Get documents about "The Tourism Industry
Document Sample
The Tourism Industry
• Tourism is based on difference
• Leisure activities presuppose their opposite, namely the
existence of regulated and organized work.
• For tourists the visited places are “free” of work, services are
supplied which free the consumer from the daily burdens.
• The strict time constraints imposed by working relationship are
released; tourists live within a different time frame.
• Tourism places are places, where tourism attractions are
assumed to be unique, different from the everyday environment.
• Tourists have to travel to the place of consumption
• Tourists are not able to test the product in advance; Information
is the only means, which can close this gap.
Werthner 41
Characteristics (2)
• The service - the tourism product is consumed at the time it is produced.
The product is based on social interaction between the supplier and the
consumer, where the quality of the product is mainly defined by this
interaction. Consumer part of production.
• Tourism is labor intensive, which will increase the costs of tourism
services on the long term, at least compared to the other areas of our
economy.
• Tourism is very sensitive to changes in private household incomes (no
primary need). It is in direct competition to other products in the household
income basket such as books, newspapers, entertainment, but also
electronic products.
Werthner 42
Characteristics (3)
• Tourism is an umbrella industry - containing a set of interrelated
businesses, involving travel companies, accommodation
facilities, catering enterprises, tour operators, travel agents,
providers of recreation and leisure facilities
• Tourism is an important vehicle for regional and national
development planning and strategies - also in industrialized
countries (see also the respective programs of the European
Commission). This is due to its job creation potential and the
rather low entrance barriers compared to other industries.
Tourism activities can be designed in such a way, that it respects
environmental, social and cultural constraints.
Werthner 43
Definition Traveler
Outside usual environment
Yes No
For less than 12 consecutive month
Yes No
And:
international - domestic Purpose of trip other than an
inbound - outbound activity remunerated from
within the place visited
Yes No
Tourism
Visitor
With overnight OtherTravelers
Yes No
Same-day
Tourist
Visitor
Werthner 44
source: WTO
International Tourist arrivals
World tourist arrivals
650 10
600 9
550 8
500 7
Change (%)
450 6
in Mn
400 5
350 4
300 3
250 2
200 1
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
And: International : domestic - 1:10 - in 1992 503 Mn internat. and 4.875 Mn domestic
Werthner 45
International tourism receipts
International tourism receipts
500 25
450
400 20
350
Change (%)
300 15
Bn U$
250
200 10
150
100 5
50
0 0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
receipts: expenditures of international inbound visitors including payments to
national carriers for international transport; include any other prepayments made
for goods/services received in the destination; excludes international fare receipts
Tourism receipts on 3. place in world exports (after petroleum and petroleum
products; motor vehicles, parts and accessories)
Werthner 46
Regional market share
Africa
3% Americas
20%
Middle East
2%
Europe East
60% Asia/Pacific
14%
South Asia
1%
Europe is declining. East Asia/Pacific grew from a share of 1 % (1960) to
14% (1995).
Werthner 47
Economic Importance
• Based on statistics of WTTC (Wolrd Travel and Tourism
Council).
• Takes into consideration also third party suppliers (construction,
investment, telecommunication, banking) and governmental
expenditures - with specific weights.
• Difficulty: travel and tourism not a own category in national
statistics
• looks at GDP - Gross domestic product (consumer expenditures,
capital investment, government expenditures and foreign trade),
jobs, investments, taxes
• open debate between WTO, WTTC, national and international
statistical bodies
Werthner 48
WTTC statistics (1)
Gross Domestic Product - World
7,0 11,0
6,0 10,9
5,0 10,8
10,7
Percent
4,0
Tr U$
10,6
3,0
10,5
2,0 10,4
1,0 10,3
0,0 10,2
1988 1989 1990 1991 1992 1993 1994 1996 1997 2007
Years
WTTC: travel and tourism - world biggest industry
Werthner 49
WTTC statistics (2)
Jobs by travel and tourism - worldwide
400 11,0
10,8
350
10,6
300
Percentage
Mn of jobs
10,4
250 10,2
10,0
200
9,8
150
9,6
100 9,4
1988 1989 1990 1991 1992 1993 1994 1996 1997 2007
Years
Werthner 50
WTTC statistics (3)
1997 2007 Growth
Jobs 262 Mn 383 Mn 68,40%
GDP 3,3 Tr USD 6,3 Tr USD 52,38%
Investments 801 Bn USD 1,5 Bn USD 53,40%
Taxes 716 Bn USD 1,3 Bn USD 55,07%
Werthner 51
Exogenous Factors - 1 (WTO)
• economic and financial developments: tourism is income sensitive with
different elasticity for different regions.
