Letter the reservation method that leisure tourists from

Letter of transmittal

George Tanasijevich

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President and CEO of Marina Bay Sands Singapore

10 Bayfront Avenue, 018956

 

Dear Mr. Tanasijevich,

I attach herewith a
proposal in support of a research program entitled “Booking preference of
luxury hotel in Singapore for Jakarta leisure traveler” to be conducted under
my management.

I am requesting for
your approval, time and support during the research program which will take 400
work hours over a 4 month period.

The main purpose of
this research is to get to know which distribution channel is preferred by
Jakarta leisure traveler in recent years.

Thank you for your attention
and I am hoping to be working with you in the future.

If you have any further
questions, please contact me at 91856542.

Sincerely,

 

Tamariska N.T.

18 January 2018

Proposal

Background

Indonesia is a country
that consists of thousands of islands in Southeast Asia. They have been the
major contributor of international tourists for Singapore. In the year of 2017,
Indonesia contributed 17.2% of the international tourist arrival of Singapore.
This number has increased by 4% (Singapore Business Review, 2017). Jakarta is
the capital city of Indonesia. With 9.806 million populations, it is the most
populated city in the whole country. With that, huge part of the Indonesian
tourists originated from Jakarta.

This research will
focus on the reservation method that leisure tourists from Jakarta prefer when
booking their room in Singapore. The importance of distribution channels need
to be reminded as it is a crucial step in controlling the company’s expenses
and revenue. Knowing the preference of one of Singapore’s biggest tourist
generator may benefit the company heavily. It may even be an advantage to know
the solid and concrete information through the data gathered from the research.

There is a lot of
luxury hotels scattered throughout Singapore. The business is among the most
competitive in terms of the preference of Jakarta leisure travelers. Most
tourists from Jakarta still use the service of travel agents and direct
booking. But as the internet technology keeps on improving, the amount of
guests booking through OTAs increased. The internet culture has made some
changes in people’s way of thinking and point of view. In recent years, more
people are picking up the knowledge and save their time by using websites like
Trivago and Agoda.

Significance

The topic came about
when the Singapore Tourism Board (STB) released the international tourist
arrival data for 2017. According to Department of Statistics Singapore (2018),
the average length of stay is about 3.5 days. Most of them if not all, will
stay in a hotel in Singapore and make their hotel reservation through a
distribution channel. Some distribution channel will earn more than others and
have more customers utilizing their services. This observation sparks my
curiosity in digging deeper into the tourist behavior in choosing a reservation
method to book their rooms.

By knowing the
preferences of the market, the company will waste less time and resources doing
the wrong thing. The information gathered can be used to make future plans and
strategies. When executed properly, it can boost the company’s revenue as they
attract guests in the right way. With my help in figuring out the preferred
reservation method, the company won’t have to spend as much money, time, and
energy in figuring out the answer themselves.

Scope

To narrow down the
demography aspect of the research, I have decided to give survey strictly to
residents of Jakarta. This means it exclude tourists that merely depart from
Jakarta. The type of traveler that the research will focus on is those tourists
that visit Singapore strictly for leisure purposes. Another set of boundary is
the type of hotel that they book for. The survey targets guests of local luxury
hotels in Singapore. Luxury hotels are those hotels with 4 or 5 star rating.

The research will be
done under a time frame of 400 work hours over 4 months. This will researched
by one person. Information obtained must be from an academic journal, research
findings, book, or government websites. Only information from year 2000
on-wards will be deemed relevant for the purpose of informational accuracy.

Type and purpose of the research

The type of research
that will be done is a comparative and causal research. This means the research
will focus on the nature and extent of cause-and-effect relationship (Research
Methodology, 2017) while finding the similarities and differences between the
distribution channels by comparing them. I will be gathering information about
each relevant distribution channel and reservation method by conducting a
survey. Comparing the recent data and putting them against the older data about
the booking pattern may give the company a better picture of how the
advancements in technology have altered customer behavior.

