the review has to contain according to the introduction, literature about the on line travel agencies, especially regarding their presence in italy, anything that will depict the benefit of of being affiliate to OTAs.
in general the literature review has to contain these argument
the composition of the Italian market has to be underpinned
controversy between hotels and OTAs
Please contact me and keep me informed of the arguments you are going to underpin
basically just follow the structure of the introduction and review the literature accordingly
Model of management change:
Online travel agencies boosts businesses in the hospitality sector in Italy.
Chapter 1
1.1Abstract
This project aims to research the changing process in the accommodation industry given by on line travel agencies.The internet has given many opportunities for hotels to sell their rooms directly online, circumventing the traditional travel agencies.
This research will look at what has been the effect of the rising influence of web based travel agency in the hospitality field, providing new opportunities for small entrepreneurs to sell their rooms. By analysing the business formula of the OTAs, a deep understanding of their success has been given.To provide a clearer picture, I created a case study focused on the structure of the Italian accommodation sector before and after the arrival of the major OTA, booking.com, which alone has half of the market share. The research intend to produce evidence in terms of number of new businesses created, thanks to the easy access to the market offered by these companies.
As market research shows, nowadays an average of the 40% of rooms reservation comes from OTAs, in Italy according to Federalberghi (Italian hotel association) the two major OTAs(booking.com and Expedia) lead the market with over 70% of the room reservations controlled. In addition to secondary data, it was very interesting to conduct interviews to learn more about the Hospitality field, combining the findings with official statistic and market trends.
In order to provide a different point of view regarding the OTAs, which are perceived as sharks by the major Hotel chains and Hotel association, I will contrast the small accommodation’s benefit, having access to the world wide market, driving out their businesses from a local to an international reality.
In conclusion, the aim of this paper is to define and clarify the contribution of the OTA to the hospitality sector, providing evidence of their positive effect to the businesses growth in this field.
1.2 Introduction
Online booking for travel and accommodation services is a face of the Travel Business Technology, which has also taken advantage of the wide use of the internet across the globe. It relies on, greatly, on computer resources and computer literacy of the travel industry stakeholders, hence Online Travel Agencies (OTAs). These agencies rely on the fact that companies and organizations, regularly, need to make travel schedules for their personnel.
OTAs have changed the game in the hospitality industry and today it is more than good and services, but also equally important is the experience economy. In Italy, for instance, the satisfaction of a customer/client depends on two distinctive factors; Quality of Products and Services, Quality of the Travel Experience and the Economic Advantage in the former two factors (Reisinger, and Dimanche, 2010:9)
Customers as well have benefited, having access to a word wide offer instantly being able to access to the best rates and offers. In the past years businesses were receiving their bookings only through direct channel or via traditional tour operator and travel agent.
The market was differently composed as well, the major stakeholders were hotels as small businesses were striving to find customers due to their reduced budget for marketing and travel agent.
1.2 Context of the study(background)
In order to proceed with the research, it is fundamental to understand the context of the study, providing a background for the research. It is appropriate to explain the environment of the study such as the hospitality sector in Italy and it’s composition, the OTAs and their position in the Italian market. To provide a better understanding, Booking.com, which is the biggest OTA in Europe and plays a predominant role in Italy will be taken in consideration.
1.2.1 Travel agencies
The travel agency is likely to be the most important link in the tourism field, as it operates as intermediary between the suppliers of tourism services and the customers. Actually, travel agencies help customers providing information about the products and services that they offer. Moreover, under customers request, travel agencies book and sell tourist packages, in exchange for commissions.
Andal-Ancion, et al.(2003) revealed, that since 1997, travel agencies have increasingly been disintermediated, by cutting off the costs caused by removing intermediaries from the holiday distribution network, and this is, basically, the business model of all the on line travel agencies which are now able offer the best rates available.
1.2.2 The online travel agencies
The introduction of B2C in travel-suppliers(Holloway et al., 2012, p 645), provide now a direct interface with their customers, threatens both agents and standard tour operators as now the clients are encouraged to make their reservations directly for less.
Nowadays, online booking now accounts for 43% of total travel sales in America and 45% in Europe(The economist, Jun 21st 2014), the Priceline group(which own booking.com) and Expedia are leading this particular market. Smaller OTAs will find harder to compete with this big two firms as online travel is a field where size counts the most. The scale of Booking.com and Expedia allow them to sign up more hotels but, as well, to negotiate the best rates available compared to their smaller competitor.
1.2.3 Toursim in Italy
The tourism industry is one of the fastest growing industry in the world, according to the world tourism organisation the international tourist arrivals grew by 5% in 2013 to 1.087 billion, in 2013, international tourism generated US$ 1.4 trillion in export earnings.WTO forecasts a growth in international tourist arrivals of between 4% and 4.5% in 2014
It represent as well:
9% of the Global Domestic Production
1/11 jobs all over the word are on the tourism field
6% of the word export
30% of service export
Tourism is the world’s largest Service Sector Industry.(UNWTO, Tourism highlights., 2014 edition)
In the 2013 Italy ranked as the 5th most visited country in the world and third in Europe after France and Spain(UNWTO press release, 2012).The total contribution of tourism to the Italian economy in 2013 amounted to 159.6 billion euro, equivalent to 10.3% of GDP.
