E-Business For Tourism

E-BUSINESS FOR TOURISM
PRACTICAL GUIDELINES FOR TOURISM

DESTINATIONS AND BUSINESSES
November 2001
World Tourism Organization Business Council
CONTENTS
Part A Introduction
1
Setting the Scene ........................................................................... 1
1.1
1.2
The Internet and tourism a powerful combination. ...........................................1

The importance of the Internet and Internet-based e-commerce .....................2
1.2.1 The growth in Internet usage....................................................................... 2
1.2.2 Internet user profile...................................................................................... 4
1.2.3 The growth of Internet commerce .............................................................. 5
1.2.4 Travel and tourisms market share............................................................... 5
1.2.5 Travel products purchased ......................................................................... 7
1.2.6 The impact of Internet use on traditional channels .................................... 8
1.2.7 Summary of main market trends ............................................................... 10
The concept of electronic business (e-business)..............................................10
The principles of customer relationship management (CRM) ...........................11
1.3
1.4
Part B E-Business for Destination Management Organisations

2
E-Business for DMOs - Principles and Concepts........................... 14
2.1
2.4
2.5
2.6
Evolving value chains ........................................................................................14

2.1.1 The future of DMOs as intermediaries........................................................ 16
2.1.2 Positioning DMOs within the Value Net ..................................................... 16
Integrated e-business systems for tourism destinations.....................................18
2.2.1 Destination e-business system model ........................................................ 18
2.2.2 e-Business Partnerships for DMOs .............................................................. 20
The potential of e-marketing and CRM .............................................................22
2.3.1 The scope for e-marketing by DMOs ........................................................ 22
2.3.2 Customer Relationship Management for DMOs ....................................... 22
2.3.3 E-marketing techniques ............................................................................ 25
2.3.4 Critical success factors - for CRM and proactive electronic marketing ... 28
E-commerce for DMOs......................................................................................28
New ways for DMOs to do business...................................................................31
Strategic Challenges for DMOs .........................................................................32
Implementing a DMS as the infrastructure for e-business ............ 34
3.1
3.2
3.3
3.4
3.5
Introduction .......................................................................................................34
Step-by-step guide to implementing a DMS.....................................................34
DMS Critical Success Factors.............................................................................45
DMS Case Studies..............................................................................................46
3.4.1 British Columbia ......................................................................................... 46
3.4.2 Finland ....................................................................................................... 49
3.4.3 Seychelles Tourism Marketing Authority..................................................... 54
3.4.4 Singapore Tourist Board............................................................................. 58
3.4.5 Tirol Tourist Board / Tiscover ....................................................................... 61
Case study summary table ...............................................................................66
Consumer Web sites..................................................................... 68
2.2
2.3
vi
E-Business for Tourism

4.1
4.2
4.3
Step by step guide to development..................................................................68

Critical success factors .....................................................................................77
Case studies ......................................................................................................78
4.3.1 Berlin .......................................................................................................... 79
4.3.2 Caribbean Tourism Organisation .............................................................. 81
4.3.3 New Zealand............................................................................................. 85
4.3.4 Singapore.................................................................................................. 89
4.3.5 Tourism Vancouver.................................................................................... 92
4.3.6 Key features of a consumer Web site ....................................................... 95
Networks for intermediaries........................................................ 100
5.1
Travel trade intermediaries.............................................................................. 100

5.1.1 Features of a travel trade Web site......................................................... 101
5.1.2 Implementing a travel trade Web site .................................................... 101
5.1.3 Online travel intermediaries .................................................................... 102
5.1.4 Examples of good practice .................................................................... 102
Meetings, incentives, conferences and exhibitions (MICE) organisers ........... 102
5.2.1 Features................................................................................................... 103
5.2.2 Implementing a MICE Web site............................................................... 103
Media site ........................................................................................................ 104
5.3.1 Features................................................................................................... 104
5.3.2 Implementing a Media Web site............................................................. 105
5.2
5.3
Networks for the tourism industry................................................ 106
6.1
6.2
Getting SMEs wired and skilled ....................................................................... 106

