual online bookings of $6.3 billions were earned through hotels’ own websites (i.e., remaining 49% were through those specialized online travel agencies). Another attempt by the industry is to change its early agreements with those online travel agencies – from old "merchant model" where hotels making rooms available to online travel agencies at wholesale rates and the agencies marking up those rates by 15% to 30% before peddling them to the public at fixed prices for fixed periods of time to a new "sharing model" where the hotels will have more control of their rooms via online booking by providing a higher priority to their own websites over the websites of those third-party travel agencies. Thirdly, other than allowing those online travel agencies to profit for an average 20% from original wholesale prices, some hotel chains now offer a more competitive price on their own websites to directly compete with those online travel agencies. For example, Six Continents PLC chain (including: Holiday Inn and Inter-Continental) and Starwood Hotels & Resorts Worldwide Inc. (including: Sheraton and Westin) both started to promote their special online packages since May 2002 – which are guaranteeing the best price deal available on all online websites. The slogan of their programs is "If a customer is able to get a better rate for the same room on another website within 24-hour of booking, the company will not only match that price, but beat it by extra 10%." Both companies reported increased online bookings on their own online systems. Another effective strategic decision by the industry is to form online allies with a single combined e-booking website. In this effort, for example, five major hotel chains (Hilton, Hyatt, Marriott, Six Continents, and Starwood) launched their allied online booking website - <Travelweb.com> in 2002 to serve as their rival directly to those online travel agencies (e.g., hotels.com or Travelocity.com). This combined discount room site provides negotiated cut-rate deals at more than 10,000 properties and nearly 100 hotel brands. The claimed advantages to online room hunters include: a better deal in room rates, a direct link to all airlines’ websites, reservations are made directly into hotels’ systems to eliminate any potential snafus, and fast payments to hotels where rooms are booked online. And finally, the hotel/motel industry has realized the importance of flexibility and thus developed new programs to provide hotels with more flexible room offerings and pricing schedules on an available-as-needed-basis.

THE STAGES ADOPTION THEORY

The staged theory has been widely use as a way of examining the adoption and progression of various aspects of electronic business in organizations. The main assumption of the stages theory is that organizations progress towards electronic business through a number of clearly defined and successive stages and phases. Each adoption state or phase is characterized by the existence of distinctive applications, benefits and problems while it reflects a particular level of maturity in terms of the use and management of information system s and information technologies .

It is also assumed that the electronic business adoption is linear, while the outcome and the developments of the progressive are cumulative (European Commission, 2007).

Electronic business can be approached in many different ways, depending on the specific business process that might be carried out through the internet. Thus, several internet usage profiles or approaches are possible. A company must determine which profiles or combination of profiles best suits its particular business context and strategy.

The staged adoption theory clearly delineates five stages:

i. Information gathering stage: Within the staged adoption model, early stages of electronic business adoption are typically characterized by gaining access to the internet,

ii. Simple application stage: followed by the use of relatively simple application, such as electronic mail, in order to dispense and gather information

iii. Information publication stage: Later, the business starts to publish a wider range of information in order to market its products or services and perhaps provide after sales support

iv. E-commerce stage: The deployment of electronic commerce practice comes next, following the use of corporate sites to order and or pay for goods and services. v. E-business stage: In most matured stages, the corporate websites is fully integrated with the various back office systems such as enterprise resource planning(ERP), customer relationship management(CRM) and integrated supply chain management(SCM) applications(Mendo and Fitzgerald, 2005) .

THE TECHNOLOGY ACCEPTANCE MODEL (TAM)

Understanding why people accept or reject new information or communication technology has been one of the most challenging issues in the study of new technologies (Davis, 1989). Among the various efforts to understand the process of user acceptance of information systems, the Technology Acceptance Model (TAM) introduced by Davis (1989) is one of the most cited theoretical frameworks. The model aims not only to explain key factors of user acceptance of information systems, but also to predict the relative importance of the factors in the diffusion of technological systems (Davis, et al, 1989). This model attempts to derive the determinants of computer acceptance that is general, capable of explaining user behavior across a broad range of end-user computing technologies and user populations, while at the same time trying to be parsimonious and theoretically justified (Davis et al, 1989).

