The Tourism Industry

1
The Tourism Industry

• Tourism is based on difference
• Leisure activities presuppose their opposite,
  namely the existence of regulated and organized
  work.
• For tourists the visited places are free of
  work, services are supplied which free the
  consumer from the daily burdens.
• The strict time constraints imposed by working
  relationship are released tourists live within a
  different time frame.
• Tourism places are places, where tourism
  attractions are assumed to be unique, different
  from the everyday environment.
• Tourists have to travel to the place of
  consumption
• Tourists are not able to test the product in
  advance Information is the only means, which can
  close this gap.

2
Characteristics (2)

• The service - the tourism product is consumed at
  the time it is produced. The product is based on
  social interaction between the supplier and the
  consumer, where the quality of the product is
  mainly defined by this interaction. Consumer part
  of production.
• Tourism is labor intensive, which will increase
  the costs of tourism services on the long term,
  at least compared to the other areas of our
  economy.
• Tourism is very sensitive to changes in private
  household incomes (no primary need). It is in
  direct competition to other products in the
  household income basket such as books,
  newspapers, entertainment, but also electronic
  products.

3
Characteristics (3)

• Tourism is an umbrella industry - containing a
  set of interrelated businesses, involving travel
  companies, accommodation facilities, catering
  enterprises, tour operators, travel agents,
  providers of recreation and leisure facilities
• Tourism is an important vehicle for regional and
  national development planning and strategies -
  also in industrialized countries (see also the
  respective programs of the European Commission).
  This is due to its job creation potential and the
  rather low entrance barriers compared to other
  industries. Tourism activities can be designed in
  such a way, that it respects environmental,
  social and cultural constraints.

4
Definition
And international - domestic inbound - outbound
5
International Tourist arrivals
source WTO
And International domestic - 110 - in 1992
503 Mn internat. and 4.875 Mn domestic
6
International tourism receipts
receipts expenditures of international inbound
visitors including payments to national carriers
for international transport include any other
prepayments made for goods/services received in
the destination excludes international fare
receipts Tourism receipts on 3. place in world
exports (after petroleum and petroleum products
motor vehicles, parts and accessories)
7

Europe is declining. East Asia/Pacific grew from
a share of 1 (1960) to 14 (1995).
8
Economic Importance

• Based on statistics of WTTC (Wolrd Travel and
  Tourism Council).
• Takes into consideration also third party
  suppliers (construction, investment,
  telecommunication, banking) and governmental
  expenditures - with specific weights.
• Difficulty travel and tourism not a own category
  in national statistics
• looks at GDP - Gross domestic product (consumer
  expenditures, capital investment, government
  expenditures and foreign trade), jobs,
  investments, taxes
• open debate between WTO, WTTC, national and
  international statistical bodies

9
WTTC statistics (1)
WTTC travel and tourism - world biggest industry
10
WTTC statistics (2)
11
WTTC statistics (3)
12
Exogenous Factors - 1 (WTO)

• economic and financial developments tourism is
  income sensitive with different elasticity for
  different regions.
• 1 growth in private consumption leads to no
  change in tourism, whereas a growth of 2,5
  results in a growth of 4 in travels spending.
• Exchange rates are crucial 5 drop (or rise) in
  the relative cost of travel abroad results in a
  growth (or fall) of 6 to 10 in tourism
  movements.
• The increased flexibility in work time will lead
  to more shorter vacation.
• demographic and social changes the main tourism
  generating countries are aging, leading to
  increased travel of the relatively high income
  group (between 35 - 55 years of peak earning
  years).
• The groups of "singles" as well as of women are
  of increasing importance.
• Relatively high unemployment rates in developed
  countries have also been taken into consideration
  as a negative factor.
• Technology this is not only related to IT, but
  also to advances at decreased cost in
  construction and manufacturing, especially in the
  transport industry.