– 1% growth in private consumption leads to no change in tourism, whereas a
growth of 2,5% results in a growth of 4% in travels spending.
– Exchange rates are crucial: 5% drop (or rise) in the relative cost of travel
abroad results in a growth (or fall) of 6% to 10% in tourism movements.
– The increased flexibility in work time will lead to more & shorter vacation.
• demographic and social changes: the main tourism generating countries are
aging, leading to increased travel of the relatively high income group (between
35 - 55 years of peak earning years).
– The groups of "singles" as well as of women are of increasing importance.
– Relatively high unemployment rates in developed countries have also been
taken into consideration as a negative factor.
• Technology: this is not only related to IT, but also to advances at decreased cost
in construction and manufacturing, especially in the transport industry.
Werthner 52
Exogenous Factors - 2
• Infrastructure, equipment and facility investment: limiting factor for
travel and tourism. For example, airlines will only be able to finance 40% of
their investment needed for a renewal of their aircrafts. In addition, airport
capacities are in many cases inadequate for supporting further growth.
• Political / legislative factors: deregulation as well as privatization strategies
are intended to break down barriers for entry in travel and tourism. It should
be noted, that this has not yet produced the foreseen growth in the former
states of Eastern Europe
• Environmental issues: The growing awareness of environmental issues is
putting an increasing pressure on suppliers and destinations. Environmental
impact assessment will become crucial. But appropriate measurements will
contribute to a sustainable development.
• Safety: this constitutes a constraint for the development in specific
destinations, many outbound countries in the Western hemisphere show a
high sensitiveness in their travel behavior.
Werthner 53
Key market forces (WTO)
• changing consumer behavior: in 1995 the non-mainstream tourism represented
approx. 5% of the total tourism demand, with growing tendency.
• increasingly varied product development, finely targeted product marketing.
• globalization: tourism is becoming a real global business, where the domestic supplier
has to compete with long distance destinations. This is accompanied by a concentration
process.
• marketing: the success products will depend on extensive and targeted marketing,
leading to the growth of new distribution channels. There will be more destination
focus on image.
• human resources: puts heavy emphasis on educated and trained personnel, increasing
average wages and salaries. Tourism will have to compete with other service industries
which have developed well suited training programs, and are offering higher salaries.
Werthner 54
Prospects
• There will be no slowdown in the growth of international tourism,
– reaching 692 million in the year 2000,
– more than 1 Bn in 2010
– and 1.6 Bn in 2020.
– This represents an annual growth rate of 4.3% 1995 - 2020.
– Corresponds to 7 % of the worldwide population, leaving still a potential
for further growth.
• Long haul tourism will increase (decreased costs, improved infrastructure,
technological progress;
• its share will rise up to approx. 24% in 2020, compared to 12% in 1994.
Werthner 55
Growth perspectives in different regions
Region Inbound Outbound
Europe + +
America +++ ++
East Asia and the Pacific ++(+)? ++(+)?
South Asia +++ +++
Middle East +++ +++
Africa +++ +++
Overall ++ ++
+: below average - up to 3.5% per year; ++: average - 3.5 - 5.1 %; ++: above average
Werthner 56
Market shares in 2020
Regional market shares - 2020
Africa
5%
Americas
18%
Europe
45% Middle East
4%
East Asia/Pacific
South Asia 27%
1%
Werthner 57
Trends in consumer behavior (2)
• From mass consumption with production oriented to consumer
oriented
• Segmented and individualized; postmodern tourist
• Shorter time spans between booking and arrival, more holidays
• Distinctions between work and holiday diminish
• Governance of the Special / Unique
• Dominance of packaged tourism - decreasing, but in 1993 in UK
63% of outbound holidays sold as packages - parallel segments
• Product competition to channel competition
• From consumer oriented to consumer driven - mass
customization; new role of travel agents
Werthner 58
Structure of tourism market
Consumers
Tourist
NTO travel
Intermediaries
outlets agent
government
bodies
tour
RTO
operator
CRS/GDS
DMO,
Planners &
Administration
incoming
LTO
agent
hotel
chain
Suppliers
Primary Airline other
supplier transport
Werthner 59
Primary Suppliers (1)
• Basic product suppliers such as accommodation, catering, or entertainment.
