Supporting Industry

For participant tourism organisations contemplating online business, issues regarding ICT infrastructure and the standard of local providers were a priority, eliciting 48 comments. The ICT sector comprises many forms: logistics, infrastructure, solution providers, information providers, online financial services. Respondents to the study said that secure online financial support from the local banks was not robust enough to encourage full online funds processing. Other comments noted that regional web developers did not understand the travel industry and were indifferent to sales promotion opportunities. Overall, the industry representatives were not convinced of the capacity and commitment of the IT firms. For web design, interviewees preferred freelance or global providers.

140 In Saudi Arabia, as elsewhere, trade and commerce are interdependent and the least capable provider in a particular sector often brings down its capacity and ability to engender growth. In this case, substandard regional ICT infrastructure impacted the tourism industry and its ability to compete in the online commercial environment. Participants said that they did not see progressive ICT organisations within the country that could guide them to better understanding and utilisation of e-commerce innovation and infrastructure; nor could they envisage them as being capable of providing support for even lesser technologies.

Dedicated Websites

A few of the participants were aware of the competitive advantage of full online commerce and agreed that it must be pursued for long term growth of the firm. However, local providers were not capable or available. Whilst tourism firms could access global e-commerce support, the largest travel industry contingent, Hajj and Umrah, lacked that

support. Although parts of the Hajj package were conducive to online sales, such as air

transport and to a certain extent accommodation, pilgrims required a full travel service that could also observe religious sensibilities. Placing this logistical complexity entirely online was plausible to an extent. However, secular tourism was another matter. P1 added:

“For market advantage, we would have no problem in establishing (e-commerce) immediately. If you know a firm that can deliver this, please let me talk to them. We usually seek out new technologies. For example, we contracted a global provider for a customer relations system, but we cannot find local IT companies that can help us in any significant way” [P1].

The absence of dependable local e-commerce providers does prevent Saudi tourism firms seeking innovation. Thus, travel agencies and tourism organisations use international providers. One participant, P4, had experience with several Saudi travel agencies, and was knowledgeable about the technology limitations in the country. Considering this, he had formed a partnership with an Indian provider:

“We understand that international firms offer superior and cost-effective solutions. We selected one from an international exhibition. Also they understand our needs as a travel agent, we speak the same language [business language] . . . we retain commercial intelligence and utilise their products” [P4].

Furthermore, the web developers, programmers and designers who work for the local firms are expatriates. As the majority are not fluent in Arabic, the resultant websites

141 are not attractively designed to induce customer purchases. To overcome this issue, P5 said that his corporation had developed its online booking website in Canada. However, those who produced the website had an Arabic background. The ability of the global provider to source professionals knowledgeable in Arabic social norms to service an Arab corporation shows that the expertise is available. However, the Arab developers have sought employment elsewhere. P5 noted:

“We developed our online booking through a Canadian company but the developers were Arab. This is much better than contracting a Saudi company because most of the developers are Indians, which causes many implementation problem. Also, surprisingly the final cost of working with foreign providers turns out to be cheaper” [P5].

Online Booking Providers

Whilst the larger firms of some participants in this research were knowledgeable about global outsourcing of their ICT needs, other organisations were not. There is thus an opportunity for Saudi entrepreneurs to access tailored ICT capability from global providers and distribute it to the local market. P11 supported this initiative, questioning the lack of interest in international firms to access the large available Saudi market:

“I have never met someone from an ICT company that offered an online booking site. Our agencies need ease of access to technology because we focus on business but not development . . . I remember a tourism international conference where a speaker talked about the impact of online agencies on (shopfront) travel agencies, but nothing about operating e-commerce” [P11].

Other interviewees mentioned the high cost of local ICT providers in implementing full e-commerce successfully, an issue that is discussed later in this section of analysis. However, P6 suggested that Saudi organisations may bypass local ICT issues by using common facilities, mentioning an international online booking service as an example. An approach to P6’s firm by a local online booking agency, Arab or Saudi, he said would be welcomed. An Arab website could be available to local tourism organisations to upload their packages and prices. P6’s firm is licensed by the Ministry of Hajj to offer Hajj travel services for a thousand pilgrims annually. He said:

“The cost of providing a dedicated online booking service would not be justified for a thousand people, but an offer from a local online booking firm certainly makes sense . . . I am ready to go in this case” [P6].

142 Information Providers

The main barrier against a common online Saudi booking provider, as P6 suggests is the lack of information produced by the industry. The participants noted that no booking portal can operate without reliable information and performance guarantees. Potential customers demand full information and certainty about their travel arrangements, standard of services, details of locations and times, and some foreknowledge of the experience they are purchasing. This information is available from shopfront agencies where plans can be discussed in full with a knowledgeable agent who advises on settling the travel arrangements, and adjusts the itinerary if required. This detailed planning and information process is a norm for Arab business culture, particularly in service delivery.

