INTRODUCTION

The Internet is the global 'network of networks" of interlinked computers operating on a standard protocol which allows data to be transferred between them. As an information exchange system, the most important aspect of the Internet is its connectivity, the ability to allow everyone to access the network  (Young et al 1999). The potential of using the Internet for marketing activities is derived from its general use as an information exchange system in the digital age. The information can be stored,  indexed,  retrieved,  restructured  and redistributed automatically by software and without human  intervention.  The  Internet  connects companies  with  companies,  companies  with customers, and people with people without regard to time, space and hardware/ software platforms (Mathur et al 1998).

Although the Internet originated in the 19605, it is only in recent years that it has become a buzz-word.  Internet  services  fall  into  two broad categories: communication services and information services. Communication services such as e-mail, and e-mail-based discussion lists and net news, allow the direct exchange of information between Internet users. Information services, including Telnet, Gopher and anonymous FTP (the File Transfer Protocol), allow users to access data that has been made available by other users. Since 1993, the Internet has been transformed completely by its newest component  the World Wide Web (WWW or the Web). The WWW not only integrates other file transfer protocols like Gopher and FTP, but also allows the user to access hosts through Telnet, read newsgroups and use e-mail. Through an Internet browser, a user can link to any web sites and may explore the Internet resource in an unprecedented way for both leisure and commercial purposes. Moreover, the Web's capability to blend text, pictures,  sounds and video clips into multimedia documents played the key role in popularising the Internet beyond its traditionally academic boundaries and become an effective communication means in business and everyday life. Indeed, the WWW has been so successful that it changed the appearance of the Internet and for many it even become synonymous with the Internet itself (Hafner and Lyon 1996, Kehoe 1996, Maler 1997, Poon and Jevons 1997). In this paper, the WWW or the Web is also used loosely and interchangeably with the Internet or the Net simply because most marketing activities carried out on the Internet are based on the World Wide Web.

The rapid growth of the Internet, especially the WWW, has attracted a great deal of interest among both  academic  researchers  and  business practitioners, especially in the fields of Information Technology (IT) and marketing. There are also an increasing number of publications on Internet tourism marketing, in the last few years. The works of Bender (1997), Sheldon (1997), Inkpen (1998), Richer and O'Neil-Dunne (1998), Buhalis and Schertler (1999), Marcussen (1999) and O'Connor (1999), among others, have provided the necessary background and some in-depth discussions of the various issues of marketing tourism on the Internet, in particular its impacts on tourism distribution. However, this field of research is, by and large, still in its infancy and much more effort must be made to improve our understanding of the Internet's role in tourism marketing and the ways through which tourism organisations and destinations can exploit its full potential.

This  paper  intends  to  investigate  two fundamental but interrelated issues in Internet tourism marketing - the potential of the Internet for tourism marketing and the current constraints on the full realization of such potential. The 'potential" issue is addressed in three parts: the paper first discusses generally the advantages of the Net as a marketing tool in comparison to the conventional media; it then demonstrates that the Net is ideal for tourism marketing largely through an examination of the characteristics of tourism; and finally it explores the main areas of Internet application in tourism marketing. The "constraints" issue is tackled through an assessment of the conditions of the four major forces - demand, supply, technology and government - which jointly determines the current shape and future prospects of internet-commerce. Based on the understanding of the potential and constraints, the paper concludes with a brief discussion of the strategic issues for successfully conducting Internet tourism marketing.

THE ADVANTAGES OF THE INTERNET AS A MARKETING TOOL

The Internet is widely recognised as an extremely valuable marketing tool. It is generally held that the Internet  offers  substantial  advantages  over traditional means of communication: reduced costs of information exchange; increased speed of information transfer and retrieval;  increased customer  involvement  in  and  control  of transactions; and greater flexibility of using the marketing mix. Its main business uses include communications (both internal and external), market research,  customer  services,  market penetration, product development, cost savings through process reengineering, direct marketing, advertising and product delivering (Cronin 1996, Ellsworth and Ellsworth 1996). The following paragraphs examine the main features of the Net, in comparison with conventional media and with relevance to marketing, as an effective and efficient communications means.

Addressability
The Internet has the unique quality that, through its addressibility, can transform the prominent marketing communication paradigm from  one-to-many  to  one-to-one  or  from broadcasting to narrowcasting. The traditional media, such as print, radio and television, follow a passive  one-to-many  communication  model, whereby a company reaches many current and potential customers through the broadcasting of the same message. This approach to communication has three problems: 

1. uncustomised message to every consumer, 
2. wasted exposures to uninterested audiences, 
3. and "noise" distraction from competing and conflicting messages.

Blattberg and Deighton (1991) argue that this kind of addressable marketing is not new; the mail, telephone and personal selling have also been the addressable tools in marketing for many years. What makes the Internet so special in this regard is its low-cost and high-speed information transmission and retrieval. The addressability of the Web provides the opportunity for marketing to create individual relationships, managing markets of one, and addressing each in terms of its stage of development.  In  essence,  it  represents  the opportunity to customise and tailor the product and/or the marketing effort to one consumer at a time. Pitta (1998) argues that this Internet-enabled one-to-one marketing reconfigures the familiar four Ps into one element - the relationship. It represents the ultimate expression of target marketing - a market of one - or at least one at a time. Therefore, well designed Internet communications, through web sites, emails and news-groups, can match the effectiveness of personal selling. In fact, Internet marketers can do what a sales-force can but with much more flexibility, better memory and less cost (Kiani 1998).

Interactivity
Another feature of the Net that distinguishes itself from traditional communication media is its ability to respond to user inputs, i.e. interactivity. The Internet is capable of giving feedback in response to the actions users perform on the computer, resulting in the sense of engagement with the computer (Shili 1998). This two-way dialogue forms an important component of relationship marketing, and is an important factor in building customer loyalty.  Customers are effortlessly communicate with companies to find product information and conduct transactions with a few keystrokes while companies can easily contact customers to clarify their needs or inform them of new products. Features such as Email, web forms and Java applets positively encourage marketers to interact with consumers (O'Conner 1999). Moreover, in contrast to traditional communication channels like newspapers or television, on the Net the customer is an active participant and is in greater control of choosing and processing information about the firm. It is the customer - and not the marketer - who decides with whom to interact and how to interact. In other words, it is entirely in the customer's power to decide whether to surf the net, which web site to visit, which web page to browse, for how long, how often and how much information to obtain.

In addition to the company- to- consumer and consumer-to-company interaction, Kiani (1998) examines the consumer-to-consumer and company-to-company communications and argues that in an interactive media like the Net, a marketing activity can  employ a combination of the above communication patterns. The company-to-company interaction not only provides competitive intelligence but also provides opportunities in partnering and co-operation, especially in improving supply-channel and distribution-channel relationships. The consumer-to-consumer communication helps to establish cyber or virtual communities, which has significant implications for marketing segmentation and customer service. These online "clubs" can be an important venue for consumers to exchange information  or  experiences,  for  example opportunities in time-sharing accommodation, as well as for companies to improve the understanding of consumer behaviour.

