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					  Empowering Small Players in
   Tourism Industry Through
eTourism: Is Destination Tanzania
             Read?

               Faustin Kamuzora
               Mzumbe University

A Discussion at SWOPNet Monthly Forum, 26/11/2004, IFM Dar
  Importance of Tourism
Tourism and travel are the world largest
industry
Globally, they contribute about 10% of
GDP and 8% of employment
Tourism is more important in developing
countries, e.g. contributes 16% of GDP
and 25% of foreign exchange in Tanzania
(highest sector)
However, in TZ little income goes into
rural players =>lack proper linkage with
rest of economy
          What is tourism?
Tourism is defined as “the activities of people
travelling for leisure, business and other
purposes to places outside their usual
environment and staying for no more than one
consecutive year.” (WTO, various years)
Tourism resembles Plato‟s philosophy of
knowledge acquisition, i.e.:
Tourism is „learning‟, it is „discovering‟ and an
„experience‟
     Where do international tourists to
         Tanzania come from?
    Europe is the major
                     30


    source followed   Percentage
 by United States    25




    UK leads all     20


countries                                                                                                 URT
                                                                                                          TZ Mainland
                     15
                                                                                                          Zanzibar
                                                                                                          MLD&ZNB


                     10




                     5




                     0
                          UK   USA   Italy      France   SA   Spain   Germany   Netherlands   Australia


                                             Source: URT, 2004
    Internet is source number 1 for travel
information (e.g. UK tourists but similar with
                other countries)




   Thus, potential tourists to Tanzania are already online
  Place of ICTs in Tourism
Tourism is information intensive industry
(Sheldon, 1997). Customers decide to
visit destinations based on prior
information
Rapid development in ICTS (esp. the
web) has drastically changed tourism
industry (e.g. disintermediation and
information provision)
Tourism and travel are largest on-line
sectors (WTO, 2001 and Buhalis, 2003)
                eTourism
The combination of internet technologies
business principles and tourism are elements of
e-tourism.

The use of web technologies, communications
technologies (e-mail, telephone, computers, fax,
video clips, ebrochures), search engines, secure
electronic payment systems, combined with
electronic booking systems are some examples
of the extent of technology penetration in
traditional tourist businesses.

Internet technologies and tourism fulfil Plato‟s
knowledge acquisition mode of via dialogue
(interaction)!!
                   eTourism domains


                 Business
                 •Mgt                 eTourism is thus
                 •Marketing           digitalisation of all
                 •Finance             processes and value chains
                                      in the tourism system,
                                      travel, hospitality, and
                 eTourism             catering industries
IT/IS
•Info. Systems
•ICTs                  Tourism
•Telecomms             •Transport
                       •Travel
                       •Hospitality
                       •Leisure
                       •Heritage
   Tourism industry (system) utilises IT
          for several functions

• enhance  efficiency for communication and
      management
• improve quality of service and differentiate
       product
• provide new services and formulate new
      products
• re-engineer new and innovative business
      practices
• create seamless experience through
      partnerships with other suppliers
• enhance tourism distribution to emarketplace
             Tourism System
Push
                                           Pull




  Mill and Morrison (1985) ‘system is like a spider’s web—touch
  one part of it and reverberation will be felt throughout’.
       Examples of IT applications used in tourism
•Hard, software and netware ranges    •Computerised reservation systems (CRSs)
•Stand-alone computers and            •GDSs (e.g. Galileo, SABRE, Amedeus)
network devices
                                      •Switch applications for hospitality
•Office automation, reservation,      organisations (e.g. THISCO, WIZCOM)
accounting, payroll, and
procurement mgt application           •Destination MS and DICIRMS

•Portable/wireless comm. devices      •Internet-based travel intermediaries (e.g.
                                      Expedia, Travelocity, Orbiz, Opodo, etc)
•Internal mgt tools e.g. mgt suport
systems, DSS, MISs                    •Mobile/WAP-based reservation systems

•Tailor-made internal mgt             •Traditional distribution technologies
applications                          supporting automated systems (e.g.
                                      videotext)
•Databases & KMS
                                      •Calling centres
•Internet/intranets/extranets
                                      •Interactive digital TV (IDTV)
•Networks with partners for regular
transactions (EDI or extranets)       •CD-ROMs/DVDs

