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THE
ROBERT GORDON
UNIVERSITY
ABERDEEN
FACULTY OF MANAGEMENT
Aberdeen Business School
Title: Internet Impact on Travel Agencies in Kharkiv region,
Ukraine
Name: Ganna Samoylenko
Submission: Date: 15th of October
Supervisor: Deirdre Mactaggart
Aim: to identify challenges faced by travel agencies in Kharkiv region,
Ukraine with the fast pace of technology innovation and suggest the
strategic initiatives that should be undertaken by travel agencies to
survive in this highly competitive market
Objectives:
1. To look at the usage of the Internet among travel agencies as well as
its purpose and effectiveness
2. Discuss the disintermediation threat
3. Discuss if there are any barriers for Ukraine to join or have EU support
in developing and improving tourism sector and what the advantages or
disadvantages are for the Ukrainian tourism industry
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4. Analyze the future prospects for establishing Ukraine Tourism in the
international market with extensive use of the Internet
Signed: Ganna Samoylenko
Total word count: 14,734
A Dissertation submitted in partial fulfilment of the requirements for the MSc Degree in International Tourism Management
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THE
ROBERT GORDON
UNIVERSITY
ABERDEEN
Internet Impact on Travel Agencies in Kharkiv
region, Ukraine
Ganna Samoylenko
The Robert Gordon University, Aberdeen, UK
Aberdeen Business School
MSc International Tourism Management
Submission Date: 15th of October
ABSTRACT
Traditional business model of Tourism distribution has been influenced by
the rapid growth of Information and Communication Technologies such as
the Internet. Due to this impact, the concept and purpose of travel
agencies are changing dramatically in the last decade. The explanatory
study in developed countries showed that travel agencies need to adjust
to changes brought by the Internet. This research proposes to investigate
the impact that the Internet made on small travel agencies in Kharkiv
region, Ukraine. The proposal follows with relevant literature review on
four core areas related to the topic which are (1) tourism industry in
Ukraine, its aims and objectives; (2) Ukraine and European Union co-
operation; (3) an examination of travel agencies, their historical value and
their current state in Ukraine and Kharkiv city; (4) the impact of the
Internet on travel agencies and their performance in different countries.
The proposed methodology, both qualitative and quantitative, allows to
identify the mistakes and limitations and to fulfil the research objectives.
The study aims to identify the strategic direction that should be
undertaken by travel agencies to survive in the highly competitive
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environment that can support and help further development of the
Ukrainian tourism in the international market.
Travel agencies in Kharkiv region, Ukraine mislead the meaning as well as
usage of Internet. The luck of knowledge on the subject can lead to major
impact on their performance in future. The usage of Internet is still in
early stage such as to gather information. This require immediate actions
from the government as well as travel agencies and composed from
following: 1) luck of knowledge require courses’ and forum organization;
2) legal support and advice; 3) co-operation between both parties with
explanation of any actions previously undertaken or planed ones in future;
4) EU questions need to be addressed with full understanding of the
addressed problem from both advantages and disadvantages side of the
case. To conclude, further research is required to address the problem
form different points of view.
Keywords: Travel Agency; Internet; Impact; Ukraine; European Union.
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Acknowledgements
This dissertation has started as a challenge and could not have been
finished without the help of a lot of people. First of all, I would like to
thank my supervisor, Deirdre Mactaggart and my personal tutor Robert
Nash. These people helped and supported me before and during my work
on this dissertation; with their encouragement I was able to come up with
many fresh ideas. Their involvement made my work on this dissertation
more interesting and more exciting.
I would like to say a special thank you to my family that made my
education in Scotland possible. I would like to thank my grandmother
without whose effort all of this could not be possible. She provided a lot of
support to my mother during my childhood and continued to give
everything she had to all her grandchildren. I would like to send my love
to my mother who supported me all the way through my education. I
would like to thank my brother Victor who sponsored me and paid all my
expenses. I would also like to thank my brother Igor and his wife Panida
whose advice made my education easier and more enjoyable. I would like
to mention Victor Nicolaevich Lisovoi who played a very important role in
my life. And I would like to thank every single one who was involved in
my life during this period of time.
Thank you all very much.
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TABLE OF CONTENTS:
TABLE OF FIGURES ................................................................................ IX
TABLE OF TABLES .................................................................................... X
CHAPTER 1. IMPACT OF INTERNET ON PERFORMANCE OF
TRAVEL AGENCIES ................................................................................... 1
1.1. Background ............................................................................................................................. 1
1.2. Problem statement ............................................................................................................. 2
1.3. Purpose of the research, its aim and objectives ............................................... 4
1.4. Scope of work ........................................................................................................................ 5
Glossary and Abbreviations ..................................................................................................... 6
CHAPTER 2. METHODOLOGY ................................................................. 7
2.1. Secondary Data ..................................................................................................................... 8
2.2. Primary research .................................................................................................................. 8
2.3. Research limitations ........................................................................................................ 11
CHAPTER 3. LITERATURE REVIEW AND SECONDARY DATA
ANALYSIS .................................................................................................. 14
3.1. Current state and aims of tourism industry in Ukraine .............................. 14
3.1.1. Overview ............................................................................................................................ 14
3.1.2. Analysis .............................................................................................................................. 15
3.2. PESTLE analysis .................................................................................................................. 15
3.2.1. Background....................................................................................................................... 16
3.2.2. Analysis .............................................................................................................................. 17
Political impact ......................................................................................................................... 17
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Economic impact ..................................................................................................................... 18
Social impact............................................................................................................................. 19
Technological impact ............................................................................................................. 19
Legal impact .............................................................................................................................. 19
Environmental impact ........................................................................................................... 20
3.3. Ukraine and EU co-operation ...................................................................................... 20
3.3.1. Ukraine views and actions on the subject ............................................................ 20
3.3.2. EU views and actions on the subject ...................................................................... 22
3.4. Travel Agencies ................................................................................................................... 25
3.4.1. Historical background and role of Travel Agencies ........................................... 25
3.4.2. Fast increase in the number of Travel Agencies ................................................ 27
3.4.3. Current state of Kharkiv’s Travel Agencies .......................................................... 28
3.5. Internet and its influence in different countries ............................................ 28
3.5.1. Background....................................................................................................................... 29
3.5.2. Analysis .............................................................................................................................. 30
3.5.3. Diffusion of Innovation ................................................................................................. 34
3.6. Models of Tourism Development .............................................................................. 35
3.6.1. Background....................................................................................................................... 35
3.6.2. Analysis and Identification of the Ukraine Tourism using the Butler’s and
Weaver’s models .......................................................................................................................... 38
CHAPTER 4. PRIMARY RESEARCH ANALYSIS ............................... 40
4.1. Data finding ........................................................................................................................... 40
4.1.1. Interviews ......................................................................................................................... 40
Overview..................................................................................................................................... 40
Analysis ....................................................................................................................................... 41
4.1.1. Questionnaire .................................................................................................................. 44
Overview..................................................................................................................................... 44
Data findings ............................................................................................................................. 46
4.2. Discussion .............................................................................................................................. 48
CHAPTER 5. CONCLUSION ................................................................... 54
5.1. Recommendations ............................................................................................................. 55
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5.1.1. Straight conclusions ...................................................................................................... 56
5.1.2. Perspective recommendations .................................................................................. 57
REFERENCES ............................................................................................. 59
BIBLIOGRAPHY ....................................................................................... 66
APPENDIX 1: QUESTIONNAIRE – FIRST SKETCH ....................... 68
APPENDIX 2: E-COMMERCE SUPPORTS FUNCTIONAL
ACTIVITIES IN TOURISM ORGANISATIONS................................. 73
APPENDIX 3: THE TOURISM AREA LIFECYCLE STAGES............ 75
APPENDIX 4: QUESTIONNAIRE – FINAL VERSION .................... 77
APPENDIX 5: QUESTIONNAIRE DATA FINDING ......................... 81
APPENDIX 6: QUESTIONNAIRE DATA FINDING % .................... 82
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Table of Figures
FIGURE 1: CHANGES IN THE TRADITIONAL PURCHASING MODEL ............................... 3
FIGURE 2: A BUSINESS MODEL FOR ELECTRONIC TOURISM MARKET ...................... 33
FIGURE 3: BUTLER’S TOURISM AREA LIFE CYCLE MODEL .............................................. 36
FIGURE 4 : DESTINATION DEVELOPMENT SCENARIOUS ................................................ 37
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Table of Tables
TABLE 1: A PEST ANALYSIS OF ENVIRONMENTAL INFLUENCE ..................................... 16
TABLE 2: RENEWAL PESTLE ANALYSIS ................................................................................... 17
TABLE 3: COUNTRY RISK SUMMARY ........................................................................................ 23
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CHAPTER 1. Impact of Internet on
performance of Travel Agencies
1.1. Background
The 20th century is the time of changes and innovations. The century is
called technological and Internet can serve as a true basis for such a
claim. Many countries already feel its influence in different industries and
fields. The Internet provides a wider set of opportunities for businesses
such as an ability to found their business without large capital investment
plus it offers real possibilities to enter the international markets. This
develops trade between countries such as Chinese silk and French design.
Even this specific example identifies advantages for Tourism Industry.
These increase the flow of air travellers as well as the use of
accommodation in foreign countries. The capabilities provided by the
Internet are amazing: the person can see, “feel” and participate on line in
any places around the world. People can book any travel package on line
as well as combine and organise by themselves any exotic trips in the
world.
To put it more precisely, Information and Communication Technology
(ICT) is one of the powerful tools that change the businesses worldwide.
Its influence is seen clearly in any industry, production or service-based
spheres and global tourism industry has not been overcome by this
change (Buhalis and Deimezi 2004). The use of technology at home, in
education and during work has grown exponentially over the past and it
changed significantly the view on traditional business models in a variety
of industries due to the growing expectations of the customers. The
increasing power of the personal computers, the originality of software
developers and the declining cost of computers and technology, have
made it possible to mechanize business processes and services within
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hotels, restaurants, small private visitor attractions and so on with
extensive use of Internet that was impossible before. (Canziani 1997)
It is well known that Tourism is one of the fastest growing industries in
the world with further growth forecast in the future. Without any doubt
the industry historically has been an early and enthusiastic adopter of new
technology (VIch-i-Martorell 2004), such as the Internet. Porter (2001)
underlined that “Internet technology provides better opportunity for
companies to establish distinctive strategic positioning than generations of
information technology”. For any small enterprise it was very hard, first of
all, to introduce their products or services to the market, secondly, to get
a range of choices in suppliers to gain a “better” price (cheaper), and of
course to reach as many customers as possible. All these barriers “vanish”
with the extensive use of the Internet and allow “to compete for market
share on even footing with industry leaders” (Cetron 2001).
1.2. Problem statement
In developed countries, the traditional distribution model started changing
dramatically for travel agencies. These changes (figure 1, p. 3) allow us to
see what happened in the distribution model with the use of the Internet.
The Travel Agencies suffer mostly due to sales of service from Airline’s
Web Page, Travel Websites and GBS (Global Distribution System) directly
to the end user bypassing Travel Agencies. The Internet gives a range of
advantages for the companies to communicate and provides a direct
communication link between an end-user (tourist) and provider of a
service, such as an airline, tour operator and so on excluding travel
agency from the supply chain system.
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Figure 1: Changes in the traditional purchasing model
Source: Smith 2004
In 1996 Walle discussed the “growing availability” of the Internet
resources in travel and tourism for different users and the opportunities it
provides for “direct marketing”. However, the Internet introduces many
new challenges to such a complex and widespread business sector as
Tourism. Undoubtedly, the advantages it provides such as cooperation,
communication, and marketing seem to outweigh the disadvantages and
challenges. The Internet environment represents a significant opportunity
for independent suppliers, small enterprises and private organisations to
cooperate, compete and present their products without any “geographical”
barriers in a complex, changing, difficult and challenging tourism
environment. Without any doubt, the companies have to apply the
technology in their everyday operations to stay competitive and attractive
to both tourists and business partners.