• It is by far the biggest group, with accommodation facilities as being the
largest subgroup. In 1995 there existed 12,3 Mn rooms worldwide.
• Mostly SMEs.
• In EU “HoReCa” sector (covering hotels and other accommodation,
restaurants, canteens and catering)
– 95.5 % of the enterprises are very small (0-9 employees).
– Half of the persons employed in this sector work in very small businesses
(1 to 9 employees).
– Only about 10 % of persons employed work in large enterprises of more
than 250 employees.
– The HoReCa sector accounts for more than 1.3 million enterprises in the
EU; is about 8.5 % of the total number of enterprises.
– In Austria average number of beds per overnight facility, including only
the one to five stars categorized hotels, is 37,4.
Werthner 60
Primary Suppliers (2)
• It is an additional feature of the tourism sector that the group of primary
suppliers covers a whole set of different areas, including culture and
agriculture as well.
• Together with their SME characteristic that is identified as being important
for maintaining and creating job, this explains the specific role of tourism for
regional development.
• Main disadvantages:
– have normally little know how about marketing and technology,
– little knowledge about market developments and
– rather limited access to distribution channels. For example, over 85% of
European accommodation providers are not listed on airline CRS/GDS
that serve travel agents worldwide.
– Whereas other sectors of the tourism industry can be seen as early
adopters of new technologies, this sector is normally lagging behind.
Werthner 61
Airlines
• Technologically most advanced sector in the tourism field, with growing importance due
to the tendency to long haul tourism.
• Between 1980 and 1992 scheduled traffic grew by 92%, and the capacity by 94% with
falling prices (due to deregulation, growing capacities, increased competition)
• Use advanced Yield Management methods. In the USA the number of rates increased
from 400.000 to 7 Mn in the seventies.
• Airlines were among the first companies creating worldwide electronic networks, for the
means of selling and distribution, for internal management and operations.
• Economic problems in this area. For example, the average load factor on international
services fell from 64% in 1989 to 59% in 1992, which is below that level at which airlines
can break even after interest payment .
• In this sector we also include other technologically advanced companies:
– Other types of transport suppliers (car rentals, railways, maritime industry)
– Enterprises such as credit or media companies (transaction or content).
• Conceptually, huge and powerful suppliers the same group as the SME structured
overnight facilities.
Werthner 62
Hotel chains
• This group is situated both on the intermediary as well as the supply side
since many chains represent marketing and operation units, where the
accommodation is owned by a different unit.
• This market is dominated by US multinational corporations, which in 1992
owned 13 of the top 20 chains.
• These chains focus on the higher priced market segment, with well-
established reservation centers.
• They have learned to cooperate. In 1989 70 major hotel brands established
THISCO as a computer switch to provide a common electronic booking
interfaces to their hotel central reservation systems worldwide.
• With 18 Mn reservations per year and 3.2 Bn USD in room revenue
generated, they represent 60% of the worldwide market share.
Werthner 63
Tour Operators
• The main function is to purchase and to assemble a large number components produced
by the principals, and to sell these as packaged products.
• They act as whole-salers, performing nearly as virtual enterprises since the value they
add to a product is the aggregation process.
• They conduct the main marketing and distribution activities and have part of the
financial risk of unsold stocks.
• One of the main advantages for suppliers is that tour operators have a good market
access, well known brands and that the financial risk can be passed on, at least partially.
• It is the advantage of the tour operator, and of the consumer, that by the bargaining
power of tour operators lower prices can be achieved.
• In Europe, in 1992 one third of total travel expenditures fell into this category. In
Germany and in the UK roughly half of all holidays sold were packaged.
• In specific destinations the percentage of packaged holidays is not that high (in Tyrol,
Austria, nearly 70 % of the tourists are “direct” bookers).
• Tour operators show several important features: they own brands well known in the
tourism sector and they have the knowledge about product aggregation and marketing.
• They experience a fierce competition and have a rather limited control over the quality
of the product.
Werthner 64
Travel agents
• Travel agents act as a distributor, broker or retailer on behalf of the suppliers, their main
contact with the supply side is the tour operator.