13
Exogenous Factors - 2

• Infrastructure, equipment and facility
  investment limiting factor for travel and
  tourism. For example, airlines will only be able
  to finance 40 of their investment needed for a
  renewal of their aircrafts. In addition, airport
  capacities are in many cases inadequate for
  supporting further growth.
• Political / legislative factors deregulation as
  well as privatization strategies are intended to
  break down barriers for entry in travel and
  tourism. It should be noted, that this has not
  yet produced the foreseen growth in the former
  states of Eastern Europe
• Environmental issues The growing awareness of
  environmental issues is putting an increasing
  pressure on suppliers and destinations.
  Environmental impact assessment will become
  crucial. But appropriate measurements will
  contribute to a sustainable development.
• Safety this constitutes a constraint for the
  development in specific destinations, many
  outbound countries in the Western hemisphere show
  a high sensitiveness in their travel behavior.

14
Key market forces (WTO)

• changing consumer behavior in 1995 the
  non-mainstream tourism represented approx. 5 of
  the total tourism demand, with growing tendency.
• increasingly varied product development, finely
  targeted product marketing.
• globalization tourism is becoming a real global
  business, where the domestic supplier has to
  compete with long distance destinations. This is
  accompanied by a concentration process.
• marketing the success products will depend on
  extensive and targeted marketing, leading to the
  growth of new distribution channels. There will
  be more destination focus on image.
• human resources puts heavy emphasis on educated
  and trained personnel, increasing average wages
  and salaries. Tourism will have to compete with
  other service industries which have developed
  well suited training programs, and are offering
  higher salaries.

15
Prospects

• There will be no slowdown in the growth of
  international tourism,
• reaching 692 million in the year 2000,
• more than 1 Bn in 2010
• and 1.6 Bn in 2020.
• This represents an annual growth rate of 4.3
  1995 - 2020.
• Corresponds to 7 of the worldwide population,
  leaving still a potential for further growth.
• Long haul tourism will increase (decreased costs,
  improved infrastructure, technological progress
• its share will rise up to approx. 24 in 2020,
  compared to 12 in 1994.

16
Growth perspectives in different regions

Region

Inbound

Outbound




Europe
America




East Asia and the Pacific

()?

()?




South Asia
Middle East








Africa
Overall




below average - up to 3.5 per year
average - 3.5 - 5.1 above average
17
Market shares in 2020

18
Trends in consumer behavior (2)

• From mass consumption with production oriented to
  consumer oriented
• Segmented and individualized postmodern tourist
• Shorter time spans between booking and arrival,
  more holidays
• Distinctions between work and holiday diminish
• Governance of the Special / Unique
• Dominance of packaged tourism - decreasing, but
  in 1993 in UK 63 of outbound holidays sold as
  packages - parallel segments
• Product competition to channel competition
• From consumer oriented to consumer driven - mass
  customization new role of travel agents

19
Structure of tourism market
Consumers
Tourist

travel
NTO
Intermediaries
agent
outlets
government
bodies
tour
RTO
operator
CRS/GDS
DMO,
Planners
Administration
incoming
LTO
agent
hotel
chain
Suppliers
Primary
other transport
Airline
supplier
20
Primary Suppliers (1)

• Basic product suppliers such as accommodation,
  catering, or entertainment.
• It is by far the biggest group, with
  accommodation facilities as being the largest
  subgroup. In 1995 there existed 12,3 Mn rooms
  worldwide.
• Mostly SMEs.
• In EU HoReCa sector (covering hotels and other
  accommodation, restaurants, canteens and
  catering)
• 95.5 of the enterprises are very small (0-9
  employees).
• Half of the persons employed in this sector work
  in very small businesses (1 to 9 employees).
• Only about 10 of persons employed work in large
  enterprises of more than 250 employees.
• The HoReCa sector accounts for more than 1.3
  million enterprises in the EU is about 8.5 of
  the total number of enterprises.
• In Austria average number of beds per overnight
  facility, including only the one to five stars
  categorized hotels, is 37,4.

21
Primary Suppliers (2)

• It is an additional feature of the tourism sector
  that the group of primary suppliers covers a
  whole set of different areas, including culture
  and agriculture as well.
• Together with their SME characteristic that is
  identified as being important for maintaining and
  creating job, this explains the specific role of
  tourism for regional development.
• Main disadvantages
• have normally little know how about marketing and
  technology,
• little knowledge about market developments and
• rather limited access to distribution channels.
  For example, over 85 of European accommodation
  providers are not listed on airline CRS/GDS that
  serve travel agents worldwide.
• Whereas other sectors of the tourism industry can
  be seen as early adopters of new technologies,
  this sector is normally lagging behind.

