Comparison of Traditional and Online Travel Services: A Concept Note

By Chakravarthi, J. S. K.; Gopal, Venu | IUP Journal of Business Strategy, March 2012 | Go to article overview

Comparison of Traditional and Online Travel Services: A Concept Note


Chakravarthi, J. S. K., Gopal, Venu, IUP Journal of Business Strategy


The influence of technology in transforming our lives needs no mention. It has been overwhelming and transformational in more ways than one. The comparison is starker when we observe how Information and Communications Technology (ICT) in general and Internet technology in particular has enabled the consumer to communicate with the outside world without any boundaries or scope. The Internet is a 24 × 7 virtual world that never rests. This technology has improved over time and has gone a step further-it has opened up immense possibilities for a flourishing e-commerce business. Buying and selling on the Internet today has reached ubiquitous proportions. This concept note explains how the traditional travel services model changed with the advent of Internet, resulting in disintermediation, and forced traditional service providers, Global Distribution Systems (GDS) and others to migrate to the new model. Today, the consumer is increasingly looking at convenience and comfort at no cost/burden. The change is not without a price for the sellers though. Initial investments in the business are high, but experts suggest that the long-term gains are immeasurable. Not everything is smooth even for a medium like the Internet. Experts and researchers opine that although the scope of technology is immense, it has its own limitations. This note is a part of a larger study that covers online travel and as such is very introductory and descriptive in nature. It is a deliberate attempt because the objective here is to inform the general reader about two travel service delivery models-one, traditional, and another, technology-based-compare and contrast them, highlight the role of the service provider, the intermediaries, the travel agents and the consumer. The note concludes with suggestions that the field of travel services research is vast and an open area in India where industry and academic researchers can collaborate and benefit.

Introduction

The Indian travel industry is rapidly changing. Many of these changes are synchronous with the changes taking place globally. These changes promise to usher in an era of convenience and comfort to the customer. For quite a long time, the travel services business had not witnessed any major change and was deeply mired in tradition (Middleton et al., 2009, p. 242). But in the last decade or so, the influence of Information and Communications Technology (ICT) is most visible in this industry. Industry reports suggest that ICT in general and Internet in particular has had a quick and pervasive influence over how the business is getting designed and transacted in the travel services market (Middleton et al., 2009, p. 242).

More specifically, the impact of ICT and Internet is being felt in the way services are getting distributed in the market. The unique characteristics of the Internet, such as interactivity between manufacturer and consumer, addressability for individual customer, and the ability to distribute digital goods immediately, offer potential competitive advantages over the traditional marketing medium (Peterson et al., 1997). Because the Internet lacks distance and time constraints, sellers can internalize the transaction function previously held by intermediaries (Wen, 2006).

To understand the impact of the Internet, the authors would like to take the example of the tourism industry. The United Nations World Tourism Organization (UNWTO) projects that the number of international tourist arrivals will see a jump from 1,000 million passengers in 2010 to 1,600 million in the year 2020 (Middleton et al., 2009, p. 4), including inbound and outbound tourism besides domestic tourist arrivals.1 The rapid growth of the tourism industry requires sophisticated Information Technology (IT) for managing the increasing volume and quality of tourism traffic. Studies indicate that modern travelers demand more high quality travel services, products, information and value for their money (Christian, 2001). …

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