Flexibility
The Web is a much more flexible marketing medium than the traditional mass media. A web page can be considered as an electronic billboard, electronic advertisement, or electronic catalogue that provides information on products or services plus contact information for interested consumers. But a virtual advertisement or catalogue is much flexible than a physical advertisement or catalogue. It can gather fresh and updated information based on the direct feedback received from consumers. A virtual catalogue can be gradually developed and organised based on the actual interest of consumers (Kiani 1998). It can also keep consumers constantly informed of the company's new product offerings, latest price changes and sales promotion initiatives.

In the travel business, the Web's flexibility and instantaneousness in information transmission is invaluable, since where the brochure is the main means for marketing package tours. UK tour operators, for example, produce about 120 million holiday brochures a year, 40% of which are not used at all. For some holidays it takes, in average, 28 brochures to generate a booking. In addition, large tour operators usually launch their main summer holiday brochures 10 months in advance (Holloway and Robinson 1995). Obviously, the preparation and distribution of holiday brochures is a costly and lengthy process during which the demand conditions and competition situation could change greatly. With the print medium, tour operators have to issue supplements to the main brochures, adjusting prices and availability. With the Web, all changes to the electronic brochures can be made instantly and at little cost. The online brochure can also be linked to inventory data, so that the user can immediately see whether a particular holiday is available or not. Moreover, the electronic brochure can be indexed in many ways and the user can be provided with search facilities to locate items quickly. They can also be associated with relevant free information and services for the consumer who visits the page.

Accessibility
As a communication medium, the area in which the Internet has overwhelming advantage over any other media is its permanent exposure and global market reach. The Net greatly improves, both spatially and temporally, the information availability and user interaction. With an effective web site, a company is on business on a global spectrum 24 hours a day, 365 days a year. Any web user in the world can access its marketing information at any time that is convenient for him. This extends greatly the place and time utility of companies which traditionally rely on distribution channel members to perform. The round the clock accessibility is extremely important especially in international trade where business is conducted across different time zones.

The global exposure is particularly desirable for tourism destinations which up until the mid-1990s had to depend entirely on promotion agencies in tourist generating regions to market its products. The Web has enabled tourism destinations to market themselves with well constructed and well promoted web sites.  Furthermore, the Web facilitates doing business overseas by avoiding regulations and restrictions that companies must follow when they are physically present in other countries, for instance in many countries, foreign travel companies are forbidden from organising or selling tours. Finally, compared with the traditional media, the Web not only provides virtually unlimited access for hundreds of million users but also delivers unlimited amount of information on the Web as there is practically no restrictions in terms of the "space of advertisement" - the number of pages a web site can accommodate or the "bytes" of data a online database can hold. For example, the global distribution system (GDS) Sabre's data centre has a capacity of 60 terabytes of electronic storage -equivalent to over 15 billion pages of information (Sabre 2000).

Service Improvements
The Web helps companies to improve service quality at all stages of customer interaction - pre-sale, during sale and after - sale. De and Mathew (1999) identified that the Web provides four tangible improvements in customer service: first, larger accessible choice set for customer since a web site can display a vast set of product options and service options; second, faster payment processing for customers - through automatic processing of cyber-cash or credit card charges; third, reduced delivery time for many products such as online software and music distribution; and fourth, easier, faster and greater availability of support literature, and more detailed and particularised help. In tourism the web-based  distribution  systems  can  satisfy consumer needs for easy access to transparent and easy to compare information on a wide variety of choices of destinations, holiday packages, flights, lodging and leisure services. They also provide immediate confirmation and speedy documentation of reservations providing a greater degree of flexibility and enabling prospective travellers to book at the "last minute" (Buhalis 1996).

Increasingly, tourists' satisfaction depends on the accuracy and relevance of tourism information as well as the promptness of responding to consumers' requests. As a Delta Airlines executive said: "Most people will tolerate misconnects and changes when they occur in the airline industry what they won't tolerate is not getting timely and accurate information. The airline business today is much more than a transportation business - it's an information business, prefaced with an 'e''' (Yahoo 2000). Many airlines are using the Internet, especially through mobile phones, to provide aggregate information in real-time to business partners, employees as well as customers. Across the tourism industry, the improved access to information covering all aspects of tourist activities has provided marketers with the opportunity to offer personalised services at price levels comparable to those of standard packages.

Cost Savings
The cost saving effect of the Internet derives mainly from five areas. First, the streamlining and electronic processing of booking and payments cuts down sales cost. Second, automation and the deskilling of tasks reduce the labour intensity and staff training cost. For example, the web-based travel reservation systems (using windows and is menu-driven) are much easier to use than the traditional viewdata systems (using DOS and was command driven where a sales clerk has to remember all the commands and the airport codes). Third, by offering direct links between the producer and the consumer, the Net helps the producer to save  huge  distribution  costs  through  the disintermediation process. Fourth, the ability of the Net in narrowcasting and electronic communication leads substantial savings on promotion in both "above and below the line" costs. Finally, cost savings in the form of reduced office and sales space, furniture and decoration outlay, and administration overheads.

The cost of setting up a promotional web site (i.e., without the booking facilities) is relatively low. An average computer user, given a proper software package, such as Microsoft FrontPage can build a basic company web site in days. The marginal cost of adding an extra web-page to the site is negligible. The more comprehensive and powerful web-sites, such as a destination site offers complete information, a tour operator site with a virtual multimedia brochure to include thousands of product offerings, and a site which integrates information, reservation and transactions, will cost more and take longer to develop. However, compared with the tens of millions of dollars spent by airlines, tour operators and hotel chains on TV and magazine ads, the Web is a low cost medium for promotion. The simple web-presence, by providing information on the Net, and allow customers to find answers to their inquiries themselves can also help to reduce telephone charges based on toll-free numbers.

The Internet has also great potential for saving distribution costs. Distribution, the selling and marketing of tickets, is one of the biggest cost items in the airline industry. At British Airways, for example, distribution accounts for about 18% of its total costs of £8.5bn and a share of about 20 per cent is typical among big carriers. The chief executive of Swissair sees that the Internet can potentially save 50% of the airlines distribution cost (Dones 2000). Airlines web-based ticket sale operation can at least eliminate the key distribution costs of an airline seat - travel agent commission (standard 5-10%, with override, another 1-2%) and GDS fees US$3.20 gross (Richard and O'Neil-Dunne 1998). Internet-based supply-channel management can also save procurement costs for businesses. British Airways aims to increase the share of online purchasing from the current 25% to 80% in two years time and achieve a estimated saving of more than 5% of its annual £3.5 billion purchasing budget (Tyler 2000).

THE CHARACTERISTICS OF TOURISM MARKETING

Travel and tourism products are ideal for marketing on the Internet. This is because tourism is an information-intensive industry and the Internet is the most effective and efficient means in information exchange worldwide. The Net can greatly facilitate the promotion and distribution of tourist products and potentially enable tourism destinations and enterprises to compete on a level playing field.

