Chapter 9 A New Paradigm For Internet Research E-commerce and Information Technology in Hospitality and Tourism Copyright 2004 by Zongqing Zhou, PhD Niagara.

Chapter 9Chapter 9

A New Paradigm For Internet ResearchA New Paradigm For Internet Research

E-commerce and Information E-commerce and Information Technology in Hospitality and TourismTechnology in Hospitality and Tourism

Copyright 2004 by Zongqing Zhou, PhDNiagara University

Learning ObjectivesLearning Objectives

After you complete your study of this chapter, After you complete your study of this chapter, you should be able to:you should be able to:Know how to search for information on the Know how to search for information on the

Internet.Internet.Understand how to collect data on the Internet.Understand how to collect data on the Internet.Know how to analyze the data you collect from the Know how to analyze the data you collect from the

Internet.Internet.Be familiar with the major measurements used inBe familiar with the major measurements used inInternet market researchInternet market research..

9.1 Defining Internet Research9.1 Defining Internet Research

Internet researchInternet research is, for the most part, no different is, for the most part, no different from traditional research in that it is the process of from traditional research in that it is the process of seeking, collecting, and analyzing data to arrive at seeking, collecting, and analyzing data to arrive at information that aids decision making.information that aids decision making.

It is, however, different from traditional research It is, however, different from traditional research since it uses different media and measurements since it uses different media and measurements that have been made possible by Internet that have been made possible by Internet technologies.technologies.

Furthermore, Internet research differs from Furthermore, Internet research differs from traditional research in that it deals more with traditional research in that it deals more with dynamic information than with static information. dynamic information than with static information. It is fast paced, ever changing, and evolving.It is fast paced, ever changing, and evolving.

9.2 Information Search On The 9.2 Information Search On The InternetInternet

The Internet is a vast sea of information. The Internet is a vast sea of information. The Internet consists primarily of a variety of access The Internet consists primarily of a variety of access

protocols.protocols. These include e-mail, These include e-mail, Mailing Lists, Mailing Lists, HTTP, and Usenet HTTP, and Usenet

news.news. Many of these protocols have their own programs that allow Many of these protocols have their own programs that allow

you to search for and retrieve material made available by a you to search for and retrieve material made available by a specific protocol.specific protocol.

The Internet is not really a library in which all available The Internet is not really a library in which all available items are identified and can be retrieved by a single items are identified and can be retrieved by a single catalog. Rather, it is a network of libraries, each of which catalog. Rather, it is a network of libraries, each of which may require different IDs to allow access.may require different IDs to allow access.

9.2 Information Search On The 9.2 Information Search On The Internet (cont.)Internet (cont.)

There are a number of ways you can search for There are a number of ways you can search for or gain information on the Internet:or gain information on the Internet:conduct a search using a Web search engineconduct a search using a Web search engineParticipate in an e-mail discussion group or Usenet Participate in an e-mail discussion group or Usenet

newsgroupnewsgroupUse a known URL to directly access informationUse a known URL to directly access informationSpecial applicationsSpecial applications


Special applicationsSpecial applications CookiesCookies Log filesLog files SpywareSpyware Special log file analysisSpecial log file analysis Consulting and research firmsConsulting and research firms Online researchOnline research


Conduct A Search Using A Web Search EngineConduct A Search Using A Web Search EngineSearch engines rely on search logicSearch engines rely on search logic to find the to find the

information you request. information you request. Boolean logic refers to the logical relationship Boolean logic refers to the logical relationship

among search terms.among search terms.Boolean logic is a method of combining terms Boolean logic is a method of combining terms

using “operators,” such as AND, OR, and AND using “operators,” such as AND, OR, and AND NOT. AND requires that all terms appear in a NOT. AND requires that all terms appear in a record, OR retrieves records with either term, and record, OR retrieves records with either term, and AND NOT excludes terms.AND NOT excludes terms.


Some of the more popular search engines are:Some of the more popular search engines are: About.com (www.about.com)About.com (www.about.com) AltaVista (www.altavista.com)AltaVista (www.altavista.com) Academic Info (www.academicinfo.net)Academic Info (www.academicinfo.net) Excite (www.excite.com)Excite (www.excite.com) HotBot (HotBot (http://http://hotbot.lycos.comhotbot.lycos.com)) Google (www.google.com)Google (www.google.com) Infomine (http://infomine.ucr.edu)Infomine (http://infomine.ucr.edu) Librarians’ Index (www.lii.org)Librarians’ Index (www.lii.org) Northern Light (www.nlsearch.com)Northern Light (www.nlsearch.com) ProFusion (www.profusion.com)ProFusion (www.profusion.com) WebCrawler (www.webcrawler.com)WebCrawler (www.webcrawler.com) Yahoo! (www.yahoo.com)Yahoo! (www.yahoo.com)


Participate In An E-mail Discussion Group Or Participate In An E-mail Discussion Group Or Usenet NewsgroupUsenet Newsgroup An effective way to obtain information on any interest is to An effective way to obtain information on any interest is to

join an e-mail discussion group (Mailing List) or a Usenet join an e-mail discussion group (Mailing List) or a Usenet newsgroup.newsgroup.

To search for a discussion group, go to To search for a discussion group, go to www.liszt.comwww.liszt.com or or www.alabanza.com/kabacoff/Inter-Links/ listserv.html. www.alabanza.com/kabacoff/Inter-Links/ listserv.html.

