“Empirical” study on the Internet-marketing
for Small and Micro-sized Hotel Operators
Maki Kato (presenter)
James McMaster
Natasha Khan
Economic Impact of E-Commerce Strategies for Marketing Small and Micro-seized Tourism Enterprises
2
Basic structure of presentation
• Background and design of Research
• Field survey
Basic findings (Internet use ,Internet marketing
and occupancy rate)
• Experiment (Process, cost, and result)
• Summary and Conclusion
• Discussion
3
Background and design of
Research
Seminar in Fiji and Samoa
4
Background (E-commerce)
• Belief in 1990s: B2B e-commerce would lead to a radical change in the way that enterprises trade
• adopting ecommerce environment in a business are the nature of business, the extent of competition and regulatory environment, the costs of ICT deployment, amount and quality of human capital, and the firm willingness and adaptability to ICT(OECD, 2001). – Context difference
• difficulties by SMEs in Fiji in adopting ecommerce : lack of awareness to utilize IT; substantial hardware and software costs; expensive technical backup service; high training costs and communications costs, particularly the high charges for regular use of Internet (Raj, 2001).
¾Use of Internet was expected to reduce the disadvantage of small and geographically isolated Pacific islands?
5
Background (SMEs in tourism)
• Tourism is significant source of foreign
exchange, 22% in foreign exchange earnings in
1999 (South Pacific trade commission).
• backpacker market is important to Fiji as 19% of
all visitors to Fiji identify themselves as
backpackers (Ministry of Tourism, 2003)
• Backpacker accommodation is usually operated
by SMEs.
6
Research Questions
•
What is the current situation of Internet
use by small and micro sized local hotel
operators located in Fiji, Tonga and
Samoa?
•
How effective is the Internet as a tool for
marketing backpacker by small scale local
enterprises located in Fiji, Tonga and
Samoa?
7
Design of the Research
Fiji, Samoa, and Tonga
• Field survey
• Short seminar for sharing of preliminary
research finding and basic technical
training for e-mail use and web page
maintenance – participatory and action
research
Fiji
• Experimental web site marketing
8
Field survey
9
Definition and schedule
• Definition: Small and Micro-seized enterprise:
Number of employee: not more than 5 (micro) and between 6-20(Small)
Total assets not exceeding $30,000(micro) and between $30,000 and $100,000 (NCSMED, 2003)
In our research:
1) F$ 80 at maximum for person /night
accommodation, 2) targeting backpackers, and 3)
less than 30 beds
• Schedule:
September 2003~October 2004
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Sampling and Methodology
• Sampling
• not a random sampling targeting “traditional” tourist destination.
A total of 98 operators: Fiji (53), Tonga (24) and Samoa (21). • Almost a third of operators.
•
Methodology
On-site structured survey with questionnaire - 45 minutes to an hour to complete the questionnaire
• Limitation
Little business record Total 178 53 15 27 Yasawas/Mamanuca 12 25 Taveuni 2 21 Suva 2 10 Savusavu 7 31 Nadi 3 18 Levuka/Lomaiviti/Kadav u 3 17 Lautoka/Rakiraki/Tailevu 5 15 Coral Coast 4 14 Beqa/Deuba/Yanuca areas Sample Sampling Frame Area 11