The research will show
the extent in which the current technology has towards customer’s perception of
the traditional and online booking agents. From the information obtained, the
hotel can then process the data and decide whether they need to change their
strategy or choice of distribution channel. The purpose of this research is to
give closure on which distribution channel has proven to be the most preferred
by customers and contribute the most profit for the hotel. This helps in having
a better understanding of the market behavior and serving them quality service that
they expect from the hotel while attracting more potential customers.

Problem statement and objectives

There have been a lot
of changes in the tourism industry as the technology is always evolving. But to
what extent has this advancement gone in terms of customers’ perception towards
reservation methods? The decision also differs from one type of tourist and
hotel to another. The problem statement is to identify which distribution
channel is utilized most by Jakarta leisure travelers in the recent years.

Objectives:

·        
To compare the
usage percentage of the different reservation methods

·        
To relate the
change in technology to customers’ behavior when booking a room

·        
To predict which
distribution channel benefits the hotel most

Conclusion

The main cause of this
research is the increasing amount of Indonesian tourists coming into Singapore
and the changes in technology in recent years. Due to these variables, the
booking patterns of tourists have changed simultaneously. This research will
dig more into the extent of the change and help the hotel in deciding what to
do next. A future plan might need to be developed to overcome any possible
obstacle. Furthermore, catching up with the current trend can increase the
market share and room sales as a big portion of the customer follows these
trends. By conducting this research, we are able to see the numerical and statistical
prove of a possible threat or opportunity for the company in the near future.

 

 

Literature Review

Reservation method

The rapid growth of
tourism industry is promoted by the accessibility of information and
technological advancements with the help of the internet (Buhalis, 2004).
Guests tend to have their own reasons when booking through a distribution
channel. The facilities provided, price, room availability, and information
contributing to their decision are crucial considerations in choosing a booking
channel. In order to increase the efficiency of products and services sales,
hotel has adopted multi-channel distribution. Having a huge variety and range
of options for the customer will make the hotel more accessible and convenient.
Providing the appropriate and sufficient amount of information will be
beneficial for the customer to get to know the hotel better as well as promote/
advertise their facilities and services.

Customers’ perceived risks
and value affects their decision making process as they will put their
expectation against the possible product that they will receive. Before
deciding on the distribution channel in which guests will book their rooms,
first they must obtain some information about the hotel and the channels. The
lack of sufficient knowledge about the important particulars may raise uncertainty
and doubt in the mind of guests. This might lead to guests not making a
decision that suit them price-wise and time-wise as they are not as
well-informed as they could. There are two types of research that the client
can go through to avoid this situation. They are internal information search
and external information search.

The source of
information may come from the guests’ personal past experience; this is also called
an internal search (Money & Crotts, 2003). On the other hand, external
search requires the guests to acquire information from sources other than their
own memory (Lee & Lee, 2005). It is practiced when the information obtained
from the internal information research is not enough/ the guest is not
satisfied with Hotel websites, travel agencies, and online booking sites can
provide some closure about the hotel. According to Roberts and Mason (2004),
there will always be doubt and fear in the mind of guests during the booking
processes. The main aim of consulting with a distribution channel is to
increase the clients’ understanding about the booking process and the
organization itself.

Different types of
tourists may differ in their perception towards the accessibility and ease of
booking through the different distribution channels. Travelers of different
backgrounds may also affect their decisions. Some people prefer the traditional
methods of booking rooms in hotels and some people react to the influence of
internet and take advantage of the new facilities offered. Most firms put the
customer’s perception into consideration while neglecting the supplier’s view
on the matter as mentioned by Zare, S. (2015). Suppliers are just as important when
it comes to the existence and sustainability of the hotel industry. Company
should start putting their shareholders’ thoughts into mind when contemplating
a new strategy for any future plans.

Hotel-owned Websites/Direct
Booking

More hotels are taking
the opportunity to use their own websites as a booking channel. This will decrease
the expenses towards agency commission (Crnojevac, 2010). Hotels must not
neglect their own websites and direct online marketing when choosing
appropriate booking channels. As the internet culture keeps on evolving, hotels
must not be content with their current position. Most of them pick up the trend
and introduced their own websites for the sake of retaining and increasing
their market share.