Usenet newsgroups provide another great place to look for Usenet newsgroups provide another great place to look for information you need.information you need.


http://groups.google.com, where you can find the http://groups.google.com, where you can find the following newsgroups:following newsgroups: . alt: Any conceivable topic. alt: Any conceivable topic . biz: Business products, services, and reviews. biz: Business products, services, and reviews . comp: Hardware, software, and consumer information. comp: Hardware, software, and consumer information . humanities: Fine arts, literature, and philosophy. humanities: Fine arts, literature, and philosophy . misc: Employment, health, and much more. misc: Employment, health, and much more . rec: Games, hobbies, and sports. rec: Games, hobbies, and sports . sci: Applied and social science. sci: Applied and social science . news: Information about Usenet news. news: Information about Usenet news . soc: Social issues and culture. soc: Social issues and culture . talk: Current issues and debates. talk: Current issues and debates


Use A Known URL To Directly Access Use A Known URL To Directly Access InformationInformationIf you know the If you know the URL URL (Universal Resource (Universal Resource

Locator), the Web site address of an information Locator), the Web site address of an information source, you can type in the address bar of a source, you can type in the address bar of a browser and go directly to the source. browser and go directly to the source.

Most browsers now offer the capability of using Most browsers now offer the capability of using the major part of the URL to carry out the search.the major part of the URL to carry out the search.

9.3 Collecting Data On The Internet9.3 Collecting Data On The Internet

Potential benefits of collecting data on the Potential benefits of collecting data on the InternetInternetFasterFasterConvenientConvenient Instant tracking and measurementInstant tracking and measurement InexpensiveInexpensive


Approaches to data collection in the Approaches to data collection in the Internet:Internet:The servers The servers log files log files (Figure 9.1) (Figure 9.1) Specialized data collection and analysis Specialized data collection and analysis

software (Figure 9.2)software (Figure 9.2)


How does a log file analysis work?How does a log file analysis work? The Web visitor issues requests (typically by clicking The Web visitor issues requests (typically by clicking

the mouse) to view specific pages on a site.the mouse) to view specific pages on a site. When the Web server receives these requests, it When the Web server receives these requests, it

serves the requested pages back to the visitor.serves the requested pages back to the visitor. In the meantime, the Web server records each In the meantime, the Web server records each

visitor’s request in a chronological log file.visitor’s request in a chronological log file. In order to see and analyze these records, the Web In order to see and analyze these records, the Web

site owner must use proprietary site owner must use proprietary log file analysis log file analysis software software to extract useful information from these log to extract useful information from these log files. The reports generated from the analysis can files. The reports generated from the analysis can then be distributed to the parties concerned.then be distributed to the parties concerned.

9.3 Collecting Data On The Internet9.3 Collecting Data On The Internet How does a typical specialized online data collection How does a typical specialized online data collection

software work?software work? The Web visitor issues requests to view specific pages on a The Web visitor issues requests to view specific pages on a

site.site. When the Web server receives these requests, it serves the When the Web server receives these requests, it serves the

requested pages back to the users.requested pages back to the users. When a page is displayed on a browser, a special HitBox code When a page is displayed on a browser, a special HitBox code

that the site owner has embedded in the page sends a variety of that the site owner has embedded in the page sends a variety of anonymous information about the page and user to anonymous information about the page and user to WebSideStory (www.websidestory.com), where it is WebSideStory (www.websidestory.com), where it is immediately integrated into the HitBox database for the site.immediately integrated into the HitBox database for the site.

Anyone who is authorized by the site owner can log on to the Anyone who is authorized by the site owner can log on to the WebSideStory site and request HitBox audience information.WebSideStory site and request HitBox audience information.


Other ways to collect data on the WebOther ways to collect data on the Web Cookies: used by a Web server to collect information Cookies: used by a Web server to collect information

from a computer about its user—the online visitor.from a computer about its user—the online visitor. Online formsOnline forms: : ask online visitors to fill out a form ask online visitors to fill out a form

about themselves in terms of their interests and other about themselves in terms of their interests and other important demographic information.important demographic information.

Secondary data collection: searching the Internet for Secondary data collection: searching the Internet for the specific information you are looking for.the specific information you are looking for.

Online surveys: Internet surveys can be constructed Online surveys: Internet surveys can be constructed in such a way that makes filling out the form both in such a way that makes filling out the form both easier and less formidable.easier and less formidable.


Web authoring programsWeb authoring programs Provides many options for the user to select the kind Provides many options for the user to select the kind

of format in which to store the data collected. of format in which to store the data collected. The user can choose to store the data in text form, in The user can choose to store the data in text form, in

HTML form, or in a database form. The user can HTML form, or in a database form. The user can export the database form to a spreadsheet or export the database form to a spreadsheet or database program. database program.

The user can also do statistical analysis right away, The user can also do statistical analysis right away, providing instant analysis of the data collected.providing instant analysis of the data collected.


Tourism consulting and research Tourism consulting and research companies and organizationscompanies and organizationsTypical services offered include the following:Typical services offered include the following:

data collectiondata collectionmarket analysismarket analysisonline consumer behavior studiesonline consumer behavior studies


Specific tasks may include:Specific tasks may include: Web site evaluationWeb site evaluation Customer profilingCustomer profiling Attitude and use testing (also called habits and Attitude and use testing (also called habits and

practices)practices) Customer satisfaction measurement, spanning a Customer satisfaction measurement, spanning a

range of applications and experiences, including range of applications and experiences, including incentive reward programs, membership registration incentive reward programs, membership registration and log-in, customer service, purchase experience, and log-in, customer service, purchase experience, community/support group experience, and e-mail community/support group experience, and e-mail marketing programs marketing programs

Major research firms (Table 9.4)Major research firms (Table 9.4)

9.4 Analyzing Data On The Internet9.4 Analyzing Data On The Internet

Analyzing data collected from the Internet Analyzing data collected from the Internet is not that much different from analyzing is not that much different from analyzing data collected by traditional means.data collected by traditional means.

