Introduction

Electronic commerce (e-commerce) allows for information to flow through the Internet on a worldwide basis with virtually no entry barriers.  The e-commerce route is an advantage to all companies around the world in most industries because it allows for tremendous cost savings.  According to a survey conducted by Industry Week, 76% of respondents sited e-commerce as a key strategy with the Internet as one of the most important growth drivers[1].

Statistics indicate that online travel sales are expected to grow to US$8.9 billion by the year 2002 which includes air tickets, hotel, car rental, and advertising on travel related sites.  Hotel and car rental sales alone will increase from $31 million in 1996 to $2.2 billion in 2002.  The actual direct sales by suppliers are predicted to increase from 22% in 1997 to 30% of online sales in 2002.  This will reduce the commissions paid to travel intermediaries as suppliers will be directly linked to customers[2]. 

Further statistics indicate a substantial rise in Internet usage for online travel bookings.  According to one Hotel Online report, 20% of all business travelers utilize the Internet in booking flights and hotels (7% increase from 1998).  Although many customers prefer the “hand-holding” travel agent, a survey of frequent travelers indicated some changes.  Results revealed that 56% use agents for air travel and 37% for hotel information (a 3-4% decrease from 1997).  The current trend suggests that the US customer is concerned primarily with price and quickness when shopping on the web[3].

The players in the hospitality and tourism industry must follow the Internet trend for future long-term growth and competitive advantage.  The first portion of this paper will focus on the general trends in the industry with emphasis on Information Technology (IT).  Examples will highlight the major hoteliers that are focusing on the Internet trend. 

The paper will go on to explore the Internet as an online distribution tool for all travel channels while providing detailed information involving the online threats such as Priceline, Travelocity, and Expedia and where Asia fits in to the "online" trend. 

A definition of the target market for hospitality & tourism organizations looking to venture online will follow detailing how to reach the market, and build relationship value chains.  This paper will further discuss the primary constraints of the Internet in the hospitality & tourism industry.  Finally the conclusions and recommendations will suggest how to overcome the constraints of the Internet for the future while suggesting the ideal travel web-site and marketing strategies.

Information Technology Trends in Hospitality

The technological era of the 1990s was known as “the network era” which can be defined as the intra- and inter-organizational networking generated by local and wide area networks.  The development of the Internet, Intranets and extranets evolved as the most efficient means of communicating and as a primary business necessity.  The 1990s also marked an era changing the competitiveness of companies on a global level.  The location and size in the product delivery process was reduced significantly because of the IT tools available. 

Today technology is providing tools for management and marketing that enhance the capabilities of organizations.  Computers are now faster and more reliable allowing for quicker results at a lower cost.  Marketing managers have been taking advantage of data warehousing via IT, which has allowed them to target specific market segments and develop competitive marketing strategies.  Perhaps networking is one of the most significant parts of the Information Technology era.  The Internet, Intranets and Extranets have enabled employees, units, organizations, external partners and customers to share an endless amount of information.  This has allowed for significant cost savings due to the sharing of information on a worldwide basis.  Further, IT has facilitated in the relationship building process due to the vast amount of information that can be transferred through the Internet in a matter of no time. 

Software, hardware, information management, and telecommunications systems have allowed for the processing and flow of information among organizations in the travel industry.  Many sources claim that the way in which tourism organizations take advantage of IT tools will determine their future success in the marketplace[4].  The tourism industry and the World Tourism Organization (WTO) must consider the importance of the IT trend by implementing an effective IT system for marketing, distribution, promotion and co-ordination of the industry as a whole.   It is crucial that tourism enterprises take advantage of the emerging technologies in order to improve management abilities and develop sound business plans focusing on the most efficient means of delivering value added products/services to customers.   In this respect, tourism organizations will be able to maintain a competitive advantage over those who are not technologically advanced. 

The increase in travelers over the years has prompted a demand for top quality IT with an emphasis on “servicing” the customer by offering high quality products at low costs.  The success of the tourism industry will depend upon the abilities to recognize and respond quickly to current and prospective customer needs.  IT is beginning to play a major role in “servicing” customers.  IT has been a significant challenge for tourism organizations because it requires efficiency in internal and external communications.  The initial cost of IT will be quite high in a financial sense, and the tremendous cost savings in the long-term will depend upon the efficiency of the IT during its crucial implementation stages.

