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The need to web-enable a Food and Hotel Industry

-- Ramesh B

The theme behind web-enabling a Food and Hotel Industry is to provide hotel management companies with the tools they need to compete more effectively and to grow their businesses successfully.

With each business big or small getting their operations online just to make their presence felt with the rest of the Internet world the hotel industry is no exception. The analysts rightly say that the Internet world is rapidly growing and is becoming the lingo of chief resource for many manufacturers and business owners.

The hotel industry, which is known for its patchy supply chain and bungling circulation processes, has the latent to improve efficiency, inventory, audit control and to diminish infrastructure and operation costs by web-enabling their business online.

Web-enabling their business will consent to the hotel industry to be better equipped to handle business desires, keeping in mind the buyers, suppliers, competitors and prospective partners.

Web enabling is quickly becoming a part of business growth. For hotel management companies typically managing more than one hotel and franchise the benefits [of going online] could be huge. The need to find ways to manage the purchasing and brand requirements for each hotel and franchise, an online system with "smart" catalogs that limit, control and/or manage the information that the owner can view will ensure that the property is making purchases within their standards. Experts predict that Web-enabled businesses will encounter significant cost returns and visibility.

Web enabling empowers the buyer to place all orders online. This not only gives the buyer the information about the product it gives them time and also the cost of buying will reduce, creating higher margins for the supplier too. The warehouses would only need to be staffed with people in charge of packing and shipping, which would be much cheaper than door-to-door sales and account management. Overall the cost of doing business will decrease to a great degree, which is very critical to the hotel industry.

As experts say that within a couple of years, 70 percent of all buying and selling will take place through the web, and the hotel industry is among the many that will benefit from its streamlined and cost-effective practices.

Chain of Hotel being very patchy in their decisions processes and being circulated does not uphold a customary of their own when it come to matters like towels, pillows, bedding, soaps etc which can lead to anecdotal experiences for travelers. If purchasing is done online, hotels can advocate brand customary and get a better product for a lower price because of collective purchasing clout.

What will the hotel or food industry gain by web enabling their operations?

  • Visibility - Web enabling your operations gives greater presence as an organization. Establishing an Internet presence transforms the way a company's brand is perceived. Products, services offered are now presented over the net and this provides a whole range of opportunities to the organization. While selling products online and becoming a key player in the e-marketplace helps target new customers, services offered over the net make it easier for the same customers to contact you, make inquiries and establish a personal relationship with you.
  • Productivity - Another predominant means of leveraging the Web for distribution are the online catalogs. Apart from acting as a sales channel and a procurement and sourcing tool, online ordering helps integrate an enterprise's order management system with the web storefront. Back office systems integrated with front-end order entry comprise the truly enabled e-commerce success store of today.
  • Information Availability - Consumers can access the same information online as most travel agents. In examining Web performance metrics, 46 percent of consumers get their primary information for the Web site and have used a Web site to gather information on the availability of rooms during travel and booking online. Consumers feel that prices quoted on the Internet provide good value.
  • Adaptability - Depending on the changing trends in the industry and consumers surveys, If a company wants to create a new hotel or give new look, then all it has to do is get onto the web and access a shopping list of items needed to build, open and operate a hotel. Apart from preserving the standard of the brand if purchasing is done online, hotels can advocate brand customary and get a better product for a lower price because of collective purchasing clout.
  • Convenience - Online purchases can be done at any time and from any place where there is a connection and delivery.

Changing Trends and Analysis

  • Travel Leads Online Sales - Travel is the single largest category of all online purchases. Between January and November 2000, $6.9 billion airline tickets were bought online, $3.5 billion hotel rooms were booked online, and $1.8 billion cars were rented online by both business and leisure travelers, according to a joint survey of the National Retail Federation and Forrester. In descending order, the biggest online purchases were airline tickets, computer hardware, hotel rooms, books, apparel, software, music, consumer electronics, health and beauty aids, toys and games. Fewer travelers are renting cars online, because fewer people rent cars when they book air and hotel reservations, and some car rental Web sites have not been well designed, says Henry Harteveldt, senior travel analyst with Forrester Research.
    When the two travel segments airlines and hotels are combined, their online revenue is almost 2.5 times larger than the next largest category of online sales, which is computer hardware at approximately $695 million.