•Networking & open distribution of    •Kiosks and touch-screen terminals
products through the Internet
Critical tourism functions supported by ICTs

  Front office: reservations, check-in, payments
  Back office: accounting, payroll, HRM, marketing
  Customer entertainment and service
  Communication with consumers and partners
  Marketing research and industrial espionage
  Reaction and mgt of unexpected events
  Flexible and dynamic pricing through yield mgt
  Differentiation and personalisation of products
  Monitoring performance indicators and building feedback
  mechanisms
  Control of business processes and personnel

          Source: Buhalis, 2003
IT & Internet as the Tourism Industry Nucleus




                                       Even legacy
                                       systems e.g.
                                       GDS/CRS are
                                       linking to Internet
Customer Communication Life Cycle and
the ICTs in Tourism




        Source: TEAM, 2000
Major stakeholders and role of
            ICTs
                          •eAirlines
                          •eHospitality
                          •eTour Operators
                          •eTravel agencies
                          •eDestination
                          •eCar Rental and
                          •eMICE
  Source: Buhalis, 2003
                  eAirlines ICTs functions
                                   Tactical planning and
Strategic functions
                                   development and running the
•Route planning and market         business
assessment                         •Networking and schedule development
                                   •Scheduling, operational management and control
•Monitoring of competitors         •Critical incident management and corrective
                                   mechanisms
•Strategic pricing and yield       •Crew management and control
management                         •Maintanance management and control
                                   •Cargo management, reservations and revenue
•Strategic business unit           support
                                   •Baggage handling and control
management                         •Procurement of materials and equipment
                                   •Coordination of stations and hubs
•Branding and communication of     •Wheather, fuel and rota reports and manifests
principles                         •Inventory mgt and distribution of tickets
                                   •Check-in, gate mgt and reporting to authorities
•Partnerships and alliances        •Mgt of in-flight catering
                                   •Airport passenger handling and baggage mgt
•Capacity and aircraft decisions   •Pricing, ticketing, revenue, and yield mgt
                                   •Coordinating with partners and alliance members
                            eAirlines ICTs functions cont..d


  Interface with consumers, partners agencies,, other distributors and
                               ticketing
•Mgt of inventory and booking through GDSs and the Internet
•Reservations mgt, ticketing and electronic ticketing
•Operational mgt, check-in procedures and allocation of seats
•Tactical pricing, yield mgt and special offers and promotions
•eProcurement and mgt of suppliers and partners
•Communications and transactions with stations, branches distributors and customers globally
•Invoicing and revenue collections
•Customer profiling, customer service and communication with consumers
•Managing loyalty clubs and customer relationship management

                                                                     Internet and e-tickets:
 Generic Management                                                   Are traveling agents
 •Relationships with partners and alliance integration                 suffering from this
                                                                         development?
 •Employee productivity and crew mgt (rota, training, etc)
 •Business management reporting
 •Safety and security procedures
                                        eHospitality
Internal systems and intranets (use of CRSs and property mgt systems
–PMSs) for:
•Improving capacity mgt and operations efficiency
•Facilitating central room inventory control
•Providing last room availability information
•Offering yield mgt capability
•Providing better database access for mgt purposes
•Supporting extensive marketing, sales and operational reports
•Facilitating marketing research and planning
•Providing travel agency tracking and commission payment
•Tracking frequent flyers and repeat guests
•Direct marketing and personalised service for repeat hotel guests
•Enhancing handling of group bookings and Frequent Individual Travelers (FITs)



Interconnecting partner systems and extranets
Switch coys (eg WizCom and THISCO) enable interconnectivity and
interoperability between different hotel CRSs and GDSs
                                 eHospitality cont..d
Connecting with stakeholders through the Internet
•GDSs pose some problems (e.g. can only display few info and not dynamic enough due to
their database architecture; use abbreviations and truncated descriptions – not friendly)
•Internet overcomes above limitations. Transactional websites are used by hospitality
industry extensively e.g. promotion, on-line booking, yield management
•Internet is used in eProcurement
•Apart from eCommerce, eSales, eMarketing, and eProcurement, Internet enhances value
chains and eHRM in attracting new employees

eHospitality in Small and Medium-sized Tourism Enterprises (SMTEs)
SMTEs are reluctant to employ ICTs cf larger accommodation properties (Buhalis, 1999).