• Their income is done on the base of a commission, a percentage of the product price.
These are designed in such a way that travel agents should prefer specific operators
and/or systems.
• They are the main point of contact for consumers.
• They are small and medium enterprises, being under pressure by commission reduction
strategies of both airlines and tour operators.
• They are part of the international electronic distribution network constituted by the
CRS/GDS. By the means of these systems they may also access products of tour
operators, perform reservation as well as billing tasks.
• The use of these systems has increased their productivity and sales (In Germany travel
agents introducing the German START system, they could lower their traditional
communication costs by 22%, while increasing their turnover by 17%).
• But linking to a specific distribution channel also creates dependencies.
Werthner 65
Computerized Reservation Sytems/Global
Distribution Systems
• CRS/GDS are product of the 1960
• Main electronic interface on the travel and tourism market (“switch” between
suppliers and intermediaries on side and travel agents on the other side).
• As the result of a permanent concentration process four major systems, e.g.,
Amadeus, Galileo, Sabre, Worldspan, have been established.
• Their shareholders are mainly airlines, since the management of airline seats
and their distribution constitute their origin.
• Today they also contain other products such as other transport means,
accommodation - mainly from hotel chains -, and tour operator products.
These products are integrated by links to the respective reservation systems
of intermediaries or suppliers.
• Their development shows failures to establish co-operative infrastructures on
a broader scale, which was tried several times. For example, Amadeus and
Galileo have been initiated as competing European systems after talks failed
to reach consensus on just one system.
Werthner 66
CRS/GDS (2)
• Good example of competing electronic marketplaces - most referenced examples that
early adopters of information technology can occupy a strategically dominant position . In
1992 these systems had over 98% of the entire market.
• The emergence of the CRS coincided with the deregulation of the US airfares.
Subsequently prices were lowered on many routes and the airlines improved their yield
management operations, i.e. they flexibly adjusted pricing (and schedules and routes).
• This led to an increasing complexity (and intransparency) of fares.
• It has been expected that the number of flights booked via travel agents would be
diminished by the CRS, however, the opposite effect happened. Because of the increasing
complexity of airfares more passenger turned to a travel agent to book their flights.
• This shows that electronic markets may lead to disintermediation but at the same time they
may also induce increasing intermediation, depending on the price volatility and
transparency and added value the (new) intermediaries can provide.
• These systems represent a very influential part of the market. Sabre Travel International,
for example, employs 1.800 persons, covers 45 Mn of prices, contains 650 airline
companies and performs 2.000 transactions per second.
• They have dominant positions in specific market, e.g., Amadeus/START in Germany.
Werthner 67
Destination Management Organizations (DMOs)
• The tasks of DMOs are manyfold:
– they are responsible for destination management,
– planning activities,
– marketing/branding of the entire destination,
– training and education,
– and they are very often also engaged in the daily operation.
– Their objective is to promote a destination's tourism by maintaining the
social, cultural, economic and environmental basis, having thus also a
political function.
• They are often genuine governmental institutions.
• They have to represent all suppliers in a democratic way, without
preferencing a single group.
• Normally they are paid by tourism related taxes.
• And: normally excluded from reservation activities.
Werthner 68
DMO (2)
• Marketing a tourism destination is not simple - a destination is a very
complex product :
– Marketing only one of the influences on tourism. It is difficult to assess the impact
of marketing on the arrival of visitors. Destination organisations cannot control
the other factors, but must respond to them.
– Many other organisations which do marketing. The marketing expenditure of a
NTO makes up only a small part of the total tourism marketing expenditure in the
country. Destination organisations cannot control, only try to influence the
marketing by third parties.
– Limited influence over the supply of products. Destination organisations also
have very limited control over the kind, quantity and quality of tourism services.
– Only a large budget will make an impact. In an image-creating promotional
strategy may be waste of money if the marketing objectives cannot be achieved.
• All these factors make it very difficult to assess how effective the marketing
activities are
Werthner 69
DMO (3)
• Though the specific institutional implementation may differ from country to
country, nearly all destinations have DMOs.
• Special support especially for the SME structured tourism industry where
smaller suppliers have limited financial opportunities.
• Impementation: a kind of a hierarchical network
– starting at the lowest level with the local tourist boards,
– regional level within the regional tourist board
– national tourist board with its international outlets.
