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Prospective Development of the Tourism Online Distribution Channe
Journal of Tourism & Hospitality

Journal of Tourism & Hospitality
Open Access

ISSN: 2167-0269

+44 1300 500008

Research Article - (2015) Volume 4, Issue 4

Prospective Development of the Tourism Online Distribution Channel

Maria GC1*, Carmen B2 and Víctor OS3
1Department of Marketing Management and Market Research, Centraldereservas.com (Online Travel Agency), Faculty of Economics and Business, University of Zaragoza, Gran Vía 3, 50.005 Zaragoza, Spain
2Department of Marketing, Management and Market Research, Faculty of Economics and Business, University of Zaragoza, Gran Vía 3, 50.005 Zaragoza, Spain
3Marketing Management Department, School of Tourism, University of Zaragoza, Ecce Hommo 5. 50.003 Zaragoza, Spain
*Corresponding Author: Maria GC, Department of Marketing Management and Market Research, Brand Image Manager of Centraldereservas.com (Online Travel Agency), Faculty of Economics and Business, University of Zaragoza, Gran Vía 3, 50.005 Zaragoza, Spain, Tel: 976762721 Email:

Abstract

We know of the development of the online channel in the tourism distribution system, due to the intensive application of ICT. This seems announce like a revolution in the industry, with structural changes in production, and in the behaviour of the involved agents. However, more advances in the literature are needed in order to gain theories to the body of knowledge. With this aim, qualitative research is done through in-depth interviews driven to a selection of experts in the field; managers of multi-channel distribution systems as well as of online channel in exclusive. Applying the triangulation of data methodology provides results which reveal certain types of changes, derived from the adoption of ICT, that tourism companies adopters consider as significant competitive advantages, with capability to affect companies’ results and increase its power within the distribution channel. This offers great potential for the future development of the online channel and for the companies that use it exclusively.

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Keywords: Consumer, Distribution system, ICT, Online channel, Tourism

Introduction

Tourism is one of the most productive service activities. In 2014, 1.138 tourists travelled everywhere of the world (4,7% more than previous year). Spain received past year 65 million international tourist. The World Economic Forum (January, 2015) considers the touristic Spanish sector is the most competitive in the world, mainly because of its adaptation to the digital habits of the consumers.

Given its importance, the tourism industry has been the focus of study in several lines of research. Nevertheless, from the point of view of information and communication technologies (ICT), there is a lack of knowledge both at the theoretical and the empirical level.

Thus the objective of this work is to go into greater detail about the role of ICT and how its application affects company results. From a revision of the specialized literature, we analyze specifically the effect of technology on the tourism distribution system in terms of process changes, agreements, and relationships of power among its members, as well as on the productivity of operations carried out by tourist companies affected by the significant and active role taken by the consumer in the production-distribution chain. They are potential factors to justify the developping of the online channel.

The tourism industry has experienced tremendous development in terms of power shifts between different agents and their benefits [1,2]. In Spain, the business of online reservations accounts for approximately 5.8 billion euros and online travel agencies take in one third of the total billing [3]. Second, it is an industry characterized by strong competitive rivalry - increased by the introduction of ICT – which has eliminated many of the barriers to entry and has altered relationships among the members of the industry [4]. Third, the perceived quality by the consumer constitutes a key element of success in the commercialisation of tourist services [3], the level and measurement of which can be altered by the intensive application of ICT.

While authors as Cooper et al. [5] sustain that Internet and electronic commerce have had positive effects on the tourism sector, its introduction of the system is relatively recent and there is not enough base research about the evolution fallowed by this channel and the changes operated in all the systemWith this aim, this research is driven to obtain evidences about propositions, considering adequate for that the use of qualitative methodology throughthe technique of in-depth interviews. The validity of the study is reinforced by the application of the methodological triangulation of data.

This document proceeds with a review of the literature that serves to the formulation of the investigative propositions. We then present the completed research and the obtained results, from which we draw our main conclusions.

The Distribution System of the Tourism Industry and the Online Channel in Tourism Distribution

There are numerous agents working in tourism distribution who form part of the distribution channels that make up the system. This is a system of intermediaries who facilitate the sale and delivery of tourist services from the provider to the consumer [6]. The emerging online channel adds great potential to the traditional channels of offline distribution.

