How important is Web 2.0 for the tourism sector and how can the industry apply to this trend?

Bachelorarbeit von Tim Lellinger

Introduction:

1.1 The Topic: Aims and Objectives:

In the 1990's a revolutionary technological invention, the Internet, paved the way to a much easier and endless expandable way of communication all over the world. But although it was initially seen as a way of private communication, companies realised the potential of the invention and started to use the Internet for matters like distribution, communication, logistics and more. As internationality was one of the biggest advantages of the Internet, especially the tourism sector tried to use the Web for commercial purposes. Starting with Computer Reservation Systems (CRS) and own Websites, the usage transformed to complete e-commerce concepts, offering online-shopping and electronic ticketing.

Today, one of the most attractive aspects of the Internet for the tourism branch is the possibility to reach a maximum of potential clients. From 1997 till 2006 the percentage of Internet users increased from 6,5% to 59,5%. By December 2008, over 43 million people in the United Kingdom were using the internet and most of them already used the Web for informing themselves about commercial products.

But the study ‘Internet Facts 2006’ even shows more potential. Considering the trend, 59,7% of the users plan to book their complete vacation through the Internet, 56,4% plan to use the network for buying airline and train tickets and 52,2% want to book their hotel rooms via Web.

Since the creation of the Internet, the commercial situation for suppliers changed more and more from a seller's to a buyer's market. With the help of new technologies and the improved accessibility through easy understandable software, consumers experienced a huge empowerment in the internet. Especially in the tourism sector, this consumer empowerment changed the market completely through more transparency and communication amongst the customers. As, in the near future, the strength of the buyers market will grow even more, suppliers now have to adapt to the new trend to stay competitive and to satisfy the customers.

The personal reasons for selecting this topic can be concluded in 3 different facts. Firstly, my last studies in tourism introduced me to the market and the recent developments and therefore showed me the importance of differentiation and of using modern distribution channels. Secondly, my first studies were focused on information technologies and thus showed me current possibilities within Web 2.0 technologies and methods of implementation. Thirdly, my own enthusiasm for the idea of Web 2.0 leads me to a daily usage of the most common applications and therefore is a part of my everyday life. The topic of this project on the one hand links the three interests and on the other hand shows up the great potential of Tourism 2.0 for the industry.

Thus, the project will identify practices used to apply Web 2.0 for tourism companies and show the components of best practice for tourism 2.0. As a result, a suitable plan for the implication of Web 2.0 within the tourism branch will be developed. Therefore, current and future examples of Web 2.0 applications will be presented and possibilities for commercial usage will be highlighted.

1.2 Methodology:

The character of this project may be described as explorative, as the topic itself still is quite unsought. Nevertheless, the basis for the research will be supported by comprehensive literature investigation, using books and studies about tourism marketing, e-commerce and the influence of the internet on intermediaries in the tourism sector. Hereby, adequate studies and market research projects will help to allocate the statements and to show up future trends. Additionally, internet sources will be constituent for the research project, as the topic is highly dynamic and up to date. Therefore, this project is based on desk research with the help of literature and adequate websites, but as well considers primary research, accomplished by professional research companies.

Having described the basis of classical tourism and Web 2.0, the adaptation of Web 2.0 applications in the matter of tourism will be specified. Subsequently the most famous Web 2.0 programs will be described and methods for application within the tourism branch will be introduced. To show the importance of the adaption, a SWOT analysis will help to clarify the advantages. Finally, the results of the project will be clearly abstracted in a conclusion.

1.3 Definition Web 2.0:

The concept of Web 2.0 was created in the year 2004 by Dale Dougherty at the O'Reilly Media Web 2.0 conference. The expression consists of the word ‘Web’, often used as another expression for the Internet, and of the number ‘2.0’, used in computer sciences as a version number. A ‘2.0’ version mostly contains considerable changes in a program. Therefore the expression Web 2.0 should express a new version of internet with formidable but positive changes.

As the expression attracted so much interest after the conference, Tim O'Reilly, the founder of O'Reilly Media, wrote an article about Web 2.0 with more specific definitions. ‘Web 2.0 is a composition of economical, technological and social trends, together forming a basis of the next generation Internet - a more mature and distinctive medium, which can be characterised through user participation, openness and network effects.’.

Thereby the boundary between the classical form of the Internet and Web 2.0 is hard to find, as there is a smooth transition of the both. Nevertheless it is clear, that Web 2.0 stands for a new generation of the Internet, in which users do not only inform themselves, but also inform others about their experience and satisfaction about any product, socialise on websites like ‘facebook’ and ‘myspace’ or upload their own videos on ‘youtube’.