• From a formal decision making point of view, none of these bodies has a real
direct influence on the other ones
• The governance model is based on cooperation and negotiation
• Leads also to rather slow and very often non very transparent decision
processes.
Werthner 70
DMO (4)
• Tourist boards can be seen as a non-computerized information system
– gathering information about the local, regional or national tourist product and
distributing this information worldwide.
– On the other hand they also have to deliver information to the local suppliers, informing
them about current trends, the general market situation and national and international
competition.
• IT raise some important questions:
– DMOs are, with some notable exceptions, not prepared for this development,
– The dynamics of the on-line market questions their functional limitation to marketing
tasks only: the consumer, once identified the proper product, wants to buy it.
– Consumer ask which product is best for their needs, they do not want just information
about “objective” product attributes, but also some specific advice (Problem in Austria).
– Tourist boards start partnerships with private companies, or they set up their own
companies dedicated to these tasks.
– This raises the question of a changed financial model and of competition with private
companies, doing similar tasks.
Werthner 71
Dynamic Network
• Dynamic links and configurations, enabled by common practice, IT and product
interfaces.
• Many links are possible (for example):
– suppliers - incoming agent - tour operator - CRS/GDS - travel agent - consumer
– suppliers - LTO - consumer - supplier - consumer.
Customer
Tourism market as a flat
Web of related companies.
Dynamic linking in
production/use and
communication
Werthner 72
The Tourism Product
(information in travel bureau,
Additive service components
Carrier
Tourism
Accomodation
product as
room service, ..)
+ a set of
components
Restaurant
Destination‟s
infrastructure
physical components + service components integrative additive set
Set of products, integration by service components and information
Werthner 73
market Product aggregation (1)
knowledge (m) di = g(m, c, ai)
di
channel ai
knowledge (c) ai = f(pi, qj)
pi qj
products
aggregated product i
pi
basic tourist
product i
dj
qj aj
aggregated product j
pi rk
rk
Werthner 77
Product aggregation (2)
pi, qj, rk, product type dependent attributes of basic components such as location,
arrival and departure date, hotel category, price,
ai = f(pi, qj) attributes of the aggregated product as a function of the basic component
attributes (entire time period of a packaged product or the package price),
di = g(m, c, ai) additional attributes of the aggregated product which take into consideration
the market segmentation and the different distribution channel, resulting into
different prices and product descriptions.
• The same basic components may be combined to different products, which are sold by
means of different intermediaries and distribution channels, which highly influences the
product descriptions.
• The aggregation process normally crosses company boarders, in that case the mapping
function is described by the means of a contract between the supplier and the
intermediary entity.
Werthner 78
Product aggregation (3)
• Normally even complexer: a room may be sold as a two or a three bedroom,
with different prices. The basic product can be seen as a function of some
kind of basic service or infrastructure.
• Different configuration options related to different product descriptions and
serving different needs.
• Resulting into different expected or augmented products. Though at the final
end the same basic components are consumed by the clients their
expectations may have been different and, thus, also the related degree of
satisfaction.
• Mass customization and consumer driven markets need basic components
with well described attributes in order to link them dynamically.
• Product configuration possibility is an important prerequisite in markets with
increased competition.
Werthner 79
Product aggregation and product categories
Breadth of Holiday treated
Holiday treated as multiple
flexibility
as one package components
Package tours or
inclusive tours
More individual
package tours
Tailor-made or
Type of package itinerary-built tours
holidays
Tour operator respond with new products as well as IT solutions (Kärcher).
Werthner 80
Dynamical aggregation and IT - limits
special
individualized products
0%
expeditions
suited for IT
theme-oriented
product set
holidays
packaged tour itinerary-built
tours
single components
last minute offers
standardized 100%
commodity
0% 100% products
information need
But not in absolute terms, depends on consumers knowledge.
Werthner 81
Strategies of Suppliers and Consumers
• Customers react - according their preferences in terms of risk taking,
flexibility, one-stop-shopping, aversion of lock-in situations etc. by
– early viz. late timing for their service purchases,
– selecting all-inclusive offers in advance viz. ad-hoc purchases of service
components (food, entertainment etc.) on the site and on demand.
• Tourism principals and intermediaries pursue a differentiated set of strategies
characterized by timing and bundling of offerings:
– early-booking incentives viz. last minute offerings;
– bundling of offerings from one (all-inclusive offerings) or multiple
principals (integrated destination offerings).