The principles underlying data analysis, The principles underlying data analysis, such as reliability, statistical measurement, such as reliability, statistical measurement, and sampling bias, still apply. and sampling bias, still apply.

However, there is no consensus so far However, there is no consensus so far regarding the criteria governing these regarding the criteria governing these principles.principles.


Issues in online researchIssues in online researchHow do we define a probability sample?How do we define a probability sample?The anonymous nature of the Internet makes The anonymous nature of the Internet makes

it even more difficult to apply the results of the it even more difficult to apply the results of the research to a general population.research to a general population.

In secondary data online research, you need In secondary data online research, you need to be careful about the accuracy of the data to be careful about the accuracy of the data collected from online sources since they can collected from online sources since they can be published by anyone who knows how to be published by anyone who knows how to publish on the Internet.publish on the Internet.


Major companies that provide online Major companies that provide online statistical analysis data for the hospitality statistical analysis data for the hospitality and tourism industry include:and tourism industry include:Jupiter CommunicationsJupiter CommunicationsNielsen NetRatingsNielsen NetRatingsStatMarket (http://statmarket.com), a division StatMarket (http://statmarket.com), a division

of the Internet market research firm of the Internet market research firm WestSideStory (WestSideStory (www.websidestory.comwww.websidestory.com).).


Some of the main services StatMarket Some of the main services StatMarket provides, besides offering online data analysis, provides, besides offering online data analysis, include the following:include the following:

1.1. Top referring search sites—From Yahoo to Excite Top referring search sites—From Yahoo to Excite and Lycos, it monitors all the top search sites. See and Lycos, it monitors all the top search sites. See what percentage of referrals each one is generating what percentage of referrals each one is generating worldwide.worldwide.

2.2. Referring domains—See what the top referring Referring domains—See what the top referring sources of traffic to Web sites consist of, broken sources of traffic to Web sites consist of, broken down by search sites, direct navigation/bookmarks, down by search sites, direct navigation/bookmarks, and links from other sites.and links from other sites.

3.3. Visitor countries—See what countries have the most Visitor countries—See what countries have the most surfers on the Web per day.surfers on the Web per day.


4.4. Top Internet Service Providers (ISPs)—Find out what Top Internet Service Providers (ISPs)—Find out what percentage of surfers are connecting through each of percentage of surfers are connecting through each of the top ISPs.the top ISPs.

5.5. Loyalty index—What percentage of surfers visit a site Loyalty index—What percentage of surfers visit a site for the first time every day? What about additional for the first time every day? What about additional visits? visits?

6.6. Frequency index—What percentage of surfers visit a Frequency index—What percentage of surfers visit a site once a month? Twice a month? This list details how site once a month? Twice a month? This list details how often the average Web site worldwide is visited.often the average Web site worldwide is visited.

7.7. Major visitor domains—Give a percentage breakdown of Major visitor domains—Give a percentage breakdown of all the major domains of Web surfers worldwide, all the major domains of Web surfers worldwide, including how much traffic is coming from non-U.S. including how much traffic is coming from non-U.S. domains.domains.


8.8. Referring countries—See what percentages of non-U.S. Referring countries—See what percentages of non-U.S. Web surfers use the domain extension of the country Web surfers use the domain extension of the country they are in.they are in.

9.9. Referring major domains—Learn which major domains Referring major domains—Learn which major domains are responsible for referring the most traffic to other are responsible for referring the most traffic to other sites.sites.

10.10. Day of week—Find out which days of the week are the Day of week—Find out which days of the week are the most popular for Web surfing.most popular for Web surfing.

11.11. Time zones—Which time zones are most wired? See a Time zones—Which time zones are most wired? See a breakdown of each time zone by percentage.breakdown of each time zone by percentage.

12.12. Rush hour–Review a list of which hours of the day Rush hour–Review a list of which hours of the day generate the most surfer traffic, both locally and generate the most surfer traffic, both locally and globally.globally.

9.5 Measurements For E-marketing 9.5 Measurements For E-marketing And Online Consumer BehaviorAnd Online Consumer Behavior

Measuring the effectiveness of conducting Measuring the effectiveness of conducting online consumer behavior research, online consumer behavior research, marketing and advertisingmarketing and advertising

The Internet has offered a whole new set The Internet has offered a whole new set of tools to measure these activities.of tools to measure these activities.

Most of the terms discussed here are Most of the terms discussed here are special terms used only in Internet special terms used only in Internet marketing and advertising research. marketing and advertising research.


Use Table 9.5 for explaining these termsUse Table 9.5 for explaining these terms Banner: A banner is really an ad in the traditional sense. It is Banner: A banner is really an ad in the traditional sense. It is

typically a graphic image or set of animated images displayed on typically a graphic image or set of animated images displayed on a Web site.a Web site.

Impression: An impression is a measure of how many times an Impression: An impression is a measure of how many times an ad is served on a sponsoring site. ad is served on a sponsoring site.

Click: A click, as its name suggests, means that a visitor clicks Click: A click, as its name suggests, means that a visitor clicks on a displayed ad banner. on a displayed ad banner.

Click stream: A click stream refers to a recorded path of pages a Click stream: A click stream refers to a recorded path of pages a visitor has clicked through. visitor has clicked through.

