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social network service and how it is changing the travel industry.

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  1. 1. SOCIAL NETWORK SERVICE<br />Technology has changed the way industries conduct business and tourism industry is no exception. This is very clearly proven, when motor vehicles and railways was introduced it led to the development of mass travel as it eased the problem of mass transportation. Also with the introduction of airways, people could travel to any part of the world. It eventually led to international tourism. In the same way social network service(SNS) are also changing the way in which people use and engage with the internet and with each other for travel reasons, which is based on Web 2.0. With the advent of social network service(SNS) there has been a huge change in the way tourist plan their travel and also the way tourism industries conduct their businesses. It is leading to smart travel. With the rise of SNS globally, it is evident from the fact that globally there has been a sharp increase in the use of SNS. According to reports Korea ranks fourth in terms of percentage use of social network service after the US and Poland, followed by England. Facebook also has more visitors than google in the US. This shows that the use of social network service is more concentrated by the developed nations. However developing countries like Indonesia and Malaysia are not far behind Tourism industries have also realized the change in the shift of technology and are using social network service in their business model. Here we need to understand two things, one is social network service and the other one is tourism industry. After having understood the two concepts, then can we understand the effects of social network service on tourism industries and how they are responding to the changes. <br />WHAT IS SOCIAL NETWORK SERVICE?<br />Travel industry if often the front runner as an industry with things like technology. While the number of people using social network service has increased so has the number of service providers increased. Before we go any further we need to understand the concept of social network service to better understand the working and the effects that it has brought with it. Especially how it has been changing the way tourism industries are doing business and also the tourist's reaction to such service. A social network service can be simply understood as online service, platform or site that focuses on building and reflecting of social networks among people, who share common interests. Most social network service are web based and provide means <br />Boyd & Ellison (2007) defined social network service as" social networking service can be broadly defined as internet or mobile based social spaces designed to facilitate communication, collaboration and content sharing across networks of contacts." <br />The online users are just not using but also providing content. Another recent phenomenon is the mobile social networking. Also today many social network sites, for example myspace and twitter, offer mobile phone services of their services, allowing members to interact and share content with their friends via their phones. Today an increasing number of people with smart phones are using the SNS through their phones. the share of mobile social network service is growing and becoming increasingly important for industries. It is being used as engagement tool by travel industries.<br />However this report will be focusing more on social networking sites like facebook and twitter and how travel industry is using them. <br />TYPES OF SOCIAL NETWORK SERVICES<br />There are usually two main formats of social network service, sites that are primarily organised around users profile and those that are organised around collection of contents. They can be classified as follows. These are the most common types of social networking service, however this is not a complete list.<br />1) Profile-based SNS - This type of SNS are generally organised around group members profile pages containing information, pictures, likes and dislikes etc, of the member. Facebook would be the most suitable example of profile based SNS. When travelers travel it has become a common thing to see pictures being uploaded while they are travelling.<br />2) Content based SNS- In this type of SNS the users profile remains an important way of organizing connection but plays a secondary role. Unlike the profile based SNS, content based SNS share contents with the members of the service. Youtube would be an example of content based SNS. Travelers sharing videos in youtube.<br />3) Mobile SNS- Social network service have now entered the mobile market and this is only evident with the introduction of smart phones like i phone and blackberries. People are increasingly using the mobile phone to access their favourite sites. Increasing number of travellers are using mobile SNS to book their flight and hotel room.<br />4) Micro blogging/Presence updates- micro blogging services like twitter allow its users to publish short (140 characters, including spaces) messages publicly or within their circle of friends. Twitter is one of the most widely used social network service, it provides services like status updates, where travelers can update their live activities through tweets. <br />TOURISM SYSTEM/TOURISM INDUSTRY<br />What makes a system?