ICT are a complex phenomenon, not only because of their various solutions and techno- logical applications3but, above all, because of their pervasive spread across all fields of economics, albeit to a different extent.
The development of ICT and related economic phenomena have stimulated extensive research applied to different contexts. They have been analysed not only as a crucial sec- tor from the economic point of view and because of their ability to produce effects on the productivity of the whole economy, but also as a tool to increase the efficiency and effec- tiveness of all main business activities and as a tool to create and exploit innovative busi- ness opportunities, which have generated deep changes in the traditional production, selling and consumption patterns (Cioppi, Savelli, & Di Marco, 2003).
The evolutionary path of the role of ICT as technologies enabling business transforma- tion can be described (Figure 11.1) allowing for the scope of their potential benefits and the degree of transformation of the business they are applied to (Venkatraman, 1994).
The five stages — from the initial stage of local exploitation of the applications to the final stage of redefinition of the business scope, through the intermediate stages of inter- nal integration, re-design of the business processes and network — have been steered by the connection capability of the technologies and by the favourable evolution of the cost- performance ratio of the technologies themselves. These stages are also the steps of a path towards an information society with more awareness of technological potential and an increasing creativeness in developing applications and identifying new fields of use.
Specific features of the tourism service market have created the conditions for it to become one of the first fields for ICT application, and a context capable of recording great advancement in terms of applications.
From the supply point of view, information is the fundamental link among the various firms, — usually small-sized firms — of the travel industry (airlines, tour operators, travel agencies, hotels, car rental firms, cruise lines). High information intensity was then the driv- ing force (Poon, 1993) for rapid ICT development and dissemination; in few other economic activities is generating, acquiring, processing and disseminating information so crucial for 172 Alfonso Morvillo et al.
3The ICT industry can be broken down into two main areas: Information Technology (IT) and Telecommunication (TC). The former includes electronic information-based technologies and is sub-divided into two parts: hardware — software and services. The latter includes fixed and mobile networks, network systems and installations, telecommunication cables, satellites and telephony/data transfer services (Dossena, 2000).
daily activities. Moreover, because of the inter-firm complementarity, use of ICT in one sector stimulated the dissemination of the technologies in the other firms of the filière (Poon, 1993).
From the demand point of view, purchasing a tourism product largely depends on the description of and information on the product itself. There is growing need for information and directly developed customised tourism products; there is a need for an active, autonomous and flexible tourism dimension that can be achieved, thanks to the increasing use of information and telematic “connection” technologies.
In most economic sectors, computer science and telematics were used in the initial stages to achieve efficiency by cutting costs and streamlining repetitive and standardised procedures. The travel and tourism industry also experienced this phenomenon; however, in this case computer science and telematics were also immediately used as network tech- nologies capable of ensuring (see Figure 11.1) a logistic and inter-functional interconnec- tion within global organisations first (internal integration stage and business process re-design stage), and then an inter-organisation and inter-sector connection (network re- design stage and business scope re-definition stage).
Typically, ICT dissemination in the industry took place in three main periods (Buhalis, 1998), corresponding to the development of:
● Computer Reservation Systems (CRSs), in the early 1970s;
● Global Distribution Systems (GDSs), mid-1980s; and
● Internet, in the early 1990s.
With respect to electronic distribution through computer networks, which characterised the CRS’s development, airlines were the technology leaders: thanks to the new systems equipped with central databases, airlines could control and distribute trip reservations at the global level, manage demand flexibly and integrate the whole range of front-office and back-office functions with a substantial cut in communication costs.
The gradual expansion of the geographical coverage and the need for horizontal inte- gration (among airlines) and vertical integration (with other tourism services and products, Information and Communication Technologies 173
Low High
Low
Range of potential benefits High
Localised Exploitation Internal Integration
Business Process Redesign Business Network Redesign
Business Scope Redefinition
Seek Efficiency
Enhance Capabilities
Degree of Business Transformation
Figure 11.1: Five levels of IT-enabled business transformation.
such as hotels, car rentals, railways) led to the creation of global communication standards termed GDSs and, simultaneously, to the concentration of these systems in the hands of four global operators: Amadeus, Galileo, Sabre and Worldsplan.