From the review of the literature dealing with the evolution of the system, we formulate the research proposals. These deal with the analysis of changes produced in the tourism industry as a consequence of the development of the online channel in the distribution system, which in turn is included due to the intensive use of ICT by the industry from the beginning of its appearance in business, principally in business-to-consumer (B2C).

The specialized literature recognizes that ICT modifies the role of tourist agents who must continually adapt to a changing work environment. The application of technology has driven the emergence of the Internet channel (online) and altered the participation of the different agents within it and the relationships of power among its members [2,7,8]. This effort to adapt leads, at the same time, to the re- of activity being developed within the tourism framework and the necessity of more dynamic and competitive channels [9,10]. In the case of travel agencies, the interactivity of ICT makes the traditional system of company-centric value creation is becoming obsolete [11]. So we propose Proposition1, as the following.

Proposition 1

The intensive use of ICT in the tourism industry, while defining the appearance and development of the online channel in the distribution system, alters the position of power and participation in the value chain of agents in the tourism industry.

Onlline channel in the tourism sector provides costs advantages as well as simplified processes [5]. Business practices and strategies related to production, distribution and commercialisation of tourism are changed by the use of ICT [12]. Innovation in the productive process and distribution of tourism products provided by ICT has allowed the establishment of more efficient transactions leading to changes that facilitate the reduction of production and distribution costs, provide greater quality of the final product, promote the creation of new products, and the adoption of best practices in the industry [8]. Searching smart market places becomes to be one way of future specialization able to increase market niches [11]. All of this leads to a predictable change of process, both in production and commercialisation. Thus, we propose Proposition 2.

Proposition 2

The intensive use of ICT in the tourism industry in defining the appearance and development of the online channel in the distribution system distinctly changes the processes of production and commercialisation of tourism products and services.

The literature explains that ICT is causing a change in the structure of the distribution system of the industry composed by offline and online channels. The online channel has revolutionized the tourism industry by modifying its structure and changing the behaviour of the agents involved. The providers and intermediaries, as well as the consumers themselves, now take on new functions in their own purchasing of the product or service [8]. Flexible networks configurations, adapted to the market opportunities are new ways to specialization for tourism intermediaries [11] and have the capability to provide more efficient results [13]. In fact, this development has generated changes in the way that tourism companies plan, control, operate and integrate technologies into their activities. The Study of Social Commerce (2011) observed a progressive presence of the online channel with regard to the offline. Although until now the online channel is visible due to the participation of retailers online, other operators online have space on other levels of the channel in the tourism industry.

Proposition 3

The intensive use of ICT in the tourism industry defining the appearance and development of the online channel in the distribution system is causing a significant change in the structure of the tourism industry, where the online option is ganing share.

Amit and Zott [14] propose a change in the strategy to create value on the part of tourism companies through an appropriate management of ICT. This management is a key strategic element in the creation of value. In digital markets, the transaction becomes a single act, which is why it is especially important to establish an emotional connection to the customer through communication and information.

Changes in markets lead to scepticism on the part of the consumer who views the online environment as a real alternative, and who counts on a greater ability to evaluate sales activities and strategies carried out by companies. Thus, there is research that studies the profile of the so-called cautious consumer in the online environment. The objective for companies is to be able to adjust their sales strategies [15,16]. Companies operating in the online environment have a greater need for strategic and targeted information.

Consumers are increasingly searching for tourism information by means of the new technologies [17]. The intensity of use of information in the tourism industry raises the importance of the processes of creation, updating, processing, application, and communication of that information [18]. New marketing intermediaries formats have been announced as well as the emergence of an open and flexible multidimensional model, where the number of participants and interactions will be wider [19]. In this sense, currently the consumer maintains a very active role on the Internet, interacting and collaborating with other users, sharing knowledge and experiences through online channels, and using technology in a productive way. These users have a prominent role in the commercialisation of tourism companies and services because they are not just consumers but promoters and producers too [20]. Their increasing participation has the capability, among others, of increase the relationships among operators in the sector.

