The Role of Technology in Hospitality and Tourism

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Introduction

In recent decades, the scope of services, shape, and external orientation of tourism and hospitality industry have notably changed. The reasons behind are overall industry saturation that exists in a state of permanent market competition and increasing customer expectations for better personalization of services and care. Considerably, industry managers were challenged with introducing new strategies that leverage the principles of service innovation. In times of extensive proliferation of technology, such transformations are mostly based on developing new digital solutions that would lead to offering new products and services, thus retaining current customers and attracting new ones. Specifically, it was identified that the use of technology helps to promote the conjoint creation of experiences and tackle recent advancements such as customer empowerment and the role of prosumers in value generation (Buhalis et al., 2019). However, both tourism and hospitality industries are not technology-oriented in nature, which resulted in certain reluctance in adopting the means of communication and data collection. Hence, it is important to investigate how technology helps to transform the industry, potential impacts of change, and evaluate potential adoption barriers.

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The Impact of Technology on Industry Growth and Development

The roots of tourism and hospitality industry could be dated back to the earliest times, when travel began to occur as a matter of adventure and curiosity. However, from technological perspective, the industry gradually started to shape during the times of the Industrial Revolution, which expanded access to foreign markets and repositioned travel as both business need and leisure activity. Further, technological contribution to tourism and hospitality was observed by the end of the Mobility Era, when automobiles and air travel opened individual freedom of destination choice. However, the most notable historical period is the post-World War II decades, when prosperity returned to industrialized countries and manufacturing of cars using new technological means was restored. For instance, in the mid-1950s, many American families were traveling by cars across the country, which stimulated growth of a motel business. Furthermore, it contributed to the extensive expansion of motels and hotels that were operating through a franchising development model. Overall, it led to the formation of mass tourism, including two distinct groups of organization tourists, who use the services of travel operators, and individual tourists, who travel independently.

The most significant impact on tourism and hospitality development was observed since the 21st century because of the internet access evolution and opening of previously closed international borders. New destinations became available to be explored online, with further selection of travel routes and booking venues having become available remotely. The most notable provisions of such period include founding TripAdvisor in 2000, a platform for sharing travel experiences and recommendations, and launching Facebook in 2004, which hosted many dedicated travel groups. Later on, the expansion of sharing economy in tourism services was initiated through the launch of Airbnb in 2007 and public introduction of Google Flights in 2011. Finally, it is important to admit that the expanded availability of GPS systems for common users to ease navigation, and broad accessibility to electronic maps that help in real-time orientation when planning travel routes.

Contemporary technological developments are more advantageous and are expected to further transcend the future of tourism and hospitality industry. However, it is reasonable to explore whether the proliferation of electronic devices which collect gigabytes of information and can simulate user experiences will facilitate environmental interactions in new forms or eventually replace the need for distant travels. For instance, the advancements in using wireless algorithms and connectivity shape current understanding of travel experience. Wearable and surface computing devices, gesture-interaction platforms, and motion sensors already bring a seamless experience for the adepts of technology (Bowen & Morosan, 2018). It means that both tour and hotel operators should be prepared for elevated demand towards digital interaction required by travelers and be ready to provide respective services. Furthermore, any travel destination should be prepared to the fact that tourists will likely demand the internet access from anywhere, which means that failure to address this need would eventually result in tourists’ attrition. Finally, it is important to consider the role of pervasive technologies, which are currently becoming popular in technology-enabled facilities and venues such as smart hotels.

Alternatively, it is worth considering the other side of the technological impact, which is the evolution of virtual reality (VR). While new developments in this area are comparatively long given that the first prototypes available for population were designed a decade ago, it could be considered that VR technologies might eventually replace real experiences. Specifically, it is relevant to the current issues with pandemics and lockdowns, which means that tourists have to imitate their feelings through virtual perceptions provided by technology. Eventually, it could bring risk to the industry, since extensive commercialization of VR devices might replace the need for long travels, especially under conditions of economic uncertainty and crisis times (Bowen & Morosan, 2018). Considerably, the future impact of technology in tourism and hospitality might have both positive and negative sides.

The Use of Management Information Systems in the Industry

Management information systems (MIS) are computerized environments used to consolidate external data and provide managers or operators with tools required for organization and evaluation of information, as well as customized opportunities for short-term predictions or long-term situational forecasting. The use of MIS is critical for any organization that deals with large amounts of data that are required to be processed, stored, and analyzed in an accurate manner. Any organization operating in tourism and hospitality industry will benefit from the use of MIS; however, the configuration and implementation aspects will definitely vary.

