According to a research done by Arbedeen Group as quoted in an article at year 2001,‘the hospitality industry spends an estimated $50-60 billion per year on supplies and services’ and the numbers are expected to grow. Given the efficiency of ICT based operations, the sector will stand to benefit by leveraging on these technologies to produce optimal results.Furthermore, Table 1 below shows that the number of annual online bookings is increasing rapidly throughout the years. It is estimated that in year 2004 and year 2005, the online bookings will see an increase to 16% and 20% of total annual bookings respectively. Whether the estimates are true is unknown to us but it is certain that the numbers are growing.
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How does this concern ICT? E-commerce and ICT are impeccably linked and can’t function without the other. Businesses that apply ICT in their processes operates on e-commerce principles and e-commerce is the application of ideas and processes of selling products and services by using ICT. With the growing importance of e-commerce, no businesses in the hotel industry can deny ICT in its operations. ICT impact the hotel industry in many ways and the following two will be discussed:
- Changes in Competition
- Changes in Annual Turnover
Changes in Competition
The aggregation of information allows for the congregation of a wider market. Furthermore, consumers equipped with more information possess the power to make optimal decisions. Hence it is natural to assume that with more information comes an increase in competition.
Theoretically, in a perfectly competitive market, price variation is insignificant provided that the products or services concerned are homogeneous. Thus we chose to analyze price variation among three existing online booking sites on three selected hotels to prove this assumption true.
Table 2 below shows the average rental rates for the hotels selected for sampling and how it varies under different booking agents. The Furuma Riverfront hotel are quoted at discounted rates of 10% under booking agents Zuji.com and Expedia.com.
Table 3 shows the percentage of price variations for each selected hotel. We observed that none of them exceeds the identified benchmark of significance of 50%. Hence we conclude that price variation is not significant and competition in the business of hotel room rental services is indeed strong.
Table 3: Price variation among booking agents for each hotel
Changes in Annual Turnover
With the growing popularity of online bookings to traditional phone booking, there is no question to the growing amount of revenue generated from online sources in comparison to bookings through traditional methods. Revenue is expected to grow provided the hospitality industry remains strong. An analysis of annual turnovers of companies such as ctrip.com and expedia shows growing returns. This translates to bigger returns earned by hotels from online sources.
Table 4: Comparison of annual revenue of two online booking agents
