The Effect of On-Line Bookings on Maltese Hotels

Introduction

When online bookings were first introduced into the hospitality industry, many of the Maltese three-star hotels believed that this would open an opportunity to expand. Most of these hotels considered online tour companies as the best way through which this industry could be developed in this country. They believed that the traditional tour operators were oppressive. Online bookings in the hospitality industry have gained a lot of fame following the success that this technology had brought in other countries around the world. The management of these hotels believed that the time had come for them to explore the market and expand without restrictions that they believed traditional tour operators posed (Buhalis 2010, p. 48). The Maltese hotels have depended on British traditional tour operators for a long time. However, they resented the fee that these operators levied on them. With the world getting globalized and technological advancements in this field taking a new shape, these hotels could not resist the urge to go online.

The history of tourism in Malta dates back to the times of the Roman Empire, as it is reported that the emperor would visit the island for holidays (Buhalis 2010, p. 57). During the reins of the British Empire, tourism in this island was closely controlled by the British Empire. When this country gained independence in 1964, tourism was still largely controlled by the British Tour Operators. When the country finally became a republic in 1974, the government decided to reform various sectors of the economy, including the tourism industry. It was clear that tourism was one of the main sources of income for this country. Therefore, the government-supported development of four and five-star hotels are a way of attracting customers into this country. This was done following a report that indicated that this country was receiving fewer visitors because of few five-star hotels. The move worked in attracting more visitors to this country but following the recession that hit the world in the late 1980s and early 1990s. The world was experiencing a financial meltdown following the fall of stock in October in what became known as Black Monday.

With the world financial crisis being felt in various western states which made the bulk of visitors to this island, five-star hotels were forced to reduce their rates. This forced the four-star hotels to equally lower theirs. The three-star and below hotels were heavily affected by this because the rates they were forced to take could not sustain their operations. Some of these hotels could not withstand this pressure and, therefore, made an exit from this industry. The few that managed to stay operational had to withstand a long period of dry seasons until the world economy stabilized. These hotels have since been struggling to find the best strategy through which they can attract more visitors in order to increase their profitability.

According to Buhalis (2010, p. 116), there has been a general concern in this country that although the number of visitors to the island is on the increase, there is a decline in the number of bookings into the hotels. The data from the National Statistics Office of Malta shows that the country experienced an upsurge of visitors early this year. Unfortunately, a good number prefer staying on board the ships other than checking in to the hotels. This concern has seen these hotels launch campaigns to help increase the number of these visitors booking the local hotels. Broderick (2005, p. 112) says that some of the hotels have considered using online tour companies as a way of boosting their sales. They considered this strategy as being better than using the traditional tour operators. However, Buhalis (2010, p. 93) says that most of the hotels in this country are yet to see the benefits of these online tours companies as they are forced to accept the heavily discounted rates. What they considered as a solution was turning out to be a problem coming in a different approach. The online tour companies were taking away the responsibility of the hotels to set their rates depending on the prevailing economic conditions. As Hendrix (2004, p. 21) puts it, the hotels in this country were first turning into institutions that had to work under the instructions of these online tour companies. Broderick (2005, p. 95) however, holds that online tour companies have had a massive benefit on the Maltese hotels over the past half a decade. It is these contradicting opinions of some scholars that have motivated the researcher to conduct this research and determine the effect of online bookings on Maltese Hotels with a particular focus on the 3 star and smaller hotels.

Online Booking of Hotels

Scholars have conducted extensive research on the effect of online bookings on hotels, especially those of three stars and below. According to Hendrix (2004, p. 26), Malta is one of the fastest-growing tourist destinations in the world. The country has seen an increase in the number of foreign visitors who come to the country for holidays. It is worrying, however, that the number of visitors who are booking the hotels is on the decline. Managements of such hotels have made effort to ensure that their hotels gain a competitive advantage over other hotels. Given the fact that this country is a small island, most of the hotels in this country have realized that it is important to find the best strategy through which they can increase the rate of tourist attraction (Pickton & Broderick 2005, p. 65). Online bookings have worked for some firms, especially in attracting international customers. Hendrix (2004, p. 26) says that given this fact, online bookings became very popular in this industry. This scholar says hotels managements have since abandoned the traditional tour operators in preference to online travel companies.