Tourism Is an Information-Intensive Industry
Tourism is very information-intensive and information is often dubbed the "life-blood" or "cement" of the industry which holds together the different producers within the travel industry - airlines,  tour operators, travel agencies, attractions, car rental, cruise lines, and other supplies. "In few other areas of activity are the generation, gathering, processing, application and communication of information as important for day-to-day operations as they are for the travel and tourism  industry"  (Poon 1993:154).  The perishability of tourism products and the often erratic tourist demand make the task of balancing tourism supply and demand far more significant than any other sector. That is probably why tourism became one of the first industries to widely apply IT and conduct electronic commerce from the 1960s in the form of computer(ised) reservation systems (CRSs) and then global distribution Systems (GDSs).

However, the traditional CRSs and GDSs had only improved the information communication between tourist businesses, originally between airlines and travel agents, as they do not directly interact with consumers. The systems are also expensive to both the tourism producer and the retailer. For instance, the GDS cost accounted for an average 8.1% of the International Air Transport Association (IATA) member airlines' distribution cost in 1996 (IATA 2000), and the major GDSs charge around US$600 a month to put a terminal in a travel agency. Moreover, the systems are flawed with incompatibility between each other, especially in the lodging sector, where "switch" companies such as THISCO (The Hotel Industry Switching Company) was needed to connect hotels with all the major GDSs to facilitate room reservations by travel agencies worldwide (Sheldon 1997). With the effective use of the Internet, these problems can be addressed effectively and cheaply. In addition to its traditional function, a web-based GDS can increase the speed of information transmission, improve the quality of information delivery (from the old viewdata to the window-based computer screen), reduce the cost to the user as no special connections are necessary, and most important of all, has the potential to interact with all web users in the world. Having realised the tremendous potential of the Internet, GDS companies already started to develop new and web-based systems which  could  transform  the  whole  tourism distribution landscape in the near future. For example, Amadeus launched Amadeus Pro Web in January 2000, which is a browser-based reservation tool allowing travel agents to service customers worldwide without a dedicated communications line and at a greatly reduced cost. In fact, with this system any Internet user can become an online travel agent within a week (Amadeus 2000).

Tourist Products and Services Are Difficult to Evaluate
As a service industry, most tourist products are intangible services, they are experienced and cannot be touched, tasted, smelt or seen and therefore
difficult for tourists to grasp and evaluate. Furthermore, the spatial fixity of tourist attractions and amenities means that a tourist cannot really assess their quality until he arrives at the destination. Tourists have, for a long time, relied on limited information from holiday brochures and other literature to evaluate tours and destinations. Comprehensive, relevant, timely and accurate information is essential in tourists' holiday decision making process. But they were not readily available to tourists until the emergence of the Internet, especially the wide use of the Web.

With the Internet, virtually unlimited amount of information can be stored at a web site and an unlimited number of users can retrieve it at any time from anywhere in the world. The Web can not only provide more information but also provide it from a much wider range of sources; while in the past, tourists are almost exclusively dependent upon representations and descriptions by the travel trade. The Web can also deliver the information in a greater variety of formats, from text to photos, graphs, audio and video clips, whereas in the past, tourists primarily relied on the printed brochures as the limited copies of videos of a limited number of tourism destinations or holidays were only available to the major travel agents. The web-based electronic brochure can also facilitate the complex process of choosing among the hundreds of holidays using browser-generated  selections  from  back-end databases linked to web servers whereas the printed brochures are usually arranged and indexed by one way, often by destination. Through Internet video telephony, tourists can also "test drive" a prospective holiday by viewing real-time scenes through  cameras  placed  in  hotels,  clubs, restaurants, scenic spots and other sites in the destination and transmitted via the Internet. Video clips can also show episodes and scenes of festivals, art performances and service delivery to facilitate tourists in the comparison and evaluation of intangible services, the quality of which is otherwise difficult to assess in advance.

Tourism Distribution Has Physically Nothing but Travel Tickets to Deliver
Since in tourism, it is the tourists who travel to the destination, rather than the tourist product be transported to the market. When a tourist books an airline seat, a hotel room, or a package holiday, he acquires the right to use that seat, room or holiday in the specified time period. After the tourist completed his journey or holiday, he takes nothing home but experiences (though often together with some photos and souvenirs). In the whole process, from the booking, through the out journey to the return journey, the only things being transported are travel tickets and the tourist himself. This unique characteristic offers tourism a great advantage in Internet marketing as the only cost of online sale will be the transaction processing expense plus a little postage cost; in contrast, for manufactured goods, the delivery cost is often substantial.

'With the increasing popularity of electronic-ticketing (c-ticketing) or ticketless-travel, especially among airlines, online tourism distribution over the Web may one day have no physical goods (not even a ticket) to deliver at all. Ticket-less travel means that check-in is achieved by proof of identity and a booking reference number. This saves the cost of ticketing for the airline which would usually include stationery, printing and postage and speeds up the check-in process at airports by enabling passengers to self check-in at check-in machines with a credit card. Worldwide, there are more than 30 airlines offer e-ticketing in at least some routes in its networks (IATA 2000). About 60% of United Airlines' passengers are now using c-tickets. British Airways has even announced that from May 2000 travellers will be charged £25 for a printed ticket where e-ticketing is available for the flight. It could also cost the traveller £50 to replace a lost paper ticket. Obviously, c-ticketing is a key development that will accelerate the acceptability and convenience of booking air travel via an on-line travel agent. Since such a web-based e-ticket seller has no physical ticket to deliver, it can potentially sell from anywhere in the world to anyone in the world (Richer and 0'Neil-Dunne 1998).

The Tourism Destination Product Is Fragmented
As a place product, tourism includes all the elements a destination has to offer to tourists, including the  social,  cultural  and  physical environments as well the "touristic" components of tourism supply such as attractions, transport and lodging facilities, and other travel related services. Pollock (1999) highlights the difficulties in tourism destination marketing which are attributable primarily to two factors. First, tourism is fragmented in that while the tourist looks at a holiday as a complete "experience", it is sold in the market place "in bits" as beds, meals, tours, seats, etc. by a plethora of independent suppliers that operate independently of one another. Second, no one agency controls or can deliver content about a destination's tourism product as the marketing of a tourism destination is shared by another plethora of organisations such as tourist information centres, regional  tourism  boards,  national  tourism organisations and national tourist offices overseas located in main generating markets.

The Internet provides the effective means for a destination to develop a sustainable electronic "infrastructure" that is capable of establishing a comprehensive and multi-lingual destination web site. This site can present existing and potential tourists with up to date information, from a variety of sources, about the destination in all aspects of tourism - tourist attractions,  transportation, accommodation, tour operators, travel agencies, shopping and leisure facilities - as well as the background of its people, culture, history, economy, climate. The master destination database can be integrated through hyperlinks with individual tourism companies as well as with suite of applications which enable tourists to pick and mix to make their own holiday "packages". As such a mega-site could be the "portal" or the "home page" of the web sites of all tourism enterprises in a destinations, it is a great deal easier for the destination to establish itself in the already crowded web-space. From this first stop-of-call, an visitor can search for all the information he needs to make a decision as to whether to visit the destination, what facilities to use and to arrange for reservations and transactions online. In comparison, with the traditional media, in order to get the relevant information of a destination a tourist often needs to go to a travel agency to get a brochure, to a bookshop to get a guide book, and may also contact the destination's national tourist office to get some promotional literature. Furthermore, the printed literature the tourists get is often outdated while a properly constructed and maintained web site can provide right-to-the-minute information.

