The Internet Revolution, The Internet Revolution, a Threat or Opportunity for the Hong Kong Tourist a Threat or Opportunity for the Hong Kong Tourist

Industry?Industry?

Erwin Huang,Councilor HKITF,

Project Leader, Sector Specific Program, Travel Industry, HKSAR, OGCIO,

Deputy Chairman, TSL Jewelry Ltd.Chairman, Digital Life Institute

AgendaAgenda

• Background of Project• Market Changes, Opportunities and

Pitfalls• Lessons Learnt

Project BackgroundProject Background

– HK Government, OGCIO Dept Sponsored Project, SSP project for Tourist Industry

– Study IT Adoption of one of the Pillar Industry in HK– From Office Automation to Paradigm shifts

• What is the Tourist Industry?– Depends on who you ask..

Defining the Tourist IndustryDefining the Tourist Industry

• Inbound Travel Agent• Outbound Travel Agent• Ticketing• Hotels• Airlines• Retailers • Tourist Service Providers, Restaurants, theme parks..

1400 Companies, mostly SME’s

The Last 10 yearsThe Last 10 years

• Achieved almost 100% ICT adoption• GDS based (Global Distribution System) Business

model– B2B electronic booking system

• Travel Ticketing– Airlines, Trains, buses, car rental, Hotel, Tour..

• Almost 100% Internet enabled

The InternetThe Internet

• Threat or Opportunity?– 10-15 years back, the value offered by Tourist

Agents are Information based• With the Advent of the Internet

– Free and Instant Information flow– The Rise of the Knowledge Consumer

• Direct Purchase between the Hotel in Budapest from your home in 3 minute– Exploration– Comparing– Booking Availability– Purchase, Discount– Done!

The Knowledge Customer Example:The Knowledge Customer Example:

Disintermediation Disintermediation

• If all that a Tourist Agent is offering is:– Only Ticketing (due to access of proprietary information,

e.g. flight availability.. Hotel vacancies..)– Commodity Product: Forced to Lower price by cutting

into agent discount• A good chance that disintermediation will occur

soon..

A Paradigm Shift A Paradigm Shift

• Change of Consumer behavior• Disruptive Technology: Internet• Value Proposition

– Shift from Information holder, to Service provider

CRMCRM

• Better Service through Better Products through better knowing your Customer

• Provide Personalized products/service to consumer at the right time and the right price.

• Build Loyal, Recurring Customer base• Tools:

– List Management, VIP programs, Point/Barter System, Direct marketing tools, Membership based Webshop..

CRM Example CRM Example

• http://www.sunnseaholidays.com/en/

Sun N Sea HolidaysSun N Sea Holidays

• Using Web as Marketing tool• Focus on a Niche Market: the Long tail for SME

travel agents• Add Value/Service to the Customer experience• Keep Loyal, Recurring Customer..

Challenges aheadChallenges ahead

• A Race to change business model• Redefine Products/Services/Values for the

Knowledge Consumer• Opportunities to use ICT to help change model

– Tourist CRM systems– Advanced B2B system for information exchanges– Advanced Web Applications– Effective Direct Marketing tools– Mobile technology to provide faster/better service..

Successful Government Successful Government Sponsoring ModelSponsoring Model

• HKITF role as a facilitator• Pulling Industries together

– IT Industry as supplier– Tourist Industry (mostly SME) with Collective

Demand• Help Explore new business models of

products• Not Direct Subsidy

APEC cooperationAPEC cooperation

• CRM, basis for better Inbound/outbound coop

• VIP club system encourages recurring sales• Better Document exchanges through

standards• Service level Alignments

Summary:Summary:

• Internet revolution– Born of the Knowledge Consumer

• Danger: Disintermediation• Paradigm Shift to the whole industry • New Business model basing on Value Added vs

Control of Information flow• CRM model• Opportunity: Longer term business based on Value

Added and Customization of Service

Q and AQ and A

Thank you!HKITF Enquiry : (852) 3101 8197Email : erwin@fdlife.comWebsite : www.hkitf.org.hk