22
Airlines

• Technologically most advanced sector in the
  tourism field, with growing importance due to the
  tendency to long haul tourism.
• Between 1980 and 1992 scheduled traffic grew by
  92, and the capacity by 94 with falling prices
  (due to deregulation, growing capacities,
  increased competition)
• Use advanced Yield Management methods. In the USA
  the number of rates increased from 400.000 to 7
  Mn in the seventies.
• Airlines were among the first companies creating
  worldwide electronic networks, for the means of
  selling and distribution, for internal management
  and operations.
• Economic problems in this area. For example, the
  average load factor on international services
  fell from 64 in 1989 to 59 in 1992, which is
  below that level at which airlines can break even
  after interest payment .
• In this sector we also include other
  technologically advanced companies
• Other types of transport suppliers (car rentals,
  railways, maritime industry)
• Enterprises such as credit or media companies
  (transaction or content).
• Conceptually, huge and powerful suppliers the
  same group as the SME structured overnight
  facilities.

23
Hotel chains

• This group is situated both on the intermediary
  as well as the supply side since many chains
  represent marketing and operation units, where
  the accommodation is owned by a different unit.
• This market is dominated by US multinational
  corporations, which in 1992 owned 13 of the top
  20 chains.
• These chains focus on the higher priced market
  segment, with well-established reservation
  centers.
• They have learned to cooperate. In 1989 70 major
  hotel brands established THISCO as a computer
  switch to provide a common electronic booking
  interfaces to their hotel central reservation
  systems worldwide.
• With 18 Mn reservations per year and 3.2 Bn USD
  in room revenue generated, they represent 60 of
  the worldwide market share.

24
Tour Operators

• The main function is to purchase and to assemble
  a large number components produced by the
  principals, and to sell these as packaged
  products.
• They act as whole-salers, performing nearly as
  virtual enterprises since the value they add to a
  product is the aggregation process.
• They conduct the main marketing and distribution
  activities and have part of the financial risk of
  unsold stocks.
• One of the main advantages for suppliers is that
  tour operators have a good market access, well
  known brands and that the financial risk can be
  passed on, at least partially.
• It is the advantage of the tour operator, and of
  the consumer, that by the bargaining power of
  tour operators lower prices can be achieved.
• In Europe, in 1992 one third of total travel
  expenditures fell into this category. In Germany
  and in the UK roughly half of all holidays sold
  were packaged.
• In specific destinations the percentage of
  packaged holidays is not that high (in Tyrol,
  Austria, nearly 70 of the tourists are direct
  bookers).
• Tour operators show several important features
  they own brands well known in the tourism sector
  and they have the knowledge about product
  aggregation and marketing.
• They experience a fierce competition and have a
  rather limited control over the quality of the
  product.

25
Travel agents

• Travel agents act as a distributor, broker or
  retailer on behalf of the suppliers, their main
  contact with the supply side is the tour
  operator.
• Their income is done on the base of a commission,
  a percentage of the product price. These are
  designed in such a way that travel agents should
  prefer specific operators and/or systems.
• They are the main point of contact for consumers.
  
• They are small and medium enterprises, being
  under pressure by commission reduction strategies
  of both airlines and tour operators.
• They are part of the international electronic
  distribution network constituted by the CRS/GDS.
  By the means of these systems they may also
  access products of tour operators, perform
  reservation as well as billing tasks.
• The use of these systems has increased their
  productivity and sales (In Germany travel agents
  introducing the German START system, they could
  lower their traditional communication costs by
  22, while increasing their turnover by 17).
• But linking to a specific distribution channel
  also creates dependencies.

26
Computerized Reservation Sytems/Global
Distribution Systems

• CRS/GDS are product of the 1960
• Main electronic interface on the travel and
  tourism market (switch between suppliers and
  intermediaries on side and travel agents on the
  other side).
• As the result of a permanent concentration
  process four major systems, e.g., Amadeus,
  Galileo, Sabre, Worldspan, have been established.
  
