The issue of disintermediation

The Issue of Disintermediation

Introduction

In general, disintermediation simply means eliminating the middleman in any type of business or work related chain. The main aim of this research is to bring out to the open the main effects that come about because of disintegration. This includes both the problems and the benefits brought about by the use of this strategy in the hospitality industry. The hospitality industry mainly deals with hotel, tourism and travel agencies. In this research, we will mainly look at how disintermediation affects the above agencies and we will get information from both the public who are served by the agencies and the workers of the agencies. As a recommendation, the study will also incorporate critical arguments from secondary literature sources, to develop an objectified yet unbiased approach to the discussion.

Literature Review

Many academic experts think that disintermediation has itself brought more benefits than problems into the hospitality industry. However, some think that use of the disintegration strategy in marketing of the hotel, tourism and travel agencies is threatening the livelihoods of the agents involved in the above industry. Therefore, the experts are in support of the agents who risk losing their careers should disintermediation become fully established (Andersen, 2003). They suggest that the hospitality industry should sit down with the agents to come up with solutions no how to improve their relationship in case of the emergence of disintermediation mostly through online.

One of the main examples of disintermediation is the internet. The internet has really revolutionized the running of the supply chain. One good example can be seen in the tourism industry where it provides its clients with information about the various tourist destinations and their major fascination. The consumers may also acquire details on particular tourist products and their respective costs. The internet also includes the use of e-mail in sending messages and it is mostly used by the consumer who is able to communicate with the supplier at a low or no cost. Therefore, use of the e-Business in the by service providers in the future through e-commerce solutions may simplifier some services between the customer and the supplier such as booking and payment of the services (Buhalis & Kaldis, 2008).

A web page is a very essential condition when the providers want to have direct contact with contact with their customers, especially when the clients have little or no information about the service providers along with their products. Hence, by creating a web page either through a personal homepage or by enlisting at a web portal, consumers can connect directly with their service providers by means of either e-mail or fax. In addition, they can use the internet to visit web sites that contain information on traveling. It is thus correct to indicate that the internet may be used as a means of facilitating direct ordering and disintermediation. The intermediaries are assumed to play both roles in marketing in that they are responsible for making a package and then guaranteeing its quality (Marcussen, 2003).

Nevertheless, many scholars argue that the internet, which is the main form of disintermediation, has brought many benefits to both the hotels and their guests. This is because hotels now have more access to consumers from all over the globe while the clients have a critical review from user-generated content that is provided online by the hotels. Other scholars argue that intermediaries traditionally played a significant role as certifiers of the market products, especially for service providers in many developing countries. They also claim that disintermediation and the benefits of internet vary across the various markets depending on the technology together with human and social capital.

Practical Analysis of disintermediation:

One major example of disintermediation is through the web page. The creation of a web page in most cases is not free of charge but may cost the provider a lot of money. As we know, one can only invest in something if he believes it is profitable. In the creation of web pages, investment costs differ depending on the internet providers and countries. With the possibility of online booking taking place in those cites, there comes also an increase in the cost (Wiig, 2004). However, the service provider may minimize his other cost-related expenses because the internet may assist in the development of the logistics amongst the service providers in the supply chain.

On the other hand, the providers may also benefit after using the internet because marketing through it may enhance simplicity leading to additional sales. The internet is also affecting the customer relationship in that it undermines and redirects customer attention away from their former traditional relationships to other new sellers of products and services (Disintermediation of Hotel Reservations, 2009). Therefore, the traditional approaches that were once used by the hospitality businesses in distribution of their products have all been affected. This can be seen in the number of reservations that were taken over the internet that more than doubled over one year as hence indicating the declining role of the travel agent.

Today, the balance of power in businesses like the hospitality industry is shifting from sellers to buyers and in so doing; it has made the sellers to improve on their quality of service deliverance and convenience hence giving the consumers a good value for their money. The internet has also improved the consumers’ awareness by making information on prices of products readily available to the consumers. One major disintermediation model is the internet business model (Tse, 2003). In the market, this model has an effect on how services are offered together with the products. It also affects the pricing and distribution of products along with customer services. The model somehow offers long-term information capabilities in a way. Consequently, some of the hospitality suppliers will obviously have to market some of their inventory through this channels that are at their disposal. These channels include the internet, travel management organizations and other destination packagers.

In the modern market, customers are after the sellers who are both convenient and consistent. They are keen on getting information and getting it fast thus, if companies offering hospitality services and travel agencies do not offer convenience, somebody else without doubt will. They also want to be connected to the rest of the world every time, that is, whether they are in the office, at home or traveling (Law, Leung, & Wong, 2004). This is where internet becomes convenient because it is accessible both at home and in the office not forgetting that many travel agencies have supported its installation in airplanes. For the hotel agencies, they have developed better in-room technologies with the delivery of high-speed internet into the hotel rooms. This makes it convenient for their consumers to use internet even when they are far from their offices or on vacation.

The operating setting for the hospitality industry is evolving with the modernization of the economy. The industry needs speed, agility and flexibility to bring success to the companies. Speed is very essential because it enables the company to have its products and services early in the market therefore getting to the consumer soon after its release (Cline, 2000). Such speed is necessary because some companies that are just getting started end up being dominant in their niche markets within a short period, therefore surpassing those too slow to start. Agility is also imperative because it helps in responding to competition threats not only from the competitors we know, but also from the unseen ones. As the unseen competitors become known, they may disintermediate the already established customer relationships thus proving the importance of agility in the hospitality industry. Finally, there is need for flexibility to provide reorganization for the established business models and help it in the adaptation to a new environment without consideration of the form it takes.