In recent years, supporting communication sites have appeared that have the experiential context built into their functioning, allowing the customer to share subjective judgements and establish a closer and more personal dialog, thus reducing the mistrust of certain consumers toward online purchase [21]. Sab [22] finds a 90.7% of people prefere Internet as the medium with which tourism related information are retrieved. The Report of the World Travel Market of London [23], shows that 80% of companies in the tourism industry participating in the study use social media to communicate with their customers, and more than a fifth (22%) use social networks as a tool to generate income. This indicates that in the tourism industry ICT is increasingly used, not only to make purchases through a specific web page, but also to access the evolution of other technology, i.e. search engines, social networks, etc. to which sales, communications, and advertising strategies are directed. Using digital media channels as search engines and online advertising, allows understanding customers better and increasing sales [22].

Whilst the use of ICT is indispensable in the commercialisation, distribution, promotion and coordination of the variety of tourism products [10], the application and use of ICT in this industry is already a necessity on every level. The online channel changes the structure of the distribution system and becomes a channel of great relative importance with a considerable capacity for expansion. The ICT atmosphere increases the range of new channels, available to consumers and retailers [11]; it offers companies to develop closer retlationships with customers through an interaction with tourism organizations more meaninful [24].

The increase in participation of the consumer in the commercialization of tourism products through the online channel [10,20,25] is significant to facilitate the personalization of the service as well as its efficiency and effectiveness. The increase in work done by the tourism consumer online is seen as a productive resource for business, since it can define a greater competitive level for the online operator. This fact seems to be confirmed by the data presented by the “The Study of Social Commerce 2011”: the online channel is gaining ground on the offline as the years pass. Marques et al. [11] find the future of the travel agencies depending on catalyzing co-creation with the consumers then accepting their integration into internal business processes. The proposition derived from this is expressed as follows.

Proposition 4

The participation of the user (tourism consumer) in the different phases of the production and commercialisation of the tourism product is greater than in the offline channels and is noticeably changing the role of the rest of the members of the distribution system.

Empirical Research

Research design

In accordance with the description by Webb [26], we find reasonable justification for carrying out a qualitative investigation as a solution to finding answers to questions raised by the analysis of the theory. Our reasoning is that the qualitative focus is used for an indepth exploration of the topic with experts in the field. The qualitative tool used to generate data is the in-depth interview, allowing those interviewed to speak freely and the interviewer to fully explore the topics without interruption [27]. This facilitates greater flexibility in the collection of information, of general as well as specific knowledge regarding online tourism as the latest entry into the distribution system of the industry.

This phase of the investigation allows an exploratory approach to the problem, previous step to approach future research. A ten-question script was created that includes questions about experience (Table 1), advantages, methods, and media used in the tourism industry. Proposals 1 and 4 are questions related to methods and media in the tourism industry, and Proposals 2 and 3 are related to the company experience and the advantages of the online environment. In addition, the questions seek to obtain additional information related to supports and strategies.

COMPANY*
(orderedfromfirsttolastinterviewed)
POSITION
(oftheinterviewed)
OFFLINEchannel
(experience in the market –at the
momentoftheinterview)
ONLINEchannel
(experience inthemarket–at the
moment of the interview)
Serhstourism(TTOO) ManagerofLarge
e-BusinessAccounts
For30years For8years
MikiTravelLtd.(TTOO) RegionalSalesManager(Spain) For45years For12years
TravelOrienta(TTAA) GeneralDirector For13years For3years
Aramon(TTAA) HeadofCRMandRelatedMarketing For7years For3years
Universalplaces.com(onlinewholsaler) GeneralDirector   For1year
Centraldereservas.com
(wholsalerandretailer)
SalesDirector   For11years
Visitaragon.es(bookingcenter,retailer) Manager   For4years
LePlan(onlinewholsaler) MarketingExecutive   For3years
ViajesMuralla(traditionalofflineTTAA) GeneralDirector For17years  
Tripwolf (platformonlinetravelguides) CountryManager   For8years.
Tradedoubler(platformonlinewithaffiliates;wholsaler) CountryManager   For16years

*TTOO: Tour Operator; TTAA: Travel Agency.