The Vast Majority of Tourism Enterprises Are Small In Size
The fragmented tourism industry is also polarised in that on the one hand, there are a few large multinational airlines, tour operators, hotel chains and theme parks; on the other, there are millions of small and often family owned businesses, especially in the travel retailing, tour guiding, hotel and catering sectors. For example, in Scotland the average size of the accommodation establishment in the Bed and Breakfast sector was 2.5 rooms in 1999. For the small tourism enterprises, the Web is probably the first effective and feasible medium for them to carry out professional marketing function beyond the basic sales and operating activities.

The Internet has opened the door for small businesses with little capital to reach a worldwide market. Open access results in lower entry barriers so that virtually anyone can both access and provide content to the Internet. Travel retailing is one of the sectors m the economy that requires very little initial capital investment. The Net also re-defines economies of scale, allowing small firms to achieve low unit costs for products and services in markets (such as tour operating) dominated by large companies. In the hospitality sector, small firms could also have more cost-effective marketing through the destination's web-site than the printed tourist directory. In essence, the Web "levels the playing field" (Hoffman and Novak 1996). For this reason, Inkpen (1998:178) goes so far as to praise the Internet as a marketer's "dream" because it enables companies of different sizes to compete on more equal terms. This analysis also applies to tourism destinations (as resorts, regions or nations). For example,  a strong web presence  may substantially increase the exposure of many small and developing destinations in the Western market where the high cost of mass media advertising made such exposure practically impossible in the past. Nevertheless, it must be noted that although it costs little to achieve a web exposure, the development of a fully functional marketing and sales site and especially the promotion of the site to increase visitor numbers require huge investment. Therefore, the Internet provides a level playing field for all sizes of companies only at the point of entry - that is, to establish a web presence.

THE MAIN APPLICATIONS OF THE INTERNET IN TOURISM MARKETING

The Internet as a marketing media can be of great benefit to virtual all areas of marketing, from marketing research, through market segmentation, targeting and positioning, to the effective use of the marketing mix, and marketing organisation and control. The following discussion does not attempt to provide an exhaustive list of the Net's use in tourism; rather, it simply intends to exemplify its common applications in and main implications for tourism marketing.

Marketing Research
The Internet does more than automating online business transaction, it can "informate" in that it provides a vast amount of information which was previously unavailable. Marketing is essentially an information-processing activity which links an organisation to the external environment in which it operates. The Internet is an invaluable source of low cost but up-to-date marketing intelligence which can be sourced through a company's own site (for details of its customers) and other web sites (for information on competition situations, market conditions and the general environment). The Internet is extremely useful in build a customer information database. With the use of proper software such as Aurum Software's Web-Trak (and even with simple means like cookies, web forms and email feedback) it is easy to gather systematic data about all users who visited the company's web site. This information can be used to identify prospects, understand  customer  needs  and  customise resources to give greater levels of service to customers (Heinen 1996). A database of online transaction histories can be the primary marketing resource of tourism companies, determining what kind of travel products they can deliver, what market segments they serve best, and what is the lifetime value of each customer to the firm.

By searching other web sites, a company can get valuable information about market demand, supply, competition and economic, demographic, legislation and technological changes in the domestic and international markets. Web sites of government agencies,  media  companies  and  non-profit organisations usually provide large amount of information free on general issues; while commercial sites are good sources of information on new technologies, best business practices, and industry initiatives. Scanning competitors' home pages helps companies to track  competitors'  marketing strategies and tactics. For example, from hotel chains' web sites, one can easily locate information about the chains' main business activities, financial performance, new hotel openings and investment plans, and key marketing strategies; whereas airlines' web sites often show such useful data as business and financial analysis, strategic alliance groups, new routes development and fleet expansion plans, frequent flyer programmes and (where a online GDS is available) the fares and availability of flights between any two destinations.

Market Targeting
An important feature of the Web as a medium is that it is the consumer who is actively searching for information about products or brands in which they are interested. In effect the consumer is "pre-screened" and shows both interest and involvement in visiting the web site. While on the Web, the consumer can also provide instantaneous feedback to the marketer (Stern, 1995). All the feedback, and indeed, every "click" or "hit" the user makes can be memorised by the web server. Through the application of the IT data mining technique, companies can find patterns within their internal customer data and make sense of data or turn data into  meaningful  marketing  information.  For instance, the visitation record of an online brochure may show the total number of hits, the distribution of the hits among the pages and across time, the order of the pages been accessed. The user's visitation data can be easily combined with user profile information from user registrations through online visit cards or questionnaires and used to uncover the consumers 'interest and the patterns of demand and buying behaviour. This in turn leads to identification of likely target segments, often niches based on specific benefit sought. Armed with such information, organisations can refine their targets and develop specific means to achieve true one - to- one marketing (Pitta 1998).

The appropriate use of user profile and surfing behaviour data can improve the effectiveness and efficiency of market segmentation and targeting. This is because the traditional approach to market segmentation is often based simplistically on geographical, demographic and economic variables while the psycho, behavioural or lifestyle data is costly to collect and difficult to measure and compare. In Internet marketing, it is easier to collect these data from potentially each and every user of the company web site, though tangible rewards such as free prize draws and free membership, are often needed to attract users to fill in web forms. It is even a great deal simpler and more effective in market targeting as the email messages and even tailor-made web-pages can reach the intended receiver with little cost. It is possible to set up 'virtual" or cyber - communities for each target market niche in the form of news-groups through which consumers with similar interest and behaviour patterns can be sent with relevant product offering and other information from the marketer. Members of such Internet communities can regularly exchange information between them and strengthen a sense of belonging.

Product
One of the major advantages of the Internet in marketing is that the tourist can here be a value creator for tourism companies through redefining the labour division between the marketer and the tourist in providing tourist experiences (Dellaert 1999). This is because, on the one hand, tourists can  provide  individual  preferences  for  or specifications of holiday packages through feedback in the forms of web forms, email messages or simply the 'clicking' patterns, which the tourism marketer can use to development new products or tailor-make existing products to suit the needs of particular consumer(s). In this sense, the Internet has accelerated a shift in the nature of products from mass produced and tangible to customised and information based.

