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MANAGEMT 7104 Marketing Management

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Introduction

The study focuses on the marketing of direct hotel business. The following will discuss about the benefits of direct hotel booking instead of going via travel agents and tour operator booking. The number of online hotel bookers have considerably increased in recent times, which makes it important for the hotel industry to identify the components that influences the travelers to prefer online booking over the traditional booking system. Moreover, it is important for the industry to identify the channels the customers prefer for booking.

Background Statement

The growing preference of online booking of hotel services has significantly changed the face of hospitality industry. The customers now book their hotel services via agents, travel tour operators, and direct company websites. A recent study conducted by Liu and Zhang (2014) identifies the product related and channel related factors that affect online hotel bookers. The study on the Chinese hostel industry reveals that the customers prefer travel agents website over the company websites as they are only compatible in website quality.

However, the hotels are now initiated the disintermediation process to gain back the control over their distribution. The business organizations are now setting up their own website allowing the customers to book their preferred services and communicate with the hotel service directly. The websites are also equipped with the feedback section where the customers are encouraged to provide their valuable experiences from the received services. This both has advantages and disadvantages for the hotel industry and the travel agents.

The report will focus to review the existing works conducted by the scholars. It will further help in identifying the gap in literature and scope of research. The report further identifies the research questions that need answers and the methods useful for data collection and data analysis.

Aim of the research

Aim of the research is to identify the advantage or disadvantage the hotel business might receive from the direct online booking counting out the tour and travel agencies.

Literature Review

Online Hotel Booking and its determinants

Lien et al. (2015) have identified a significant growth in online hotel booking. The travellers show their increased interest in booking hotel online for its convenience and time or cost savings. Travellers of modern generation are well equipped with smartphones and internet that encourage them to purchase the hotel service via their mobile app. The authors’ research in Taiwan reflects the cost satisfaction of the customers. The three critical drivers that encourage the customers for going online in case of hotel booking are perceived value, perceived price and brand image. Impact of trust or gender or travel agents in this case is hardly found. Similar study conducted by Andrés-Martínez, Gómez-Borja and Mondéjar-Jiménez (2014) reflects similar results rejecting the idea of brand loyalty. They concluded that the price satisfaction and confidence is the only variables considered in this matter and brand loyalty hardly influences the decision of the customers. Liu and Zhang’s (2014) report reflects that the customers use two basic channels to make their purchase online. They are hotel websites and online travel agent websites. Their survey of 437 valid samples ion Chinese hotel industry concluded that the customers tend to choose the travel agent websites over the hotel websites.

Direct Hotel booking

There are various factors influence the customers to purchase their service through hotel websites. According to the findings of Wang et al.(2015), the hotel website quality has a strong influence and is a predictor of eTrust which further mediates the relationship between website quality and consumers’ online booking intentions. Their study recommends the hotel businesses to invest a significant amount for developing their websites to build the customer trust. The main trust issue that can be identified in this case is the payment mode. They need a more efficient, friendly and customer trusted payment channel to increase their website transaction rate. Morales (2017) explains that the hotels urgently need to develop their booking services to gain access to the customer data that are handled by the online travel agencies as they work as a mediator to connect the hotels with the customers. They are in need for understanding the market to keep track of their sells and compete with their competitions. Moreover, they need to understand and reflect their understanding their customers’ preferences in their websites to attract more customers to nook directly from the hotel websites.

Advantages of Direct Hotel Booking

Wang et al. (2016) states that the hotels are adopting mobile reservation system to access the advantages from online booking that is currently shared with the online travel agencies. The travel agencies takes a serious advantage from the online booking tendency of the customers. However, the hotels are now attempting to get back the profit invested in the travel agencies to attract customers by introducing mobile reservation system. There are several benefits of direct booking that Wang and his co-authors identified in their report. Firstly, the can potentially decrease the investment made on the third party to attract customers and increase guest loyalty. Secondly, they can gain better control their room and can increase reservations using mobile reservation system. Thirdly, they can gain access to the customer information that is held by the third parties. Moreover, the customer satisfaction will be directly communicated with the hotels through their websites. It will enable them to better understand the customers’ requirement. Lastly, it will give access to the first hand copy of booking acknowledgement and will reduce the foul play at intermediary level. Another study conducted by Chiappa (2013) on the customers’ perception reveals that the travel agencies considerably influences in shaping the perception of the customers. They controls the information that are to be delivered to the customers, sometimes significantly modifies it.