Table 1: Relationship of interviewees: company, position and experience.

The questions are posed in an open way following a logical sequence. The sequence and logic may vary from one interview to the other, without affecting validity [27]. To give better approach to the investigated matter, we used the methodology of triangulation of data; in particular, person analysis to a colective level [28], as a previous process to the theoretical sampling. The experts chosenwere selected for convenience, trying to select companies with different formats of operation in the distribution channels.Moreover, we do it twice. First of all in 2012, the beginning of our field reseach, a year potentially conditioned for the economic crisis and, in 2015, first year which provides good expectations for economy. In March 2012, seven professionals were contacted as collaborators from the offline and online tourism environment. In June 2015, they were four professionals;anyway we obtained access to representatives from multi-channel companies with off and online channels, as well as from companies with an online channel exclusively. In this way we established contact with Tour Operators, online and offline retailers and wholsalers, and local, national, international and global operators (Table 1); there we show the position of the interviewee in every company and his/her seniority and, the type of intermediarie in the channel). The interviews averaged 50 minutes. All were recorded in their entirety and transcribed later.

To gain awareness about the different interviewed: Serhs Tourism is a travel agency, global provider of services for national and international wholsalers travel agencies and tour operators. They are one of the most important division of the Group Serhs, leader in the tourism sector in Spain and Europe. They have over 30 years of experience. Miki Travel is one of the largest and most experienced wholesale tour operators in Europe, and is one of the leading providers of wholesale group and FIT (flexible independent travel) programmes. Travel Orienta is an offline travel agency, which recently launched the online world, and whose main activity is the organization of trips completely customized and personalized. Aramon is a local activity company, owned by the Government of Aragón (Spain region) and Ibercaja bank,which manages most of the Aragonese snow tourism. Includes a travel agency that operates both online and offline, organizing trips to these ski resorts. Centraldereservas.com is a central online hotel reservations, with over 10 years experience operating exclusively in the online channel. Visitaragon.es is an online booking center of the Government of Aragon, which is responsible for managing all types of reservations in the Community of Aragon, serving as an intermediary between the various accommodations and tourists. Universalplaces. com is an online travel agency recently created, which aims to organize trips to their clients, using only online suppliers. Likewise, companies selected in 2015 are traditional-consolidated and innovators-more recently introduced in the distribution channels. Le Plan is a Disney provider for national and international wholsalers travel agencies and tour operators.Viajes Muralla is a tradicional offline travel agency operating just in Zaragoza (Aragón, Spain).Tripwolf is one of the most famous download platform online travel guides worldwide. Finnally, Tradedoubler is a platform for online sales affiliate; the most recent intermediate system in the online tourism chnnel. The affiliates are from all over the world.

Results of the investigation

Analysis of the answers provided by the expert interviewees chosen allows us to observe common patterns in the responses to certain questions and/or differences, depending on whether they operate exclusively online or in a multi-channel distribution system with off and online channel, as described below.

Comparing the point of view of interviewees in the two years, just a relevant difference emerges between them: in 2012 all the interviewees saw in the use of online channel a high potential to get returns; currently, the opinion has the same direction, but this is less intense due to the obtaining low-marginbusiness (lower prices in comparison with offline alternatives are mandatory and the lower costs are not enough to avoid low gross margin).

Main advantages of the online channel: The majority of the experts interviewed stress that the main advantage of incorporating ICT into tourism is a significant reduction of structural expenses (offices, necessary personnel...) and the optimization of the use of company resources.

Companies that were born in the online environment, as represented by the interviewees, are an example of the advantage that the channel provides in the availability of information (in quantity and quality, due to its constant updating). They can also make real-time adjustments between supply and demand as reflected in the best price at any moment.

In all cases, the interviewees consider that the advantages of an online agency are greater than the disadvantages when comparing online and traditional agencies. Online agencies achieve better results because they can satisfy the customer in less time and service a greater number of customers at a lower cost. For that reason, those companies that operated in the traditional marketplace have launched an online channel, seeking to take maximum advantage of the reduction in costs that the technology affords. Agencies that have entered directly into the online environment have done so without considering the possibility of the traditional travel channel.

