1. Introduction
Most recent literature has contributed a large amount research and studies on the performance and trend of E-commerce although it had been just developed in 1990s and generated observable impact to the industry in the recent 10 years. Therefore, most literature referred in this essay are published in recent decades about the performance and the trend of E-commerce across different countries in order to address any gaps that have not explored. The definition and background are introduce in the first part and is also mentioned more specific in the literature review section where the performance and trend of E-commerce in hotel industry is analyzed. The identification of gaps and suggestions for future research is followed after conclusion.
E-commerce known as electronic commerce has brought many changes to the hotel industry, it changes the consumer behavior, the operation functions of firms and the also the whole market.E-commerce is generally considered as the sales part of the E-businesses.It also consists of the exchange of data to facilitate the financing and payment aspects of the business transactions(Tsai, H. and Chiang, J.,2011).
E-commerce is widely used across the hotel industry from electronic funds transfer, supply chain management to online bookings, payments and electronic data interchange.As E-commerce becomes an important competitiveness in the hotel business, E-commerce itself changed and is changing rapidly due a fast speed of replacements of hardware and software, for example, mobiles and tablets are used more often in recent years over traditional personal computers.(Hua et al., 2015)
Therefore, research related to E-commerce and digital systems has to be carried frequently and fast to ensure the knowledge and theories are up to date.On the other hand, hotel industry is also changing at a relative fast pace and relies most on consumer satisfaction and retention. This essay aims to develop a gap within the hotel industry about the performance of E-commerce under the dynamic and relatively new economic environment.
2. Literature Review.
E-commerce in the 1990s appeared to have offered advantages to firms with resource slack, exhibiting characteristics of utilizing proprietary systems , while only firms with high level of capitals and human resource were able to introduce E-commerce to their business.(Wang, P.2010), “Chasing the hottest IT: effects of information technology fashion on organizations”, Management Information Systems Quarterly, Vol. 34, pp. 63-85.].E-commerce is taken to mean “the sharing of business information, maintaining business relationships and conducting business transactions by means of Internet-based technology” (Poon and Swatman, 1999 based on Zwass, 1996).In some literature, it is argued there is difference between E-business and M-commerce which indicates a platform based upon mobile services, in this literature, there will be no such difference and E-commerce would be used to cover all these sectors.
E-commerce started to take center in 2000s, the importance of E-commerce has been noticed and more SME, small and medium sized enterprises, are able to introduce it into their business with the support of governments and higher development of IT technologies. Most of SMEs found it hard to adapt the IT technology related to E-commerce as it takes time and money to invest in and the importance of E-commerce is seldom noticed by most of small sized enterprises. The barrier of employing E-commerce becomes low as more people are educated about it and related hardware devices are advaced to become cheaper and easier to use. Under such conditions, E-commerce becomes a unique necessity for every operator in most of industries. (Chae,H. et al., 2014) [Clemons and Row 1991; Hitt and Brynjolfsson 1996]Therefore, large amount of literature suggested that it is necessary for businesses especially SMEs to invest more on the E-commerce to maintain their competitiveness in the industry. From the research of E-sales, measures of proportion of firms took part in such activities over Europe, it shows that E-commerce is still not wide spread, it is more frequently used by large firms with international experience. However, the effect of E-commerce could be substantial especially to SMEs, the modest E-sales might hold a large potential in the future, which suggests that the investment on E-commerce could be expected for a long-term return. This may also explain why SMEs do not have much motivations to invest on E-commerce as the short term return can barely cover the huge cost of applying such system. 【E-commerce trends and impacts across Europe】
It is observed that E-commerce has most positive impact on the industry, high efficiency with 24 hours non-stop service for instance，generated more sales and a new trading platforms in most developed countries. The adoption of E-commerce has helped companies to exchange information and to improve their co-operations.[E-commerce trends and impacts across Europe] It is believed that E-commerce and IT technology is going to change this world continually. However, there are literature mentioned that under old economy, companies may have suffered these changes due to different type of goods they produce and made different adjustments in order to keep competitiveness under these new IT era.[E-commerce in the old economy: three case study examples David Barnes Matthew Hinton and Suzanne Mieczkowska] This might suggested that under hotel industry, firms might developed different E-commerce strategy under different circumstances.
In the hotel industry, E-sales activities provide alternative channels in which firms can interact with their customers and enter new markets.Since 2002, more than 162 million online users have processed travel using the Internet where frequent online travelers tend to spend more than less frequent online travelers.Due to its high convenience compared to travel agencies and hotel chain call centers. The development of E-commerce offers consumers a more efficient way of searching for a better price. As room rates are fluctuated over time, E-commerce enables consumers to have a wider search of room prices for different dates and a easy and frequent way to keep consumer updated to all the information such as last minutes promotions from hotels and airlines.[Determination of Important Underlying Dimensions of E-Commerce Competencies in Hospitality Curricula from the Hotel Managers’ Perspective] Therefore, E-commerce has attracted more consumers to the business and generated a higher revenue for this industry.This also indicates that less people are booking directly with hotels and the share sales of the total revenue contributed by E-commerce has been growing ever since.