Influence of Online Travel Agencies

The technological development has lead the customers purchase their every commodity online. The businesses ranging from everyday household product sellers to hotel industry has opted online selling to provide the customers a more efficient services. Inversini and Masiero (2014) finds out that the online travel agencies uses the opportunity of the weakness of the hotel industry caused by the visibility. There is a constant tension between the hotel businesses to make their presence to the potential customers. This convince them to collaborate with the travel agencies to stay in the limelight. Stangl, Inversini and Schegg’s (2016) report reflects similar result stating the dependency of the hospitality industry on the intermediators. The report reflects and average of one fifth of the hotel bookings are generated through online travel agencies. Moreover, the German and Swiss hotels are more dependent on the OTAs. It is due to the availability of options. The customers get to scroll through a number of hotels in a single web page and choose one out of them that is convenient to them. Visiting hotel websites on the other hand takes more time and effort that they can reduce by using travel agencies. Bernardo, Marimon and Mar Alonso-Almeida (2012) used structural equation modelling identify the dimensions of e-service quality that attracts the customers use their website rather than purchasing the service directly from the hotel websites. The outcomes reflects that both the functional and hedonic quality have significant influence on the perceived value. These helps the agency to deliver high value to their customers that in turn increases the customers’ loyalty. The hedonic quality contributes in attracting and retain customer. Another important factor that plays vital role in attracting customers towards the online travel agencies is the reviews that they provide on the hotels. It is actually the reviews posted by the customers, which the agencies highlight in their website influences the potential customers to make decision about their purchase. According to Ö?üt and Onur Ta? (2012), increase of one percent customer rating is potential to increase the sales per room up to 2.68% in Paris and up to 2.62% in London.

Benefits of Cooperation

There are several benefits for the hotel industry in cooperating with the third party travel agencies. According to Guo et al. (2013) the hotels need to modify their pricing strategy if they are cooperating with the travel agencies as they have to pay a considerable amount to the third party for operating their online activity on their behalf. The report further identifies that it becomes hard for the organisation to independently run their own direct channel as the cost expenses becomes considerably high in that case. Moreover, The depending solely on direct online booking makes it hard for the hotels to attract customers. Hence, they need help from third party agencies to gain attention of the customers.

Literature Gap

There are a number of article present in the market, which identifies the overall benefits of online booking for hotel services. Moreover, the research has already been conducted on the customers’ perception about online booking either via travel agencies or via direct purchase. However, a limited number of articles present that directly narrates the advantages of using the direct booking for the company. Even fewer articles communicate the drawbacks that the hotels might face solely depending on the direct booking approach in case of promotion and marketing. It provides ample amount of opportunity for the researcher to carry the research finding the possible advantage and disadvantage of using direct booking for the hotel business. Further, it can also incorporate the drawbacks of exiting the third party agencies from the chart in attracting the customers.

Hypothesis

H0 – Direct booking from the hotel website is beneficial for the business promotion.

H1 – Direct booking from the hotel website is disadvantageous for the business.

Research Objectives

  • To critically analyze the importance of direct online hotel business
  • To critically evaluate the customer preferences of online booking
  • To identify the advantages of direct hotel business
  • To identify the disadvantages of direct hotel business
  • To identify the consequences forthcoming for attracting customers
  • Impact on the travel agencies and tour operators

Research Questions

  • What are the impacts of direct hotel business?
  • Why do the travelers prefer to purchase online tickets?
  • What channel does the travelers use purchasing online hotel services and why? Is direct hotel website of travel agent website?
  • What are the benefits hotels reveals from direct website purchase and how does it help in marketing?
  • What are the disadvantages of direct booking?
  • Does the agents have any contribution in the marketing and promotion of the hotel?

Research Design

According to Bernard (2011), research methodology is the systematic process that helps the researcher to carry out the research following a proper guideline. Hence, it is important for the researcher to identify the correct methodology required for a particular research matter. It incorporates various assumptions which are fixed and used in the research conduction. The researcher is required to design the methodology in such manner that can be used for reproduction of similar results in studies with similar topics and objectives.

Figure 1: Research Onion Model

Source: (Sekaran & Bougie, 2016)

Research Philosophy

The purpose of the research philosophy is to narrate the dimension and knowledge of the particular research study. The scholars have identified three basic philosophies namely realism, interpretive, positivism and post positivism. Realism circulates around the idea of reality and finds it as independent from the human mind. It uses scientific approach in the process of knowledge development. It can be divided into two that are direct and critical realism. The former uses the personal human sense, whereas, the later denies its effectiveness to portray the real word as images and senses can be deceptive. Interpretivism on the other hand narrates the social construction as the basis of accessing the reality that comprises of shared meaning, language and instruments. It amalgamates different approaches to the research like, phenomenology, constructive and hermeneutics. The philosophy of Positivism assists to uncover the truths from numerous observations and facts. It further assists in gaining the factual knowledge on the research topic. Post Positivism on the other hand denies the concepts of positivism and rejects any idea that differentiates scientific method from Mandan way of life (Mkansi, & Acheampong, 2012).