The economic impact of tourism is reflected in a significant way on the job market, with more than 2.6 million jobs directly and indirectly created in 2013, or 11.6% of total employment in the country. Also according to the WTTC, the number of employees is expected to grow 1.3% in 2014.
1.2.4 The Italian Hospitality sector
To understand why OTAs are controlling almost 70% of the total bookings it is important to take in consideration the structure of the market and the number of accommodations all over the territory. The Italian hotel network is the largest in Europe by number of rooms and beds (Italian Hotel association, 2012).With 1.1 million rooms, detach the order in Germany (about 950.000), Spain (915 000), the UK (720 000) and France (620 000). It drives also the ranking of the hotel beds, with 2.25 million beds followed by Spain (1.9 million), Germany (1.8 million), the United Kingdom (1.6 million) and France (1 , 2 million). Italy is also in the world leading group, fourth with 1.1 million rooms, behind the US (4.9 million rooms), China (1.5 million), Japan (1.3 million).
As we can see(according to UNWTO and international inbound), there is a discrepancy between the offer in terms of accommodation and the demand in terms of arrivals which has created a fertile ground for all the OTAs that are able to fulfil the demand.
1.2.5 Are OTAs an issue or not?
Different Antitrust authorities under request of Hotel associations all over the world have raised legal action against the OTAs, engaged in anticompetitive conduct and violated antitrust laws.
Alessandro Nucara, general director of the Italian Hotel association said “ it is like between the hotelier and the guest there is always a third party, which always impose it’s rates, rejecting the chance to negotiate different prices”
The subject of the Antitrust legal action are the clauses that bind the accommodations to offer the best rates with them(parity rate), denying the possibility of promoting better prices on any other booking channel, even on the accommodation’s website.
As a consequence of these agreements, purchasers of hotel services will pay an artificial inflated price and the benefits of a competitive marketplace are denied(Federalberghi, istruttoria contro Booking.com ed Expedia, 2014).
Despite a resolution has not been reached and, in countries such USA and UK has been dismissed by the relatives courts(Antitrust and Competition newsletter, 2014) the issue in Italy has not been still solved.
1.3 Research questions and objectives
This project aims to research the changing process in the accommodation industry given by on line travel agencies by measuring the contribution of the OTAs to the creation of new businesses in terms of numbers, providing a different point of view of the market, to evaluate the level of satisfaction of the small properties that are selling their services through OTAs.
The research aims to find the following objectives:
Measure the satisfaction of the small properties which are selling their services with on line travel agencies
To define whether the OTAs have boosted businesses growth in hospitality field in Italy
To provide an insight of the OTAs role from a different perspective, highlighting the benefit provided to the market
In order to address these objectives in a clear and precise way, the study will answer following questions:
How many accommodation are listed with the major OTA in Italy?
How many of these are actually on the market only because of the easy access provided by the OTA?
Why they are so powerful and which are the key factor of their success in Italy?
1.4 Hypnotises
In this dissertation I hypothesise that the rising power of the OTAs in Italy is beneficial for the hospitality sector and increase the growth of new businesses. I also hypothesise that the market it is increasing the offer in terms of plurality, therefore customers will be benefiting of a wider choice.
1.5 Methodology Overview
The aim of this research is to evaluate the contribution of the OTAs to the creation of businesses in the hospitality sector by analysing the Italian case study and the major OTA in that market. In this research a mixed method has been adopted as it involves both, quantitative and qualitative methods. It is the most appropriate methodology, because it seems to provide more strengths than weaknesses in regard to producing an answer to the question posed.
Saunders et al. (2012, pp.171): “An exploratory study is a valuable means to ask open questions to discover what is happening and gain insights about a topic of interest. It is particularly useful if you wish to clarify your understanding of a problem, such as if you are unsure of the precise nature of the problem.”
To answer the research question, it has been decided to develop a case study, where booking.com , which is the most diffused OTA in Italy has been taken in consideration in order to highlight the information needed.
Both primary and secondary data has been gathered in order to achieve the research objectives.
Primary data:
Semi-structured interview
Questionaries
Secondary Data
Published articles
Analysis report
Online database
Relevant literature
The study will be based on a deductive research method, trying to enforce an hypothesis by concerning whether OTAs have benefited the italian hospitality sector, contributing the growth of new businesses.
1.6 Structure of the dissertation
The dissertation will be structured in five chapters.
The first chapter will be the introduction to the thesis and is based on a general summary, highlighting the hypothesis and main research questions.
The Chapter 2 will be the literature review, covering the main works which discuss the On line travel agencies, Hospitality field in Italy and draws attention to the controversy around this field.
In Chapter 3 the methodology of this study will be discussed, Following the structure provided in Chapter 1.
In Chapter 4, the case study analysis will be conducted using both the primary and secondary data gathered from different sources.
Chapter 5 is the conclusion to the dissertation. Through explaining what has been done, recapping all the key findings and in case, if it will be required a comparison of results with other studies, future recommendations and a discussion concerning whether the case study could be applied to other geographical areas.
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