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

Structure

1. Introduction
1.1. The Topic: Aims and Objectives
1.2. Methodology
1.3. Definition Web 2.0
1.4. Tourism 2.0
1.5. Literature Review

2. The Evolution of Tourism - Context
2.1. Classical Tourism & Distribution
2.2. Modern Distribution

3. Modern Practices of Tourism 2.0
3.1. Hotel Rating Websites
3.2. Social Networks
3.3. Video Sharing Websites
3.4. Podcasts
3.5. Blogs
3.6. Wikis
3.7. Web forums
3.8. Search Engines

4. Implication of Web 2.0 within the Tourism Branch
4.1. Consumer Empowerment
4.1.1. Dynamic Packaging
4.1.2. Travel Communities
4.1.3. Routerank
4.2. Communication
4.3. Marketing
4.3.1. General Marketing Activities
4.3.2. Viral Marketing
4.3.3. Future Trends

5. Importance of Tourism 2.0 for Businesses
5.1. SWOT Analysis
5.1.1. Strengths
5.1.2. Weaknesses
5.1.3. Opportunities
5.1.4. Threats

6. Conclusion and Generic Strategy

7. References
7.1. Books
7.2. Websites
7.3. Surveys
7.4. Press releases and Magazines

8. Figures

1. 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. (cf. Internet World Stats (2008): P.1) 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 chan- ged 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. Espe- cially in the tourism sector, this consumer empowerment changed the market completely through more transparency and communication amongst the cus- tomers. 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. (cf. Wieser (2007): P. 80-83 & Freyer (2009): P. 546-548) 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 com- panies 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 de- veloped. 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 tour- ism 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 re- search, 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."(O'Reily (2005): P. 1)

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 Inter- net, 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 "tri- padvisor.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. (cf. Wieser (2007): P. 33-40 & O'Reilly (2005): P. 1-5)

illustration not visible in this excerpt

Figure 1: The 5 phenomenons of Consumer Empowerment

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 con- sumer. 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 in-

dustry and the importance to adapt to the changes in the near future. (cf. Toffler (1980) & Rengelshausen (2008): Video Interview)

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.

illustration not visible in this excerpt

Figure 2: The Hype Cycle for Emerging Technologies

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 com- panies 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."(Bill Gates cited in Haderlein(2006): P. 38)

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 canni- balization 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. (cf. Gartner Inc. (2006): P.1 & Freyer (2009): P.549 & Tietz (2007): P.198)

2. The Evolution of Tourism - Context

To understand the idea of Tourism 2.0, the characteristics of the touristic product itself and the current distribution possibilities need to be explained. The following section will clarify these points.

A holiday trip differs in several attributes from usual products. First a trip is im- material and a physical distribution is not possible. Another specific feature is the "uno-actu-principle" being applied in the tourism sector. Hereby production, sales and consumption affiliate in one service. Also typically for tourism pro- ducts is the different "residence-principle": As the product can not be delivered to the place of residence of the consumer but to the place of the producer, a logistic problem changes. Not the product has to be transported, but the cus- tomer.

On account to these special conditions, the distribution politics limit themselves primarily to "travel claims" of the consumers. Therefore the contact mostly only happens in one direction. According to Walter Freyer distribution in the tourism therefore "is mainly a one-way relationship of the product to the consumer". (Freyer (2009): P. 519)

2.1. Classical Tourism & Distribution

"As a tourism company in a more accurate sense, all the businesses being involved directly in the production of the basic touristic product, the journey, are meant." (Freyer (2009): P. 18)

Basically, two groups are affected here. On the one hand the providers of the product, in particular accommodation and transport companies. On the other hand the tour operators and travel mediators.

Tour operators set the classical frame for touristic products. They choose differ- ent touristic commodities and bundle them into one all inclusive package. Char- acteristically for those packages is, that they insist of a minimum of 2 different products and that they are offered as one single product with one single price. Travel mediators work as an intermediary between the suppliers and the con- sumers. They hereby help the suppliers to sell their products to the consumers.

illustration not visible in this excerpt

Figure 3: The touristic value added chain

The most classical form of an intermediary between the providers and the customers is the travel agency. They mostly sell the customers products from tour operators (e.g. TUI, Thomas Cook), transport companies (airlines, railroads, bus travel etc.) and insurances.

Over many years, travel agencies nearly were the only medium to inform one- self about destinations and to book vacations. However, classical travel agen- cies at the moment strongly suffer from the rising number of Internet users. Al- though there is an added value by a personal and professional guidance in the travel agency, the sector suffers of a strong decline because of cheaper prices of Internet reservations. More accurate information about the advantages and disadvantages of the new medium and the differences to the classical travel agency will be explained in the next chapters. (cf. Tietz (2007): P. 31, 158-161 & Freyer (2008): P. 18-22)

[...]