Catégorie : etourism and technology

Catégories
etourism and technology Trends

You haven’t heard the last of Web 2.0!

As the number of web users keeps growing, so the internet keeps evolving. It now features much simplified, more flexible and lower‑cost technology that encourages interactivity. Thanks to broader applications, internet users are now truly benefiting from the web’s participatory philosophy, forming virtual communities in which they share information about personal experiences, interesting websites, photos, and so on. Blogs, RSS content feeds, travel journals, meta‑search engines and podcasting have all emerged in the constantly changing new‑generation internet. Welcome to the Web 2.0 era!

The first generation has come and gone

Why is e-tourism evolving so rapidly? It’s important to first understand how e-tourism came about. Initially, it arose as an alternative to the traditional « off-line » reservation methods, and had just one motivation: find the best price. The consumer gained great transparency on prices and fares; this was the era that the firm PhoCusWright today calls « Travel 1.0. »

How Web 2.0 is taking shape will inevitably change the rules of the game for the travel industry. Consumers and businesses alike can now turn to ergonomic and useful solutions of all types that clearly alter the way people surf the web and change the travel-product sales approach. If the Web 2.0 phenomenon were to be described in one simple statement, it would be: « It is how internet users have taken control of the web. »

Now that we’re nearing the point where 50% of American internet users reserve their trips online, consumers’ increasingly intuitive use of innumerable applications enables them to play an active role. There are countless tools to assist tourists as they seek to find, or design, not just the cheapest trip, but the perfect trip.

Another aspect of Web 2.0 involves a rejection of traditional marketing channels as a source of persuasion. The internet user has become difficult to influence with classic advertising strategies, preferring to look for more neutral information sources, such as word-of-mouth recommendations or online forums.

As an example, Carnival added a section to its website called Carnival Connections that invites customers to use a discussion platform to plan a cruise (see photo). Carnival Connections offers forums (private or open to all) that let site visitors organize a cruise in detail, alone or through interacting with other visitors. It also features a journal of comments from past cruisers about their experiences.

What is social networking?

While Web 2.0 is still an incredibly abstract concept for most consumers and companies, 2006 is expected to be the turning point at which consumers and tourism organizations will begin to integrate social networking – a gathering place (virtual in this case, as it’s online) where relationships are formed among a great number of people with the aim of discussing a given subject.

First and foremost, social networking sites let internet users communicate with each other in an extremely efficient way, thanks to applications that enable them to locate specific interest groups. For instance, a birdwatcher can now easily share his passion with other birdwatchers through exchanging information, sharing photos, forming travel groups, etc. – in short, anything related to the interest they have in common.

Catching on

The « Social internet » is spreading, with specialty sites like YouTube, MSN Spaces, Classmates.com, Myyearbook.com and so on mushrooming. The New York Times even went so far as to attribute the rebirth of Silicon Valley to the phenomenon. The most popular of these sites is MySpace, which has some 80 million members and is clearly a leader. It had more than 51 million unique visitors this past May (30% of the total number of American internet users) and is poised to become, by autumn, the single most-visited website of all. People go to Myspace mainly to swap info about destinations, talk about their latest trip, post their photos, plan a journey with friends, meet like-minded people, etc. According to PhoCusWright, about 10% of e-tourists who buy travel online have already joined such virtual communities in order to get guidance while planning trips.

Multiple Web 2.0 developments

RSS Content Feeds
One word kept coming up at recent conferences on e-tourism: « involvement. » Simplified applications and intuitive user interface allow consumers to play an active role and let businesses know what they want. The best example are the RSS (Really Simple Syndication) content feeds that allow internet users to receive streaming information right in their computers, instead of having to do internet searches. The user employs these applications (feeds) to select particular topics of interest or websites from which he/she wants to obtain the latest information. Once the parameters are defined via a personal profile, the feeds become an alert tool and web content transmission mechanism tailored to the internet user’s needs.

As an example, online agencies like Expedia and Orbitz offer customers the opportunity to automatically receive all new promotions as soon as they’re posted on the site. Another example of the application would be a sports-news fan who receives from Cyberpresse all articles published in the sports section of the site.

