The Effect of the Internet on Tourism

Alfredo Ortiz # 3725031
Florida International University CMBA
Krishnan Dandapani
FIN 6644 Global Financial Markets

Table of Content

Introduction…………………………………………3 Impact of the Internet……………………………….3 Financial Impact…………………………………….6 Negative Effects of the Internet…………………….9 Conclusion…………………………………………10 References………………………………………….11

Introduction The development of the Internet has dramatically changed the world. One of the industries that have been directly affected by the Internet is the Tourism industry. The effects of Globalization have revolutionized tourism by encouraging people to travel from one place to another. The Internet has been pivotal in this revolution by increasing the access to information and greatly improving communication in the world. The Internet has affected tourism both positively and negatively. While it has increased access to information about tourism and provided a medium marketing tool, it has also been blamed for discouraging traveling since people can access everything at a push of the button. Regardless, the Internet has been one of the most important factors that have increased tourism activities in the world. (1) It has made moving from one point to another easier, safer, and faster.

Impact of the Internet For a long time, travel had been considered quite risky due to the fact that people had limited knowledge of the places they wanted to visit. People had limited knowledge about terrain, climate, culture, and other factors that drive or inhibit traveling. Only well known destinations were visited and those who dared and went to a remote place, had no idea what to expect once they arrived. Generally, lack of information about different parts of the world limited traveling. It was only adventurous men desiring to explore new environment who embarked on travels. (1) However, the Internet has changed the magnitude and access to information in the tourism sector. Now, all the information needed about a given tourism destination is just a click away. Travelers can access accurate information about the terrain, climate, attractions, and others factors which helps them make an informed decision. This has made traveling more enjoyable and comfortable with such privileges. Travelers have a plethora of information that assists in making choices. (2) Preparing for travel usually meant gathering books and magazines to get information and recommendations about a desired destination. Today, all is needed is a computer and access to the Internet to view real time pictures and videos of such destination. Research also shows that one of the factors that have limited tourism in the world was the lack of adequate marketing. (3) Advertising became very expensive. Most tourist destinations existence was only known by the local community. Many places with great tourism potential and scenic beauty could not attract potential tourists because they were not well marketed. Their attractiveness was limited by the limitations of the available means of advertisement. Tourism products were not marketed effectively. However, marketing of tourism products has been greatly improved by the integration of Internet technology in the tourism sector. (3) In the early years of the Internet, important features of marketing like graphics, videos, and others could not be supported. But the increased development of the Internet technology changed drastically allowing the industry to flourish. Integration of protocols like Transmission Control Protocol/Internet Protocol (TCP/IP) has greatly revolutionized Internet marketing of tourism products. This has enabled transmission of advertisement features like graphical images, music, videos, and others, which gives an accurate view of the tourist attraction products. (4) Many tourism and travel sites have been developed to provide information on tourism. With the accessibility of the Internet, these sites expose exotic places, peaceful getaways and exciting adventures. Some sites have user rating on the places they visit, giving you a somewhat honest review of the experiences you’re planning to encounter.(5) This allows potential travelers to plan their trip better with the advance knowledge of the best things to do and best attractions to visit. Another concept that has been facilitated by the Internet and has spurred growth in tourism is “e-ticketing”. This is a concept where passengers or group of passengers can book their seats in commercial airlines over the Internet. Potential tourists can book air tickets at the comfort of their offices or their homes. By eliminating the need for paper work, E-ticketing reduces booking expenses significantly. It also reduces the probability of documents getting lost in the process since everything is done online. (6) Statistics shows that about 25% of tourist currently book their tickets online and mostly travel through low cost fliers. (3) E-business in tourism, which has been referred to as e-tourism has provided faster means of doing business and eliminated additional cost. This makes tourism cheap and attractive for most people who would have shied away due to exorbitant cost. (4) Prices of vacation packages have been drastically reduced because of the Internet. The competition is so great that it would be impossible for the prices to stay high. This makes tourism one of the best markets for buyers of great vacations. (7) The Internet has also affected travel bookings and confirmations. Booking a flight, hotel, rental car and anything else needed can be done online. The Internet has made traditional travel agents a thing of the past. There is no longer the need to spend extra money on a travel agent when it can all be done with a few clicks from home. (7) Not only can you book your vacation online, you can confirm it all as well. This allows you to be sure that you get exactly what you wanted. When a travel agent books it for you, you don’t know exactly what you are getting.

Financial Impact The tourism economy is recognized as one of the fastest growing activities in developed and developing countries. The increased spending in the tourism sector reflects a growing demand of tourism. Such demand can be accredited to its exposure through the Internet. The Internet exposure has had a direct economic impact on tourism prices, employment and tourism direct spending. This theory is supported by the following data provided by the U.S. Department of Commerce:
TRAVEL AND TOURISM SPENDING GREW IN SECOND QUARTER 2011 Real spending on travel and tourism increased at an annual rate of 2.6 percent in the second quarter of 2011 after increasing 2.8 percent (revised) in the first quarter. Growth in travel and tourism outpaced growth in real gross domestic product (GDP), which increased 1.0 percent in the second quarter after increasing 0.4 percent in the first quarter. The growth in real spending on tourism primarily reflected increases in total transportation and in recreation and entertainment.

