Technological Innovation and Competitive Advantage in Tourism

This report delves into the critical role of technological innovation within the tourism and hospitality industry. It begins with an introduction to the concept of technological innovation and its significance in achieving competitive advantage, followed by a critical review of key theories such as technological determinism, social constructivism, and Porter's five forces model, analyzing their impact on the industry's structure and competitiveness. The report further examines the application of technology, including information and communication technology (ICT), in enhancing customer approach and operational efficiency within the tourism sector. It explores the division of key concepts like competitive advantage, value chain models and how they are influenced by technological advancements. The analysis extends to a critical discussion of the changing nature of the tourism industry, evaluating the impact of technology on its structure and the competitiveness of various tourism businesses. The report concludes by summarizing the key findings and the importance of technological innovation for the future of the tourism industry.

Technological
Innovation

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Critical Review of Key theories of technological innovation......................................................1
Technological development & Tourism......................................................................................3
Division of Key concepts.............................................................................................................5
Critical discussion of the changing nature of Tourism industry structure...................................5
Critical evaluation of competitiveness of the Tourism................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Technological innovation is an extended concept of innovation. Innovation is the primary
source of competitive advantage for organizations which derives the forward efficiency and
higher productivity along with the differentiation to full fill higher variety of needs.
This report will help in understanding about the Development of information and
communication technology which allow Tourism and hospitality industry in improving the
customer approach which leads to overall improved performance. The study will also make a
clear understanding about the technological innovation with the application of the theory and it
will also explore various models in order to identify the competitive advantage in the market.
Moreover, it will also help in making clear understanding about influence of technology on the
changing structure of Travel and tourism industry. Also it will helps in evaluating the impacts of
technology within the travel and tourism industry which leads to gain more competitive
advantage. It will provide the brief view about the semantics of connections which have
connected large number of people across the world together via social networking sites.
MAIN BODY
Critical Review of Key theories of technological innovation
Technological innovation can be termed as a production of the goods and services along
with the significant technological changes in products and their process in order to meet the
demands and needs of the customers.
There are various different theories of technology has been introduced in order to explain the
factors which shape the Technological innovation (Allaoui, Bourgault and Pellerin, 2019).
Theses theories leads to the impact of technology on society and culture. Today's theory of
technology points to the historical evidence that technological innovation often give rise to new
scientific fields. The history and foundation of the technology within the hospitality industry
ensures effective services along with the efficient Customer care services and this may be
categorised into three categories such as Technological determinism, social constructivism,
Critical theories of technology. Key theories of technological innovation leads to various
competitive advantage for the organization which can be described through the use of Porter's
five forces.
In addition to this, Michael Porter's five Competitive model has been a most influential
model which allows the organization to produce the effective strategies of the business. Porter's
1

five competitive forces are therefore are both highly independent with the other sub system in the
external environment. Porter's five forces is an analytical tool for testing the competitive
environment. There are five key index which helps in analysing the competition in the market
and this is used to examine the attractiveness of the market (Basnet and Aryal, 2018). A
technological change in the organization requires a business unit to understand the marketplace
and it also helps in analysing the external environment of the business.
The threats to new entrants
Travel and tourism industry usually requires low skilled employees and large amount of
resources in order to meet the demands of the customer. Financial barriers are generally low for
new entrants within the industry especially after the invention of the internet. Technological
advancement have increased the growth of the travel and tourism industry as it also includes the
online approach of the customer. Thus it helps in increasing the sales of the company and thus in
this way technology and innovation within the company has affected the growth and
sustainability for the long time. On the other hand, normally new entrants suffer from their cost
however they are the huge competition for the existing industries in the market. New entrants
also suffer from the limited number of suppliers which result in limited choices of destinations
(Charles, 2019). So new entrants are the one of the bigger challenges as with the growing
technological improvement, they can easily identify the choices of the customer according to the
new trend in the market.
The threats of substitute products
Substitute product choices of the travel and tourism industry are plentiful. As tourists can
go for self-driving tour instead of travel agent. As a GPS equipment and travel guide offered by
the internet and technology, there are various substitutes which may be a threat to the existing
tour and travelling industry.
The threat of competitive rivals
The company claims that the UK business decline significantly in 2011 as the profit
margin has been reduced to 25 percent from 4.1% to 3.1% . The tourism industry remains its
high competition, which not only results into the number of new entrants which result in reduced
customer purchasing power. The company generally foresees the uncertain economic
environment which continue the disruption in the input costs.
The bargaining power of suppliers
2