Features and functions .................................................................................... 106
6.2.1 Publish corporate information................................................................. 107
6.2.2 Publish intelligence and provide access to resources ............................ 108
6.2.3 Interactive services ................................................................................. 109
6.2.4 Business to Business trading ..................................................................... 110
6.2.5 Users and Content ................................................................................... 110
6.2.6 Costs and benefits .................................................................................. 111
Step by step guide .......................................................................................... 111
Critical success factors ................................................................................... 116
Case Studies.................................................................................................... 117
6.5.1 Canadian Tourism Exchange .................................................................. 117
6.5.2 Scot Exchange ........................................................................................ 119
6.3
6.4
6.5
vii
Part C E-Business for Tourism SMEs

Introduction to Part C .......................................................................... 123
7
Industry overview ....................................................................... 125
7.1
7.2
7.3
7.4
Growth of tourism e-business and impacts on SMEs throughout the industry.. 125
Strategic importance of e-commerce and e-business for SMEs ..................... 127
Mapping e-commerce and e-business applications ..................................... 128
Structure and content of each sector analysis ................................................ 131
Hospitality services..................................................................... 133
8.1
8.2
8.7
Introduction ..................................................................................................... 133

Targeting your e-business strategy.................................................................. 133
8.2.1 Attracting international visitors ................................................................ 133
8.2.2 Offering customised packages............................................................... 134
8.2.3 Maintaining long-term relationships ........................................................ 135
E-Business applications and functionality ....................................................... 136
Step-by-step guide to implementing your e-business strategy ...................... 138
8.4.1 Phase 1 Developing your Web site....................................................... 139
8.4.2 Phase 2 Positioning your Web site......................................................... 140
8.4.3 Phase 3 Reengineering your reservation process ................................. 141
8.4.4 Phase 4 Building your back office ........................................................ 143
8.4.5 Phase 5 Re-configuring your property.................................................. 147
Critical success factors of your e-business strategy........................................ 150
Case studies of innovative e-business solutions.............................................. 151
8.6.1 Application service providers.................................................................. 151
8.6.2 E-Procurement partnerships .................................................................... 153
8.6.3 Property management systems .............................................................. 154
8.6.4 Competitive intelligence......................................................................... 155
Future of e-commerce and e-business ........................................................... 156
Travel Agencies.......................................................................... 158
9.1
9.2
Introduction ..................................................................................................... 158

Targeting your e-business strategy.................................................................. 158
9.2.1 Getting realistic about e-commerce and e-business ............................. 158
9.2.2 Moving beyond ticketing ........................................................................ 160
9.2.3 Adopting an alternative revenue base structure ................................... 161
E-business applications and functionality ....................................................... 162
Step-by-step guide to implementing your e-business strategy ...................... 164
9.4.1 Phase 1 Scaling your strategy and resources ....................................... 164
9.4.2 Phase 2 Building infrastructure and competencies .............................. 167
9.4.3 Phase 3 Focusing applications on service excellence ......................... 170
Critical success factors of your e-business strategy........................................ 174
Case studies of innovative e-business solutions.............................................. 175
9.6.1 Finding opportunities for segmentation and specialisation .................... 175
9.6.2 Growing a small online travel agency on the side ................................. 175
9.6.3 Joining an online referral service ............................................................ 177
9.6.4 Becoming a click and mortar agency.................................................... 178
9.6.5 Applying e-business technologies for service excellence....................... 179
Future of e-commerce and e-business ........................................................... 181
8.3
8.4
8.5
8.6
9.3
9.4
9.5
9.6
9.7
viii
10
Tour operators............................................................................. 183
10.1
10.2
10.7
Introduction ...................................................................................................... 183

Targeting your e-business strategy .................................................................. 183
10.2.1 Concentration and niche market structures......................................... 184
10.2.2 Changing relationship with travel agencies ......................................... 184
10.2.3 Competing with new entrants............................................................... 186
E-business applications and functionality ........................................................ 187
Step-by-step guide to implementing your e-business strategy ....................... 188
10.4.1 Phase 1 Moving towards e-marketing ................................................ 189
10.4.2 Phase 2 Adapting your technological base....................................... 191
10.4.3 Phase 3 Making product development more flexible ........................ 195
Critical success factors of your e-business strategy ........................................ 197
Case studies of innovative e-business solutions .............................................. 199
10.6.1 Developing new concepts for online tour operators ............................ 199
10.6.2 Integrating e-business applications for growing tour operators ............ 201
10.6.3 Becoming a click-and-mortar consolidator .......................................... 202
Future of e-commerce and e-business............................................................ 203
11
Visitor Attractions........................................................................ 206
11.1
11.2
11.7
Introduction ...................................................................................................... 206