<br />1) Components - demand(tourist) and supply(attraction)<br />2) Interrelated-( tourism products are interrelated)<br />3) Dynamic-(Changing)<br />4) External environment-(in this case technology) (SNS)<br />Tourism consists of different components like demand and supply as seen below in the figure 1. Tourist is just one part of the tourism phenomenon, likewise supply side is also just a part of the tourism system. We need to understand how social network is affecting the tourist(demand) and how suppliers are responding to the changes. Most tourism products are interrelated as one will not function properly without the existence of the other product. For example hotel and travel agency are interrelated. And finally tourism is also affected by external environment like in this case technology. There is also an increasing use of social network service among B2B. Not just technology we also have political and social environment. <br />But in this case we are more interested in the supply side of the tourism system or the tourism industry and how it is being affected by the social network service. An industry consists of the sellers of a particular product. Thus, an industry comprises only one side of the market, the sellers. What I mean by the supply side is the supply components like attraction, facilities like accommodation, restaurant, transport, infrastructure, hospitality etc. In the figure the external environment is technology, i.e social network service. I would also like discuss how the tourism industry is responding to the changes and its future implication.<br />How is social network service changing the way we travel.<br />To understand how SNS is changing the travel industry, we first need to understand how it is affecting the travellers. Social network, like facebook with its 600 million users, will have a dramatic impact on how consumers make their travel decisions. Travelling to a destination today and few years back is a totally different affair and experience. Because it is changing the way we travel it will eventually lead and affect the way tourism industries do business. Travelling to a destination was a simple affair in those days with email use being limited and mobile phones but now it's a different situation as technology has changed the way we travel. Today travellers have many tools at their disposal. Planning a trip few years back required travellers to carry guide books, maps, time table of train schedules but these days the use of guide books is slowly decreasing as travellers continue to use SNS. Guide book was everything that gave the traveller information about places to visit, eat and stay. But today travellers are constantly communicating with other travellers. For example instead of going to where 19 million domestic tickets are booked Delta passengers can now buy tickets on Delta's facebook page. More travellers are booking flights through social networking sites. In response airlines have been increasingly using the SNS to cater to the changing needs. Planning for a trip these days not only include using guide books but with the increase use of SNS, travelers can get to know more about a destination through social networking sites like twitter and facebook. These people are more likely to trust their friends as they share their experience. In some way SNS is replacing recommendation from experts as socializing among friends increases. Not just sites like today travellers read reviews about a destination on sites like tripadvisior. <br />Blogging is also another tool that is used by the traveller for information. In response many hotels and restaurant are promoting them through these bloggers. Travel industry are also getting involved with frequently read columnist to write blogs. Travelers have changed the way they plan their trip. Another change is in the way we keep people informed about our activities and where abouts while travelling. Few years back travellers kept their families and friends informed through phone and in some cases by email. Today this is an area of real change. Not only do travellers have a plan that people can see it but travellers can now with the help of social media and smart phone inform their friends and families about what they are doing, seeing and even experiencing. Twitter lets it users update in real time, telling friends what they are doing and even share pictures. Up loading videos is also possible today, basically you can share your experience as you experience it. There has also been a significant change in the way we search for travel related information. Travellers are increasingly using social networking sites to get information about where to go, what to do and even where to eat. Many of the tweets received at travel portland are from people looking for restaurants. In response a staff serves as official travel portland twitter, but anyone that sees the feed can respond to the query. One of the great thing about the response is that you get many response to your queries.<br />What does this mean for the travel industry.