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After a wide range of research studies were undertaken in different
countries (Bennett and Lai 2005, Buhalis and Deimezi 2004, Ozturan and
Roney 2004, Vasudavan and Standing 1999, Vrana and Zafiroponlos
2006, Walle 1996), it was identified that Internet has made a major
impact on the role and existence of many travel agencies. Keynote report
(2006) provides figures that suggest that “High-street retail travel
agencies in the UK are facing a serious challenge”. In UK tourism market
is growing; however, this does not affect the turnover of travel agencies.
It happened because the tourists can make their own arrangements and
book directly via the Internet.
1.3. Purpose of the research, its aim and objectives
Ukraine, situated in Europe with a possibility to join the European Union in
near future, is very likely to experience similar problems with the spread
of Internet technology as those experienced in the developed countries.
These provide a good list of problems for this research work to look at and
provide answers.
This research aims to identify challenges faced by travel agencies in
Ukraine with the fast pace of technology innovation and suggest the
strategic initiatives that should be undertaken by travel agencies to
survive in this highly competitive market.
Therefore, the following are the main objectives of this research:
• To look at the usage of the Internet among travel agencies as well
as its purpose and effectiveness
• Discuss the disintermediation threat (Chapter 3, Section 3.5., Part
3.5.1.)
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• Discuss if there are any barriers for Ukraine to join or have EU
support in developing and improving tourism sector and what the
advantages or disadvantages are for the Ukrainian tourism industry
• Analyze the future prospects for establishing Ukraine Tourism in the
international market with extensive use of the Internet
1.4. Scope of work
The main focus of this research is on the Travel Agencies based in Kharkiv
region. This region was specifically chosen due to rapid growth in the
number of Travel Agencies in recent years (Chapter 3, Section 3.4. Part
3.4.2.). Kiev region (capital city region) is showing smaller growth
allowing Kharkiv region take the first place (Report on the work of the
travel agencies and tour operators in the first half of 2006; Report on the
work of the travel agencies and tour operators in the first 9 months of
2006). Therefore, the Kharkiv region was identified as most appropriate to
fulfil the aims and objectives of this study.
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Glossary and Abbreviations
B2B Business to Business
B2C Business to Consumer
CAT Circumstantial Alternative Tourism
DAT Deliberate Alternative Tourism
E-Business Providing service or products on line
Disintermediation Elimination of intermediaries within distribution channel
EU European Union
GBS Global Distribution System
GNP Gross National Product
ICT Information and Communication Technology
PEST analysis Political, Economic, Social and Technological analysis
PESTLE analysis Political, Economic, Social, Technological, Legal and
Environmental analysis
SMT Sustainable Mass Tourism
TDDM Tourism Destination Development Model
UAH Ukrainian national currency – Ukrainian grivna
UMT Unsustainable Mass Tourism
WTO World Trade Organisation
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CHAPTER 2. Methodology
In the course of this research extensive analysis has been undertaken to
provide the results, discussions, and findings, as well as offer a critical
analysis of facts and ideas. For more clear understanding and more
structured work, the work is divided by use of chapters, sections and parts
that are spaced for ease of reading and cross-reference relevant to the
points addressed. However, it is important to clarify what the
methodology is. Methodology, being the actual theory of how research
should be undertaken (Saunders et al. 2007) is “a procedural
(operational) framework within which the research is concluded” (Remenyi
et al. 1998 p. 28) and describes an approach that can be undertaken in
the particular research to arrive at more or less clear solutions of specific
problems set out as the aims of the research work.
This research methodology is comprised of Secondary data analysis and
Primary data collection which is addressed further in this chapter.
Nevertheless, it is worth mentioning that analysis of secondary data such
as PESTLE analysis (Chapter 3, Section 3.2., Part 3.2.2.), Diffusion of
Innovation (Chapter 3, Section 3.5.3., Part 3.5.3.) and Model of Tourism
Development (Chapter 3, Section 3.6., Part 3.6.2.) is provided, for the
ease of reading, in the Literature review (Chapter 3) every time as
relevant background is given. However, the Discussion section (Chapter 4,
Section 4.3.) provides a general discussion consisting of both Secondary
data analysis and Primary data collection.
This chapter is divided in two sections that cover the methodology of
secondary data analysis and primary data collection respectively. Each of
the section explains the relevant approach to each type of the data
analysis.
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2.1. Secondary Data
To improve understanding of the subject, Secondary Data analysis is
necessary. It allows to understand other important issues that have major
impact on Travel agencies’ performance. The knowledge of relevant
literature comprising of text books, journals, electronic resources
(journals, articles, press releases, Ukraine Government and EU WebPages)
and usage of PESTLE analysis (Chapter 3, Section 3.2., Part 3.2.2.),
Diffusion of Innovation (Chapter 3, Section 3.5.3., Part 3.5.3.) and Model
of Tourism Development (Chapter 3, Section 3.6., Part 3.6.2.) allowed to
develop an accurate picture of the subject area before addressing Primary
Research. The methodology of this study’s Primary Research is addressed
in next section.
2.2. Primary research
The methodology of the primary research is one of the most important
parts of this work. The clear objectives help to identify the method and
way of work. However, this research is primarily in Ukraine which makes it
harder to identify the potential and most accurate field of work. Due to
these, mixture of qualitative and quantitative methods will be used. This
usage of both qualitative and quantitative methods, known as multiple
methods, especially sequentially, one after another, offers a good
opportunity for the researcher to identify the key issues of the research
area. Different techniques lead to different effects, so using both “leads to
greater confidence being placed in conclusion” (Saunders et al. 2007 p.
147). Tashakkori and Teddlie (2003 in Saunders et al. 2007 p. 146)
suggest that “multiple methods are useful if they provide better
opportunities for you to answer your research questions and where they
allow you to better evaluate the extent to which your research findings
can be trusted and inference made from them”. Consequently, this
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research will be undertaken using two approaches 1) qualitative –
telephone semi-structured in-depth interviews (Hague, Hague and Morgan
2004 ,p. 99) and 2) quantitative – questionnaire. This technique allows
narrowing down the mistakes that can occur in the questionnaire and, on
the other hand, can expand on area on which the researcher has limited
information or knowledge. Furthermore, this method is beneficial in that is
increases the confidence of the researcher by addressing the most
important issues.
Telephone interviews, at the early stage, allow to ‘get a feel’ of the key
issues, probing for the answers, before using a questionnaire to collect
explanatory data. Ten travel agencies from Kharkiv city would be
randomly selected, but it is important that they have different business
structures and models, such as incoming tourism, outgoing tourism, and
directors or top managers would be interviewed. After the interviews are
completed, the analysis of the discussion and answers will be undertaken
that allows to add or correct the previously developed questionnaire. The
questionnaire will be sent to 150 travel agencies in Kharkiv city.
However, it is useful to identify the main stages to facilitate understanding
of primary research phases. To simplify the course of research events the
plan was developed and is as follows (note: the primary research was
undertaken after secondary data research; however, researcher followed
the events and all the relevant information was added to achieve “up-to-
date results”):
• At this early stage, after secondary data analysis the main
questions to be addressed at the semi-structured interviews
(Chapter 4, Section 4.1., Overview) are developed. At the same
time, first draft of the Questionnaire is produced (Appendix 1)
• The fullest list of Kharkiv region Travel Agencies with Names and
contact addresses is arranged. To achieve this result, Yellow Pages
of Kharkiv region for the present (2007) year were used.
• From the list of Kharkiv region Travel Agencies, randomly selected
ones were contacted. During this informal telephone conversation,
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the aim and objectives of the research were addressed;
participation in the semi-structured interview was offered. As soon
as ten participants agreed to take part in the interviews, informal
contacts through the phone were stopped (Note: 16 agencies were
contacted before 10 agreed to take part in the semi-structured
interviews). With each of ten participants, time of the actual semi-
structured interview was agreed. The time of those interviews was
noted during the conversation and final time sheet of these
interviews was developed. Three days before actual interview, draft
of questions to be addressed was sent through to each company by
email to ensure that interviewer and each participant was prepared
for semi-structured interviews in advance. This procedure is
beneficial in respect to spending telephone interview time on
discussion, not conversation. The telephone interviews are normally
limited in duration to not more then 10 minutes (Hague, Hague and
Morgan 2004); this may not be enough for a full discussion. For this
reason, preparation undertaken as described above was required to
limit such inefficiency during each interview. Additionally, each
participant that agreed to take part in the interview was offered to
have access to the results of the interviews on request.
• Next stage is to analyse the findings of semi-structured interviews.
• After the analysis, the study returns to the questionnaire
(addressed in section a)) in order to use the new findings to
improve the first draft of questionnaire. However, before the final
version is finalised the questionnaire is tested with four travel
agencies that are involved in the semi-structured interviews (it is
believed that the knowledge of these particular travel agencies can
benefit for the further improvement of the questionnaire). At the
same time 10 travel agencies, not familiar with the research study
were randomly selected and the same questionnaire, with covering
letter, was sent to them by email. The analysis of first three
answers from the ten was taken into account. At this stage, the
questionnaire reached the final version and the study is ready for
quantitative analysis.
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• The final version of Questionnaire accompanied with cover letter
(refer to section e)) is sent to 150 Travel Agencies. It is planed to
analyse first 100 responses received from Travel Agencies.
• After the required number of responses is reached, interpretation of
the data and its analysis is undertaken.
• Discussion is presented last; here extensive analysis and discussion
of both Secondary data analysis and Primary data collection is
undertaken.
• Conclusion summarises the key findings of the research and draws
recommendations on their basis.
Nevertheless, it is worth mentioning the limitations that are involved in
any research. Limitations of this particular study are addressed below in a
separate section.
2.3. Research limitations
Without any doubt any research has some strengths and weaknesses
(Remenyi et al. 1998), but the understanding of the research limitations
allows researcher to evaluate the data more accurately as well as to
improve the work if the research project is started again. This research,
being exploratory (primary research and secondary data analysis)
(Remenyi et al. 1998 p. 108) in its nature, has its limitation. However,
addressing and understanding such limitation from the beginning of
research allow to minimise defects up to the minimum.
The following list outlines the limitations of this research:
• Concentration on one geographic region, such as one country’s
region – Kharkiv
• Actual distance between the interviewer and interviewee; 1)
telephone conversations do not provide a face-to-face contact and
do not offer external information for the researcher such as face
expression, uncertainty during addressing an important issue,
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hesitation and so on; during the telephone interviews the
respondent can easily say “no” or if there may be a lack of time or
the interviewer may rush, as well as there may be some
distractions such as knocking at the door and so on (Hague, Hague
and Morgan 2004 ,p. 139). 2) Directing questionnaire through email
can result on high percentage of participants not responding. To
reduce the effect of the above issues to the minimum, continuous
participation with Travel agencies is required.
• It is a new approach for Ukraine Tourism Industry where there is no
typical work undertaken previously. The study needs to refer to
other countries. However, the difference between Ukraine and them
can lead to inappropriate recommendations.
• The other major limitation is lack of time to gather more responses
to gain a more informed picture of the investigation. This does not
allow to expand significantly firstly, the telephone interviews, and
secondly, with questionnaire responses. Addressing the above, it is
better to wait for the maximum amount of response and only then
randomly select 100 ones required. The study is restricted to the
first 100 received (if possible) and ignores the rest.
• Improvement of questionnaire through the semi-structured
interviews was designed to limit the influence but not to completely
eliminate these important issues; however, there is a small chance
to avoid all of them.
