Mobile Commerce in Tourism and Hospitality Sector

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Introduction

The computer and the internet are two of the most vital innovations of the 20th century. These technological developments changed the manner in which communication took place and presented numerous opportunities for businesses. One novel technology that exploits the internet ability of mobile devices is mobile commerce (m-commerce). The tourism and hospitality industry has shown great interest in this technology. Key players in the sector have appreciated that this technology adds value and provides competitive advantages to individual businesses. Jung and Mills (2010) observe that in addition to extending the reach of wired networks, mobile technology acts as an alternative channel of information providing new opportunities to travellers. This paper will set out to discuss mobile commerce in the tourism and hospitality sector. It will highlight the ways in which m-commerce has been exploited in this industry and demonstrate how the technology has improved the tourism and hospitality sector.

Defining M-Commerce and its Importance

Traditionally, the internet could only be accessed through wired technology. However, advances made in telecommunication technology over the past two decades have made it possible for mobile communication to access the internet. This made it possible for mobile devices to be used for mobile commerce functions. M-commerce is essentially the application of electronic commerce though mobile devices. Alqatan, Singh and Ahmad (2011) define it as a wide array of business activities including advertisement, sales, and marketing, carried out by use of wireless devices such as personal digital assistants, tablets and smart phones. The convenience offered by this technology has led to a marked shift from e-commerce, which relies on wired networks. M-commerce is useful due to a number of important features it possesses. To begin with, it has great mobility making it possible for the user to carry out business transactions while on the move. The user can engage in business activities including looking for the best products from anywhere and at any time.

The second feature is the broad reach of mobile devices in the modern world. The past decade has witnessed a phenomenal growth in mobile technology and wireless communication. The cost of mobile devices has reduced significantly while the technological advances have increased. Mobile devices are able to offer high speed data connection using the 4G network. According to Patten and Harris (2013), there are billions of mobile devices owned by the general population. This means that the number of mobile communication devices far surpasses that of personal computers. These devices have therefore become the most common means of accessing the internet for a large segment of the population. Alqatan et al. (2011) acknowledge that consumers are increasingly depending on their mobile phones for more than just communication purposes. These devices are being used to access content and services from the internet on a frequent basis.

Another advantage is that m-commerce applications are built with usability in mind. Many consumers avoid technology that is complicated to use or requires a lot of learning before proficiency can be achieved. Dae-Young, Jungkun and Alastair (2008) reveal that the learning curve for m-commerce applications is steeper than that of other IT applications since this technology emphasises on user friendliness. Many businesses have moved in to exploit the advantages offered by m-commerce.

M-Commerce in Tourism and Hospitality

The tourism and hospitality sector plays a significant role in the global economy. The World Trade Organisation declares that the tourism and hospitality sector is the worlds largest employer making it the single most important economic activity globally. The economic growth of many nations is therefore dependent on this sector. For this reason, significant efforts are dedicated to its success. M-commerce has emerged as an important component of the tourism and hospitality business with the technology contributing to the success of various entities in the industry.

Airlines

Airlines play an integral role in the tourism business. Most tourists make use of airplanes to reach their favourite destinations. Access to airlines is therefore an important consideration for many tourists when they are making decisions to travel for leisure. Research indicates that most holiday makers are likely to use their mobile devices to research on the air travel options available to them (PhoCusWright Innovation, 2012). Through m-commerce, they are able to engage in personal research on the different airlines and the services they offer.

Once a traveller has chosen an airline, m-commerce technology can be used for booking purposes. A number of important advantages are attributed to online booking services. The consumer experiences a sense of control since he can conduct the transaction at his convenience. Christou (2006) confirms that people feel empowered when they are able to do their travel planning transactions using the mobile technology. Consumers experience increased satisfaction with the services offered leading to the development of a positive attitude towards airlines. In addition to this, the use of m-commerce leads to a sense of freedom by the consumer. When airlines or booking agents make use of m-commerce, the consumer is given the ability to make travel planning transactions at anytime and from anyplace. Without mobile commerce facilities, consumers would have to physically find travel agents at their offices in order to buy travel products and services (Christou, 2006). To make matters worse, the consumer would only engage in these activities during office hours. The online booking technology availed made possible by m-commerce reduces these restrictions. The customer can perform travel planning transactions at his convenience and without having to physically visit an agents office. Another advantage is that the customer is able to carry out real-time monitoring of the status of a reservation request.

