Why Hotel Ecommerce So Important

Published Date: 02 Nov 2017

The hospitality industry is a broad category of fields within the service industry that includes lodging, restaurants, event planning, theme parks, transportation and additional fields within the tourism industry. The hospitality industry is a several billion dollar industry that mostly depends on the avaibility of leisure time and disposable income.

E-business may be defined as the conduct of industry, trade and commerce using the computer network. Electronic business methods enable companies to link their internal and external data processing systems more efficiently and flexibly to work more closely with supplier and partner and to better satisfy the needs and expectation of their customer

The application of the interne in the business world has become a major trend in practice and generated a hot stream of research in the recent literature. As such the internet has becoming a powerful channel for business marketing and communication and for new business opportunities, is often called as e-business. It provide communication between consumer and companies and through electronic data interchange, 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-travelling, referring to all travel related business transaction now through internet application. Some key issue addressed in the recent literature about the e-travelling include: customer acceptance and satisfaction, services rendered, value added for the travel business and consumer, privacy concerns, profitability, operational risk and completion from traditionally non-travelling firms.

This new virtual market place allows small companies competing with business giants by just having a better web presentation of their product and services. Online customers can enjoy a wider choice of products or services, more competitive prices and being able to buy their favourite items from the seller located thousand miles away.

The internet has consolidated itself as a very powerful platform that has changed the way we communicate, and the way we do business. Over the last decade the population of internet users has increased rapidly. The hospitality industry has always been among the first to capitalize on new sources of information to help them make decision before purchasing services.

Why hotel e-commerce so important

Accelerating internet usage worldwide

The internet is the lowest cost hotel-booking channel

Most travellers research hotel reservation on the internet

Social media and online hotel reviews are an increasingly important decision factor

The web is the preferred media source for travel information, favoured 17:1 over television and 6:1 over newspapers and magazine.

E-booking

It has been reported that the online booking in the hospitality industry is increasing at a very rapid speed recently. Online hotel room booking has been increased by six times just during last four years. The hotel industry is certainly full aware of this trend and fully wiling 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 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.

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. Another attempt by this industry is to change its early agreements with those online travel agencies-from old merchant model where hotels are 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 price for fixed period 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.

Other than allowing those online travel agencies to profit for an average 20% from original wholesale price, some hotel chains now offer a more competitive price on their own websites to directly compete with those online travel agencies.

The claimed advantage to online room hunters include: a better deal in room rates, a direct link to all airlines website, reservation are directly made into hotels systems to eliminate any potential snafus, and a fast payments to hotel where rooms are booked online.

It has been predicted that in the travel industry to be successful in long-term, the operation 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 competitor as well as its online business counterparts.

An internal and external fit

The internet provides a means to internally network the hotels business processes together from bookings, food service and housekeeping to car rental, tours and even kennel services for dogs and cats. Centralized, internet based property management system will eliminate the need for expensive on-site computer hardware and software. The internet also provides a way for hotels to integrate external business into their supply chain as when Omni hotel upgraded its reservation system to a seamless environment for agents both within and outside the company.

A business to multi-customer fit

The internet facilities the hotels interaction and helps to transform relationship with three distinct customer groups: individual as tourist; individual on business and business looking for support facilities. The online environment is less structured, and people will spend the time they think they need to spend at the web site they go at their own pave; they feel comfortable asking question, digging deeper and have no pressure to make up their mind. Individuals on business provide another opportunity for integration of web technology to attract and provide service to this unique client base. The third opportunity for web business looking for support facilities.

A business to business fit

The internet provides the ability for the hospitality industry to engage in two types of business to businesse-commerce: back office integration with external suppliers and network integration with external business. Hotel industry purchasing has long been regarded as a painful process- inefficient and bureaucratic-and certainly ripe for radical overhaul. Back office integration allows supplier direct access to the operation centre of the hotel which reduces ordering time and inventory storage, thus reducing transaction cost. The internet gives small supplier and allows the hotel to find best possible fit. Hilton hotel views buying materials online as critical. They have formed a partnership with e-commerce service and software provider purchase pro.com to build Hiltons next generation procurement system and start a purchasing exchange that will be opened up to other hotel chains.

In addition to allowing two way accesses to suppliers, the internet makes possible the networking of suppliers and support companies directly into the value chain allowing them to replace functions normally carried on by an organization. It even provides a platform to permit competitors to share individual core competencies thus increasing the worth of both companies.