• The interviews are performed and questionnaire is written in
Russian that allows to get better understanding of the research
problem for interviewees. Note: official language of Ukraine is
Ukrainian. However, some parts of Ukraine still use Russian in
every day life. This can be explained by Soviet Union collapse and
Ukraine’s independence in 1991. Nevertheless, there are many
people that prefer to speak Russian language and to have it as
second officially recognised language of Ukraine. Kuchma
attempted to resolve this issue, but it never happened. Therefore,
the Eastern parts of Ukraine, that are situated close to Russia, such
as Donetsk, Dnepropetrovsk, Odessa region and so on, prefer to
use Russia language in communication. The Kharkiv region is not
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exception. (Kubicek 2005). However, due to the differences in
culture and the way things are expressed, certain things can be lost
in translation if English were to be used in the interviews and the
questionnaire. What sounds straight forward and appropriate in one
language can be easily misunderstood expressed in another.
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CHAPTER 3. Literature review and secondary
data analysis
The purpose of this part is to provide critical literature underpinning and
main ideas relative to the statement and purpose of this research. It will
include (1) the analysis of the current state and aims of the tourism
industry in Ukraine; (2) Ukraine co-operation with EU; (3) travel agencies,
its purpose, current state in Ukraine and in Kharkiv city; and (4) the
influence of the internet world-wide.
3.1. Current state and aims of tourism industry in
Ukraine
3.1.1. Overview
Ukrainian government identified Tourism as “one of the priority directions
in economic and cultural development” of the country (item 6 in the “On
Tourism” Act, Analytical World 2006). Main priorities in tourism
development, identified by the Ministry of Culture and Tourism (Analytical
World 2006 p. 78) are:
• Development of the organizational, social and economical
regulations for realisation of the government policy in tourism
industry
• High priorities given to domestic and incoming tourism
• Protection of the natural resources of the country
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• Development of the cultural and farm tourism to fully use the
cultural and natural potential of Ukraine
• Formulation of the vertical international structure in tourism
management
• Provision of European standards in tourism service
• Development of the competitive national tourism products
• Development of the information technology strategy for
popularisation and image development of the tourism resources of
the country
3.1.2. Analysis
The aim of Ukraine government is to increase the incoming tourism from
European countries. First step was undertaken by the introduction of visa-
free travel, which made the access to the country easier (Information
about co-operation Ukraine and EU in tourism sector, 2007). On the other
hand, outbound international tourism such as Ukrainian tourists going
abroad still has many barriers such as having to apply for visas to
European countries, United States of America and so on. These reduce the
potential of the international tourism development in Ukraine as well as
limit and infringe upon the right to free travel. To remove these obstacles
the Ukrainian government works on improving the co-operation between
European countries that would help improve prospects for the country’s
economy and development as well as create a suitable image for the
country’s tourism in the world market.
3.2. PESTLE analysis
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3.2.1. Background
It is important to consider the environmental influences that have massive
impact on the performance of the country, or organisation or agency.
Such analysis is known as PEST that stands for Political, Economic, Social
and Technological (Johnson and Scholes 1999, pp. 104-107). This analysis
helps to address important issues that influence the business
performance. Table 1 below summarise the factors that Johnson and
Scholes (1999, p. 105) identify in PEST analysis.
Table 1: A PEST analysis of environmental influence
Political/legal
• Monopolies legislation
• Environmental protection
laws
• Taxation policy
• Foreign trade regulation
• Employment law
• Government stability
Economic factors
• Business cycles
• GNP trends
• Interest rates
• Money supply
• Inflation
• Unemployment
• Disposable income
• Energy availability and cost
Sociocultural factors
• Population demographics
• Income distribution
• Social mobility
• Lifestyle changes
• Attitudes to work and leisure
• Consumerism
• Level of education
Technological
• Government spending on
research
• Government and Industry
focus on technological effort
• New discoveries/development
• Speed of technology transfer
• Rates of obsolescence
Source: Johnson and Scholes 1999, p. 105
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However, the analysis can be improved adding Legal and Environmental
issues that became very important at present. This analysis is actually
improved PEST and known as PESTLE (Table 2 below).
Table 2: Renewal PESTLE Analysis
POLITICAL Global, national, regional, local and community
trends, changes, events etc.
ECONOMIC World, national and local trends, changes, events
etc.
SOCIAL Development in society – culture, behaviour,
expectations, composition etc.
TECHNOLOGICAL Developments: computer hardware, software,
applications, other equipments, materials, products
and processes etc.
LEGAL World/EU/National legislation changes, prospects
etc.
ENVIRONMENTAL Global/EU/national/local issues, pressures,
movements etc.
Source:
http://www.renewal.eu.com/resources/Renewal_Pestle_Analysis.pdf
3.2.2. Analysis
Political impact
The Ukrainian government pays a lot of attention to joining the European
Union (EU) and World Trade Organisation (WTO). Without any doubt, this
will not only bring financial benefits but also provide better access for
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incoming tourists and, particularly, for outgoing ones. Ukraine signed
many agreements with EU, but membership was never offered. However,
the Orange Revolution in November - December 2004 opened up more
possibilities and challenges that allowed EU to look more democratically
towards Ukraine; plus Ukraine has a border with three EU members and
one of them (Poland) is “prodding Brussels to engage more actively with
Kiev“ (Kubicek 2005 p. 287). And, of course, not to forget that during the
Orange Revolution itself Ukraine was on the news all over the world that
made it more recognisable for potential and new tourists from different
countries. Nevertheless, Ukraine will “lapse back into being a faraway
country of which they (Westerners) know little” (The Economist, 2005). In
addition, to compare favourably to the western counties, especially to
European ones, Ukraine will have to catch up on a lot of legislative and
political aspects (Kubicek 2005 p. 287) that can cause a lot of problems
and debates.
Economic impact
Economically, Ukraine still suffers from post Soviet Union cataclysm. The
country is trying to follow the European style; however, it still needs time
and investments to get to the same level with other developed countries.
Nevertheless, if we take Poland or Slovakia which entered EU not long
time ago they already can proudly identify the benefits and achievements
they made during this short period. Ukraine is one of fast developing
country among the Post Soviet countries as was proved and identified by
Kubicek (2005) in his work “The European Union and democratisation in
Ukraine”. In addition, taking all this into account Ukraine Tourist Industry
will struggle to complete with those of highly advanced European
countries. Without any doubt, European funding and knowledge will
benefit to the growth and development of the Ukrainian Infrastructure.
However, this should be done through careful discussion and planning
with a good understanding of outcome by both sides.
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Social impact
Socially, Ukraine is divided on two groups – first still strongly believes in
Soviet Union regime and do not appreciate the way Europe develops; they
prefer to follow Russia. The second is young and many in the group were
born and grew up during the perestroika; they strongly believe in
European power and strength and looking forward to joining the EU
(Kubicek 2005). There are obviously other different society groups, but
the main problem is that these two big groups are the main drivers of the
future. They need to understand the needs and desires of each other and
work together for the benefits of the country.
Technological impact
Technologically, the country is behind its European neighbors. Such things
as roads, infrastructure and quality of service are still low and need
additional spending from government. Obviously, being the country that
“is trying to catch up”, Ukraine requires additional support and advice
from its European neighbour countries. One of the major impacts is
mainly due to use of Internet. There are obviously other different issues in
modern technology that have a strong influence on the country’s
performance. However, the main focus of this work is to identify the
influence of the Internet, so the technological impact under consideration
will be limited to it.
Legal impact
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To join the EU, Ukraine will need to review and rewrite some of its legal
procedures and laws. Without any doubt, the Tourism will be one of the
industries affected by these changes. At present some companies, not
excluding the travel agencies, employ illegal practices and obviously cause
a lot of damage to the Ukraine Economy. Undoubtedly, the fault is not
only on the government side; however, the government is also
responsible for such issues. The companies prefer to work illegally, not
showing for instance all the income they make. Such things are
unacceptable and need to be resolved for benefit of both parties.
Environmental impact
Ukraine, whilst having some of the finest resources among the European
countries, such as climate zones, Black sea line, The Carpathian
Mountains, mineral and curative mud, only use its resources at about 30-
40% (Analytical World 2006 p. 84). Ukrainian Tourism Industry can
provide a wide range of different activities from sun and sea to snow and
mountains. However, on the other hand, one of the main events that can
either be a barrier, attract or stop incoming tourists is a Chernobyl
disaster that happened on 26th of April 1986. Its consequences are still
acute and have a significant impact on the environment.
3.3. Ukraine and EU co-operation
3.3.1. Ukraine views and actions on the subject
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The Ukrainian government relies heavily on the future integration with
European Union (EU). If Ukraine becomes a part of EU, this will bring
many opportunities and destroy barriers that now exist. At this early
stage, Ukrainian government is involved in co-operation with EU focused
on “pushing” Ukrainian national tourism products onto the European
market, including it in the information communication space, involving
and joining the prominent world tourism organisations, and on increasing
Europeanization of tourism standards in Ukrainian tourism industry (The
State Agency on Tourism and Resort 2007. Information on cooperation
between Ukraine and EU in the tourism sector).
Undoubtedly, one of the main reasons in joining the EU is financial
support in development or recreation of the national tourism sector
(Ukraine applied for financial and technical support as well as investment
in new projects). Nevertheless, EU has to provide support in
reclassification of the whole tourism sector (Ukrainian government
developed programmes such as ‘Tourism service. Hotel classification’) as
well as provide training and programmes for staff involved in tourism
development. All this will lead to improvement of the regulations as well
as normative and legal sphere of Ukrainian tourism industry. Ukraine
managed to sign twelve international bilateral agreements with members
of EU – Austria (2004), Bulgaria (1996), Greece (1996), Estonia (1994),
Latvia (2000), Lithuania (2004), Poland (2005), Portugal (2006), Slovakia
(2001), Hungary (2001), Finland (2000), and Czech Republic (2006),
which provide the support and experience sharing from these countries
and can support Ukraine in joining EU (Information on cooperation
between Ukraine and EU in the tourism sector, 2007).
There is a lot to be done at the moment; Ukraine developed programmes
to improve motorways, roads and tourist routes; launched a new project
to develop hostels for student and young people; develop informational
point such as the tourism information centres, such as for example in
2004 with support and co-operation of EU the project to develop tourism
information centres in Crimea region (The State Agency on Tourism and
Resort 2007. Information on cooperation between Ukraine and EU in the
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tourism sector). There are several questions that arise related to this
close cooperation with EU such as if the travel agencies are ready for
changes, if they expect some support from the government as well as if
they are able to use “help” from international companies, and if they have
the facilities to utilise it. To answer these questions further investigation is
needed; however, the Travel Agencies’ view can be obtained from the
research primary data analysis.
Obviously, it is important to understand the interest in EU co-operation
not only from the Ukraine government point of view. Next section is
focused on analysis of the EU interest in Ukraine from their point of view,
discussions and press releases.
3.3.2. EU views and actions on the subject
To achieve a more comprehensive picture, it is useful to address the issue
from both sides. Ukraine’s location is one of the advantages of Ukraine’s
membership from EU’s point of view. Ukraine is another East European
country that embraces a wide geographical location that can increase the
strength and power of the EU. “Ukraine is one of the EU’s largest
neighbors to the east and negotiation were opened early March 2007 for
new enhanced EU-Ukraine agreement, which would include a free trade
area and increased energy co-operation. The EU has a strong interest in a
stable and prosperous Ukraine and the Commission hopes that the new
agreement will help the EU to go further in ensuring energy security and
environment standards and progress towards integration of its electricity
and gas market” (Ukraine heading towards new election, 4 August 2007).
Undoubtedly, there are other issues that EU takes into consideration
before accepting their members. EU is strongly involved in investigating
the country’s Political, Economical, Ecological, Legal and Social aspects.