The TAM is rooted in the theory of reasoned action , which has been applied to predicting and explaining user behaviors across a wide variety of domains. According to the theory of reasoned action (TRA), a person's performance of a specified behavior is determined by his or her behavioral intention to perform the behavior, and behavioral intention is jointly determined by the person's attitude and subjective norms concerning the behavior in question . Following the logic of the TRA, the TAM explores the factors that affect behavioral intention to use information or computer systems and suggests a causal linkage between two key variables—perceived usefulness and perceived ease of use—and users' attitude, behavioral intention, and actual system adoption and use.

BENEFITS OF E-BUSINESS ADOPTION

Companies gain two fundamental types of benefits from e-business. These are generally described as: Value Creation or Value Enhancement for one or more company‟s stakeholder group; and lower cost of providing goods and services to the market place.

Among the value creation include are improvement in internal and external communications through effective e-marketing, increment of sales through an e-commerce website integrated with a back-office system and improvement on supplier relations and productivity through collaborative workspaces.

Whiles lower cost benefits include: reduction in communication and travel costs using online meeting tools; shared workspaces and benefits from license free open source alternatives to proprietary software .

Businesses also enjoy tremendous opportunities such as cost saving, revenue generation, increased market share, marketing and market access and improving customer service through direct link that facilitate speedy enquiry and feedback. Similarly, consumers can inter alia, access the world market through the virtual economy on the internet, choose from a wider variety of products, and shop in the comfort of their homes .

Globalization and specifically liberation of communication networks have all facilitated this breakthrough that further present massive boost for international trade .

It has been argued that firms should go the e-business way and outlines the integrated benefits derived by firms who have already integrated e-business in their proce. Research has shown that the cost of a full-service trading transaction is about $150. It will cost $69 doing the same using a discount broker and $10 using an online broker. That is about $140 saving on doing business on the web.

CHALLENGES TO E-BUSINESS ADOPTION:

ii. Also factors the enable the adoption of e-business are not readily available .Enabling factors such as the availability of ICT skills, qualified personnel, network infrastructure. The most critical barrier can be ascribed to the very limited information and communication infrastructure available in most countries in Africa .

v. Besides all the above challenges in areas of management, skills, technological capabilities, productivity and competitiveness also impede e-business application The tourism sector has received some considerable attention in the economic development strategy of Ghana Since the late 1980s.

i. Unsuitability for the type of business: The challenge of unsuitability of e-business model for the type of business has to do with the reasons for adoption which vary widely among sectors and countries and mostly commonly related to lack of applicability to the business in question and preferences for established business models (OECD, 2004)

iii. The cost factor of implementing e-business is high in terms of the acquisition of ICT equipments and networks, software and re-organization

iv. Security and trust factors militate against the adoption of e-business as there is lack of reliability of e-commerce systems, uncertainty of payment methods, poor or no legal frameworks and intellectual property right enforcement. Lack of reliable trust and redress systems and cross-country legal and regulatory differences also impede e-business adoption.

How e-business challenges are overcomed by hotel industry:

The biggest challenges of a successful e-procurement implementation are change management and supplier adoption. Change management deals with the people side of e-procurement and changing buying behavior. The new solution will not be successful if people within the organization avoid using the system. Linked with change management is supplier adoption. Focusing on which suppliers to bring online for the quickest return on investment, supplier adoption ensures success by reinforcing the benefits and capabilities of online purchasing. If the change management issues and supplier adoption challenges are addressed together, the implementation of e-procurement practices becomes much easier.

An easily avoidable challenge is inadequate technology and access to the Internet. Given the right tools in the form of updated PC technology and high speed Internet access, e-procurement should, in most cases, significantly improve the otherwise mundane and time consuming task of creating requisitions, and generating, approving, and tracking purchase orders.

Conclusion:

The contribution of the hospitality industry to the overall growth of the economy of India cannot be overemphasized. For the hospitality industry to succeed, the need for efficient and responsive hotel subsector which incorporates modern trend of business and customer service cannot be ignored. The efficiency and smart services provided attributable to e-business present a bigger opportunity to firms, industry and the country as a whole necessitating the availability of knowledge through research.