New technology and the future of tourism

Margaret Bruce

Throughout the 198Os, the travel industry has undergone rapid technological change - the introduction of interactive videotex by over 80% of the retail travel agencies is just one example - and this trend is likely to continue well into the 1990s. This article reviews some of the main technological developments in the travel industry and considers various trends in terms of their opportunities and threats. The role of technology as part of the strategy of some principals and agents in their attempt to gain and sustain a competitive advantage is discussed. Finally, projections are made of some possible technological developments in the 1990s which open up opportunities for the future.

Keywords: tourism technology; customer service

Pleasure, sea, blue skies, fun, adventure, change . . . are some of the words conjured up by the offerings of the travel industry. Yet behind these happy vistas, the structure of the UK travel industry is competitive, conflict-ridden and undergoing immense technological change. The main forms of competitive strategies adopted by the protagonists, ie the principals of the wholesale side of the industry, are price-cutting, providing a differenti- ated range of travel products and a focus on particular market segments, eg the provision of longer-stay holidays for the elderly, or a mixture of these. Rivalries between the main suppliers of travel products are notorious as well as potential conflicts between those in the wholesale and those in the retail end of the business. Technology is affecting the travel industry through changing the way the industry is organized and how tasks are done, eg public access ticket machines for airflight bookings, etc. It is also changing the competitive ‘rules of the game’ of the industry because those companies that effectively exploit new technologies can enhance their own competitive performance in the industry. In order to move into the 1990s effectively travel companies will have to assess available technological and marketing options and relate these to their own corporate strategies.

Margaret Bruce is at the Department of Management Sciences, UMIST, Manchester, UK.

1980s in retrospect

The most recent and widespread technological change in the UK travel industry has been the adoption of interac- tive videotex. Within five years of its introduction to the industry late in 1979 about 90% of all UK travel agencies use videotex systems for at least checking latest availabil- ity, up-to-date prices and general travel information, such as currency exchange rates etc. Over 55% of all package bookings are now made through videotex. As well as the travel services available through British Telecom’s Prestsl service, there are private videotex systems designed and operated by principals and carriers. The most famous of these is perhaps that of Thomson Holidays ‘TOPS’ system and the videotex networks provided by Istel and Fastrak. Videotex technology has become an integral part of the communications infrastructure of the travel industry, so it is not possible for any particular group of the industry to work effectively without interactive videotes.

Videotex has been used mainly to improve communica- tions between the tour operations and travel agencies. Why was interactive videotex taken up so rapidly by all

sectors of the industry? Up to the 19SOs. the main communications channels between the carriers, tram-sl principals and the geographically dispersed agents about travel offerings had been via telephone, paper and telex. Booking and confirmation procedures were time consum- ing, with loss of potential custom and travel companies were unable to realize the full value of their products. Interactive videotex offered significant advantages for improving the distribution of travel products. in particular, information about availability of airline seats, hotel accommodation, etc and the opportunity of making

electronic confirmation of reservations. The travel principals and agencies initially adopting

videotex were able to gain a competitive advantage by cheapening the cost of communications between principals and agents, for example with the reduction in the production and postage of written information and by improving communications especially in the dissemination of up-to-date information about their travel products, such

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as prices and availability. The service to the customer has improved too. resulting in increased custom for those companies with electronic information systems.

Videotex applications

The companies taking up interactive videotex exploited its potential in different ways. One effective technological/ competitive strategy with regard to videotex was that of Thomson Holidays. At the beginning, the company designed and developed its own private videotex system.

-TOPS’. This system restricted access to Thomson Holi- days’ travel information to those agents trained to use TOPS which ensured that its travel information was easily selected by the agent selling its travel products. Also, the system meant that the principal’s information was secure; its competitors could not find commercially sensitive information about. for example, the company’s load factors. TOPS also led to cost-savings in the communica- tions between Thomson Holidays and the agencies which distribute its products. Then in December 1986, Thomson Holidays made all its holiday bookings available via interactive videotex only. Indeed, during 1986, the com- pany doubled its business, increased its market share from 20% to 30% and kept its average holiday prices at the 19S4 level. Cohn Palmer, Deputy Managing Director, claims that the TOPS videotex system is responsible for this

success.

This has allowed us to shake up the market with dramatic pricing moves in the sure knowledge that we had the systems in place to soak up the extra demand! The ability to handle bookings on a massive scale and to cope with the huge surges in demand that are a feature of the package holiday business has been an important factor in keeping Thomson in front of every other UK tour operator year after year.’