Large hotels in this country have managed to develop their online system to accommodate online bookings (Brooke, Lucinda & Yan 2011, p. 348). It is the three-star hotels that are still struggling to come up with the best strategy through which they can capture the international customers who visit the country. According to Pickton and Broderick (2005, p. 65), irrespective of the level of the hotel, the only way through which the hotels can remain competitive in the market is to ensure that they attract international customers. This scholar says that Malta is a small country, and the hotels cannot depend on the locals as their only customers. In order to attract these international customers, the three-star or lesser hotels must embrace online bookings as a way of attracting international customers (Pelsmacker, Geuens & Bergh 2005, p. 47). This scholar holds that given the current forces in the market, these hotels have no otherwise but to use online bookings as a way of remaining competitive in a market that has embraced technology.

St Julian’s Bay Hotel is one of the three-star hotels in Malta that have realized the importance of online booking to its growth in this market. The hotel is one of the leading three-star hotels in St. Julian’s. The hotel receives visitors from all over the world. According to Barthe (2010), the current society is increasingly getting globalized. The world has been turned into a global village. This has opened the scope for trade. These hotels are therefore open not only to the local but also international market. The management of these hotels has the responsibility to ensure that they have the capacity to operate globally. The online system of booking hotels is increasingly becoming popular (Park, Cha, Kim & Jeong 2012, p. 56). Hotels today can easily reach out to their customers from any part of the world through the internet. This further reduces the geographical barrier that exists between the hotel and its customers in other parts of the world.

According to Boyd (2006, p. 222), it is worrying that some hotels in this country are yet to fully embrace online bookings despite the obvious fact that this system helps attract customers. St Julian’s Bay Hotel has attracted travelers from all over the world because of its ability to facilitate online bookings through online travel companies. These online tour companies offer the Maltese Hotels opportunity to expand their operations beyond the borders of this country (Andrzej, & Buchaman 2007, p. 31). Travelers and other holidaymakers should have access to the websites of these online tour companies where they can see the exclusive products offered by various hotels in Malta. This will have a direct positive effect, as Bluemink (2011, p. 90) observes, and the hotels will be in a position to expand their operations. The online tour companies would offer all the information that a traveler may need about these hotels, a snapshot of the hotels, and the rates charged. This means that they will be acting as advertising agencies to these hotels. According to Noor Al-Deen and Hendricks (2011, p. 94), online tour companies have proven to be the solution to the three-star hotels’ effort to increase the number of visitors to the hotels. These online tour companies benefit both the hotels and customers alike. To the hotels, they take away the responsibility of having to advertise online as a way of attracting international customers. To the customers, the lack of online tour operators makes it impossible to book for the facility they desire in advance (Bennett & Strange 2011, p. 98). Such customers may end up being loyal to other competitors that have an online booking system. To the management, physical booking is time-consuming, hence reducing the efficiency of the firm in general (Andreas 2012, p. 2). It also means that the management will be forced to hire more employees, a fact that will reduce the income of the firm.

Importance of Online Tour Companies to Maltese Hotels

Roxana and Valentin (2011, p. 63) say that technology has completely changed the face of the earth. Firms have been forced to change their operational activities to reflect these environmental changes. Various multi-national firms have gone online. One of the industries that have found online transactions very important in the hospitality industry (Brooke, Lucinda & Yan 2011, p. 348). Various hotels around the world have realized the importance of allowing their customers to make most of their bookings online. It also creates a borderless market where a customer can complete transactions while several miles away from the facility. Online tour companies have come in handy, as a solution to hotels in their attempt to go online.