Corporate Blogs
Meanwhile, more and more companies are offering feedback forums for customers. Many corporate blogs are set up with the aim of getting more direct feedback from customers, of soliciting their participation and getting their comments. Designated as a community space for the consumer, the revamped Sheraton website is a good example. Visitors are encouraged to share stories, advice and photos relating to their top travel discoveries, favourite destinations, etc. Sheraton management says the portal is a reflection of how people now research and buy their trips. In a context where businesses seek to show as much transparency as possible, such discussion areas help achieve this goal.

Wikis
Among many other concrete examples of what Web 2.0 has given rise to, the travel « Wikis » are worth mentioning. These are collaborative websites where any internet user can easily participate in authoring the content. The pioneering and most popular of these sites, TripAdvisor, has positioned itself as an encyclopaedia of travel destinations built upon the reviews of real travellers. The collection of all these personal tourist experiences is a powerful tool of influence on traveller decision-making and is enormously popular because of its completely neutral and transparent nature.

Implications for businesses

Now the big question is: what should we do to prepare for the coming Web 2.0 era?

Personalization of online content and community spaces provide whole new marketing opportunities for businesses wanting to target a very precise customer profile. These « involved » internet users, if properly approached, if solicited in the right place with offers pertinent to their profile, are liable to react very positively to product offers.

As most community sites include search applications in the form of a search engine or tags (key words related to content), it is easy to buy advertising space associated with categories that are innately compatible. For instance, many different groups gather and discuss travel-related topics at Myspace.com. In the illustrated example, you can see to the right of the page an advertising banner containing sponsored links related to this theme.

MySpace.com

Note that Myspace.com offers participants the option of identifying the information and products that interest them; for tourism companies, this is a crucial component of social networking. Every traveller who uploads a holiday itinerary identified with a keyword (tag) or a personal photo from a trip, or designates a favourite page, is giving managers very pertinent information about his/her personal interests and tourist behaviour.

You may not be familiar with these new players, but some of them are already among the most-visited sites on the web. Experiments on how to best utilize Web 2.0 from a marketing standpoint are only at the embryonic stage. Managers still have much to learn in terms of optimizing the use of these new technologies and the potential interactions with customers. It is perhaps too soon to overhaul your marketing strategies, but you would certainly be well-advised to adopt an open mind in order to properly anticipate the way Web 2.0 will influence how you do business and how to get the most out of it.

Sources:
– Aho Williamson, Debra. « The Social Net Catches More and More, » eMarketer [www.emarketer.com], June 26, 2006.
– Bray, John. « Web 2.0 Begins to Sprout in Travel, » PhoCusWright, April 19, 2006.
– Bray, John, Cathy Schetzina and Susan Steinbrink. « Six Travel Technology Trends for 2006, » PhoCusWright, February 2006.
– ehotelier. « ‘Social Computing’ and Enhanced Rich Content to Shape Future of Hotel Electronic Distribution, » 2006 HEDNA Conference [www.hedna.org], June 5, 2006.
– eyefortravel. « Online Branding Has Proven To Enhance Brand Awareness and Search Performance, » TDS Europe 2006 Special [www.eyefortravel.com], June 6, 2006.
– Lamarche, Simon. « Influencez en utilisant les communautés, » Adviso Consulting [www.adviso.ca], June 14, 2006.
– Poudrier, Sophie. « Le Web 2.0, les entreprises emboîtent le pas, » Bulletin SISTECH, CEFRIO (Centre francophone d’informatisation des organisations) [www.cefrio.qc.ca], June 2006.
– Ri, F. « internet 2.0, un nouvel eldorado? » Libération [www.liberation.fr], March 24, 2006.
– Schetzina, Cathy and Bob Offutt. « Social Technology Ushers in New Era of web, » PhoCusWright, April 2006.
– Wolf, Philip C. « Travel 2.0 Confronts the Establishment, » PhoCusWright, June 2006.

Catégories
Distribution networks etourism and technology

Tour operators moving online

Tourism giants, particularly TUI and Thomas Cook, have long been expected to become a strong web presence. Rebuilding from some difficult years, the major European tour operators have found a way to respond to discount carriers and online agencies, whose e-commerce breakthroughs have been gradually siphoning off market share. Tour operators are now directly and effectively reaching consumers via their new reservations portal, TV campaigns and call centres.

