Theme 1: Perceived Relative Advantage

Participants generally acknowledged that their firms should adopt new marketing strategies offered by ICT, particularly when there are emerging markets for the tourism industry such as e-commerce. All interviewees noted the use of ICT, the internet and e- commerce for a number of purposes, which can be grouped variously under the sub- themes of cost management, time management, productivity, customer service, and new profit centre. The key findings identified within each of these sub-themes are as follows.

5.5.1.Cost Management

Based on frequency of mentions during the interviews, cost reduction is not seen in Saudi tourism as a significant advantage of e-commerce adoption. However, for the single e-commerce practising firm, reducing costs was a critical advantaged derived from their move into enhanced e-commerce, as illustrated by this quote.

“We try to reduce the use of the global booking systems, which charged us for every transaction per segment of route, for instance, Jeddah to Riyadh is a segment. We were paying about SAR 350 million ($AU94m) annually for these services. Because of excessive costs, we moved to internet booking. We also plan to launch a mobile booking function and to use kiosk facilities for our booking. We can then reduce the number of branches both in Saudi and internationally . . . it’s all to reduce the cost” [P10].

The factor of cost management of e-commerce functions was therefore not a priority for the other participants; in fact the project cost for establishing e-commerce may have been a deterrent if the existing market conditions were considered satisfactory.

105 On the other hand, cost management of physical functions, as P10 noted in a desire to close branches, is also inherent in e-commerce.

5.5.2.Time Management

The recurring frequency of this sub-theme (12) in participant responses indicated its critical importance: all participants commented on time savings through ICT usage. Comments included reference to product preparation and publishing and business process automation. For one participant, customer service would be streamlined through e-commerce:

“Customers require a range of information, frequent updates and often change or refine their travel decisions so that our staff are continually providing answers and emailing information. I think we could save considerable time in servicing these customers once we provide online booking in a website, which we are currently planning” [P 2].

Thus, time management was generally acknowledged as a factor in pursuing ICT and e-commerce strategies, whether through administration, business-to-business communications and data transfer, or through e-commerce.

5.5.3.Productivity

The majority ofparticipants considered e-commerce as a tool that would enhance their productivity, particularly in improving work processes. But there decision to move or contemplate moving to e-commerce was not entirely made out of the firms’ own volition. The government required all businesses involved in Umrah religious travel to

operate online and encouraged greater adoption of e-commerce in the travel and tourism industry. There are about 40 Umrah agents licensed by the Ministry of Hajj (pilgrims’

affairs) and they are required to administer to each pilgrim from arrival at Jeddah airport until the end of pilgrimage, which may end with a holiday in Saudi Arabia, or return home. Umrah agents provide a range of products that are offered to the agents’

international networks of dealers. The dealers offer packages based on these products together with travel to Jeddah. On acceptance, the dealer obtains a special Umrah visa

for each pilgrim from the Saudi Ministry of the Interior, and advises and pays the Umrah

106 The religious travel system has built up over centuries and is complex. At this time the Umrah agents are involved with four organisations which together provide the

pilgrimage and the numbers of pilgrims involved, approaching 4 million each year, was the impetus for the Ministry of Hajj adopted an online system, (عاخﻣ, Makha’a). There

are five Makha’a Internet providers to serve the Umrah agents:

“We continually update our Makha’a website with prices and packages. The

(international) dealer sends us a request for a certain number of pilgrims and payment through the Internet. The conditions of our contract with the Ministry of Interior include permission to approve inclusion of the pilgrims to Umrah and the

numbers of pilgrims are also referred to the Ministry of the Hajj. We could not

productively administer this trade without the online system” [P3].

As potential customers increasingly use the internet to scout for information and compare prices, other participants see this as an opportunity to both improve their productivity and improve their marketing. For instance, databases can be used to find trends in travel arrangements preferred by customers and to use these for market segmentation. Customer information and industry-wide data can lead organisations to consider direct marketing programs through email or social networking sites. These are considered to be avenues of marketing which can be explored by individual organisations to discover which profitable approaches. One study participant said that he had no information on e-commerce or how to enter the market:

“Once I’m convinced that marketing my firm’s products through the internet is useful and productive, we will adopt it. The problem at the moment is that no one has approached our firm and explained how it could improve our business; if this was set out as a project we would accept it” [P1].