Normally, MIS does not exist as a single environment; it has several modules designed for specific organizational needs. The typical representation of such configurable addition to the primary MIS is a hotel reservation system. It is one of the most important computerized environments for the hotel of any size, since it is required to manage reservations depending on the customer group prioritization and seasonal occupancy rates. Furthermore, it enables front desk managers to decide whether to accept or reject reservation requests based on customer types, while considering that regular customers are more likely to not cancel the visit after the room is booked. Hotel reservation system is usually integrated with the accounting system, since reservation processing requires requesting funds transfer from the customer for pre-booking purposes in advance. Finally, hotel reservation systems should have external gateways that are consolidated with hotel website, where customers can select the appropriate booking dates and desired scope of services. Hence, the role of hotel reservation systems is to efficiently manage the order flow, process payments, and provide consistent information about service availability while managing large data arrays.

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Another type of MIS used by tourism and hospitality organizations is customer relationship management (CRM) systems. Initially, CRM systems were used to collect customer feedback about the hotel or venue services and make specific decisions for improvement. However, with the growing opportunities provided by new technologies, the role of CRM was extended towards customer targeting and prototyping hotel visitors to better understand their preferences. Recognizing the increasing importance of customer centricity, CRM systems were enhanced with the ability to analyze consumer profiles from the social media and the feedbacks left on the external resources such as TripAdvisor. Alternatively, better understanding of customer tastes allowed creating targeted advertising campaigns and sharing special offers. Hence, the role of CRM is to ensure better collaboration between the facility and customer based on both feedback analysis and profiling.

Apart from the MIS, tourism and hospitality industries deal with the global distribution system (GDS), which is a network that connects service suppliers with consumers and travel operators to provide an opportunity for direct booking. Service suppliers include airline companies, car rental services, alternative suppliers of hotel rooms for safety precaution measures, and special event organizers. GDS evolved from the effort to develop the central reservation system, eventually resulting into merging activities of the airlines and hotel chains to sell the common inventory set to the travel agents. With the evolution of internet and improved network connectivity, GDS emerged as a single business unit specialized in distribution of travel packages. Currently, the largest GDS on the market include Sabre, Galileo, and Amadeus. They provide an important contribution towards industry development, since basically hotels and tour operators are not required to market their services separately but simply combine the set of offers with the GDS vendor services.

The large GDS providers also partner with online travel agencies (OTAs), which are the online services or websites that provide travel-related products such as travel packages, car rentals, or flights. Typically, OTAs benefit the same services offered by the physical agencies, since they could be accessed any time at user convenience through a self-service approach rather than the need to be physically present for making necessary arrangements. Moreover, OTAs include the built-in booking systems that work through the meta-search principles and allows choosing a wide variety of opportunities for traveling and reservation. The meta-search allows retrieving the variety of options for tour operators, hotel chains, and airline service providers rather than rely on the narrow scope provided by a single operator or contractual restrictions of the physical agencies. However, OTAs usually require paying commission of 25% of the order price and more, as well as are heavily dependent on the activities of a channel manager, who requires regularly updating extranet to avoid double bookings. Hence, the future benefits of OTAs remain blurred, given that commission fees continue to increase.

The Impact of Internet and Social Media

The effectiveness of international tourism marketing in time of technological innovations extensively depends on the internet. The use of digital communication channels provides the fastest opportunity to expand and transfer data to various destinations worldwide. It means that online methods of marketing communications are the fastest way to reach customers and the most optimal way to increase turnover ratio (Alvarez-Ferre et al., 2018). For instance, the use of internet provides an opportunity to develop promotional visualization of services and venues, which gives better impression comparing to the printed brochures and catalogues. Additionally, the effective use of surveys, data analytics, and exploration of customer tastes through the internet equips tourism services and hotel operators with knowledge about travel trends in different parts of the world. Internet is also considered as a more effective communication tool comparing to other forms of media, since it allows comprehending both textual and visual elements simultaneously. The role of internet for international tourism marketing is also important to track the activities of competitors online and make strategy optimization decisions faster and more efficiently. Finally, internet booking services noticeably speed up the reservation process.

Progressive development of internet technologies has led to the evolution of social networks, which are currently seen as one the marketing channels to promote destination management. In practice, it means that hotels, tour operators, and travel agencies should be able to promote specific location better than it is done by their competitors. However, it is important to consider that social media content is populated by people without specific marketing purposes. Considerably, hotels and resorts should be concerned with creating positive experience among customers and encourage them to share a twit, leave a feedback, or write a short post or comment about their experience in social networks. The most effective platforms for these purposes are Twitter and Instagram, since the former is recognized for creating a pool of followers and the latter is appreciated for its visualization content. In this way, a visitor creates a network of friends and acquaintances who become attracted with positive feelings, emotions, and visuals of the author and might eventually consider visiting the same destination. Meanwhile, there is a risk that the visitor is not satisfied, which might create reputation issues for the destination.