However,although E-commerce has been booming in other industry, it has just taken off in the hotel industry. The sales in the hotel industry is more complicated than other industries, there are more factors consumers has to consider when choosing their desirable place to stay such as smoking or non-smoking rooms, leisure facilities, locations. [Tillett, 2000][Tillett, L. S. (2000). Site gives view of a room–Marriott.com update includes more personalization and support for customer preferences. InternetWeek, 837, 24.]This indicates a higher level of information requirement for the sales of rooms, to achieve such requirements, it needs whether a large amount human resource for consultant or a well designed online-system .This issue may developed into a main advantage of E-commerce in the future when the cost of developing such systems becomes low as once the systems are well produced, the operating might be far lower than relative human resources.In the current states the requirement for such high-tech human resources remained high and cannot be fulfilled.
Furthermore, there are also studies shows that the growth of E-commerce in the hotel industry has increased the competition between direct booking methods to hotels and online booking intermediaries such as booking.com and Expedia.[Trottman, 2003] The increased competition actually induced a price war between large hotel groups such as Hilton and Starwood and online intermediaries. This might directly damage to the large international hotels and also indirectly hurt local hotel business as most of large hotels dropped their prices during the war. Therefore, despite the development of E-commerce has brought a higher revenue, the profits for the hotels has decreased. As mentioned before, compared to large co-operations, SMEs would be the one who suffered most under such competitive environment. There are literature examine the business performance with IT capability of firms, the fast development and quick adoption happened in the IT industry makes the competitiveness brought by IT technology, E-commerce in this case a very short life. However, none of the previous case studies has noticed and consider the actual sustainability of the advantages brought by E-commerce to the hotel industry.
Considered hotel industries and E-commerce are both closely linked to globalization, reviews and suggestions on the impacts of E-commerce on hotels might not be appropriate as most of the research has not taken account the limitations on the internet within different countries. China, for instance, has banned facebook, instagram, youtube, twitter and has more limitations on the internet which might leads to different performance of E-commerce overall.
Base upon the motivations of consumers visiting online booking websites and good expectation on the development of online booking system, the only problem left with managers of the hotels would be a good E-commerce strategy.[The Evolution of E-Commerce - How to develop a successful Strategy? -]While, in the literature, it clearly mentioned this industry lacks the human resources who can mange to design a successful E-commerce strategy since the education supplied for such skills is weak. Therefore, it can be said that the investment on developing a successful E-commerce strategy could be enormous for huge amount of capitals and educations.
Research shows that different countries have different attitudes toward E-commerce, where U.S.A and Canada are the leaders and Japan referred the Internet unreliable and developed more on mobiles transactions.[E-commerce: The challenge for UK SMEs in the twenty-first century]This might because of different culture background as mentioned before, the other cause might also be the difference of their economies.There has been literature about SMEs in the hotel industry across Europe [E-commerce trends and impacts across Europe],U.K[Micheal Quayle],Egypt,Taiwan[The impact of e-commerce on Taiwanese SMEs: Marketing and operations effects] and large companies in U.S.A.. Most literature indicates that E-commerce generates beneficial growth to the industry while, the barrier of implementing such technology still remains high in most of European countries[E-commerce trends and impacts across Europe]. In developing countries as government is more encouraging about E-commerce, the barrier is relatively lower to SMEs.[The impact of e-commerce on Taiwanese SMEs: Marketing and operations effects,][PERCEIVED BENEFITS AND E-COMMERCE ADOPTION BY SME TRAVEL AGENTS IN DEVELOPING COUNTRIES: EVIDENCE FROM EGYPT]
Recent empirical research also suggests that there is difference of consumers reactions to different ways of communications. Electronic communications tend to resulted a more negative reaction than the hard-copy ones.[High Tech Versus High Touch: Comparing Electronic and Hard-Copy Gift Cards Charles E. Naquin1 , Terri R. Kurtzberg2 , and Lisa Lewin2] On the other hand, there are research shows a positive influence on occupancy rate of hotel under the power of online crowd-voting. Through E-commerce platform, consumers are easier to find hotels’ past record and service quality and therefore is more willing to pay more for those who keeps a good record.[The Role of Cybermediaries in Reputation Building and Price Premiums in the Online Hotel Market].Therefore, although hard copies are important, electronic information is easier for communication and spreading reputation.
