Tourism and information technology in developing countries

The Information Economy Report 2005 (UNCTAD, 2005) reveals a number of issues that need to be considered when studying developing countries. The tourism industry

52 tends to be fragmented and heterogeneous, and includes a great number of small and medium enterprises (SMEs) that could be better organised and promoted (UNCTAD, 2005). The report emphasises that according to WTO, 85 per cent of accommodation enterprises in developing countries are small to medium sized. It notes that small businesses such as hotels have often been excluded from global distribution channels due to the high costs of entry, and that developing countries often depend on international and foreign tour operators in order to be included in the international tourist scene:

Before the advent of the Internet, local hotels often had no other option than to sell their room capacity at a low cost to well-known tour operators, ensuring a small but stable amount of revenue for them throughout the year. As a result, the destinations marketed to tour operators may have gained in popularity, increasingly in the form of low-price package vacations, encouraging the development of “mass tourism”, but earned very low returns. (UNCTAD, 2005, p.158)

However, the most lucrative elements of developing countries’ tourism, namely:

“marketing and the procurement of customers, international transportation and food and lodging” are dominated by western-owned vertically integrated global networks (Brohman, 1996). For instance, in the electronic distribution channels, the most significant element of tourism marketing, some of the IT companies operating Internet based tourism technologies such as Galileo (Blackstone Group/Cendant, Avis and Budget Days Inn Hotels), and Amadeus (British Airways, Qantas, Lufthansa, Air France, and Iberia) have a great influence over tourism distribution (See also Robinson, Heitmann, & Dieke, 2011).

Researchers have shown that the tourism sector largely depends on the availability and conditions of air transport (Diaz, 2001). Pearce, Reid and Schott (2009) note that with the rapid technological change and an expanding range of available distribution channels, one of the most frequently purchased travel product online is air tickets.

However, as noted by Brohman (1996), most developing countries are not in a position to take much advantage of the available distribution channels because of the way their air transport sector and tourism sectors are structured. In a paper presented at the symposium on tourism services, Diaz explains the situation of international air transport for developing countries. He highlights that, air transport, in particular international air

53 transport, is a means used by majority of tourists arriving in developing countries.

However, as noted earlier, air transport and all segments of the tourism industry supply (notably CRS/GDS (discussed in section 2.3.1 Electronic distribution), tour operators, travel agencies, hotels etc.) are dominated by few integrated players in the developed economies (Britton, 1982; Diaz, 2001; Pearce, 1989). Consequently, tourism suppliers in developing countries are at a clear disadvantage. The travel agencies from tourism destinations in developing countries are almost entirely dependent in their linkages with the dominant suppliers. Often the air transport sector or the airlines in developing countries are not in a position to compete effectively, nor to invest heavily in ICT systems in order to gain a fair share in the market. For instance, the Maldives as a successful emerging tourism destination largely depends on European tour operators. A large portion of tourist arrivals (inbound tourists) depend on package tours arranged in one resort (one island) accommodation (Shareef & McAleer, 2008). The Maldives has not been able to strategically manage and sustain an independent fleet of an international airline and has not managed to establish functionalities of tour operators independent to the international dominant suppliers.

Telfer and Sharpley (2008) highlighting tourism domination by Western-owned global networks, argue that in-country tourism systems themselves are dominated by local elites hampering the equity benefits of tourism. Jamal and Lagiewski (2006) indicate that a similar situation exists in the Maldives whereby the country depends on international and foreign tour operators which encourage “mass tourism” into the country, and where domination by business elites restricts equitable distribution of tourism benefits within the country. Reimer (2007) describes the relationship between powerful government authorities and the business elites as the “one hand washing the other” (p. 372). According to Reimer, government authorities offer lucrative business opportunities, whilst the elites reward them with gifts. He also notes that using tourism association(s) as a means of formal grounds to establish them strengthens such a relationship. For instance, eStandardsForum (2009) makes accusations of cases of corruption in the Maldives, and notes that the former President was engaged in nepotism and siphoned off profits from the tourism sector.

54 2.3.6 Section Summary

ICT and e-business play a key role in promoting tourism products and services globally especially for DMO’s and tourism suppliers in developing countries. The literature review indicates that, despite the heterogeneity and dynamism experienced by the tourism industry, ICT and e-business have enabled a smooth progress in the industry by transforming the business models and processes much more quickly and more substantially than those in most other B2C arenas (Werthner and Ricci 2004). However, a number of scholars agree that developing countries as tourism suppliers face a myriad of issues in using ICT and e-business given the rapid and substantial transformation of the various processes of the tourism industry.

Electronic distribution being one of the main processes of the tourism industry, research has shown the need for a strategic approach to distribution. The discussion emphasises the importance of developing a viable approach to electronic distribution by leveraging the opportunities offered by ICT to tap into the global tourism marketplace. Many researchers highlight how organizations engaged in tourism activities have developed web-based applications to complement the distribution of their products and services.

They also urge tourism organizations to position themselves in the electronic marketplace in order to compete in the global marketplace and warn those who fail to do so.

Researchers emphasise that online pricing is one of the critical factors of electronic distribution and advice industry participants to have a consistent pricing strategy. They note that presenting online prices on participants’ own websites is one of the most effective ways of attracting customers, leading to more profitability.

Research also emphasises the fact that ICT has allowed the industry to address customer needs more strategically, and shows that customer satisfaction has a positive effect on profitability. Researchers emphasise that customer satisfaction leads to loyalty and retention. Researchers identify that interaction between tourism organizations and customers is important to address customer needs, which are critical for customer satisfaction. Several researchers have focused on categorising and analysing websites and note that website quality is an important antecedent to satisfy customers. However,

55 they point out that some of the organizations host websites similar to other organizations paying less attention to managing it, reflecting a bandwagon approach.

Another critical approach to marketing using ICT and e-business is to develop the websites of the DMO. Researchers and especially international organizations like the UNCTAD conclude that DMOs play a central role in marketing a destination.

According to the UNCTAD (2005), ICT also helps destinations to market their product worldwide. Further they note that the increase in the number of the Internet users wanting to obtain tourism-related information, coupled with the growing demand for new travel experience, opens a huge opportunity for developing countries.

In conclusion, despite the fact that the importance of ICT and e-business in the tourism organizations is widely acknowledged in the literature, little is known about ICT and e-business is used in tourism organizations. This study aims to fill this gap in the literature, taking into account the elements identified in the tourism literature. The dynamics of ICT and e-business presented in the literature highlight important areas that need to be addressed by the tourism organizations.