Information Systems in Tourism Industry: Essay Example

Information Systems in Tourism: Introduction

The tourism industry has extensively adopted technological innovations to help serve the demands of its customers. In organizations and institutions, Information Systems is responsible for computers, networking as well as data management.

It supports different kinds of decisions at various levels of hierarchy within organizations. Information technology supports various tourism activities.

Why Is Information Management Important in the Tourism Industry?

The increase in the number of people owning computers connected to the internet in their homes have significantly changed the way tourism consumers identify their destination, make reservations, define the extent of leisure they want to obtain, choose the mode of transportation and many others (Dimanche and Jolly 2).

Many tourism firms continue to explore the diverse applications of information technologies so as to increase the value of their services.

The back-office of tourism firms uses Information Technology to handle routine operational problems as well as to facilitate multi-stakeholders interactions (Parakevas 17). It is also used in yield management.

In the front office, IT is used in managing customer relationships. Information technology is used for many purposes in tourism firms including product development, tourism marketing, data management, developing and interactions among tourism stakeholders and many others (Technovation 576). All these have dramatically improved the value chain of tourism firms.

Peculiarities of value chain in Tourism Industry

Tourism industry is both capital and labour-intensive and requires know-how and ability to minimize risks through building up networks. Distribution and marketing adopt co-operative alliance to reduce costs, increase customer value and achieve market extension (Weiermair 2).

According to Poon (114) tourism worldwide has become a relationship and information industry. It has therefore become increasingly important to keep client data.

Tourism industry involves practice-oriented operation, experience as well as knowledge resources in areas such as corporate management, market information plus product features and brands. Value chain in the tourism industry is characterized by tourism products, destinations as well as market segments.

Tourism destinations are the heart of leisure for tourism consumers. The sceneries, parks, museums, monument and historical sites, sports and cultural activities provide great experiences to tourists.

In particular, these destinations include sandy beaches, sand dunes, scenic marine parks, waterfalls, gorges and mountain escarpments; wildlife, rural villages and archaeological sites.

The need for institutional coordination, monitoring as well as the need to pursue existing opportunities in the destinations call for the application of information systems to help manage and communicate effectively.

Tourism organizations continuously build on their destination’s own strength in order to increase their core competencies and provide quality services and products to tourism consumers. Most tourism destination marketing agencies have developed websites which offer different levels of interactivity.

Interactive websites are very important as they provide multiple tourism destination suppliers with opportunity to uniquely assemble the specific components of their destination offer sought by individual tourism consumers.

Tourism companies apply a combination of intermediaries, the internet, brand names as well as business relationships to guide individuals through the wide range of destination options that are available.

Bonera and Corvi (9) believe that the use of branded virtual intermediaries as well as trusted brand names has lowered the risks involved in purchases of tourism products.

Customer order is a very important aspect of tourism value chain. In the tourism industry, tourists have alternatives whenever they are purchasing tourism products.

They have the option of arranging their travel plans by obtaining guidance from tour operators or with the help of outbound travel agents or just arranging travel plans by themselves.

By using tour operators, they can access holiday packages and at the same time, individual arrangements allow flexibility in their travel experiences. They can also use incoming travel agents to make transfer arrangements (Buhalis and O’Connor 13).

The industry has a vertical separation of its services as well as products. It offers visitors products as well as services which include food, accommodation, transportation, entertainment together with shopping services that take place in a natural inter-industry specialization as well as a longer value chain.

Peculiarities in services in tourism organizations are also characterized by tourism industry cluster (Deng 70). Tourism organizations, institutions and associated service companies tend to cluster in particular geographical regions.

This is normally based on competition as well as cooperation among companies in provision of tourism services (Liu, Yin, Yu-Qi 22). Tourism enterprises as well as tourism-related support companies and tourism institutions are normally located around the core tourist attraction.

They have closer economic ties and focus development in specific geographical area. The economic attributes of the industry, the agglomeration of tourism enterprises and support institutions promote tourist and capital flow as well as logistics into the tourist destination while tourism resources attract tourists.

The cluster in the tourism industry takes value chain as the overriding mode. In this case, the linkages between the core tourism resource and performance of enterprises which are within the cluster as tourism suppliers-users relationships are connected through value chain (Deng 71).

Tourism industry cluster promotes interconnectivity of tourism market channels. Marketing channels in each industry within tourism sector can connect the industrial chain food, accommodation, transportation, entertainment, shopping as well as travel. This helps guide development in tourism industry cluster.