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While internet and social media brought certain advantages for international and destination marketing, some difficulties are observed as well. The major problem relates to the major presence of previously discussed OTAs, that are basically a third-party booking sites collecting information from GDS rather than from hotels directly. As previously discussed, OTAs provide easier ways to reach destination and do not require users to search for additional information. Moreover, there is a tough competition on the OTA market as well, since Expedia, one of the market leaders, consistently taking over smaller players (Hotel Tech Report, 2020). It is expected that the website will take over 75% of domestic market in the United States, which will be unintentionally sponsored by customers, airlines, and hotels because of hug commission rates. Currently, hotels are trying to address the issue by offering benefit packages for the customers who purchases from them directly; however, it frequently remains a matter of convenience for the customer. Hence, tourism sector and other hospitality organizations should seek for developing more effective integrated marketing communications using digital channels, while placing a high emphasis on quality at affordable price.

Ethical Implications of Technological Change

The initiation of technological changes in discussed industries anticipates the importance of considering associated risks and ethical concerns. Regardless the industry, any organization that upgrades its computerized systems should be ready for the drawbacks and risks of the underlying technological base. The major risk related to system implementation that requires major data exchange and remote communication is security. Money fraud, hijacking, phishing, spamming, and denial-of-service (DoS) attacks are only some of the major types of interventions attempted by cyberterrorist to disrupt organizational operations, primarily seeking for the monetary advantage and extortion. To avoid this, the implementation process should be done in line with security considerations related to specific types of systems installed and configuration of the previous installments. For instance, it is important to have an Active Directory that groups system users depending on their rights and privileges to ensure that confidential information is not available publicly. Alternatively, the encryption algorithms and trusted firewall should be installed to prevent the system from external breaches. It is also important to keep the log of uncommon network events and have a security mitigation plan for such cases.

Furthermore, it is important to protect personal and organizational data from potential cyberattacks. Internally, it is advised to implement a two-step verification procedure when the authentication process is running. Furthermore, network administrators and management team should have a policy that explains the basic security requirements to the employees. Externally, it is important that all users provide information only under their own account and disclose only information that is required for the booking purposes. Since users will be paying with the credit cards, this information is the most vulnerable and requires additional protection through an encryption, which will require further consultancy with cybersecurity specialists before deployment. Finally, it is important to protect users from receiving unnecessary information from tourism or hospitality organizations, which will require exploring and testing the system for the loopholes and effective spam filtering mechanisms before the actual deployment.

Additional measures of the confidentiality should be provided for travelers before direct registration or making a reservation without it, as well as to employees as the front users. First, it is important to include the link to the privacy policy, which should describe how personal information will be managed while specifying that it will never be shared with the third parties. It will be a mandatory requirement to accept these terms and conditions to avoid potential lawsuits for the breach of personal rights, further considering that the destination will host visitors from different locations. Second, the registered users will be required to choose strong passwords only, while the same will apply to employees accessing the system. Furthermore, employees will be required to change their passwords regularly applying the principle of password longevity.

Conclusion

Being the leading industries worldwide, both tourism and hospitality are expected to benefit from innovative technologies to support business operations. When the industry is extensively oriented at providing best-in-class services for their customers to develop loyalty, respect, and commitment, it should leverage on recent innovations in the areas of social networking, communication, and digital marketing. Similarly, it is important to consider the impact of pervasive computing which currently transforms customer perceptions from traditional to innovative travel experiences. Furthermore, tourism and travel organizations should take maximum advantage from information systems required for data analysis and interpretation given that its amount grows exponentially. Additional focus should be made on how the data is integrated with GDS, and whether it really brings benefits for the organizational profitability considering heavy presence of OTA in the market. The role of social media should be emphasized for developing effective marketing and communication campaigns, while reputational risks should be anticipated. Finally, security and data protection risks are required to be analyzed and addressed prior to implementation of new technologies to ensure data integrity and consistency of operations.

References

Alvarez-Ferre, A., Campa-Planas, F., & Gonzales-Bustos, J.P. (2018). Identification of the key factors for success in the hotel sector. Intangible Capital, 14(1), 74-98. Web.

Bowen, J., & Morosan, C. (2018). Beware hospitality industry: The robots are coming. Worldwide Hospitality and Tourism Themes, 10(6), 726-733. Web.

Buhalis, D., Harwood, T., Bogicevic, V., Vigila, G., Beldona, S., & Hofacker, C. (2019). Technological disruptions in services: Lessons from tourism and hospitality. Journal of Service Management, 30(4), 484-506. Web.

Hotel Tech Report. (2020). The evolution of OTAs in the hotel industry. Web.

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Premium Papers. "The Role of Technology in Hospitality and Tourism." October 25, 2022. https://premium-papers.com/the-role-of-technology-in-hospitality-and-tourism/.