Figure 2: Research Philosophy

(Source: Toloie-Eshlaghy et al. 2011, pp- 110)

Positivism in this study will uncover the truths and help finding the customers’ selection process. It will further increase the observational scope of the study. Hence, descriptive study can be used for analyzing the research topic. The researcher can consider the existing theories related to the field of study for testing the hypothesis formed.

Research Approach

Researchers can choose between deductive and inductive approach for the hypothesis testing. Inductive approach helps in formulating new theories, whereas, the deductive approach helps in validating the assumptions made. The inductive approach is required in the case where the researcher needs to implement research questions for formulating new theories. Deductive approach on the other hand creates hypothesis and validates the hypothesis for justifying the proposed assumption. Deductive approach is useful to study the advantages and disadvantages of using direct hotel business. It will help in concluding the found existing facts and come up with an idea that can help in identifying required modification in the business.

Figure 3: Research Approach

Source: (Sekaran & Bougie, 2016)

Data Collection and Analysis

The primary data collection method will show its efficiency in data accumulation process. This data collection guideline provides two primary methods for the data collection that are quantitative and qualitative method. The quantitative method is useful for collecting quantifiable data using the questionnaires and surveys. The questionnaire is comprised of multiple close ended questions that will be provided to the lower level stuffs and customers of various organizations. The tools used under this method are regression and hypothesis testing to access the statistical data (Delport & Roestenburg, 2011). Qualitative data collection method on the other hand is comprised of the open ended questions and interview schedules. This is useful for collecting a wide range of unquantifiable data where the respondents are free to answer according to their set of priorities and no restriction or guideline is set for the answers (Taylor, Bogdan & DeVault, 2015). The higher authority of the organizations will be approached with this method of data collection to understand their perspective.

Using only one out of these two methods represents the mono method. Mixed method on the other hand incorporates both the methods using various tools. There are two more types of methods used in data collection, which are multi method qualitative and quantitative. When a research uses multiple qualitative methods for the purpose of their data collection, it is called as multi method qualitative. Similarly, the use of multiple quantitative methods is referred as multi method quantitative (Molina-Azor?n, 2011). The use of mixed method is required to fulfill the purpose of this research, as it requires both the customers’ opinion and authority’s approach.

The analysis of the collected data incorporates both qualitative and quantitative data analysis using different tools. The qualitative data analysis will identify the patterns in the answers provided by the respondents. Quantitative data analysis incorporates the analysis of close ended questionnaires which will be further linked with the research objective to reach to a conclusion. The researcher has to plot the collected data in graphs and chart for analyzing it. To establish the relation between independent and dependent variable, the researcher will require the regression tool. However, the extent of this relationship is not possible to identify using this tool (Saunders, 2011).

Sampling

Sampling is used to identify the target population out of a broader population to carryout the research. There are various methods of sampling, which are probabilistic and non-probabilistic. Probabilistic or random sampling will be used for this case, as it will provide equal opportunity for the respondents to gather an unbiased data (Blumberg, Cooper & Schindler, 2014).

Reliability and Validity

When the same instrument brings out similar data from multiple samples, the reliability is justified. Validity on the other hand is justified on the fulfillment of all the requirements of the research during analysis of the collected data (Csikszentmihalyi & Larson, 2014).

Ethical Consideration

Ethical consideration is important for carrying out any research. Hence, the confidentiality and privacy of the informants are maintained for saving them from any external threat. Moreover, the authenticity of the report is maintained to avoid plagiarism allegation or theft charges.

Time Scale

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Collecting data from secondary sources

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Constructing the research layout

 

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Literature review

 

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Development of research Plan

 

 

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Selection of Appropriate Research Techniques

 

 

 

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Primary data collection

 

 

 

 

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Analysis & Interpretation of Data which are collected

 

 

 

 

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 Source: Author’s Creation

Conclusion

The report concludes that there is an amount of scope to identify the advantages and disadvantages of using direct hotel business for online booking. This particular topic requires more attention to clarify the benefits they are receiving from the third party agencies and the benefits they can obtain by using their own website for attracting customers. However, it identifies the importance of the travel agencies in attracting customers. It further identifies the customers’ opinion in choosing between the company website and travel agencies for making online transaction. This leads to formulation of two hypothesis that will guide the following research and help it to focus on the desired findings. The research philosophy and approach are selected for confirming the observation made in the research. Moreover, the required data collection methods and data analysis methods chosen for gathering useful data required and to analyze the obtained data. The mixed method will prove to be useful in this case as it will require to collect both quantifiable and non-quantifiable data for their supporting the report.