According to Coombs (2007, p. 16), online business has gained a lot of popularity within the past decade. Firms have come to realize that the best way to reach out to customers is through online means. With the changes taking place in the social structure in most societies around the world, women are also becoming breadwinners in their families. This means that most families do not have time to go around shopping for items they need. They prefer searching for the desired products online while at work or home (Red Cross 2012, p. 83). They do not mind the distance because, with improved transport means, geographical barriers have been eliminated.

According to Crandall, Parnell & Spillan (2010), going online has its pros and cons. When a firm makes the decision to go online, there will be extra charges that the firm will have to meet in order to be successful in managing its online business (Boyd & Ellison 2008, p. 89). The cost of hosting and maintaining a website is an extra cost that would have been used elsewhere if this option were not considered. Cybercrimes are other challenges that firms must be ready to deal with (Qualman 2012, p.74). Cybercriminals are increasingly getting sophisticated. They use advanced technology to crack into sensitive information about their target firms. This can result in massive distortion of the information of the firm. They can also add or delete some information on the website of a firm, leading to miscommunication between the firm and the targeted audience. Depending on the magnitude of the distortion, the impact will vary, and this may injure the image of the firm in the corporate world (Pickton & Broderick 2005, p. 65). The firm will be tasked with the responsibility of ensuring that the website is protected from intruders. For the Maltese Hotels which rely on online tour companies, they have to accept the discounted rates that these companies forward to them. Despite these challenges, Safko (2010, p. 125) says that online business has become increasingly important to firms, especially in developed countries like the United States. Most of the citizens in this country have internet connectivity either through their phones or personal computers. Going online would help a firm reach out to customers who are beyond their immediate environment. It helps in marketing to individuals around the world (Boyd & Ellison 2008, p. 89). Online business also eliminates the need to have a physical facility in every part of the city. Clients can easily communicate with the firm online. When dealing with online tour companies, the company will communicate with the customers online, on behalf of the hotels.

Financial Effects of Online Bookings on Maltese Hotels

The essence of changing from one system to another for every organization is always to increase efficiency and reduce costs of operations. Going online can only have a sense of the involved firms stand to benefit in one way or the other. It is always important to understand the fact that a time span of three years is long enough to determine the benefits of a given system (Solomon 2011, p. 31). By adopting a system that was not in use before, a firm may experience a period of reduced profitability before finally benefitting from the system. This may be attributed to what Crandall, Parnell & Spillan (2010) described as the initial costs of installation and the need to understand the system. As both the customers and the employees understood this new trend, there was an increase in income of this firm in subsequent years. Online tour companies offer a completely new approach to booking that Maltese hotels were not used to before.

According to Taylor and Kent (2007, p. 144), online tour companies have been of benefit to many of the Maltese hotels in their effort to increase the number of visitors. However, it affects these hotels negatively by setting highly discounted rates even during high seasons (Forbes 2011, p. 89). The three-star or lesser hotels are the worst hit by these reduced rates. This is because other larger hotels do not rely on online tour companies for most of their visitors. To the three-star or lesser companies, they are forced to accept these rates because once a customer is booked into the hotels, they would avoid scenarios of turning them down. This is a sensitive industry and such actions may lead to serious dissatisfaction of the customers. Accepting the discounted rates means that the hotels will be making reduced profits in their operations.

According to Cutlip, Center and Broom (2006, p. 112) success of a firm will always be determined by its ability to maintain its market share. Maltase three-star hotels have the responsibility of ensuring that they maintain a good relationship with the online tour operators (Sunden 2003, p. 70). This may force them to accept demands that may be seen to reduce their profitability. While these hotels found the fee levied by the traditional tour operators as exorbitant, online tour companies had a different approach of eating into the profitability of these hotels (Doorley & Garcia 2011, p. 74). These firms appreciate the fact that online tour companies do a lot by looking for tourists and checking them into these Maltese hotels. However, they find an issue with these companies when they send visitors to these hotels at very low rates. It remains an issue that most of the Maltese hotels are trying to find a solution to.