It promotes timely market demand and tourism interaction which enables the industry to achieve high customer satisfaction. The vertical markets are highly complex creating the need for strong cooperation among tourist operators.

Travel agencies as well as their suppliers have adopted specific e-procurement initiatives. These are aimed at creating economies of scale through utilizing optimization as well as higher efficiency by adopting online supply systems in the value chain (Baggio and Corigliano 3).

Market segmentation in the tourism industry is achieved by applying elements of e-commerce which facilitate collection large amounts of client data to create marketing-data-bases. This enables tourist organizations to customize supply targeted at different market segments.

Tourism industry provides unique service management aimed at achieve tourism consumer satisfaction. The management of service is targeted at achieving intended consumer delivered value. The driving force for the tourist operators is to provide quality service as perceived by tourism consumers.

The marketing tourist companies are managed such that tourists’ expectations are met timely. Management of services involves putting in place value chain which helps integrate marketing activities, products and services provision, corporate management, production processes as well as resource management. In service management within the tourism sector, interactive communication is very important.

According to Gabriel (11) communication interactions in the service industry make consumers aware of the relationship between the cost of obtaining a service and the expected value. Value chain is applied in managing as well as marketing tourism destinations and products.

Uses of Information System in Tourism

Information Systems enable value chain managers communicate with the organization’s partners, suppliers and prospective customers directly. It offers user-friendly access to channels of communication as well as employees of the firm through the use of intranets.

It helps value chain managers coordinate activities among operators, destination management agencies, flight companies as well as hoteliers to help provide higher value services to customers and to leverage the economies of scale.

The coordination enables them share costs so that they can offer fair prices to tourism consumers (OECD Development Centre 26).

Information technology enable value chain managers outsource specific non-core functions of the organization from specialist agencies and business organizations to handle the part or the entire process.

Networking also allows organizations to outsource value added services as well as products from competent and trusted partners. As such, ICTs enable tourism companies expand their value by including continuous products and services and proving greater value-added transactions (Buhalis and O’Connor 16).

Information systems also provide value chain managers with the capacity to use organisation data to perform online transactions. It offers various internal-management applications which facilitate strategic as well as operational management. It also provides marketing applications for value chain managers.

They are therefore able to search for profitable as well as significant niche market segments. The application tools help them identify value-added components and enable them promote differentiated tourism products relevant to particular market segments (Buhalis (b) 806).

Value chain managers use IS to assess elements of the organizations’ external environment, levels of competition within the industry as well as customer needs and accordingly adapt strategies which enable them enhance the organizations’ competitiveness.

This enables them differentiate and add value to their products to suit individual requirements (Buhalis (a) 807).

IS assists value chain managers in Destination Management Systems which are based on different Information Systems. Destination Management Systems utilises different data to represent tourism products as well as services.

DMS assists value chain managers disseminate and exchange information. According to Kanellopoulos, Karahanidis and Panagopoulos (1) destination management organizations use Destination Management Systems to develop marketing channels for tourism destinations and to promote their destinations.

DMS helps value chain managers collect, store, manipulate and in addition distribute tourism information. It also facilitates reservation transactions as well as other commercial activities. It enables value chain managers get access to complete as well as up-date information about other destinations which gives them the capacity to make informed decisions.

For example, it provides knowledge on attractions, accommodation together with travel information among others (Dimanche 14). This is used by destination management organizations in decision-making in destination management.

Information Systems assists destination marketers provide detailed descriptions of intangible products that they offer; photos and videos to help influence tourism consumer purchase decisions.

The description includes the level of expenditure for each package. Tourists often choose among destinations based on the holistic destination attributes (Çetinkaya 1).

How Is Information Management Used in the Tourism Industry?

Information and communication technologies are used in this sector to perform tourism product development, training of tourism personnel, marketing as well as distribution of tourism products. Information systems is used in this industry to perform collaborative filtering.

This is application software that uses customer database built by the company or the intermediaries to classify customers with similar profiles using characteristics such as travel patterns, preferences as well as interests among other characteristics based on previously accumulated data.

The findings are therefore used to customize tourism products and for direct marketing (Menon, and Nath 5). Personalization profiling is also a major application of IS in the tourism industry.

In this case personalization software is used to track and monitor the purchasing trends as well as preferences of tourism consumers. The results are used to customize products and services according to the needs as well as preferences of customers. They can also be used to carry out direct marketing.

Information systems enables electronic transactions through electronic payment. Electronic payment simplifies the buying-payment process and help skip intermediaries.