On the other hand, the self-servicing tourist can not only conduct transactions online and reduce costs of sales for the supplier but also actively participate in the production process itself. Provided with choices, a tourist can now assemble his own product according to the specifications desired. This is especially useful in the production and marketing of package holidays. Tour operators, for example, can offer modular products or services, such as flights, rooms, tours, car hire and performances on their web sites, and allow the user to participate in the development of the specific holiday packages using a menu of options, ie., 'pick and mix" his own package. As tour operators negotiate with the providers of these separate holiday items and buy in bulk, The economies of scale will enable the  operators to offer lower "parts" prices to individual consumers than they buy directly from the different producers of the travel products. At the meantime, since the booking engine is integrated with the product inventory, it is easy for the operator to adjust in real-time the prices of different holiday components in response to their relative popularity and demand patterns. In this way, tour operators can effectively provide the market with low cost and flexible (rather than the conventional rigid) package tours This is what both marketers and consumers have long dreamed for - high quality products made individually at a unit cost level of mass production -all enabled by the power of the Internet.

Internet technologies can also contribute to the improvement of current products on offer or development of new products and services that redefine the company's strategic position. For instance, Boeing announced on 27 April 2000 plans for a network which will allow passengers to use the internet, watch TV and receive other data while flying. Called Connexion by Boeing, it will use satellite technology to provide broadband services to aircraft, which could greatly improve passengers' flight experiences. The introduction of electronic ticketing  (e-ticketing)  and  flight  information exchange through mobile phones by many airlines in recent years also improve customer services. The Internet also give tourist attractions such as museums and galleries wider format options for electronic presentation and show web collections which are physically impossible to construct (Taylor and Ran 1995). Zoos and aquariums can improve its product offering through 'live" camera links using web sites like whale-watching to show views of animals not in captivity (Benhow 1997).

Pricing
The role of the Internet in pricing is based on its ability in processing and exchanging large amount of data instantaneously with a great number of people.  This information processing capacity enables a company to analyze relevant pricing data effectively and quickly. The information exchange capacity enables firms to set and change prices in real time and also facilitates online bidding and flexible pricing. Both of these qualities of the Net are extremely useful in tourism marketing.

The major tour operators in the UK, for example, produce some 2,000 to 3,000 brochure pages annually, most pages feature a price panel with perhaps 100 separate prices, making a total of about a quarter of a million individual prices (Holloway and Robinson 1995). The sheer number of prices, together with the fact that most brochures are launched 10 months in advance of the holiday season, mean that pricing in the travel industry is extremely difficult Since it is unpractical to set the
prices for such a great number of holidays on the bases on demand analysis or competition research, most operators simply follow a cost-plus policy with little regard to the market changes in the months to follow. Even an operator wishes to adjust its holidays prices it is a costly and cumbersome process as new price panels have to be printed and distributed to the travel agencies. With the help of a web-based reservation system, the task can be a great deal easier. A tour operator can make real-time adjustment to its thousands of holiday prices at a touch of a button in response to competition moves and demand changes. A special late-booking section can also be included in the main web site to promote 'left-over" holidays at the last minute to solve the problems of over-supply or under-demand in the package tour industry which has become a chronic issue in the UK during the last decade or so.

In Internet marketing, the potential for price discrimination is diminished given the enhanced capability of consumers to identity the least expensive source, regardless of supplier or location. The skilled consumer could have the "perfect knowledge" of market prices, which could facilitate the realization, to certain extent, of 'perfection competition" at the national and global markets. This will lead to the increasing standardisation of prices across companies or even borders, especially for the undifferentiated products such as airline seats, beach holidays and city breaks. Other applications of pricing on the Web including bidding and flexible pricing - many web-based businesses allow customers to bid for products on their sites. Customers commit to the sale if the price is agreed upon. The bidding locks in customers to the sale and the committed price. This is a flexible pricing strategy where the buying capacity of the customer reflects in the eventual price. Companies such as Ebay.com and Bid.com have developed a model where other vendors can place products up for bids (De and Mathew 1999). Airlines could sell seats on over-demanded flights or routes through online bidding to the highest bidders to generate extra revenue. Tour operators may use online bidding in a different manner to market special holidays the demand for which may be extremely difficult to estimate in advance. For example, a tour operator can put on its web site the details of a package holiday to the moon and the total cost (including profit margins) for a group, say 50 travellers, the more people bid the lower the price for each traveller. This way of pricing could well enhance the operator's image and profitability, as it is both an innovative marketing and sound financial approach.

Place
The uniqueness of the Internet as a means of distribution is based on the fact that it exists in "cyberspace" thus physical phenomena such as location and distance are less significant or even irrelevant. For the producer, the Web enables it to have direct links with consumers at a low cost therefore provides it with the opportunity of "disintermediation". For the retailer, the Web threatens its livelihood and changes its critical success factor from location, location, location to access, access, access. For the wholesaler, web-based business means it can bypass retailers while at the same time risk being bypassed by the producers.

The foremost role of the Web in tourism distribution is the direct electronic reservation and transactions between tourism product supplier and consumers. AIdridge et al (1997) argues that direct marketing is the name of the game on the Internet, offering both consumers and marketers greater control and lower potential costs of access due to the conveniences of the Net. Because direct channels may be producer-direct or intermediary-direct, the potential for channel conflict will be magnified. In order to assuage channel conflict and price  competition  between  direct-sellers and retailers, both producers and intermediaries will have to develop augmented product features and unique benefits. For example, direct online booking of airline tickets often carries special benefits not available from travel agents, such as extra frequent-flyer miles; while purchasing an airline ticket from an online travel agency may also benefit from such services as hotel reservations and travel insurance.

Airlines are among the first industry to invest in and develop CRSs and GDSs to exploit the potentials of IT. The Web offers the airlines even greater opportunities in streamlining and shortening the distribution channel. The no-frills or low-cost airlines emerged in the last few years are already heavily relying on the Web to distribute flight tickets directly to customers. The major global airlines have also started to believe that the Internet offers a unique opportunity to drive down costs and restore profitability to the sector which is troubled with financial losses across the globe (e.g., the 266 IATA member airlines as a whole made an accumulated loss of US $800 million during the first 8 years of the 1990s) (IATA 2000). British Airways, for example, launched an e-business strategy recently which places the Internet at the centre of its efforts to transform relationships with both customers and suppliers. It is planning to invest £90 million during the next two years to develop its web-based operations with the aim of increasing the share of tickets sold over the Internet from less than 1% in 1999 to 50% by 2004. It is also preparing to operate via mobile phones and interactive television. Major airlines have also started to use the Internet to manage  the  supply  channel  and  reduce procurement costs. For instance American Airlines, Air France, British Airways, Continental Airlines, Delta Airlines and United Airlines have agreed to jointly create and operate a web site that will handle supply purchases with US$32 billion a year (CNET News 2000).

The biggest change to tourism distribution brought by the Web could, in the next 5 to 10 years, be the noticeable shrinking of the travel agent sector. Agents are squeezed by both a decreasing market as more and more consumers go online and book directly from airlines and operators and by airlines'  declining  commission  levels.  The Association of British Travel Agents (ABTA) believes that the Internet will not cut out the middleman, but it will certainly put their added value under scrutiny. It warns that High Street travel agents that do not excel in what they do may not survive the competition. Nevertheless, the travel agent sector will not be doomed to extinction. How far and how soon the role of travel agent will diminish in the future is dependent upon how flexible and innovative the travel agents can be and how fast the Web can dominate both business and everyday life (Liu and Jones 1995). The Travel agency will have to reinvent itself to suit the new Internet era by transforming from a travel ticket seller to a travel information manager.