The opinion of all those interviewed is that ICT has brought about a change in the structure of the industry in terms of better results from the online channel and from multi-channel (off and online) agents, as opposed to the traditional option, resulting in more competitive costs and a more accessible optimization of resources, which are growing trends for the future. The expert responses also take into account the changes in production processes: more rapid procedures and the growing possibility to sell a more personalized product. The consumer has greater access to information and participates in the creation of a product better adapted to his/her needs and with greater value.

Media: media advertising and linking the online character with expansion strategies: To gain more knowledge of the working media and its possible evolution, the experts were asked about the communication supports that both online and offline companies use to communicate with their customers. As can be observed, all the companies, independent of the type of channel, have incorporated ICT in their communication with customers, if only to inform them of offers, in order to continue maintaining a relationship over time through social networks, emails, etc. (Table 2).

COMMUNICATIONSUPPORT OFFLINE ONLINE
OwnWebPage   x
MembersZone x  
SocialNetworks x x
Blogs   x
Forums   x
Personalizede-mail x x
Newsletter x x
Textmessage x  
Whatsapp x x
Skype   x

Table 2: Communication supports.

These results are coherent with those presented in the latest report of the World Travel Market of London [23], being a different sample of respondents. This appears to confirm that, not only has the tourism industry incorporated ICT to carry out sales through a specific web page, but it has also evolved toward other technological media i.e. search engines, social networks, etc. to which it directs sales, communication and advertising strategies.

In all cases, the interviewees view the inclusion of ICT in the tourism industry as a key opportunity for strategies of expansion. According to all those polled, technology allows access to different markets beyond the main or domestic - and in much less time. In addition, in legal terms, it is noticeably simpler and structural and management costs present considerably less of an obstacle than before the integration of ICT into the industry.

The interviewees expressed an opinion about the influence of ICT in different operational areas of the company, according to their experience. All agreed that technology is one of the keys to many of the strategies used by tourism companies due to the opportunities it presents (Table 3).

AREA/CONCEPT Agree Disagree Depends(NS)
Areaofinternalmanagement 8of11 1of11 2of11
Improvedcompetitivepositioning 6of11 3of11 2of11
Greaternumberofcustomers 10of11 0of11 1of11
Increasedsales 6of11 1of11 4of11
Greatermarketshare 9of11 1of11 1of11
Improvedsalesmargins 4of11 5of11 2of11
Increasedprofitability 5of11 4of11 2of11
Greaterproductoffering 7of11 3of11 1of11
Improvedqualityofservices 4of11 6of11 1of11
AdvantagesinthedevelopmentofR&D 6of11 3of11 2of11
Innovation 9of11 0of11 2of11
Newsourcesofmarketing 8of11 0of11 3of11

Table 3: Influence of ICT in different operational areas.

The interviewees agree that the application of ICT improves the internal management of the tourism company due to the intrinsic nature of the online business. Thus, the increased automation of processes allows greater efficiencies resulting in better adaptation to the market.

Likewise, the interviewees agree that online agencies have the potential to gain greater market share than those offline. This argument is supported by the fact that the online channel can acquire a greater number of customers, basically due to the increased speed of product distribution. The perception is that online intermediaries incorporate innovation better than those offline, besides which, they currently have access to more assistance to do so (financing, subsidies…).

There is, nevertheless, disagreement over the quality of tourism services. Those who believe that online agencies offer greater quality of service, measure it basically in terms of availability in time and savings of displacement. Other interviewees consider physical contact to be the main determinant of the level of quality, so that the online intermediary is seen as disadvantaged compared to the traditional. It should be noted that this reasoning is given among those interviewed who are more committed to one channel over another, which could be taken as a self-defense of their activities.

Regarding strategic alliances between operators and agencies in the tourism industry, we observe a very different behavior among those who operate mainly online and those who operate offline or in a mixture of off and online channels. All online operators have admitted to maintaining strategic alliances with other operators, online as well as offline, although maisnly online, since they find it more practical and manageable. Having a more developed technology present in their core business allows them greater ease in sharing data, technology, reservation systems, and even inserting banners or links from several pages to others in a rapid and simple manner.