Consequently, customers feel empowered by IT while at the same time are distancing suppliers.  The customer enjoys having the power to identify products of preference at the right price, place, and time frame.  It is important that service providers understand customer needs in building relationships and developing the best products at the lowest prices.  The online companies that provide a full packaged travel experience at a low price will be successful in the long-term.

The Y2K Blessing

According to an article published in 1996 by Cornell Hotel and Restaurant Administration Quarterly, “A hotelier should think long and hard before going on the worldwide web (WWW).  This article strongly urges hoteliers to conduct a thorough analysis before focusing strategically on the Internet[5]. 

Following the Y2K scare, opinions on the “WWW” topic changed quite significantly.  Hotels began to focus more on upgrading and improving their IT systems while creating a fast paced Web platform user friendly to all.   Many call the Y2K scare “a blessing in disguise” for the hotel industry in the case for both small operations and major Fortune 500 companies.  Y2K prompted Starwood Hotels & Resorts in Boston to completely revamp their entire IT structure to a state of the art system.  Management indicated that the IT investment was the right move as Starwood is now recognized as one of the “technology leaders” in the hotel industry while other companies lag far behind.  Hotel and Motel Management published an article containing Y2K investment figures of hotel companies[6]. 

According to the fourth-quarter filings with the U.S. Securities and Exchange Commission, Y2K investment projections of the major hotel chains were quite high as indicated in the following table[7]:

According to Robert S. Bennett, director, hospitality and leisure, PriceWaterhouseCoopers (PWC)/NYC, the Internet is not the full solution to success in the hospitality industry.  However, Bennett goes on to suggest that the Internet is the “overall business answer” across industries.  Bennett also indicates that the Internet wave is not just a benefit for the major players in the market.  Independent hotel chains can also realize advantages by utilizing the Internet to share room inventory availability with customers, shop for supplies and enable employees to modify scheduling from their home.  As Bennett perceives, the key to success to the Internet wave is gaining the capabilities to provide online services to customers ensuring quickness and user friendliness while watching out for “technology overload” [8].

Hospitality Organizations & The Internet

Many prime hospitality organizations such as MeriStar & Resorts, Marriott International, Royal Caribbean, Hyatt International, Ritz Carlton, Canadian Pacific Hotels and Fairmont Hotel Management Company have been taking advantage of the Internet opportunity by fully implementing the latest technological systems throughout their organizations[9]. 

MeriStar & Resorts is implementing a new Internet-based procurement system that is considered flexible and user friendly.  According to the Vice President of purchasing, Steve Shamion, it is important that the system is user friendly for a chief engineer, chef, housekeeper, etc.  As soon as MeriStar succeeded 100 hotels, it was necessary to get rid of the manual system.  The goal was to implement an Intranet system with a new web-based provider.  The e-mail system is currently functioning efficiently as it alerts purchasing agents to contact suppliers in every case where corporate revises a product.  The new system has allowed for excellent quality control.  In this respect, MeriStar claims that they are able to obtain high quality products at low costs via the Internet[10]. 

Marriott International has chosen the same Internet provider for its new procurement system.  The Vice President of Technology states that Marriott is currently working on a pilot consisting of 24 properties.  They are analyzing the mechanics of the system as well as the concept of electronic purchasing and the advantages that could be realized by Marriott.  One of the key elements of this research involves the “user friendliness” of the system.  Another concern is the connection factor.  The system must be reliable in connecting without failure.  The content is another very important requirement.  The suppliers must be able to easily find products on the site.  As for the overall costs involved in the implementation of such a system, it is still unclear.  On a positive note, both MeriStar and Marriott believe that they will be able to quantify the new system’s effects right away.  By tracking every purchase over the web, this will allow them to record their progress.  In the long-term, as one of the first movers in the hospitality industry, the prediction is that the overall impact will be positive[11].

High Speed Internet Access Amenity

Many hospitality players are offering the amenity of high speed Internet access to customers.  This new amenity has introduced new dilemmas for hoteliers such as the type of Internet service provider, the cost (if any) to impose on guests, and the forms that the access should take.  These questions presently remain unanswered, as the focus seems to be on providing the best service to the customer.  Although Internet access is in high demand, sources claim that it is not yet a necessity for hotels.  Much of this depends on the target market of the hotel.  In general, most customers have Internet access at home and at work, therefore the new assumption is that they should have access from their hotel as well (especially the business traveler) [12].