Referring to PESTLE analysis of Ukraine addressed before (Chapter 3,
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section 3.2.) and analysing recent political events between Ukraine and
EU following points are addressed:
• Undoubtedly, the Orange Revolution played an important role in re-
evaluation and reconsideration of Ukrainian proposition to enter EU.
However, the first “blocks” of partnership started to be built by
Kuchma (Note: Former Ukraine President since July 19, 1994 until
January 23, 2005) “-who since 1994 has acquired plenty of
experience in navigating Ukraine’s fragmented political landscape
and outmanoeuvring his opponents” (Surprise Setback for Kuchma,
2004, p. 4). On the whole, Kuchma’s period’ did not provide
extraordinary changes, however, played an important role in
establishing first communication and negotiation between both
parties. Political and Economical situation, Business Environment
did not achieve EU level of requirement during Kuchma’s period.
Table 3 below provides “Country Risk Summary” of Ukraine from
Emerging Europe Monitor: Russia, Ukraine and Baltic’s political
outlook, which stated that the task that Kuchma promised to
achieve was still a “myth” at the end of his second term (Surprise
Setback for Kuchma 2004, p. 5).
Table 3: Country Risk Summary
• Political Risk – EU Remains Aloof.
The EU’s historic eastwards enlargement on May 1 has not brought any
cheer to Ukraine’s own bid to join the rich economic club, with EU
Enlargement Commissioner Guenter Verheugen specifying at the World
Economic Summit in late April that the accession of Ukraine, along with
that of Russia and Belarus, was ‘for the time-being … not on our agenda’.
Ukraine will need to engineer a sharp improvement in its democratic
credentials for the EU to entertain the possibility of its eventual
membership.
• Economic Risk – WTO Bid Encounters Hitch.
After important progress made in 2003 on bilateral negotiations with the
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World Trade Organisation (WTO)’s existing member countries, Ukraine’s
drawn-out bid to join the trading bloc appears to have encountered last-
minute complications. In particular, Kiev has become increasingly
frustrated with the EU’s failure to grant Ukraine ‘market economy’ status
– a prerequisite for joining the WTO. The approach of the presidential
election in October may work against a breakthrough in Ukraine’s WTO
membership bid in the coming months.
• Business Environment – Forex Liberalisation In The Offing.
Central bank chairman Serhiy Tyhypko has indicated that maintaining a
tight currency policy will continue to be a priority in the run-up to the
presidential election. However, he did specify that the foreign exchange
market could be liberalised ‘significantly’ after the vote. Exchange controls
introduced after the 1998-99 regional financial crisis, banning commercial
banks from trading in currency and requiring that exporters sell 50% of
their hard currency earnings on the market, are a significant constraint on
economic participants’ activities
Source: Surprise Setback for Kuchma, 2004, p. 5
• Undoubtedly, since current President of Ukraine, Victor Yushchenko
came to power (on January 23, 2005) EU and Ukraine achieved
more in discussing and negotiating a “new enhanced agreement,
...free trade area (FTA) ...(and) accession process to the WTO ”
(EU-Ukraine Summit on 14 September in Kiev, Brussels, 13
September 2007) as well as Energy and environment, justice and
home affairs, regional issues. However, after more then a year of
negotiation membership was not offered. The main arguments were
“further movement of Ukraine towards consolidation...,
strengthening of the rule of law and respect for human rights
...(that) contributes to a new, advanced level of relations with EU,
based upon principles of close and privileged political links, and
deeper economic integration.” (EU-Ukraine Joint Statement,
Portugal 2007 p. 1). This requires 1) changes in government – this
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may happen after the early elections on 30 September 2007 (EU
sees closer trade links with Ukraine after September poll 2007, EU
presses Ukraine on upcoming election 2007); 2) improvements in
democracy; 3) social transformation and other changes.
• Recent visa agreement and readmission that allows “Ukrainians …
now to be able to travel more easily while maintaining the efforts to
clamp down on illegal migration” (Further strengthening EU-Ukraine
bilateral relations: visa facilitation and readmission agreements are
singed today. Press Releases 2007). It will also allow to provide
“positive cooperation with the EU Border Assistance Mission at the
Ukrainian-Moldovan border” (EU-Ukraine Joint Statement 2007)
To conclude, it is strongly believed that “country’s development as EU’s
“most progressive partner” (was optimistic) … (and is) expected the new
enhanced agreement to be implemented in six years … (plus) EU
membership negotiation with Ukraine could start in 2013 already … ”
(Ukraine political crisis deepens 2007).
3.4. Travel Agencies
The research aims to investigate the influence of Internet on performance
of Travel Agencies. Consequently, it is important to address that role of
Travel Agencies, plus to identify the increase, if any, in numbers in
Ukraine as well as in Kharkiv region. This section is divided on three parts
and includes: 1) historical background and role of Travel Agencies; 2) fast
increase in numbers of Travel Agencies; and 3) current stage of Kharkiv’s
Travel Agencies accordingly.
3.4.1. Historical background and role of Travel Agencies
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Travel agencies historically were one type of the intermediaries that
provided service directly to the public. The profit normally came from
commissions that were charges for the supplied service. The fundamental
role of intermediaries is to “bring buyers and sellers together, either to
create markets where they previously did not exist, or to make existing
markets work more efficiently and thereby to expand market size”
(Cooper and et al. 1993, p. 189). The main intermediaries in tourism are
tour operators that produce tour packages and sell them through travel
agencies.
Tourism differs from other industries because tourists can buy the
components of the trip (accommodation, transportation, entertainment
and so on) directly from producers. However, this is more expensive and
not ideal for the end user, so middlemen, such as travel agencies had
advantages by improving the distribution channel. When the tour
operators are involved in creating the packages, the travel agencies
provided an outlet for selling them, plus increasing their income through
insurance and foreign exchange to the public.
The other task of the travel agencies that is identified by government
authorities is to fulfil the customers’ needs by providing the most
appropriate and accurate information, plus promote and advertise in the
local market area. Nevertheless, it is questionable whether travel agencies
are trying to meet customers’ requests or provide information that will
simply maximise their commission. The commission is now one of the
important factors that will determine if the travel agencies will survive.
The Internet allows producers to sell directly to the tourists and
consequently to reduce the commission’s percentage provided to the
travel agencies. Undoubtedly, this occurred because the traditional
distribution channels have changed, allowing for more channels for the
tour operations to sell their products (Figure 1)
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3.4.2. Fast increase in the number of Travel Agencies
Ukrainian tourism industry has experienced a rapid growth in the number
of the officially registered Travel Agencies. In year 2006 for the first six
months service was provided by 1496 travel agencies around Ukraine,
when the same report by duration of nine months shows that the number
increased up to 1873 travel agencies around Ukraine. (Note, that these
figures provide information only about travel agencies; the tour operators
are a separate group with figures 1091 and 1192 respectively) (Report on
the work of the tour agencies and tour operators in the first half of 2006:
Report on the work of the tour agencies and tour operators in the first 9
months of 2006). Using Porter’s five forces (2004), it is obvious that this
fast increase in the number is due to “low barriers” for the Ukrainian
Travel Agencies to enter the market; to provide a service as a Travel
Agency in Ukraine a licence is required. To obtain this licence the person
just needs to provide some basic documents such as application of
registration, office lease or ownership, three years of experience or degree
in Tourism, and the bank statement that shows the amount of 8,000 UAH.
(Approximately £785 (http://coinmill.com/GBP_UAH.html#UAH=8000))
(On Tourism, Statuses 1995 Act 15 ). The licence would cost 20 not
taxable minimum wages (340 UAH multiplied by 20 equals 6800,
approximately £670 (http://coinmill.com/GBP_UAH.html#UAH=6800.00))
Obtaining the licence for Tourism activity 2006).
On the other hand, Ukrainian travel industry does not provide enough
information centres for tourists to refer to for the variety of information as
offered in the developed countries. So the customer is obliged to use
travel agency as a consultation point. However, the picture can change
dramatically with the extensive use of Internet that can offer a wide range
of different information about any tourism activity. The Ukrainian State
committee for statistics (2006) provided the information that in 2006
100% of organizations and companies had the Internet access compared
to 35% among private individuals. However, this percentage is likely to
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grow fast simply because even in 2002 the amount of Internet users
increased by 2.5 times (Mironov 2004).
3.4.3. Current state of Kharkiv’s Travel Agencies
In identifying the aria of this research that is focused on Kharkiv region,
especially on the travel agencies in Kharkiv region, it is useful to provide
statistics related to this particular region. In the first half of 2006 there
were 250 travel agencies, but at the same year (2006) but in
consideration for the first nine months (only three months more) this
number increased up to 330 officially registered travel agencies (source:
Report on the work of the tour agencies and tour operators in the first half
of 2006; Report on the work of the tour agencies and tour operators in
the first 9 months of 2006).
Relating to the above discussion, the following questions occur: how long
can the market expand at this rate? What can be done when there is a
glut? What strategic decision should each travel agency take to stay
attractive and recognisable in the market? What does customer require
from the travel agencies nowadays? The Internet, without any doubt, can
be used if its real potential is understood. But are the travel agencies able
to utilise the Internet to its full potential and can the travel agencies cope
with the fast technology developments? The Primary research of this
work, with combination of the Secondary data analysis (Chapter 3), aims
to cover all these questions (Chapter 4).
3.5. Internet and its influence in different countries
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3.5.1. Background
Undoubtedly, the main impact of the Internet is that it revolutionises the
distribution system mainly by reducing the use of intermediaries between
producers and consumers; distribution and delivery chain is more
efficient; interaction between users create another source of information;
co-operation offers ability to aggregate different facilities, location and
people in one virtual space (Buhalis 2003, Buhalis and Deimezi 2004,
Cetron 2001, Oyturan and Roney 2004, Vasudavan and Standing 1999,
Vich-I-Martorell 2004, Vrana and Zafiroponlos 2006, Walle 1996). It is
also understandable that the Internet provides some aspects that are
seen as disadvantages, such as perceived lack of security of financial
transactions undertaken via the Internet and the importance of updating
the information regularly so that customers stay interested in exploring
the facility (Buhalis and Deimezi 2004, Cetron 2001, Oyturan and Roney
2004, Vich-I-Martorell 2004, Walle 1996). The main reasons behind the
use of the information technology in Tourism Industry are as follows: to
reach larger markets, to collect tourism information, to reduce costs and
to increase time efficiency, utilisation for marketing and direct selling
(Walle 1996). Furthermore, communication offered via the Internet
benefits the suppliers’ cooperation as well as the tourists’ information
sharing. All these provide for stronger and better relationship between
business partners as well as tourists.
The extensive use of Internet technology made changes in the structure
and operations of travel and tourism. One of them is disintermediation –
elimination of intermediaries within distribution channel (Bennett and
Buhalis 2003); these occur simply because customer can access the
supplier or even destination directly. In their research Bennett and Lai
(2005) suggest that to stay competitive on the e-tourism market space
travel agencies have to “reposition themselves as travel consultants and
become more technically orientated”. And certainly, agencies providing
niche product (gay tourism, over 60, extreme tourism and so on) are
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experiencing growth becoming more popular; customers still prefer to
stay with their providers and have a direct communication or use their
Internet facilities if any. Undoubtedly, Internet supplies extra tools that
can be applied to some part of the tourism industry that were not so
successful before. And we must not forget about the growth of ‘aggregate’
websites that contain mostly information about the product (destination,
location, country and so on) or bring together different suppliers in ‘virtual
space’ to make it easier for customers (traveller, tourist) to find all the
necessary information (hotel, maps, car rent, entertainment on so on)
(Willmott and Graham 2001 p. 32). All these changes revolutionized the
distribution channel, interaction and cooperation.