• Their shareholders are mainly airlines, since the
  management of airline seats and their
  distribution constitute their origin.
• Today they also contain other products such as
  other transport means, accommodation - mainly
  from hotel chains -, and tour operator products.
  These products are integrated by links to the
  respective reservation systems of intermediaries
  or suppliers.
• Their development shows failures to establish
  co-operative infrastructures on a broader scale,
  which was tried several times. For example,
  Amadeus and Galileo have been initiated as
  competing European systems after talks failed to
  reach consensus on just one system.

27
CRS/GDS (2)

• Good example of competing electronic marketplaces
  - most referenced examples that early adopters of
  information technology can occupy a strategically
  dominant position . In 1992 these systems had
  over 98 of the entire market.
• The emergence of the CRS coincided with the
  deregulation of the US airfares. Subsequently
  prices were lowered on many routes and the
  airlines improved their yield management
  operations, i.e. they flexibly adjusted pricing
  (and schedules and routes).
• This led to an increasing complexity (and
  intransparency) of fares.
• It has been expected that the number of flights
  booked via travel agents would be diminished by
  the CRS, however, the opposite effect happened.
  Because of the increasing complexity of airfares
  more passenger turned to a travel agent to book
  their flights.
• This shows that electronic markets may lead to
  disintermediation but at the same time they may
  also induce increasing intermediation, depending
  on the price volatility and transparency and
  added value the (new) intermediaries can provide.
  
• These systems represent a very influential part
  of the market. Sabre Travel International, for
  example, employs 1.800 persons, covers 45 Mn of
  prices, contains 650 airline companies and
  performs 2.000 transactions per second.
• They have dominant positions in specific market,
  e.g., Amadeus/START in Germany.

28
Destination Management Organizations (DMOs)

• The tasks of DMOs are manyfold
• they are responsible for destination management,
• planning activities,
• marketing/branding of the entire destination,
• training and education,
• and they are very often also engaged in the daily
  operation.
• Their objective is to promote a destination's
  tourism by maintaining the social, cultural,
  economic and environmental basis, having thus
  also a political function.
• They are often genuine governmental institutions.
  
• They have to represent all suppliers in a
  democratic way, without preferencing a single
  group.
• Normally they are paid by tourism related taxes.
• And normally excluded from reservation
  activities.

29
DMO (2)

• Marketing a tourism destination is not simple - a
  destination is a very complex product
• Marketing only one of the influences on tourism.
  It is difficult to assess the impact of marketing
  on the arrival of visitors. Destination
  organisations cannot control the other factors,
  but must respond to them.
• Many other organisations which do marketing. The
  marketing expenditure of a NTO makes up only a
  small part of the total tourism marketing
  expenditure in the country. Destination
  organisations cannot control, only try to
  influence the marketing by third parties.
• Limited influence over the supply of products.
  Destination organisations also have very limited
  control over the kind, quantity and quality of
  tourism services.
• Only a large budget will make an impact. In an
  image-creating promotional strategy may be waste
  of money if the marketing objectives cannot be
  achieved.
• All these factors make it very difficult to
  assess how effective the marketing activities are

30
DMO (3)

• Though the specific institutional implementation
  may differ from country to country, nearly all
  destinations have DMOs.
• Special support especially for the SME structured
  tourism industry where smaller suppliers have
  limited financial opportunities.
• Impementation a kind of a hierarchical network
• starting at the lowest level with the local
  tourist boards,
• regional level within the regional tourist board
• national tourist board with its international
  outlets.
• From a formal decision making point of view, none
  of these bodies has a real direct influence on
  the other ones
• The governance model is based on cooperation and
  negotiation
• Leads also to rather slow and very often non very
  transparent decision processes.

31
DMO (4)

• Tourist boards can be seen as a non-computerized
  information system
• gathering information about the local, regional
  or national tourist product and distributing this
  information worldwide.
• On the other hand they also have to deliver
  information to the local suppliers, informing
  them about current trends, the general market
  situation and national and international
  competition.
• IT raise some important questions
• DMOs are, with some notable exceptions, not
  prepared for this development,
• The dynamics of the on-line market questions
  their functional limitation to marketing tasks
  only the consumer, once identified the proper
  product, wants to buy it.
• Consumer ask which product is best for their
  needs, they do not want just information about
  objective product attributes, but also some
  specific advice (Problem in Austria).
• Tourist boards start partnerships with private
  companies, or they set up their own companies
  dedicated to these tasks.
• This raises the question of a changed financial
  model and of competition with private companies,
  doing similar tasks.

