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E-Commerce in the Hospitality Industry

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  • 0:02 What Is E-Commerce?
  • 0:52 Examples in Hospitality
  • 2:22 Challenges of E-Commerce
  • 3:29 Benefits of E-Commerce
  • 4:15 Lesson Summary
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Lesson Transcript
Instructor: Savannah Samoszuk

Savannah has over eight years of hotel management experience and has a master's degree in leadership.

Technology has changed the way things are done in several industries. This lesson takes a look at the impact of E-commerce specifically on the hospitality industry.

What Is E-Commerce?

The hospitality industry quickly learned that the Internet is a valuable tool. No longer are the days when customers call to make reservations over the phone. Most people book reservations from their smartphone or computer, and use multiple websites when making purchases.

E-commerce is the buying and selling of products and services over the Internet. Due to the increase in technology use, the hospitality industry has embraced e-commerce. Most hospitality businesses have an entire department devoted just to e-commerce. Since there are so many websites that travelers can use when planning a trip, businesses need to be aware of all the options in order to capitalize on bookings. We'll take a look at examples of e-commerce in the hospitality industry, as well as challenges and benefits.

Examples in Hospitality

Peggy is getting ready to book her vacation to Hawaii for next summer. She starts doing research on airfare, hotel accommodations, restaurants, and activities to do while she's there. She utilizes the Internet in order to search for each of these items for her trip and then eventually books everything online. As you can see, there are a few different components to hospitality e-commerce.

First, hospitality businesses want to make sure they have a user friendly website for travelers doing research and making reservations. If people are coming to the website but not booking, then the e-commerce team would need to make changes to improve their conversion rate.

Next, businesses need to attract people to their website. A big piece of e-commerce is using search engines. Have you ever conducted an Internet search and wondered how certain businesses get on the first page? Businesses have to manage their online presence and may even pay for search positions in order to make sure that people visit their website. For example, if a hotel in Hawaii paid to come up under search terms such as 'Hawaii vacation,' or 'Hawaii hotels,' then it would help direct travelers like Peggy to their website.

Lastly, businesses can use social media to help with their e-commerce. People are on social media more than ever now. Hotels, airlines, and restaurants can capitalize on this new technology by being able to directly connect with their customers and hopefully turn those connections into revenue.

Challenges of E-Commerce

There are two main challenges that e-commerce presents in the hospitality industry. First, there are an abundance of websites that travelers can use when booking. For example, when booking a hotel, third party websites, such as Expedia, Travelocity, and Priceline, offer more options for people to book reservations. The same hotel room is on multiple websites at different prices. This makes it more difficult for hotels to receive direct bookings. In addition, businesses are competing for first page positions on search engines and paying to be at the top. This competition makes it more challenging for businesses to be found on the Internet.

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