Werthner 87
Specific role of information (1)
• Services (non-material and bilateral goods) focus on the relationship
between the supplier and the consumer.
• Production integrates consumer - new concept called prosumer, a
combination of producer and consumer, emphasizes the increasingly active
role of consumers in the process of service provision.
• Service goods are promises about something that will be done in future.
• Both sides are confronted with uncertainty.
• Customers cannot sure about the quality and the price of the products offered
(and even if service will be accomplished).
• Supply side is not sure about the consumer, about their number and behavior.
(important since the consumer has to participate in the production).
• Situation of asymmetric information between market participants
• Non-complete and late information produce uncertainty
• But, information reduces uncertainty. Between both is a positive trade-off.
Werthner 88
Specific role of information (2)
Uncertainty appears along two dimensions:
• Price:
– The consumer (aware of different prices for the same product) does not know
which supplier has the best price.
– This increases with the number of suppliers for the same product.
– Supplier‟s problem: have to pay for accessing the market (identify the respective
segment or distribution channel) - related to information costs.
– The costs for looking for information should be lower than the related benefit.
– Search costs are not objective, one cannot be sure to have identified the lowest
price. And one cannot be sure whether the identified price won‟t change within the
next future.
– It is up to the own judgment whether to continue or to stop the search procedure.
– In addition, in a single purchase one will accept higher prices since the opportunity
costs are higher than in repeated market transactions.
Werthner 89
Specific role of information (3)
• Prices will change in the case that many participants perform search procedures and
evaluate different suppliers
• This puts pressure on the supply side. This will raise the number of and the
willingness for innovation, the creation of new products.
• Assuming that IT leads to price transparency, it will accelerate competition and favor
innovation.
Werthner 90
Specific role of information (4)
• Quality: product quality is related to specific features or attributes
– experience qualities: these qualities can be completely evaluated only
after the consumption of the product and are strongly related with the
experience of the customer. Tourism products are typical examples.
Related to expected and augmented product.
– confidence qualities: These can not be completely evaluated neither
before nor after the purchase, the consumer does not possess the know
how nor the time to do that. Promises such as “doing a vacation as never
before” fall into this category.
– search quality: these are feature such as price information which can be
evaluated by means of search, which may stop when a consumer is
satisfied or the costs become to high. Since tourism products contain also
physical components, features of these components such as the
geographical situation or the category of a hotel, are typical search
qualities. Related to expected and augmented product.
Werthner 91
Specific role of information (5)
Timing of quality assessment
before purchase after purchase
Assessment of possible search quality experience quality
service quality not possible experience or confidence quality
confidence quality
source: Schertler 95
Werthner 92
Specific role of information (6)
• Informational market imperfections may lead to so-called information impactedness
(Williamson 85), based on behavioral assumptions about market participants:
– bounded rationality: this is not only due to limited knowledge of humans but
also due to limited opportunity costs in looking for information,
– opportunistic behavior: this kind of behavior may be caused by the
informational market imperfections, participants seek to optimize their benefit,
even in the case that they may discriminate others,
• and external factors:
– uncertainty/complexity: uncertainty may be the result of the opportunistic
behavior of other market participants (espec. due to its dynamic features the
market developments cannot be overlooked, thus, increasing complexity,
– specificity: before agreeing about a contract the situation is characterized by
competition with all its imperfections. Once an agreement has been reached,
both participating partners can gain an advantage by repeating transactions
(assuming that the service was performed in a satisfying manner).
Werthner 93
Specific role of information (6)
Behavioral External
assumptions factors
Bounded Complexity /
rationality uncertainty
Information
impactedness
Opportunistic Specificity
behavior
Werthner 94
Specific role of information (7)
• A priori unspecific situation can lead to a posterior specificity
• Both market partners try to maintain their bilateral relationships in the case of
repeated transactions. This increases with the specificity of the product.
• The change of partners may also induce additional costs.
• A specific form of information asymmetry arises: although each partner has
access to the entire knowledge, it might be too costly to disclose this
information to other market participants.
Werthner 95
Specific role of information (8)
• In tourism high information seeking costs
• Specific intermediaries for coordination in order lower the information transaction
costs
• The informational market imperfection is one of the reason of rather long value
chains in the tourism market:
– DMO: they provide transparent access for both sides with at the same time
certifying the quality of the given information, thus, they increase confidence.
