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STI INNSBRUCK WHY ON-LINE MARKETING OF TOURISTIC SERVICE PROVIDERS NEVER FULFILLED ITS EXPECTATIONS Ioannis Stavrakantonakis, Zaenal Akbar, Anna Fensel, Dieter Fensel, Jose Garcia, Birgit Juen, Nelia Lasierra, Ioan Toma, Serge Tymnaiuk, STI Innsbruck, University of Innsbruck, Technikerstraße 21a, 6020 Innsbruck, Austria [email protected] 2014-06-18 Semantic Technology Institute Innsbruck STI INNSBTRUCK Technikerstraße 21a A – 6020 Innsbruck Austria http://www.sti-innsbruck. 1 2 Contents Abstract ......................................................................................................................................................... 2 1 Introduction ........................................................................................................................................... 3 2 Methodology ......................................................................................................................................... 7 2.1 What we measure .......................................................................................................................... 7 2.1.1 Web 1.0 ................................................................................................................................. 7 2.1.2 Web 2.0 ............................................................................................................................... 11 2.1.3 Web 3.0 ............................................................................................................................... 23 2.1.4 Mobile Platforms................................................................................................................. 31 2.1.5 E-Commerce – booking ...................................................................................................... 36 2.1.6 List of Criteria ..................................................................................................................... 38 2.2 Where to measure ....................................................................................................................... 41 2.3 How to measure .......................................................................................................................... 41 2.4 List of Channels .......................................................................................................................... 41 3 Evaluation ........................................................................................................................................... 50 3.1 Hotels .......................................................................................................................................... 50 3.2 Hotel chains ................................................................................................................................ 58 3.3 Destination sites .......................................................................................................................... 64 3.4 Review channels ......................................................................................................................... 71 3.5 Booking channels ........................................................................................................................ 77 4 Major findings and recommendations ................................................................................................. 85 4.1 Web 1.0 ....................................................................................................................................... 85 4.2 Web 2.0 ....................................................................................................................................... 86 4.3 Web 3.0 ....................................................................................................................................... 91 4.4 Mobile Platforms ........................................................................................................................ 93 4.5 E-Commerce ............................................................................................................................... 95 4.6 Summary ..................................................................................................................................... 95 5 References ........................................................................................................................................... 97 1 Abstract The internet is a powerful communication infrastructure enabling easy and smooth interaction beyond physical boundaries. Originally designed to interlink computers, it has since released its full potential in connecting people from all over the world. Various application layers such as the web, social media, semantic web, and mobile technologies provide new means for eCommerce. Using this technology appropriately is becoming an increasingly imperative challenge for each sector. This technology will significantly alter the relationship between customers and service providers and therefore may change established business models drastically. Our study focuses on the take-up of internet technology in the touristic sector, with a regional bias towards the Austrian and Tyrolean touristic sector. Generally, these sectors have already perceived significant modifications in the customer/service provider relationship. On the one hand, established intermediaries have disappeared or lost their importance. More and more, customers interact and book directly through the internet, bypassing other intermediaries (travelling offices etc.). On the other hand, new intermediaries have established themselves to mediate the customer-provider relationship. Therefore, the original expectation that the internet will enable a direct peer-to-peer relationship between service consumers and providers has only partially fulfilled its expectations. Still, touristic service providers depend on other agents to help them to connect to their potential customers. One potential explanation for this could be that the touristic service providers may lack the competence to use these new technologies (and their steadily changing application layers) properly. Therefore, we empirically compare the usage of internet technology by hotels, hotel chains, touristic associations, booking and review channels. Our findings confirm our hypothesis. The use of internet technology is quite cumbersome via touristic service providers and excellently handled by intermediaries such as booking channels. Obviously, if one fails to use a technology appropriately, one may depend on other parties that have achieved such a competency. And one needs to be prepared to share a significant piece of the cake with them. 2 1 Introduction The goal of selling services directly to customers by bypassing intermediaries, which often significantly reduce profit margins, is still a very relevant, yet unfulfilled objective in the tourism domain1. The advance of internet technologies, and the Web in particular, brought very high expectations of how direct sales could be achieved through online marketing. For small and medium touristic service providers, online marketing was seen as a silver bullet enabling massive direct sales. A common belief, especially during the Web1.0 bubble, was that being online (e.g. having a Web site) could significantly improve your online marketing and in the end, your direct online sales. However, these expectations were never fulfilled as many touristic service providers, particularly the small and medium ones, are still not visible to their potential customers and have not increased their profit margins. In contrast, intermediaries (e.g. Booking.com, HRS.de, etc.) have flourished with a very good online marketing strategy that has resulted in high online visibility and has consequently increased sales through their portals. This allows them to charge higher fees for each service sold through their portals (such portals may take up to thirty or more percent of the price of a hotel room2 in exchange for this service) and in the end, they take a large share of the generated value. For example, let us look at the case of Austria. According to (Schegg & Fux, 2012)3, in 2011, online booking (including Global Distribution Systems (GDS) e.g. Amadeus, Internet Distribution System (IDS) - online booking platforms e.g. HRS, Booking.com, and real-time bookings on hotel website) in the Austrian hospitality sector generated a turnover of just under 1.3 billion euros. Out of this, 134 million euros in commission fees went to various online intermediaries with most of the share i.e. 101 million euros going to Online Travel Agencies / Internet Distribution System e.g. HRS.de, Booking.com, etc. The main question to be answered is why and how intermediaries (e.g. booking platforms) have succeeded in online marketing and sales while touristic service providers have failed. The problem becomes even more complicated when we consider the exponential growth of communication channels that interact with customers, and therefore fully take advantage of online marketing. Nowadays, it is not enough to have a website but it is a must to be present on all types of communication channels, including various websites (e.g. the website of the Tourist Board, Wikipedia, etc.), email, email lists, chat, instant messaging, news, message boards, internet fora, blogs, microblogs, podcasts, photo and video sharing, collaborative tagging, social networks, mobile platforms, recommendation sites,