References

Andrés-Martínez, M. E., Gómez-Borja, M. Á., & Mondéjar-Jiménez, J. A. (2014). A model to evaluate the effects of price fairness perception in online hotel booking. Electronic Commerce Research, 14(2), 171-187.

Bernard, H. R. (2011) Research Methods in Anthropology: Qualitative and Quantitative Approaches. 5th ed. Plymouth: Alta Mira Press.

Bernardo, M., Marimon, F., & del Mar Alonso-Almeida, M. (2012). Functional quality and hedonic quality: A study of the dimensions of e-service quality in online travel agencies. Information & Management, 49(7), 342-347.

Blumberg, B.F., Cooper, D.R. & Schindler, P.S., (2014). Business research methods. McGraw-hill education.

Chiappa, G. D. (2013). Internet versus travel agencies: The perception of different groups of Italian online buyers. Journal of Vacation Marketing, 19(1), 55-66.

Cohen, L., Manion, L., & Morrison, K. (2013). Research methods in education.

Csikszentmihalyi, M. & Larson, R., (2014). Validity and reliability of the experience-sampling method. In Flow and the foundations of positive psychology (pp. 35-54). Springer Netherlands.

Delport, C. S. L., & Roestenburg, W. J. H. (2011). Quantitative data-collection methods: questionnaires, checklists, structured observation and structured interview schedules. Research at Grass Roots for the Social Sciences and Human Service Professions Pretoria: Van Schaik Publishers, Fourth.

Guo, X., Ling, L., Dong, Y., & Liang, L. (2013). Cooperation contract in tourism supply chains: The optimal pricing strategy of hotels for cooperative third party strategic websites. Annals of Tourism Research, 41, 20-41.

Inversini, A., & Masiero, L. (2014). Selling rooms online: the use of social media and online travel agents. International Journal of Contemporary Hospitality Management, 26(2), 272-292.

Lien, C. H., Wen, M. J., Huang, L. C., & Wu, K. L. (2015). Online hotel booking: The effects of brand image, price, trust and value on purchase intentions. Asia Pacific Management Review, 20(4), 210-218.

Liu, J. N., & Zhang, E. Y. (2014). An investigation of factors affecting customer selection of online hotel booking channels. International Journal of Hospitality Management, 39, 71-83.

Mkansi, M., & Acheampong, E. A. (2012). Research philosophy debates and classifications: students’ dilemma. Electronic Journal of Business Research Methods, 10(2), 132-140.

Molina-Azor?n, J. F. (2011). The use and added value of mixed methods in management research. Journal of Mixed methods research, 5(1), 7-24.

Morales, T. (2017). Increasing Direct Booking in Hotels.

Ö?üt, H., & Onur Ta?, B. K. (2012). The influence of internet customer reviews on the online sales and prices in hotel industry. The Service Industries Journal, 32(2), 197-214.

Saunders, M. N. (2011). Research methods for business students, 5/e. Pearson Education India.

Sekaran, U., & Bougie, R. (2016). Research methods for business: A skill building approach. John Wiley & Sons.

Stangl, B., Inversini, A., & Schegg, R. (2016). Hotels’ dependency on online intermediaries and their chosen distribution channel portfolios: Three country insights. International Journal of Hospitality Management, 52, 87-96.

Taylor, S. J., Bogdan, R., & DeVault, M. (2015). Introduction to qualitative research methods: A guidebook and resource. John Wiley & Sons.

Toloie-Eshlaghy, A., Chitsaz, S., Karimian, L. and Charkhchi, R. (2011) A Classification of Qualitative Research Methods, Research Journal of International Studies, 20, 106-152.

Wang, L., Law, R., Guillet, B. D., Hung, K., & Fong, D. K. C. (2015). Impact of hotel website quality on online booking intentions: eTrust as a mediator. International Journal of Hospitality Management, 47, 108-115.

Wang, Y. S., Li, H. T., Li, C. R., & Zhang, D. Z. (2016). Factors affecting hotels' adoption of mobile reservation systems: A technology-organization-environment framework. Tourism Management, 53, 163-172.

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