– tour operator: since tourism products consists of several basic components from
different suppliers tour operators act as a single point of access, thus, lowering
drastically the information search costs for their consumers. At the same time
they also lower the market information costs for suppliers.
– travel agent: they lower uncertainty for the consumers, and they are closing the
spatial gap to the place where the service is offered. They lower the market
information costs for the supply side.
Werthner 96
Time dimensions
Information type Time-sensitivity
static information low
„availability“ information middle
reservation and booking data high
These information types refer mainly to search qualities.
Time sensitivity important aspect for architecture of IT systems, where to store which
information since transmission related with cost.
Werthner 97
Information needs in phases
Information Needs pre trip during trip after the trip
Phase
information * * *
agreement * *
control * *
adjustment * *
operation / settlement *
• Any changes within the time span (decision - consumption) has to be communicated to
the consumer.
• Information about consumers has to be communicated to the final supplier or
representatives of tour operators, in the case of a packaged holiday.
• Design criterion for IT applications, either the system distributes the information
properly, or the consumer may “carry” it (the form of a chip card application).
Werthner 98
Travel phases and potential IT impact
post trip return
H L
Origin Destination
H H
pre trip on site
M
travel to site
Werthner 99
Model of Planning and Decision Making (1)
Formulation of
From Supply Side Objectives
Information Gathering &
Model Building
Forecasting
Planning Extrapolation
Distribution Evaluation
Planning, Decision and
Implementation of Action
Reservation - Booking
Marketing Cycle Evaluation & Reformulation
of Strategies
Werthner 100
Model of Planning and Decision Making (2)
• information collection stage: information links leading to suppliers - different
strategies for finding the proper information (electronically: direct retrieval of
information or searching, scanning and information wandering)
• Implementation of Actions: product creation, aggregation, and distribution, delivers
back policy to the information network.
• Model Building: arrangement of a formalized business model in terms of
information structures capturing faithfully the market "reality" and integrating all
economic parameters of relevance.
• Forecasting/Extrapolation: set of tools for assessing the company‟s as well as the
market‟s performance against varying economic assumptions and business
strategies
• Planning: takes also into consideration the different distribution channels available.
Different time range:
– Short term: such as yield management methods - optimize price based on
observed trends and a priori defined performance criteria
– Long term: product creation and investments
Werthner 101
Information types
• two main components for the supply side:
– pre-sales information: description of the suppliers‟ basic offer
(accommodations their description, lodging capacity, kind of
infrastructure/facilities), and
– post-sales information: timely summaries and statistical aggregates about
the operative business, e.g., customer frequencies, effective demand
structure, utilization of capacities, etc.
• Pre-sales information covers
– long-term component: supplier‟s production structure, determined
economically mainly by bound capital and fixed costs resulting thereof,
– short-term component: variable components of service such as in-person
services offered, days/hours of operation, price lists, contractual conditions
Werthner 102
Information types (2)
• IT point of view - the management of both types is quite different:
– Pre-sales information:
• hard to unify semantically (hard task of harmonizing the price information
delivered by different suppliers in different destinations),
• a rather static type of information and, hence, mostly independent of the operative
business
• The main challenge with respect to pre-sales information is the task of semantic
data integration (definition of a common vocabulary, the meaning of terms and the
relationship between them).
– Post-sales information (the other way round):
• primary feed-back loop transmitting operative business data (resource utilization)
• highly dynamic and must be recorded on a continuous basis which implies the
provision of a means for dynamic linking of reported performance data.
• should fulfill several marketing-relevant criteria (fit the structure of the actual
tourism offer).
Werthner 103
Information sources and tools
Phase Task Source Tools
information gathering on-line market data, electronic search tools ,
statistical sources, i.e., scanning, browsing,
information and questionnaires retrieving
modeling performance monitoring on-line performance statistical tools,
market analysis and market data market portfolio,
analysis and segmentation statistical tools
forecasting forecasting and historical performance econometrical models,
extrapolation data, market data simulation
product planning and market data, „own“ optimization models,
planning and creation infrastructure simulation
decision distribution channel market data optimization models,
selection simulation
implementation and information distribution
operation negotiation and selling performance data decision models (game
theory)
Werthner 104
Related docs
