I. Introduction............................................................................................................................. 2 II. History ................................................................................................................................... 3 A. History of e-business ......................................................................................................... 3 B. Recent developments in the hospitality business .............................................................. 3 III. The three most important areas for hotels to use e-business successfully ........................... 4 A. Online Reservation ............................................................................................................ 5 B. Human Resources .............................................................................................................. 5 C. E-Procurement ................................................................................................................... 6 IV. The importance of websites ................................................................................................. 8 V. Conclusion........................................................................................................................... 10 VI. References.......................................................................................................................... 11

I. Introduction

The world is going online, and the hospitality business is going to follow. Ten years ago words like e-business, internet or intranet were considered to be specific technical terms. But within only five years, the Internet changed our private lives and the way of doing business for many managers. The world is getting connected and our economy is more global than ever before. All kind of services are available to everybody for a very small amount of money and only a few clicks away.

According to a survey about e-commerce in the hospitality business done by Arthur Andersen two years ago (Cline & Warner, 2001), 41% of all hotel employees work with a computer already and this amount is expected to increase to 51% by 2003. In this respect it was also ascertained, that America still takes the leading position with 47%, while the rest of the world lags behind with 37%. Of all employees 28% have internet access, but an increase of around 50% percent is expected over the next few years. Again America is taking the lead with 38% of all employees connected to the world-wide-web (WWW), but the rest of the world is expected to catch up in the future.

These are very important figures, as the profitable use of the internet strongly depends on the common handling of day-to-day technologies in every business. Every company is forced by the recent developments to take initiatives in the area of e-business. But what does e-business mean? Faramarz Damanpour (2001) said it “is any net business activity that transforms

internal and external relationships to create value and exploit market opportunities driven by new rules of the connected economy” (p.18). It is surprising, that only an average of 58% of all hotels in the world have an e-business plan for the future. Here I have to mention that bigger companies and hotel chains have a much higher planning level, than small and private hotels. (Cline & Warner; 2001). This is because basic investments in new technologies and software are much cheaper for large organizations, than for their small competitors. But as it is much more difficult for private hotels to start a profitable e-business, I want to investigate their actual competitive situation. What are their problems, what is the general situation on the e-business market and what are the three best ways for private hotels in Europe to manage e-business successfully and why? These are the central points I will focus on in this paper.

II. History

A. History of e-business

The old economy with its common marketing tools like direct mailing, newspaper advertising, 0800-numbers for phone orders and personal selling, is very well known to all of us. But with the introduction of the World-Wide-Web (WWW) in 1990 the world offered new business options. From there on the world was revolutionized. It took several years until the internet was established. Another 4 years passed until the first serious signs of e-commerce appeared. In 1994 the first customer ordered a pizza from Pizza Hut online, of course in the USA. With the software of Microsoft, which entered the market in 1996, easy access for everybody via personal computer was achieved and 12.8 million people were able to visit around half a million websites. One year later in 1997, almost 20 million visitors clicked through the WWW (History, 1997). As more and more potential customers were surfing the internet, many companies decided to use that opportunity to establish websites and offer their products and services online. What started with e-commerce, the normal selling via the internet, was followed by e-business, which means the use of the WWW in all areas of a company. So when we were able to buy a pizza online in 1994 on the Pizza Hut website, you can today not only do that, but you can gather all kinds of information about a business from its homepage, apply for a job or start a new business-to-business (B2B) relation with a firm. B. Recent developments in the hospitality business

Like many businesses, the tourism and hospitality industry was under great pressure to keep up with the rapid development of that new market. The anxiety of possibly ‘missing the boat’

caused many hotels to launch their websites, but without a concept or a marketing strategy.

The internet boom forced everybody to keep up with the rest of the world, but many hotels didn’t have the know how and qualified people to start up a successful e-business. In 1999 the dot-com euphoria had its peak (Osborne, 2001), and Clay Dickinson, a principal at IBM

said that “the hotel industry didn’t jump all over the e-business wave, it was forced into it. And with the dot-com implosion you could almost hear a collective sigh of relief for a little breathing room” (E-Commerce, 06/2001, p.64). Nevertheless over the last 3 years, the industry adjusted more and more to the new technologies and e-business is now used in a professional and profitable way. The numbers of internet users steadily increased in the 3 last years, but many companies were pushed out of the market. It was quality that survived. Tourism is known to be the biggest industry in the world, and 11 % of all web purchases are related to it. According to a research done by the University of Lisbon, the tourism segment earned around $13 billion in 1999 and around $30 billion in 2000. By 2003 experts expect, that around 30 % of all sales in that industry will be done online. We all know of low price airlines, like “Ryanair” and “Easyjet”, which are primarily internet based. Ninety percent of all airlines and 52 % of all hotels are planning to invest more money into their e-business to provide the best service in combination to their traditional sales activities. “Hotel Reservation Network” (HRN), a well-known hotel reservation system started its website in 1995. They shifted more and more from the traditional telephone sale to the internet. In 1998, 45 % of their revenue was earned online and by 1999 this figure rose up to 80 %. Of the total ebusiness sales figures in the tourism industry, hotels contribute around 13 % (Rita, 2000).

III. The three most important areas for hotels to use e-business successfully There are several areas, where hotels can use the internet to expand their services and where they can increase their profits. On the next few pages I will try to give an explanation, where hotels should mainly invest and why.