It helps monitor casual relationships so as to understand the correlation between the impacts of the company’s advertisements and the outcome purchase patterns (Menon, and Nath 5).

Tourism organizations also utilize the application of Virtual Reality and Web Casting. This provides cyberspace vacation experience to tourism consumers through the internet.

It enables customers to have perfect of view of the destination they are planning to visit. The technology is used by tourism organizations to market their products and services (Menon, and Nath 6).

Video conferencing is also used by tourism companies to communicate with each other regardless of the spatial location. It allows geographically dispersed tourism companies and service providers to cooperate (Menon, and Nath 7).

Tourism organizations also use Computer Reservation Systems as well as Global Distribution Systems to aid reservations. CRS allows tourism organizations and service providers to communicate with the travel agents.

The system helps increase sales volume as it provides information on available tourism products and is also utilized in selling the product. GDS on the other hand distributes reservation as well as information services particularly to sales outlets worldwide ((Menon, and Nath 7).

Advantages of Information Systems to Tourism Companies

Information systems is used by tourism firms to assemble packages which are reflective of the market. It enables tourism companies research on the best offers in the market and use them to assemble their packages.

The packages are made in air travels, flight bookings through global reservation system, accommodation and transfers as well as add-on services.

Information systems enable tourism firms reinvent tourism packages with greater individual-focused activity thereby providing huge opportunities for intermediaries and principals. This helps enhance the total quality of the ultimate product.

Information systems are used in the tourism industry to enable tourism consumers to identify, customize and acquire tourism services and products.

It helps develop, manage and distribute offers to tourism consumers worldwide. Information technology has become a major determinant of tourism organizations’ competitiveness.

Information systems can help lower administration as well as production costs through integration of internal data and processes.

Tourist organizations can reduce communication and operational costs by incorporating operational systems, capitalizing on internal efficiencies, lowering the labour costs in the back office and empowering tourism consumers to have timely access to information.

ICTs contribute to the decline of distribution costs incurred by tourism companies as more consumers can now serve themselves online. Tourism firms are also able to reduce the costs associated with purchases since they have the capacity to access marketplaces through ecommerce.

Moreover, it helps them reduce administrative costs associated with procurements since they have ecommerce connection with suppliers (Buhalis and O’Connor 13).

Networking channels both within tourism organizations and between partner organizations supports communication within the industry and individual tourism firms.

The growth of the internet and the development of intranets and extranets within and between companies help support communication between organizations, external partners, units and employees within an organization.

Intranets as well as Enterprise Resource Planning systems enhances coordination of departments, functions and processes which enable the organization to reduce labour costs. Information and communication technology also supports the adoption integrated electronic infrastructure.

Interoperability helps increase efficiency and responsiveness and therefore makes informed decisions. Information systems thus empower employees in the organization to improve their performance. This increases internal efficiency as well as effectiveness.

Extranets on the other hand enhances interoperability as well as interactivity between organizations. This promotes formulation of alliances that help build complementary services and to also expand reach.

Tourism firms have consistently applied information systems in yield management. Information technology supports accurate demand estimates as well as decisions to either change capacity or price in order to optimize revenue (Enz and Withiam 32).

Yield management involves coordinating calendar, capacity, cost, time as well as customer. It enables organizations match services timing as well as pricing to tourism consumers’ willingness to pay depending on its timing in addition to demand from other tourist consumers.

ICTs provide revenue-management with critical information regarding previous demand patterns, events affecting demand as well as competitor pricing. In addition, it provides consistent interactivity with consumers and organization partners which enable competitive and flexible pricing (Enz and Withiam 32).

They provide the capacity to monitor sales allowing tourist firms to adjust their products or prices (Buhalis (b) 417). It also facilitates promotional campaigns.

It alerts tourist organizations on excess demand or capacity and therefore they are able to divert their capacity to profitable segments of the market. The internet provides the capacity to make online auctions for disposing distressed capacity and to advertise last minute offers. These help acquire additional revenue.

Tourism firms use information technology to project demand, schedules as well as to monitor the expected carrier capacity factors before deciding on visitors’ capacity and expansion into new markets. ICTs also enhance direct distribution of tourism products which is a very important function for raising revenues.

Distributing tourism products directly enable tourist companies save fees plus commission. In the process, the organization also reinforces its brand as it engages with consumers (Buhalis and O’Connor 12).

The ability to sell products directly to consumers increases customer loyalty to the individual organizations and hence reduces leakages to competitors.