Click-through: A click-through often is used interchangeably with Click-through: A click-through often is used interchangeably with “click.” “click.”

Click-through rate: The click-through rate measures the Click-through rate: The click-through rate measures the percentage of impressions rate that results in click-throughs. percentage of impressions rate that results in click-throughs.


Conversion: Another term for “click-though.” Conversion: Another term for “click-though.” CPM: A measurement used by ad agencies or CPM: A measurement used by ad agencies or

site owners to charge advertisers. CPM stands site owners to charge advertisers. CPM stands for “cost per thousand” online ad impressions.for “cost per thousand” online ad impressions.

Pay per lead: When an advertiser places a Pay per lead: When an advertiser places a banner on a site and a visitor clicks on the banner on a site and a visitor clicks on the banner to complete what the banner intends him banner to complete what the banner intends him or her to do, the advertiser pays accordingly.or her to do, the advertiser pays accordingly.

ROI Stands for “return on investment.” ROI Stands for “return on investment.”


Run of An ad network enables you to place your Run of An ad network enables you to place your ad on all its associated network sites, giving you ad on all its associated network sites, giving you the power of large-scale exposure.the power of large-scale exposure.

Unique visitor A unique visitor is someone who Unique visitor A unique visitor is someone who visits a Web site with a unique IP address for the visits a Web site with a unique IP address for the first time in one day or a specified period of time.first time in one day or a specified period of time.

Hit: A hit is a record of a requested file from the Hit: A hit is a record of a requested file from the server.server.


Other issues related to Internet researchOther issues related to Internet researchPrivacyPrivacyCopyrightCopyrightEthicsEthicsRights of individual online visitorsRights of individual online visitors

8.2 Historical Perspective8.2 Historical Perspective

Historically, travel agents played an essential role in Historically, travel agents played an essential role in hospitality and tourism.hospitality and tourism.

They were a leading intermediary between the They were a leading intermediary between the traveling public traveling public and travel carriers and suppliers. and travel carriers and suppliers.

Travel agents were supposed to be trained Travel agents were supposed to be trained professionals with extensive knowledge of the professionals with extensive knowledge of the hospitality and tourism industry. hospitality and tourism industry.

8.2 Historical Perspective (cont.)8.2 Historical Perspective (cont.)

They were there not only to sell tickets but also, They were there not only to sell tickets but also, supposedly, to provide advice and recommendations supposedly, to provide advice and recommendations on every aspect of a trip, from planning to onsite on every aspect of a trip, from planning to onsite visitation. visitation.

They act as the They act as the retailer retailer and and promoter promoter on behalf of on behalf of the service providers, that is, the travel carriers and the service providers, that is, the travel carriers and suppliers. suppliers.

Agents sell these products and services directly to the Agents sell these products and services directly to the traveling public and in return receive a traveling public and in return receive a commission commission from the travel carriers and suppliers.from the travel carriers and suppliers.

Travel Agents and the Value of Travel Agents and the Value of Information AccessInformation Access

Travel products are unique in that they are not Travel products are unique in that they are not tangible nature, travel is about the experience.tangible nature, travel is about the experience.

Agents provide the key to an unforgettable travel Agents provide the key to an unforgettable travel encounter in providing critical travel information that encounter in providing critical travel information that leads to a satisfactory experience.leads to a satisfactory experience.

In the past, travel agents were held in high esteem In the past, travel agents were held in high esteem because they were virtually the most important, if not because they were virtually the most important, if not the only, medium through which consumers could the only, medium through which consumers could gain travel information and make advanced travel gain travel information and make advanced travel purchases.purchases.

The key to success was their access to travel The key to success was their access to travel information not available directly to the public.information not available directly to the public.

Travel Agents and the Airline Travel Agents and the Airline IndustryIndustry

Travel agents relations with airline carriers create Travel agents relations with airline carriers create many impacts within the industry. many impacts within the industry.

Travel agents relied heavily on the commissions they Travel agents relied heavily on the commissions they received from airline ticket sales to stay in business.received from airline ticket sales to stay in business.

At the same time, airlines conducted a majority of At the same time, airlines conducted a majority of their ticket sales through agents.their ticket sales through agents.

Many issues faced by agents have come about Many issues faced by agents have come about because airline commissions have such a great effect because airline commissions have such a great effect on travel agents.on travel agents.

Why airlines need travel agents?Why airlines need travel agents?

The travel agents’ great popularity and The travel agents’ great popularity and visibility in the eye of the public.visibility in the eye of the public.

How did this relationship develop How did this relationship develop over the years?over the years?

Travel agents have not always been present since the Travel agents have not always been present since the airlines began shuttling travelers around the world.airlines began shuttling travelers around the world.

Historically, airlines were dependent on any person who Historically, airlines were dependent on any person who had contact with the traveling public to sell their tickets.had contact with the traveling public to sell their tickets.

In 1945, the In 1945, the Air Traffic Conference Air Traffic Conference (ATC) was (ATC) was established by the airline industry to alleviate this established by the airline industry to alleviate this unorganized method of distribution.unorganized method of distribution. The conference system was responsible for establishing The conference system was responsible for establishing

agreements and standards that would regulate the activity of agreements and standards that would regulate the activity of domestic airlines and the dispersion of their tickets.domestic airlines and the dispersion of their tickets.

It also established the modern-day travel agent.It also established the modern-day travel agent.