The Web 2.0 phenomenon of the so called User Generated Content (UGC) as well influences the tourism sector. Websites like ‘holidaycheck.co.uk’ or ‘tripadvisor.co.uk’ give users the possibility to rate hotels and other holiday spots and thereby inform other potential customers about the real conditions at the locations. Transparency and a high degree of specific information and feedback make it therefore much safer and easier for consumers to find a good cost/performance ratio. Beneath the User Generated Content there are 4 other phenomenons of Consumer empowerment. The digitalisation of word of mouth combined with the viral and fast circulation of information, the digitalisation of social networks and the high relevance of search engines.

But although Web 2.0 mainly empowers the consumer, the new technology also offers opportunities for the industry. The transparency for the consumer may for example also often mean transparency for the supplier. Web 2.0 improves the quality and quantity of feedback from customers and thereby reduces the need for expensive market research.

As apparent, Web 2.0 stands for consumer empowerment in the Internet but also offers possibilities for the industry. The following chapters will carefully analyse those possibilities and show the importance of using those opportunities.

1.4 Tourism 2.0:

As the expression ‘Web 2.0’ caused a lot of interest within the public, marketers discovered the effect of this word and transformed the power of the version number to their products. Since then, everything with the appendix ‘2.0’ meant something modern and innovative with more customer focus. Within this trend, the concept of ‘Tourism 2.0’ was created. In conformance with ‘Web 2.0’, ‘Tourism 2.0’ describes a strong buyer's market in the tourism sector and therefore a new and modern way of tourism.

According to Oliver Rengelshausen, chief of the e-commerce department at the Thomas Cook AG, consumer empowerment in the tourism sector is mainly caused by applications like hotel rating websites and online communities. With the help of those platforms, users change themselves to prosumers. The word prosumer, created by Alvin Toffler, means a combination of producer and consumer. The expression thereby stands for the empowerment of the consumers, giving them the possibility to tell the producers what they desire. Thereby the consumer participates in the manufacturing process and becomes consumer and producer at the same time. Nevertheless, Mr. Rengelshausen also highlights the possibilities for the industry and the importance to adapt to the changes in the near future.

1.5 Literature Review:

To understand the importance and the influence of the Internet and Web 2.0 for the markets, a critical view to the topic is necessary. As a basis, different literature and opinions of the authors helped to clarify the strengths and the weaknesses of the upcoming trend and thereby helped, to find a justifiable conclusion at the end of this project.

Although all the literature, on which the assignment is based on, find a high importance of a focus on Web 2.0 as a result, criticism as well is often mentioned in the books. The book ‘Consumer Empowerment through Web 2.0’ by M. Wieser for example mentions ‘The Hype Cycle for Emerging Technologies’, annually released by the research department of Gartner Inc.. In the report of 2006, Web 2.0 is positioned on the ‘Peak of Inflated Expectations’, indicating the exaggerated expectations of the new trend. Nevertheless, the analysts estimate a high potential for Web 2.0 in the future.

In the book ‘Marketing 2.0 - From the Mass to the community’, A.Haderlein strengthens the opinion of exaggerated expectations by using a citation of Bill Gates: ‘I think we will observe the same thing as always: A lot of new companies and a lot of new ideas. 90 percent of those will not have enough differentiators or not use the right business concept and therefore will disappear again. But the other 10 percent will bring us new, exciting things”.

Thus, tourism enterprises should try to adapt to Web 2.0, but thereby have to use a carefully chosen business model and should not rely on the high popularity of Web 2.0. Furthermore they should focus on a high degree of differentiation to be competitive in this business. But also online tourism in general should be handled carefully. As W.Freyer states, customers are often still hesitant when it comes to online booking. With the slogan ‘a lot of looking but few booking’, the author clarifies the slow-going development within the market.

Within the work ‘The influence of the internet on intermediaries in the tourism sector’, the author D.Tietz as well brings up another issue. He considers cannibalization effects, which may emerge for several suppliers with a higher focus on the internet. The classical all-inclusive tour thereby maybe displaced by new products for the Web 2.0 customer. Therefore especially companies like TUI or Thomas Cook, not only operating within the online segment, have to consider this problem when developing adaptation plans.

Besides the criticism of some authors within their books, most of the modern literature then concludes with the strong recommendation of an adoption of every business to the changes brought by Web 2.0. The different forms of adoption and further strengths and weaknesses will be discussed in the following parts of this Business Research Project.