For global tourism, travellers also have access to full information. Global online booking providers interlink with vast networks within the tourism industry worldwide, offering detailed information to customers about destinations, accommodation, air travel, tours and lifestyle experiences. P4 commented on the success of international online booking providers, noting that the depth of information from their global networks is the driver of their success:

“Let us talk about (global booking agency) as an example, because I consider it a travel agent. The tourism information includes car rentals, packages, air lines . . . that assisted (the agency) to grow . . . their task was only to connect with these providers and operate their business” [P4].

For instance, more information about the locations of the various attractions in Jeddah would assist the tourist to select relevant accommodation. It is unlikely that this tourist would be accommodated near the attraction, as this type of information is not available in the Arab web environment, as P2 commented. He added that his organisation’s adoption of virtual marketing had to be superior to that available in the local and even the global market. Thus, there is a need for supporting industries that can offer complex and timely information on destinations. He said:

“We are missing the destination websites that we could link to for detailed information. If they were available, it would just be a matter of connecting to them. If we had sufficient detail on travel and accommodation for destinations that travellers are interested in, pictures of the accommodation and attractions, and information on access, this would assist us move to online booking. We cannot just consider e-commerce as a booking engine, our online presence must be an informative integrated customer service website. We would love to

143 implement technology with a high degree of certainty of success; however, the information links are not there to begin” [P2].

Providers’ Tourism Knowledge

The discussion to this point highlights the needs for ICT provider specialisation, another limitation for the Saudi tourism industry. Participants frequently stated that it is not enough to engage an e-commerce provider, but that the provider had to understand the tourism industry to the extent that its services could be marketed well online. P3 had many years of experience in hotel management and stated that the outsourcing firm for e- commerce must be flexible, and the system employed for e-commerce must be adapted to the client and respond to changing circumstances. P3 also noted that, although his firm had made many attempts to use local ICT providers, they had all failed and been replaced by others with offshore services. He said:

“We tried server information systems made by local vendors, they were not reliable enough. The difference between the locals and the ‘big name’ providers is that locals rely too much on tailor-made solutions, whilst the others focus on an industry and keep improving their services. Systems improvement adds value for the user and allows us to offer product improvements which work brilliantly . . . but locals want us to team with our business so they can computerise it” [P3]. Similarly, P2 did not like to be distracted by ICT staff who are uninformed about the industry. He said that a systems provider should understand the firm’s processes and not have to rely on staff for information:

“We need to know which companies are capable of creating and e-commerce website without constantly requiring guidance from our employees. I will not allow any provider to involve us in the implementation work as we have our own duties and cannot spare time for this purpose” [P2].

Outsourcing Options

Some participants preferred the generic, off-the-shelf solutions, as their management believed that this form of e-commerce solution minimised risk of failure and was cost-efficient. Other participants preferred customised systems, or purpose-built solutions. The third group preferred proven freelancers, as they were disinclined to approach industry leaders. The last group have used global web developers quite successfully. But across all the groups, participants were not confident that their providers could take their online presence to the next step for e-commerce.

144 The research literature suggests that the capacity of ICT providers and the support industry underlies the success of e-commerce adoption in any business sector (Rodrigues 2002, Holloway 1988, Internet Retailing 2008). As discussed in the literature, the 1990s tourism sales model comprised travel agencies and computer network providers working through dedicated accommodation and travel wholesalers (Rodrigues 2002, Al Rasheed & Mirza 2011). The sales model changed as systems moved to the internet and linked in the form of business to business (B2B) e-commerce, described by participant P2: ‘the support from our systems providers assisted our move to work on the internet’.

P3’s organisation, a chain of Saudi hotels, had tested two customised booking systems offered by local providers. Neither was satisfactory and a global provider was later appointed to implement the service. He said that the disappointing experience of the local providers and the greater complexity of the e-commerce applications would make global providers with their proven e-commerce systems the only choice. He added:

“There is an English saying, ‘why reinvent the wheel?’ My business is not new and there are many adequate systems for online reservations. Why spend years of effort starting from scratch? Honestly, from my 22 years of experience I know that proven systems applications grow business” [P3].

E-commerce presents challenges for tourism industry members who prefer not to depend on intermediaries, or wholesalers, to sell their services. However, to sell directly to consumers (B2C), some companies prefer to work with free lancers who can develop a specialised system to meet client needs. Frequently, the decision to use freelancers is based on competency and value for money. P2 said:

“I am looking for someone who is competent in developing websites. I do not seek website firms because most of them quote me different prices. A non- technical manager like me cannot decide whether a company offer is reasonable. Even when I find a freelancer who can offer me exactly what I need, two issues matter: one is reliability, particularly as most of them are expatriates; the second is professionalism, which is not available in our local market” [P2].