Some people prefer the
convenience of making direct booking with the hotel or even perform walk-in. In
some cases, the hotel website will offer discounts for a specific credit card
payment or for a certain event. But it is widely known that most people choose
to book their rooms via OTA and travel agents rather than the hotel’s website.
More effort to promote the hotel-owned website is needed in order to be able to
boost sales and booking from the website. Having a competent and creative
marketing team may help in promoting the hotel’s technological contributions.

Establishing and
managing a hotel website takes up time and might be pricey. A web designer and
marketing strategist must be employed to achieve the desired website that
embodies the hotel’s value and personality accurately. Guests booking through
the hotel reservation system will be given a confirmation number and be routed
to the individual hotels (Burns, 2016). Some hotel website only features
information about the hotel and others offer the facility of booking a room
reservation.

Traditional travel
agents

A lot of people still
rely on the counselling services provided by travel agents. High search cost
can be avoided when a personnel is helping with the guests’ enquiries (Mayr,
2009). They are the entities that traditionally mediate the customers and
suppliers. But as the OTA is taking over their job function, they will be
forced to embrace the technological advancements. This is also called as
Cybermediaries. Those travel agents that take the risk in order to excel and
remain relevant in the current industry will surpass the performance of travel
agencies that refuse to change or improve.

Nowadays, more and more
people feel the need to save their time. By having to visit or make a phone
call to a travel agency they waste their time and energy. Some travel agents
may even charge the guests with consultation fee or service tax once they book
through the agency. Their loyal customers are usually the big spenders. They
will usually return year after year (Marsh, 1994).

Those people who still
choose to have the assistance of a travel agent usually look for the personal
counselling and face-to-face contact. They try to materialize the intangible
product through their marketing communication skill. This is an added value
that other distribution channels may not provide. Some people may also prefer
direct human consultation and interaction as well as the service they offer to
help. The convenience of not booking your own room is the purpose and reason
for a travel agency’s existence.

 

Online Travel Agents
(OTA)

Thanks to the internet,
OTA has provided the industry with a new way of communicating the customers’
wants and the hotels’ values. They provide a direct contact with the potential
customers and brings down the selling price by decreasing the costs of services
and time spent (Heung, 2003). Habit is one of the factors that may alter the
effect of trust, attitude, and commitment on the intention of booking hotel
online (Agag, 2016). When an action has become a habit, it will be harder for
external forces to alter it. This may work against OTAs as some people have
made traditional booking method a habitual action.

Through this
advancement, the industry is facing some challenges as well as benefits. They
have gained importance of the past decade as it opens up new revenue growth
opportunities. As long as there are rooms available in the hotel, customers are
able to book the room through OTA. But these third-party websites usually sell
the room at a much lower price or huge amount of discounts. Furthermore, the
hotel must pay commission to the OTA (Line & Runyan, 2012). This may hinder
the hotel from selling a large amount of rooms through third-party websites (Morosan & Jeong,
2008).

There is an increasing
number of travelers that do their research and bookings through the internet
before travelling (Kim & Lee, 2004). OTA has a strong advertising power and
sometimes even foreshadow traditional travel agencies and hotel-owned websites
due to their low price and fast services. Internet has provided accessibility
and flexibility when it comes to planning and obtaining information. It only
takes you few clicks to know about the hotel and make a booking reservation.
They can easily compare the features and price of the room by opening multiple
tabs.

According to a
research, about 32% of the hotel revenue is generated through online bookings
in 2013. It has become easier for technologically savvy customers to find the
best price available in the market by browsing through the internet. Some price
sensitive customers are hard to please and attract as they have high expectations
for rooms with low prices. They have developed a deal-seeking behavior and tend
to be pickier. Guests will compare the deal between one site and another to
find the best rate in the market at that particular time of booking (Jiang,
2003).

 

 

References

 

Agag,
G. and El-Masry, A.  (2016),
“Understanding the determinants of hotel booking intentions and moderating role
of habit”, International Journal of
Hospitality Management, Vol. 54, pp. 52-67.