The potential for e-business has been one of the most inducing changes confronting business executives at large. However, although the importance of e-business is too evident, the business solutions required to exploit on the opportunities they offer are not that obvious (Kim, & Kim, 2004). Many of the general concepts used nowadays will have to be adjusted in the future to fit in the nature of relationships between the hospitality industry and its customers, suppliers and business partners as it goes through a constant and swift adjustment. As this transformation persists, it means that the business leaders of the new economy must also learn the new rules and adjust to how they approach the businesses. They can do this by aligning key processes around the internet, building corporate intelligence automatically, creation of incorporated value chains and developing new processes to deal with the ever-changing circumstances.

To support the changes in the new economy, the hospitality industry will need a lot of capital to be able to bring new ideas and new technologies to put up with the traditional ways of doing business (Gilbert, Beveridge, & Lee-Kelley, 2005). By doing so, the industry will steadily increase the pace associated with development of productivity. For the hospitality industry to respond to all this, it needs to address this challenges especially those relative to the enrollment, preparation and development of human capital. Human capital inventory for e-businesses generally is dependant on some factors like private enterprising, imaginative leadership, potency in sales and marketing together with commitment to customer relationship management. The organization ought to concentrate more on creativeness and taking risks and avoid being dependent on analysis and procedures of its activities.

The business model that involves making profits from spare parts and maintenance of products instead of sale of the main products can also apply in the hospitality industry. This can be seen in some companies where products such as hotel rooms are given out free or at discounts for the company to be able to sell linked services (Eysenbach, 2007). By doing this, the companies will be giving the term hospitality another meaning. It will also be a way of marketing the products and services related to the hospitality industry to consumers who have become dissatisfied with the former traditional ways of making such purchases. With services becoming more important than products in the modern economy, the hospitality industry that formerly used to provide rooms, board, management and marketing will have to shift their roles in the new economy. They have to consider the increasingly electronic world where direct customization is the common order of the day and thus redefine themselves if they want to grow.

Conclusion

As discussed in the paper, intermediation is a very important aspect in the hospitality industry. This has been proven by how it has improved efficiency and convenience in both the travel and hotel agencies. Its applicatory relevance is also cited as being an applicable in other hospitality related domains such as accommodation planning and catering services within the larger service industry.

However, as suggested in the discussion, research carried to investigate the preparation of the hospital industry as concerns intermediation, are quoted as confirming that only a small percentage of its web site can manage reservations on a real-time basis; with a much smaller percentage being able to collect information from customers. These results confirm that intermediation is not particularly efficient. Again, some literature contexts may confirm that intermediation approaches may loose relevance in future contexts; citing the negative impact it has on employment opportunities.

Despite this though, literature evidence to confirm intermediation as being inadequate is minimal, hence the conclusive argument on intermediation paradigms being a positive aspect within the hospitality industry.

 

References

Andersen, S. R. (2003). The influence and effects of financial development on economic growth. An empirical approach. Bergen: Chr. Michelsen Institute.

Buhalis, D. & Kaldis, K. (2008), “eEnabled Internet Distribution for Small and Medium Sized Hotels: The Case of Athens”, Tourism Recreation Research, Vol. 33, No. 1, pp. 67-81.

Cline, R. (2000). Hospitality eBusiness In the New Economy. Ideas & Trends: Hospitality and Leisure Executive Report. <http://www.hotel-online.com/Trends/Andersen/2000_ebusinessAA.html>. Web. Viewed March, 19 2010.

Eysenbach, G. (2007). From Intermediation to Disintermediation and Apomediation: New Models for Consumers to Access and Assess the Credibility of Health Information in the Age of Web2.0. In: Kuhn, A, Warren, R, Leong, T eds. Medinfo 2007: Proceedings of the 12th World Congress on Health (Medical) Informatics; Building Sustainable Health Systems. Amsterdam: IOS Press. pp:162-6. <http://search.informit.com.au/documentSummary;dn=781801614799059;res=IELHEA> Web. Retrieved March, 19 2010.

Gilbert, D.C., Beveridge, D.W. & Lee-Kelley, L. (2005). “Electronic Distribution of Hotel Rooms – An Exploratory Study of the European Hotel Industry”, Journal of Hospitality & Leisure Marketing, Vol. 12, No. 3, pp. 45-61.

Kim, W.G.. & Kim, D.J. (2004), “Factors affecting online hotel reservation intention between online and non-online customers”, International Journal of Hospitality Management, Vol. 23, pp. 381-395

Law, R., Leung, K., & Wong, J. (2004), “The impact of the Internet on travel agencies”, International Journal of Contemporary Hospitality Management, Vol. 16, No. 2, pp. 100-107.

Marcussen, C. H. (2003). Trends in European internet distribution of travel and tourism services. Amsterdam: North-Holland Publishing Co

n.a. (2009). Disintermediation of Hotel Reservations: The Perception of Different Groups of Online Buyers in Hong Kong. New York: Emarald Group Publishing Limited

Tse, A.C. (2003), “Disintermediation of travel agents in the hotel industry”, International Journal of Hospitality Management, Vol. 22, pp. 453-460.

Wiig, A. (2004). Risk and disintermediation in tourism. Bergen: Chr. Michelsen Institute