The Impact of E-commerce on the Marketing Strategies of International Hotel Companies

The hotel industry can potentially use e-commerce to improve its primary and support marketing management operations by using the new technologies in the value chain. This essay generally narrates the impact of e-commerce on the marketing strategies of international hotel companies. Specifically, it tackles on the concept of e-commerce, marketing mix structure, and examples of different international hotels that ventured into e-commerce.

Definition of e-commerce

E-commerce is another name for electronic commerce. It offers what many people believe to be an effective property of the World Wide Web (WWW). The property of the web is the ability to adjust sites to the different needs, wants, desires and, even personalities of each individual customer. The increasing competition worldwide, increasing demands made by customers and the rapid pace of change in technology are forcing companies to review the way they do business, what kinds of products and services they offer, and the speed with which they release products to market. The term e-commerce is simply defined as transacting through electronic means. Gathering, relaying and exchanging information electronically are all covered by e-commerce. Electronic media used for e-commerce can be through the internet, telephone or fax machines (Dunt and Harper 2002). At present, these e-commerce methodologies are very significant in the business field, thus, the interchangeable term, e-business, was introduced. The scope of e-business covers various business and marketing processes that are performed through networks mediated by computer systems.

The Impact of e-Commerce in Marketing Strategies of International Hotels

The use of electronic business processes allowed organizations to carry out more efficient activities, including buying and selling processes, production and management. The basis of e-business is on the processing and transmission of digitized information such as sound, text and images from one computer to another electronic instrument or device (Hecker 2001). According to the Organization for Economic Cooperation and Development (Wyckoff and Colecchia 1999), businesses have various reasons for introducing e-commerce into their operations. One of these reasons is the ability of e-commerce to reduce the costs incurred from business transactions. The inexpensive cost of internet application allows small and medium sized companies to avail to e-commerce’s many benefits. The ability of e-commerce to improve the quality of both product and customer services also encourages companies to use this business trend. Conducting transactions through e-commerce channels allows faster delivery of services, which in turn leads to higher levels of customer satisfaction. Finally, businesses engage themselves to e-commerce in order to cope with competition. As more and more businesses are recognizing the role of e-commerce to successful business operation, other businesses would have to integrate this trend as well into their respective operations so as to adapt and maintain their businesses afloat.

Generally speaking, e-commerce using the internet as the main infrastructure enhances sales activity and revenue generation (Adam et al. 2002). This is due to the fact that the internet uses a single-button-click process that leads to the appearance of various data in a significantly brief time allocation. Speed may be considered as one of internet’s feature in the e-commerce. Through the speed, it enables business to automate many operations and create worldwide products, 24-hours per day at low cost (Guttman 2002). In the hotel industry, such speed is advantageous in terms of overseas corporate or personal travel appointments wherein there is a need to immediate reserve for a room accommodation. Online reservation is faster and hassle free. Of particular example, Hilton Hotel implemented an electronic ticketing scheme through their website in order to make an easier booking of rooms and meeting facilities (Wagner 2000). According to Bruce Rosenberg, Hilton Hotel’s senior VP for e-business and distribution, the internet facilitates the hotel’s interaction and helps in the transformation of customer-business relationship.

Meanwhile, the increasing competition worldwide, demands made by customers, and rapid pace of change in technology force companies to review the way they do business, kinds of products and services they offer, and speed with which they release products to market (Guttman 2002; Kotter 1994). E-commerce empowers customers to conduct business from corner to corner of the globe and enhances their array of product choices and preferences and information about prices. In the hotel industry, the presence of complete information with regards to prices brings out favorable response to the hotel clients. This is because the client will save more time by just looking directly into the price list instead of calling over the line. Hotel owners and operators who understand and implement the science of e-commerce will be able to permanently survive competition while those who do not may be out of business (Watkins 2000).