<br />As the number of people using SNS increases it has become a great platform for travel industries, that they have joined in. Social network service is being incorporated at a rapid rate in every part of the journey. Social network service has changed the way we travel. Today travellers plan, the way we book a trip, the way we act while on a vacation and also the way we report it. Travellers are increasingly using more of review web sites to book hotel and events. For example in response the Riz Carlton in Washington, DC sstarted using twitter to send messages about specials, restaurant news and holiday hours, and to ask fans what they would like to see on the seasonal menu, when its fan based saw a dramatic increase. Orbitz also uses facebook to keep fans up to-date on specials and deals. In the past most deals to customers by airlines, hotel, tourism agencies, etc were updated to their customer by emails. Greater availability of social network service will lead to 20% of employees to use social network service as their business communication hub by 2014, according to research firm in the US. What that means for the travel industry is that social networking service will replace email as primary vehicle for interpersonal communication. In response travel industry are also using and interacting on social sites to reach out to their customers.<br />People are also using facebook and twitter to find out what people really think about a destination that they are going to visit. Popularity of a destination was only known through market and other types of research in the past. But now its possible to know how popular a destination is by looking at the fan base in case of facebook and followers in case of twitter. In response many destination have profile and links on many websites. In such an environment travel industry should take social network service very seriously and find ways so that they can benefit from it. Even the loyalty programs are no longer the same. Intercontinental in the US is working with start-up company Topguest. People who sign up at the Topguest's web site can walk into any hotel, restaurant or bar operated by Intercontinental and receive a small allowance of the company's loyalty points. To receive the points, they must alert their friends on social networking sites like facebook and other popular social networking tools. For hotels it is a way of promoting their loyalty programs, increase sale during off hours and learn which of their customer are the most influential members in the social media circles. <br />There is also the way the industries change their way of dealing with customer relations. If a traveller is going to check in the hotel or is going to be late, what the traveller simply does is he or she tweets. They should listen to people on what they think about their destination, service and property. And most importantly the travel industry should capitalize on the real-time discussion and reviews to showcase what people think of them. Travel industry is also using social networking service to harvest ideas. One powerful use of online communities is to help get new ideas into business from people who has nothing to do with the company. People joining communities and then suggest their ideas, comment on existing idea or even vote for the best idea. There are well known examples of businesses working with consumers on co-creation in this way. Sometimes travellers don't know what type of product to buy or which hotel to stay, so co-creation fills this gap by involving the traveller in the buying process so that it is matched according to their needs and wants. Mystarbucksidea is a well known example. <br />Case 1- Mahindra Homestay<br />This case study shows how this property in india is using and benefiting from the use of SNS. It shows how they have responded to the changes by using facebook, twitter, blog and youtube.<br />Mahindra Homestays is a unique indian accommodation network. Launched in 2008, and initially targeting the UK and the indian market. Mahindra Homestay is an effort by Mahindra holidays & resorts india ltd, which is part of the US$7.1 billion Mahindra group, one of indias leading industrial houses, who have recently acquired Ssangyong Motor company(쌍용자동차).<br />Through innovitive blog content and social media initiative the property has built the necessary foundation for any travel brand looking for success in the modern online marketing environment. Then how is Mahindra homestays is using social network service, they are basically using twitter, facebook, blogging and youtube, the most common social network tools.<br />Twitter- For the property being on twitter was not just a trend. They saw the opportunity to use twitter in a powerful way to find customers as they are making decisions. What the company did was they developed a page, to send links to Mahindra homestays web site and respond to queries. They saw an opportunity not just building relations with the consumer but also travel journalist, bloggers and fellow travellers all over the world.<br />Facebook- Facebook also has a similar page to twitter with the help of applications and features search for their audiences. They also have user-centric initiatives such as photo of the month contest the company have grown its fan base. The company also uses the facebook page to seed their blog contest, answer customers esquires and push fans to the main home site. <br />Blogging- Mahindra created the Indian Travel Blog, designed to draw traffic and ultimately send it to the main site. The blog is very strategically developed to appeal different target audience and niches, from yoga lovers to pet friendly accommodation. The blog also suggest and recommends places that the traveller could visit. The property uses keyword techniques to capture search traffic on certain useful terms. The blog also contains highly popular things to do articles covering key location, video tour of properties, original competition and offers. They have also recently podcasting.