32
Dynamic Network

• Dynamic links and configurations, enabled by
  common practice, IT and product interfaces.
• Many links are possible (for example)
• suppliers - incoming agent - tour operator -
  CRS/GDS - travel agent - consumer
• suppliers - LTO - consumer - supplier - consumer.

Tourism market as a flat Web of related
companies. Dynamic linking in production/use
and communication
33
The Tourism Product

Set of products, integration by service
components and information
34
Product levels(1)

source Kotler, Pompl
35
Product levels (2)

• The core product focuses on what the buyer is
  really interesting in a product is the packaging
  of a want-satisfying service. Tourism identify
  the tourists' basic needs when they look for a
  vacation relax within a quiet environment or
  satisfy cultural interests.
• The generic product includes the basic version,
  which the consumer is assuming to exist, a hotel
  a room for sleeping. contains no specific
  features.
• The expected (or tangible) product is a specific
  one, containing also those features the consumer
  is usually expecting (e.g., a telephone in a
  hotel room). Such features may differ from one
  client segment to another one (skiing versus
  recreation tourists). The expected product also
  has a specified quality, a brand and features
  which can be evaluated or searched for. Also
  these may vary considerably.
• The augmented product adds additional features
  and value to the expected product, e.g., in a
  hotel additional services such as wellness
  products or vegetarian food. The augmented
  product is close to the basic needs formulated
  by the consumer. And it is important for
  differentiation. Important to evaluate the
  willingness of clients to pay for additional
  services with respect to the costs generated by
  these features

36
Product levels (3)

• The potential product includes all future
  development possibilities in order to attract new
  and to keep existing customers.
• Augmented product means everything has been done
  to satisfy known consumer wishes and needs, the
  potential product looks at what may remain to be
  done.
• Information is crucial in the design of these
  different product levels and their communication.
  
• Each level needs specific information
• core product emotional description
• generic product basic descriptions relying on
  background knowledge of consumer
• expected/augmented product objective and
  assessable features

37
Product aggregation (1)

38
Product aggregation (2)

• pi, qj, rk, product type dependent attributes of
  basic components such as location, arrival and
  departure date, hotel category, price,
• ai f(pi, qj) attributes of the aggregated
  product as a function of the basic component
  attributes (entire time period of a packaged
  product or the package price),
• di g(m, c, ai) additional attributes of the
  aggregated product which take into consideration
  the market segmentation and the different
  distribution channel, resulting into different
  prices and product descriptions.
• The same basic components may be combined to
  different products, which are sold by means of
  different intermediaries and distribution
  channels, which highly influences the product
  descriptions.
• The aggregation process normally crosses company
  boarders, in that case the mapping function is
  described by the means of a contract between the
  supplier and the intermediary entity.

39
Product aggregation (3)

• Normally even complexer a room may be sold as a
  two or a three bedroom, with different prices.
  The basic product can be seen as a function of
  some kind of basic service or infrastructure.
• Different configuration options related to
  different product descriptions and serving
  different needs.
• Resulting into different expected or augmented
  products. Though at the final end the same basic
  components are consumed by the clients their
  expectations may have been different and, thus,
  also the related degree of satisfaction.
• Mass customization and consumer driven markets
  need basic components with well described
  attributes in order to link them dynamically.
• Product configuration possibility is an important
  prerequisite in markets with increased
  competition.

40
Product aggregation and product categories

Tour operator respond with new products as well
as IT solutions (Kärcher).
41
Dynamical aggregation and IT - limits

But not in absolute terms, depends on consumers
knowledge.
42
Market transactions
Market (virtual) place for exchanging goods.
Different markets along the value chain

43
Transaction phases

44
Further Phases

• From a marketing perspective, after sales
  activities are important in order to maintain and
  deepen the relationship to customers.
• World Wide Web - building on online-communities,
  maintaining customer communities (Armstrong and
  Hagel 96).
• (Selz and Schubert 98) are proposing community
  building as a fourth phase in electronic market
  transactions.
• Assumes an cyclical interpretation of market
  transactions as the companies try to facilitate
  customer communities in order to encourage
  repeated transactions.
• The Swissair Web site features a section targeted
  at younger travelers for writing electronic
  postcards reasoning why they would like to travel
  to a particular Swissair destination. Once a
  month, the most creative submission is rewarded
  with a complimentary ticket to that destination.
• Further example for online communities bookshop
  amazon and firefly