 

Buhalis,
D. (2004), “e-Airlines: strategic and tactical use of ICTS in the airline
industry”, Information & Management, Vol. 51 No. 7, pp. 805–825.

 

Burns, J. and Burns, J. (2016),
“A Web bookings workbook: how to get your share”, Hospitality Technology Consulting, available at: http://www.burns-htc.com/articles/a-web-bookings-workbook-how-to-get-your-share.html Accessed on 16
January 2018

 

Chang,
C. F. and Jang, S. C. (2006), “The effects of perceived price and brand image
on value and purchase intention: Leisure traveler’s attitudes toward online
hotel booking”, Journal of Hospitality
& Leisure Marketing, Vol. 15 No. 3, pp. 49-51.

 

Crnojevac, I. H., Guci?, J. and Karlov?an, S. (2010), “eTourism:
A comparison of online and offline bookings and the importance of hotel
attributes”, Journal of Information and
Organizational Science, Vol. 34 No. 1, pp. 
        

 

Department of
Statistics Singapore (2018), “International visitor arrivals by length of stay,
monthly”, available at:  http://www.tablebuilder.singstat.gov.sg/publicfacing/createDataTable.action?refId=14884 Accessed on 15 January 2018

 

Heung,
V.C.S., (2003), “Internet usage by international travellers: reasons and

Barriers”,
Int. J. Contemp. Hospitality Manage.
Vol. 15 No. 7, pp. 370–378.

 

Jiang, P. (2003), “Understanding customers’ intention to seek for a better deal in electronic marketplace: The
role of tolerance for sacrifice gap”, Journal
of Internet Commerce, Vol. 2 No. 3, pp. 39–63.

 

Kim, W. G. and Lee, H. Y. (2004), “Comparison of web service
quality between online travel agencies and online travel suppliers” Journal
of Travel & Tourism Marketing, Vol. 17 No. 2-3, pp. 105-116.

 

Lee,
B., and Lee, W. (2005), “Information search on the Internet: A causal model”,
In Y. Gao (Ed.), Web systems design and online consumer behavior (pp.
19–42),

Hershey,
PA: Idea Group Publishing.

 

Lee, C.
H. and Cranage, D. A. (2010), “Customer uncertainty dimensions and online
information search in the context of hotel booking channel”, Journal of Hospitality Marketing &
Management, Vol. 19, pp. 397-420.

 

Line, N.
D. and Runyan, R. C. (2012), “Hospitality marketing research: Recent trends and
future directions”, International Journal
of Hospitality Management, Vol. 31 No. 2, pp. 477–488.

 

Mason,
D. D. M. and Roberts, E. (2004), “Guest perceptions and uncertainty: A study of
the hotel booking process”, International
Journal of Hospitality & Tourism Administration, Vol. 5 No. 3, pp.
49-51.

 

Mayr,
T. and Zins, A. H. (2009), “Acceptance of Online vs. Traditional Travel
Agencies”, Anatolia: An International
Journal of Tourism and Hospitality Research, Vol. 20 No. 1, pp. 164-177.

 

Money,
B. R. and Crotts, J. C. (2003), “The effect of uncertainty avoidance on
information search, planning and purchases of international travel vacations”, Tourism
Management, Vol. 24 No.
1, pp. 191–202.

 

Morosan,
C. and Jeong, M. (2008), “Users’ perceptions of two types of hotel reservation
web sites” International Journal of
Hospitality Management, Vol. 27, pp. 284–292.

 

Research Methodology
(2017), “Causal Research (Explanatory research)”, available at: https://research-methodology.net/causal-research/ Accessed on 19 January 2018

 

Siebenaler, T. C. and
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Indonesia”, available at:
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Wonderful Indonesia
(2018), “Jakarta”, available at: http://www.indonesia.travel/us/en/destinations/java/dki-jakarta Accessed on 18 January 2018

Zare, S.
and Chukwunonso, F. (2015), “How travel agencies can differentiate themselves
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