TOURISM SPECIAL: WILL IT BE AFRICA’S E-COMMERCE ‘KILLER APP’?
1 January 1970
For a number of obvious reasons, e-commerce has been slow to take off in Africa. Only South Africa is doing any appreciable volume of e-commerce. In this week’s tourism special, iVeri Payment Technology’s Barry Coetzee argues that tourism will be the market that has the potential to open all of Africa to e-commerce. In the second article Jean Bosco of Tanzania’s Tourism and Travel Options shows how e-business - bookings rather than transactions - can be generated if you get it right.
Tourism and e-commerce share many things in common. E-Commerce exists mostly on the internet which is just like our planet without all the border posts. People move relatively freely in search of content which will meet a need that they have. It is a personal voyage, as the interest of each user is different to that of another. This is the essence of the internet, empowering individuals to easily get the information that they need. Sometimes, the user has to pay for the content. Sometimes the content is free. The choice to pay or not is up the user and is beyond the control of the content supplier. However, the wily content supplier knows that if the content is displayed in a manner that is attractive to the user, then a sale is more likely. This is generally called marketing. If the user decides to acquire the data, a transaction takes place. This is called e-commerce. The magic of this transaction is that the physical location, the home currency, the language, the time of day, etc of the supplier are irrelevant. The content is displayed, the transaction enabled, e-cCommerce successful.
Likewise, tourists also "go to the content". They also make buying decisions based on how the content is presented to them. While in the past many travelers have purchased tourism sight-unseen and have been dependent on their travel agent for pricing of a limited number of competing destinations, the internet is increasingly providing sites to market destinations and accommodation and related services. This provides tourists with unprecedented previews of a variety of destinations and their costs. Greater information about the prices and frequency of different means of transport to specific destinations and about the costs of packages that combine travel and accommodation and sometimes other services are also easily made available on web sites. Therefore, destinations that can convince prospective tourists online that their product provides the best quality within a specific price range have a considerable competitive edge over destinations that are not yet online. The availability of destinations online is a factor in the growth of independent travel, particularly in Europe and the USA. This is marketing. The prices of packages offered by rival tour operators are becoming more competitive as consumers’ knowledge improves through the Internet. Industry sources suggest that travel and tourism is second only to computer-related sales in e-commerce. This is e-commerce.
The confluence of tourism and e-commerce is the credit card.
An internationally recognised credit card has the advantage of being the most convenient currency for the tourist. With one card you are able to cross borders, pay for accommodation, flights, buy curios, dinner, or hire an elephant, without any real regard to the currency, the prevailing exchange rate or any of the other factors usually involved in cross border transactions. Visa, with 54% of the world credit card market share claims to have more than a billion cards in issue and 29 million places that will accept them. What is more, unlike cash and travelers’ cheques, you can also use the same credit card on the internet. A truly universal payment system. The disadvantages of NOT being able to leverage off the system are obvious and painful.
Credit cards and the credit card system are crucial to the tourism industry as they are the preferred method of payment for tourists and travelers. The reasons for this are fundamental, security and convenience. Credits cards make currency issues transparent, reduce the amount of cash that a tourist needs to carry, can be used in virtually every country on the planet, and, unlike cash, can be insured and replaced.
To buy tourism content requires the buyer to have a credit card and the seller to able to accept a credit card. Almost 1 million (925,043 ) overseas tourists (not including those from Africa and the Indian Ocean islands) arrived in South Africa for the year to June 2002. The vast majority of these tourists originated from the UK and the USA and have credit cards. So the "buyer side" of the equation is covered. What is needed is the "seller side". Provide these card toting tourists with places to use those cards.
The reason why credit card acceptance lags behind issuance is simply that it is more difficult and requires more infrastructure. It also requires banks as they are the guardians of credit card acceptance. However, it is a crucial cog in the tourism machine and banks should be encouraged to join the tourism drive and address this imbalance. Fortunately, each bank in each country only needs to do a little bit to resolve a massive issue. The resolution does not require treaties between nations, or massive IMF loans. The credit card networks already span the planet, we just have to plug in. The solution does not even require new legislation. It just requires each bank in each region to solve a part of the problem.
The additional revenue that could be generated from taking bookings or deposits on the same website used for marketing is enormous, especially when you consider that up to 30% of tourist revenues are paid in commissions to agents for making sales. Also, the advantage of direct bookings from tourists before they leave on their trips allows, not only for better planning, but for larger profit margins.
According to the Tourism and Poverty Alleviation Report from the World Tourism Organisation (http://www.world-tourism.org), tourism is a principal export for developing countries and Least Developed Countries. Furthermore, it is growing rapidly and is their most significant source of foreign exchange after petroleum. Money generated by international arrivals in developing countries increased by 90% from 1990 to 2000. The share of global tourist arrivals to developing countries increased from 20.8% in 1973 to 42% in 2000.