Tourism organizations use ICTs to build awareness and promotions through websites and search engines optimization, pop-ups and newsletters. It provides tourism organizations with the capacity to build as well as to maintain websites internally and through their partners.

This enables them to achieve a global presence as well as partnerships throughout the world. Small tourism firms are also able to develop their virtual size.

According to Buhalis and Licata (212) the internet enables tourism companies to expand their value chain as well as promote their products and brands by means of a combination of systems alongside partners.

Disadvantages of adopting Information Systems in Tourism Companies

Initial investment into Information Systems is very costly. Implementation of application programmes such as GDS, GIS, CRS among other applications require massive investments since they involve complex network of large mainframe computers, PCs as well as telecommunications. Besides, the investment may not give immediate returns (Menon, and Nath 7).

Maintenance of the network system is also expensive. It requires high level expertise which is expensive and not easily available. Moreover, the application programmess are constantly modified meaning that the programmes have to be updated every time and again. These increase the operational costs of tourism organizations.

The availability of communication networks allows consumers to access tourism information and obtain products and services from several tourist companies. They therefore become more experienced and sophisticated making it difficult to please them.

Internet enhances the development of virtual corporations and increases globalization. This brings more market players in the tourism industry which in turn complicates the distribution channels raising heterogeneity as well as requiring standardization.

Recommendations

Information systems is a key component of tourism organizations. Organizations therefore need to optimize its applications in value chain management and operation within the industry by adopting the following measures:

1. Build intranets and extranets and also develop business partnerships. It is has been noted that tourists choose among destinations based on the total attributes of the destination. Extranets will help create partnerships and coordinate partnerships activities. Competition in the tourism industry is heightened and is characterized by network of interactions between tourist organizations and related service providers.
2. Connect the company’s information systems infrastructure to the internet. Internet enhances the company’s marketing abilities and also helps increase value and customization of tourism products. By building a more interactive website with optimized search engines, the company empowers tourism consumers to acquire all its tourism information. This will help value chain managers including destination management organizations to interact more with the customers, reduce the cost of distribution and achieve greater customer loyalty. This will in turn help build a virtual value chain and increase the company’s virtual size.
3. Offer comprehensive services that enable tourism consumers to arrange their travel over the internet at one site.
4. Develop an integrated reservation system for the whole cluster or group of partners. This will enable customers to make reservations for all parts of their vacation in just one transaction. Integrated reservation system facilitates customization by empowering the customer to create his or her own tour in a way that suits him or her.
5. Maintain a database that allows the company or the intermediary to keep an accurate profile of each visitor. This will facilitate customization of services to each tourist.

Newspaper and Technology

What Newspaper companies are doing now that they can do better

Newspaper publishers today have built websites that they use to provide online published news to consumers. Online media services offer internet users instant and free of charge access to information and therefore most consumers have come to prefer to read newspapers online.

Newspaper publishers mostly rely on their sales staff to sell most of their products and therefore limiting their revenues. Most newspaper publishers tend to rely on print products to generate their revenue since they find them easier to monitor as compared to web products.

This implies that traditional newspapers have to reinvent value chains as well as business models that enable them increase their revenues. They need to restrict some of their articles to paid subscribers so as to obtain revenue from online newspaper publications (Graham and Sacha 9).

They also have to use advertisements to promote the coming newspaper’s articles and encourage subscription or purchase of the newspaper.

Newspaper publishers have to capitalize on the broad realm of online opportunities available both in the local and international market. This will help them offset the increasing declines in revenue which is the core of the business.

A few newspaper publishers have adopted video presentation of particular news which they consider significant.

All online newspaper publishers have to adopt the virtual reality as well as web casting applications that create value chain to the publishers by extending this to advertisements available to all paid subscribers as well as non-subscribers.

Adding videos to the news presented through online publication would be more appealing to the current visitors of the internet and new consumers. They also have to negotiate for more advertisement contracts so as to balance between news and advertisements.

The online advertisements should be made more attractive and should provide much detail of the products, services, brands and destinations they advertise so as to achieve customer loyalty and increase revenue from online publishing.

They should therefore develop more attractive newspapers and adopt presentation formats that are appealing to customers. They have to empower the capability of subscribers to optimize search engines to obtain information they want to read with much ease.

They have to increase traffic in their websites through search-engine marketing, website design as well as search engine optimization (American Press Institute 17). This will help its advertising businesses better reach their target customers.

They need to use other major websites such as Yahoo, Google, MySpace, Facebook as well as other major websites with powerful search engines which could help connect hard-to-reach consumers (American Press Institute 17).