Maintain market share

Until recently, major tour operators specializing in selling holiday packages were staying away from online distribution, essentially relying on their traditional travel-agency networks. The latest estimates suggest direct sales by European tour operators stood at just over 8%, at a time when they were also concerned about not penalizing agencies, which account for a major portion of their revenues. And according to PhoCusWright, just 9% of online vacation-package sales were recorded by operators in 2005, with online agencies accounting for the bulk of those sales.

But the winds seem to be shifting in favour of large-scale tour operators like TUI and Thomas Cook, which have begun the transition to e-commerce (see image). Their recent massive investment in developing e-commerce platforms is beginning to bear fruit, and a new dynamic is in place.

Such a move was becoming necessary to preserve market share, as more and more travellers wish to buy online. In Britain, for example, dynamic packaging (in which the consumer designs his/her own package on the internet) is expected to account for more than 34% of revenues by British tour operators in 2007 – compared to just 3.8% recently.

In addition, the short-haul vacation market has become ultra-competitive in Europe since the arrival of discount carriers. With fares for all flight segments of both scheduled and charter carriers available online, internet users can easily compare prices and seek out bargains. So traditional holiday packages face a threat, because consumers can now find out the price of each component and create their own personalized packages. Tour operators were forced to react to this very real threat of losing the traveller to online agencies or other suppliers offering the same dynamic packaging possibilities.

Tour operators target consumers directly

In 2005, TUI posted record sales due mainly to internet transactions, which reached 1.8 billion euros, an increase of 44% over the previous year. The company is a dominant presence in the German and British markets, where it has 18% and 13% of market share respectively. And this is only the beginning, as TUI’s global portal, with its many applications, was officially launched just this past December. Though known for its vacation packages, TUI is also recording significant increases in online reservations for other products such as flights and accommodations; including reservations made through call centres and sales resulting from television ads, direct sales to consumers now account for 25% of the TUI tourism division?s revenues, totalling 14 billion euros.

Tour operator Thomson, a subsidiary of TUI, is offering several innovations designed to seduce the consumer directly. For example, the firm hopes to deliver its latest offers to customers via RSS feeds to their cell phones. And since February, customers have been able to view their prospective vacation site in 3-D, thanks to Google Earth technology. In addition to numerous images, the site also has a bank of some 1,700 videos to facilitate the process for internet users as they buy various products.

Thomas Cook marketing blitz

Over at Thomas Cook, the other tourism giant, online sales in the British market now account for more than 20% of revenues. In February 2006, the British conglomerate also launched a major advertising campaign to influence consumers’ perceptions of the very nature of the company. The strategy was to position Thomas Cook as the main leader in terms of internet offers. The firm went with a message that took direct aim at its two main rivals, Expedia and Lastminute, with the objective of showing that its site is a one-stop shopping solution – a source of scheduled flights, charter flights and dynamic-packaging options as well as the usual holiday packages.

In addition to sponsoring film screenings and television programs where it offered a chance to win a trip, Thomas Cook promoted its Neckermann brand specifically in the television media. It even created a character, Supernecky (see image), that symbolizes the tour operator’s « values of proximity and accessibility, » to serve as a communications tool in relation to both the general public and the distribution network.

Commissions cut

Another key step in the tour operators’ global strategy involves changing the business model for compensation to the distribution network. In January 2006, several operators cut travel agency commissions to 7%. The move, initiated by Thomson, was very badly received by retail agencies, which worried that tour operators were accelerating their business strategy vis-à-vis direct sales to travellers. Analysts expect the money saved will be reinvested in direct marketing.

By way of protest, many travel agencies stopped selling Thomson products, but paradoxically, Thomson’s website has become one of the most-visited sites on the internet. The move seems to be paying off in spades for Thomson, and other tour operators may be inspired to follow suit. Another cut in commissions, to 5% this time, is likely to be announced soon.

Closer to home, the Transat group dominates the Canadian vacation-holiday scene. The Québec-based tour operator is still relying largely on its network of retail agencies to sell its products, but a steadily growing portion of its revenue is now coming from online sales, direct to consumers, through its Exit.ca website.

Meanwhile, wholesaler Go Travel Direct’s strong arrival on the Quebec scene had such an impact that the players already in place were forced to change their distribution methods. Go Travel Direct’s strategy is low prices that circumvent the agency network; Transat’s response came via its Nolitours banner, which offers similar products thanks to reduced commissions and direct online reservations. One thing seems certain: the race for bargains is increasingly defining business dealings between consumers and the distribution network. « Disintermediation » is proceeding apace.