The suppliers for the travel agent mainly refers to hotels, transportation, attraction mega
events and so on. The sources of suppliers are various such as big organisation posses the great
power in negotiation with suppliers (Coccia, 2018). Technology also help the company in
identifying the effective suppliers and who seeks the long term cooperation so that the cost of the
suppliers can be lowered.
The bargaining power of customers
The customers are the main key to success and thus they bargaining power of the
customer is one of the important thin g for travel and tourism industry. Due to the increased
competition within the market, all the organizations are adopting various different types of
technologies to improve the services to the customer. So the development of the technology
allows the customer to compare the prices of tour and travel industries and thus it may change
the bargaining power of the customer. Nowadays, customer tend to be more informative as the
increased technology have helped them to gain more information about the tour and travel. So
delivering the effective and efficient services within the affordable cost is also considered as one
of the important threat to the travelling and tourism industries.
Technological development & Tourism
A few months ago, the Eurecat technology center put on the Forum Turis TIC in
Barcelona, where all talked about technologies making a mark on the industry. Technological
change and technological development is the overall process of invention, innovation and
diffusion or processes that have transformed the way to communicate with each other.
Information technology has played a important role in the hospitality and tourism industry over
the last decades. The development of the technology enables the people to create new things and
conversely many scientific endeavours are made possible by the technologies which assists
human in travelling to such places they could not previously reach. The technology has helped
the business in reducing the costs, enhancing the operational efficiency, improving the services
and enhanced customer experience (Dodgson, 2018). The integration of ICT in the tourism
industry is essential for the success for tourism enterprise. ICT facilitates an individual to access
the tourism products and destination from anywhere and at any time. Also, technology play
substantial role in achieving the economic growth by garnering economic means for consumers
to travel from one place to another (Technological Innovation in T&T, 2018).
3

Travel and Tourism was the pleasure or the business which includes the practices of
tourism, the business of attracting, accommodation and entertaining guests and business of
operating tours. Earlier travel and tourism has to suffer a strong economic slow down in the late
2000s recession between the second half of 2008 and the end of 2009. Gradually, travel and
tourism industries adopted innovation ideas to attract the customers and they started recovering
after the use of internet and employing the technology within the firm. As the travel and tourism
industries has become an important source of income for many regions and even entire country.
As per the Manila Declaration on world tourism of 1980, it has recognised its important as an
activity essential to the life of the nation because it directly impacts on the social, cultural,
educational and economic sector of national society and their international relations. Tourism
brings large amount of income into a local economy in the form of payment of goods and
services needed by tourist accounting (Hofmann, 2019). It also generates the opportunities for
the opportunities for employment in the service sector of the economy associated with tourism.
So in order to grow and sustain the travel and tourism industries for the long time, there is a rapid
need for industry to transform the ideas and innovate new process within the organization. So
internet have provided various ideas to enhance the customer interaction in order to meet the
demands which helps in maximising the sales and profitability of the firm. Nowadays, the world
has become much smaller and the potential to explore its surface much greater. However, for
most of the human history the ability to explore different countries around the globe was either
confined solely to the rich or used only for the purpose of conquest and necessity.
Technology is the only media and predictive intelligence resource exclusively dedicated
to helping both hotel and restaurant operators to better employ the technology to improve the
performance of the business. Also, advancement of technology have engaged the people towards
the excessive use of the social networking sites and internet in order to research on the potential
destination which allows them to confirm the bookings online. Meanwhile, augmentation and
contribution of air travel as a means of transporting tourist to different locations is an important
contribution of the technology to the tourism and travel industry (Isaac And et.al, 2019).
Technology have almost changed the way in which people usually travel in the form of
embedded devices and sensors which help the people in detecting the locations which are
connected inside the car and various travelling transports.
4