Hotels such as Hyatt and Ritz Carlton have a technology button for technological needs.  In other words, they have a “Technology Concierge” who is ready to help guests with all personal technological needs.  Ritz Carlton first introduced this in 1998 at its Kuala Lumpur hotel.  Since this concept was an immediate success, they implemented it throughout the US.  Hyatt has a similar concept in helping guests configure laptop computers and answering email questions.  This service is complementary to all business executives[13].

Another case in point is Wyndham International, now providing high speed Internet access throughout 200 hotels/50,000 rooms.  This allows guests wireless Internet access for public areas, restaurants and guestrooms.  The only requirement of the guest is for a laptop and a card for online communications and meetings.  The Wingate Inns and Wyndham International chains utilize the same solution provider.  Wyndham is still configuring what the appropriate charge should be for this amenity.  Wyndham associates the new Internet offerings with the “hairdryer” indicating that each hotel will be consistent in providing it throughout its hotel chains.  Wingate is linked to the Internet through the television or a jack that is connected to a laptop computer and includes an Ethernet card with a high-speed T-1 cable. Wingate’s main target market is the business traveler.  Therefore, they feel it a necessity to provide high speed Internet service to fit customers needs.  Wingate projects that in the future the hotel operator will receive a commission for the usage of Internet access.  The operator will then pay a provider a monthly charge for provider support.  In this case, as Wingate suggests, franchisees do not necessarily have to possess the technological know-how of these systems since the provider will take care of it[14]. 

 The Avalon hotel in NYC utilizes 2 high speed Internet access solutions provided by a local vendor.  This amenity includes a custom Internet oriented computer and Ethernet jack laptop option.  The Avalon hotel targets mostly business travelers and noticed a high demand for Internet access among customers.   The Houstonian hotel charges guests $17.95 per day for Internet usage.  The hotel is working with a computer provider who they will share 25% of all revenues depending on usage time[15]. 

Many customers (especially business travelers) are attracted to the idea of sitting on the beach and browsing the net as they download emails/presentations.  However, it is important to keep in mind that it is not worth the while of all hotels to provide Internet service to customers.  Whether or not hoteliers should provide Internet amenities to guests depends significantly on their target markets.  To this extent, it is crucial that hoteliers take a look at their target customers and the demand for technology within that particular target market.  Next they must build relationships with vendors who would like to place their site on their e-storefront.  The user friendliness of the systems and speed are also a prime necessity[16]. 

Another Alternative to Accommodate IT Demands

Many hotels in the midst of the actual construction of their buildings are encountering problems in planning for the most cost-effective room wiring that will allow them to provide guest with the most efficient IT services.  Overall, the costs associated with offering the IT amenity to customers are not worth it to many management teams, especially in the case of the smaller hotel chains.  As an alternative, some hotels have considered hardware leasing options.  This transaction-based pricing model allows hotels to pay for the systems according to use and occupancy.   In this situation, the information technology costs are paid by the guests as a technology tax.  This model spreads the risks, benefits, and costs among the vendor and hotel[17].

Merger Mania

The worldwide merger/acquisition trend continues to play a significant role in all major industries.   It is interesting to take a look at how the merger/acquisition mania situation is effecting investment in IT throughout the industry.  One prime example of this is in the case of the October 1999 merger between Canadian Pacific Hotels and Fairmont Hotel Management Co.  The merger resulted in a total of 34 properties to market and sell to customers.   Following the merger, the company realized tremendous benefits of implementing an IT system which would allow for a smooth and organized transition.  The new company web-site is extremely user friendly and contains beautiful graphics of all of the properties.  Further to this, there is a hyperlink for access to booking, concierge suggestions, and travel information.  The web-site contains an abundance of information for all travel needs, making for a pleasurable and user friendly experience for customers[18]. 

The M&A wave will continue to grow on a worldwide basis.  As for the effect of the Internet in the industry, the resulting mega corporations sprouting from mergers will still have to compete for loyal customers through efficient, user friendly web sites that offer low prices coupled with reward systems.  Whether large or small, the online market suggests a world of opportunity for all players in the hospitality industry[19].