On the other hand, the offline and multi-channel off and online operators do not maintain agreements with other offline operators, since they consider it to be assisting the competition more than taking advantage of possible synergies. In fact, one of the experts interviewed commented that the policy of his company not permit establish agreements with other offline companies. They belong to a multichannel distribution system and consider that this type of alliance helps the competition more than being mutually supportive. That said, this same company admits to maintaining horizontal as well as vertical agreements with online operators with the goal of reducing operating costs.

Conclusions, Implications for Management and Future Research

This work shows ICT as the cause of a revolution in the tourism industry and more specifically for its distribution channels. The exploratory study summarizes information compiled from experts and highlights, among its conclusions, that one of the major advantages of the online distribution channel is the reduction in costs that allow a company to offer more competitive prices to the marketplace and therefore to gain greater market share. The result is that tourism companies that adopt the online channel become more competitive and manage to increase their power within the tourism distribution channel, as well as destabilizing power relationships among different agents that have been in effect until now. This consideration agrees withour proposition P1. Nevertheless, a large number of independent travel agencies are not using the potencial of Web 2.0, its interactivity, according Marques [11].

The optimization of resources and the increase in speed of management, internal as well as external, is notable, as are the other advantages enjoyed by online operators over traditional ones. These advantages have caused a rise in intermediaries exclusively in the online environment. At the same time, they have compelled intermediaries and large tourism chains operating in the traditional distribution channel to partially or fully adopt the online channel. This forced innovation is necessary in order to survive the shift in expense and billing from the traditional channel to the online channel. Thus, it is believed that the structure of the distribution system is changed and the leadership is coming from the online channel. It is therefore in agreement with our proposition P3.

Similarly, the inclusion of ICT has meant changes in the production processes allowing greater personalization of the product in which operators and the consumer participate. Due basically to greater access to information, at any moment in time and with greater availability and quality, the experts consider propositions P2 and P4 to be correct.

The main conclusions regarding media and methods of action include the adoption of strategic alliances among the intermediaries where exclusively online operators tend to make agreements with other online operators, discounting offline operators. Different forms of management of different types of distribution are considered to be incompatible. However, offline operators are available to establish agreements with online operators, above all when dealing with providers or other agents who can facilitate the optimization of resources.

These conclusions have implications for the management of tourism companies as they demonstrate, at the very least, a need to be present in the online channel. The evolution of the channel in recent years indicates that this need is one of survival in the industry. Those who seek something other than survival ought to know how to obtain, select, process and better present their offers, differentiating them from the rest through a good use of ICT.Therefore, it is important to transfer clairly that advantages to the tourism agents and help them in the developping of interactive ICT in order to get better results.

In addition, there is an increasingly expanding tendency toward internationalization for those companies that operate in the online channel. The motive is greater access to many more geographic markets with lower costs and in much less time, less need for investment, and lower barriers to entry, allowing for a focus on much more aggressive strategies for expansion.

Finally, we observed that this result is not just a technology, it is an operational change. More than likely, in the medium term, the distribution system will be dominated by the online channel, not to mention the potential of the mobile phone, the m-commerce. Dealing with technology and its developments and to deploy politics, strategies and processes driven to get a competitive advantage, and with multichannel strategies in the tourism sector are key to the future.

One must keep in mind that this study is exploratory and needs greater development, which future research must address. In addition, the study is focused on conclusions obtained from the opinions of organizations, and does not account for the perspective of the consumer. Therefore, future research should be directed toward a quantitative study that, taking as its base the main points now confirmed, should be directed to the proposal and confirmation of scales and models that would permit the generalization of the obtained results. The interest in modeling will be centered on all tourism agents, from those who define the demand, to tourists themselves, since the latter group - as has been validated - are an important part adding value.

Acknowledgement

This work has been financed by the Research Project of the Ministry of Science and Innovation, ECO2010-20880, FEDER, and conducted within the framework of the IMPROVE Group.

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Citation: Maria GC, Carmen B, Víctor OS (2015) Prospective Development of the Tourism Online Distribution Channel. J Tourism Hospit 4:165.

Copyright: © 2015 Maria GC, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
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