Overall growth in prices for travel and tourism goods and services remained high, increasing 7.3 percent in the second quarter of 2011 following an 8.5 percent (revised) increase in the first quarter. The growth in prices for travel and tourism goods and services reflected increases in prices for traveler accommodations and for gasoline.

[pic] Direct tourism-related employment increased 2.6 percent in the second quarter of 2011 after increasing 2.0 percent (revised) in the first quarter. By comparison, overall U.S. employment increased 1.4 percent in the second quarter after increasing 1.3 percent in the first quarter.

[pic] Real Tourism Spending. Real spending on passenger air transportation increased 5.4 percent in the second quarter of 2011 after decreasing 7.8 percent in the first quarter. Capacity utilization increased, even as prices rose to cover rising fuel costs. Real spending on traveler accommodations decreased 0.4 percent in the second quarter after increasing 15.0 percent in the first quarter.
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Tourism Prices. Prices for traveler accommodations increased 16.7 percent in the second quarter of 2011 after decreasing 3.3 percent in the first quarter. Prices for passenger air transportation continued to grow, increasing 7.9 percent in the second quarter after increasing 18.7 percent in the first quarter. Air passengers paid more in the second quarter as fuel costs continued to rise.
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Tourism Employment. Direct employment in the travel and tourism industries increased 2.6 percent in the second quarter of 2011. All industries saw increases in employment with traveler accommodations experiencing the largest growth at 4.6 percent. Total Tourism-Related Spending in the U.S. includes the goods and services that are purchased directly by visitors and the inputs used to produce these goods and services. In the second quarter of 2011, total current-dollar tourism-related spending was $1.2 trillion and consisted of $803.9 billion (68 percent) of direct tourism spending — goods and services sold directly to visitors — and $383.3 billion (32 percent) of indirect tourism-related spending — goods and services used to produce what visitors buy.

Total Tourism-Related Employment was 7.7 million in the second quarter of 2011and consisted of 5.4 million (71 percent) direct tourism jobs — jobs where workers produce goods and services sold directly to visitors — and 2.3 million (29 percent) indirect tourism-related jobs — jobs where workers produce goods and services used to produce what visitors buy. (8)

Negative Effects of the Internet

While travel consumers are increasingly turning to the Internet, critics predict a decline because people will be able to see anything they want with a push of a button. The intrigue of experiencing a location personally will be lost. Other factors are the perceived lack of a secure payment method, lack of confidence in the technology, and a need for a personal service and human interface. Even experienced Internet users still prefer to book their travel the traditional way. Critics also argue that customers who used to make long journeys to Paris, Milan, and other fashion design cities will no longer require going shopping since they can order their preferred fashion products online. The Internet has reduced the need for people to travel since they can now virtually visit, explore and purchase items from any remote place in the world. As the Internet continues to evolve with its technology, it will become more essential for supplier sites to create rich content on their sites to enhance the user experience. But the results of an enhanced website could be that it will almost leave nothing undiscovered by the travelers before they even take the trip. People will be able to travel and visit many remote places from their couch.

Conclusion It is undeniable that the Internet has had a major effect on Tourism. Many critics want to highlight the negative effects of too much access to information eliminating the need for travel. However, it should be understood that there is always a lifetime experience that people desire to have. Traveling is not just for such activities as shopping, it entails different needs including the need to relax, explore, and adventure. Yes, too much exposure can seem to take away the intrigue about a tourist destination; but it has allowed us to discover new and wonderful destinations. There are definitely more positive than negative effects of the Internet on Tourism. The Internet has propelled Globalization. It has revolutionized the way people travel. It has and will continue to connect different cultures by exposing the many wonderful places around the world. Again, critics would say that exposure to these remote locations has had a negative effect on their ecology by the development of hotels and tourist attractions. But in the contrary, these developments have helped the economy by creating jobs and exposing the local merchants. These local merchants have greatly benefitted from the exposure created by the visit of these tourists. The Internet has also provided the industry with enhanced tools and capabilities that result in better customer service, better prices, and better features for the consumer. At the end, both the consumer and the travel destinations are mutual benefactors of the impact of the Internet on Tourism.

References
1) Sheldon, P., Weber, W., & Fesenmaier, D. (2003). Tourism: Principles, practices, philosophies. New York: Wiley

2) Gorsy, D. & McLeay, K. (2004). An integrative model of tourist’ information search behavior. Annals of Tourism Research 31(2): 353-373

3) Angela, D. (2005). Internet transforms marketing for tourism industry. Marketing and Advertising 9(3): 8-14

4) Sweeney, S. (Ed). (2000). Internet marketing for your tourism business: proven technologies for promoting tourist-based business over the Internet. Maximum Press

5) Stem bridge, S. (2009). How technology has affected tourism. www.helium.com

6) Karzai, M. & Chon, J. (2008). Impact of information technology on cultural tourism. Annals of Tourism Research, 29(1): 264-266

7) Hawkins, D. (2010). How technology has affected tourism. www.helium.com

8) U.S. Department of Commerce.www.bea.gov/news releases/industry/tourism/2011/