Internet Opportunities for Innovative SMTEs
•Internationalisation
•Differentiation
•Adding value
•Interconnection and distribution
•Embracing technology (Morrison et al. (1999)
Internet opportunities for innovative SMTEs (expanded)
Internationalisation
•   Small hotel can target a much more international markets, with potential access to guests from around the world at low
    marginal costs
•   Time difference is not an issue any more, as Internet is available on a 24/7 basis
•   Web materials can be translated into a variety of languages
•   Machine translation, available freely on the Internet, can help translation of web pages and eMails

Differentiation
•   N iche specialist interest markets can be used to be pursued more effectively by small hotels on the Internet
•   Differentiation can be demonstrated and ‘tangibilised’ through photos, text, graphics, testimonials, awards, etc
•   Regular themed events can be advertised on-line and through targeted eMails
•   Developing collaboration with specialised associations, publications and interest groups can differentiate products, creating
    specialised Internet pages for them is worthwhile

Adding Value
•   Provide special offers and deals to visitors of website
•   On-line club of regulars to facilitate interaction of loyal and repeat guests
•   Facilitate the entire value chain on-line
•   Providing additional services through partnerships with other local providers, e.g. restaurant meals
•   eMail visitors regularly and establish communication channels
•   Offer additional information on the local area, events and attractions

Interconnection and distribution
•   Develop digital alliances on the web through reciprocal hyperlinking
•   Expand network through representation companies that do not require fixed costs or expenses technologies (e.g.
    worldres.com – on-line hotel reservation network for leisure travel – any property can use it for a small commission)
•   Develop links with small travel organisations from around the world and interconnect smallness

Embracing technology
•   Embrace technology through developing an Internet site
•   Provide extra technological assistance for technologically advanced travellers through modern sockets and plug-and-play
    systems
                                      eTour Operators (TOs)
Tour operators are organizers, who put together packages and sell or offer them for sale, directly or through retailers

ICTs in TOs Business
From early 1980s videotext networks linked TOs with travel agents (TAs). TAs could have interactive access to TOs’
reservation systems and search databases, enquire availability of packages and make bookings.
Traditionally TOs distributed their products to TAs by displaying brochures on packages but emergence of Internet,
extranets and intranet is providing both more opportunities and threats to TOs (consumers and TAs can build build
their personalised packages and purchase them on-line i.e. disintermediation).



Opportunities from connecting with all stakeholders through the Internet
•TOs can easily research destinations (i.e. access information on local products) and develop their products on-line
•TOs can provide better information for product managers and contracting employees
•TOs can enrich products by offering a whole range of additional value-added services such as financial and loan
facilities, weather forecasts, shopping opportunities (Marcussen, 2000)
•TOs are able to interact closely with consumers, dynamically change prices according to market condition (no more
need of printing prices on paper brochures)
•TOs are able to demonstrate pictures and videos of services eg accommodation and testimonials
•Customers can customise their itineraries, change accommodation, meals plans, and add value-added services such
as car rental, scuba driving lessons, etc (Buhalis, 2003)

• eBrochures (lower printing costs and distribution) and booking forms can be distributed directly to trading partner
and consumers.
                                   eTravel agencies (TAs)
TAs are the main distributors of the tourism product (several types e.g. outgoing and incoming)
ICTs and TAs
•Videotext for leisure TAs (for TOs databases and reservation systems) and GDSs for business
TAs (to access information about scheduled airlines, hotel chains, car rentals and other ancillary
services)
•Integration of TAs back office (e.g. accounting, commission monitoring, personnel) and front
office (e.g. customers’ history, itinerary development, ticketing and communication with
suppliers) has enhanced synergies, efficiencies and cost savings
•Interconnecting partner systems and extranets strengthens competitiveness and
efficiency and control. Also, it enables storing data in warehouses which assists in developing
proactive marketing tools in order to target individual customers with specialised products for
value-added services (this may defend TAs against disintermediation).
•Connecting with all stakeholders through the Internet enables TAs to communicate with
consumers from all the world, attract more customers, promote special deals and interact
constantly. Web presence enables TAs to develop their brand names both on and off-line (by
communicating their mission, principles, aims and objectives). Online presence provides another
channel for sales generation and fulfillment. However, online presence poses challenges such
dealing with customers who have access of available information on price and product
transparency thus TAs have to work harder to earn respect of customers. Using advanced ICTs
TAs must match traveler's preferences with product and destination attributes (O’Brien, 1999)