The success of Thomson Holidays in exploiting the competitive advantages offered by interactive videotex has not been shared by all principals. Thomson Holidays with its offensive strategy in the travel trade is perhaps the ‘shaper’ of technological change in the industry with the

other principles responding to it. What constitutes an opportunity to some poses a threat to others!

As regards the retailers or travel agencies, the adoption of videotex has been advantageous in:

l being cost-effective, mainly because a greater volume of business could be handled by the agencies without incurring substantially greater costs; and

l making the process of booking, confirmation and finding out the latest availability of prices of travel offerings so much easier.

Improved customer service has meant that the agencies with videotex gained a larger market share in the areas in which they were operating.

Trends

It is possible to discern certain trends coinciding with the use of interactive videotex in the UK travel industry. The technological changes occurring with videotex were

accompanied by a process of greater rationalization and centralization of the travel industry.’ Principals have taken some control over the communications network and distribution of travel products through. for example, locking agencies into videotex systems designed and operated by principals and by expanding chains of agencies owned by principals. The latter process is intensifying. The smaller and independent agency is particularly under survival threat because of being unable to sustain the loss of revenue as their high-street competi- tors invest in electronic technology and take a significant proportion of their business.

Jobs have been lost in the reservation and information offices of tour operators and carriers but new jobs are being created and new skills are required, eg keyboard and information retrieval skills, learning how to sell travel products while using a visual display unit to carry out the transaction, how to make bookings, etc. The task of providing training and education for these new skills is being addressed by private companies and managers of travel agencies; and some colleges have courses with an information technology component.

The interactive videotex wave of technological change in the travel industry is nearly over. Videotex has become one of the industry’s main standards and has led to the automation of the travel industry. Now companies are looking for new technological changes to exploit and to gain a competitive advantage.

Forward into the 1990s

There has been a phenomenal growth in the amount of information technology available. Figure 1 depicts the historical development of information technologies from the emergence of telegraphy in 1847 to television to an expanding plethora of information technologies by the year 2000. eg satellite, speech facsimile, telemetry and so on. The choice is overwhelming. But which technologies are of relevance to the travel industry, and if adopted, what will the consequences be?

Many of the forecasts of future society assume that there will be a greater quantity of information technologies around at home, in the community and in workplaces.’ These societal changes will facilitate new forms of distribu- tion of travel products, especially for the nest generation who will be so much more familiar with computers. Not only will the consumer’s role change with the provision of more self-service ticketing facilities but so too will the principal’s and the agent’s roles change.

Short-term technological advances

In the shorter term, there are problems with information technology as it is currently used in the agencies. These can be rectified and in so doing, may lead to an improved customer service. Some of these problems are listed here. It can take the agency staff a day to enter or .log-on’ to the databases of some of the principals and carriers in order to check availability and make bookings. This can lead to bottlenecks, loss of custom and empty seats; and the

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Figure 1. An example of a telecommunications service taxonomy Source: Consortium British Teleconsult/Consultel/Detecon/Nepostai/Sofrecom et al, Report to the European Commission, Brussels, 1985

procedure is time-consuming and frustrating for both staff and customers. Automatic dial-up facilities to search the different computerized reservation systems of the princip- als and carriers is required for agents. Installing ticket facilities in the retailers would be helpful especially for late bookings - more common than not for business travellers - and deposit bookings. Providing ‘print-outs’ for customers to take away with them can prevent misunderstandings and provide reassurance for the customer. Separating the

administration tasks from making bookings would release agency staffs time so they could focus on the selling of travel products. Introducing microcomputers and word processors can assist the agencies’ administrative tasks. Also, word processors can lead to new tasks, eg mailshots to businesses to advertise the agent’s services. It would be helpful to have two terminals on the desks of the travel-agency clerks so that the customer can see the screen at the same time as the clerk and so follow through the booking process. Paying attention to the customer’s needs is to do with people as well as technology. One prime example of this is the failure of the requirements of the female business traveiler to be taken into account. Many times, a female business traveller is assumed to be a ‘person’ defined as ‘male’ which can lead to embarrassing situations - as the cartoon illustrates so well.’

All of these suggested improvements can be implemented now and with little investment in technological change.

Why have such issues not been dealt with before? Partly because there has been a focus on installing or im- plementing technology without fully considering the effect

on the customer. Indeed. a survey of northwest UK agencies to investigate the effects of new technology on the motivation of staff in travel agencies supports this.’ The research shows that automation beyond a certain threshold depresses staff motivation and affects their interaction with potential customers. Dealing with some of these problems may help to bring about a balance between a technological focus and a customer orientation. Getting this balance right is crucial.