Airlines have exploited m-commerce for marketing purposes. Mobile applications have created an opportunity for airlines to promote direct distributions of their products to the consumers. This technology makes it possible for airlines to offer end-to-end services to their clients. Travellers are able to interact exclusively with the airlines as opposed to using travel agencies as a go-between. M-commerce has made it possible for airlines to build stronger customer relationships by encouraging travellers to book directly with them (PhoCusWright Innovation, 2012). This has increased the productivity of airlines as they are able to attract and retain customers. Travellers benefit from the reduced cost of travel as they deal with the airlines directly instead of relying on agents who charge a commission.

Hotels

Accommodation is a crucial part of the tourism and hospitality sector. Traditionally, tourists had to rely on travel agents or make phone calls to reserve rooms at their hotels of choice. The hotel sector has made intensive use of m-commerce to increase efficiency and productivity. Peters (2012) reveals that hotels were the first businesses in the tourism and hospitality sector to invest heavily in m-commerce. The initial mobile efforts by hoteliers were in building booking capabilities. These efforts paid off since over the past decade, mobile hotel booking has experienced a strong growth. According to PhoCusWright Innovation (2012), hotel bookings represented the largest share of mobile bookings in the year 2011.

M-commerce has increased the ease with which tourists can access accommodation services. This technology has made it possible for customers to make reservations by simply clicking on their mobile devices. M-commerce reservations provide some significant advantages to the customer. He/she is able to choose from a large assortment of hotels available through the mobile device (Evangelos, 2010). The customer can compare and contrast the prices and special features provided by each hotel before making a decision. Customers also benefit from a reduction in the cost of obtaining information. Most of the information needs to make an informed decision on accommodation is available for free.

Hotels have benefited from a reduction in operating costs due to m-commerce. Specifically, the cost of advertisement has gone down considerably when this technology is used. Due to their broadcasting capabilities, mobile devices are able to efficiently disseminate information to a large population (Jung & Mills, 2010). By relying on this method, hotels do not have to use a lot of money for advertising using conventional methods such as newspapers and televisions.

A unique advantage of m-commerce is that it provides additional business to hotels by making the establishment visible to the unmanaged business travellers. This class of travellers do not make plans for their accommodation in advance. Instead, they make their accommodation decisions while on the move. M-commerce is suitable for last-minute hotel bookings since it shows the traveller the available hotels within his current location. PhoCusWright Innovation (2012) confirms that m-commerce is ideal for the average mobile traveller seeking a last minute hotel nearby.

Tourist Destinations

Tourist destinations are the most important part of the tourism and hospitality industry. These are the sites that provide the attractions which compel people to travel from their home destination for leisure purposes. Suppliers of tourist services aim to attract visitors and therefore increase their productivity. Beritelli and Schuppisser (2005) declare that the tourism industry is characterised by fierce competition among tourist destinations. M-commerce plays an important role in the war for customers among the many destinations. Borzyszkowski (2014) reveals that with increasing frequency, tourists are choosing their destination using informational technology solutions. Destination Management Organisations (DMOs), which are the entities responsible for managing and marketing specific destination, make use of m-commerce to increase their efficiency and productivity. M-commerce is used to plan and promote the activities offered at a particular destination. This technology is also used to market tourist destinations at the regional and national levels.