Another participant noted that the internet is always available and enhances productivity:

“Our decision to go online is influenced by the 24/7 availability of services . . . the fact that the information we need is always available allows staff to undertake more transactions” [P2].

Productivity was a high priority for the participants, and direct quotes and inferences from the transcriptions continually address issues of productivity that could be addressed through ICT in general: updated and primary information, price comparison, allocation, ticketing. Productivity was mentioned often in the interviews (27 times) as a

107 probable advantage of adopting e-commerce, however, the participants were not convinced of this enough to use it as a motivating factor.

5.5.4.Customer Service

All participants acknowledged the need for good customer services to attract and retain customers. They collectively voiced the view that customer service represented competitive advantage and that e-commerce presented a unique approach to offer a high standard of services. P10, the B2C e-commerce adopter commented:

“The massive number of calls into our customer service centre prompted us to offer online booking services through e-commerce. There are so many people calling the centre that we can’t serve even four per cent of our customers. We have automated software monitoring the number of callers and there are actually 850,000, almost a million calls per day whereas we can answer only 23,000 to 27,000 per day. This is intolerable, so we had to develop some other system to answer the huge number of callers” [P10].

Another organisation (P4) is using a third party outsourced provider, a business to business system. P4’s management contracted a provider to consolidate all their agency services in a single online portal to manage external relations with customers and other firms, and internally, to manage office procedures and business processes such as customer databases, human resources, finance and marketing functions. He said:

“Another function of this outsourced system [B2B online] is that it allows customer services customisation. We can determine how often a customer visited a location, their enquiries about other locations, information about family preferences for attractions and accommodation. Using this information allows us to target packages and send the customer information to suit their needs. I am sure this will make our customers feel more comfortable with us” [P4].

However, another participant considered that shopfront services provide better customer services than online booking, e.g. P5 said:

“What prevents us from simply using a website for all our services such as those offered by (xx.com) is that the user has to be aware of everything: timing,

destinations, appropriate airline services and acceptable accommodation. In a shopfront store, we can advise the customer and tailor the travel package to specifically suit each person, with fewer issues regarding the logistics of travel. This is better customer service” [P5].

108 There is an argument for individualised travel advice which complements, rather than replaces, e-commerce in customer services, a factor of concern with participants (reported in 20 comments). This supports the argument that good customer service from e-commerce can lead to customer satisfaction (Turban et al. 2010, Schneider 2008, Laudon & Traver 2009)

5.5.5.=ew Profit Centre

In entering into e-commerce, firms can service both local and global markets, allowing potential customers to access travel information at any time. This was a perceived benefit for many participants:

“I see that e-commerce leads towards higher turnover and thus greater profit. We hear about entrepreneurs who have built up an excellent business over the Internet. Global companies in delivery and online booking went to online services because it increases their revenues and boosts their business network . . . but here in Saudi we have not started this yet” [P1].

A profit centre based on e-commerce can use new products such as mobile ICT platforms to enter new markets, or extend services to target different markets. P10’s organisation which fully adopted e-commerce is pursuing these opportunities:

“We have a plan to improve our booking system to offer greater specialisation . . . this will include services for Hajj pilgrims, Umrah pilgrims, business travellers,

and students . . . this way we will increase sales through reaching a greater potential market” [P10].

5.5.6.Summary

Perceived Relative Advantage of e-commerce utilisation by the tourism executives in Saudi Arabia, according to this analysis, is predicated on sub-themes of achieving productivity and customer service, with an awareness also of the marketing implications of the firm’s continual presence online. As the majority of firms did not have an online strategy, cost effectiveness was mentioned as a factor only by those that depended on online sales. A similar response was received from participants regarding e- commerce, inasmuch as the others were unaware of many aspects of online trading.

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