Importance of Social Media to On-Line Travel Companies

According to Grunig (2002, p. 43), online travel companies are becoming relevant in the hospitality industry as opposed to traditional tours operators. Social media has become an important tool in marketing the brand and products of a firm. When Facebook has launched about six years ago, many corporate leaders never imagined that it could turn out to be of massive importance in the corporate sector (Hines 2010, p. 38). It was considered as a social network for youths, specifically those who had time to waste on the internet. However, this perception changed as Facebook continued attractive a massive number of people from all corners of the world (Socialnomics 2010, p. 56). With the increased sophistication in the field of technology, most phones became internet-enabled just to allow users to access Facebook. Personal computers also became cheaper. Other social media such as YouTube and Twitter also became common and very popular. Corporate leaders realized that they could no longer ignore the potential of social media. On-line tours operators have come to appreciate the importance of social media in reaching out to customers (Toth 2007, p. 49). Social media has found a new role other than its initial role as a mere social site. Besides the role of social networking, social media has become a vital tool for online travel companies to market their brands and products. It has enhanced viral marketing as a strategy of increasing the customer base of a firm. Currently, there are a number of social media that firms use as a way of reaching out to customers (Jargon, Steel & Lublin 2011, p. 34). They include Facebook, YouTube Tweeter and MySpace among others. Taylor and Kent (2007, p. 144) observe that Facebook has the highest number of subscribers of all the social networks. According to (Kaplan & Haenlein 2009, p. 49), Facebook has attracted a massive number of youths, especially given the fact that it allows an individual to reach out to friends or family members whose contacts could have disappeared (Brooke, Lucinda & Yan 2011, p. 348).

Facebook is estimated to have a fan base of about one billion people. This media allows users to send and receive messages from ‘friends’ using a specified number of characters. The fact that an individual can chat with two or more friends simultaneously has made it very popular. An individual can also send a message to the intended recipient if the recipient is not online. As Jobber (2010, p. 67) observes, Facebook has become very popular as a way of creating awareness about a product and promoting a brand among online travel companies. Market segmentation is one of the most important activities that marketers undertake to ensure that they can formulate policies to reach out to the right customers. Youths have become an important market segment for many travel companies due to their spending habits. It may be true that youths do not have high disposable income to spend as compared to middle-aged individuals (Wright & Hinson 2009, p. 20). However, they readily spend the little income they get as compared with the middle-aged group and the aging population. Given the fact that the majority of youths have Facebook accounts and access them frequently either through their mobile phones or personal computers, it becomes a vital channel through which online travel companies can reach out for them (Tuten 2008, p. 48). Jordan-Meier (2012, p. 39) says that many of the online travel firms have signed up their own pages on Facebook and invited as many friends as possible. This way, they can easily post important information on their wall for the customers. This also allows them to receive communication from their customers about their products or market strategies for the purpose of adjusting their system for the better.

Individual hotels have also found social media to be relevant in online marketing. The management of these hotels finds it easier to trace their customers through these sites. Once they receive them from online travel companies, social media helps in creating a permanent relationship through constant communication. Such a customer may not go to the online tour companies when they want to visit this country. They will communicate directly to the management of the hotel. YouTube is another very popular social media both to firms and the general public. Like Facebook, YouTube allows users to share information online. The main difference between Facebook and YouTube is that through YouTube, an individual can share heavy graphics such as a video (Werner & DeSimone 2008, p. 78). Facebook and Twitter cannot support audiovisuals. However, YouTube offers its users the ability to share or watch videos or songs online. Another advantage that YouTube has over other types of social media is that one can access a video or any information on YouTube without having an account with it. In various countries around the world, YouTube is growing in popularity as the way in which firms can advertise to the target audience. St. Julian’s Bay Hospital and many other online travel companies have, therefore, considered using this media because of this growing popularity. Leighton and Shelton (2008, p. 111) note that It is advantageous to these firms because they can develop television commercials showing the beauty of their products to attract customers. To the customers, YouTube is one of the best sites for entertainment.