While at a particular destination, m-commerce assists the tourist to identify the specific attractions available in the area. Beritelli and Schuppisser (2005) assert that easy and effective identification of places to visit contributes to the positive experience of the tourist during his/her trip. Through m-commerce, tourists receive recommendations on the best attraction sites to visit. Mobile commerce applications highlight museums, leisure parks, exhibition centres, conferences, and restaurants available near the tourists current location.

M-commerce makes it possible for appropriate leisure activity recommendations to be made to a traveller. The mobile applications have access to data on the travellers history and his interests. By analysing this information, the application can accurately provide personalised recommendations (Beritelli & Schuppisser, 2005). The visitor receives filtered and suitable suggestions based on his current location and contextual needs. The individual can use these recommendations to make the best choice regarding his leisure activities.

Tour Operators

Tour operators are business entities that come up with packaged tourism products for holiday makers. These entities are responsible for designing and marketing various travel destinations to the consumer. M-commerce is used in a number of ways by the tour operators. Mobile applications play a major role in the marketing of the packages developed. According to Alqatan et al. (2011), M-commerce has transformed the way in which travellers buy and search for tourism services from the various distribution channels including tour operators. This technology makes it possible for the individual to make last-minute bookings. This ability offers great flexibility to the traveller and the travel companies benefit from additional revenue.

M-commerce assists in personalised advertising by the tour operators. Through data mining, travel companies are able to use past behaviour of a tourist to determine his preferences. They can then predict the products that might be of interest to the individual and market them to him/her. This targeted advertisement is not only cheaper but also more efficient than mass advertisement since it considers the unique preferences of the individual. Christou (2006) notes that electronic travel services on the internet enable travel agents to anticipate changes in consumers behaviour and examine their socio-demographic profiles. The travel agents are therefore able to offer packages that are suit the needs of each customer.

Tour operators use mobile technology to differentiate themselves from their competitors. There are many companies offering similar services in the tourism and hospitality sector. Alqatan et al. (2011) confirm that the tourism sector is saturated with tour operators all fighting for the same customers. To establish its uniqueness, a company can make use of m-commerce. Through mobile applications, a tour operator can highlight the unique nature of its products. By so doing, it will be able to differentiate itself from competitors and attract more customers.

Car Rental

Tourists need a convenient way to move about when at the travel destination. Car rental companies satisfy this need by offering travellers with vehicles that can be used to visit attraction sites. These companies have made use of m-commerce to improve their services. Car rental companies offer mobile booking as well as advertise their products through mobile applications. According to Peters (2012), the use of m-commerce increases efficiencies and decreases the operating cost of companies by reducing the number of live representatives needed.

Car rental companies also exploit the location awareness of mobile applications. Through GPS, a company can advertise its presence to a traveller. M-commerce technology can direct the customer to the nearest car rental service based on his current address. Jung and Mills (2010) assert that location-based services are an innovative product offered to tourists.

How M-Commerce Has Improved Tourism

M-commerce has played a positive role in the growth and development of the tourism and hospitality sector. The technology has had a tremendous success in meeting the informational needs of tourists. Alqatan, et al. (2011) observes that tourists face significant difficulties in their attempts to access relevant information from conventional sources such as websites. In addition to this, the websites often fail to meet the expectations of the tourism leading to low customer satisfaction. Since the development of third generation wireless services, consumers have been able to access the internet from their mobiles while on the move. M-commerce applications are user friendly making them usable to a large segment of the population (Alqatan, et al., 2011). Travellers are therefore able to exploit this technology for their informational needs both before and during their trips.

Tourists are exposed to a wider variety of products due to m-commerce. A defining attribute of m-commerce is that it increases the scope of information available to the customer. Travellers are able to search through products offered by a wide array of providers. Through mobile applications, quick comparisons of the products and pricings of different providers can be made in a timely fashion. Travellers are therefore able to choose the best and most competitively priced product from a wide variety due to m-commerce. In addition to this, the technology enables tourists to get advice from other travellers. Instead of relying solely on conventional advertisements, travellers use mobile devices to obtain recommendations from their fellow tourists. Evangelos (2010) reveals that consumers are able to communicate with other consumers when they utilise m-commerce through discussion groups and forums.