3.5.2. Analysis
There is a number of research projects undertaken in different countries
on the following topics: how the Internet changed the promotion and sales
of tourism products in Turkey among travel agencies (Ozturan, Roney
2004); the impact of the Internet on the travel agencies and their
distribution system in technologically advanced country as Taiwan
(Bennett, Lai 2005); even in 1999 Vasudavan and Standing raised the
question of how the travel consultants are seeing the impact of the
Internet on their work; as well as, after evaluation of the e-tourism
market in Greece by Buharis and Deimeri in 2004. A more narrowly
focused research was undertaken by Vrana and Zafiroponlos in 2006 on
tourism agents’ attitudes on internet adoption. The findings suggest that
Internet provided the ‘easy reach’ for the global market, additional mode
of communication, but on the other hand researchers identified the need
for travel agencies to become more technologically orientated as well as
improve the training for the agents to improve performance. Undoubtedly,
there are still problems of security of the financial transactions as well as
the need for social interaction.
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There are few main purposes in the use of the Internet as a part of the
service such as marketing, communication or cooperation, supply chain
and E-Business (providing service or products online). Summary of the
analysis of the Influence of Internet on company’s performance is
addressed below and is as follows:
• Marketing - Internet is an “Interactive multimedia platform”
(Buhalis and Deimezi 2004) for promoting the tourism product for
the end-user (tourist). Internet can provide video clips, virtual tours
and images in addition to the standard information. The Internet is
spread globally and can reach end users world wide. In 1996 Walle
discussed the “growing availability” of Internet resources in travel
and tourism for different users and the opportunities it provides for
“direct marketing”. Tourism, being the industry that offers mostly
the information or experience to the traveller that cannot be
sampled or purchased in advance and is perishable in nature
(cannot be stored) (WTO Business Council, 1999), benefits with the
use of Internet that enhance the promotion and distribution of
tourism service. One of the most powerful tools that the Internet
presents is E-Commence – where transactions happen via the
Internet between businesses or customers and between both
parties in order to market, buy or sell products or services.
(Summary of positive and negative sides of E-Commerce in Tourism
is provided in Appendix 2)
• Communication - One of the advantages that the Internet bring to
Tourism Industry is well explained by Roger (1995, 1976, in Buhalis
and Deimezi 2004) as Internet provides a “closer” relationship with
providers and customers. Porter (2001) underlined this as a
disadvantage because it gives more power to customer and reduces
the provider’s strength. However, on the other hand, Tapscott
(2000) suggests that the extensive use of technology creates
“economic value, customer value, shareholders value, and
community value” that embraces much wider aspect then Porter’s
‘Fundamental’ theory. It is important to understand that basics of
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The Six Principles of Porter’ strategic Positioning are accurate and
important in the modern world, but the Internet has to ‘be
interlaced’ with them and not be treated as a separate, unrelated
part (Porter 2001, Tapscott 2000)
• Supply chain - The main attractiveness of the Internet is to
facilitate and integrate different suppliers in one virtual market
space. The nature of the tourism products is characterised by a
large numbers of small suppliers who are located all over the world
as well as tourists that are geographically separated from their
providers. On the side of B2B relationship the Internet provides
competitiveness and collaboration. Archer and Yuan (2000) who
studied B2B relationships throughout the e-commerce procurement
life cycle concluded: (1) procurement process can be automated;
this will lead to lower transaction costs, higher volume, faster and
more reliable delivery to customers; (2) free up time for other
activities; (3) due to the investment needed to install or apply to be
part of the system, it can lead to a stronger relationship, because
“switching cost” will be high; (4) wide range of information
available about supplier and business partners. It is important to
remember that both parties should have the ability to use the
system. For example small travel agency may not have the power
to utilize the software (lack of resources – equipment, money, and
knowledge)
• E-Business - Siegel (1999) pointed out very well that E-Business is
not about the company doing everything for the customer on-line,
but it is about every person in the company using the Internet as a
tool to provide an external, extensive, and in some cases faster
service to the customer. Joo (2002) in his work proposed a
Business Model that emphasises the “players’ role and their benefits
to the electronic tourism market” (figure 2). This business model
highlights two major advantages: Direct revenue – sales;
transaction, advertising, consultancy, subscription, membership
fees; revenue sharing; and Potential revenue – customer
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experience, loyalty, brand image, trust. Such a model can be used
to achieve better results with the usage of Internet space as a
competitive advantage (Porter 2004, Tapscott 2000). However,
“Direct revenue” needs to have stable bases, support from
government and international organisations plus “Potential
revenue” needs to have clear aims and objectives to provide an
excellent service for the end user, tourist.
Figure 2: A Business Model for Electronic Tourism Market
Source: Joo 2002 p. 63
• E-Tourism is one of the ways forward in providing services through
E-Commerce and ICT allows not only to maximise internal efficiency
of the tourism organisations on the tactical level but also to
revolutionise all business processes with their stakeholders on the
strategic level (Buhalis and Deimezi 2004). However, the lack of
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information sharing or integration between the systems within the
organisations (public and private) in tourism industry limits the
performance improvements. In their research Palmer and McCole
(2000) observed the co-operations within the virtual organisation
(network of independent companies, suppliers, customers) and they
came to a conclusion that the collaboration happens only one way.
Nevertheless, it is obvious that “two way” information sharing
would benefit all the parties in any industry.
3.5.3. Diffusion of Innovation
One of the advantages that the Internet brings to the Tourism Industry is
well explained by Roger (1995, 1976) (sourced from Buhalis and Deimezi
2004) as the “Diffusion of Innovation”. The main idea is to transfer the
innovation (such as idea, object, practice or process) through different
channels. This allows individuals to communicate with each other and
share information, knowledge and experience with time efficiency (joint
problem solving exchanged in real time). These provided for better
relationship in Business-to-Business (B2B) interactions as well as created
a good atmosphere for Business-to-Consumer (B2C) ones as well. The
model itself includes several different stages: (1) knowledge of innovation
and understanding its functions; (2) perception and attitude toward
innovation and interest in exploring it; (3) a decision to adopt and invest
in innovation; (4) implementation stage – how innovation is put into use;
and the final stage (5) reinforcement of innovation – positive outcome
from its usage (Roger 1976, Roger 1995, Buhalis and Deimezi 2004).
After the research is undertaken and analysis is provided, it would be
possible to identify the role played by the Internet in Ukrainian Travel
Industry among travel agencies in Kharkiv region.
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3.6. Models of Tourism Development
Undoubtedly, targeting to increase income tourism, Ukraine needs to
improve its infrastructure, service provided, communication and so on.
Therefore, it is useful to identify and analyse on which level Ukraine
Tourism as a destination not only for foreigners, but also for local tourists,
is situated. To achieve this, two models of Tourism Destination
Development are used: Butler’s “The tourism area lifecycle” (1980 in
Butler 2006 pp. 3-14) and Prideaux’s “Destination Development
Scenarios” (2000). Consequently, this section addresses the above issues
and is divided on two parts, Background and Analysis respectively.
3.6.1. Background
The tourism area lifecycle, divided into seven stages by Butler (1980 in
Butler 2006 pp. 3-14), is one of the widely used models in tourism that
helps to identify the point that particular attraction, destination or whole
country is at in its evolution. The phases are Exploration, Involvement,
Development, Consolidation, Stagnation, Decline and Rejuvenation (the
latter can take different directions, as illustrated in Figure 3). (The brief
description of these stages summarised in Appendix 3)
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Figure 3: Butler’s Tourism Area Life Cycle model
Source: Baum 1998
The Butler’s model is a basic one and still provides some discussion on its
accuracy. Prideaux (2000, p. 226) identified that the model does not
include the economic factors as well as market place, plus the model does
not provide a “sufficient basis for developing planning or policy in tourism
area”. However, this does not stop other academics from using it as a
basis and develop more sophisticated, up-to-date models. Weaver (2000)
proposed “a broad context model of destination development scenarios”.
This model includes four stages that are based on correlation between
“the level of tourism intensity or scale, and the amount of regulation
associated with tourism sector” (Weaver 2000, p. 217). These levels are
Circumstantial Alternative Tourism (CAT) – non-regulation, small-scale
tourism sector (similar to Exploration and Involvement stages by Butler
1980 in Butler 2006 pp. 3-14); if the regulation is present then it is
Deliberate Alternative Tourism (DAT); Unsustainable Mass Tourism (UMT)
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the stage that was well described by Butler (2006 p. 9) as a logical
conclusion of continued tourism development without any restricted
regulation that goes beyond social, cultural and environmental capacities;
and Sustainable Mass Tourism (SMT)– high concentration, large-scale
tourism zone, but within limit and capacity. As illustrated on figure 4,
these four ‘ideal types’ can involve the transition from one type to
another. Weaver (2000) explains well in his article how this process
occurs which can help to identify in time undesirable trends in
development of the destination that can lead to an unsuccessful outcome
for the whole country.
Figure 4 : Destination development scenarious
Source: Weaver 2000
Nevertheless, Cooper et al already pointed out in 1993 that the future
development would be influenced by the variety of factors and one of
them was, without any doubt, technology. Consequently, when secondary
data is combined with primary one, after the research is complete,
Weaver’s model would help identify the most appropriate set of actions
that could be undertaken to achieve specific targets for the Ukrainian
government to consider in its tourism industry development strategy.
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3.6.2. Analysis and Identification of the Ukraine Tourism
using the Butler’s and Weaver’s models
According to the Butler’s Tourism Destination Development Model
(TDDM), Ukraine is at the end of the Involvement Stage with intention to
move to the Development Stage. PESTLE analysis (Chapter 3, section
3.2), Ukraine and EU co-operation (Chapter 3, section 3.3., statistical
facts in increased numbers of Travel Agencies (Chapter 3, section 3.4.)
and Internet Impact (Chapter 3, section 3.5.) addressed before in this
chapter, provides essential information to identify more accurately the
place on the TDDM of Ukraine destination development process. However,
it is more important to use this information in relation to providing a
framework for future development of Ukraine Tourism. To add, location in
TDDM does not give direct answers on the research questions. Only
combination of all internal and external factors addressed before in this
chapter plus primary research result and its analysis may help archive the
research aims.
First of all, the lack of funds from government does not make the process
very fast. On the other hand, there are a lot of foreign organisations that
are interested in Ukraine as a modern tourist destination. Ukraine is a
unique country that has mountains, sea, health facilities plus the history
of more then 2000 years. Obviously, with such long history, Ukraine did
pass all the Tourism Area Lifecycle stages, with the Decline stage
occurring during the collapse of the Soviet Union. All the facilities were
closed due to lack of resources and funds. Undoubtedly, this increased
chaos in the tourism branches. However, after the 1991 (Ukraine
Independence (Kubisek 2005 p. 278)) with the passage of time, the
country started to develop economically and that provided the foundation
for regeneration of the Tourism Industry. However, we should remember
that the Butler’s model does not include the economic factors identified
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above but they are important for identifying the exact stage of the
Tourism in Ukraine.
Weaver (2000) moved further and developed more advanced model;
however, it is still based on Butler’s one. This model does include the
economic factors, and also provides a basis for developing planning and
policy in tourism area. According to Weaver’s model the most suitable
phase for Ukrainian tourism industry is the beginning of the Sustainable
Mass Tourism (SMT). On the other hand, Ukrainian Tourism has a huge
potential that has not been fully explored. This should be the first priority
for the Ukrainian government together with a full appreciation of the
benefits the tourism can bring for the country’s economy.
