Internet and the Virtual Marketspace: Implications for Building Competitive E-Commerce Strategies in the Hospitality Industry

Article excerpt

During the last years, research has focused more on the tactics surrounding Internet development such as the development of web site content and design, and only recently on the competitive dynamics of the Internet and on building successful e-commerce strategies. This article aims to provide a conceptual framework for developing competitive e-commerce strategies in the hospitality industry. To this end, the new competitive environment (the virtual marketspace) fostered by technological developments and in which hotels have to compete is examined; specifically, three features of the virtual marketspace, namely, reach, richness and digital representation are analysed. Competitive e-commerce strategies in the hospitality industry aim at addressing and managing the challenges fostered by these three features. Successful examples from the hospitality industry are also provided.

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During the last few years, we have been overwhelmed by new ideas, concepts, facts, opinions and even buzzwords surrounding the spectacular development of e-commerce business. It can actually be said that knowledge development in this arena has replicated the image of its own evolution: speediness and a perpetually fierce race. Carried over by the flood of innovations, research has focused more on the tactics surrounding Internet development such as the development of Web content, design interface and/or the digitisation of business operations on the Internet (e.g., Cunliffe, 2000; Gilbert, Powell-Perry, & Widijodo, 1999; Huizingh, 1999; Liu & Arnett, 2000; Procaccino & Miller, 1999; Weeks & Crouch, 1999) and only recently on the competitive dynamics of the Internet and on developing successful e-commerce strategies for the Web (e.g., Sigala, 2001; Riggins, 1999). Moreover, confused about developments on the Internet, many hotels are developing e-commerce strategies that are short-lived or not profitable. Thus, there is a need to investigate and identify the strategic issues that can be considered as the pillars for the development of competitive e-commerce strategies, which in turn can form the basis for developing web site content and design.

The purpose of this paper is to provide a framework for developing competitive e-commerce strategies in the hospitality industry. To this end, the Internet features and the new competitive environment that they generate and in which hotels operate are analysed. When immigrating from marketplaces into marketspaces, three features become important, namely, reach, richness, and digital representation. The management of these three concepts underpins the development of a conceptual framework for building competitive e-commerce strategies which: (a) pulls together and unifies all the previously identified but scattered best practices on the Internet; (b) provides the objectives and reasons for developing innovative Internet services and offerings; and (c) identifies the managerial implications for implementing such practices.

Internet Features and Their Applications

Sigala (2001) identified three distinct capabilities that make the Internet a very powerful tool--interactivity, connectivity and convergence. The Internet allows real-time, online true interactivity, which is crucial since much business activity consists of interactions. Interactivity enhances the richness of customer relationships and creates new paradigms of product design and customer service (e.g., the customer can customise the product/service and the supplier can learn from the customer). Moreover, the Internet is an open, global network that everyone can easily get connected with. The increased connectivity enables new communication and coordination mechanisms both across organisations and customers as well as within groups of customers themselves, while, according to the "network externalities" phenomenon, as the number of connections increases the value of the network grows exponentially (Gosh, 1998). …