THE ROLE OF E-COMMERCE IN FIVE-STAR HOTELS IN THE CAPE TOWN METROPOLE by ...

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THE ROLE OF E-COMMERCE IN FIVE-STAR HOTELS IN THE CAPE TOWN
METROPOLE

by

ILHAAM BANOOBHAI-ANWAR

Thesis submitted in fulfilment of the requirements for the degree
Master of Technology: Tourism and Hospitality Management

in the Faculty of Business and Management Sciences

at the Cape Peninsula University of Technology

Supervisor: Karla Maryna Keating
Co-supervisor: Desré Ann Draper

Cape Town
January 2016

CPUT copyright information
The thesis may not be published either in part (in scholarly, scientific or technical journals), or
as a whole (as a monograph), unless permission has been obtained from the University.
DECLARATION

I, Ilhaam Banoobhai-Anwar, declare that the contents of this thesis represent my own unaided
work, and that the thesis has not previously been submitted for academic examination towards
any qualification. Furthermore, it represents my own opinions and not necessarily those of the
Cape Peninsula University of Technology.

2 December 2015

Signed Date

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ABSTRACT

Electronic commerce, popularly referred to as e-commerce, is the latest catchphrase
surrounding the Internet and its many functions. In the past, the Internet was solely used for
information seeking, but the 21st century has brought a new global economy to the fore – one
that is conducted online. Tourism is seen as a driver of economic growth, contributing both to
the Gross Domestic Product (GDP) of South Africa (SA) and creating jobs in the hospitality
sector. E-commerce does not only provide a platform for business to be conducted online but
also an opportunity for consumers to interact directly with industry. Many studies have been
done previously about the perceived benefits of e-commerce in the retail sector, yet none in
Cape Town and at five-star hotels in particular. It is well known that holidaymakers conduct an
online search prior to booking accommodation; some of those potential guests in turn choose
to finalise their bookings online. The purpose of the study was to investigate the role of e-
commerce in five-star hotels in the Cape Town Metropole. The main objective of this study
was to define what e-commerce is for five-star hotels in the Cape Town Metropole and
determine if the hotels are using e-commerce as a booking method. Online questionnaires
were used to gather primary data and a literature review was presented as secondary data.
The findings of this study showed that all the hotels surveyed use online bookings and half of
the respondents believe Online Travel Agents (OTAs) generate more revenue than traditional
methods of room reservation. When asked to rank methods of room’s reservations, there was
a slight difference between telephone bookings and e-commerce as number one. This could
mean that while electronic methods are popular, they have not completely replaced traditional
methods. The researcher recommends that five-star hotel managers train the rooms’ division
staff to respond to negative reviews on social media, as this was one of the findings. The hotels
should also learn how to effectively use their social media presence to increase room sales.
(Keywords: e-commerce, tourism, hospitality, OTAs)

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ACKNOWLEDGEMENTS

I wish to thank the following persons and organisations:

 Karla Keating, my supervisor, for her unwavering passion for research.
 Mariette Hattingh and Nina Septoe, my colleagues at the Cape Town Hotel School, for
their continuous support.
 Desré Draper, my co-supervisor.
 Corrie Uys, for helping me with statistics.
 The respondents who completed my questionnaire.
 My parents, for instilling a culture of constant learning and self-reflection in our family.
 My husband, Syed Kashif Anwar, for his kindness and support.
 CATHSSETA for awarding me a bursary.

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ABBREVIATIONS AND ACRONYMS

ADSL Asymmetric Digital Subscriber Line
ARPANET Advanced Research Projects Agency Network
ATM Automatic Teller Machine
B2B Business to Business
B2C Business to Consumer
BBC British Broadcasting Corporation
CATHSSETA Culture, Arts, Tourism, Hospitality, Sports Sector Education Training Authority
CERIAS Center for Education and Research in Information Assurance and Security
CERN European Organization for Nuclear Research
CPUT Cape Peninsula University of Technology
CRS Central Reservation System
CTIA Cape Town International Airport
EC Electronic Commerce
EDI Electronic Data Interchange
EFT Electronic Funds Transfer
FIFA Fédération Internationale de Football Association
GDP Gross Domestic Product
GDS Global Distribution System
ICT Information and Communications Technology
IT Information Technology
MC Mobile Commerce
ORTIA Oliver Reginald Tambo International Airport
OTA Online Travel Agent
SAA South African Airways
SMS Short Message Service
TGCSA Tourism Grading Council South Africa
WESGRO Western Cape Destination Marketing, Investment and Trade Promotion
Agency
WOM Word of Mouth
WWW World Wide Web

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GLOSSARY

 The Dotcom Bubble refers to a period in the late 1990s when the American stock market
was fuelled by the rise of the Internet and the technology industry. The bubble was caused
by the growth of Internet users and investors pouring money to finance start-up Internet-
based companies without any caution as to whether these companies would turn a profit
or not. When the dotcoms failed to report a profit, the bubble burst which triggered a mild
economic recession (Business Dictionary, 2015).

 E-commerce can be defined as commercial transactions conducted electronically on the
Internet (Oxford Dictionaries, 2015).