   Expedia, lastminute, Orbitz, Ebooker, Travelocity, American Express are e.g of eTAs
     E-destinations (based on Buhalis, 2003)
Destinations are recognised as the raison d’être for
tourism
Satisfy the need for travelling
Have attractions that generate the motivation to visit
Amalgam of products, facilities & services that
comprise the ‘total tourism product’
Bring together a number of tangible elements &
attractions, intangible aspects & facilities/services
Planning, management & marketing are undertaken by
public sector or partnerships between stakeholders of
the local tourism industry
Attract tourists from distant or long-haul markets
Need to disseminate information globally as
destination-naïve travellers require more information
Types of Destinations: Main target markets &
           activities undertaken

 Type of                Customers       Activities
 Destination
 Urban                  Business-MICE   Meetings-incentives-conference-exhibitions
                                        education-religion-health
                        Leisure         Sightseeing-shopping-shows-short breaks
 Seaside                Business-MICE   Meetings-incentives-conference-exhibitions
                        Leisure         Sea-sun-sand-sex-sports
 Alpine                 Business-MICE   Meetings-incentives-conference-exhibitions
                        Leisure         Ski-mountain sports-health
 Rural                  Business-MICE   Meetings-incentives-conference-exhibitions
                        Leisure         Relaxation-agriculture-learning activities-
                                        sports
 Authentic              Business-MICE   Exploring business opportunities-incentives
 third world            Leisure         Adventure-authentic-charities-special interest
 Unique-                Business-MICE   Meetings-incentives-retreats
 exotic-                Leisure         Special occasion-honeymoon-anniversary
 exclusive

Source: Based on Buhalis (2000b)
 Strategic management and marketing
       objectives for destinations


Enhance the long term prosperity of
local people
Delight visitors/tourists by
maximising their satisfaction
Maximise profitability of enterprises
Maximise macro economic benefits
through maximising multiplier effects
Optimise tourism impacts, not
necessarily attract more visitors
Ensure sustainable balance between
economic benefits and socio-cultural
and environmental costs
         ICTs for destinations:
Destination Management Systems (DMS)

A collection of computerised information, interactively
accessible about a destination
Critical for the development & management of
destinations
Major promotion, distribution & operational tools for
SMTEs & destinations
Can improve the functions & performance of
Destination Management Organisations (DMOs)
Can satisfy the information & reservation needs of
buyers
Support destinations in strengthening their
competitiveness
Include information on attractions and facilities
Support travellers to create a personalised destination
experience
Tourism Distribution Mechanism and DMS
  Tourism distribution mechanisms and the role of DMOs and DMSs
              Services and features for DMS
                    advanced systems
 Information search-by category, geography, keyword
 Itinerary planning for customer and reservations
 Customer/contact database management
 Customer relationship management functions
 Market research and analysis
 Image library and PR material for press
 Publishing to electronic and traditional channels
 Event planning and management
 Marketing optimisation and yield management
 Data editing and management
 Access to third-party sources, such as weather,
  transport timetables and travel planning, theatre and
  event ticket reservations
Source: Based on WTO (2001)
Strategic & tactical role of ICTs for destinations -
                       DMSs
  Provide the essential info-structure for DMOs
  Integrate the entire supply at the destination
  DMSs gradually move towards fully functional
  websites - eCommerce
  Successful DMSs
   –   Tiscover - Austria
   –   Gulliver - Ireland
   –   Singapore
   –   Holland
   –   Jersey
   –   Australia
   – VisitBritain
   Destination Integrated Computerised Information
         Reservation Mgt Systems (DICIRMSs)
DICIRMSs are advanced DMSs, digitilising the entire tourism
industry and integrating all aspects of its value chain (and
wealth generation).
DICIRMSs provide the info-structure for communications and
business processes between all stakeholders, including
consumers, principals, distributors and DMOs.