<br />Youtube- As of now the property has 26 videos that it features in the video sharing web site youtube. The videos include host-led tours of accomodations that has seen an increase in the views on youtube. Mahindra homestays videos dominate the search results on the leading keyword term "india homestays". They are increasingly using youtube to share videos rather than using the broadcasting it.<br />Outcome & impact<br />The outcome and impact of using social network tools like twitter, facebook, and blogging have all had a positive result, especially the blog and twitter have had better result. Traffic to the blog has been increasingly steadily since launch and almost half of this traffic has come via natural search engines rankings. With a new brand and targeting a new market(UK) the company has been able to build brand awareness early on in the travel research process. The property also uses analytics on the blog which if fully customized to help them measure the effectiveness of the blog. Although all blog visitors are being exposed to the brand Mahindra avoids selling on the blog, their key aim is for visitors to visit the main Mahindra homestay web site. Currently at least 10-20% of the blog visitors visit the main home page, which also leads directly to online booking.<br />In case of twitter it is hard to measure the direct results as Mahindra limits time on twitter to a 4 to 6 hours each month. Links to new blog content have been retweeted by a number of high profile followers such as times travel in the UK that provides peak in traffic. It is not that they are not using the traditional form of marketing tools and customer relations but are increasingly becoming dependent.<br />Conclusion<br />Technology has been moving forward with such speed that some struggle to keep up. Social network has become crucial and extremely fashionable and many business have already discovered its appeal. Wether it is airlines, hotels, travel agencies- any business in the travel industry is making the use of SNS. To expand the basis of 'fans' is an ideal internet exposure and a brilliant marketing tool. So much so that many companies have now hired teams to only focus on working with facebook and twitter generated business. By being on such sites the company is only upgrading its customer relationship management that cost little but brings a lot. Traditional sources of information about destination and travel service suppliers appear to continue to exert greater influence over consumer choice, however even though their reach is generally less and the composition of the audience they deliver tends to be more diffuse. This is true today, but may not be tomorrow.<br />Social commerce for travel industry<br />One of the most happening trend in the context of SNS. It is simply understood as a subset of electronic commerce that involves using social media social interaction and user contribution, to assist in the online buying and selling of products and services. Discounted purchase with their online friends from social networking sites like facebook and twitter. Social commerce business in korea began to take off with the opening of (위픈) wipon. <br />What does mean for the travel industry.<br />The concept of loss leader is not new, business have been using loss leaders for ages, product that are sold at a lower cost or below cost in order to stimulate sales. This is more successful incase of retailers, as they sell something at a great discount in the hope that the customer will buy other(higher margin) items while visiting the store. Restaurant business have been successful in using loss leaders by providing discount, in the hope the customer will spend the savings on other product like alcohol and desserts.<br />So does loss leaders work for the travel industry, that have and sell one or two services as in the case of most tour operators, you can really sell at a discounted price without seriously affecting the profit of the company. To put in context let us look at the characteristics of loss leaders. A loss leader may be placed in an inconvenient part of the store, so that purchasers must walk past other goods which have higher profit margins. Next, a loss leader is usually a product that customers purchase frequently, thus they are aware of its usual price and that a lower price is a bargain. A fine example would be the lotte mart chicken(통큰 치킨) at a cost of just 5000won. And then, loss leaders are often scarce, to discourage stock piling. Next, the retailer will often limit on how much the customer can buy. Finally, some loss leader items are perishable, and thus cannot be stockpiled. Based on these characteristics of loss leaders the concept of loss leader for tourism products may not work particularly well. There are social commerce websites selling tourism products but are generally very specific service that have little or no chance for upgrades. Like most social commerce websites have a time limit which if not used during the said period then it is as good as not buying the product. Tourism products are generally not purchased frequently by the same consumers. I don't think a traveller would not like to take a guided tour to japan, unless the traveller frequents Japan. And the most important thing the perceived value of the product because people don't usually re purchase.<br />REFERENCE<br /><br /><br /><br /><br /><br />Boyd D. M. & Ellison, N. B. (2007). Social network sites: Definition, history, and scholarship. Journal of Computer-Mediated Communication, 13(1), article 11 form: . (Retrieved on 22/08/2009).<br /><br /><br /><br /><br /><br />