Research Paper on "Co-Creation of Tourism Experience on Travel Guide and Booking Websites"

Research Paper 16 pages (4824 words) Sources: 25

[EXCERPT] . . . .

co-creation does not exist in tourism marketing today but is the future of the industry. The concept is investigated from multiple angles. Today's e-commerce tourism sites are sophisticated marketplaces but are incapable of providing a true co-creation experience. The algorithms to provide this true co-creation experience are in development, however. This article examines the convergence between these algorithms, customer relationship management, the experience economy and the concept of co-creation in tourism marketing with an eye towards a vision of the industry's future. While the scholars who have introduced the idea of co-creation to the tourism marketing literature may have made some spurious assumptions, their ideas are more ahead of their time than faulty.

Introduction

The notion of co-creation in tourism is an interesting one that has been proposed -- yet the reality of the tourism industry today does not support this fanciful notion. Tourism is pre-packaged in the form of cruise ships, all-inclusive resorts and package tours. Independent travel is a dying art in Western society, where the types of trips on offer are limited and even niche tourism is becoming subject to industry packaging. While the information available on the Internet allows consumers to exercise more choice in co-creating their own experience, few consumers exercise this option as a matter of course. The notion that consumers are co-creators of their own experiences is absolutely unsubstantiated. This paper will demonstrate the potential for co-creation in the tourism industry but understands that this potential has yet to be realized by the industry, which instead markets the idea of co-creation.

The literature in support of the idea of co-creation is subject to sweeping, generalized assumptions that are not supported. Once these assumptions are removed, the argument that tourism is a bastion of the co-creation experience becomes shakier. The idea of co-creation sounds good, and certainly the potential for a dramatic shift in consumer behavior is there, but in the real world, co-creation is to this point little more than wishful thinking, an idea that is good on paper but has yet to take hold in the marketplace. There are specific reasons for this. Customized, negotiated travel costs more than mass market travel. Companies simply cannot offer co-created travel at the same margins as pre-packaged travel. Consumers, while empowered by information, have recognized there is an opportunity cost to acquiring this information. As such, they are trending towards tourism in a format that requires little work -- most seem unwilling to dedicate hours to research when a packaged trip offers them the utility that they seek.

Co-Creation

The idea of co-creation was explained by Binkhorst (n.d.) as being a manifestation of the experience economy. The experience economy is loosely described by Binkhorst as being "a balance between control by the experience stager and self-determined activity with its spontaneity, freedom and self-expression." What this means is that the tourist, working with a framework provided by the destination, engages in some element of customization of their experience. This is the embodiment of Binkhorst's co-creation ideal.

Prahalad and Ramaswamy (2004) clarify the concept. They argue that the process of value creation is "shifting rapidly from a product- and firm-centric view to personalized customer services." They argue that the notion of the market is as a point of interchange between consumers and businesses. To them, at no point in human history until now did consumers have any say in product design. This is a faulty assumption, equally faulty as the idea that consumers are able to interact directly with companies prior to the point of exchange. They point as an example of this shift online hotel and airfare auctions (i.e. Hotwire, Priceline). Yet the locus of interaction at these markets remains at the point of exchange. Bargaining online is no different than bargaining at a Middle Eastern bazaar or Asian night market.

Prahalad and Ramaswany further argue that there is a paradigm shift in which "the customer pays according to her (sic) utility rather than according to the company's cost of production." This implies two things. The first is that there has been a shift in buyer power in the industry. This is true. In consideration of Porter's Five Forces model (Porter, 1980), an increase in information on the part of the buyer implicitly increases the bargaining power of the buyer and these websites represent an increase in buyer information.

The second implication, however, is that there has been a shift in the negotiating dynamic itself. This is not the case. The negotiating dynamic still involves the same parameters as it has since the first markets appeared in Neolithic society. A buyer and seller must, after a period of negotiations, conclude their business with an offer, acceptance and delivery - the fundamentals of any purchase contract. The medium for the negotiation may have changed, but the negotiation itself has not changed. The consumer may be better empowered to seek his or her price, but cannot negotiate the finer terms of the offering. A consumer can no more negotiate, for example, the thread count on the linens at the hotel as a result of online auctions than was possible ten or twenty years ago. The company still controls the nature of the product. Moreover the company will still not sell a price that is unfavorable and the consumer still will not make an offer at a price that he or she considers unfavorable. Indeed, Prahalad and Ramaswamy commit a cognitive error in comparing the way a firm sets price on a physical good to the way prices are set on a perishable service such a hotel or an airline seat. The two are not the same, and never were. What online auctions deliver, at best, is the illusion of co-creation. This illusion is created by greater information and the increased competitive intensity created by the online marketplace in comparison to the pre-Internet marketplace when the acquisition cost of information was much higher.

Both Prahalad and Ramaswamy (2004) and Binkhorst (n.d.) argue that "consumers want much more." This claim is not verified. Indeed, evidence from the industry indicates that the vast majority of consumers have no particular interest in a co-creation experience. They may like the idea of co-creation, but in practice, the major drivers of travel revenue continue to be packaged vacations -- all-inclusive resorts, tours and cruises. When consumers do undertake independent travel, they do not necessarily do it as part of a co-creation process; they simply do it on their own.

The global tourism industry is with $1.1 trillion per year. Growth has been strong from the mid 2000s through to 2007, suffering a decline in 2008 with the onset of the economic downturn. An estimated 51% of this was for "leisure, recreation and holidays" (WTO, 2009). Areas of growth are all focused on package tourism sectors -- Central and Southern America, the Middle East and Asia. The Chinese market is dominated by package tourism, and domestic tourism in China is growing rapidly. Emerging markets lead the way for tourism source growth at a growth rate of over 15%, and emerging market tourists tend to be focused on package tourism as they are less familiar with the concept of independent tourism than Westerners. The WTO also identifies construction of mega-resorts as being an industry trend in recent years, though it criticizes the practice as short-sighted and views that in the coming years the trend will be towards greater diversification in the industry (WTO, 2009).

Towards Diversity

At its core, the notion of co-creation as presented by Binkhorst, Prahalad and Ramaswamy is a representation of a future that maximizes the use of technology. The WTO report highlighting a future of highly diversified travel shows that organization believes that co-creation may come to pass in future. This is facilitated by the use of technology. Simply put, the Internet provides consumers with the access to information needed to create the vacations they desire. Companies will naturally respond to this by setting up systems whereby they do work with consumers actively to create these experiences. It is easy to imagine that the proponents of co-creation are simply ahead of their time. To understand how co-creation in tourism will work -- and perhaps why it does not yet work on anything approaching a mainstream scale -- it is worth considering how e-commerce works in the travel industry today.

The websites that facilitate interaction between consumers and travel providers attract consumers with information -- the same information that increases consumer bargaining power. Consumers implicitly understand that increased bargaining power will mean lower prices. They gain knowledge about the quality of the offerings available, the number of offerings available and they are provided with invitations to treat from the travel providers.

With this captive audience, the websites need to find ways to make consumers buy, so that the site earns revenue. Hu (2008) explains how this process works. "Travel websites should pay more attention to the improve (sic) the electronic service quality," he explains. The quality, the e-SQ employs a fuzzy… READ MORE

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