Targeting your e-business strategy .................................................................. 206
11.2.1 Managing attraction information strategically ..................................... 207
11.2.2 Creating more flexible operations ......................................................... 209
11.2.3 Exploiting the power of alliances .......................................................... 210
E-business applications and functionality ........................................................ 210
Step-by-step guide to implementing your e-business strategy ....................... 212
11.4.1 Phase 1Creating and diffusing attractive informational contents ...... 212
11.4.2 Phase 2 Creating seamless e-business processes ............................... 218
11.4.3 Phase 3 Becoming an agile and innovative attraction...................... 219
Critical success factors of your e-business strategy ........................................ 221
Case studies of innovative e-business solutions .............................................. 222
11.6.1 Cultural tourism...................................................................................... 222
11.6.2 Nature-based tourism............................................................................ 225
11.6.3 Sports tourism......................................................................................... 225
11.6.4 Urban tourism ........................................................................................ 226
11.6.5 Rural tourism .......................................................................................... 227
Future of e-commerce and e-business............................................................ 228
12
Conclusion ................................................................................. 230
10.3
10.4
10.5
10.6
11.3
11.4
11.5
11.6
Appendix A Review of consumer Websites...................................... 233

Appendix B Technical glossary and abbreviations .......................... 266
Appendix C Suggested reading ....................................................... 271
Appendix D Bibliography.................................................................. 273
ix
PART A - INTRODUCTION
1
1.1
Setting the Scene

The Internet and tourism a powerful combination.
The Internet and its protocol (TCP/IP) have created a universal platform for
communication and presentation - a truly open, global network. Increasingly it will
be accessed from different types of equipment - TV, mobile devices, in-car
technology, terrestrial phones, kiosks, computer games consoles, etc - for a range of
purposes. The cost of access is going down and the speed of access is going up.
The Web is becoming more useful (in terms of functions and content) and more userfriendly. This is a powerful combination of factors driving increased usage, as shown
in Section 1.2.
Tourism and the Internet are ideal partners. For consumers, when they are planning a
trip to a new destination, they face the problem of making a costly purchase without
being able to see the product. The Internet provides them with the means to gain
immediate access to relevant information of greater variety and depth than has
been available previously, about destinations throughout the world; and to book
quickly and easily.
For tourism destinations and businesses, it offers the potential to make information and
booking facilities available to large numbers of consumers at relatively low cost; it
enables them to make large-scale savings on the production and distribution of print
and on other traditional activities (e.g. call centres and information centres); and it
provide a tool for communication and relationship development with tourism
suppliers and market intermediaries, as well as end-consumers.
Tourism has a key difference from most other sectors of e-commerce its consumer
goes and collects the product at the point of production i.e. the destination. Thus
the tourism sector avoids the need to deliver products around the world - a task that
faces real logistical problems that have been a major source of customer
dissatisfaction.
These factors, taken together, have resulted in the travel and tourism sector taking a
larger and larger share of e-commerce globally as documented in Section 1.2. As a
result, the Internet is revolutionising the distribution of tourism information and sales.
Not only does it provide tourism destinations and businesses with direct access to end
consumers, but also it is becoming the primary channel for business to business
communication.
1.2
1.2.1
The importance of the Internet and Internet-based e-commerce

The growth in Internet usage
The dramatic growth in the number of Internet users over the past five years and
projections for the next five years are shown in Figure 1 a nine-fold increase over five
years. The top fifteen countries in terms of the absolute number of Internet users
(predicted for year-end 2001) is shown in Figure 2, with the United States clearly
dominating. The worlds top nine generators of international travel are included
(except The Netherlands) and Pacific-Asia features strongly.
1,333
1400
1200
1000
800
814
600
413
400
200
184
44.5
0
1995
1998
2000
2003
2006
Figure 1 Number of Internet users world-wide (in millions)