The Internet as a Travel Distribution Tool

As suggested previously, customers feel empowered to construct their own itineraries for airline, hotel and other travel amenities directly through the Internet.  It is predicted that the worldwide web will drive the majority of reservations directly from customers and intermediaries at a fraction of the costs associated with today’s 800 number and Global Distribution Systems (GDSs)[20]. 

Beginning in the 1970’s and continuing on to today, GDSs have been the primary implementers of Computer Reservation Systems (CRSs) as they integrate horizontally with other airline systems, and vertically by bundling services such as accommodations, car rentals, train and ferry tickets, and entertainment online.  CRSs allow management to keep track of inventory on-line where distributors such as travel agents and tour operators have access to this system.  As a result, travel agents have been able to offer reasonable pricing and capacity modifications which have increased overall flexibility in product/service offerings. 

GDSs prompted the actual development of e-commerce in tourism and was a major player in the distribution system and strategy of travel organizations.  GDSs were initially known to focus mainly on the business travel market.  However, they now offer a wide array of products including theatre tickets, holiday packages, and leisure destinations.

Presently, the four main GDSs leading the international tourism distribution sector consist of Sabre, Galileo, Amadeus and Worldspan.  Other smaller Asia-Pacific GDSs include Axess (mainly Japan), Infini Travel Info (mainly Japan), and TOPAS (South Korea).  The travel distribution system is currently facing many changes as online agencies such as Expedia, Travelocity, Priceline, etc. have introduced a way to access travel suppliers directly through the worldwide web.  In general, GDSs have not shown much of an effort toward targeting on-line customers.  Instead, CRSs have remained loyal to their travel agency distributors.  On the other hand, the tremendous growth of online travel agencies has influenced GDSs to consider working toward developing private interfaces with customers like SABRE did with Travelocity or looking into partnerships with Internet providers as Worldspan-Abacus assisted Expedia with reservations (Please see Appendix III for further clarification).  If GDS does not make a move toward private interfaces or partnerships, online travel agencies such as Priceline, Travelocity, Expedia, and Intellitrip will eliminate the need of the current GDS based system and CRSs.  According to McKinsey Quarterly, future GDSs could work with Internet providers in assisting with packaging travel reservations, putting together itineraries, and facilitating in the actual financial transaction[21].

Traditional Travel Distribution Channels

The traditional travel distribution channel works where the customers contact the travel agent or direct selling channel to book their entire vacation or business travel package (please refer to Appendix I).  Statistics indicate that travel agents handle 80-85% of vacation packaging[22].  However, with the advent of technology and the worldwide web, these figures are changing.  Purchasing tickets online through airlines will continue to dominate the travel market.  A major challenge for airlines, other suppliers and travel agencies is to encourage customers to book their travel packages online.  They must continue to keep customers satisfied by offering traditional programs, recognition, servicing, and other rewards that keep them coming back for more. When it comes to competing directly with the major online players such as Priceline, Travelocity, etc., airlines and other suppliers have an advantage because they have all of the loyal customers, brand recognition and large call centers that online agencies do not possess.  Airlines have a stronger direct link to customers as they compete directly against travel agents[23].  Further to this, airlines have stronger control over the customers due in part to the paperless tickets (e-ticketing).  In this respect, online technology has replaced the travel agency by adding value through fare shoppers, promotions, and personalized recommendations.  Although travel agencies have maintained market share, they must strategize to become either a niche player or a large player in the changing business environment. 

Threat of Online Players & The New Distribution Channel

By 2003, analysts predict that online travel sales will quadruple and online travel agents will offer a total of  $29 billion worth of travel products over the Internet.  However, of all the travel sites, sources indicate that 80-90% will fail due to the weak make-up of business models.  Further to this, the web-based reservation system has experienced severe problems in maintaining control over room inventories[24].

Consequently, many online travel players are posing a serious threat to traditional hospitality & tourism organizations and travel agents through their successful marketing/selling of tourism products over the WWW.  Online players have reinvented the distribution, sales, and booking model.  Auction style-pricing models are becoming customer preference, where the customer controls the price of the products and services to be consumed.   At the same time, vendors still retain control over the final terms of the transaction and can utilize mechanisms such as Priceline to help clear the market of unsold inventory.  Travel auctions such as Priceline have become the latest trend in offering the best price for hotel packages.  Since customers are now focusing on price as a main factor in shopping for travel packages, online auctions such as Priceline are a significant threat to the hotel branding system and the industry in general.  The future distribution channel calls for service providers, suppliers, and customers all linked together in an integrated environment.  Horizontal and vertical integration among vendors will be transparent, even as hospitality firm’s suppliers and alliance partners may be interacting directly with the guests by providing peripheral services[25].  

