Senior Lecturer in Tourism

University of Westminster

35 Marylebone Road

London, NW1 5LS, England

Tel : +44 (0) 171 9115000 ext 3112

Fax: +44 (0) 171 9115171

Internet: http://www.wmin.ac.uk/Env/UDP/staff/buhalis

Tourism Review magazine (1996, No.2, pp.34-36.)

NOTE: Bibliography follows the article

Information technology revolution. Information Technologies' (ITs) developments in the 1990s revolutionise both the global economy and enterprises around the world regardless of their size, product and geographical coverage. At the macroeconomic level, ITs are increasingly regarded as instrumental in regional development and long term prosperity of regions. There is therefore an emerging need for competitiveness of both enterprises and regions which will be based on the new information society and the knowledge-based economic powers. Thus the competitiveness of regional economies and enterprises will to a great extend depend both on the conditions of utilisation and on the development and application of these technologies (EC,1993).

Tourism is inevitably influenced by the business re-engineering experienced due to the technological revolution (WTO,1988). As information is the life-blood of the travel industry (Sheldon,1994), effective use of technology is fundamental to the tourism sector as we approach the 21st century (Wayne,1995). Therefore "a whole system of ITs is being rapidly diffused throughout the tourism industry and no player will escape its impacts" (Poon,1993). The ITs' revolution, has profound implications for the tourism industry management, mainly by enabling efficient co-operation and offering tools for a real globalisation. ITs have undoubtedly become one of the most important elements of the tourism industry as in few other economic activities are the generation, gathering, processing, application and communication of information as important for day-to-day operations (Poon,1993). Consequently the rapid development of both tourism supply and demand makes ITs an imperative partner of the industry and thus ITs increasingly play a more important role in tourism marketing, distribution, promotion and co-ordination (Buhalis,1995).

Unlike durable goods, intangible tourism services cannot be physically displayed or inspected at the point of sale before purchasing. They are normally bought before the time of their use and away from the place of consumption. In the marketplace, therefore, tourism products are almost exclusively dependent upon representations and descriptions by the travel trade, ie. information in printed and audio-visual forms for their ability to attract consumers. Timely and accurate information, relevant to consumers' needs is often the key to successful satisfaction of tourism demand. Experienced travellers are increasingly empowered by ITs use information and booking systems independently in order to increase their personal efficiency and to create tailor-made products which gratify their needs. ITs have a dramatic impact on the travel industry because they force this sector as a whole to rethink the way in which it organises its business, its values or norms of behaviour and the way in which it educates its workforce (Vlitos-Rowe,1995). ITs' impacts in the tourism industry are increasingly evident in the marketing, distribution and cooperation functions of both the private and public sector. More specifically, ITs enhance tourism distribution to an electronic marketplace where easy access to information and ubiquity is achieved and thus the interactivity of principals and consumers is enhanced. This new potential can be very beneficial for innovative Small and Medium sized Tourism Enterprises which hitherto had little means to communicate directly with consumers as well as to defend themselves against the horizontal and vertical integration of large multinational tourism corporations (Buhalis,1994 and 1995).

Computerised networks and electronic distribution lead the dramatic structural changes within the tourism industry, and become central to the distribution mix and strategy. Computer Reservation Systems (CRS) are clearly regarded as the most important facilitators of these changes as they formulate a new travel marketing and distribution system. In its simplest form, a CRS is a database which enables a tourism organisation, to manage its inventory and makes it accessible to its distribution channel partners. The rapid growth of both tourism demand and supply in the last decades, demonstrated that the tourism industry could only be managed by powerful computerised systems. Airlines were the pioneers of this technology, although international hotel chains and tour operators realised the potentials and followed by developing centralised reservation systems. The need for CRSs arises from both the demand and supply, as well as from the expansion of the tourism industry in the last decades.