Thus, DICIRMS is an integrated destination management
strategic tool aiming to assist: the enhancement of the long
term profitability of the local private sector by reinforcing its
intrachannel negotiation power and the management of tourism
impacts by reinforcing integrated and sustainable economic
development, interpretation and interaction of socio-cultural
rituals and enhancement of the environmental concern for
Challenges & critical issues for destinations

  The challenges & critical issues destinations need to be
  aware of are:
  – Developing & maintaining credibility, as often DMOs do
     not have comprehensive & consistent data
  – Ensuring accuracy of information for customer
     satisfaction & to avoid legal action against the
     organisation
  – Changing the mind frame of intermediaries & principals
     to avoid antagonistic relationships
  – Choosing an online domain name & brand as it should
     reflect the brand & attributes of the destination
   Lessons & issues for the future of
        destinations & DMSs

Co-ordination & co-operation is essential for
stakeholders
DMOs need to be catalysts for the development of
tourism
Close collaboration is required between public &
private sectors
Development and use of extranets & intranets
facilitate more user-friendly platforms
For destinations to take advantage of DICIRMSs
they need to demonstrate:
 – Long-term vision
 – Commitment
 – Strong strategic objectives
 – Capitalise on expertise & knowledge
Lessons & issues for the future of DMS
  DICIRMSs need to:
   – Be functional, effective, efficient & profitable
   – Support SMTEs
   – Be used for education, business support &
     advice
   – Act as a neutral network at the destination
     level that enables industry to act & co-ordinate
     its actions proactively & reactively

  An example of a world leader in DICIRMSs is
  Tiscover - Tyrol Austria, www.tiscover.com
         Characteristics of the successful
         destination systems of the future
 Vision, commitment and strategic understanding at the
    top
   Complete and comprehensive representation of the
    entire range of tourism enterprises and facilities
   Accurate information, tourism product pricing and
    unbiased inventory display
   Guaranteed acceptance of confirmed bookings
   Strong political and industrial support
   Secure and adequate financial bases, based on a realistic
    business model
   Interconnectivity and interoperability of systems
   Multi-channel strategies capitalising on all technologies
    and strong links with all distribution partners and
    mechanisms
      Characteristics of the successful
destination systems of the future (continued)
 Technology must always follow business models, not
    lead
   Wide number of added value services, based on
    personalised information
   Micro-sites for niche markets and specialised groups
   Convenient payment methods for consumers,
    guaranteed commission payment for all intermediaries
    involved in a booking and prompt suppliers settlement
   Easy, clear and accessible interfaces
   A degree of standardisation DMSs and DICIRMSs
   SMTEs should be involved at an early stage and gain
    ownership
   Marketing of DICIRMSs to both consumers and travel
    trade on line and offline
eDestination (practical example)
Internet can be used to provide counter
information on unnecessary travel
warnings issued by some tourist source
markets!! (this requires human capacity
and will to use the channel)
  Implication to the industry
Some stakeholders may lose business
Need of co-option
Customer is more in driving seat i.e
destinations and other principals should be
customer-centric not product-centric
(almost information symmetry thus source
of competitiveness is how you treat a
customer)
           Challenges
Public readiness to E-business
environment
HR (skills and will i.e. information
competence and culture)
Infrastructure
Legal framework
Costs (ERP, CRM, CMS but some now
are FOSS)
             Opportunities
99% of firms dealing with tourism activities in
EU are SMTEs but with highest online sales –
it is possible for small players too
(empowering to deal with customers)
          Opportunities 2
In TZ some firms receiving customers
online (my study will reveal more e.g.
metrics, applications, etc )
ICTs can easily be acquired if it makes
direct sense in life (e.g. mobile phones)
=>eTourism is expected to outperform
other forms since it empowers small
players to directly reach the market (small
investment no need of intermediaries)
           Opportunities 3
Local tourism organisations (destinations) can
directly reach potential tourists e.g. Lushoto‟s
FoUS, etc.
Other small players e.g. tour operators, TAs,
hospitality (B&B), can reach the world market from
the comfort of their premises
What about internal eTourism? Do local
governments recognise the potential of internal
tourism so that they can use ICTs to promote it?
(an example of UK Lake District – web cams
displaying real time pictures!! – this is hype but
something ought to be done!!)
Thank you for listening

				
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