Sources:
– Carroll, William J. and Peter O’Connor. « European Hotels: Managing Hospitality Distribution, » PhoCusWright, September 2005.
– Filliâtre, Pascale and Stéphane Jaladis. « Les TO passent à la télé, » L’Écho touristique, No. 2754, February 3, 2006.
– Fox, Linda. « Thomson Trials Phone Technology, » Travelmole, March 23, 2006.
– L’Écho touristique. « Thomas Cook préfère la télé, » January 16, 2006.
– Sileo, Lorraine. « PhoCusWright Assesses its 2005 Predictions, Makes New Ones for ’06, » PhoCusWright, 31 janvier 2006.
– Skidmore, Jeremy. « First Choice Set To Follow Thomson with 7% Commission, » ABTA Convention Special Report, November 25, 2006.
– Skidmore, Jeremy. « Operator Accused of « Hypocrisy » over Commission Cut, » ABTA Convention Special Report, November 25, 2006.
– Thomas Cook. « New Thomas Cook Advertising Challenges Online Travel Perceptions, » Press Releases, January 30, 2006.
– Thomas Cook. « Thomascook.hit! » Press Releases, November 2, 2005.
– Travelmole. « Thomson Holidays Gives Customers Google Earth, » February 2, 2006.
– TUI. « TUI Starts the 2005/2006 Travel Wear with Increased Bookings Turnover Growth in Key Source Markets / Online Turnover Up by 44 Per Cent, » Press Releases, March 8, 2006.

Catégories
etourism and technology Management

Price customization: bold… or deceptive?

Is it farfetched to believe that an online shopper’s browsing history could affect a travel site’s search results? It most certainly is not. Although the internet gives consumers a powerful tool for easy price comparisons, the downside is that it also enables retailers to collect detailed information about online shoppers’ spending habits. Thanks to the internet, businesses can now use a myriad of new approaches to efficiently adjust their pricing to increase profit margins.

Warning, you’re being tracked!

Thanks to browser technology, businesses now have the ability to store profiles of their customers’ buying habits, preferences, financial resources, and so on. Some companies judiciously use this type of strategic information to adjust their pricing according to a user’s profile.

According to Charles Leocha, a journalist for MSNBC.com, online travel agencies like Expedia use sophisticated software and browser cookies to analyze customers’ previous transactions. This means a consumer’s search results can vary according to the profile recorded. For example, if a particular consumer is shown more higher-priced fares – or fewer discounted fares – it could be because the system has identified him or her as a « good customer » who is more likely to purchase higher-priced items. In fact, this is a subtle way of preventing certain types of consumers from purchasing lower-priced items. It’s a little like banning well-heeled shoppers from dollar stores!

A concrete example

Although this type of marketing practice may seem like a paranoid example of Big Brother at work, it is nonetheless closer to the truth than to fiction. Online travel agencies may insist that such biases don’t exist, but our experience shows otherwise.

To test the truth of this hypothesis, we conducted a test with members of the Tourism Intelligence Network team. We ran a simple search on the Canadian Expedia site for a plane ticket from Montreal’s Dorval Airport to Paris’ Charles de Gaulle Airport, departing January 8, 2006, and returning a week later on the 15. However, our three searches, conducted simultaneously on three different workstations, produced three different results (see illustrations).

Profile 1

In the case of Profile 1, the lowest price offered was $800 for a connecting flight or one with 2 stops or more, with no direct flight option. As for Profile 2, the lowest price displayed was once again $800, but this time, we were offered a non-stop flight for $978. Finally, Profile 3 was offered a flight for the somewhat surprising price of $699, in other words, $101 less than the other two! And yet, it was the very same US Airways itinerary, with exactly the same departure times.

Profile 2

 

Profile 3

Read the fine print

Expedia’s policy with regard to using information collected from customers is as follows:

«Expedia.com collects certain technical information from your computer each time you request a page during a visit to Expedia.com. This information is collected from your computer’s Web browser to enhance your experience on our site…»

Few consumers are aware that retailers are able to manipulate online shoppers’ personal information to conduct what some experts call « psychological marketing. » The Annenberg Center at the University of Pennsylvania examined this phenomenon in a study entitled Open for Exploitation, released in June 2005.