According to a recent study from Orbitz (http://www.orbitz.com) and the Travel Business Roundtable, conducted by Penn, Schoen & Berland, since the tragic events of 11 September 2001, 32% of US business and leisure travelers say they are more inclined to book their travel with independent online services. In particular among those respondents who are traveling more now than one year ago, 45% say they are more inclined to book travel through online services now compared to before 11 September.
Speaking during a recent workshop organised by the African Wildlife Foundation (AWF), Kenya Tourism Board (KTB) Chairman, Raymond Matiba said that in order to develop the Kenyan tourist market, the board had decided to sell Kenyan tourism industry through the Internet. He said it was impossible to reach the global market without vigorous advertising. The jump from using the internet as a marketing medium to using it as a channel for sales is relatively small, yet there is massive ignorance and resistance to taking this step.
South African eCommerce company AfriCam (www.africam.com) provides a system whereby game lodges pay monthly subscriptions to run wildlife cameras on their reserves. The pictures from these cameras are then shown live on the AfriCam website. Internet users which log on this site can then see, in real time, scenes from the game lodges. Not only does this system generate marketing for the lodges, but drives bookings. AfriCam claims that these lodges each can receive 250 hard inquiries via the Internet every month. AfriCam further provides training on converting Internet inquiries to Internet bookings.
In Bulgaria widespread Internet usage has remained limited in the tourism sector. However, since 1998 an Internet-based reservation system has been in place to serve the best hotels in the best sea and mountain locations. At the end of January 2001, there were twelve relatively easily accessible Bulgarian tourist operators’ websites. According to the March 2002 Bulgarian Tourist Industry Assessment by J.E. Austin Associates, Inc. , one of the largest problems that the tourism and other industries face is the inability of service providers to provide credit card services for tourists. The report found that "The lack of this service will have a detrimental effect on the overall ability of the industry to attract customers".
However, in spite of all the obvious advantages that the tourism/e-commerce team brings to developing countries, there are still obstacles. The most consistent of which are spurious and interest protecting rules and laws emanating from our governments and politicians. In South Africa, a country that is desperate to address its image of being a crime hotspot, the government, which controls the fuel industry, refuses to allow credit cards to be used for the purchase of fuel. This forces tourists to once again carry cash which has all the associated security issues.
The argument for tourism as a means of sustainable development is clear. In many instances the tourism infrastructure is already in place. It just needs to be improved and expanded. It is also clear is the internet is the empowering medium to assist in achieving greater tourism. This infrastructure is also in place in most developing countries. Clearly, it is now essential that the cycle be completed with the addition of e-commerce. With the enabling of credit card acceptance.
To protect our environment we ask tourists to "Leave only Footprints & Take only Pictures". To build our economies we should also ask them to "Take only Cards & Leave only Foreign Exchange".
Barry Coetzee is CEO of iVeri Payment Technology (www.iveri.com) and an authority on payment solutions in developing economies. He can be contacted at email@example.com
TANZANIA’S TOURISM AND TRAVEL OPTIONS BAGS ONLINE BOOKINGS
Tourism and Travel Options is a subsidiary of INFO-Consultancy Ltd. The company is unique in that it is based on online booking and (soon) the purchase of holidays, either domestically or internationally. With this in mind we developed a clear vision and decided to establish a global commercial website that sells all of the Tanzania’s Tourist product in one-stop shop site: www.tanzaniaholidays.com
The decision to set up the site originated from the fact that there was no such a site in Tanzania or indeed in the whole of East Africa. Touring companies in Tanzania have been solely dependant on chance or luck in attracting tourists who have not made a booking in advance. After thorough market research, we realized that this was contrary to the current trends in the international tourist market.
The second reason behind our website is to make it easy for the tourists and travelers to make the best selections of holidays to Tanzania at their convenience. We aim to advertise and promote the unique tourist attractions that are found in Tanzania. We want to increase the number of tourists who visit Tanzania’s Tourist Attractions.
The site has been designed to be used by all those who are either potential or actual tourists all over the world. The number of people who use our site is big and it is expected to be bigger as more people from the five continents will start using it for booking their holidays in Tanzania.
So far we have received a total number of 758 inquiries and 300 of them have now confirmed bookings for Christmas and the New Year holidays. The majority of these enquiries come from outside Africa. We intend to make our web site a place where all travel and tourist-related businesses can advertise themselves.
Tourism and Travel Options is focused on delivering. For this reason, discount is our priority. We have negotiated with most accommodation providers for discounted rates and we shall extend these negotiations to tour operators.
The site will be developed in three phases:
1) The first phase was to build up the largest web site, informative and easy to use. This has now been completed.
2) The second step will be to allow online payment
3) The third phase will involve e-ticketing to add cheap tickets and online ticket delivery to our customers.
What new advantages do we bring to the marketplace?
Our customers will have a double advantage:
1) They will have at their fingertips a comprehensive picture of the region to visit, with an instant customer support service to operate 24 hours a days 7 days a week.
2) Their will get always very low rates for the following reasons:
- a) Our network of hotels, transport companies, airlines, sell to us at discounted rates to remunerate a good volume of business brought to them.
- b) Our system will reduce the number of intermediaries who make prices too high to save their profit margins.