In 2000, airlines saw between seven and eight percent of their bookings coming over the Internet, up from five percent in 1999. Hotels generally receive more than two percent of overall bookings online.

Online consumers are described as either "bookers" or "lookers." Lookers research online and then buy off-line, whereas bookers will research and buy online. As a result, bookers are a more valued consumer that online businesses want to attract.

A survey in 2000 by Forrester of bookers shows that:

  • 76 percent researched and bought airline tickets on the Web; 16 percent only researched airline rates;
  • 59 percent researched and bought hotel rooms; 24 percent only researched hotel rates, and
  • 38 percent researched and booked rental cars; 22 percent only researched rental cars.
    As more mainstream consumers come online, travel companies will want to consider the consumers' choice of Internet service providers when developing online promotions. For example, about 45 percent of Earthlink subscribers are travel bookers, which means that they research and buy travel online, and 20 percent are just lookers. In comparison, 30 percent of AOL subscribers are lookers, and 38 percent are bookers, according to Forrester.
  • Hotels Sell Online - Although airline tickets continued to lead in travel purchases made online in 2000, almost 6 in 10 travel bookers were reserving hotel rooms, Harteveldt notes. "This is very important for the lodging industry because many of the hotel companies have been late in the game in terms of developing really good Web sites," he says. Even as online hotel sales start to catch up with airlines, Forrester estimates that online purchases will account for only 6 percent of hotel revenue by 2004, which is less than what airlines have already achieved.

"What we have found is that consumers' interest has often outpaced companies' abilities to sell online," Hartveldt says. During the mid-to-late 1990s, hotel companies "did not expect or react to the anticipated consumer demand to move to the Internet as rapidly as they [consumers] did," says Harteveldt. "They [hotels] really missed the boat because they had not developed easy booking engines or have easily accessible Web sites," Harteveldt says. For example, Marriott, before 1999, used its Web site primarily for intranet communication, such as e-mail, and distributing RFPs and corporate contracts.

When a hotel can shift its customers from booking from a traditional phone reservation center to an online reservation site, it can reduce its booking costs from more than $20 to under $5 per room, Harteveldt notes.

Harteveldt believes that the hotel industry has opportunities to succeed in a cooling economy where airlines do not. When consumers cut back on their leisure travel expenditures, they may vacation closer to home, and drive instead of fly. They will, however, still stay at a resort or city property.

The Internet provides hotels with enormous flexibility to attract business in real time. Hotels won't be able to capitalize upon opportunities without a vision, a well-designed Web site, and more creativity in their marketing promotions on the Web site, Harteveldt says. Hotels need to provide as much information as they can about their products, and they should have an easy to understand, rigidly enforced security policy for booking. If hotels harness their customer information to build brand loyalty and site loyalty, they will generate revenues for their properties, Harteveldt says.

Since early 1999, hotel corporations, led by Hilton, Marriott, and Holiday Inn, have recognized how consumers want to buy, and they have enhanced their Web sites, The combination of web-enablement and high-speed Internet access will allow the hotel industry to deliver services such as online reservations, room requests and even a virtual room tour that will create a better experience for the traveler.

The transformation to online services from more traditional means of advertising and business operations, say experts, will provide hotel owners and managers with more streamlined operations, resulting in fewer operational costs, better service offerings, happier patrons and more productive business relationships.

Many Hotel and Food chains have already caught on to the buzz surrounding the Web. At Stylus, a company specializing in e-business solutions gives you this power and makes your dreams a reality.

In addition to Web Enabling the Food and Hotel Industry, we also offer other services like Business Process Engineering, Porting Legacy applications to the web and Enterprise Application Integration. Please contact us here for more details.


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