 E-procurement refers to the online purchasing of goods and services. Using a web
browser, buyers are able to review product catalogues, identify vendor services, conduct
price comparisons, place orders and settle transactions (Kasavana & Cahill, 2007:225).

 Groupon is a special type of coupon website that offers group deals to a group of
customers. Groupon offers a substantial discount to a group of people who want a
particular product or service (Investopedia, 2015).

 The Hospitality Industry is defined by Mill (2008:103), as the provision of accommodation,
food and drink for people away from home, for reward.

 Internet is defined by Business Dictionary (2015:1) as a means of connecting a computer
to any other computer, anywhere in the world, via dedicated routers and servers.

 Mobile Commerce refers to the business activities conducted via wireless
telecommunication networks (Zhang et al., 2012:1902).

 Online Travel Agents (OTAs) provide flight, hotel, car and cruise reservations on a
website. All transactions are transmitted electronically (Wulf, 2012).

 Social Media are defined by Oxford Dictionaries (2015), as websites or applications that
allow users to create or share content or participate in social networking.

 Social Networks can be described as a network of social interactions and personal
relationships which enables users to communicate with each other by posting information,
comments, messages and images (Oxford Dictionaries, 2015).

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 A Tablet is defined by PC Mag (2015a) as a general purpose computer contained in a
touchscreen panel. Modern tablets are operated by your fingers.

 Tourism can be described as the sum of the relationships arising out of the activities of
persons travelling to and staying in places outside their environment, for a period of less
than one year, for leisure, business and other purposes. (McCabe, 2009:2).

 Travel Agents are travel intermediaries who disseminate information and sell airline, hotel,
cruiseline, lodging and car rental products and services (Dedrick et al., 2006:64).

 World Wide Web (www) is defined by Webopedia (2015) as a system of Internet servers
that support specially formatted documents.

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TABLE OF CONTENTS

Declaration ii.
Abstract iii.
Acknowledgements iv.
Abbreviations and Acronyms v.
Glossary vi.
List of Figures xiii.
List of Tables xiv.
Appendices xv.

CHAPTER ONE
INTRODUCTION TO THE RESEARCH

1.1 Introduction 1
1.2 Purpose of the study 2
1.3 Problem Statement 3
1.3.1 Sub-problem one 3
1.3.2 Sub-problem two 3
1.3.3 Sub-problem three 3
1.3.4 Sub-problem four 3
1.3.5 Sub-problem five 3
1.4 Research objectives 3
1.4.1 Sub-objective one 4
1.4.2 Sub-objective two 4
1.4.3 Sub-objective three 4
1.4.4 Sub-objective four 4
1.4.5 Sub-objective five 4
1.5 Research design and methodology 4
1.5.1 Research design and type 4
1.5.2 Research methodology 5
1.5.3 Sampling and related issues 5
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1.5.4 Data collection instruments 6
1.5.5 Data analysis and procedures 7
1.5.6 Ethical considerations 7
1.6 Limitations of the study 7
1.7 Significance of the research 7
1.8 Chapter outline 8
1.9 Summary 9

CHAPTER TWO
LITERATURE REVIEW

2.1 Introduction 10
2.2 Framework of literature 15
2.2.1 Types of networks 15
2.2.2 The World Wide Web (www) 16
2.2.3 E-commerce 16
2.2.4 The Social Web 17
2.2.5 Mobile Commerce 18
2.3 What is E-commerce? 20
2.4 The Development of E-commerce in the 20th Century: Innovation 21
2.5 The Development of E-commerce in the 20th Century: 22
Transformation
2.6 The Future of E-commerce in the 21st Century 22
2.6.1 Social Networks 23
2.6.2 Smartphones 25
2.7 South African tourism within the global market 26
2.7.1 Western Cape vs. other South African provinces 27
2.7.2 The larger Cape Town area 29
2.7.3 Cape Town Metropole 29
2.8 Defining Hospitality’s role within Tourism 31
2.8.1 Hotels 32
2.8.2 Restaurants 33
2.8.3 Tourism Grading Council 34
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2.8.4 Five Star Hotels 34
2.9 The Role of E-commerce in Tourism 35
2.9.1 E-commerce vs. alternate reservation methods 36
2.9.1.1 Travel Agents 38
2.9.1.2 Telephonic Reservations 39
2.9.1.3 Walk-in Reservations 39
2.10 Types of E-commerce 40
2.10.1 Business to Business (B2B) 40
2.10.2 Business to Consumer (B2C) 40
2.11 South African E-commerce Websites 40
2.11.1 Bid or Buy 41
2.11.2 Takealot/ Kalahari 42
2.12 South African Booking Sites 43
2.12.1 Travelstart 43
2.12.2 Airlines 43
2.13 International E-commerce Websites 44
2.13.1 Amazon 44
2.13.2 eBay 44
2.14 International Booking Sites 45
2.14.1 Booking.com 46
2.14.2 Tripadvisor.com 46
2.14.3 Expedia.com 48
2.15 Summary 48

CHAPTER THREE
RESEARCH METHODOLOGY

3.1 Introduction 50
3.2 Research design and methodology 50
3.2.1 Research design and type 51
3.2.2 Research methodology 51
3.3 Sampling 52
x