Online Customer Relationship Management

According to Meredith (2012, p. 45), firms are always concerned about how best they can manage their relationship with customers. This is because of a number of factors. Managing an online customer may not be as easy as managing a customer in brick-and-mortar markets (customers physically coming to the stores). This is because it is not easy to determine the exact taste of a customer through online means (Anthoniessen 2008, p. 56). However, this is a challenge that many international hotels must always be ready to face given the growing popularity of the online market. Customer relationship management always involves a number of activities. One such activity includes keeping connections with customers before and after the purchase of a product. This will involve tracking the online activities of such a customer from time to time (Wilcox, Cameron, Ault & Agee 2003, p. 38). The ultimate aim of this strategy is to ensure that such a customer is constantly engaged by the firm in order to increase the chances of him or her making a repeat purchase. This will require special software that will make this possible. Many hotels have found it a lot more beneficial to track their customers online because it enables them to monitor their online activities.

It s important to connect with customers who have visited a firm’s website (either as buyers or just passers-by) in order to make them consider revisiting the site. One of the best ways of doing this is to make the experience of the viewers memorable. This way, it would be easy to create a need for them to revisit the website (Andzulis, Panagopoulos & Rapp 2012, p. 310). Another strategy would be to trace these individuals through their e-mail or any other address they could have used while on the website. Using these contact details, a firm can send the relevant message to these customers urging them to revisit the website for new and improved products. Given the fact that a firm would need to keep in touch with the customer after the visit, there are some pieces of information that will be very important to the company (Meredith 2012, p. 82). The most important information that a company may need is direct contact with the customer. This can be the e-mail address, Facebook account, phone number, or any other information that will enable the firm to reach out to the customers (White 2012, p. 47). The firm will also be interested in understanding the demographic information of the customer such as gender, age and social status. This way, it will be easy to formulate the right information about appropriate products. For new visitors, it will be important for the firm to determine such factors as how long the potential client was on the website, the areas that were visited, and whether or not a product was ordered. The duration of the visit will help determine the interest of the customer in the products. Areas visited will help the firm to know specific products that the customer desires.

In order to achieve this, Lerbinger (2006, p. 45) says that the firm should come up with appropriate CRM software that will enable the firm to track all the online movements of the target audience. B-kin CRM software is one of the best software that can help achieve the desired result in this field (McGriff 2012, p. 53). B-kin CRM is one of the emerging tools used in an e-mail marketing campaign in the current competitive market. This software helps a firm in achieving the following.

• Designing personalized messages.
• Making database segmentation.
• Sending of the e-mail marketing campaign.
• For each user, it will show if the e-mail was opened or declined.
• Help avoid duplication of information in the campaigns.
• Helps statistically is determining the success of a campaign.

This information can be used to better the customer experience. The management should use this information to reach out to the customers with products that best meet their needs. The information should also help the firm determine how to adjust the quality of its products in order to improve customer experience when using the product.

Analysis on the Effect of On-Line Bookings on Maltese Hotels

The review of the literature above clearly demonstrates the shift that is taking place, from the traditional tour operators to online travel companies. Hotels have come to realize that they cannot operate successfully in the market without embracing online bookings. It is also apparent that these firms are currently working towards implementing e-commerce as a way of staying above the market competition. The Maltese hotels must realize that in the current competitive market, they have a responsibility to ensure that they develop websites that can enable their customers to book the services online. The literature review above has also openly demonstrated the fact that Maltese hotels, especially those of three stars or below, have found online tour companies helpful in their operations. Although it comes with a number of challenges, it can be beneficial if properly managed. It is clear from the analysis that online booking is beneficial to Maltese hotels, and given the current trends in the market, the hotels have no choice but to embrace it. It is through this that they can manage the current market competition.

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