Alongside Brand, People and Emerging markets, technology is a key driver of shareholder value for Tourism Enterprises according to a report published by Deloitte and New York University ‘Hospitality 2010 - a five year wake-up call’.
Deloitte’s analysis shows the global hospitality industry alone could save up to $180 million for every 1% of bookings made online versus intermediaries.
Commenting, Alex Kyriakidis, Global Leader of Tourism, Hospitality & Leisure at Deloitte said: “The potential for e-commerce in this industry is substantial. For hoteliers, it can be the difference between 98% gross yield for direct online reservation and 75% gross yield for online merchant bookings.”
Deloitte’s report shows travel has been one of the most popular products sold online for some years, accounting for 40% of total online retail revenue. Airlines lead the pack with a 62% share of the online travel market, followed by hotels with a 14% share. However, within travel, certain sectors lag behind consumer business as a whole when it comes to investing in IT. Hotels are in the lowest quartile of spend with a gap of some $22 billion, half of it in the USA.
However, Kyriakidis is keen to point out that all CEOs interviewed plan to spend more on IT, appreciating the opportunity to interact directly with the guest maximises revenue. “Most CEOs we interviewed have identified spend on e-commerce and distribution as a high priority over the next five years. For many, the mission is to target spend where the business case for payback is clear through cost efficiencies or increased revenues.”
He identifies emerging markets as an area where there are exceptional growth opportunities for tourism companies prepared to invest in IT.
Commenting he said: “While internet penetration rates in the USA and Western Europe are above 60%, China, who has the second highest number of internet users after the USA is barely above 9% and India is even less at 5%.”
“The challenge for the product providers continues to be investment in IT which will capture the direct relationship with the customer. Fresh competition is coming from new search engines” he said.
“Our analysis shows that the internet is now the first touch-point between the customer and the product provider’s brand. Ecommerce strategies will need to engage the guest and deliver, in their own right, a consistent brand message and experience. Most CEOs we interviewed have earmarked spend in e-commerce and distribution as high priority over the next 5 years” said Kyriakidis.
In advising the industry, Kyriakidis said: “Analysis and evaluation of emerging technologies needs to ensure investments in IT are sound rather than following the latest fad. Combining the right IT technology with the right products will provide substantially greater opportunity for customer interaction, service and brand differentiation.”