2010:023 MASTER'S THESIS A Study of E-commerce Applications Adoption in Iranian Tourist Organizations Ghazaleh Saddad Luleå University of Technology Master Thesis, Continuation Courses Marketing and e-commerce Department of Business Administration and Social Sciences Division of Business Administration and Management 2010:023 - ISSN: 1653-0187 - ISRN: LTU-PB-EX--10/023--SE E-commerce Applications Adoption in Tourism in Iran Supervisors: Dr. Amir Albadavi Dr. Esmail Salehi Sangari Prepared by: Ghazaleh Saddad Tarbiat Modares University Faculty of Engineering Department of Industrial Engineering Lulea University of Technology Division of Industrial Marketing and E-Commerce MSc PROGRAM IN MARKETING AND ELECTRONIC COMMERCE Joint 2009 1 Aknowledgement I would like to thank my supervisors who lightened up my path with their assistance and advices. My supervisors have been my supporters. I would like to thank my parents, husband and friends whose support and encouragement kept me going all the way. I also would like to thank other who have motivated me and helped along the way. 2 Abstract Iran possesses a rich range of natural, cultural, and manmade tourism resources much of which is unique in the world and which constitutes its tourism resource base. Tourism is the fastest growing industry around the world which has the highest share in countries‘ GDPs and this is a unique opportunity for Iran. Additionally, tourism is the only industry that has accepted e- commerce with open arms. While business and stock market expectations have not been fulfilled, online transactions in the travel and tourism industry are continuously increasing. This industry is the leading application in the B2C (business-to-consumer) arena. Whereas other industries are displaying a stronger hold to traditional processes, the tourism industry is witnessing an acceptance of ecommerce to the extent that the entire industry structure is changing. The Web is used not only for information gathering, but also for ordering services. A new type of user is emerging, one who acts as his or her own travel agent and builds a personalized travel package. This research focuses on evaluating the current status of Iranian tourist organization websites in order to study the adoption of e-commerce applications on them. A website evaluation model is used to reveal the status of the tourist organizations to find out their reasons for having web presence. Iran‘s tourism competitive advantages and weaknesses have also been studied. Based on this, the weak pints of the websites and the potentials which are missed are extracted to help managers enhance their e-commerce activities in Iran‘s tourism industry. 3 Table of Contents 1 Introduction................................................................................................................................................ 6 1.1 Tourism in Iran .................................................................................................................................... 7 1.2 Problem Definition .............................................................................................................................. 8 1.3 Importance of the subject ................................................................................................................... 9 1.3.1 Financial Contribution of Tourism ............................................................................................. 10 1.3.2 Perceived Benefits of E-commerce ............................................................................................ 11 1.3.3 E-commerce and Tourism .......................................................................................................... 13 1.3.4 Tourism Worldwide.................................................................................................................... 15 1.4 Research Objective ........................................................................................................................... 16 2 Literature review ...................................................................................................................................... 17 2.1 Internet ............................................................................................................................................. 17 2.2 E-commerce ...................................................................................................................................... 18 2.3 E-tourism ........................................................................................................................................... 22 2.4 Models .............................................................................................................................................. 23 2.5 A Benchmark of E-commerce Applications on Tourist Organization’s ............................................. 36 3 Methodology ............................................................................................................................................ 41 3.1 Purpose of the Research ................................................................................................................... 41 3.2 Research Approach ........................................................................................................................... 42 3.3 Research Strategy .............................................................................................................................. 42 3.4 Data Collection ................................................................................................................................. 43 3.5 Data Analysis .................................................................................................................................... 45 4 Data Analysis ........................................................................................................................................... 46 5 Conclusion ............................................................................................................................................... 65 5.1 Achievement of the objectives ......................................................................................................... 66 4 5.2 Limitations ......................................................................................................................................... 68 5.3 Implications ....................................................................................................................................... 69 5.3.1 Management Implications ......................................................................................................... 69 5.3.2 Theoretical Implications ............................................................................................................. 70 5.3.3 Implications for Further Research ............................................................................................. 70 6 References: ............................................................................................................................................... 72 5 1 Introduction Today the Internet provides an extraordinary level of connectivity and the ability to communicate efficiently and effectively directly with customers at a reasonable cost. According to Yao (2004), the emergence of the Internet has led to the rapid growth of electronic commerce which has had an effect on the nature of various businesses. Its potential to generate more revenue is not questionable, but is acknowledged as something the tourism industry in developing countries need. Since the developing countries can not benefit from a sufficient usage of their resources and expertise, tourism industry can be looked at as a savior for increasing the revenue of these countries. According to Werthner and Ricci (2004) travel and tourism illustrate how e-commerce can change the structure of an industry and in the process create new business opportunities. Nowadays, on one hand, the internet has turned into an informative channel providing both individuals and organizations with different types of information, making them aware of new travel and tourism opportunities and offers enabling them to compare the offers, have online purchases and provide feedback. And on the other hand, the internet has turned into a source for travel agencies and organizations to promote their services and products to their potential customers. The recognition of the major role internet can play in an industry has led many countries including Iran to put a lot of effort into implementing internet services in their tourism industry. The growing usage of the internet opens the doors of potential markets for every industry. The table bellow illustrates the internet usage worldwide which showcases the importance of implementing it into business. Table1: Internet Usage Statistics based on internetworldstats.com WORLD INTERNET USAGE AND POPULATION STATISTICS World Regions Population Internet Users Internet % Population Usage Usage (2008 Est.) Dec/31, 2000 Usage, ( Penetration ) % of Growth Latest Data World 2000-2008 Africa 955,206,348 4,514,400 51,065,630 5.3 % 3.5 % 1,031.2 % Asia 3,776,181,949 114,304,000 578,538,257 15.3 % 39.5 % 406.1 % Europe 800,401,065 105,096,093 384,633,765 48.1 % 26.3 % 266.0 % Middle East 197,090,443 3,284,800 41,939,200 21.3 % 2.9 % 1,176.8 % North America 337,167,248 108,096,800 248,241,969 73.6 % 17.0 % 129.6 % 6 Latin America/Caribbean 576,091,673