[Source: eTForecasts, July 2001]
160
148
140
120
100
80
60
40
48
38
24
20
24
21
17
17
14
12
10
10
Sp
ai
n
Ind
ia
Ru
ss
ia
Au
st
ra
lia
Ta
iw
an
Ita
ly
Br
az
il
Fr
an
ce
UK
Ca
na
da
Ch
in
Ge a
rm
an
So
y
uth
Ko
rea
US
Ja
pa
n
Figure 2
Top 15 markets in terms of numbers of Internet users at year-end 2001
(in millions) [Source: eTForecasts, July 2001]

Figure 3 shows a different pattern the top 15 countries in terms of the number of
Internet users per thousand population. On this basis, smaller countries stand
alongside the larger ones, with Sweden having the highest rate of usage. Other
Scandinavian countries and Australasia also feature strongly, as do the smaller Asian
countries. Of the worlds top ten major markets for outbound international travel, the
following do not appear on this chart: Germany, UK, France, Japan, Italy, Spain and
Belgium.
600
500
546 546 545 540

532 521 516
499 498
467 464
447
410
400
395 385
300
200
100
US
A
Fin
lan
d
Si
ng
ap
or
So
e
ut
hK
or
e
Sw
a
itz
er
lan
d
Au
str
ali
Ne
a
th
er
lan
Ne
ds
w
Ze
ala
nd
Au
str
ia
Ta
iw
an
Sw
ed
en
Ice
lan
d
Ca
na
da
De
nm
ar
k
No
rw
ay
Figure 3 - Top 15 markets in terms of number of Internet users

per thousand population at year-end 2001 [Source: eTForecasts, July 2001]
Future growth in Internet user numbers is expected to vary markedly between the
different regions of the world. Jupiter predicts (Figure 4) that:
North America will have a relatively slow rate of growth, but still remain
predominant in 2003
The largest growth overall will be in Pacific Asia

The largest percentage rates of growth will be in the late adopter markets,
particularly the Middle East (from a low base).
180
160
140
120
100
80
60
40
20
0
North America
Western Europe
Asia Pacific
Middle East
Latin America
Eastern Europe
Africa
1998
1999
2000
2001
2002
2003
Figure 4 - Internet users (in millions) by world region

[Source: Jupiter Communications, 2000, quoted by eMarketer]

Another company, eTForecasts (Figure 5), projects much stronger growth in Asia, to
the extent that it will have overtaken North America by 2003 and will have twice as
many users in 2006. The assumption of rapid growth in Asia is based on rapidly
increasing use of wireless Web devices.
600
500
N. America
W. Europe
E. Europe
Asia
S/C America
M. East/Africa
400
300
200
100
0
1997
2000
2003
2006
Figure 5 - Internet users by regions (in millions), 1997-2006

[Source: eTForecasts, July 2001]
1.2.2
Internet user profile
Internet users tend to be relatively:

wealthy
well educated
interested in independent travel
In other words, they relate very well to some or all of the target markets of many
destinations. However, as the number of Internet users grows, particularly through
increases in the use of new access channels (especially interactive TV and mobile
devices), the user profile will change, broaden and become less up-market.
In the United States, it is already the case that a very high proportion of people
travelling internationally is, or will be soon, Internet users. The same will be true in other
major markets within the next two or three years.
Thus, based on user profile, the Internet appears to be an ideal medium for marketing
by tourism destinations and businesses. We shall see later in this chapter how this is,
indeed, proving to be the case. First, however, we look at the key question of how far
the Internet is being used as a medium for buying, as well as researching.
1.2.3
The growth of Internet commerce
Figure 6 contains a key analysis provided by Jupiter, showing how, in the US, the
propensity to purchase increases directly with length of time as an Internet user. Those
who have been Internet users for three years or more, are more than twice as likely to
buy than a first year user.
100%
16%
23%
80%
37%
45%
60%
Buyers
Browsers
56%
40%
Non-Shoppers
51%
20%
39%
21%
12%
1-2 years
> 2 years
0%
< 1 year
Figure 6 - Browsing and buying, related to experience online - in US

[Source: Jupiter Communications 2000]
Thus, as the market has matured, there has been and will be substantial growth in
both the number and the percentage of Internet users who are buying see Jupiter
figures again in Figure 7. Figures 8 shows IDC forecasts of the number of Internet users
and of Internet buyers on a worldwide basis.
Millions of Users
100
85
67
80
60
40
20
19
23%
29
29%
80%
52
39
34%
40%
100%
60%
47%
54%
40%
20%
0%
1998
1999
2000
Number of Online Buyers
2001
2002
2003
% of Online Users
Figure 7 - Online buyers increase as a proportion of online users in US