Among the top online threats to traditional players include Priceline, Travelocity, and Expedia.  Other smaller dot com companies entering the ring include Bid4Vacations, Intellitrip, SkyAuction, and First Auction.   Priceline.com and Expedia practice more of a buyer driven e-strategy where the buyer names his price and an intermediary negotiates with the seller.  The customer is almost guaranteed that he will obtain the best price by negotiating through an online broker such as Priceline.  But a downside to all of this is that the customer will not realize all of the normal benefits of air tickets as they are sacrificed through online auction purchases.  For example, in many cases the travel ticket does not permit an accrual of miles or any changes without significant penalty charges.

Many customers have made Travelocity their online vacation planner.   Sites such as Travelocity offer real-time, on-line reservation capabilities for unsold inventory and vacation packages.  By tracking customers on the Internet, online companies can create profiles of potential customers in defining their target markets. The Microsoft destination commerce site, Expedia is the second most visited travel site, with travel booking sales totaling about US$ 5 million.  

A new dot com player in the online market called Intervalworld offers many interesting products and services as well.  Members are able to view a resort directory, explore member services, deposit and request exchange weeks, purchase CD-ROM vacation planners, book vacation getaways, renew memberships, and track the weather patterns for a particular destination[26].  Another comparable online player called resortdeveloper offers online procurement, career and financial services, and marketing materials for developers.  The company web-site provides virtual tours of properties[27]. 

Expedia and Travelocity book about half of the overall hotel rooms reserved on the web.  Their leverage is growing rapidly as the industry grows.  Small and independent hotels are not able to get their fair share of hotel room bookings because of the major players that already dominate the market.  A solution to this problem for small players is to develop an innovative, catchy, attractive, and quick web-site which may tempt customers to delete their Expedia and Travelocity bookmarks[28].

The New Distribution System

Given all of the online players now in the market, a new distribution system for the industry has emerged.  The new distribution channel begins with customers logging onto the Internet.  The customers then proceed to purchase an entire travel package directly through an online broker (please refer to Appendix II for a full description).  

The Asian Internet Challenge & Online Threats

Given that Internet marketing is still in its beginning stages in the US, the development throughout the Asian region is still quite immature as well.  There is not as much of an online threat to travel agents and intermediaries in Asia compared to the US.  Now that the threat is obvious, perhaps hospitality and tourism companies in Asia can take advantage of the Internet and gain an edge on competitors.

However, Internet companies in Asia do not have a very high success rate.  The major source of transactions over the Internet is through the use of the credit card.  In most Asian countries, credit cards are not utilized as much as in the U.S., which is a major disadvantage to Asian online companies unless they are targeting U.S. customers.  However, the hospitality and tourism industry in Asia still must look at Internet marketing for a long-term strategy. 

In general Asia is currently experiencing many challenges in the e-commerce revolution, especially on the business to consumer area due to the fragmentation of the market.  Some examples of successes have been a Hong Kong company called Park ’n Shop and Welcome supermarket chains which sell online groceries.   An online e-tailor such as Amazon would not have likely proved successful if it started in Asia since it would not have had the same homogeneous market as in the U.S.  One Hong Kong online company that has been in existence for 3 years now called Chinesebooks.com, has been extremely successful in marketing and selling books and CDs.  The revenue figures from 1999 increased eight-fold from 1998.  Online companies have more of a chance at success in Hong Kong due to the dense population, strong education systems, high credit card and cell phone usage.   This leaves room for the future development of the next Priceline or Travelocity in Asia which could pose a major threat to hospitality & tourism organizations[29].  

Asia Travel Mart is known as the first online travel reservation Internet-based booking system.  Asia Travel Mart offers a secure booking system for worldwide hotels, tours, transfers, meals, car rentals, travel insurance through its network of suppliers.  Asia Travel Mart offers customers savings on travel, graphics and destination guides, advice, news, exchange rates, weather patterns, and flight schedules providing a full web experience.  It is linked to travel suppliers worldwide.   Perhaps Asia Travel Mart is the first mover setting the trend for the future of online travel companies in Asia.  This may be a signal for Asian organizations, travel agents, and intermediaries to reevaluate their long-term strategies[30]. 