This view indicates the issues encountered by smaller tourism firms that lack familiarity with the supporting industry’s providers. Finding a competent website developer or booking service system is difficult; sifting through their offers leads to further issues of comparison, with technical jargon and conflicting claims.

145 Competency Issues

Although the interviews with the participants were conducted separately, most participants’ views were complementary. Further, the information of one participant tended to enlarge on and support the view of another. Consequently, the previous quote by P2 highlighted another aspect: that of the general opinion of the participants, and thus the Saudi tourism industry, towards their local ITC providers.

Participant P3 was a hotel chain representative and, as noted, accepted a booking system by a local ICT provider for testing. The provider installed the demonstration system for staff to load and trial. However, the test was disappointing due to the transactions speed. He said:

“A local company came to us and demonstrated their system. I was not convinced because the system was slow; you needed 15 minutes to upload a few items of information. There was no advantage in the system they offered. We are in the age of speed and the demonstration we saw could not cope with customer needs” [P3].

The competency of the local ICT industry support is perhaps the greatest barrier to tourism development for Saudi Arabia. The ICT barrier is probably the gravest of threats to private sector growth in Saudi Arabia. The participant noted that this lack of support underlies private sector reluctance to compete online, let alone to embrace e- commerce. Only those organisations with international affiliations can access their partners’ global standard e-commerce capabilities. P3 said:

“Honestly, the issue for e-commerce in Saudi is lack of ICT support. Getting the right support is very hard in our county. Once a provider has a contract, the level of support diminishes. Thus any local company would know that is why we moved to global providers” [P3].

Participant P1 was a representative of entertainment and accommodation in the tourism industry and his corporation invested heavily in ICT, without local issues. He added:

“We employed a well-known local IT solutions company. They promised to make fundamental changes in our work practices. We paid this company handsomely, after payment, the company contractor vanished. They did not deliver on their promises” [P1].

146 Participants in this research commented on the cost of ICT providers in Saudi Arabia. As noted, there was reluctance by the sophisticated participants to employ local ICT support firms due to a perceived lack of competence. However, cost for these services was a separate issue. Participants linked the size of their business to their ability to justify the outlay for elaborate websites and online services. Small and medium sized organisations were not able to afford high cost e-commerce solutions. P7 noted:

“I hope to find a company that offers web solutions that meets the requirements and the size of the business. For example, an event management company like mine with a turnover of a quarter of million Saudi Riyals annually will not be able to contract an e-commerce site for SR50,000, but a larger company with sales of two million can easily afford this” [P7].

P6’s organisation used an online portal Yosr (رسي,), which assists many Hajj

providers to organise their client travel data from pilgrim registration to the finish of the

Hajj rituals. The annual cost of the portal is reasonable because development costs are

shared by the Hajj travel providers. P6 added:

“We had an ERP [enterprise resource planning] information system specified for our company. It was fine for our needs at that time, but the annual cost was prohibitive. However, when we moved to Yosr, technological advances were

absorbed by many firms at reasonable prices because it is available for many Hajj

travel providers” [P6].

Participants also linked quality with cost, as higher quality deserves higher value. P3 noted:

“IT companies inflate the costs in their quotations to build a website which offers online sales, I do not why . . . even testing a trial version involves a high cost. . . . Actually I searched for other services and I found much better solutions but they would cost us 10 times more . . . you should keep the cost in mind. Research is a critical factor for websites” [P3].

Online Payments

To adopt e-commerce, online payment is a key issue for tourism organisations in Saudi Arabia. All participants mentioned the importance of the availability of payment channels on the internet. There were statements to the effect that the local banking institutes do not allow payment providers to be connected with e-commerce websites. Participant P4 argues that there can be no e-commerce without online payments, and these services are not available within the Saudi financial industry. He noted the perceived risk of online financial transactions with global payment engines, stating:

147 “I will not upload prices and packages online without purchasing facilities. This is a real issue in Saudi Arabia. Local banks try to offer online payment via credit card, but nothing makes sense. In this case the customer still has to visit our branches, this is not online booking . . . also I cannot contract foreign payment providers that do not have local agents because I do not like to get into judicial matters” [P4].

He illustrated this statement by referring to a colleague who had started his business with an online booking site contracted with a foreign online payment provider. The business prospered for the first few months, and then the payment provider was asked for the resultant funds. The provider had disappeared and the matter amounted to fraud. Similar anecdotes affect the attitude of business owners toward online commerce who return to the local financial industry for assistance.

P2 concurred in this view of global finance managers regarding online services. Regulatory and logistical restrictions on funds flow between tourism industry