The study’s results demonstrated the naiveté of US online consumers, 68% of whom believe price comparison sites like Expedia and Orbitz are required by law to display the lowest available price. Furthermore, 87% of the people surveyed said they strongly object to online retailers offering different prices for the same product, depending on the information gathered on customers’ shopping habits.

Somewhat questionable, but still legal. Use with care.

Price customization is therefore a very real practice and, contrary to popular opinion, it is entirely legal. As long as discrimination is not based on factors like race, religion, nationality or gender, there is no problem. Such approaches have been around for a long time, like discounts for students and seniors, for example.

This type of strategy is a legitimate business tool because it follows the trend of yield management and companies must satisfy the needs of shareholders. Although businesses that offer a flat price at all times may satisfy their clientele, they will definitely deprive themselves of a higher profit potential.

There’s nothing new about dynamic pricing. The major difference stems from the fact that the internet offers businesses a number of new ways to efficiently adjust their pricing. Since consumers are still not very aware of the incidence of price customization, businesses employing this strategy must be very careful not to cause dissatisfaction and erode customer loyalty.

The internet unquestionably offers businesses an opportunity to acquire highly relevant and strategic information about their customers and thereby target different market segments with different prices for the same product. Technical tools enable retailers to study not only the purchasing behaviour of online shoppers, but also their non-purchasing behaviour, in other words, their information searches.

In today’s context where the internet plays an increasingly important distribution role in relation to global distribution systems (GDS), more and more travel agencies are going online to find prices. This raises another question: what happens when travel agents consult the internet on behalf of their clientele? Could such agents be penalized due to their frequent use of sites that employ dynamic pricing?

Tourism-based businesses with the technological ability to do so must ask themselves a key question: is it profitable to take advantage of our clientele’s electronic profiles to implement dynamic pricing?

A double-edged sword

Retailers trying to determine their web strategies in relation to dynamic pricing must define these strategies with great care. For example, is it better to offer lower prices to customers who visit the site frequently, but rarely buy, or to those who are loyal and rarely shop elsewhere? It is a difficult question because, in fact, a business could decide to offer higher prices to loyal return customers, gambling that their loyalty will blind them somewhat and make them unlikely to shop elsewhere. Or the same business could just as easily adopt the opposite strategy, in other words, reward loyal customers by offering them the lowest prices possible.

The stakes are high because bad decisions could cause a business to lose many customers. On the other hand, automatically rejecting any type of dynamic pricing is also a way to miss out on some lucrative profits that would be difficult to make in other ways. To make an informed choice, retailers must look at all the parameters that could help guide them. In particular, they should not only consider the frequency of a customer’s site visits, but also the time of year, the type of products purchased, the profit margin on previous transactions, etc.

Possible backlash

Since the practice of dynamic pricing is in its infancy, businesses can still take advantage of the fact most consumers know nothing about it. However, in the longer term, organizations that rely too heavily on this approach could well pay the price.

One possible risk is an increase in the number of intermediaries created to fight back against businesses « guilty »of too much greed. Although the goal of such initiatives would be to denounce abusive practices, they could also, for example, rank travel websites according to their level of « honesty » and try to protect customers – or even steer them away – from businesses seen as too manipulative.

Although it is difficult to accurately assess the extent to which dynamic pricing is used in Quebec, we can safely assume that few organizations have adopted it as yet. Although companies are technically capable of amassing a ton of information about their online customers, very few do so in order to analyze it, while others simply do not have the resources needed to efficiently collect this type of information.

Managers will definitely have to weigh the pros and cons before blindly adopting dynamic pricing. However, there is an amazing wealth of strategic information that can be gleaned by analyzing online clicking behaviour. Without going so far as to customize pricing, businesses could benefit – at the very least – from learning more about their site visitors, whether they buy anything or not.