[Source: Jupiter Communications]
In millions
977
1,000
INTERNET USERS (includes

PC/IAD and mobile)
800
522
600
INTERNET BUYERS (includes

users purchasing via PC/IAD
and mobile)
446
400
317
143
200
119
WORDWIDE HOME INTERNET

BUYERS
0
2001
2005
Figure 8 IDC Internet Commerce Market Model Worldwide (in millions)

[Source: IDC, 2001]
As a result of these factors, IDC forecasts that e-commerce revenue worldwide will
increase approximately eight-fold between 2001and 2005, rising from $634 billion in
2001 to more than $5 trillion in 2005. The highest growth rates (percentage increases)
are expected to be outside North America. As figure 9 shows, the US, Japan and the
rest of the world are expected (by IDC) to have a reduced share of Internet
commerce, whilst the share of Western Europe and the rest of Asia will increase.
50%
43%
36%
40%
30%
20%
34%
26%
16%
9%
10%
11%12%
6%
6%
US
Western Europe
Japan
Asia
Rest of the World
0%
2001
2005
Figure 9 Shares of Internet Commerce Revenue by Region

[Source: IDC, 2001]

1.2.4
Travel and tourisms market share
For the reasons outlined in Section 1.1, travel and tourism have become rapidly the
single largest category of products sold over the Internet. In 1998, Datamonitor
estimated that their share of Internet commerce increased from 7% in 1997 to 11% in
1998 and they projected an increase then to 35% by 2002. Other sources have
suggested that this forecast may have been achieved already.
Jupiter has forecast that, as a result of these trends, US on-line travel industry sales will
increase from $18 billion in 2000 to $63 billion in 2006, of which nearly half will come
from the corporate travel market. PhoCusWrights projections for Europe are that
online travel and tourism sales will increase from $2.9 billion in 2000 to $10.9 billion by
2002.
1.2.5
Travel products purchased
Travel Industry Association of America (TIA) research in 2001 has shown that a large
majority of Internet using US travellers have bought air tickets and made hotel
reservations online see Figure 10. Because of the size and frequency of air ticket
transactions, they have taken the largest share of the market, but that share is
diminishing, from 80% in 1998 to a forecast 59% in 2003 (Jupiter).
90%
80%
70%
60%
84%
Bought an airline ticket
78%
Made a hotel reservation

59%
Rented a car
50%
40%
30%
20%
Booked entertainment tickets

33%
Booked tickets for amusement park

18% 17%
Booked a travel package
8%
10%
Booked a cruise
0%
Figure 10 - US consumer on-line travel booking by sector

[Source: Travel Industry Association of America, 2001]
1.2.6
The impact of Internet use on traditional channels
A key question for DMOs and tourism businesses is the way in which the Internet is
affecting the use of traditional channels of marketing. A number of recent surveys
cast light on this:
A travel & lifestyle survey for Concierge in 2000 (Figure 11) showed that, across the
US population as a whole, the Internet had already become the number one
source of information consulted when choosing or planning a vacation.
30%
26%
Internet *
22%
Travel Agents
20%
11%
10%
Guide Books
10%
Newspaper/Magazines
0%
* Among Internet users this figure rises to 64%
Figure 11 First source consulted by US consumers for

researching and planning travel [Source: Results of travel & lifestyle survey
for Concierge, 2000 reported at www.hotel-online.com]
Results from the e-Travel tracker Survey, prepared by MORI on behalf of the
Scottish Tourist Board, on the UK market, which tends to follow 18-24 months
behind the US market, showed that in March 2001, the Internet and brochures
were used in similar proportions, as sources of information for booking holidays or
other forms of travel, by Internet using travellers- see Figure 12. In May 2000, when
interviewees were asked which source provided the most complete information,
the Internet was rated much more highly than brochures or any other source
see Figure 13.
60%
50%
Brochures
51% 50%
47%
Internet
Travel Agent
40%
30%
20%
Friends/Relatives/Colleagues
Teletext
29%
24%
Guide Books
16% 16%12%
11%
10%
National Press
Magazines
TV Travel Programmes
0%
Figure 12 - Use of different sources of information for booking decisions UK