Looking further ahead into the future, it is likely that current experiments with public-access ticketing machines located at railway stations and airports for the customer to purchase rail tickets and tickets for internal flights directly will become increasingly widespread: and will be used for other standardized travel products. As with retailers in other service sectors this trend to ‘self service. will grow.’ Although the travel consumer has to be confident when booking electronically that the information to go through the transaction is comprehensive, accurate and reliable, and that liability is guaranteed if something goes wrong.

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In the high-powered world of hi-tech the one comforting thought is that there is always a human element to screw it all up!

Indeed this form of distribution of travel products may require changes to the laws of product liability. Another trend is the introduction of videotesivideodisc equipment in agencies. The customer will be able to watch videos of holiday destinations and simultaneously acquire informa- tion about availability and price.’

Approaching the 1990s

Travel agencies are concerned about their survival, in the longer term, precisely because new information technolo- gies offer opportunities for travel principals and carriers to sell their products direct to the consumer. However, travel agencies themselves can gain some control over the design and implementation of information technologies and act creatively on the opportunities new technology can give them. One innovation is that of ‘Travel Desk’ an information service available through Prestel. It is Pre- stel’s first electronic travel agency and it enables the travel agency providing Travel Desk to take its ‘shop’ directly into clients’ living rooms and offices. This service offers quotes and booking facilities on Prestel for airline tickets. car hire, travel insurance, etc. This is one example of the ‘paperless travel agency’. Alternative high-technology armchair agencies may be those acting as consultancies rather than high-street booking shops. The travel consul- tants could focus on particular market segments. eg

holidays in the UK for the over Xk, or offering esotic travel packages in the Far East. etc. This assumes that the agencies would segment the market for the area in which they are based and make offerings for their market segments. These agencies could use information technolo- gies to ‘mix and match’ trav-el products to suit individual requirements and tastes. This development would. perhaps, counter the conformity of standardized travel packages offered via electronic ‘self service’ outlets.

During the course of the 1999s, cable and satellite communications will be more and more prevalent. Again. these may not be entirely in the hands of principals. It may well be the case that travel agencies can exploit these technologies and arrange hotel accommodation them- selves with hoteliers in Spain, Greece or wherever and so bypass the principals.

Another significant development is that of ‘fifth genera- tion’ software, eg ‘expert systems‘.” This r)pe of software would enable the consumer booking at home or through an agency to give certain parameters defining travel arrangements, eg date of travel, length of stay, price. etc to the reservation system. This would then automaticall> generate a list of travel products and present these to the consumer to help the customer choose. .4nother appiica- tion of expert systems is in helping to plan [ravel routes, eg a train journey in southern France. However. with

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with videotex-videodiscs and with public-access ticket machines. So, the outcome of technological change will be a continuation of efforts to cheapen the communications costs for the distribution of travel products and to improve the purchase process.

Focusing on technological change can mean a neglect of a ‘customer orientation’. A balance has to be made between the improvements technology can bring and other changes, such as a greater investment in marketing. Effort at the retail end of the industry to make the selling experience more professional and pleasurable, the intro- duction of marketing ideas. eg market segmentation and catering for the entire needs of the travel consumer. would be at least as effective as introducing more technology. Already trends are discernible in this direction with, eg the revamping of agencies in accordance with new concepts like that of Abroad and other agencies paying attention to such aspects of their business. Maybe there will be a move towards a greater specialization within the industry with some companies focusing on particular market segments and providing products for these. A new type of agency may emerge which moves away from the high-street booking shop to more of a travel consultancy providing individualized travel packages made up of a ‘mix and match’ of available travel offerings. Sophisticated informa- tion systems could be used to achieve the optimum travel

package. The rate of adoption of technological change in the

travel trade is related to the competitive strategies of the travel companies. Companies that have effectively taken up and used technology in the past will be more likely to continue to do so and to make the introduction of new technology an integral part of their corporate strategy. Such ‘shapers’ of technological change set up procedures L eg think-tanks with people from different departments in their own company and with representatives from equip- ment suppliers and so on - to search for developments in technology, assess these and relate them to their own position in the travel industry. The harnessing of technolo- gy can affect the competitive ‘rules of the game’, as interactive videotex has done, for the travel industry with some companies gaining a sustainable competitive advan- tage over time through their ability to exploit the technology.