45
Customer retention
When customers continue to do business, they also
tend to be more profitable over time

46
Transactions and Travel Phases

47
Strategies of Suppliers and Consumers

• Customers react - according their preferences in
  terms of risk taking, flexibility,
  one-stop-shopping, aversion of lock-in situations
  etc. by
• early viz. late timing for their service
  purchases,
• selecting all-inclusive offers in advance viz.
  ad-hoc purchases of service components (food,
  entertainment etc.) on the site and on demand.
• Tourism principals and intermediaries pursue a
  differentiated set of strategies characterized by
  timing and bundling of offerings
• early-booking incentives viz. last minute
  offerings
• bundling of offerings from one (all-inclusive
  offerings) or multiple principals (integrated
  destination offerings).

48
Specific role of information (1)

• Services (non-material and bilateral goods)
  focus on the relationship between the supplier
  and the consumer.
• Production integrates consumer - new concept
  called prosumer, a combination of producer and
  consumer, emphasizes the increasingly active role
  of consumers in the process of service provision.
  
• Service goods are promises about something that
  will be done in future.
• Both sides are confronted with uncertainty.
• Customers cannot sure about the quality and the
  price of the products offered (and even if
  service will be accomplished).
• Supply side is not sure about the consumer, about
  their number and behavior. (important since the
  consumer has to participate in the production).
• Situation of asymmetric information between
  market participants
• Non-complete and late information produce
  uncertainty
• But, information reduces uncertainty. Between
  both is a positive trade-off.

49
Specific role of information (2)

• Uncertainty appears along two dimensions
• Price
• The consumer (aware of different prices for the
  same product) does not know which supplier has
  the best price.
• This increases with the number of suppliers for
  the same product.
• Suppliers problem have to pay for accessing the
  market (identify the respective segment or
  distribution channel) - related to information
  costs.
• The costs for looking for information should be
  lower than the related benefit.
• Search costs are not objective, one cannot be
  sure to have identified the lowest price. And one
  cannot be sure whether the identified price wont
  change within the next future.
• It is up to the own judgment whether to continue
  or to stop the search procedure.
• In addition, in a single purchase one will accept
  higher prices since the opportunity costs are
  higher than in repeated market transactions.

50
Specific role of information (3)

• Prices will change in the case that many
  participants perform search procedures and
  evaluate different suppliers
• This puts pressure on the supply side. This will
  raise the number of and the willingness for
  innovation, the creation of new products.
• Assuming that IT leads to price transparency, it
  will accelerate competition and favor innovation.

51
Specific role of information (4)

• Quality product quality is related to specific
  features or attributes
• experience qualities these qualities can be
  completely evaluated only after the consumption
  of the product and are strongly related with the
  experience of the customer. Tourism products are
  typical examples. Related to expected and
  augmented product.
• confidence qualities These can not be completely
  evaluated neither before nor after the purchase,
  the consumer does not possess the know how nor
  the time to do that. Promises such as doing a
  vacation as never before fall into this
  category.
• search quality these are feature such as price
  information which can be evaluated by means of
  search, which may stop when a consumer is
  satisfied or the costs become to high. Since
  tourism products contain also physical
  components, features of these components such as
  the geographical situation or the category of a
  hotel, are typical search qualities. Related to
  expected and augmented product.

52
Specific role of information (5)

source Schertler 95
53
Specific role of information (6)

• Informational market imperfections may lead to
  so-called information impactedness (Williamson
  85), based on behavioral assumptions about market
  participants
• bounded rationality this is not only due to
  limited knowledge of humans but also due to
  limited opportunity costs in looking for
  information,
• opportunistic behavior this kind of behavior may
  be caused by the informational market
  imperfections, participants seek to optimize
  their benefit, even in the case that they may
  discriminate others,
• and external factors
• uncertainty/complexity uncertainty may be the
  result of the opportunistic behavior of other
  market participants (espec. due to its dynamic
  features the market developments cannot be
  overlooked, thus, increasing complexity,
• specificity before agreeing about a contract the
  situation is characterized by competition with
  all its imperfections. Once an agreement has been
  reached, both participating partners can gain an
  advantage by repeating transactions (assuming
  that the service was performed in a satisfying
  manner).