These operators, whose majority shareholders are the airlines, could cover the earth’s whole surface through a number of arrangements with local operators. GDSs are still networks of networks, which combine and integrate automatic booking systems of dif- ferent tourism organisations and reach end users through travel agencies sometimes linked to the individual GDS by exclusive agreements. “GDS, like the early automatic booking systems, are characterised by a “closed” technological network, i.e. based on proprietary systems, the control of which is remunerated through a service price sur- charge” (Martini, 2000).4
The firms involved in these processes are the main large multinational tourism organisa- tions, such as hotel chains, airlines and car rentals, while SMEs are excluded due to the intrinsic properties of the sophisticated technologies, the high hardware, software and inter- connection costs, and the need for skilled human resources. Therefore, these systems con- tributed to increasing the traditional duality, inherent in the tourism industry (Martini, 2000).
The Internet has profoundly changed relationships among the firms of the tourism sys- tem and between the system and consumers. It is a low-cost infrastructure that enables a large body of information, even multimedia information, to be conveyed, and goods and services to be promoted and distributed. Being an “open” infrastructure, the Internet makes a tool available to operators, which enables them to reach end consumers or be reached by them. From this perspective, small firms can compete on an equal footing with large organisations.
The properties of tourism products are ideal for e-commerce: they are complex prod- ucts, which can be represented through the web, exploiting the potentials of the multime- dia representation. Telematics also enables innovative use of information. By browsing, collecting and selecting information, tourists can “self-specify” their needs; thanks to ICT, they do not passively accept a pre-set tourism package, but play an active role in generat- ing the tourism product, and make their choice based on the different attractions and opportunities suggested by the network.
The potential provided by the Internet to SMEs and consumers has originated wide- spread dis-intermediation and process/network re-engineering within the tourism industry.
At present the following organisation types can be found on the web:
● Tourism service producers, such as hotel chains and airlines;
● Traditional tourism intermediaries, such as GDS, tour operators, travel agencies, which have extended their business through an Internet website, even creating new brands; and
● Tourism intermediaries specifically created to operate on the web (e-intermediation), such as entrepreneurial undertakings linked to the New Economy, which operate through a website providing not only information but also the opportunity for on-line booking or transaction. This category includes both infomediaries (Internet Service Providers, generalist portals, vertical portals) with a high volume of traffic generated in 174 Alfonso Morvillo et al.
4As to the role and development of GDS, see also Buhalis (1998), Buhalis and Licata (2002), De Angelis (2004).
the website and substantial returns generated by the Internet advertising — and virtual travel agencies.
Many suppliers of tourism services developed e-commerce applications to make it pos- sible for customers to have direct access to their booking systems. This drastically reduced the scope of activity of traditional intermediaries who underwent a strict selection process due to the decrease in intermediated flows and intermediation margins resulting from increasingly less dependent customers. Along with traditional travel agencies, also GDSs were affected by Internet competition and underwent a re-engineering process involving mergers and acquisitions or diversification towards virtual intermediation through on-line travel agencies.5
The co-existence of many operators and intermediation channels made competition more aggressive and generated new forms of supply arrangement by means of extensive co-operation among different producers and the creation of networks. The boundaries between the various types of intermediaries then became increasingly blurred (Rayman- Bacchus & Molina, 2001). Generally speaking, the possibility of taking advantage of the web depends on operator visibility and on the ability of the website to capture visitors (potential clients). In turn this depends on website accuracy and the availability of multi- ple hypertext links. Links are actually fast, cost-effective and enhance the website profile;
they enable intermediaries who view the width of their network as a valuable asset to improve their competitiveness.