There is reason for optimism in the hospitality & tourism industry. The 2010 Soccer World cup is expected to bring a flood of tourists to South Africa. The intense media interest will stimulate tourism. This will in turn translate into a cash injection for the hospitality industry. This bodes well for IT investment in this cash-constrained industry. For the IT supplier, it is useful to understand the factors that influence the IT usage patterns in the hospitality industry.

Saturday, September 26, 2009

Disintermediation

Disintermediation refers to the exclusion of intermediaries from a distribution channel. Through the Internet, organisations can reach consumers directly. Thus hotels can create their own web sites, bypassing the travel agents and the Global Distribution Systems (GDS’s) completely. A popular prediction is that the web will drastically alter the role of the travel agent as well as the role of the Global Distribution Systems (GDS’s). The GDS’s originated in the 1950’s, when airlines created in-house systems to manage their own inventories. Because travellers often wanted to book accommodation together with their flight bookings, the airlines allowed travel agents to add accommodation stock to their flight inventory applications. Hence the GDS’s were born, and still today, are used to purchase bundled products, i.e. flights, accommodation, car rental etc. Today there are only two large GDS’s used by the travel industry worldwide, namely Galileo and Amadeus.

A number of research papers deal with aspects of disintermediation – the article by O’Connor and Murphy (2004) provides a great summary of the important papers on this topic.
The Internet has created opportunities for new intermediaries like Opaque channels (e.g. Expedia.com, Travelocity.com), that filter and bundle travel products (Olsen et al., 2000).
Several papers address the rapid growth in hotel web sites (Garces et al., 2004; Buick, 2003 cited in O’Connor et al. 2004). The marginalisation of travel agents and GDS’s due to direct bookings on hotel websites has not happened, nor is this foreseen by industry experts (O’Connor & Frew, 2002).

References:
Garcés S & Gorgemans S. et al. (2004). Implications of the Internet – An Analysis of the Argonese Hospitality Industry 2002. Tourism Management, 25:603-613.
O’Connor P & Frew AJ. (2002). The Future of Hotel Electronic Distribution. Cornell Hotel and Restaurant Administration Quarterly, June:33-45.
O’Connor P & Murphy J. (2004). Research on Information Technology in the Hospitality Industry. Hospitality Management, 23(2004):473-484.
Olsen MD & Connolly DJ. (2000). Experience-Based Travel: How Technology is Changing the Hospitality Industry. Cornell Hotel and Restaurant Administration Quarterly, Feb 2000:30-40.

3 comments:

  1. The statement of O'Connor & Frew - 2002 concerning the marginalistion of Travel Agents and GDS's is and will remain true as Travel Agents adapt and extend their services to meet the changing demand of clients - especially in Coporate Travel - to ensure their survival.

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  2. That was awesome post on Disintermediation ! Probably one of the more interesting reads in awhile. Damn interesting......


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