Sources:
– Elliott, Christopher. « A Low-Fare Browser? », National Geographic Traveler, July-August 2005.
– Feldman, Lauren, Joseph Turow and Kimberly Meltzer. « Open to Exploitation: American Shoppers Online and Offline », Annenberg Public Policy Center of the University of Pennsylvania, June 2005.
– Knowledge@Wharton. « What Consumers – and Retailers Should Know about Dynamic Pricing », Hotel News Resource [www.hotelnewsresource.com], December 2, 2005.
– Kontzer, Tony. « Online Shoppers Growing Wary Of Sharing Data », InformationWeek, August 15, 2005.
– Ramasastry, Anita. « Web Sites Change Prices Based on Customers’ Habits », CNN [www.cnn.com], June 24, 2005.
– Ramasastry, Anita. « Websites That Charge Different Customers Different Prices: Is Their ‘Price Customization’ Illegal? Should It Be? », FinLaw, June 20, 2005.

Catégories
etourism and technology Marketing @en

Show me the room!

When it comes to reserving a hotel room online, what criteria are important? According to a recent survey of US internet users, being able to see the place is key. With the increased adoption of high-speed internet, suppliers can now do a better job selling an experience, rather than just a price.

According to a recent survey of approximately 2,900 adult US internet users conducted by Harris Interactive for VFM Interactive, after considering price and location, consumers now want to see photos when they reserve a hotel room. In fact, 73% of the respondents who stay in hotels said they went online to research their accommodations. Of this number, 71% considered the written description very important while 69% said the same of the visuals.

The survey also showed that some groups of online travellers are more interested in the visual aspect than others.

This is true for the following:

  • women (36%), compared to 21% for men
  • families with children; in fact, 35% of households with children find visuals important, versus only 25% of those without children

For 28% of online travellers, visuals were rated « very important, » ahead of:

  • description of property (23%)
  • information about the destination (17%)
  • star ratings (14%)
  • customer testimonials (13%)
  • hotel brand (11%)

Internet and streaming video

Streaming video is a technology that should encourage the travel industry to take a second look at the internet. With its ability to transmit both audio and video, the internet is ideal for conveying information, and with the increased use of high-speed (broadband) connections, streaming video is now more common.

Although still photographs work well as promotional tools, streaming video is an even more effective medium. All businesses using the internet to sell or promote products should consider the use of this technology:

  • a night in a hotel (the Ice Hotel, for example)
  • a day at a spa (the Scandinavian Spa in Tremblant, for example)
  • a show (in Las Vegas, for example)
  • an entire region (BonjourQuebec.com, for example)
  • a gourmet meal in a top-rated inn
  • a tour of the Père-Lachais cemetery in Paris
  • or any other product or service
  • and don’t forget 360-degree virtual tours.

Streaming video can present a highly realistic portrait of your business: a virtual tour, an overview of the site, a demonstration of a product or service, a commercial, filmed testimonials from satisfied customers, etc.

Video can capture dreams, desires and longings. It is therefore an ideal communication tool well-adapted to the tourism and recreation sector. Video can inform and reassure consumers; it inspires trust and can help break down the final barriers to the act of purchasing.

It is not complicated to add streaming video to a website (webcasting). However, for visitors to be able to view it, they must have an appropriate multimedia application (that can be downloaded for free). Although Media Player is the most common program for Windows users, it is always a good idea to offer videos in several different versions so they can be read by other applications like Real Player and QuickTime, for example.

Although the quality of the video depends on the user’s connection speed, the technology is very promising because it can make information available in real time, just like television. And with more and more homes now enjoying the same type of high-speed connections found in workplaces, the market should really explode in the coming years.

When speed is an advantage

According to a recent survey of 3,000 Canadians conducted in May and June of 2004 by the Canadian Internet Project (CIP), 72% of the Canadian population uses the internet, either from public or private sites. Some of the survey’s other findings:

  • a majority of Canadians use the internet a lot: 56% say they spend at least seven hours per week online
  • most of the time, they use the internet at home or at work, rather than in public places
  • internet users spend less time than non-users on traditional media like television or newspapers and magazines

In Canada, broadband internet services have made major inroads in a short time. In 2003, 66% of businesses had high-speed access (compared to only 48% in 2001). Overall, in both homes and workplaces, Canada is a world-wide leader in broadband penetration. In fact, in 2005, 67% of Canadian households enjoyed broadband access and some experts believe that this number will rise to 81% by the year 2007.

In the United States, according to the latest estimates of the Pew Internet & American Life Project, broadband adoption at home has also grown in recent years. In May 2005, 53% of the internet users surveyed had a high-speed connection at home (compared to 50% in December 2004).