Travel Agency and Airline Travel Agency and Airline RegulationsRegulations

The ATC Passenger Agency Program was The ATC Passenger Agency Program was developed to determine the conditions for the developed to determine the conditions for the authorization of agents. This system protected authorization of agents. This system protected airlines from dealing with unqualified distributors.airlines from dealing with unqualified distributors.

ATC ATC accreditation accreditation was based on several was based on several standards:standards: business practicesbusiness practices financial requirementsfinancial requirements personnel trainingpersonnel training and agency locationand agency location

Travel Agency and Airline Travel Agency and Airline Regulations (cont.)Regulations (cont.)

A major provision of the Passenger Agency Program A major provision of the Passenger Agency Program was the 20 percent rule. This rule required that an agent was the 20 percent rule. This rule required that an agent must do less than 20 percent of its annual air must do less than 20 percent of its annual air transportation business with itself or other businesses transportation business with itself or other businesses under its control. Which prevents large corporations under its control. Which prevents large corporations from forming agencies to regulate distribution of their from forming agencies to regulate distribution of their own business travel.own business travel.

Any price commanded by the CAB (Civil Aeronautics Any price commanded by the CAB (Civil Aeronautics Board) was dictated to travel agents for sales. All Board) was dictated to travel agents for sales. All airlines were required to charge the same fare for flight airlines were required to charge the same fare for flight to and from the same city.to and from the same city.


Not long after the establishment of the ATC, the Not long after the establishment of the ATC, the International Air Transportation Association International Air Transportation Association (IATA) was formed for the regulation of (IATA) was formed for the regulation of international air travel. international air travel.

The IATA has the same basic functions of the The IATA has the same basic functions of the ATC: security, safety standards, and ATC: security, safety standards, and appointment of travel agencies to represent appointment of travel agencies to represent member airlines.member airlines.


The The Civil Aeronautics Board Civil Aeronautics Board (CAB) regulated (CAB) regulated air travel from 1938 to 1978. Among its duties:air travel from 1938 to 1978. Among its duties: granting airline routesgranting airline routes controlling farescontrolling fares protecting the interest of the publicprotecting the interest of the public airline fares: Airlines themselves had little control in airline fares: Airlines themselves had little control in

pricing their own tickets. Any price commanded by the pricing their own tickets. Any price commanded by the CAB was dictated to travel agents for sales. All CAB was dictated to travel agents for sales. All airlines were required to charge the same fare for airlines were required to charge the same fare for flights to and from the same city.flights to and from the same city.

Airline DeregulationsAirline Deregulations In the winter of 1973, worldwide oil supply shortage In the winter of 1973, worldwide oil supply shortage

almost broke the airlinesalmost broke the airlines By 1977, the CAB had implemented By 1977, the CAB had implemented deregulation deregulation

allowing discount fares and advocated total airline allowing discount fares and advocated total airline deregulation.deregulation.

From 1976 to 1978, a boom in the airline industry From 1976 to 1978, a boom in the airline industry resulted from these changes spurred the growth and resulted from these changes spurred the growth and success for travel agencies.success for travel agencies.

In the aftermath of the deregulation, airlines had the In the aftermath of the deregulation, airlines had the added freedom of allowing non-ATC agencies to sell added freedom of allowing non-ATC agencies to sell ticketstickets

Airline Deregulation Act and Its ImpactAirline Deregulation Act and Its Impact

The passage of the The passage of the Airline Deregulation ActAirline Deregulation Act, signed by , signed by President Carter in 1978, removed all remaining President Carter in 1978, removed all remaining obstacles to route entry by established carriers, opened obstacles to route entry by established carriers, opened up entry to new carriers, and phased out all fare up entry to new carriers, and phased out all fare regulations.regulations.

Major components of this law, the gradual Major components of this law, the gradual dismantling of the CAB by 1985, thus eliminating dismantling of the CAB by 1985, thus eliminating any prospect of further airline regulation. The any prospect of further airline regulation. The second is the scope of antitrust legislation that was second is the scope of antitrust legislation that was entered into upon the freedom to competition and entered into upon the freedom to competition and protection from monopolies gained by the industry.protection from monopolies gained by the industry.

Ticket prices rose and fell based on individual Ticket prices rose and fell based on individual instruction, competition accelerated.instruction, competition accelerated.

Airline Deregulations Act and Its Impact Airline Deregulations Act and Its Impact (cont.)(cont.)

The Act had two major components:The Act had two major components: The first was the gradual dismantling of the CAB The first was the gradual dismantling of the CAB

by 1985by 1985 The second was the scope of antitrust legislation The second was the scope of antitrust legislation

that was entered into on the freedom to that was entered into on the freedom to competition and protection from monopolies competition and protection from monopolies gained by the industry.gained by the industry.

Airlines experienced a period of unlimited Airlines experienced a period of unlimited freedom following deregulation. freedom following deregulation. ..

Airline Deregulations Act and Its Impact Airline Deregulations Act and Its Impact (cont.)(cont.)

The importance of travel agents to the The importance of travel agents to the travel public was obviously increased travel public was obviously increased since travelers were depending more and since travelers were depending more and more on travel agents for deals and for more on travel agents for deals and for understanding the complicated rules of understanding the complicated rules of airline ticket pricing.airline ticket pricing.

The Rapid Growth of Travel AgenciesThe Rapid Growth of Travel Agencies

Travel agencies experienced unprecedented Travel agencies experienced unprecedented economic gain as airlines prospered in the wake of economic gain as airlines prospered in the wake of deregulation. deregulation.

