The emergence of the Internet has completely transformed the global economy, namely the relations among suppliers and between them and their customers, optimising management, Business-to-Business (B2B) cooperation and production practices (Castells, 2001). Nowadays, ICTs continue to have a profound effect on the economies and societies where they are used (Huang & Sun, 2016).
Regarding the evolution of the Internet in terms of its users, the worldwide growth was exponential. Hence, according to the Internet World Stats (2019), by mid-19, more than 4.5 billion people (54% of the world population) were internet users (Table 1.1), representing a 1,157% increase since the year 2000. As represented in Table 1.1, when it comes to the distribution of internet users across the globe, in mid-2019 Asia accounted for more than half of users worldwide (50.7%), distantly followed by Europe (16%), Africa (11.5%), Latin America and the Caribbean (10%), North America (7.2%), Middle East (3.9%) and Oceania (0.6%). However, as illustrated in Table 1.1, the penetration rate of internet usage when confronted with the overall population provides a very different scenario, with North America ranking first (89.4%), closely followed by Europe (87.7%). The remaining world regions held considerably lower penetration rates, being Africa the region with the lowest rate (39.6%). In addition, according to Statista’s (2019) e-travel Report 2019, in 2018, 20% of internet users had regular access to broadband internet connections, while 44.9% of the world’s population used smartphones regularly, which explains the overwhelming growth of tourism-related booking via mobile channels.
Table 1.1 – World Internet usage, in mid-2019
As far as the use of the Internet in e-commerce is concerned, the total values of transactions (both domestic and international) rose from US$16 trillion in 2015 to US in 2015, representing a 56% increase in only two years (World Trade Organisation, 2018). As depicted in Figure 1.1, in 2015, the three most representative national markets vis-à-vis the total value of e-commerce transactions were the United States (28% of the total value), followed by Japan (10%) and China (8%) (World Trade Organisation, 2018).
Figure 1.1 - Distribution of world’s e-commerce transactions by value, in 2015
Source: World Trade Organisation (2018)
According to Öörni (2004), electronic markets substantially benefit from ICTs such as the Internet, since product information can be disseminated with a higher speed, quantity and quality. Due to the nature of the tourism sector, which is highly intangible and also demands suppliers to promote their products to potential customers at a global scale, tourism was, undoubtedly, one of those sectors which were more dramatically transformed by the Internet shortly after its advent (World Tourism Organisation Business Council, 1999). In fact, tourism is perceived as a leading sector and even as a driver of Business-to-Consumer (B2C) e-commerce (Peng & Lai, 2014; Werther and Klein, 1999).
Hence, the tourism sector seems to be one of the most digitalised in the world (European Commission, 2017). An evidence of that is the European Commission’s 2017 Digital Progress Report, which measured a digital intensity ranking of sectors based on the share of enterprises in a given sector that use at least seven out of 12 digital technologies (European Commission, 2017). It seems noteworthy that the travel services’ sector was the most digitalised, alongside computer programming and ahead of telecommunications, two
intrinsically technological sectors (Figure 1.2). As far as the accommodation sector is concerned, it ranked sixth, behind the three above-mentioned and two other inherently technological sectors: media publishing and recording and repair of ICT equipment (European Commission, 2017).
Figure 1.2 - Digital intensity of the European Union’s economic sectors, in 2017
Source: European Commission (2017)
The online travel market comprises the distribution of online mobility services (flights, ride hailing, railway and bus transportation, car rentals), as well as online travel bookings of package holidays and accommodation stays (Jacobs, Klein, Holland, & Benning, 2017). In 2018 the online travel market had global revenues of US$757 billion and is expected to garner US$1.064 billion by 2023, with an average annual growth of 7.1% (Statista, 2019). The Unites States are the leading national online travel market, with a total revenue of US$217 billion in 2018 (Statista, 2019). It is noteworthy that the three major players in the US online travel market are all OTAs, namely Expedia, the Priceline Group, and Airbnb
(Statista, 2019). Europe was the second world region with the highest revenues (US$200.5 billion), followed by China, which was the second largest national market worldwide, with a total revenue of US$ 156.6 billion (Statista, 2019). The Chinese market is likely to overtake Europe in 2023, with an estimated annual average growth of 10.7%, while the European market is expected to grow 5.8% per year, on average (Statista, 2019).
The above-mentioned data demonstrate that there was an increasing adoption of technologies since the advent of the Internet, which may have opened a whole new range of possibilities but also created challenges to individual tourism suppliers and to destinations as a whole. According to Buhalis (2003) the Internet brought some key innovations, such as “melting” down geographical barriers in both B2B and B2C perspectives, which enhanced the capacity of tourism suppliers to act at a global level with much fewer financial costs, and also allowed visitors to become more informed, autonomous and demanding. However, given that tourism is a multidisciplinary sector composed by many different actors ranging from national airlines to family-managed restaurants, there is a considerable gap regarding the use of the Internet among the various tourism subsectors (Maurer, 2015; Minghetti & Buhalis, 2010). Egger and Buhalis (2011) state that even in the same subsector there might be considerable differences in the level of Internet usage and e-readiness.
In such a volatile scenario it is not an easy task for the academia and for the strategic players within the sector to keep up with new trends in terms of e-tourism. However, perhaps more than ever, to gain competitiveness, it is essential to analyse how Internet affects and will affect the tourism industry in the future.