Basic findings
• occupancy rate
Occupancy rates (percentage)
9%- 20% 21% - 30% 31% - 40% 41% - 50% 51% - 60% 61% - 70% 71% - 80% 81% - 90% 91% - 100% Don’t know 98 (100%) 21 (100%) 24 (100 %) 53 (100 %) Total 3 (3%) 1 (5%) 2 (4%) Don’t know 4 (4%) 4 (8%) 91% - 100% 7 (7%) 1 (5%) 1 (4%) 5 (9%) 81% - 90% 6 (6%) 2 (10%) 1 (4%) 3 (6%) 71% - 80% 14 (14%) 5 (24%) 2 (8%) 7 (13%) 61% - 70% 10 (10%) 4 (19%) 2 (8%) 4 (8%) 51% - 60% 23 (23%) 3 (14%) 5 (21%) 15 (28%) 41% - 50% 10 (10%) 6 (25%) 4 (8%) 31% - 40% 11 (11%) 4 (19%) 2 (8%) 5 (9%) 21% - 30% 10 (10%) 1 (5%) 5 (21%) 4 (8%) 9%- 20% Total Samoa Tonga Fiji Occupancy rate 12
Occupancy rate in geographical
difference
#* Operator with E-mail and Website Total Number of operator in that area Key: 9% - 20% 91% - 100% 51% - 60% 61% - 70% 21% - 30% 71% - 80% 31% - 40% 81% - 90% 41% - 50%
Occupancy rate not given
F Owned by expatriate 3 4 7 2 12 2 3 15 5 3 2 1*F 7*F 6 5F 4 12 8F 11*F 10* 9 13 14* 15F 16* 17* 18*F 19*F 21F 20 33 32 31*F 30F 29 28 27*NR 26 25 24 23*F 22 35 34 36 37 38 53* 52* 51 50 49 48 46 45F 44 43* 42 41 40 39 47
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Originating country and age of guests
*98 (100%) Total 4 (4%) NR 2 (2%) Pacific Islanders 16 (16%) Locals 5 (5%) Asia 5 (5%) Canada 13 (13%) USA 16 (16%) Australia 16.5 (17%) New Zealand 21.5 (22%) Europe 72 (73% )
Guests from developed countries
Operators having guests by age
10s 5% 20s 24% 30s 31% 40s 19% 50s 9% 60s 5% NS 7% 14
SMEs operators perception of Internet charge
39 9 9 21 No response 59 (100%) 12 (100%) 15 (100%) 32 (100%) Total 33 (56%) 6 (50%) 7 (47%) 20 (63%)
Charges are too expensive 26 (44%) 6 (50%) 8 (53%) 12 (38%) Charges are reasonable Total Samoa Tonga Fiji Perception of charges 15
Internet use (
Operators various
access to Internet by Country)
98 (100%) 30 (31%) 35 (36%) 33 (34%) Total 21 (100%) 9 (43%) 4 (19%) 8 (38%) Samoa 24 (100%) 4 (17%) 10 (42%) 10 (42%) Tonga 53 (100%) 17 (32%) 21 (40%) 15 (28%) Fiji Total No Internet Only Email
Email & Web
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Origin of Owner by accessibility to Internet
98 30 35 33 Total 2 1 1 Don’t know 1 3 1 Asia 3 4
USA & Others
1 5 3 Europe 13 1 3 9 Australia and New Zealand
13 7 3 3 Samoa 15 4 6 5 Tonga 39 17 15 7 Fiji Total No Internet Only Email
Email & Web Origin of Owner
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The reason operators don’t have website
100% 65 Total 6% 4 Non Response 20% 13 others 15% 10
All the above
5% 3 Little staff support
9% 6 Lack of infrastructure 25% 16 Too expensive 20% 13
Lack of technical knowledge and support
% Number Reason
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Occupancy rate and Internet
accessibility
Occupancy rate by Internet accessibility
0 2 4 6 8 10 12 11- 20% 21- 30% 31- 40% 41- 50% 51- 60% 61- 70% 71- 80% 81- 90% 91- 100% Email & Web Only Email No Int ernet
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Rate of occupancy increase by operators with
Webpage marketing
-33 Total -9 No response Unsuccessful Promotion 4Remained the same
1 increase a great deal
2 by 30% Successful Promotion 1 by 25% -1 by 15% -3 by 10% -12 has increased Group Frequency
Rate of Occupancy increase
60%mentioned that their occupancy rate has increased.