The number of travel agencies around the country The number of travel agencies around the country multiplied at an alarming rate. Increases in multiplied at an alarming rate. Increases in commissions were a result of the confusion that commissions were a result of the confusion that airlines felt with their newfound freedom and were airlines felt with their newfound freedom and were readily accepted by agents.readily accepted by agents.

For the time being, the travel agent industry was a For the time being, the travel agent industry was a prosperous one that appeared to have limitless prosperous one that appeared to have limitless opportunities.opportunities.

The Rapid Growth of Travel AgenciesThe Rapid Growth of Travel Agencies

Since CAB was dismantled and the validity of the Since CAB was dismantled and the validity of the ATC conference system were questioned, travel agent ATC conference system were questioned, travel agent exclusivity and agency accreditation procedures were exclusivity and agency accreditation procedures were no longer abided byno longer abided by

The travel agency industry experienced its own The travel agency industry experienced its own deregulation in December 1982.deregulation in December 1982.

Travel Agency Industry DeregulationTravel Agency Industry Deregulation

The largest change resulting from agency The largest change resulting from agency deregulation was the implementation of the Airline deregulation was the implementation of the Airline Reporting Corporation (ARC), which, in 1984, Reporting Corporation (ARC), which, in 1984, replaced the ATC while maintaining most of its replaced the ATC while maintaining most of its functions.functions.

The ARC allowed airlines to decide for themselves The ARC allowed airlines to decide for themselves who represented them and their ticket distribution, who represented them and their ticket distribution, giving the airlines gained enormous power in the giving the airlines gained enormous power in the distribution of air travel information and ticketing distribution of air travel information and ticketing and also sowed the seeds for the strained and and also sowed the seeds for the strained and hostile relationship between the airlines and the hostile relationship between the airlines and the travel agencies over the structure of commissions in travel agencies over the structure of commissions in the age of e-commercethe age of e-commerce

Impact Of The Deregulations On Impact Of The Deregulations On Travel AgentsTravel Agents

Both deregulations set the tone for the Both deregulations set the tone for the industry standards and practices that were industry standards and practices that were followed up to the birth of Internet e-followed up to the birth of Internet e-commerce.commerce.

Without airline deregulation, the airlines may Without airline deregulation, the airlines may have had a much more difficult time jumping have had a much more difficult time jumping on the Internet distribution channel and on the Internet distribution channel and freeing themselves from the influence of freeing themselves from the influence of travel agents.travel agents.

Commission and the Travel AgentsCommission and the Travel Agents

The The commission structure commission structure of travel agents with travel of travel agents with travel carriers and suppliers as well as travelers is such that carriers and suppliers as well as travelers is such that potential troubles for travel agents were already potential troubles for travel agents were already planted. planted.

Travel agent commissions are unique in that they are Travel agent commissions are unique in that they are subtracted from the selling price of a ticket rather than subtracted from the selling price of a ticket rather than added on the final cost for the customer. added on the final cost for the customer.

Travel agents’ monetary compensations come solely Travel agents’ monetary compensations come solely from the service providers, not the customers they from the service providers, not the customers they work with. work with.

Commission and the Travel Agents (cont.)Commission and the Travel Agents (cont.)

Therefore, agencies are at the mercy of Therefore, agencies are at the mercy of those who direct commission payouts; those who direct commission payouts; these people determine the financial these people determine the financial success of an agency. success of an agency.

Airline commissions account for Airline commissions account for approximately two-thirds to nine-tenths of approximately two-thirds to nine-tenths of a travel agency’s total income (Foster a travel agency’s total income (Foster 1990). 1990).

The Failure of a Business ModelThe Failure of a Business Model

Relationships between travel agents and the airlines Relationships between travel agents and the airlines have been dictated largely by the airlines since it is the have been dictated largely by the airlines since it is the airlines who control the commission structure, not the airlines who control the commission structure, not the agents.agents.

There is strong incentive for airlines to reduce the There is strong incentive for airlines to reduce the commissions since it is a considerable part of their commissions since it is a considerable part of their operating expenses in selling tickets.operating expenses in selling tickets.

It is not surprising that when the Internet provides an It is not surprising that when the Internet provides an alternative for airline ticket and information distribution, alternative for airline ticket and information distribution, airlines were the first ones to capitalize on it.airlines were the first ones to capitalize on it.

A commission cut seemed to be a logical step for airlines A commission cut seemed to be a logical step for airlines since they were relying less on their old-time partners, since they were relying less on their old-time partners, travel agents, to complete sale transactions.travel agents, to complete sale transactions.

8.3 Technology And Travel Agents8.3 Technology And Travel Agents

In the years preceding such information In the years preceding such information technology advances, agents had to technology advances, agents had to access information through various access information through various channels, phone calls to central locations, channels, phone calls to central locations, using wall-sized availability boards and a using wall-sized availability boards and a manual method called the “lazy Susan,” manual method called the “lazy Susan,”

Travel agents depend on the airlines to Travel agents depend on the airlines to provide technology support provide technology support

Computer Reservation SystemsComputer Reservation SystemsHistoryHistory

The first CRS (computer reservations systemsThe first CRS (computer reservations systems) ) was officially introduced in 1953 by a partnership was officially introduced in 1953 by a partnership between American Airlines and IBM.between American Airlines and IBM.

This system later became known as Semi-This system later became known as Semi-Automated Business Research Environment, Automated Business Research Environment, better known as better known as SabreSabre

These systems have traditionally been These systems have traditionally been organized by individual airlines to handle organized by individual airlines to handle reservations, ticketing, schedules, and seat reservations, ticketing, schedules, and seat inventoriesinventories

Soon, other airlines followed suit and developed Soon, other airlines followed suit and developed their own CRSstheir own CRSs

Global Distribution Systems Global Distribution Systems HistoryHistory

Sabre is both a CRS and a global distribution system Sabre is both a CRS and a global distribution system (GDS) of travel information and ticket reservations.(GDS) of travel information and ticket reservations.