For tour operators, the potential disintermediation has a dual effect. On the one hand, they can be bypassed by the producer as airlines and hotels that directly sell their products to the travel agencies and consumers; on the other, tour operators could benefit from its own direct sell operation by eliminating the travel retailers. It is hard to estimate the full impacts of the two. But one thing is sure to say that the tour operators, more than travel agencies, have a future in the Internet era. This is based on the understanding that tour operators are not purely intermediaries as they do perform some production function in assembling the various parts of tourism products into a marketable package. Through this value-creating activities, tour operators can provide convenience and better value for consumers, by passing on to them some cost savings gained through bulk buying the separate components of the package, than they would otherwise get from the individual tourist product providers. The major tour operators (in the UK) are also 'backward" integrated and have their own charter airlines thus major schedule airlines' direct selling is not much as a threat to them as to travel agents.

Promotion
Arguably, the component of the marketing mix being most quickly transformed as a result of Internet usage is promotion. The Internet provides a labour-efficient and cost-effective way of distributing information almost instantaneously to millions of potential clients in the global markets. Internet promotion combines mass media's reach with the personalization inherent in two-way dialogue -previously only possible in personal selling. It can be used for corporate visibility, brand name recognition, advertising, public relations, corporate sponsorship,  direct  sales,  sales  promotion, customer support and technical assistance. There are three main issues in the application of the Internet to tourism promotion.

First, present the promotional information on the company's web site. The Web enables more information to be transmitted to (potentially) more people cheaply, instantly and with multimedia effect. The key to achieve these benefits is a well-designed and maintained web site which is attractive, informative and interactive. Through its multimedia capability, a good web site can and should incorporate information as accurate and detailed as brochures or timetables, photos and graphs as glossy as magazine ads, and videos as entertaining as TV commercials. The site can and supply as much promotional information as possible as there is virtually no capacity constraints or advertising space limits on the Web. By hyper-'inking pages together in an appropriate fashion, the Web marketer can create an ultra-comprehensive brochure to include everything a user wishes to know. For instance, a tourism destination web site may become a 'information mall" which provides the users with all the basic information about it such as the exchange rates, local traditions, weather, what to buy, etc. and, through the hyperlinks to the sites of tourism firms, details of flight schedules, tour prices, park opening times, late offers, and so on. A company web site with email links or even telephone numbers and address will enable users to contact it for further and often more personalised information.

Second, promote the web site itself to increase its exposure and visitation since a company's web site has to compete in the clutter of thousands of other web sites selling similar products and services. This can be achieved through a number of ways. A memorable Internet address to help user locate it on the Web, usually the company or brand name or a catchy word or phrase. Links "from" other web sites, by registering with search engines and online directories and paying relevant sites for click-through links or banners ads, are particularly important if the company's site is not well known. Links 'to" other sites, such as those offer news or entertainment   services   and   those   offer complementary products can also make the site more interesting as well as providing more relevant and up-to-date information for the users. Promoting the web site through the traditional media is also important, especially when it was first set up. For example, expedia.co.uk launched a £4 million promotion campaign on British TV and Press recently. The company's web address should also be included on all its media messages "to drive consumers to the Web" (Pardun and Lamb 1999).

Third, use the company's web site as a platform for advertising sites or products of other businesses. Through "banners" and banner linked web pages, a company's web site can also generate revenues by becoming an advertising medium for other organisations. Indeed, the effectiveness of the Web as a medium for advertising has already made online advertising a boom business itself. The Internet Advertising Bureau's research shows that online advertising revenue reached US$4.62 billion in 1999. It also finds that banner advertisements is the predominate type of advertising, accounting for 56%, sponsorships at 27%, interstitials at 4%, email at 2%, and other rounding out the category at 11% (IAB 2000). Increased Web advertising will reduce the attractiveness and spending on some traditional forms of promotion such as direct mail, outdoor displays and radio advertising. Fletcher Research (2000) predicted that the online advertising spending in the UK would soar from £50 million in 1999 to £625 million by 2004, while expenditures on direct mail could see a 33% fall in the same period.

THE CURRENT CONSTRAINTS ON INTERNET TOURISM MARKETING

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.

Demand Factors
Consumer  demand  is  the  fundamental determinant of all forms of businesses. Whether an industry is initially supply-led or demand-driven, consumers are the key force in deciding the scale, structure, style and speed of its development. 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%. One estimate shows that in 1997, there were 50.2 million web-users, of which 60% were in US and 20% in Europe; the world total web-population in 2001 was predicted to be 174.5 million, the US and Europe account for 54% and 18% respectively (Juliussen and Petska-Juliussen
1998). Although people with Internet access tend to be more affluent, better educated and younger than the average consumer, the small number of web-population does reveal that globally it is still a relatively small market. Furthermore not all web-user are frequent users. In the UK for example, a quarter of the 15 million adults with Internet access surf the Web less than once a week, and only a fifth of web-users have actually ordered something via the Internet (Fletcher Research 1999). At the well publicised travel web cite - lastminute.com - only 6% of its 1.5 million register users have ever purchased anything there.

Second, the low frequency of web surfing is mainly caused by high access cost, especially in countries outside of North America. In the UK for example, local telephone charges are still metered, though the Internet subscription fees has largely gone from last year. Most consumers find it is an expensive hobby to surf the Web, especially when the search task is complicated by low speed and difficulties in locating the desired information. The main UK Internet service providers (ISPs) have recently launched unmetered packages which will be available from mid-2000. This new development could see a surge in web visitation in the country.

Third, The vast majority of users access web sites for information or entertainment purposes rather than for online shopping. Among the Net resources, email is the most frequently used, news and sports sites attract more visitors than commercial sites, and sex and MP3 are for many years the most searched key words. Although Internet transactions offer the potential benefits of convenience and cost savings, due to factors discussed later, consumers still believe traditional shopping methods are more reliable and sometimes more economical. A recent survey of 50,000 Internet users in the UK show that 80% used the Web to access email while less than a third had bought online (Fletcher Research 1999)

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 (Ratnasingham 1998). 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). As a result, in average less than 1% of those 'looking" are actually 'booking" at the web site. A recent MORI survey of package holidaymakers in the UK also found that only 45% of the respondents answered 'Yes" to the question of "In principle (if you had access) would you be prepared to book a holiday through the Internet?" while 46% answered "No"; and 9% answered "Don't know" (Martin 1999). A report on travellers' use of the Internet in the US, which has the most advanced Internet businesses and Internet users, shows that 52.2 million people used the Internet for researching travel in 1999 but only 16.5 million (32%) of which actually made their travel reservations online (Tyler 2000).