From the tourism demand side, the rapid growth of travellers urges the utilisation of powerful CRSs for the administration of the traffic. CRSs satisfy consumer needs for easy access to transparent and easy to compare information on a wide variety of choices of destinations, holiday packages, travel, lodging and leisure services, the actual prices and availability of such services. They also provide immediate confirmation and speedy documentation of reservations providing a greater degree of flexibility and enabling prospective travellers to book at the "last minute". Moreover, "improved access to information covering all aspects of tourist activities provided the framework for offering personalised services at prices levels comparable to those of standard packages" (WTO,1988). Increasingly, tourists' satisfaction depends on the accuracy and relevance of tourism information as well as the promptness of responding to consumers' requests (Buhalis,1994). Tourism supply utilises CRSs to manage its inventory and distribute its capacity. CRSs are utilised to facilitate and manage the drastic expansion of tourism enterprises and destinations globally and can be characterised as the "circulation system" of the tourism product. CRSs enable tourism providers to control, promote and sell their products globally, while assist them to increase their occupancy/load factor levels and to reduce seasonality. They can also contribute to their profitability and long term prosperity as they enhance numerous business functions. In addition, CRSs often charge competitive commission rates in comparison with other distribution options, while enable flexible pricing and capacity alterations, in order to adjust tourism supply to demand fluctuations. CRSs also reduce communication costs, while provide managerial information on tourism demand patterns or competitors' position. Cooper and Buhalis (1992) suggest that principals can enjoy several competitive advantages when represented on CRSs, namely: products on the CRSs will provide value added products by widening the availability of services on the system to allow customising; CRSs can facilitate yield management systems providing profitable inventory management; CRSs can affect price competition through cost savings and efficiencies in operational management and communication; CRSs allow an increased volume of transactions to be handled and both simplify and speed the process; CRSs initially allowed operatives at the pint of sales to be locked in or to prefer a particular company's system over a competing one or over competitors who are not on a system.

At the destination base, Destination Integrated Computer Information Reservation Management Systems are emerging as strategic tools for the competitiveness of Small and Medium sized Tourism Enterprises and the diagonal integration of destinations. These systems aim to ameliorate the information delivery and reservation function for prospective and actual tourists by using widely distributed multimedia presentations. They attempt to facilitate multi-integration at the destination level aiming to enhance the multiplier effects in the local economy and to provide a strategic management tool for the entire range of tourism related enterprises at destinations. This enables the delivery of a better co-ordinated tourism product which consequently contributes to the consumer satisfaction (Buhalis,1994 and 1995). In addition they can play an instrumental role in destinations' ability to improve their economic, socio-cultural and environmental impacts and to sustain their resources (Buhalis,1996).

The integration of a series of high capacity communications channels in the INTERNET and the "Information Superhighway" convergence media, telecommunications, and information technology, increasing the interactivity between consumers and suppliers (Budley and Bennett,1994). It enables the provision of tailored made information and marketing material to meet the needs of individual tourists. As a result, ITs become the single most important determinant in bridging tourism demand and supply, as well as in facilitating the operation of the tourism industry. Since the beginning of 1995, the World Wide Web has emerged as the fastest growing area of the INTERNET, enabling distribution of multimedia information. As textual data, graphics, pictures, video, and sounds become easily accessible it soon became the flagship of the ITs' revolution and instituted an innovative platform for efficient, live and timely exchange of both ideas and products. Consequently, unprecedented and unforseen implications were drawn by futurists and media reports, for the future of marketing, consumer behaviour and even societies. Encouragingly, there is evidence that the tourism industry launches several services to take advantage of the information superhighway. The utilisation of the INTERNET and the World Wide Web for tourism distribution provides unprecedented opportunities for the industry. Due to World Wide Web's interlinking structure, it can provide an extremely vital service by incorporating similarly structured information and enable the packaging of a wide range of diverse products and services. Although it is recognised that the currently available information in the INTERNET is chaotic, mainly due to its immaturity and the lack of any type of standardisation, increasingly it becomes evident that the World Wide Web provides the infrastructure for inexpensive delivery of information, concerning every single enterprise and destination. Thus, the INTERNET empowers the marketing and communication functions of remote, peripheral and insular destinations as well as Small and Medium sized Tourism Enterprises which become able to communicate directly with their prospective customers and differentiate their product according to their needs. It is increasingly evident that the competitiveness and prosperity of both enterprises and destinations in the new millennium will depend on the degree of innovation utilised in the utilisation of new strategic tools provided by the revolutionary information technology.

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