A GDS is basically a computer reservations system that A GDS is basically a computer reservations system that contains a vast database of inventories and travel contains a vast database of inventories and travel information of participating travel carriers and suppliers information of participating travel carriers and suppliers who pay a fee to subscribe to the GDS service who pay a fee to subscribe to the GDS service

It was impractical for travel agents to subscribe to It was impractical for travel agents to subscribe to different CRSs owned by different airlines. different CRSs owned by different airlines.

A system called GDS would be needed to collect all A system called GDS would be needed to collect all airline information into one mass database. airline information into one mass database.

These GDSs serve as centralbrepositories for all kinds of These GDSs serve as centralbrepositories for all kinds of data and information, ranging from databasesbof data and information, ranging from databasesbof reservations to information about the travelers who made reservations to information about the travelers who made reservationsbwith themreservationsbwith them

Major GDS systemsMajor GDS systems

Sabre Sabre (www.sabre. com)(www.sabre. com)Galileo/Apollo Galileo/Apollo ((www.galileo.comwww.galileo.com))Amadeus Amadeus ((www.amadeus.comwww.amadeus.com))Worldspan Worldspan ((www.worldspan.comwww.worldspan.com))

Table 8.1 A Brief View of Global Distribution Systems

Company/WebsiteInternet Gateway for corporate &/or travel agents

Internet Gateway for individual travelers

Sabrewww.sabre.com

www.getthere.com www.virtuallythere.com Galileo/Apollo

www.galileo.com www.travelgalileo.com

www.viewtrip.com

Amadeuswww.amadeus.com

www.e-travel.com www.checkmytrip.com Worldspan

www.worldspan.com

www.tripmanager.com

www.mytripandmore.com

Travel Agents and the InternetTravel Agents and the Internet Travel agents responses to the challenge of the InternetTravel agents responses to the challenge of the Internet

blame the airlines, accusing them of breaking the traditional blame the airlines, accusing them of breaking the traditional partnership and practicing bad business ethics. partnership and practicing bad business ethics.

shrug their shoulders and shut their eyes to the changes by shrug their shoulders and shut their eyes to the changes by saying that people will never leave travel agents since they saying that people will never leave travel agents since they always need live human help. always need live human help.

claimed that Internet was a fad and that it would go away as claimed that Internet was a fad and that it would go away as the frenzy died down. the frenzy died down.

simply give up, claiming that doomsday had come for the simply give up, claiming that doomsday had come for the travel agents. travel agents.

look for ways to survive, compete, and ride the tidal wave of look for ways to survive, compete, and ride the tidal wave of e-commerce e-commerce

Travel Agents and the Internet (cont.)Travel Agents and the Internet (cont.)

Three things travel agents need to do before Three things travel agents need to do before they subscribe to any particular visions or they subscribe to any particular visions or claims.claims.

1.1. ask the questions about their business:ask the questions about their business: Why are customers leaving us?Why are customers leaving us? Are we meeting the changing needs of our customers?Are we meeting the changing needs of our customers? How can we keep and grow our customer base?How can we keep and grow our customer base?

2.2. ask questions about the use of technologies:ask questions about the use of technologies: What can the Internet do for us and our customers?What can the Internet do for us and our customers? What can I do to take advantage of the Internet to meet the What can I do to take advantage of the Internet to meet the

needs of my customers?needs of my customers?

3.3. come up with strategies. come up with strategies.

Table 8.2 Questions and Answers for Table 8.2 Questions and Answers for Travel AgentsTravel Agents

Why travelers Why travelers Leave Travel Leave Travel agentsagents

Convenience factor (not accessible 24/7)Convenience factor (not accessible 24/7)Illusion of cheaper fareIllusion of cheaper fareGlamour of shopping onlineGlamour of shopping onlineImage problem: agents and low techImage problem: agents and low techCustomer Service(unhappy agent Customer Service(unhappy agent service)service)Curiosity of technologyCuriosity of technology

Motivating Motivating Factors for Factors for the use of the the use of the InternetInternet

24/7 accessibility24/7 accessibilityInformation, rich, and updatedInformation, rich, and updatedSeeing/comparing optionsSeeing/comparing optionsGlobal reachGlobal reachControl over decision, Dollar drivenControl over decision, Dollar driven


Travel agents have to realize and admit the Travel agents have to realize and admit the following facts about themselves before they can following facts about themselves before they can realistically comprehend their current situations:realistically comprehend their current situations:

They have always been passive receivers.They have always been passive receivers. They have always been at the mercy of They have always been at the mercy of

suppliers and technology.suppliers and technology. They are not receptive to technological They are not receptive to technological

innovations.innovations. They have not really defined their roles. If they They have not really defined their roles. If they

have, however, they have incorrectly done so.have, however, they have incorrectly done so.


What is behind this rush to online travel shopping? What is behind this rush to online travel shopping? First, the Web is revolutionizing the way consumers plan and First, the Web is revolutionizing the way consumers plan and

buy their travel. buy their travel. Second, the novelty of multimedia and the interactive capacity of Second, the novelty of multimedia and the interactive capacity of

the Web captures the imagination of millions of computer users. the Web captures the imagination of millions of computer users. Third, the competitiveness of the hospitality and tourism industry Third, the competitiveness of the hospitality and tourism industry

requires, on the one hand, that companies better manage their requires, on the one hand, that companies better manage their information systems with less of their financial resources and, on information systems with less of their financial resources and, on the other, that they are pressured to increase the speed of the other, that they are pressured to increase the speed of responding to customers and raise the satisfaction level of their responding to customers and raise the satisfaction level of their customers. customers.