Internet is also dynamic and decentralized. This technology brought shopping to consumers with innovative types of market for information. In click of a button, consumers will have a wide choice of products to purchase. It provides very satisfactory global marketing application (Greenemeier and Rosen 2000). E-commerce facilitates wide market coverage for products and services. In international hotel operations, the presence of websites allows the potentialities of marketing across geographical borders. Foreign clients who are first-time visitors depend on the information about a particular hotel and its service provided in the web. There are several international hotels who invested in multilingual website and seen to be effective means in expanding geographical market coverage. For instance, Adlon Hotel in Stockholm increased its clientele by maintaining a website that caters to specific international languages such as German, French, Italian, Spanish, Portuguese, and Scandinavian languages and English (Dunlap 1998). Also, the application of multilingual website of Adlon Hotel reduced the amount of advertising using the mainstream media. As to this case, international advertising is cost effective and at the same time extensive in scope. Just by taking the pains of translating one single page of Adlon Hotel’s website and promoting these language gateways into the site, the marketing operations significantly improved (Dunlap 1998).

Using e-commerce technology such as the internet, the promotion of products and services of international hotels is more cost and time efficient. For instance, in the marketing communications mechanisms of international hotels (like advertising), management hope to create consistent brand images worldwide, spend less marketing resources in producing unified appeals, and use only one or a few international agencies to handle the company's entire advertising (Harris 1994; Mueller 1991; Englis 1994). Today, internet advertising is among the most popular means of marketing promotion. Internet advertising or sometimes called web advertising is a type of advertising in which a person can control or customize the information according to his/her interest with the use of internet (Shih 2001). It provides instant interaction and connection to the consumers since the buyers or the audiences are the one who decides on what advertisement to view favorable to the field of their interest. The consumers are given the power to control the opportunity in establishing an on-line participation through the use of internet (Cartellieri 1997; Kim 2001). In Europe, Internet advertising revenues in the year 2000 reached an estimated amount of US$ 180 million in the UK and US$300 million in France (Mcdowall 2001). With this innovation, internet advertising have gained significance in promoting the company’s products and services and have considered that the medium have been successful in providing the company to have instant interaction with the consumers which marked opportunity for the company to save time and money.

E-commerce enthusiasts are aware of the technical and financial advantages of using the internet as the infrastructure (Adam 2002). Internet-based commercial activities offers opening up of markets, improving information provisions about products, including non-corporate information (Eckersley, Harris, and Jackson, 2003; Czerniawska and Potter 1998; Karake-Shalhoub2002). The Internet allows consumers much greater access to information, opening up the market and undermining monopolies. For international hotels and their marketing strategies, it is expected that e-commerce makes marketing procedures to be fast, cost saving, convenient and simple for consumers. With the presence of existing technology today, it allows consumers to focus their resources and make decisions through a series of self-interaction with the internet.

As to the case of Bass Hotel, the brewer and world's second largest hotel operator, it is predicted that it would hit its $1 billion annual target for internet room booking revenues within four years of using e-commerce (Macalister 2000). In 2000, the company together with its 2,800 hotels with 450,000 rooms saw an increased of $12 million a month of hotel bookings over the internet. Accordingly, this figure represents almost 3% of the company's global revenue and it is perceived to double each day of operation (Macalister 2000). In general reference to international hotel businesses, e-commerce provides competitive advantages ranging from cost and time effective mechanisms, expansion of market coverage, and integrated product and services promotions. However, there are some criticisms on e-commerce dealings (Andrew et al. 2000). Inge (1999) noted that most non-buyers criticize the internet's lack of human contact, personal privacy and credit card security, and cite a need for more time to make a decision. Another barrier on effective implementation of e-commerce is the consumers’ concern on online access and cost (Pallab 1996). In some nations, internet access is only limited to business sites and schools. In some cases, the lack of appropriate training or education on using various e-commerce channels tend to be one of the barriers encountered by consumers.

Generally, there are numerous advantages of e-commerce and its related technologies (like the internet) to international hotel operations. However, analyst Alan Alper (Wagner 2000) declared that hotels have been rather late getting into the internet game. The implementation of e-commerce not only to international hotel business but to other businesses as well needs appropriate strategy and managerial research and development efforts. According to Epstein (2004), appropriate strategy must reflect a company's customer type, product type, geographic scope, procurement and distribution channels, and so forth. He added that the consideration of timing and speed of entry into the e-commerce environment is important. Most importantly, businesses must know how to provide differentiation in the marketplace, since strategy is about being different. Thus, the international business environment worldwide departs with the traces of traditional marketing. Today, they engage in contemporary marketing experiences that include e-commerce and internet-based economic activities. For there are uncertain trends that emerge in the business internal and external setting, global firms like hotel bunnies use e-commerce as a marketing strategy to go along with the challenges of the more competitive and diverse global market.

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