Table of Contents:

1.	Introduction	3
1.1	The Topic: Aims and Objectives	3
1.2	Methodology	4
1.3	Definition Web 2.0	5
1.4	Tourism 2.0	6
1.5	Literature Review	7
2.	The Evolution of Tourism - Context	9
2.1	Classical Tourism & Distribution	9
2.2	Modern Distribution	11
3.	Modern Practices of Tourism 2.0	14
3.1	Hotel Rating Websites	15
3.2	Social Networks	18
3.3	Video Sharing Websites	19
3.4	Podcasts	20
3.5	Blogs	21
3.6	Wikis	21
3.7	Web forums	22
3.8	Search Engines	22
4.	Implication of Web 2.0 within the Tourism Branch	23
4.1	Consumer Empowerment	23
4.1.1	Dynamic Packaging	23
4.1.2	Travel Communities	24
4.1.3	Routerank	24
4.2	Communication	25
4.3	Marketing	26
4.3.1	General Marketing Activities	26
4.3.2	Viral Marketing	27
4.3.3	Future Trends	28
5.	Importance of Tourism 2.0 for Businesses	28
5.1	SWOT Analysis	29
5.1.1	Strengths	29
5.1.2	Weaknesses	29
5.1.3	Opportunities	30
5.1.4	Threats	30
6.	Conclusion and Generic Strategy	31
7.	References	33
7.1	Books	33
7.2	Websites	33
7.3	Surveys	34
7.4	Press releases and Magazines	35
8.	Figures	35

Text Sample:

Chapter 3.4, Podcasts:

Podcasts are cyclically published media files, mostly in the form of audio or video content. Tristan Louis and Dave Winer invented the expression, combining the name of the popular Apple mp3-player ‘iPod’ and the word broadcasting.

With the help of podcasts, users are able to create their own ‘radio or TV shows’ and publish them in the internet with the help of specialised applications (e.g. iTunes). Listeners can subscribe to the podcasts and upload them to their portable music and video players to hear or watch whenever they want. According to studies, meanwhile 86 percent of the internet users know about the existence of podcasts and 40 percent already used the tool.

Although, the high number of users and the popularity make podcasts quite interesting for marketing activities, most suppliers have not yet discovered the format to market their products. For tour operators, weekly video presentations of their destinations would be an excellent marketing tool. But as well hotels and the destinations themselves could publish podcasts presenting their highlights for tourists. Nevertheless, the implication should be done quickly, as the first podcast on the market most of the times is the most famous. Due to habit, people then rarely try other tourist podcasts.

3.5, Blogs:

Blogs are as well typical for the trend of Web 2.0. The basic idea is to create a personal online diary on an own website and share it with the public. The creation of the website is mostly easy understandable and in most cases free. The search engine operator ‘Google’ for example offers free blog websites and during the set up process a clearly arranged instruction guide. Besides text, several other types of media like pictures or videos can be included in the blog.

According to the newest numbers, meanwhile more than 71 million blogs worldwide are online with a daily growth rate of 75.000. 77 percent of the internet users know blogs and 15 % even visit the pages weekly. With the possibility to post comments to the entries, blogs may also be used as discussion forums. Currently, the most favourite topics for blogs are spare time, politics, news, computer, internet and personal experiences.

As there exist several blogs concerning travelling, banner advertising on the blogs can be quite interesting for tourism suppliers. When creating the blog, users often have the possibility to allocate space on the website for advertising. In the case of ‘Google’ blogs, users only have to register for the promotion program ‘Google Adwords’ and then earn money, depending on the frequency of clicks on the banner.

Suppliers, participating in the ‘Adwords’ programme, then have to pay for the clicks. But on the other side, they enjoy personalised and targeted markting, as the ads on the banners change, according to the topics, the blogger relates to.

3.6, Wikis:

The principle of wikis is, to create an online encyclopaedia by the help of user generated content. Beneath some people, controlling the new entries, only the users write the articles and descriptions. Thereby, wikis try to actualise and increase knowledge of Web 2.0 users. Amongst diverse specialised wikis, the encyclopaedia ‘Wikipedia’ is the most famous and comprehensive. Only the English part already contains nearly 3 million articles and most of the articles are as well available in more than 10 other languages.

3.7, Web forums:

The so-called web forums offer further sources for the customer to obtain information. As the creation of forums is mostly rather easy and inexpensive, the websites are often operated by private persons. The principle of the forums is as well mostly based on user generated content. The user first has to create a profile free of charge. If this step is done, he is able to ask questions within the adequate theme section and the other users try to answer it.

Especially in the tourist branch, forums therefore offer a respectable basis for the exchange of experiences. Thus various forums focused on touristic topics meanwhile exist. If the Internet user now, for example, did not find any information about his desirable hotel on the appropriate rating websites, he can ask for experiences of other tourists in forums. But also in addition to rating websites, forums can be interesting. Thus, the user there can ask more specific questions to the other forum members and therefore find out more additional information.

Companies also recognised the value of the forums. Thus many suppliers already offer customer-forums on their websites. Besides other customers, also specialists often answer the questions there.