ABSTRACT

This paper reviews recent research on information technology in the hospitality industry. The analysis revealed three broad research areas: the Internets effects on distribution; on pricing; and on consumer interactions. Similar to aftermath of the dot com boom, the hospitality industry is realising that information technology has unintended effects and prognosticators are often wrong. While the reviewed articles provide sound advice for hospitality operators and a rich stream of future research for academics, poor rigor and a lack of relevance throughout the reviewed journals underscore a worrying trend in hospitality research.

Introduction

Information systems form a fascinating and rapidly expanding field of study.

Hospitality traditionally lags other sectors in adopting information technology Buick,

2003 but this has changed in recent years and research into its application has

followed suit. This paper represents our analysis of the information technology

themes that emerged in a dozen hospitality and tourism journals: Annals of Tourism

Research, Cornell Quarterly, Information Technology in Tourism, International

Journal of Contemporary Hospitality Management, International Journal of

Hospitality Management, Journal of Hospitality and Leisure Marketing, Journal of

Travel and Tourism Marketing, Journal of Travel Research, Journal of Vacation

Marketing, Tourism and Hospitality Research, Tourism Management, and Tourism

Review. We reviewed their tables of contents from January 2003 to July 2004 and

selected articles touching on information technology and hospitality. While by no

means comprehensive, this systematic approach focused on peer reviewed

publications and provides a useful overview of current information technology themes

and active researchers.

INFORMATION TECHNOLOGY AND DISTRIBUTION

ELECTRONIC DISTRIBUTION

Developments in electronic distribution are the most recurrent theme throughout the

period under review, reflecting topical developments since it has changed how people

book hotel rooms. Two articles provide useful overviews. Carroll amp; Siguaw 2003

describe the major players involved in distribution, and highlight how economic

issues are forcing hotels to provide increasing amounts of inventory to third party

intermediaries. Using economies of scale and scope, the latter are gradually gaining

control over both the sale of the hotel product and the selling price. In particular,

Carroll and Siguaw highlight the growth of the merchant model, which changes the

relationship between intermediary and supplier. Unlike commission based models,

with the merchant model intermediaries determine the selling price by adding a

margin to discounted rates given to them by hotels. This lack of control is problematic

given the ease with which consumers can compare rates on the Web. Carroll and

Siguaw maintain that the adoption of the merchant model has pressured rates

downwards, thus softening hotel profitability and making hotels more dependent on

intermediaries in the future. They stress using merchant channels selectively to avoid

commoditisation, drafting terms and conditions carefully to effectively fence rates,

and that hotels need to strive to drive business to their own websites.

OConnor and Picolli 2003 follow a similar theme in their retrospective on Emmer

et als classic 1993 article Marketing Hotels Using Global Distribution Systems.

They highlight the strategic threat posed by online intermediaries, the dangers of

overreliance on the merchant model, the need to develop a logical pricing strategy

and the need to drive customers to direct websites to help regain ownership of the

shopping experience and to gather valuable customer data. They council hoteliers to

rethink their approach to distribution. Currently most use a shelf space approach

being present on as many channels as possible in the mistaken belief that more is

better. They fail to realise that as the number of channels increases, so too does the

complexity of the infrastructure needed to support them. A good strategy involves

knowing what channels to include a theme returned to by OConnor and Frew

2004 below. They also emphasise customer ownership as a key strategic issue.

Online intermediaries attract consumers based on their convenience, rich feature set

and highly competitive prices. Supplier sites cannot compete on these dimensions and

instead need to leverage their customer relationships to build and retain loyalty. They

suggest that by using sophisticated CRM techniques, hotels can combat the online

intermediaries. By developing close customer relationships, they reduce the danger of

substitution, thus helping to insure long term profitability.

Dale 2004 provides an analysis explaining why electronic distribution has become

so complex. Using strategic network theory, he shows how electronic intermediaries

need to form strategic alliances in order to prosper. In a competitive business

environment, independently developing the competences and capabilities to insure

success is a massive task, so companies enter into stable interorganisational

relationships for example, strategic alliances, joint ventures and long terms supplier

relationships to leverage the capabilities of partners. Dale maintains that establishing

such virtual clusters leads to synergistic strategic value, with each partner

reciprocally and mutually benefiting from the relationship, generating inimitable and

nonsubstitutable network resources. This synergy helps offset the newness of the

firm and helps compete with more established players.

Dale identifies five categories of relationships: Channel, which enables one company

to access the distribution channels of another; Collaborative, where competitors

cooperate with each other to achieve goals that would be difficult in isolation;

Communicative, where content from infomediaries enriches and adds value to partner

websites; Complementary, where companies cross sell products normally bought

together e.g. flights and hotel rooms; and Converse, where the partners distribute

unrelated products, thus allowing each one to access the distribution channels of the

other in a nonthreatening manner. He highlights how this framework explains current

developments in travel, where intermediaries have created a large number of

networks, with each partner gaining from the competitive advantage this brings. He

speculates that competition in the future will be dictated more by the network of

partners as a whole than by a single intermediary, and advises firms to participate in

such networks unless they want to be left at a competitive disadvantage.

Given that electronic distribution is likely to grow more complex, how can suppliers

decide which of the growing range of channels to use OConnor and Frew 2004

address this issue by developing an evaluation methodology for electronic channels of

distribution. Having reviewed literature on the evaluation of technology projects, they

argue that existing approaches have major limitations. They thus use a Delphi study to

develop and prioritise a portfolio of factors for use in channel adoption and continued

use decisions. In contrast to contemporary literature, which stresses evaluating

projects on strategic, financial and marketing criteria, their findings suggest that

technical and operational factors should drive the evaluation process. While the

decision to continue using a particular channel is more multifaceted, technological

and operational issues remain at the fore, suggesting that performance should be the

key determinant. The study highlights the complex nature of such evaluations, as well

as how the increasingly complex environment makes the use of formal methodology

important.