There are various technofears’ in the industry about the impact of automation on job design and on the displace- ment of jobs. Will the small agencies survive’? Will cable and satellite lead to agencies bypassing principals and so taking business away from the principals? Will the offerings available to the consumer be limited as agencies look into the electronic information systems of a handful of principals? Or will the range open up as agencies survey a range of databases? These ate all pertinent questions which need to be raised and continually assessed by members of the travel industry. Technology is not ‘out of control’, and it rarely has sudden impact. Consequently a greater awareness within the industry of technological developments, anticipating ‘what would happen if technol- ogy x were introduced . . . ‘, a closet interaction between

developments in communications technologies. it may be that the amount of movement of people will start to decrease. Instead business people may well hold telecon- ferences, and other potential travellers will take instant trips with audio-visual images. Perhaps these are new market opportunities for travel companies. If travel companies do not move into such areas. other companies outside the industry will.

These ate some of the discernible technological trends which are likely to take the travel industry into the 1990s and affect the industry in the next decade. But technology is not the only issue for tourism in the 1990s. Marketing is also important.

Marketing strategies

Harnessing technological changes can be used by travel companies to develop an effective competitive strategy by lowering the cost of distribution and improving the service provided to the consumer. But what has tended to happen is a ‘technocist focus’ and a neglect of other factors influencing the consumer’s purchase behaviour. One marketing strategy which is likely to be effective and initiated by other retailers is that of a travel agency business in the northwest UK. Speakman’s Travel has revamped its retail outlets and renamed these Abrond.’ This travel agency has invested resources in the develop- ment of computer software to improve and speed up the access and the search of principals‘ and carriers’ databases of travel products and so to enhance the customer service. At the same time, the company provides a pleasurable shopping experience for the customer. The ambience of the retail outlets is relaxed and the staff are professionally trained to sell the travel products, the consumer can peruse the printed information in comfort and also sit and watch videos of the travel products available. Abroad intends to cater for the entire needs of the ttaveller by selling Abroad sunglasses, Abroad suntan lotion and so on.

Other marketing strategies can be employed - these include segmenting the market and generating travel offerings for particular segments, eg holidays in the UK for the over 3Os, etc. Agencies could combine with local retailers to have joint marketing ventures, eg for winter ski holidays the agency could collaborate with a sport retailer to provide special offers of ski clothes. New technologies could be employed to assist marketing ventures. Micro- computers and word processors can help in the administer- ing of surveys, to find out what the demands are in the local market-place, and of mailshots to, eg local businesses to advertise its particular travel products.

Technology in the 1990s

It is clear that the quantity of information technology utilized by the travel industry will increase. The main applications will be in improving the distribution of travel products by the principals and carriers both to agencies and to the potential consumers directly, eg experiments

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travel companies and equipment suppliers to introduce joint development of information systems appropriate for the needs of the travel industry, and the instigation of think-tanks or planning procedures within travel com- panies to enable them to cope with change. may lead to the effective introduction of new technologies within the industry. Opportunities for some particular groups may represent threats for others. The issues of ‘who controls’ (the principals and carriers or the agencies) the rate and direction of technological change is relevant to such

assessments. Addressing technological futures, and working out plans

of action in accordance with an understanding of corporate strategy and an awareness of a marketing orientation, is an effective approach for the tourist industry entering the 1990s.

Notes and references

‘Videorex Viewpoinr. 17 December 19S6. ‘kl. Bruce, ‘Information technology: changes in the travel trade‘. Tourism .Llanagement. Vol 4. No 4, 19%. pp 292-293. ‘Long Term Perspectives Group. IT Furrrres Stcrveyed. NEDO, London. 1986. ‘Hi-Tech Hitches are Human Nature. Travel ,Vervr. S August 19S6. ‘H. Kahn. Information Technology and Job Satisfacrion. Work in progress. Management Sciences. UhfIST. Manchester. UK, 1957. ‘J. Gershuny. After Industrial Society? The Emerging Self-service Economy, XlacMillan. London, 1978. ‘L. Kwok, C. Jackson and F. Teskey. ‘A combined videote.4 videodisc system for tourist information’, Journal of information Technolog!. September 1986. ‘E. Feigenbaum and P. McCorduck, Tire Fifrh Generariont Artificial lnrelligence and Japan’s Challenge to the World. Michael Joseph, London, 19S-1. “M. Bruce. Speakman’s Travel. Swinton. UK. Personal inter- view, 19S6.

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