Division of Key concepts
Competitive advantage is the circumstance that puts a company in a favourable or
superior business position. This allows an organization to perform better then other industries in
the market in order to gain the competitive advantage. It ensures the tour and travel industry to
produce the goods and services of equal value at lower prices or same as the others. It allows the
customers to distinguish the products of the different industries according to the efficiency and
effectiveness of the product (LAODE, 2018). It is the ability of a firm to utilize its resources
effectively and managing to improve the customer value and position itself. Models of
competitive advantages are described below:
Value chain
A tourism value chain is simply defined as a system which describes the collaboration of
the private sector firms with government and civil society receives or access the resources as
inputs, add value through various processes. These value is added to the functioning of different
aspects such as planning, development, pricing, positioning, distribution ,marketing and
financing etc. This model is generally helpful in performance measurement of the company and
also suggests various ways to improve the customer and internal dimensions of the company via
use of technology within the business.
In addition to this, Value chain competitive advantage model helps in creating and
sustaining the superior performance of the company. The value chain framework has been u
utilised as a powerful and commanding analytical tool which helps in strategic planning of an
organization. It also allows the value creation and conception while minimising the costs or
expenses. It allows the managers to identify the key activities within the firm. It helps in
identifying the end market opportunities at the local, national and global level (Mohammed and
et.al., 2018). This allows in empowering the business at all the three levels and also helps in
supporting the markets.
Critical discussion of the changing nature of Tourism industry structure
The tour and travelling industry is changing its activities and operations on with the
evolution of the technology and its related concepts. Earlier the tour and travel industry provides
the services to the customers some of the industries do sustain in the market whereas it was not
possible for the new entrants to posses a rapid growth in this sector. The main services of the
tour and travelling industries are food and beverages, accommodations, entertainment,
5

transportation, travel services etc. earlier there was a less scope and opportunities for the growth
and it was quite difficult for the industries to sustain in the market for the long time. The main
reasons behind the lack of sustainability is lack of customer interaction, people were generally
not aware about the existence of such travelling industries in the market which resulted in
decreased sales and therefore minimised profitability.
In contrast, technology has turned the way industries normally deal with the customer.
Evolution of internet and advancement of technology have improved the main performance of
the business as well as it have advanced various opportunities to grow and sustain in this highly
competitive market (Perna, Custódio and Oliveira, 2018). Technology leads to the great changes
on the main structure and nature of the T&T industries. Technology has offered the online
marketing for the companies in order to increase the sales of the firm. Aslo, various social media
sites have have advanced the opportunities for the business to interact with the customers and
provide the effective customer services in order to attract them towards the specific tour and
travel industry.
Although, technology have transformed the way in which these industries offers the
services to the people and also internet have advanced various easy ways to get the feedback and
reviews of the customers regarding the services offered to them by the staff of the organization.
However, Google provides the automatic feedback forms on the mobiles of the users who have
visited the hotel or consumed the services of the specific industry. This helps in getting the
proper reviews and feedbacks from the side of customers. Technology helps the managers in
identifying the latest trend and requirements of the customers via internet and comments posted
by the clients. Also, it helps the company in analysing the competitive advantage and along with
the threats and weaknesses of the company. This allows the manager to overcome such issues
and helps them in developing a full pro of strategies that help in delivering the effective services
to the customers. One of very important thing which influence the T&T industries is it have
enhanced the customer interaction with the business and thus resulted in making loyal customers
of the company.
In addition to this, acquisition and merger are the two very important concept which
contributes towards the sustainability and growth of various small industries. Acquisition is
referred as the process in which the one firm can acquire another firm in case if the second one is
not creating the enough profits to survive in the market (Sahadeo, 2018). In this situation one
6