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. Most of the security worries are caused by people who are not sufficiently aware of the possible protection that exists (Furnell and Karweni 1999). Although the Web is generally considered to be user friendly and even 'foolproof", a user without the proper IT knowledge and skills will certainly encounter more problems and feel less confident in conducting web-based transactions.

Technological Factors
Many of the current constraints and problems of conducting web-based business are caused by the Web technology itself. 'Web technologies consist of the hardware, software and networks that enable individuals and organisations to connect with and interact with the World Wide Web. Hardware consists of the client terminals, the server, the gateway, the router, and hubs. The software consists of operating and application software, including the browsers and application software on the client side, database servers, web servers and other application servers on the server side, and network operating systems and managers on the network side. The networks consist of cables, either leased or proprietary, and message carrier services" (Dc and Mathew 1999:432). The main causes for concern over the ability of the Web in implementing c-commerce are as follows:

The Web's slow speed, often dubbed as the 'world wide wait", slows down the growth of the web-based businesses as users are often not prepared to wait for too long to see the information appears on the screen. The slowness of the Web is a combined results of three factors: the increasing number of Internet users, the increasing frequency of use, and the increasing richness of the information (from simple text to full colour pictures and videos) being transferred over the Internet (O'Conner 1999). Technology will not reduce these growing demands on the Web, on the contrary, technology will constantly expand the Web's capacity for accommodate and even stimulate the increasing demand. For example, the new digital broadband service, due to be introduced in the UK this year, could offer instant and always-on high-speed (10 times faster) Internet access. It will not only enable much faster Internet access but also enhance facilities such as interactive digital TV and video e-mail. The advent of broadband and mobile accessibility is creating a second wave in Internet development (after the WWW in 1993). Research shows that a broadband customer will stay online four times as long as a narrowband customer, and spend nearly three times as much on c-commerce BBC 2000).

Functionally, the Internet is close to fully operational for commercial purposes. The main remaining impediment to maximum use of the Internet for c-commerce is the concerns for information security. 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 individuals 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 (Liddy 1997). 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. A survey of US corporations revealed that 75% of the executives lacked confidence in the Internet as a vehicle for electronic commerce, primarily because of the vulnerabilities. The risks in electronic commerce are shown in poor security such as: from the short-cuts in the software development process, shortcomings in the popular operating system, deficiencies in the Internet protocols and problems inherent in managing the Internet (Ratnasingham 1998).

Related to security is the issue of 'cyber' crimes. Internet crimes include not only fraud and theft-related activities, which simply represented the extension of traditional crimes into the electronic environment, but also new and more advanced forms of abuse such as hacking and computer viruses (Furnell and Warren 1997). Web scam and online credit card fraud are also increasing rapidly. 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 (BBC 1999c). Web technology does not cause the web crimes but these cyber crimes are more difficult to prevent and detect as they are committed in a virtual space. Unless the IT industry can come up with some effective solutions to the security problems in web-commerce, consumers will have to either take a high risk in or stay away from Net-shopping.

Furthermore, the 'unorganised" nature of the Web, makes it difficult to locate the information users desired. The Web offers an uncontrolled and vast universe of information: there are now about 5 million web sites with some 1 billion web pages. However, there is no overriding structure and control over information, no single entry point to the Web, and no centralized directory of content. Although the development of search engines and online directories has made finding information somewhat simpler, it i~ still easy to get distracted or lost during a search and much precious time can be wasted in gathering information. Ironically, this may negate the productivity benefits that derived from its use (Soh et al 1997, Hormozi et al 1998).

The other problems of the Web can be seen from Internet Industry Almanac's "Top 10 pain in the Net" - junk email, slow web sites with too many images to load, web sites with white text that you can't print, cookies, broken links, interstitial ads, hard-to-read tiny text, web sites with no basic company information, old forgotten web sites, and the server is not responding (Juliussen and Juliussen 1998).

Organisational Factors
The low level of web-based business is also attributable to the failure of business organisations in implementing the Web technologies in operation and marketing. Most business leaders did not realise the potential impacts of the Web on commerce until very recently (some still do not). A survey of US hotel managers found that they believe the Internet will 'someday" become an effective marketing and communication tool but not at the present time. Ironically, respondents with greater exposure to the Net rated its present usefulness lower than those with no net experience. On the other hand, those same experienced users gave the Net's future prospects a much higher rating than the inexperienced respondents (van Hoof and Combrink 1998).

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. This is particularly the case for small tourism businesses. In the UK for example, travel agents are not using the Internet to provide better service to customers because of perceived investment and access costs and fear of new technology. Sabre (UK) recently discovered that fewer than half of its agency customers had an email address (Fox 2000).

On the other hand, some large  travel corporations failed to develop web-based operations wholeheartedly due to both complacency about their market leader positions and the vested interest in their highly vertically integrated business structure. The top three tour operators in the UK - Thomson, Airtours and First Choice - for instance, did not have a formal Internet strategy until March 2000. They probably overlooked the potential of the new Internet start-ups since the Net-commerce had a slow start and the travel web sites were mainly selling airline seats instead of package tours. The major tour operators were also 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.

As a result, not all tourism companies are on the Web. When they are on the Web, most of their web sites are PR or promotion sites that provide merely the companies a presence on the Net or little more than advertisements for their products and services. With the few comprehensive sales and transactions web sites, users were often asked to phone an operator or offered a brochure in the post. Just a fifth of the UK's top 40 tour operators have a real-time booking facility on their Internet sites. A recent survey also shows that 62% of the travel companies which have facilities to sell via the Web or email have less than 1% of its total business is conducted through online booking (TTG 2000).

Even when web sites are fully operational in real-time transactions, such as many airlines owned sites, they often offer limited choice. Consumers increasingly want to use the web, and they want the convenience to see all the options in one place, no matter which airlines or tour operator is involved. 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. Research by Express Money (1999) shows that booking holidays and flights through the Internet is not cheaper and traditional, low-cost outlets offer lower prices for several popular destinations. This is particularly the case for airlines as where a single flight could have over 50 different fares, the cheapest fares are usually given to flight-brokers or consolidators. Since most web users consider 'price" as the most important factor in buying an airline ticket, they will certainly be discouraged from booking directly on the Web when they realise that the traditional agents offer better deals.

Governmental Factors
The nature of the Internet enables no one to control its structure and content, while as a recent phenomenon, laws and standards are yet to be developed and adopted to facilitate and regulate its commercial use. Some of the problems highlighted above are partly attributable to or greatly escalated by the lack of effective government involvement in promoting, facilitating and regulating e-commerce on the Internet.

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 requires special treatment, especially in the areas of security, fraud, sabotage, and data and consumer protection. Without the confidence and trust of those participating in the process, it will be impossible to achieve sustainable growth in e-commerce.  However,  censoring indecent  and potentially criminal material on the Internet were often the main reasons chosen for regulation. In the UK, one of the advanced Net-economies, the Government put forward a draft Electronic Communications bill last year which deals with a wide range of issues central to the healthy development of e-commerce, including consumer protection, information security, authentication and digital  signatures,  confidentiality,  encryption, taxation  issues,  intellectual  property  rights, technical standards, illegal content and so on. The problem is, the bill remains to be a draft bill until the Parliament passes it through a lengthy process that could last for years.

