Literature Review

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Literature Review

Zongqing Zhou (2003) defines e-commerce as “using computer networks to conduct business. This includes buying and selling online, electronic funds transfer, business communications and other activities associated with the buying and selling of goods and services online.” (Ritendra Goel (2007) ) further expands the definition by streamlining their internal processes by using internet technologies.

(Alan Charlesworth, Rita Esen (2007)) mentions five phases that an organisation must follow to achieve e-business adoption. In the first step a company will allow communication by e-mail by ‘creating’ an e-mail address. The second phase involves the creation of a ‘catalogue’ website. The next two phases involve e-commerce and e-business functionality with the last phase being the a Business Transformation, with improved internal and external processes.

E-Commerce has transformed the travel and tourism industry, the communication between the business and its stakeholders and clients. With e-commerce and its business models, they can extend and expand the distribution and value chain. With the Internet, the hospitality industry can communicate with all their stakeholders.
E-business enables businesses to re-design their internal systems through the use of intranets and use extranets to build and improve relationships with partners. “e-tourism will increasingly determine the competitiveness of the organisation.” (Buhalis (2003)).
The European Travel Commission’s 2009 report outlines the following facts about European tourism. Tourism provides 5% direct and 10% indirect, of the European GDP with over two million firms that are active in the tourism industry. (ETC 2009).
Carl H. Marcussen from the Centre for Regional and Tourism Research compiled the following statistics about the European e-Tourism market. In 2008, 58.4 billion Euros in travel sales were conducted over the Internet. The total European travel market was 260 Billion Euros with 25.7% of all sales conducted online.
Direct sellers accounted for 64% of online sales with the remaining 36% from intermediaries. The breakdown of the market in 2008 was composed as follows:
The World Organisation Business Council states that “The Web may account for one in every four travel purchases within the next five years”. The e-tourism market will increase as more people have access to the internet. In a 2009 survey, Eurostat conducted a survey on the EU27 adoption rates. 65% of households had access to internet, an increase of 5% compared to 2008. There is quite a substantial difference in internet adoption rates across the EU27 with household adoption rates from 30% in Bulgaria to 90% in the Netherlands. Malta has an internet access rate of 64%.
The age group with the highest adoption rates are those aged 16-24. Three quarters of people in this age group use the internet on a daily basis. Again, there is a huge difference between the EU27 with the Netherlands leading the pack at 90% with the lowest in Romania at 41% and Malta at 74%.
37% of internet users in the 16-74 age groups have bought a good or a service online. Again, there is a considerable difference between member states with Romania at 2%, Malta at 34% up to 63% in the Netherlands and Sweden. According to the Eurostat survey, men purchase more goods online than women.
Air-travel had 54% of the total market share followed by hotels and other accommodation 19.5%, package tours 15%, rail 17.5 % and rental cars and car ferries with the remaining 4%.
The three major economic forces in Europe (UK, Germany and France) have 64% of the total European market. Southern Europe and the twelve new EU countries have 17% of the total market.
The 2007 European e-Business Readiness Index conducted a survey to assess the ICT adoption rate by the EU27 enterprises. After analysing the data, one immediately notices that “countries from the northern part of Europe steadily occupy the top ranks”. The ‘new’ members of the EU composed of the Mediterranean and Eastern European nations “are still in the developing stage of their e-business environment.
Larger firms perform better in both ICT adoption and ICT use than smaller firms. The IT adoption rate and use also varies in different sectors. “H (Provision of short stay accommodation) seem to be characterised by an important use of ICT given the investments made”.
Eurostat’s “Use of Information and Communication Technologies”of 2008 provides some interesting statistics. “Among those enterprises having a website in the EU27 in January 2008, 57% provided product catalogues or price lists, 26% had facilities for online ordering, 26% for online job advertising or job applications and 10% for online
payment.”

Product catalogues
or price lists Online ordering, reservation or booking. Advertising jobs or online job applications Online Payment
EU27 57 26 26 10
Adapted from: Use of Information and Communication Technologies 173/2008 – 9 December 2008

Hannes Werthner defines the tourism industry as “increasingly being dominated by information”. The World Trade Organisation (WTO) defines a tourist as a person that spends a day or more away from his place of residence with the intention of not going away permanently. Leisure and business are the main reasons for travelling.
The tourism industry can be divided into two main parts. The hospitality sector is part the service suppliers where they provide accommodation services. The second part is the delivery of the service to the clients. These distribution channels are important because this is used to deliver the products to the consumer.
Two main distribution channels can be identified in the travel and tourism industry. The first is direct marketing where the potential client approaches the firm through the internet or through advertising in the media. The second part is when the firm uses intermediaries to make a sale to the customer. Intermediaries in the travel industry earn revenue by earning a commission which is normally a percentage of the selling price.
The tourism market has a number of stakeholders. ICT and the internet have altered the power of each stakeholder. The main stakeholders who each have sometimes conflicting demands are
• Suppliers.
• The consumers.
• The tourist boards.
• The tour operators.
• The travel agents and;
• Online reservation systems.