Internet users. [Source: Results from theE-Travel Tracker Survey from
www.scotexchange.net, March 2001 Base: all who use the Internet (605)
March 2001]
35%
30%
25%
20%
15%
10%
5%
0%
Internet
31%
Brochures
Travel Agent
22%
Guide Books
16%
Friends/Relatives/Colleagues
12%11%
Teletext
TV Travel Programmes
National Press*
2% 2%
Magazines*
Figure 13 - Most complete source for researching and planning travel

UK consumers. [Source: Results from the E-Travel Tracker Survey from
www.scotexchange.net, May 2000. Base: all who have used any source of
travel information May 2000 (1,112)]
TIA research in 2001(Figure 14) showed that about 70% of Internet using travellers
were using travel agents and state tourism offices less often. A similar proportion
was calling airlines less often, whilst nearly 60% were using other travel call centres
less.
In 2000, US on-line travellers reported that since they started planning

their trips on-line, they were
Using travel agents less often
80%
71%
68%
68%
70%
58%
57%
57%
60%
Calling or visiting state tourism

offices less often
Placing fewer calls directly to
airlines
50%
40%

rental companies
30%

lodging companies
20%
10%
Ordering travel brochures by

phone less often
0%
Figure 14 - Consequences of increased use of Internet for traditional channels

[Source: The Travel Industry Association of America, 2001 (www.tia.org)]
Thus, over a period of only five years, the Internet has become a primary source of
travel information for the more mature markets of Internet users, which are also major
tourism generating countries. At present, the proportion of travel booked through the
Internet is relatively small (between 6 and 15% in the US, according to sector, and less
elsewhere), but will increase substantially, as the number of Internet users grows and
the propensity to purchase increases. It seems reasonable to anticipate that
transactions across the Internet may account for 20-25% of all tourism sales in the
main markets, over the next four or five years.
World Tourism Organizat io n Business Council

1.2.7
1.3
Summary of main market trends
Usage of the Internet is increasing dramatically

Increasing proportio ns of Internet users are buying online
Travel and tourism will gain a larger and larger share of the online commerce
market
Ground products will gain a larger share of online commerce in travel and tourism
User profiles relate well to the target markets many tourism organisatio ns
The Internet is having a major im pact, relativ e to other channels, as a source of
information for choosing and planning holidays and other forms of travel, and
increasing importance as a booking channel.
The concept of electronic business (e-business)
E-business has been defined as im proving business through connectivity

(PriceWaterhouseCoopers1) and the use of Internet technologies to improve and
transform key business processes (IBM 2). Taking these two definit ions together, it is
clear that for tourism destinatio ns and businesses, e-business is about realising the
opportunitie s of improved connectivit y both ex ternally , through the Internet, and
internally , through intranets.
The external dimension is about transformation of the value chain, linking the tourism
supplier (or service provider) to the customer, and of the supply chain, linking the
tourism supplie r with it s ow n supplie rs. This brings in e-marketing, e-commerce and eprocurement:
e-marketing ex plo its the Internet and other forms of ele ctronic communicatio n to
communicate in the most cost-effective ways w it h target markets and to enable
joint working w it h partner organisatio ns, w it h w hom there is a common interest
e-commerce is the sales activit y undertaken through ele ctronic distribution
channels
e-procurement streamlines the purchasing process by allow ing a business to tie its
inventory and procurement systems into the despatch and billing systems of its
suppliers, or vice versa. Not only does this reduce costs through automation, it
also facilitates identificatio n of best value sources of supply .
Figure 15 illustrates diagrammatically how these three aspects of external

connectivity fit within the envelope of e-business.
e-business
e-procurement
e-marketing
e-commerce
Figure 15
Components of the external di mension of e-business
1 ht t p://www .pricew aterhousecoopers.com/extw eb/indissue.nsf/

2 ht t p://www .ibm.com/e-business/ov erv iew /28212.ht ml
10

The internal dimension is about transformation of the way in which the organisation
functions, enabling it to work in a fully integrated way, through the use of common
systems. The transformed organisation should:
Be fully networked for internal and external communication

Use a common set of tools, protocols and standards
Share product and customer data as a common resource

