Internet Tourism Marketing: Potential and Constraints

 Hotel Online: Ideas and Trends. July 2000. Liu, Zhenhua.

(Fourth International Conference "Tourism in Southeast Asia & Indo-China:  Development, Marketing and Sustainability June 24-26, 2000 ") 

 Part 4: THE CURRENT CONSTRAINTS ON INTERNET TOURISM MARKETING

Summary:

The Internet has created great opportunities for tourism marketing. However, the current level of online travel sales is low though most researchers expect it to increase rapidly in the next few years. For example, it was estimated that purchases of travel products represent just 6% of overall Internet sales and 0.5% of all travel and tourism spending (Smith and Jenner 1998). In the US, Jupiter Communications forecasts that online travel bookings will grow from US$2.2 billion in 1998 to US$ 16.6 billion by 2003, representing a market share of total travel sales of 1.7% and 9.6% respectively (Bates 2000, Tyler 2000). In the UK, Thomas Cook predicts that one in five package holidays and 40% of all flights will be sold via the Internet or digital television in the next three years (Banerjee and Mayling 2000). Obviously, the comparative advantages of using the Internet in tourism marketing is compelling but its full potential as a marketing tool will only be realised if a number of well-documented limitations are successfully addressed.

One question that relates to this introduction is how are these figures actually derived. With the initial introduction of the Internet, experts made guesses as to the adoption as were substantially inaccurate, is there any reason why these are going to be correct?

Demand Factors

The small size of Internet business transactions in the world economy at present is caused to a great extent by insufficient demand, though more limited by consumers' willingness than their ability to shop on the Net.

First, the penetration rate of computer using and Internet connections is still low worldwide. In the main developed countries, about 30-50% of the adult population are Internet users while the global average is about 1-2%. Furthermore not all web-user are frequent users.

Second, the low frequency of web surfing is mainly caused by high access cost, especially in countries outside of North America.

Third, The vast majority of users access web sites for information or entertainment purposes rather than for online shopping.

Fourth, concerns over privacy, information abuse, web crime, payment security and undelivery or late delivery, are often cited as the main inhibitor to online shopping. There is a lot of trust involved in online shopping. A web users has to trust that he receives the product he orders as well as trust its quality to be as described. He also wants to be sure that his private information such as address and credit card numbers is handled sensitively

However, there is at present no special legal provision to protect consumers' interest in web transactions and according to a Consumers International survey: 6% of the items ordered took more than a month to arrive and at least 8% never did; many sites did not give clear information about delivery charges; only 13% of sites promised that they would not sell customers' personal information on to a third party; and only 53% of the companies had a policy on returning goods (BBC 1999a).

Finally, consumers' anxiety over safety and security in online shopping is further exacerbated by frequent media reports about web security breaches and frauds, and insufficient knowledge of the matter itself.

Technological Factors

The Internet is close to fully operational for commercial purposes

The securing of information includes the protection of: (1) confidentiality -providing confidentiality in the transmission (and sometimes the storage) of data; (2) authentication -proving the identification of the individuuals both transmitting and receiving the data; certifying that all parties to a transaction are indeed who they claim to be; and (3) non-repudiation - providing proof that the transaction actually took place, establishing an irrefutable time stamp on the sending and receiving of the message

In particular, there is an urgent need for an integrated financial transaction system that is suitable for an open electronic marketplace such as the Internet. How the consumer will pay for goods and services and how the provider will receive the payment securely over the Internet are issues which are being seen as some of the most important success factors for Internet commerce

Visa International says that half of all credit-card disputes are about Internet transactions, despite online transactions making up just 2% of Visa's overall business. Visa found that across the EU only 5% of consumers trust e-commerce

Organisational Factors

Many companies, even with recognition of the advantages of the Internet in marketing, failed to exploit its full potential due to the lack of management commitment, investment capital and the qualified technical and managerial personnel.

Concerned with the impacts of web-based operation on their own travel agent chains because the "disintermediation" in travel distribution saves operator side cost at the expense of losing businesses at the agency side.

However, most of the travel products on sale over the Net are stored at various web sites owned and operated by individual companies, such as airlines, tour operators, travel agencies and ferry companies. Another problem is that the Web does not always offer the lowest prices compared with the traditional distribution outlets.

Governmental Factors

Governments across the world have been slow in realising the potential of the Internet for economic growth and even slower in providing the necessary regulatory framework appropriate for conducting Net-based business. Although existing business laws and regulations are applicable to e-commerce, the particular nature of Internet-based business does require special treatment, especially in the areas of security, fraud, sabotage, and data and consumer protection.

The UK Government is trying to promote the ideas of 'e-hallmarks" which will guarantee that its users are legitimate traders offering assurances on security of payments and communications and giving accurate information on goods, prices and a returns policy.

* All text in red indicates quotes taken from the full text article.