The Future Role of Travel Agents

The growth of the Internet leads to the question of what will happen to online travel agents and intermediaries.  Currently, travel intermediaries work with suppliers in negotiating prices at lower costs for customers and handle much of the logistics.  They also advise customers and build an ongoing trusting relationship in order to maintain customers for the long-term. 

As low cost desktop real-time data, voice and video communications become a reality, travel agencies may no longer be necessary.   On the other hand, the Internet challenge can also mean opportunity.  Hotel owners and operators who understand and master e-commerce challenges will be able to jump ahead of online threats from large players such as Priceline.  Otherwise, many will find themselves out of business.

IT tools have allowed travel intermediaries to expand their role in the industry by presenting opportunities to venture into other markets on a geographical level.  Given the IT craze, the major challenge that lies ahead for travel agents is to identify how they can continue to add value to customers.  The small and mid-sized travel agents may find this even more of a challenge as large conglomerates take over the online marketplace offering full travel packages at low prices.  However, one way in which to overcome this obstacle is through innovation.  Many companies have been very creative in designing a strong presence in the online market offering niche products to customers[31]. 

The Internet Target Market 

The business traveler seems to be the number one target for hoteliers who are focusing on the Internet trend.  Most of the hotels mentioned previously are offering online services specifically to accommodate business traveler demands. 

Not only should hoteliers focus on the business traveler, but they should also consider whether there are other types of potential target customers.  During a visit to Koh Samui Thailand, it was evident that Internet services were quite popular among other travelers aside from the “business traveler”.  Both young and older generations were sitting in the Internet shops utilizing online services during their vacation.  This target market could mainly be categorized as cyber savvy travelers under the age of 30. 

Ultimately, as mentioned earlier, regardless of the actual target market, hospitality and tourism organizations will have to be up on all of the latest technology, in order to realize a competitive advantage in the market especially in the long-term.  One major challenge for all online travel companies is in evaluating how their target customers are using their computers.  For instance, the young generation will utilize their computer differently from a 40 year-old or even a 60 year-old traveler.  From a marketing standpoint, there is a major difference as to what would be an attractive web-site to younger travelers as opposed to the older travelers.  Therefore, it is crucial that online travel agents can identify their target prior to marketing/selling their products/services online[32]. 

Primary Constraints of the Internet 

Although IT and the Internet have tremendous potential benefits for the future, many constraints have deterred hospitality & tourism organizations from focusing much of their marketing efforts on the worldwide web.  First and foremost, compared to other major industries, the industry is characterized as having “archaic technology.  In this case, hospitality & tourism organizations must invest in the equipment and expertise in order to build a strong IT base.  Although the costs involved in this process are quite substantial, the investment is crucial for long-term growth in the market.  As more and more hospitality & tourism companies become well educated on the long-term benefits of IT, they will realize the significance of it to their organizations. 

The costs associated with distribution have been a concern of hospitality firms.  Many hotels have all of the following areas involved in the reservation process:  room reservation dept., central reservation system, banquet dept., restaurants, spas, golf courses, etc.  The number of entities involved in the booking process has led to a serious overlap and inefficient system for many travel organizations.  Hotels must delegate responsibility to one main area in order to prevent inefficiencies.  Companies must evaluate how to obtain the right businesses from the right channels.  In this respect, the distribution function must be consolidated.   Hospitality & tourism marketers are labeled as having too much of a focus on data and not enough on knowledge.  All of this must be resolved prior to the implementation of a sound Internet system. 

Internet security has been a major issue surrounding the Internet community.   There is an endless amount of information passing through on a worldwide basis.  Not only is there a major concern for an overload of technology, but security is also an issue.  Many customers are weary of disclosing credit card information over the Internet.  Major online operations such as eBay have experienced serious problems where “hackers” have gotten a hold of credit-card records.  The issue of “connectivity” has also been a main concern.  For example, anyone who browses through a major “e-tailor” such as Amazon and purchases multiple products with a standard connection will not remain un-noticed[33]. 

Governments are currently addressing Internet based global commerce by considering rules of conduct, guiding principles, laws and taxation.  Future regulations will undoubtedly distort the current free flowing information throughout the web.   However, given the strict regulations now coming into play in the e-commerce arena, many customers may begin to trust the Internet while shopping on the WWW[34].