Fourth, the perception of getting a deal by bypassing the Fourth, the perception of getting a deal by bypassing the middleman, in this case, the travel agent, and buying directly middleman, in this case, the travel agent, and buying directly from service suppliers has generated plenty of excitement from service suppliers has generated plenty of excitement among consumers. among consumers.

Finally, the traditional travel agents’ Finally, the traditional travel agents’ business model business model needs to needs to be revamped. be revamped.

Strategies for the Travel Agents in the Strategies for the Travel Agents in the Age of the InternetAge of the Internet

Vulnerability of the travel agents:Vulnerability of the travel agents:They are almost totally at the mercy of travel They are almost totally at the mercy of travel

suppliers for their revenue.suppliers for their revenue.They have never been active participants in They have never been active participants in

any technological advancement.any technological advancement.They have never clearly defined their role in They have never clearly defined their role in

relation to consumers. relation to consumers.

Strategies for the Travel Agents in the Age Strategies for the Travel Agents in the Age of the Internetof the Internet

Attitude and business model changes:Attitude and business model changes:Proactive rather than reactiveProactive rather than reactivechange from the old product-orientedchange from the old product-oriented sales sales

approach to a approach to a service-oriented service-oriented sales and sales and marketing approach.marketing approach.The Internet has created a new demand for better The Internet has created a new demand for better

service and service alternatives. service and service alternatives. The consumers are the kings of all kings, the The consumers are the kings of all kings, the

increasing power of consumers on freedom of increasing power of consumers on freedom of choices.choices.

Questions and Issues

Strategies and Opportunities

Understand customers

1.Use your existing customer database to understand your customer’s needs2.Ask your customers what you can do for them to keep them as your loyal customers3.Reassessment of your relationship with your customers

Table 8.3 Strategies and opportunities for the travel agents

Table 8.3Table 8.3 Strategies and opportunities for the Strategies and opportunities for the

travel agentstravel agents (cont.)(cont.)

Convenience 1.Have your presence on the Internet.2.And try to make a portal for your customers 3.Choose the appropriate Internet communication tools available4.Provide your own travel information and links to all



Perception of cheap fares

1.Travel agents need to be organized to educate the public that online travel service providers are not providing cheaper fairs, they merely provide an alternative.2.Be pro-technology, but emphasize travel agents’ ‘human touch’.



Glamour of shopping online

1.Build your own online book capability2.Link your homepage to online booking websites3.Provide valuable travel information online



Marketing of services

1.Change from ‘product-orientation’ to ‘marketing-orientation’2.Emphasize the human factor3.Add value to your service



Image problem: low-tech

1.Better training2.Pro-technology3.Vocational School4.Geography is irrelevant on the Web. Companies should think globally when they go online.



Improve customer service

1.People who are not happy with the customer’s service are always looking for alternatives2.The Internet offers excellent tools for improving customers’ service3.Think globally, but act locally.

The Future Marketing Orientation The Future Marketing Orientation Combined With Individualized ServiceCombined With Individualized Service

Prediction of the future:Prediction of the future: Technology will not totally replace human service, but Technology will not totally replace human service, but

it will considerably reduce dependence on it. Travel it will considerably reduce dependence on it. Travel agents are not going away, but they will feel the pinch agents are not going away, but they will feel the pinch from now on.from now on.

The travel information distribution system will undergo The travel information distribution system will undergo major shake-ups, and so will travel agents. major shake-ups, and so will travel agents. Restructuring and forming new partnerships are Restructuring and forming new partnerships are inevitable. Fee-based and value-added services will inevitable. Fee-based and value-added services will be combined. Only the fittest will survive.be combined. Only the fittest will survive.

Travel agents must find their niches in customer Travel agents must find their niches in customer service—areas where human service is superior to service—areas where human service is superior to nonhuman interaction—to find new customers and at nonhuman interaction—to find new customers and at the same time to keep the old ones.the same time to keep the old ones.

The Future Marketing Orientation The Future Marketing Orientation Combined With Individualized Service Combined With Individualized Service

(cont.)(cont.)What consumers are looking for:What consumers are looking for:

They are not using the Internet for cheap They are not using the Internet for cheap tickets and inexpensive reservations. They tickets and inexpensive reservations. They are looking for value and experience in their are looking for value and experience in their total travel package—the travel information total travel package—the travel information search, travel planning, and the actual search, travel planning, and the actual purchase of travel products and services. purchase of travel products and services.

Whoever can provide value and good Whoever can provide value and good experience will win the minds of the experience will win the minds of the consumer.consumer.

The Future Marketing Orientation The Future Marketing Orientation Combined With Individualized Service Combined With Individualized Service

(cont.)(cont.)

Who to blameWho to blameAirline commission cutAirline commission cutThe InternetThe InternetTravel agents’ loosened accreditation Travel agents’ loosened accreditation

requirements in the ownership of travel requirements in the ownership of travel agencies.agencies.

Chapter 9 A New Paradigm For Internet Research E-commerce and Information Technology in Hospitality and Tourism Copyright 2004 by Zongqing Zhou, PhD Niagara.

Documents

internet market research

internet technologies

internet research ecommerce

information search

traditional research

dynamic information

static information

information technology