The websites need to be more interactive so that corporate companies and individuals can order their daily newspapers online which can then be delivered to them in their locations or via mail. Printing quality newspapers and delivering to homes and institutions increases readership and customer loyalty to the newspaper.

They should use the websites to collect information on customers’ news preference and interests and therefore customize the newspapers to reflect the behaviors of the customers.

In addition, newspaper publishers which utilize the internet to distribute information should update news content on their websites more often (Graham and Sacha 36).

Newspapers have continuously developed and maintained social networks to help interact with consumers and achieve diverse sources of news content. However, they do little to achieve customer loyalty and create new audiences through their social networks.

They therefore have to identify consumer groups and develop online user communities. This will bring together consumers with similar interests and keep them engaged.

The target groups will extend their activities to paid search engines in their areas of interest. This could also increase circulation of newspaper copies via mail or through traditional sales.

By creating online discussion groups or communities, the newspaper company gets the opportunity to acquire user-generated content such as uploaded photos, written news articles and any other information content to increase its information sources (American Press Institute 24).

Newspapers highly depend on advertisements to earn revenues from published newspapers. Advertising is therefore an important element of value chain in this industry considering their contribution to revenue as well as financial sustainability of newspaper’s operations.

Newspaper publishers have to outsource more advertisement contracts and also increase their in-house collaboration with advertising agencies. Newspaper companies can use the internet to expand partnerships with large advertising agencies worldwide so that they are able to acquire local and international advertisement contracts.

Online advertisements presented on websites should provide for gift certificates from small or local businesses as well as rewards websites which offer coupons to customers so as to retain subscribers. This will add value to the products provided online as well as the website.

Local businesses would be able to use money-saving coupons in buying coupon advertising. The newspapers would also be paid through gift certificates which they can resell through their websites at a discount to customers.

These will eliminate the cost barrier to advertising especially by small business and therefore encourage advertising (American Press Institute 37).

Although newspaper publishers have adopted internet applications, they do not use the internet to advertise themselves. They sell their print newspapers to hotels and airlines at cheaper prices as a way of achieving international reputation and global brand so as to boost their advertising opportunities (Graham and Sacha 35).

They should use pop-ups to advertise their brand names as well as their advertisement space and also advertise on other established websites so that they can increase their virtual size. This will enable international companies easily know about them and contract them to perform international advertisements.

There is significant cooperation among companies in the media industry (Karla 638). Today, the newspaper industry is characterized by partnerships through content sharing and in organizing for information collection trips from far locations. They also make syndication deals between themselves.

These partnerships enable newspaper companies reduce costs of operation while focusing on ways of building their brands and core competencies as well as reinventing methods of creating value chains in their activities. Through content sharing agreements, they are able to reduce or cut completely the fees they pay to news wires.

They are also able to reduce risks by sharing costs among publishing partners. However, these partnerships are limited in activities. The partnerships would be more beneficial if they shared core technologies of news collection and production.

In addition, newspaper partners would increase their value chain if they could agree to use each other’s market channels. This would give them the opportunity to market their brands, products and advertisement space on their partners’ websites and provide links to their websites.

They would also be able to use other channels of marketing adopted by their partners including their newspapers.

In most cases, these partnerships are limited to their regions of coverage. They should extend their partnerships to international level to enable them acquire more diverse news contents and develop international brands.

By making partnerships with many newspaper publishers, the company is able to connect as well as touch every consumer including several businesses.

This would give the company an opportunity to reach consumers who want and are able to afford mass-reach advertising. The American Press Institute (1) describes these advantages as local information as well as connection utility.

Although newspaper publishers have adopted technologies that enable them efficiently and effectively collect and produce news both in print and online publications, most of them do not provide broad news content.

Journalists are able to gather news online by collecting information from websites and using internet applications to watch live events. This gives them the capacity to present accurate news without travelling to the points of where the events have taken place.

They also use mobile technologies and GIS systems to deliver information instantly regardless of the distance from the media house. User interface, advanced mobile as well as wireless networks technologies have significantly improved value chain in information gathering and delivery to media houses.

The development of kindle and e-reader has changed the way people access information (Graham and Sacha 40). GIS enables the transmitting of large amount of data in the shortest time possible from news wire or journalists collecting information from frequently visited locations.

However, news content presented by newspapers is less as compared to other online publishers including the non-profit generating websites.

They should be able to take advantage of the technologies available to present the highest-band-width information to consumers so as to be able to meet the wide demographic trends. This will enable the companies to better serve the information needs of every consumer group.

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