Book Report on "Use of ICT"

Book Report 15 pages (4804 words) Sources: 5

[EXCERPT] . . . .

Communication Technology in the Hospitality Industry

Computers, global telecommunications and the Internet have all fundamentally changed the manner in which companies of all types and sizes operate and market their businesses today. In fact, information and communication technology (ICT) have been responsible for fueling the globalization of the marketplace and these same forces have contributed to the resurrection of the travel and tourism industry following the major downturn the industry experienced following the terrorist attacks of September 11, 2001. Today, the tourism industry is the largest industry in the world and the hospitality sector that is supports has enjoyed the results of this upsurge. Some hospitality organizations, though, have benefited from their ICT initiatives in more significant ways than others, but it is clear that virtually any type of company competing in the hospitality industry can benefit from the use of ICT provided that certain factors are taken into account during its selection, implementation and administration. Therefore, to gain some valuable insights into what is involved, this paper provides an overview of the use of information and communication technology in the hospitality industry today to determine the impact that information technologies have had on the industry's structure as well as an examination of ways in companies are using these technologies to add value to their business proposition by measuring the added value originating from IT. A Porter's five forces analysis of the hospitality industry is followed by an analysis concerning how both existing and emerging IT technologies can be used as a source of competitive advantage. Finally, a summary of the research and important findings are presented in the conclusion.

Review and Discussion

Background and Overview

The term "hospitality industry" is an umbrella reference for all of those companies that have as their primary purpose the provision of food, beverages and accommodations for sale on a commercial basis (Lucas 2003). The most common activities or sub-sectors in the International Standard Industrial Classification of all Economic Activities (ISIC) Division 55 (Hotels and restaurants) are (a) hotels, (b) restaurants, (c) bars (this designation includes pubs and clubs) and contract catering (Lucas 2003). As noted above, the hospitality industry is part of the tourism sector which is the largest industry in the world and is estimated to employ more than 255 million people, accounting for fully 10% of employment worldwide (Spillane 2001). Given the enormous numbers of people that are competing in the hospitality industry, it is clear that a competitive advantage is needed to survive and grow. Because the hospitality industry depends on delivering high quality products and services with a view towards providing high levels of customer satisfaction, this competitive advantage will naturally be related to this function. For instance, according to Spillane, the tourism industry "has now grown into a modern, mature industry where workers are forming their professional identity. These 'hospitality professionals' are primarily concerned with customer satisfaction. But that's not always easy to achieve and many problems can -- and do -- arise" (2001, 16).

Problems with customer satisfaction are certainly not unique to the hospitality industry, of course, but companies competing in this service industry in particular must depend on a track record of satisfied customers in order to sustain their existing levels of operations and to grow their businesses in the future. Because the hospital industry typically caters to a global consumer base, providing consistently top-notch services in such a transcultural environment can be a daunting enterprise that is fraught with opportunities for failure. Indeed, the tourism and hospitality industry have had a global focus in the past, of course, but this focus has become increasingly pronounced in recent years due in large part to the innovations introduced by ICT. In fact, according to Egger and Buhalis (2008), "As more consumers move online, travel has become the most commonly sold online product" (16). As a result, the competitive environment in which companies in the hospitality industry operate has become increasingly fierce in recent years and there has been a push among many companies to "reinvent or differentiate themselves successfully, especially if they become homogenized as predicted by some researchers. In particular, destination organisations will need to seek competitive advantage by providing a quality service product" (Wahab & Cooper 2001, 37). Therefore, companies competing in the hospitality industry must take advantage of every resource available to help them achieve the operational capability to both deliver high quality customer services as well as to communicate this feature to the prospective clientele. These companies must also be able to identify trends in the marketplace that have the potential to affect their operations and to monitor costs and other operational data in the process. All in all, it is hard to imagine how these processes were ever accomplished efficiently without ICT, and these issues are discussed further below.

Applications of ICT in the Hospitality Industry

The research shows that there are a number of ways in which ICT can help to facilitate the development of a competitive advantage for companies competing in the hospitality industry and innovations continue to be introduced that hold a great deal of promise for this industry in the future. According to Crandall and Gao (2005), "Specific applications in the hospitality industry have also been recognized, such as reservations and sales and marketing functions" (31). There are a number of other applications currently being used as well. For instance, according to Domke-Damonte and Levsen (2002), "As information technology usage has increased greatly due to more user-friendly applications, cheaper and faster software and hardware, and major advances in telecommunication capabilities and usability, more business are including the Internet in their strategies" (31).

Although there is no "one-size-fits-all" IT solution available for all companies competing in the hospitality industry, the research shows that the manner in which hospitality organizations can use ICT to develop a competitive advantage depends on their location, targeted customer base, size and the type of services offered; however, there are also some common approaches being used that can serve as good examples of how these techniques are being applied by hospitality companies today. For example, all hospitality organizations need timely information concerning what their customers want, what the most popular tourist destinations are at a given point in time, and what their competitors are doing to remain competitive and it is in this area in particular that ICT can help. In this regard, Taylor advises, "No business, and especially no customer service intensive business, can operate without information. From the broader understanding of what customers want, need, and desire to the feedback concerning how well a business has met those demands, information provides the rudder to guide the service ship" (2002, 36). Based on his empirical observations and experiences, this analyst cites as especially salient the following examples of how hospitality organizations' ICT failed in recent months:

1. The information system has failed if the international travelers who comprise 80% of a hotel's business have no World Wide CNN on their TVs.

2. The information system has failed if a business does not know why first time visitors to its facility seldom return.

3. The system has failed if 60% of a business' customers are Jewish and the business does not provide Kosher food in its restaurant.

4. The system has failed if a company's front-line workers know customers' most common complaints, but management only knows the complaints listed on the complaint cards filled out by one-fifth of one percent of its customers (Taylor 2002, 36).

Because customer service is the focus of the hospitality industry, it just makes good business sense to use these technologies to their best advantage in acquiring needed information. As Taylor emphasizes, "Customer service requires market research, communication barrier reduction, and proactive use of the information subsequently generated. Customer service requires knowing when customers are upset and being willing to take action to recover from a service failure" (2002, 36). Instances of these types of customer service feedback can be easily categorized, the information plugged into a database and trended to identify failures and opportunities for improvement, but other information related to customer satisfaction and current trends is also important. It is in this area that ICT can play a major role. The information-gathering function has historically been a labor-intensive and time-consuming operation but ICT has changed this in major ways. In the past, Domke-Damonte and Levson report that, "Information relating to the future of an industry required interorganizational cooperation at the local level. With increased, cheaper, and more user-friendly access to the Internet for noncomputer specialists, much of this information can now be collected by small business owners" (2002, 31). In addition, even an inexpensive personal computer with Internet access can provide smaller companies with a competitive advantage. For instance, Domke-Damonte and Levsen note that, "The World Wide Web can be used to investigate competition, gain information about innovative practices within the small hotel industry, and stay ahead of the curve on the technological, regulatory, and economic issues that target the industry" (2002, 31). Contributing to… READ MORE

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