firm purchases another property in order to perform the acquisition and now both the business
can be handles by the owner of the first T&T. On the other hand, merger referred to the mutual
coordination and merging of the one industry into another in order to share overall profits and
loses with each other.
Critical evaluation of competitiveness of the Tourism
Tour and travelling industry is becoming more powerful in gaining the customer
advantages. As the technology has advanced various opportunities for the business to develop the
effective services with the customer. As the advancement of technology have offered the online
platform to sale the services of the company so many entrepreneurs have participated into T&T
in order to generate the profits and increase the sales of the firm. It resulted in huge competition
in the market and hence most of the industries survive if thy adopt the changes and new
technology (Wilson, 2018). However, most of the business often fails as they do not periodically
adopt changes within the industry.
On the other hand, technology have increased the competition all around the world which
encourage the T&T businesses to bring innovation and invention within their industries. The
companies who are timely adopting the innovating and bringing new concepts in the market have
more and better chances to survive in this competitive world whereas companies do not bring
changes fails to compete with the other growing industries.
CONCLUSION
Information technology has been around for a long, long time basically as long as people
have been around. Information technology has been around because there were always ways of
communicating through technology available at that point in time. This report has made a clear
understanding about the use of porter's five forces in order to identify the competitive advantage
of the travel and tourism industry. It has also provided the brief view about the competitive
advantage and various models which are used to analyse the competitive advantages such as
supply chain which helps in analysing the marketing demands and supply of the pro duct and
services within the tour and travel industries. It has developed a complete knowledge as
technology has transformed the way people earlier used to travel to the different destinations.
7

REFERENCES
Books and Journals
Allaoui, S., Bourgault, M. and Pellerin, R., 2019. Business transformation frameworks:
Comparison and industrial adaptation. Journal of Enterprise Transformation. pp.1-28.
Basnet, B. and Aryal, S., 2018. An Empirical Study on External Environmental factors
influencing Nepalese Travel & Tour Business (Master's thesis, Nord universitet).
Charles, D., 2019. Enhancing and Capturing More Value from the Caribbean Community’s
Value Chains. Cambridge Scholars Publishing.
Coccia, M., 2018. Theorem of not independence of any technological innovation.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge.
Hofmann, B., 2019. Technological Arguing: How Innovation and Business Practices Shape
International Environmental Regulation.
Isaac, W.A. And et.al, 2019. Sustainable Climate-Smart Agricultural Solutions to Improve Food
and Nutrition Security in Trinidad and Tobago. In Development, Political, and Economic
Difficulties in the Caribbean (pp. 167-195). Palgrave Macmillan, Cham.
LAODE, M., 2018. THE SUSTAINABILITY OF TOURISM COMPETITIVENESS IN
TERNATE. Journal of Life Economics. 5(4). pp.75-96.
Mohammed, M. and et.al., 2018. Mango value chain in Trinidad and Tobago, Guyana and St.
Lucia: Measuring and reducing postharvest losses. Journal of Postharvest
Technology. 6(2). pp.1-13.
Perna, F., Custódio, M.J. and Oliveira, V., 2018. Tourism destination competitiveness: an
application model for the south of Portugal versus the Mediterranean region of Spain:
COMPETITIVTOUR. Tourism & Management Studies. 14(1). pp.19-29.
Sahadeo, C., 2018. Business Planning. In Financial Literacy and Money Script (pp. 231-248).
Palgrave Macmillan, Cham.
Wilson, S., 2018. Assessing export competitiveness of food manufacturers in
SIDS. Competitiveness Review: An International Business Journal. 28(4). pp.408-432.
Online
8

Technological Innovation in T&T. 2018. [online]. Available
through:<http://shodhganga.inflibnet.ac.in/bitstream/10603/160616/11/11_ruhi-economics-
chapter%205.pdf>
9

10

11

12