M-commerce has improved the tourism and hospitality sector by making it possible to offer highly personalised products to the customer. Different customers have differing tastes and preferences. The business that is able to provide the goods or services that best suit the unique preferences of a consumer is more likely to achieve high profitability. Personalisation in technologies such as e-commerce can be hampered by the fact that a single computer might be used by multiple users (Evangelos, 2010). In contrast to this, most mobile devices are owned and used exclusively by a single user. It is therefore possible for tourism and hospitality businesses to collect the user information and provide personalised products or services to the customer on his mobile device. The products fit the consumers preferences therefore increasing the probability that he/she will purchase them. This targeted advertisement leads to an increase in the productivity of the business.

Another improvement brought about by m-commerce is the ability to offer location based services. The customers in the tourism and hospitality industry are highly mobile. Being able to provide these individuals with information that is relevant to their current geographical location is of great importance. PhoCusWright Innovation (2012) declares that the power of the mobile platform is its potential for time- and location-sensitive services that are unique to each user (p.18). M-commerce makes it possible for companies to provide products or services to potential customers depending on their current geographical location (Alqatan, et al., 2011). Using locating technologies such as GPS, the company can acquire information on the current location of a customer. Based on this, reliable location-relevant information can be forwarded to the user directly to his mobile device.

Conclusion

The business world has engaged in a rapid adoption of mobile technologies to increase its productivity. This paper set out to discuss the use of m-commerce by the tourism and hospitality sector. It began by defining m-commerce as electronic commerce that makes use of mobile devices. It then proceeded to highlight the usefulness of this technology. The paper has articulated the numerous opportunities that m-commerce offers to the tourism and hospitality sectors. It has reviewed the ways in which the technology has been used by airlines, hotels, destination management organisations, tour operators, and car rental services. The paper has acknowledged that m-commerce has had a significant impact on this individual player in the tourism and hospitality sector. It has shown that the technology has contributed to the increase in revenue by players in the tourism and hospitality industry. At the same time, the technology has led to higher customer-satisfaction due to the greater efficiency in service delivery. Considering the significant benefits that m-commerce has brought to all stakeholders in the tourism and hospitality sector, it can be anticipated that this technology will only become more prevalent in the years to come.

References

Alqatan, S., Singh, D., & Ahmad, K. (2011). A Theoretic Discussion of Tourism M-commerce. Journal of Convergence Information Technology, 6(12), 100-106.

Beritelli, P., & Schuppisser, M. (2005). Challenges in Mobile Business Solutions for Tourist Destinations The Trial Case of St. Moritz. Journal of Quality Assurance in Hospitality & Tourism, 15(2), 147-162.

Borzyszkowski, J. (2014). Information technologies in the activities of destination management organizations. Tourism and Hospitality Management, 20(1), 61-70.

Christou, E. (2006). A qualitative analysis of consumer attitudes on adoption of online travel services. Tourism, 54(4), 323-331.

Dae-Young, K., Jungkun, P., & Alastair, M. (2008). A Model of Traveller Acceptance of Mobile Technology. International Journal of Tourism Research, 10(1), 393-407.

Evangelos, C. (2010). Investigating attitudes towards mobile commerce for travel products. Original Scientific Paper, 58(1), 7-18.

Jung, K.L., & Mills, J.E. (2010). Exploring Tourist Satisfaction with Mobile Experience Technology. International Management Review, 6(1), 91-101.

Patten, K., & Harris, M.A. (2013). The Need to Address Mobile Device Security in the Higher Education IT Curriculum. Journal of Information Systems Education, 24(1), 41-52.

Peters, M. (2012). Innovation in Hospitality and Tourism Framing 21st Century Social Issues. NY: Routledge.

PhoCusWright Innovation (2012). Market Sizing and the Travel Industry Outlook. NY: PhoCusWright Inc.

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