54
Specific role of information (6)

55
Specific role of information (7)

• A priori unspecific situation can lead to a
  posterior specificity
• Both market partners try to maintain their
  bilateral relationships in the case of repeated
  transactions. This increases with the specificity
  of the product.
• The change of partners may also induce additional
  costs.
• A specific form of information asymmetry arises
  although each partner has access to the entire
  knowledge, it might be too costly to disclose
  this information to other market participants.

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Specific role of information (8)

• In tourism high information seeking costs
• Specific intermediaries for coordination in order
  lower the information transaction costs
• The informational market imperfection is one of
  the reason of rather long value chains in the
  tourism market
• DMO they provide transparent access for both
  sides with at the same time certifying the
  quality of the given information, thus, they
  increase confidence.
• tour operator since tourism products consists of
  several basic components from different suppliers
  tour operators act as a single point of access,
  thus, lowering drastically the information search
  costs for their consumers. At the same time they
  also lower the market information costs for
  suppliers.
• travel agent they lower uncertainty for the
  consumers, and they are closing the spatial gap
  to the place where the service is offered. They
  lower the market information costs for the supply
  side.

57
Time dimensions

These information types refer mainly to search
qualities. Time sensitivity important aspect for
architecture of IT systems, where to store which
information since transmission related with cost.
58
Information needs in phases

Information Needs

pre trip

during trip

after the trip

Phase

information







agreement






control






adjustment






operation / settlement

• Any changes within the time span (decision -
  consumption) has to be communicated to the
  consumer.
• Information about consumers has to be
  communicated to the final supplier or
  representatives of tour operators, in the case of
  a packaged holiday.
• Design criterion for IT applications, either the
  system distributes the information properly, or
  the consumer may carry it (the form of a chip
  card application).

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Travel phases and potential IT impact

60
Model of Planning and Decision Making (1)

From Supply Side
Marketing Cycle
61
Model of Planning and Decision Making (2)

• information collection stage information links
  leading to suppliers - different strategies for
  finding the proper information (electronically
  direct retrieval of information or searching,
  scanning and information wandering)
• Implementation of Actions product creation,
  aggregation, and distribution, delivers back
  policy to the information network.
• Model Building arrangement of a formalized
  business model in terms of information structures
  capturing faithfully the market "reality" and
  integrating all economic parameters of relevance.
• Forecasting/Extrapolation set of tools for
  assessing the companys as well as the markets
  performance against varying economic assumptions
  and business strategies
• Planning takes also into consideration the
  different distribution channels available.
  Different time range
• Short term such as yield management methods -
  optimize price based on observed trends and a
  priori defined performance criteria
• Long term product creation and investments

62
Information types

• two main components for the supply side
• pre-sales information description of the
  suppliers basic offer (accommodations their
  description, lodging capacity, kind of
  infrastructure/facilities), and
• post-sales information timely summaries and
  statistical aggregates about the operative
  business, e.g., customer frequencies, effective
  demand structure, utilization of capacities, etc.
• Pre-sales information covers
• long-term component suppliers production
  structure, determined economically mainly by
  bound capital and fixed costs resulting thereof,
  
• short-term component variable components of
  service such as in-person services offered,
  days/hours of operation, price lists, contractual
  conditions

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Information types (2)

• IT point of view - the management of both types
  is quite different
• Pre-sales information
• hard to unify semantically (hard task of
  harmonizing the price information delivered by
  different suppliers in different destinations),
• a rather static type of information and, hence,
  mostly independent of the operative business
• The main challenge with respect to pre-sales
  information is the task of semantic data
  integration (definition of a common vocabulary,
  the meaning of terms and the relationship between
  them).
• Post-sales information (the other way round)
• primary feed-back loop transmitting operative
  business data (resource utilization)
• highly dynamic and must be recorded on a
  continuous basis which implies the provision of a
  means for dynamic linking of reported performance
  data.
• should fulfill several marketing-relevant
  criteria (fit the structure of the actual tourism
  offer).

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Information sources and tools