3. Discussion and Conclusion
In conclusion, most literature has separated the performance of E-commerce into three sectors,marketing benefits, essential benefits and efficiency benefits.[E-commerce and performance]Overall the marketing benefits of E-commerce of hotels has increased while making the whole industry more competitive. The essential benefits for the development of firms and strategy making is substantial for the investment on human resources and software but the investment on equipment might be out dated quickly therefore cannot the benefits cannot last very long.
Since 1990s E-commerce has introduced to this world, the changes of it has never stopped and is faster since then. It is a shock to most of industries, it hugely increased efficiency of money transactions and quickly increase revenues. The development of E-commerce has both effect the consumer side and suppl side of businesses, although the barrier of enter this new platform is high at first, most of businesses nowadays has applied similar E-commerce system.The return on the investment on E-commerce is believed to be substantial and long term. Under current circumstance, it is believed that the IT capability as the development of E-commerce may not directly changes into business profits but might be shown in the long-term success.(Chae,H. et al., 2014) While E-commerce is booming, hotels industry is still new to such change and is still looking for a way to adapt this new change. With the establishment of E-commerce, the competition within the hotel industry becomes more fierce. It becomes important for businesses in this area to have the right level of relative human resource and capital in order to keep their competitiveness.
It is known that hotel industry is closely linked with tourism industry and the nationality of consumers and their different consumer behaviors increase the level of complexity when developing a E-commerce strategy. For example,study shows that with different culture background, Asian, and non-Asian consumers have different complaint consumer behaviors. [Consumer complaint behaviour of Asians and non-Asians about hotel services]As mentioned before, consumer behavior also changed if the information is expressed under different ways,[High Tech Versus High Touch: Comparing Electronic and Hard-Copy Gift Cards Charles E. Naquin1 , Terri R. Kurtzberg2 , and Lisa Lewin2] or in different countries or regions.
Although most of literature mentioned previously has realized that there difference of E-commerce performance between different sized companies, SMEs treat more as a challenge[E-commerce: The challenge for UK SMEs in the twenty-first century][and firms on the IW500 lists take it more like a competitiveness,(Chae,H. et al., 2014)little has considered the location of these business as an impact to the performance of their business as the consumer behavior changed with nationalities.
Many literature has mentioned E-commerce has change the hotel industry by bringing a highly efficient method of marketing, support strategy and business efficiency.(Chae,H. et al., 2014)Therefore, people are expecting a rapid growth as a result of the development of E-commerce in the future. However, few literature has mentioned the actual sustainability of the competitiveness that is brought by E-commerce. Hotel industry are much different from other tertiary industries as it is more revealed to the international guests and relies much on consumer satisfactions, loyalty and retention. As mentioned, it is crucial for managers to develop different E-commerce strategies towards consumers with different nationalities and backgrounds within a certain area. Therefore, the research on the relationship between consumer with different nationalities and reactions towards E-commerce would be important in the future. It is also noticed that the hotel industry is now in the shortage of human resources who can mange to develop a specific E-commerce strategy for the hotel. [the Evolution of E-commerce]
4.Further Research and Discussion
As the development of E-commerce becomes faster and more widely spread, the gap of Chinese E-commerce in hotel industry still remain blank.To be known as the one of the biggest market in the world, the purchasing power of China,’The hotel industry in China has witnessed hotel development activity on an unprecedented scale and at an extremely vigorous rate.’[China Hotel Investment Watch 2016 | Excerpts]. It remains uncertain which role that E-commerce has played during this huge development. It is mentioned in most literature that most large international hotels are suffering as more sales are actually taken by online sales websites. Is Chinese market a better place for those international hotels to enter while the competition in their own country, U.S.A for example to competitive to stay. Will E-commerce become a helpful tool to establish a good entrance for those international hotels?
Also, the internet background is different from most research countries as the government policy on Internet is more strict. Most online social networking system, such as facebook, youtube, twitter, google are banned from use[https://www.theguardian.com/technology/2009/jun/02/twitter-china]. There are also banned words and limitations on the text and videos released.This may result in difficulties when hotels are promoting online for E-commerce.
Furthermore, due to different country background the condition of the E-commerce market in China might be different from the others. As most of social network systems are banned.China has developed their own online networking system which is similar to facebook, twitter and youtube. The unique and national online system might be another difference to consider when analysis the performance of E-commerce in China.
For future research, the research on Chinese E-commerce hotel market would be necessary. It is important to know if Chinese consumer have different attitudes towards online sales systems, is the attitude positive or negative? The attitudes of Chinese consumers would be an important factor when conduct E-commerce strategy while the Internet environment in China is far different from others. Thus, the other thing might effect the performance of E-commerce might be the difference of existing E-commerce strategy in China because under a different circumstance, the strategy used by Chinese hoteliers might be different in most western countries. This leads to another factor that needs attention to be paid, which is the level of competition of existing E-commerce marketing. As the case of U.S.A the competition level of E-commerce has become high enough that induce damage to existing large hotels.
6. Methodology