In conclusion, high-speed internet and related technologies like streaming video are proving to be fundamental tools for businesses of all sizes. For users, the technology has many advantages, and with the growing popularity of media for private viewing (like podcasts), videos can be downloaded and viewed on cell phones and iPods, or saved and forwarded to friends. The possibilities are endless!

Sources:
– eMarketer. « Travel Shoppers Say: ‘Show Me a Picture’, » November 16, 2005.
– PRNewswire. « The Majority of Online Travelers Rate Hotel Visuals Among Top Influencing Factors in Selecting a Hotel Online, » November 14, 2005.
– Horrigan, John. « Broadband Adoption at Home in the United States: Growing but Slowing, » Pew Internet & American Life Project, September 21, 2005.
– Uhrbach, Mark and van Tol, Bryan. « Broadband Internet: Removing the Speed Limit for Canadian Firms, » Statistics Canada, Science, Innovation and Electronic Information Division, September 2004.

Catégories
etourism and technology Trends

Why purchase online?

A 2005 tourism management study sheds light on the purchasing habits of North American Web users with respect to tourism products. The two primary factors motivating them to conclude online transactions are the quality and accuracy of on-site information and a simple reservation process.

Study context

The main reason consumers have overwhelmingly adopted the Internet is that it enables them to shop 24/7 in the comfort of their home. However, there are a number of factors that differentiate Web user purchasing habits. For instance, those who purchase travel products online are influenced by the complexity of the product. Other important considerations include the ability to compare prices, discounts and a user-friendly interface.

With that in mind, experts have studied the relationship between the purchaser’s motivation to buy and the complexity of online travel products. Since Web expertise plays a significant role in this, consumers have been divided into expert users and novice users. The study aimed to prove that ease of navigation was the primary reason for variations in purchase decisions between online products.

Airline tickets, accommodation and car rentals are considered relatively simple travel products. All-inclusive trips, cruises and tours constitute more complex products.

In an attempt to simplify navigation, many sites have become « content aggregators » that offer one-stop shopping. This strategy has been extremely successful for such agencies as Travelocity and Expedia. Dynamic packaging, whereby Web users create their own package while retaining a certain degree of flexibility, have added a new twist to the tourism landscape.

Motivating factors for Web users

The study examined the top six factors that motivate consumers to make online purchases (see Tables 1 and 2). The factors are as follows:

  1. The opportunity to earn points through a customer loyalty program. Some sites have even set up a special page for members to track their reward points (marriottrewards.com, for example).
  2. The availability of the desired product.
  3. Clear, detailed information that enables the user to make an informed decision.
  4. A simple reservation process is a key factor in the online purchase decision. Especially in the case of more complex travel products, customers must be able to find the information they need to make a decision.
  5. The reputation of the company or site’s banner, as this reassures the purchaser and may positively influence the outcome of the transaction. 
  6. Consumers are more sensitive to the price of online products than they are to conventionally purchased products. This is partly due to aggressive advertising campaigns that have gradually led consumers to expect discount products.


 
 


 

The experts used data from a Canadian Tourism Commission study conducted in November 2001 that surveyed 1,161 Canadians and 1,145 Americans. Although Web user behaviour has admittedly changed since then, the study’s findings nevertheless constitute a valid basis for comparing and understanding travellers’ online purchasing habits, based on their experience with the Web and the type of product in question.

Behaviour varies according to sector

A user-friendly interface is a key factor in the decision to buy any kind of online travel product, regardless of the amount of Web user experience, leading experts to conclude that consumers want a simple reservation process. Competitive prices play a greater role in the purchase of less complex products, such as airline tickets, packages or car rental.

The quality and accuracy of the site’s information was a deciding factor for travellers looking for activities, events, tours, attractions and accommodation. Company reputation was less important to those making « simple » transactions -such as renting a car- compared to those purchasing more complex products. Finally, customer loyalty programs constitute a greater draw for expert users and mainly affect purchases of airline tickets, car rental and attractions.

Sources:
– Beldona, Srikanth, Alastair M. Morrison and Joseph O’Leary, « Online shopping motivations and pleasure travel products: a correspondence analysis, » Tourism Management, No. 26, 2005.
– Ham, Sunny, « The Use of the Internet for Hospitality and Travel-related Activities, » e-Review of Tourism Research (eRTR) [ertr.tamu.edu], vol. 2, No. 6, 2004.