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Successful and unsuccessful website and
factors
61 – 70% 1997/Jan 004 F$ 1,500 IT Company US Taveuni Fiji 41 – 50% 1998/2004 free of charge Friend Local *marketing by Swedish Savai’i Samoa 41 – 50% 2001/Jan 2004 NZ $ 3000 IT Company Australia Vava’u Tonga Promotion 41 – 50% 1997/Jun 2004 T$ 150 Self Germany Nuku’alofa Tonga Successful 11 – 20% -$200 IT company Local Taveuni Fiji 41 – 50% 2003/Oct 2003 $600 IT company Local Coral Coast Fiji 51 – 60% 2000/2001 doesn’t know Local Vava’u Tonga 51 – 60% 2001/Aug 2004 $60 IT company Local Nuku’alofa Tonga Unsuccessful Promotion Occupancy rate Year of Web creation/upd ated Cost of initial website design Website developer Origin of owner Place Country 21Website development cost, quality, and occupancy
rate
51-60% -Yasawas Free of charge by 15% 17 71-80% -Nadi Free of charge has increased 16 81-90% -Nadi $800 has increased 15 31-40% C Vava’u No response by 10% 14 31-40% C Nuku’alofa Free of charge has increased 13 51-60% C Sava’ii $500 by 10% 12 31-40% B Levuka $500 has increased 11 41-50% B Nuku’alofa $120 by 25% 10 71-80% B Pacific Habour $90 by 10% 9 71-80% B Nadi No response has increased 8 91-100% B Yasawas $300 has increased 7 41-50% A Vava’u $3,000 by 30% 6 51-60% A Yasawas $2,500 has increased 5 61-70% A Taveuni $1,500 by a great deal 4 61-70% A Nuku’alofa $500 has increased 3 61-70% A Apia $1,000 has increased 2 91-100% A Nadi $2,000 has increased 1Total Occupancy rate Web design score Area Initial Website design cost Increase in occupancy rate No. 22
Operations on shared websites and impact on
occupancy rate
• The results indicate that 45 operators were
aware of being on shared websites, 25
indicated occupancy rates increases
* not all 98 participants are in web sites• Occupancy rate increase is varied form
90 % to 2 % including 5 in 40-59% and
8 in 10-19%.
• Yasawa is half in Fiji’s beneficiaries.
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Experiment
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Objective
• to measure the impact of a website on the
bookings of budget accommodation
businesses in Fiji through monitor and
evaluate the whole process of setting a
website for business
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Website creation process
• Sampling 3 operators either in Pacific
Harbour or Coral Coast
• Website design by USP webmaster and
professional photographer
• Peer review by Media colleague at USP
• domain name and hosting search.
• After 6 months, make linkage
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www.holidayfiji-backpacking.com
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6 months no change… so Promotion
• Keyword replacement for search engine
• Better linkage
Which Websites we should link for
cost-effective promotion?
¾
Research a few successful operators’ link,
and create same linkage both with public
and private sites including commercial
sites and FVB.
28
Cost for 3 operators
Professional photography
$1000
Web designer
$ 750
Domain name
$ 70
Hosting
$ 72
Linkage to other sites
$ 300
Total $2,192
29Results
11 16 13 24 31 54 60 0 10 20 30 40 50 60 70February March April May June July August
Number of Website hit
Report of enquires/booking related emails received by website operators
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Operators feedback and limitations
• Operators do not monitor and keep record regularly.
• One of the operators had
not checked any emails
or
replied to any emails. 139 unopened emails were found
in their email account, of these 35 were related to
bookings and enquiries
• Operators
expected dramatic increase in bookings
by
being on the
website in a short span of time
.
¾
The operators are interested to continue having this
website at the end of the one year experiment period
with paying the hosting charges and taking control of the
administration of the website.
¾
The operators also suggested some changes to the
website design to become more attractive to the tourist.
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Conclusion and Recommendation
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Summary and Conclusion
• Internet is effective for marketing of backpackers. Positive impact of Internet for occupancy rate both for individual and shared websites. • Currently, one thirdhas own website and use email, one thirdhas
only email and the remaining third without any Internet and/or email facility.
• 60% of the own website group (33) responded that their occupancy rate has increased. The occupancy rate increase varied between 10% - 30%. Some operators with own website did not show positive impact to their occupancy rate.
• The results indicate that 45 operators were aware of being on shared websites, 25 indicated occupancy rates increases. The rate of increase varied.
• Once a website is created,linkage is very crucial. Without linkage, we did not confirm significant increase of enquiries.
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Recommendations
• Awareness raising: for instance, development of a basic self-help manual to teach operators how to check and reply emails and how to develop an effective website.
• Fiji Visitors Bureau should include more SME operators on their website. This should be done free of costs.
• Tourism key stakeholders in each country develop a quality assurance database of professional web site designers, shared web site promoters, and training institutes.
• For designing websites, operators utilise professional web site designers, particularly if they have little IT knowledge. For cost effectiveness the SMEs could develop shared websites with at least two or more operators.
• There should be some basic standards for the hotel service that should be regulated by a national body. Good websites might attract guests, but if they leave with a bad impression of place, the word of mouth in real and virtual community could lead to negative impact on the operation.
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END