Have staff operating as teams, focused on maximising the synergies of sharing
resources.
In other words, the staff of a DMO or tourism business can work together more
effectively, both to compile information and to use it - in effect, pooling knowledge
and expertise. The tools (applications) that may be shared include content
management, customer relationship management (CRM), financial management
systems (sometimes called Enterprise Resource Planning ERP) and operational
control systems.
The internal and external processes are, of course, linked intimately. Most simply, the
enhanced internal e-business processes enable the organisation to maximise the
benefits of the external opportunities. Also, the boundaries between internal and
external business processes become more flexible. Buying services in (or outsourcing)
becomes a more practical proposition as external connectivity improves.
Thus the benefits of e-business may be summarised as:
More cost-effective communication with target markets
Making it quicker and easier for the customer to buy and thereby increasing
conversion and levels of spending
Improved customer service and retention

Reduced costs through more efficient internal operations and purchasing
processes.
Later chapters of this report look at the implications of e-business for DMOs (Part B)
and tourism businesses (Part C). There is, of course, a direct relationship. The various
categories of tourism business are key elements in the DMOs e-business network (see
Section 2.1). The DMO has a particular responsibility to tourism suppliers to act as
the integrator of the many elements of the destination product and present them in
the marketplace under the umbrella of the destination brand. E-business provides an
ideal way of doing this more effectively.
1.4
The principles of customer relationship management (CRM)
A key aspect of e-business and of e-marketing is customer relationship management

and/or marketing normally referred to by the acronym CRM. CRM is a highly
effective and cost efficient approach, some would call it a philosophy, based on the
principle that knowledge of, and relationship with, customers is key to maximising
sales opportunities, particularly through repeat purchase. It merits particular attention
here, because it provides the basis for re-focusing and restructuring the whole
organisation. The principles can be applied to customers of whatever type whether
end-consumers or intermediaries.
As for e-business generally, there are many definitions of CRM . The one used by
Nykamp Consulting Group 3, optimising all contacts with customers or potential
3
http://www.eyefortravel.com/pastevents/crm/program.html
11

customers, picks up the essence of it in a few words. Nykamp has also provided an
excellent conceptual model for the CRM cycle, set out in Figure 16. Perhaps the best
starting point is the understanding of customer needs (lower right hand quadrant),
followed by the differentiation between customers in terms of those needs and their
potential value and the type of relationship that may be most effective.
Figure 16 The Nykamp CRM cycle

The cycle then moves through product and channel development and customisation
for different segments, customer interaction and delivery of increased value to them,
customer acquisition and retention.
CRM involves building up in depth information about customers or contacts. In the
case of consumers, this information would normally include their socio-demographic
profile, interests and activities, past and possible future requirements, etc. With this
type of information, it is possible to be:
Knowledgeable and efficient in servicing enquiries

Pro-active in targeting best prospect customers with products specifically
appropriate to their needs
Establish the basis for a lifetime relationship with the customer, and maintain it
even where transactions are not involved.
Relationships should be developed over time, as a result of contact through different

channels, requiring that all customer facing staff have access to the same customer
database. In the context of tourism destinations or businesses, the aim should be to
maintain the relationship with customers before, during and after the visit, through the
Web, e-mail, call centre, kiosk, Tourist Information Office, etc. see Section 2.3.
CRM is not a module that can simply be added on to an organisations activities. It
must be integral to the whole ethos and method of operation, with customer (rather
than product) focus to the fore. Marketing staff should be geared to addressing the
12

needs of specific customer segments and their targets should be in terms of customer
acquisition, retention, value and profitability, as well as satisfaction. This will require
excellent monitoring systems, together with creative and focused market research.
As it happens, the Internet provides a good means for instant research (through email or surveys linked to Website usage) on customer requirements, interests,
activities, attitudes, satisfaction, etc. This will need to be supplemented by market
research through traditional methods from time to time.
13

E-Business For Tourism - Practical Guidelines For Destinations and Businesses

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PRACTICAL GUIDELINES FOR TOURISM

World Tourism Organization Business Council

Setting the Scene ........................................................................... 1

The Internet and tourism a powerful combination. ...........................................1

Part B E-Business for Destination Management Organisations

E-Business for DMOs - Principles and Concepts........................... 14

Evolving value chains ........................................................................................14

Implementing a DMS as the infrastructure for e-business ............ 34

Consumer Web sites..................................................................... 68