As the Internet is a global computer network and e-commerce is essentially global business, the establishment of international standards and legal provisions for its smooth function is also critical. International bodies like the Organisation for Economic Cooperation and Development (OECD) and the European Union (EU) started to address some of the key issues in e-commerce from 1998, such as building trust in electronic commerce by ensuring the security and privacy of information and the protection of consumers; establishing ground rules for electronic transactions; and enhancing the information infrastructure through common interoperable standards, and access to open networks (BBC 1998). However, progress is lamentably slow. It appears that each country will have to create their own Internet acceptable use policies, and figure out how to enforce them. Until then, the Internet will be a lawless frontier where anarchy and vigilantism are alive and well (Thomas et al 1998, Westphal and Towell 1998).

Legislation is of fundamental importance, but legal provisions only mark the boundary of unacceptable business practices and protect the consumer by redressing any illegal treatment. Consumers want to buy from companies that are not only law-abiding but more importantly are reliable and offer quality and value. Nevertheless, it is extremely difficult, if not impossible, to judge a company by its web site. Therefore, other (non-legal) measures must also be taken to boost consumer confidence in online shopping. 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. A new body -TrustUK - will be set up to accredit c-commerce codes and there are plans to market the c-hallmark internationally  (BBC  1999b).  However, many business organisations oppose the idea, wanting instead  to  rely  on  self-regulation  without government intervention. For example, ABTA aims to clamp down on Internet sales by creating regulations for online travel transactions. It plans to publish a single revised code of conduct for agents and operators in May 2000, with a new section on Internet sales. It will require members to have a secure payment system if using the Internet to take bookings, and to observe the same ABTA rules as for other types of advertising.

The government can also play an active role in e-commerce by providing the necessary infrastructure for conducting Internet business. After all, the Internet was first started by Government - the US Department of Defence - in 1969 as ARPANet and
only became commercialised in 1993 (Krol 1994). Uncertainty in many countries with regard to policies for investment, ownership, technology selection and general public access to the Internet has restricted the development of Net-based business and the penetration of Internet itself. Especially in the developing world, the huge investment required to establish the network and to make full use of it is out of reach of many businesses. In such circumstances, government could provide start-up funding for small companies. The UK government is also trying to close the gap between technology haves and have-nots and has launched an initiative to make computers available to low-income families for as little as £5 a month.

CONCLUSIONS

This paper has so far examined some of the key issues related to the marketing of tourism on the Internet. In particular, it has highlighted the main features of the Internet as an effective and efficient communication  medium,  including its addressability, interactivity,  flexibility and accessibility, and its role in improving customer service and reducing costs. It has also analysed the unique characteristics of tourism which make it perfect to be marketed on the Internet and further explored the main areas in tourism marketing where the Internet could play a significant role and provide substantial benefits for both the marketer and the consumer. In an investigation of the key forces which drive Internet commerce, it has found that a wide variety of factors, grouped conveniently in four broad  categories     demand,  organisational, technological and governmental - could both enable and restrict the application of the Internet in tourism marketing.

With regard to the future of Internet tourism marketing, there appears to be little question that the Internet will permeate into every aspect of tourism business and every area of marketing activities. Indeed, the Net could become the dominant platform and instrument for tourism promotion and distribution in five years' time. This is based on the author's belief that Internet marketing has now survived its infancy and is ready to accelerate the transition from the introduction to the growth stage as more and more people and organisations are recognising its unique and great potential for marketing. The increasing power of computers, decreasing surfing cost, and higher level of computer literary and web skills will make web surfing as a necessity in everyday life to an increasingly large population, especially in the developed world. Many of the current technological constraints could also be overcome (though new problems will inevitably emerge) in the next few years with the high quality broadband access via optical fiber or satellites to improve speed; the wide application of constantly improving firewalls, encryption and digital signature software to enhance  security; the development of more sophisticated search engines and 'intelligent agents" to simplify web search task; and the Wireless Application Protocol (WAP) technology linking mobiles to the Internet to extend the range of services available to the public. At the same time, governments are increasingly involved in the expanding e-commerce through providing incentives to small businesses, facilitating infrastructure development and  establishing the regulatory framework which supports and protects all those concerned.

It is obvious to the current writer that the key to the future growth and improvement in Internet tourism marketing lies in tourism organisations. The market conditions and web technologies are improving steadily and a conducive legal and social environment is starting to take shape, it is now up to tourism organisations to seize and exploit the opportunities created by such changes to its full potential. Therefore, the crucial question for academic researchers and practitioners in future research is how tourism organisations can take advantage of the changes and opportunities brought about by the Internet. To offer a prescriptive list of policy recommendations is neither feasible, because it requires a thorough understanding of all relevant issues including expertise in technology, tourism, marketing and a keen awareness of all new developments in both IT and tourism, nor necessary since different tourism businesses have different resources and operate in different settings. Instead, an attempt is made here to discuss issues that are both important and with wide applicability. Three interwoven cognitive issues are highlighted below to emphasise the significance of changing the mentality of tourism organisations to preparing for the new virtual business environment.

In order to market tourism products successfully on the Internet, a tourism organisation must first of all have a strategic vision whereby it can fully comprehend the changing market space, from physical to both physical and virtual, and the underlying forces shaping this new marketing space. The Internet has altered forever the tourism marketing system and its environment, no tourism business can escape its impacts but companies willing to become engaged in Internet and embrace Net commerce should find more opportunities while those still pretend that the internet is a bad dream, such as some travel agencies, will be left with all the threats. Whether a organisation likes it or not, the Internet is here to stay and is going to dominate tourism marketing. Andy Grove, the Chairman of Intel, has been widely quoted as saying that in five years' time all companies will be Internet companies or they won't be companies at all.

Second, the Internet must not be treated as just a promotion aid or distribution device, but be seen as a major force in itself that profoundly changes the way tourist business is conducted. 'Marketers will need to rethink fundamentally the processes by which they identify, communicate, and deliver customer value. They will need to improve their skills in managing individual customers and allies. They will need to involve their customers in the act of codesigning their desired products" (Kotler 1999:206). Indeed, tourism marketers should change their business paradigm and marketing practices to suit the new Internet era.

Third, as the Internet alters the critical success factors in many businesses, tourism organisations must use it effectively to create new competitive advantages. For example, tour operators (in the UK) were obsessed with gaining control of distribution through vertical integration with travel agencies in the last decade, but with the emerging web-based online sales companies, control of how they let the product be distributed now supersedes control of actual distribution. In responding to the threats from airlines direct sale, the major GDSs have been using the Internet to develop web-based GDSs and to diversify their product base to include hotels, car rental, cruise lines, tour operators, etc. Clearly, tourism organisations have to adopt a technology management policy that will assist their competitive strategy and usefully leverage the technology innovations to their advantage. Strategic Internet partnerships or alliances, especially those between tourism companies, and between tourism and IT companies, are also a major source of competitive advantage.

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