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CHAPTER 4. Primary research analysis
This chapter will be divided into two sections: Data Finding and
Discussion respectively. The first section that discusses the Data
Finding is divided on two parts, semi-structured interviews and
questionnaire. This section aims to cover all the information discovered
during the research, addressing each of the research stages, Interviews
and Questionnaire, separately. The second section of the chapter is
focused on Discussion of the whole research findings. This includes both
secondary and primary data finding. This section embraces all the work
during the research, providing ideas and thoughts arisen throughout this
research. This particular section reviews how fully the research objectives
are covered and if the research achieves its main aim.
4.1. Data finding
4.1.1. Interviews
Overview
The primary focus of semi-structured interviews is the main objectives of
the dissertation that help archive the aims of the research. However, they
are not designed to limit interviewees’ responses. The structure of the
interview is intended to be flexible and open for cross discussion of
addressed questions.
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The main questions planed to be cover during the interview are:
• Are there any challenges that your travel agency is facing now with
the fast pace of technology innovation and particularly the Internet?
• How can you describe the Internet usage, its purpose and
effectiveness, if any, in your travel agency?
• What do you think of the increase year on year in amount of online
services?
• How can you describe the “meaning” of travel agency in Ukraine,
for example a first point of contact, information adviser, one of the
important participants in Ukraine’s economy and so on?
• Are there any barriers for Ukraine to join or have EU support in
developing and improving tourism sector and do you see it as
advantages or disadvantages for Ukrainian Tourism Industry?
• Is there anything your agency would like to achieve but there are
some issues that prevent you from being able to do it?
For convenience, interviews’ analysis is divided on two parts, Internet
impact and EU influence. However, it is important to understand that each
interview is different and unique in its nature. Even as the researcher tried
to maintain a more relaxed atmosphere and reacted according to the
situation, it was essential to keep focused on the subject. Obviously, each
interviewee had their own perception of what is important for his/her
company. This was noted and addressed below.
Analysis
The first part was mainly to stress the importance of Internet and its use
among Travel agencies, but was not limited by it.
All of the respondents identified that Internet becomes more important in
every day life. All of 10 use Internet in every day tasks. Almost all of the
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operations can be done through Internet like online booking, searching
for the travel package as well as fast acknowledgement of special rates
between the agencies. However, not all of these tools are used. For
example, special rates information is used by all 10, “it gives the
opportunity to search for special (cheaper) prices when the customer sits
in front of you”. However, on line booking was used only by 2
respondents, 6 from 8 that do not use online booking said that “it was not
safe”; 2 of 8 “preferred to have a document to prove the booking”, all 8
use fax to do the actual booking.
One of the threats to the business was mentioned by 9 of 10 interviewee.
More and more tourists these days are searching for the information about
location, prices and service themselves on the Internet. Even though, they
still come to the agency to buy the package, they demand a discount that
is “higher than commissions”, plus can go around several travel agencies
“to get a better price”.
One problem that agencies come across when using Internet as a tool
between their business-partners is: “the site is not prepared for so much
traffic”; this can complicate the work and cause a lot of problems such as:
“booking did not go through”, the prices that had been charged to a
tourist not updated on the site. This problem was identified by 8 of 10
interviewers.
The problem of disintermediation threat was completely differently
expressed compared to other European countries. 7 of 10 identified it as
an advantage and specified it as more “income to their travel agencies”.
None of the interviewees mentioned that the result can lead to the
business closure. Clearly, it is showing the lack of knowledge even though
it is addressed by research aim what exactly disintermediation can mean
for many travel agencies. Furthermore, 5 of 10 specified that they have
much more work with each individual client due to loss of some parts of
the selling procedure, but which parts was not clearly explained by any of
5. Moreover, all 5 presented it as disadvantage saying: “it requires us to
be able to present vast amounts of information to the tourist; information
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is hard to store and is hard to remember where to find”. All 5 referred to
guide books, catalogues and not mentioned the Internet as a possibility.
When Internet was mention as possibility, it raised a “new challenge” for
the travel agency to handle – “knowing how to find the information fast”.
Undoubtedly, with such a competition it is hard to retain tourists.
One of interviewees said that their agency provided all necessary
information and did understand that they were tourist information point
for any requests for information. However, it is believed that the tourists
do not feel that they use travel agencies as a tourist information center.
This can explain the increase in tourists’ knowledge about travel product.
It is possible that this knowledge is gained through usage of Internet as
was identified by 9 of respondents (as mentioned above). “Mostly all of
tourists are well prepared when they came to the agency”. In addition,
the agencies are expected to show a lot of knowledge of the product but
this can be difficult.
When EU was mentioned, most of the answers were divided on pluses and
minuses; however, having carefully analysed all responses it is clear that
there are many common views. They are as follows:
No visa requirement for Ukraine citizens: Advantages: 1) easy access to
any country in EU; 2) direct booking – no need to use a middleman
(Ukraine travel agency that has authority and agreement with foreign
company). Disadvantages: 1) active tourists can book on line; 2) tourists
can gain knowledge of easer and cheaper holidays faster through their
experience 3) no business for agencies that are heavily dependant on
income from visa applications
EU Membership: Advantages: 1) possibility to provided services abroad;
Disadvantages: 1) Requirement to improve performance, that can lead to
extra cost
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It is a weakness, not to receive any thoughts and ideas on the politics as
well as lack of funds issued by EU. The researcher strongly believes that
due to a lack of full support for democracy in Ukraine it would be very
hard for the travel agencies to follow the European standards. The travel
agencies can suffer and not survive on this competitive market. The
foreign travel agency can easily dominate the market and tourists
obviously would be happy to get better quality and wide range of services
provided, and benefit from such things as loyalty cards that are already
well developed in Europe. Tourists can easily identify such advantages
very fast.
It was good to hear some advice for the future development of Ukrainian
Tourism that was provided by interviewees. 8 of 10 identified the
importance of the creating an organisation that would be independent
where any of the questions and inquires can be discussed. This
organisation can provide consultation services on behalf of the
disintermediation and other important issues. And all of the participants
point to the importance of training that should be provided free or
completely free. This is very important for small travel agencies as well as
newly established ones.
After identifying such an interesting result of the interviews the researcher
decided to modify the questionnaire that was developed previously and
can be observed in Appendix 1. The new questionnaire has more direct
questions that make it easer to answer the proposed questions.
4.1.1. Questionnaire
Overview
The second part of the research involves quantitative analysis that entails
the usage of the questionnaire. As mentioned above, the questionnaire
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was developed and improved by use of semi-structured interviews.
Nevertheless, questionnaire still has limitations addressed in Chapter 2,
section 2.3. In addition, it still does not allow any further thoughts and
views. However, the questionnaire by its nature does not provide a facility
to add more information in answers that is required (Oakshott 2001, p.
17).
Due to the low response to the questionnaire, we have to analyse the
available number of responses such as 46. As was mentioned before
(Chapter 2, Section 2.2) 150 emails were sent to different travel agencies
randomly selected, in Kharkiv region after a final version of Questionnaire
was approved (Appendix 4). However, 36 emails returned as undelivered.
This can be explained by several reasons, such as recent closure, or
complete change of address. Such changes are not well received by
tourists. They prefer to know that the agency is still there when they get
back from their holiday, so they can share their knowledge or complain
about some problems occurred during their trip.
On the other hand, low response on questionnaire can be explained by
one of disadvantages of Internet addressed in Chapter 3, section 3.5.,
such as security. Due to the fast increase in viruses that can damage the
computer some of the emails are not even opened. The issue could be
addressed by phoning the agency in advance, explaining fully the research
aims, and only after that sending the email with agreed person. However,
this process requires time and may not address the whole problem.
In addition, lack of interest in the subject can also be attributed to low
response. However, it is possible that agencies are too busy to pay
attention and respond to questionnaire. That is obviously not beneficial for
overall study and can not adequately describe the whole picture of the
research aim.
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Data findings
Summary of the questionnaire responses is provided in Appendix 5 and 6
and give the opportunity to see the responses in numbers and
percentages respectively.
After analysing the questionnaire responses, following points come to
consideration:
• A majority (82.60%) of small Travel agencies that have fewer than
5 (82.60%) people involved in selling the travel packages (82.60%)
only and not actually organising it. Not to forget that almost all of
them are from Kharkiv city (84.75%) which makes their
performance even more competitive. These, plus fast increase in
numbers (Chapter 3, Section 3.4., Part 3.4.2. and 3.4.3.), only
confirm that the market can be easily glut and important steps from
both government and travel agencies’ sides are required to stay
competitive on the market.
• All of the respondents (100%) use Internet in their day-to-day
operations and majority of them identified Internet as “important”
(69.55%) or “very important” (15.25%) tool compared to “not
important” (4.35%) and “could not tell” (10.85%). These place
Internet as a useful tool for improvement of the travel agencies’
performance. However, the usage of Internet is mostly only
external (93.45) and as was discussed during the interviews
(Chapter 4, Section 4.1., Part 4.1.1.) is used only for the data
collection and not for 1) presenting the product – too expensive,
requires more capital investment than travel agencies can provide;
2) booking on line – increase speed of service;
• On the other hand, when addressing the question “Do you think you
agency is in step with technology and innovations?” majority
(84.75%) responded “No”. These provides for an opportunity to
understand how competitive the market can be if appropriate steps
are not taken to open the borders with EU (Chapter 3, Section 3.3.)
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• The barriers for travel agencies were identified as “Legislation”
(32.60%), “Lack of funds” (23.90%), “Competition (19.55%), Lack
of knowledge (15.25%) and other (8.70%) and provide an
opportunity for the government to see where main emphasis is
required for its focus.
• The Internet is not considered as a threat by majority of
respondents. On a question “Do you think it is possible that with
Internet tourists can easily skip the travel agency and for example
book on line?” 2/3 of the respondents (67.40) answered “No”
compares to 1/3 (32.60%) “Yes”. As well as “Neutral” (58.90%)
attitude of more than half of respondents towards E-Travel
Agencies show lack of knowledge on the subject. Undoubtedly, the
problem of disintermediation will occur in Ukraine in near future,
but lack of understanding of the situation can cause serious
problems. On the other hand, awareness of the problem and proper
preparation can lead to the success of any business or further
country development.
• On the subject of tourist information centres nearly all of the
respondents answered “Yes” (95.65%). However, going back to the
Interview analysis (Chapter 4, Section 4.1., Part 4.1.1.),
interviewees did not “feel” that the tourists understand that travel
agency can be used as information point. The actual understanding
of the tourists that they can use travel agency to gain useful
information can withdraw them from intensive use of Internet and
reduce the threat of disintermediation for travel agency. However,
the tourists can still believe that travel agency need only to sell the
package and not interested in spending time with each tourist,
trying to identify the interests, requests and so on. Nevertheless,
with such rapidly increased competition, travel agencies require to
specialise and provide more unique and qualify service to stay
competitive on the market (Porter 2004, Porter 2001, Tapscott
2000) or even survive in it.
• On behalf of Political aspect of the problem, almost all of the
respondents (93.50%) identified increased Political influence on
tourism industry and consequently on their performance. Majority
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(76.10%) compares to ¼ of respondents (23.90%) see Ukraine in
EU in near future. Even more of them (80.45%) think that it will
benefit the Ukrainian Tourism, consequently can provide some
support for their business. And even larger figure show the interest
in entering international market, 90.15%; this can be explained by
desire to stay competitive in the market.
• All of the respondents (100%) prefer to see their company with the
Internet or other innovation using for their advantages in a future.
This can be explained by understanding of the real potential of the
Internet or other technology and how it can benefit to the
company’s performance by reducing the cost and increasing the
efficiency.
To conclude, the above findings provide good ground for further
discussion that will be addressed in the next section and allow to see how
the aim of the research can be achieved.