Dot com companies have an advantage in funding, leadership, low channel conflict, organization and technology skills while traditional companies have the brand and customers base.  Although Dot com companies seem to dominate in this sense, traditional hospitality & tourism companies have the capabilities of coming out on top if they opt to venture online[35]. 

Conclusions & Recommendations 

The hospitality & tourism Internet future first calls for a user-friendly platform containing a wide range of services that fit all customer interests.  Web customers are looking for the ultimate experience when browsing through the Internet.  A professional web graphic designer is an option for companies requiring assistance in creating an innovative attractive web-site that will lure customers into the web travel experience of a lifetime.  A travel site that is quick, user-friendly, and includes state of the art graphics will prove attractive for web customers[36].  

Now is the time for hospitality companies to take advantage of the opportunities available in creating a new value added customized online travel shopping experience for customers.  The ultimate trend calls for something comparable to the shopping-bot.  For those who are not familiar with the shop-bot concept, it is meant exclusively for online clothing shoppers who prefer to have a personal agent.  Similar to the shop-bot, the future of the Internet in the travel industry will provide a travel bot who will play the hand-holding travel agent for those that require the most guidance in arranging their travel plans.   This travel bot will create a custom experience that suits the particular customer needs offering a range of services including hotel rooms, restaurant tables, airline seats, and rental cars.  The travel bot will provide advice and recommendations as currently found on GDSs[37]. 

It is important to take a look at how Internet technology will effect the future of the tourism industry.  Most IT tools are being utilized.  However, there is still much room for improvement in speed, reliability, and adaptation to new technologies.  It is crucial for companies to take advantage of the Internet before the competition.  A solid R&D function is one of the elements in this process.  It is pertinent to study the customers and their businesses by encouraging them to fill out a customers profile form on the web.  As an incentive to fill out this form, a company may consider offering to provide a service or reward to the customers in return.   In order to keep up on the changing technologies, maintaining or subscribing to a data or data trend bank is a key option for hospitality & tourism organizations.  The process of turning data into knowledge can be found through working with such companies as Horwath, Smith Travel Research, PWC and PKF consulting[38]. 

It is important to consider how technological drivers will influence changes.  Many traditional small and large players in the industry are having a difficult time adjusting to the changes involved in switching to a full IT based strategy.   This is mainly due to the extent to which the Internet changes how hospitality services and amenities are delivered.  It further alters the organizational structures within hospitality companies and modifies the interaction of the customer and service provider.

The hospitality & tourism internet future suggests a universal system where property management systems will eliminate the need for expensive on-site computer hardware/software.  The maintenance problems relating to breakdowns, backups, and upgrades will be resolved in an easy efficient manner.  The Internet will control all transactions involving credit card authorization, travel agent commissions, and point of sale transactions.  This will result in fewer problems, a decrease in staff and an increase in profits.  The typical hotel guest will have the option of selecting movies, games, software, shopping and information through voice communication and data/video, all available at a low cost[39]. 

Future success for hospitality & tourism companies depends upon their abilities to identify a target market and the strategic opportunities available for survival and growth.  If data is managed properly, the technology can assist hoteliers and restaurateurs in projecting the lifetime value of guests, creating increased loyalty, resulting in an increase in market share.  The process of mass production has never been accepted in the tourism industry, therefore customized services are a must for survival.  Today’s computer world allows for mass customization in pricing, location, and amenities to a more knowledge-based format.  In this case, marketing and IT departments must work closely toward a merger of core competencies.   The drive toward e-commerce success includes a plan to track surfing and consumption habits such as the buyers, payers, and the return visitors.  Independent consultants are available to provide this data efficiently and confidentially. 

It is crucial for hospitality & tourism organizations to stay on top of the roles of the major online players that are posing a serious threat to the industry such as Travelocity, Priceline, Expedia, Yahoo, etc.  Their role in the future of hospitality & tourism marketing is crucial to the survival of Hoteliers.  Hospitality & tourism organizations might want to look into the potential of becoming one of the first movers to join the dot com craze.  The already established loyal customer base will allow hospitality & tourism organizations to have an upper-hand over general online threats. 

The customized travel bot could provide the ultimate travel experience of a lifetime for customers in adding the most value, thus allowing first movers in the industry to gain an overall competitive advantage.   

APPENDIX III

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