4.2. Discussion
Undoubtedly, a comprehensive study is a challenge. Research tried to
embrace important aspects of the Ukraine Tourism Industry. Even though
the similar studies were undertaken before in other countries and provide
a good comparative guideline, the cultural, social, economical, political
differences make this research unique. This study can be used as a
beginning of understanding of the importance of communication and
cooperation, firstly, of the country’s government and its citizens, secondly,
on the international level between countries, and thirdly, weighing
carefully all the pluses and minuses of any agreements, studies and
innovation.
The findings in the Secondary data analysis and Primary data collection
provide an opportunity to analyse and make conclusions on their basis.
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Nevertheless, the appropriate discussion of the their grounds is useful and
can create further interest in the subject.
To begin with, opening the borders (Chapter 3, section 3.3) can provide
an opportunity for an “easy” increase in amount of incoming tourists.
However, it is very important not to “drop down” in Weaver’s model
(Chapter 3, section 3.6) from SMT to UMT. UMT can be seen as advantage
only in the short run. Lack of regulation provides a good foundation for
fast increase in number of tourists that will release extra cash and
improve economy for a short period of time. The damage that UMT brings
in a long run is unacceptable for the country’s long-term development.
Firstly, the number increases competition, and consequently, it reduces
prices on tourism services. Secondly, the environment can accept only
limited number of tourists and if this number is over a certain limit it ruins
country’s resources such as seacoast, mineral water and so on, increases
country’s waste products and so on. UMT can be only considered as fast
increase in “cash” and is misleading. The government’s interest is clearly
in the long run initiatives; its participation and support in legal aspects of
the problem, clear explanation of the problem and sharing the knowledge
with all interested parties and stakeholders can avoid such problems.
It is well known that there is an easy entry to the travel agencies market
space. There is no need for the big capital expenditure or provide wide
range of services for the small private travel agencies. It is fully up to
them how they establish and segment themselves in the market place
(Bennett and Lai 2005, Ozturan and Roney 2004, Vrana and Zafiroponlos
2006). As well explained by Cooper et al. (1993), the small independent
travel agencies need to control and carefully manage their operational
costs to survive in a long run, so they normally cut costs on advertising,
training and investing in new technology as well as keeping the salaries
low. This introduces a problem with the lack of experienced staff and with
combination of Internet can provide disadvantages in different arias of
travel agencies performance such as:
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Distribution and delivery chain
• Business travellers – can make a direct agreement with provider
(airlines, hotels); these types of tourists are less flexible than
leisure travellers (are less likely to search in the Internet for a
better deal).
• The rapid growth of “integrated” on-line companies –
customer can access all different types of information and the
websites can provide full package information (hotel, ticket, car,
map, location information and so on) and may compare the prices
from different online source for the customers’ convenience
• Provide a “major opportunity for innovative organisations and
destinations to improve their relative position in the international
market” (Buhalis and Deimezi 2004). For example, Lastminute.com
(www.lastminute.com ) was one of the first companies that did not
have the physical place where the tourist can come and interact
directly with travel agent; everything was done ‘on line’. On the
other hand the user (tourist or distribution company, for example
tour operator) can easily find a variety of information about any
destination, even those that before could be only explored by direct
visit.
• E-tickets, e-holiday package and all sorts of services that are
sold through the Internet save some of expenses that are normally
spend through traditional way of distribution (such as printing,
postage and etc.)
Interactions
• Internet allows tourism organizations to interact with all their
stakeholders, including potential and loyal customers, local groups
and public authorities.
• Tourists can share their experience on the web about destination,
hotel, travel agency service and so on, with the other individuals.
All this communication gives good grounds for community building
on the web
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Co-operation
• Ability to aggregate different facilities on the website for the
tourists. This can be achieved by a well-built B2B co-operation.
Internet made it possible for different providers (hotels, car hire,
theatres – such as ticket distribution, even small private companies
and so on) to come together in the virtual space (provided by one
of the involved companies or an independent one) when presenting
a service to the user. These destroy all geographical barriers that
were there before, and provide a time efficient and well organised
service that benefits both parties (providers and end customers).
However, when purchasing a holiday package, hotel room or air tickets via
the Internet, people are still insecure about their money transactions.
They must provide bank or credit card details that prevents some of the
users from using the Internet as a procurement tool. However, many of
them use it to gather information about destination, service or travel
package.
One of the other developments that needs identification is the importance
of quality improvement of the local tourism infrastructure. This was
mentioned during the interviews as a disadvantage and inability to provide
a service on similar level as in European countries. The lack of good hotel
infrastructure, good roads and quality service keeps Ukraine as the least
favorite countries to visit for foreigners. On the other hand, Ukraine’s
unique natural resources and long history of 2000 years are attractive for
tourists; there is an opportunity to see mountains, sea and forests as well
as historical artifacts in one go.
Addressing the issue about EU funds, there is obviously lack of knowledge
in this aria. 80.45% respondents answered that it would benefit to enter
EU for the Ukrainian Tourism. However, low response level suggests that
the subject of the research is not well understood at the moment among
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travel agencies. This obviously creates a problem that can be explained as
lack of knowledge and can be resolved by improving communication
between government and travel agencies.
On the other hand, there is also not much of competition for travel
agencies at the moment; the tour operators can provide similar service,
but they prefer to deal with quantity that can be supplied by travel
agencies and not with individuals. This is why, there is only 17.40 %
(Selling and Organising the travel package only 10.85% and Providing all
different tourist service 6.55%) that are involved in both selling and
organising the package. Obviously, the research did not target to
investigate tour operators group, but the above figures show that the
travel agencies in Kharkiv region, Ukraine are intermediaries (Chapter 3,
Section 3.4. Part 3.4.1.), and only involved in selling. This does not give
them a competitive advantage (Porter 2001, Porter 2004, Tapscott 2000)
so they are the first to be under influence of disintermediation. At present,
Travel agencies require to include and to be involved in all possible
services that can maintain or even raise the flow of tourists.
The discussion during interviews that the tourists are well prepared before
they seek an advice from travel agencies (Chapter 4, Section 4.1., Part
4.1.1.), show that majority of potential tourists can access the Internet
easily from work or use Internet Cafes that are widely used all over the
world. The Travel agencies have to maintain at least the same level of
knowledge to keep the tourists interested in service. However, it is
important to mention that tourists have their own desires and perception
of destination, so the travel agencies have to provide wide amount of
information to perform the service at a high level. In addition, legislation
(32.60%), lack of finds (23.90%) plus high level of competition (19.55%)
was identified as the major barriers for the successful business
performance of travel agencies. These can be addressed by high level of
government involvement through free courses, legal supports and advice.
Another issue that can influence the travel agencies’ existence is the
vertical and horizontal integration. This is simply because most of the
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travel agencies in Ukraine are independent small private organisations
that do not involve themselves in business co-operation in the long run.
This can be explained by such a high amount of new (fewer then 3 years
in operation) travel agencies (80.45%).
The government priorities (Chapter 3, Section 3.1.) show that the interest
is in improving tourism industry and gaining as much advantage from it as
possible by developing: new policies and regulations; domestic and
incoming tourism; cultural and farm tourism; competitive national tourism
products; and information technology strategy; at the same time
protecting natural resources. However, the message to the public need to
be clear and provide explanation why this is needed and how this can
benefit to the country’s further development, so the others (like travel
agencies) can understand and enable them to gain the most of it.
As was addressed in Chapter 3, Section 3.5., Part 3.5.2 (e-commerce
procurement life cycle), the Internet plays an important role in company’s
performance and when the full potential is recognised it can reduce cost,
provide a medium for interaction and communication, as well as access to
the wider range of information, that can be obtained faster than paper-
based material (catalogues) as was mentioned during the interviews.
Furthermore, with a use of Roger’s Diffusion of Innovation (Chapter 3,
Section 3.5., Part 3.5.3.), Internet could be placed at the last stage
(reinforcement of innovation) if its potential is fully understood. At this
moment, Internet, among Travel agencies in Kharkiv region Ukraine, is
placed only in the second stage (Perception and attitude towards
innovation and interest in exploring it). However, the knowledge from
other European countries can provide firstly, analysis of the mistakes and,
secondly, give the guidance towards achieving better results.
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CHAPTER 5. Conclusion
To conclude, Internet introduces a lot of new challenges to such a
complex and wide-spread business sector as Tourism. However, the
advantages it provides such as cooperation, communication, and
marketing seem to outweigh the disadvantages and challenges. The
Internet environment represents a significant opportunity for independent
suppliers, small enterprises and private organisations to cooperate,
compete and present their products without any “geographical” barriers in
a complex, changing, difficult and challenging tourism environment.
Without any doubt, the companies have to apply the technology in their
everyday operations to stay competitive and attractive to the both tourists
and business partners.
The easiest way to survive in the competitive market is to be well
prepared for any inconveniences. This allows to investigate, discuss and
seek solution that provides higher possibility to outlive or even avoid the
circumstances. The research offers an opportunity to see the current
situation on Kharkiv region Travel Agency Market and focuses attention on
the problem of Internet Impact.
Undoubtedly, Tourism is a very complex industry with disparate nature
and as such, the use of technology varies widely from one sector to
another. However, the Internet is a very powerful marketing tool in all
sectors from airlines and tour operator to small visitor attractions. Some
parts of the industry, like for example hospitality, are depended on the
technology in order to fulfil their day-to-day operations.
Travel agencies are using Internet as an information gathering point and
not as operational tool. This lack of understanding of the real Internet
potential can lead to some of them closing down. Consequently, this will
have major impact on the country’s economy. When tourism can be used
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as an advantage, such things like lack of knowledge, information and
interest on the similar situation in other countries, can provide completely
opposite outcome.
The misunderstanding of the disintermediation threat, does not allow
travel agencies to be prepared for the future “cataclysm”. The awareness
can help without any doubt. There are too many examples in Europe,
addressed in this study, to stay ignorant of the problem.
The political situation in Ukraine (Chapter 3, Section 3.3.) proved that
there are not many barriers for Ukraine to enter EU in near future.
Therefore, the government need to address all relevant issues and try to
come with appropriate solution. In case of Travel agencies, the fast
increase in completely new competitors such as foreign agencies, will be a
real challenge to stay competitive or even survive in the tourism market
5.1. Recommendations
Recommendations provide an opportunity for any study or research to
provide foundations for future research. The knowledge can be gathered
and improvements can be recommended for the future. Recommendations
can be divided into straight conclusions and future prospects. The straight
conclusions are the most obvious conclusions that can be reached from
the research and future prospect recommendations need to be developed
and applied in the future to provide a better opportunity for development
of Ukraine’s Tourism. The research conclusions and recommendations not
only address specific aims and objectives of this research but also can
help address wider issues, such as in this case to involve and engage
various participants and stakeholders in decision-making.
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5.1.1. Straight conclusions
a. This study focuses on travel agencies in Kharkiv region, mostly Kharkiv
city. The research is targeted to achieve the main aim that covers the
impact of Internet on performance of travel agencies. From the secondary
research that was addressed in Chapter 4 and Primary Data collection it is
clear that Travel agencies mostly consist from small, new companies.
The research that involves more participants can benefit to provide more
advanced and precise results. The areas for the research are:
• To undertake the research among local government, authorities and
organisations. This will improve the overall picture and will increase
the possibility of reaching better conclusions.
• To undertake the research involving travel agencies in other regions
of Ukraine. This will provide an opportunity to see the whole picture
in the Ukraine Tourism Market.
• To undertake the research with more personal touch, to have ability
to observe the respondents’ reaction and behaviour.
b. Lack of time and resources did not allow involving too many of the
participants . As has been described earlier in section 4.1.1. (Chapter 4)
in 2006 Kharkiv city had 330 officially registered travel agencies (Chapter
3, Section 3.4.3.). It would benefit the research to involve at lest 40% of
them to obtain better results. However, the government participation in
increasing funding in further research in Tourism, to provide better
results, will allow avoiding other barriers that small businesses such as
travel agencies can have in the future.
c. There is a requirement to improve the knowledge of the travel
consultants as well as to provide help and guidance in identification of the
potential barriers (as in the case of the Internet) is needed to be
addressed by government. The government can provide more support to
improve and maintain small business performance as well as help them
compete with potential for future growth
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5.1.2. Perspective recommendations
The influence of Internet on Travel agencies was more then once
researched in other countries (Bennett 2005, Buhalis 2003, Ozturan and
Roney 2004, Vasudavan and Standing 1999, Vich-i-Martorell 2004, Vrana
and Zafiroponlos 2006). The impact became visible at the end of the 20th
century and is still accurate today. Based on this earlier research as well
as the results of this present study, the following recommendations can be
made:
• The difference in Economic development between countries can be
used as an advantage. It is important to understand however that
this present research is not aiming to provide a new model to help
minimize impact of the Internet. However, it is worth mentioning
that one of the possibilities for the future development of the
Ukraine’s Tourism industry is to improve and increase the Internet
usage. Using example of other countries it is possible to find a
“fungible program, that is, capable of being put into effect in more
than one place” (Rose, 1993) and draw a lesson from it. Rose
(1993) develops the concept, which he called “lesson-drawing” that
provided an opportunity to learn a ‘lesson’ from mistakes. The main
aspect of the program is to identify as many similarities as possible
between two, or more cases, like environment resources, climate,
organizations involved in policy development; economical,
geographical, political, and cultural issues; in order to achieve the
best effect from “drawing” (Nash 2003). The process of lesson
drawing involves four analytical steps: searching for information;
making the cause-and-effect model; creating a lesson; and in the
final stage, evaluating the effectiveness of proposed program.
There are five alternative ways to create the drawing lesson model:
copying, adaptation, making a hybrid, synthesis, and inspiration
(Rose, 1993). After a careful evaluation, the lesson can be adapted
Page 68
58
from one of the European country and applied to achieve
improvement in Ukrainian Tourism Industry.
Page 69
59
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Appendix 1: Questionnaire – first sketch
I. General Information
1. Name of the travel agency: _______________________________
2. Number of years in operation on tourism market: ______________
3. City of location: ________________________________________
4. When compared to others travel agencies in Ukraine, the size of your
company:
Large
Medium
Small
5. Main service provided: ___________________________________
6. Number of staff:
fewer than 10;
fewer than 30;
more than 30;
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II. Internet.
1. Do you use Internet in your day-to-day operations?
Yes No
2. How important is Internet usage to your company? (from 1 to 5, when
1 is very important and 5 is not important at all)
1: 2: 3: 4: 5:
3. How many of your staff are using Internet everyday?
All; majority; half; minority; none;
4. Do you use Internet:
- internally;
- externally;
- both;
5. Identify 3 main issues of concern regarding the internal usage of
Internet:
1)______________________________________
2)______________________________________
3)______________________________________
6. Identify 3 main issues of concern regarding the external usage of
Internet:
1)______________________________________
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2)______________________________________
3)______________________________________
7. Do you think your agency is in step with technology and innovations?
Yes; No;
8. Do you see any other barriers for travel agencies and their success on
the tourism market?
___________________________________________________________
9. Do you think it is possible that with the Internet tourists can easily skip
the travel agency and for example book online? (disintemediation)
Yes; No;
10. What is your and your colleges’ opinion about E-Travel agency (doing
their business online)?
Positive; Neutral; Negative.;
11. Do you think of your agency as the provider of tourism information or
as a service?
Yes; No;
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III. European Union (EU).
1. In which scale do you think Ukraine Politics influence the tourism
industry (identify from 1 till 5, where 1 – very much and 5 – not at all)
1: 2 3: 4: 5:
2. Do you see Ukraine in EU?
Yes; No;
3. Do you think it would benefit Ukrainian tourism to join EU?
Yes; No;
4. Will your agency benefit or be disadvantaged by the EU agreements?
___________________________________________________________
5. Is your agency interested in entering international market or provided
service for foreign clients?
Yes; No;
6. If yes, how do you think it is possible for you to enter foreign markets?
__________________________________________________________
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IV. Future.
2. Do you see your agency’s future with the Internet or other innovations
of 20th – 21st century?
Yes; No;
3. What strategic initiation should be undertaken to survive in this very
competitive market?
___________________________________________________________
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Appendix 2: E-commerce supports functional
activities in tourism organisations
ADVANTAGIES DISADVANTAGIES
New cannels for the global
distribution
The customer has more power to
chose from different providers of
products or services
Enhance existing service Losing a personal touch – you do
not know the customers you are
selling your product or service to on
line; sending information to a
personal email that is widely sent to
everyone
Customer tracking, recognition
during the use of the system and
customer loyalty, direct
communication with a customer
The information provided on line by
customers can be irrelevant to the
particular occasion or will not give
the necessary information
Cost effective and time efficient in
order to manage customers,
suppliers, partners; to fulfil the
orders; to reduce the cost that was
spent on traditional distribution,
advertisement, paperwork and so
on
Necessary to know where to search
and what information is appropriate
– travel agencies are the
information bunkers, that keep a lot
of knowledge, consequently better
aware of the information
Provided a wider scale of
information to different users;
customers have access to faster
and better quality information
Provides strong advantages from
marketing point of view such as
high quality design, possibility to
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74
see hotels room on line in 3D
Can analyse and provide a
information on Just-In-Time bases
for suppliers, customer and
organisation itself
E-learning – combine learning and
work; all material available online;
same cost as traditional learning for
employee – travel expenses and so
on.
The importance to have knowledge
how to use e-learning software
programs; the high cost of training
program; the infrastructure
availability; feedback; motivation to
learn and so on.
Adapted from a variety of sources: Garces et al. 2004, Canziani 1997,
Collins, Buhalis and Peters 2003,
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75
Appendix 3: The tourism area lifecycle stages
Exploration Small number of tourists – few
adventurous ones, poor
infrastructure, close contact with
local people; very little social or
economical impact
Involvement Local initiatives begin to offer some
services for the visitors,
consequently causing the number of
tourists to grow, tourism season
and market area develops, pressure
on public sector to provide
infrastructure; seasonality and
advertising emerge
Development Large number of tourists, peak
periods, local population is not able
to provide full service, external
companies emerge with the
requirement of labour, facilities and
service improvement – all this may
cause issues such as overuse and
deterioration of destination;
increase in need of regional and
national planning and control as
well as to market destination in
international markets
Consolidation The rate of visitors declines,
however, the number is still enough
for the permanent residents; the
destination has all the up-to-date
facilities, chains and facilities are
fully developed; marketing
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76
campaign is used heavily to extend
the season and attract even more
distant visitors
Stagnation The destination no longer attracts
new visitors and mainly survives on
repeated visits; require a lot of
efforts to maintain the number of
tourists; may have social,
economical and environmental
problems
Decline Loss of interest in the destination,
only attracts small number of
tourists on small geographical area,
other facilities are now used for
other purposes. At this stage it is
possible to rejuvenate the
destination or completely change its
function
Rejuvenation Adapting or introducing new
channels, markets or usage of the
destination to attract new visitors;
often involves co-operation between
private and public sector to seek
and invest in new market to reach
recycle pattern
Source: Adapted from Butler 2006 pp. 3-14, Cooper et al. 1993, Tooman
1997
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Appendix 4: Questionnaire – final version
I. General Information
Number of years in operation on tourism market:
less then 3
between 3 and 7
more then 7
Location:
Kharkiv city;
Kharkiv region;
Other;
When compared to others travel agencies in Ukraine, the size of your
company:
Large;
Medium;
Small;
Main service provided:
Selling the travel package only;
Selling and Organising the travel package only;
Organizing the travel package only;
Providing all different tourist service;
Other;
Number of staff:
fewer than 5;
fewer then 10;
more then 10;
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78
II. Internet.
Do you use Internet in your day-to-day operations?
Yes;
No;
How important is Internet usage to your company? (from 1 to 5, when 1
is very important and 5 is not important at all)
1: 2: 3: 4: 5:
How many of your staff are using Internet everyday?
All; majority; half; minority; none;
Does your company use Internet:
internally;
externally;
both;
Do you think your agency is in step with technology and innovations?
Yes;
No;
Do you see any other barriers for travel agencies and their success on the
tourism market?
Luck of funds;
Competition;
Luck of Knowledge
Legislation
Other
Do you think it is possible that with the Internet tourists can easily skip
the travel agency and for example book online?
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79
Yes;
No;
What is your and your colleges’ opinion about E-Travel agency (doing their
business online)?
Positive;
Neutral;
Negative;
Do you think of your agency as the provider of tourism information or as a
service?
Yes;
No;
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80
III. European Union (EU).
In which scale do you think Ukraine Politics influence the tourism industry
(identify from 1 till 5, where 1 – very much and 5 – not at all)?
1; 2 3; 4; 5;
Do you see Ukraine in EU in near future?
Yes;
No;
Do you think it would benefit Ukrainian tourism to join EU?
Yes;
No;
Is your agency interested in entering international market or provided
service for foreign clients?
Yes,
No;
IV. Future.
Do you see your agency’s future with the Internet or other innovations of
20th – 21st century?
Yes;
No;
Thank you for taking you time to answer these questions.
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Appendix 5: Questionnaire Data finding
Section I
a
b
c
d
e
Question 1 37 5 4 n/a n/a
Question 2 39 7 0 n/a n/a
Question 3 2 6 38 n/a n/a
Question 4 38 5 0 3 0
Question 5 38 2 6 n/a n/a
Section II
a/1/All
b/2/majority
c/3/half
d/4/minority
e/5/ none
Question 1 46 0 n/a n/a n/a
Question 2 7 32 5 2 0
Question 3 5 41 0 0 0
Question 4 0 43 3 n/a n/a
Question 5 7 39 n/a n/a n/a
Question 6 11 9 7 15 4
Question 7 15 31 n/a n/a n/a
Question 8 10 27 9 n/a n/a
Question 9 44 2 n/a n/a n/a
Section III
1/a
2/b
3
4
5
Question 1 43 3 0 0 0
Question 2 35 11 n/a n/a n/a
Question 3 37 9 n/a n/a n/a
Question 4 41 5 n/a n/a n/a
Section IV
a
b
n/a
n/a
n/a
Question 1 46 0 n/a n/a n/a
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Appendix 6: Questionnaire Data Finding %
Section I
a
b
c
d
e
Question 1 80,45% 10,85% 8,70% n/a n/a
Question 2 84,75% 15,25% 0% n/a n/a
Question 3 4,35% 13,05% 82, 60% n/a n/a
Question 4 82,60% 10,85% 0% 6,55% 0%
Question 5 82,60% 4,35% 13,05% n/a n/a
Section II
a/1/All
b/2/majority
c/3/half
d/4/minority
e/5/ none
Question 1 100% 0% n/a n/a n/a
Question 2 15,25% 69,55% 10,85% 4,35% 0%
Question 3 10,85% 89,15% 0% 0% 0%
Question 4 0% 93,45% 6,55% n/a n/a
Question 5 15,25% 84,75% n/a n/a n/a
Question 6 23.90% 19,55% 15,25% 32,60% 8,70%
Question 7 32,60% 67,40% n/a n/a n/a
Question 8 21,75% 58,70% 19,55% n/a n/a
Question 9 95,65% 4,35% n/a n/a n/a
Section III
1/a
2/b
3
4
5
Question 1 93,50% 6,50% 0% 0% 0%
Question 2 76,10% 23,90% n/a n/a n/a
Question 3 80,45% 19,55% n/a n/a n/a
Question 4 90,15% 10,85% n/a n/a n/a
Section IV
a
b
n/a
n/a
n/a
Question 1 100% 0% n/a n/a n/a
