Conference PaperPDF Available

Digital infrastructure of service logistics: the case of the tourism industry

Authors:
Digital infrastructure of service logistics: the case
of the tourism industry
Natalia Vasilenko
Department of Economics
St. Petersburg Mining University)
St. Petersburg, Russian Federation
nvasilenko@mail.ru
Tatiana Lavrova
Department of National Economy
St. Petersburg State University of
Economics
St. Petersburg, Russian Federation
victoriatan@inbox.ru
Olga Tokareva
Department of Foreign Language
St. Petersburg Mining University
St. Petersburg, Russian Federation
ov-tokareva@mail.ru
AbstractThe article discusses the digitization of services in
the tourism industry. By applying the concept of service
product to the tourism industry, the authors claim that the
primary utility of a tourism product has a shifting nature and
discuss the features of additional, derivative, and accompanying
services as part of different types of tourism products. Logistics
services in the tourism industry are considered to be one of the
elements in the accompanying part of its service product. The
value of the logistics support provided to tourism products is
associated with the need to coordinate the efforts of tour
operators, service providers involved, and the tourists
themselves. The development of digital infrastructure is
interpreted both as a trend connected with the development of
the digital economy and as a ground for its servitization. The
article highlights the advantages of a single digital
infrastructure of the tourism industry and discusses its
influence on different types of logistics flows. It identifies a
number of areas associated with service provision which look
promising in terms of their inclusion in digital infrastructure. It
also contains examples of global systems and local technologies
as components of the digital infrastructure in the tourism
industry.
Keywordsservice logistics, digital infrastructure, tourism
industry, customization of tourist products, automation of service
products
I. INTRODUCTION
One of the fastest-growing branches of the global
economy is tourism. At the beginning of the XXI century,
international tourism accounted for about 8% of total world
exports and 30 to 35% of world trade in services. According
to forecasts made by the World Tourism Organization, the
number of international tourists may increase more than
twofold by 2020 and amount to 1.6 billion people.
Consumer interest in different tourism services continues
to increase, as evidenced by the following data on the number
of international tourist arrivals in all regions of the world
(Table I).
TABLE I. THE NUMBER OF TOURIST ARRIVALS IN ALL REGIONS
OF THE WORLD IN 2018 (IN MILLIONS)
Region
Year
2018
1
Europe
713
2
Asia and the Pacific
343
3
North and South America
217
4
Africa
67
5
The Middle East
64
a. Based on: International Tourist Arrivals Reach 1.4 billion Two Years Ahead of Forecasts.
URL: https://www2.unwto.org/press-release/2019-01-21/international-tourist-arrivals-reach-
14billion-two-years-ahead-forecasts (accessed 20.06.2019)
A growth in the scale of operation in the tourism industry
makes it necessary to improve resource management in this
sector [1], which results in the application of logistic methods
[2, 3] taking into consideration the accompanying functions
of logistics at all stages of the development, promotion, and
consumption of tourism products [4]. Under current
conditions, the most important type of service logistics is
information logistics, which consists of data streams that are
associated with tourist traffic and the flows of products,
services, and finance satisfying consumer needs [5].
In order to maintain high tourist traffic, increase the speed
of service, and improve the quality of tourism services
provided, digital technologies are increasingly being used,
including digital platforms and mobile applications which
influence consumer choices and make it possible for tourists
to search for information and buy tourism products [6, 7].
As the environment in which today’s tourism businesses
operate is changing due to digitalization, one can see how
companies are moving to the network format of using
resources to provide services involving data exchange with
counterparties [8, 9]. This sets the trend for the development
of digital infrastructure in the tourism industry.
The processual nature of the service as a market product
makes it necessary to analyze the dynamic aspects of the
development, promotion, and sales of service products,
which, in the authors’ opinion, is reflected in logistics
services. In this study, digital infrastructure is understood as
an open and ordered set of digital technologies which create
a technological foundation for data exchange with the view
of solving issues concerning production and marketing.
Having assumed that the technological transformation of
today’s economy is a combination of technological and
organizational transformations, the authors set themselves a
goal to analyze the interplay between the development of
International Conference on Digital Transformation in Logistics and Infrastructure (ICDTLI 2019)
Copyright © 2019, the Authors. Published by Atlantis Press.
This is an open access article under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).
Atlantis Highlights in Computer Sciences, volume 1
41
digital infrastructure and logistics support for service
products using the tourism industry as an example.
II. MATERIALS AND METHODS
Within this study, the concept of a service product which
was substantiated in earlier works by the authors [10] was
applied to the tourism industry. This concept is based on the
assumption that there is a good reason to combine products
and services in order to better meet the needs of clients [11].
It also relies on the features of service activities considered
within the framework of service marketing [12] and service
quality management.
It is possible to reveal features specific to service logistics
[13] using the tourism industry as an example because
tourism services are provided over a period of time and there
is a need to manage the provision of resources used in these
services depending on where and when a tourist is staying
[14]. The high differentiation of service products in the
tourism industry makes it possible to interpret the process of
their development, marketing, and consumption as a set of
flow processes in integrated logistics systems [15].
Digitization of activities in the tourism industry is
connected with the influence of mobile communications and
the Internet on the development of tourism [16, 17] against
the background of a digital divide [18] and revenue growth in
the host country [19]. It is also connected with digital
document management [20], the use of digital marketing
technologies [21, 22], and the effects of digital transformation
in tourism influencing productivity and management aspects
[23, 24].
III. RESULTS
Products offered by the tourism industry on the market
have all the features of a service product by being a set of
interrelated goods and services that meet the needs of tourists
taking into account the two-tier structure of utility. Goods and
services characterized by the secondary utility and creating a
foundation for differentiating the supply of tourism are of
highest importance to tourism companies willing to become
more competitive.
The structure of the tourism product can be decomposed
into main, additional, derivative, and accompanying
components. Services of different types have different values
in terms of how consumers perceive the quality of the tourism
product and in terms of the division of labor between
organizations in the tourism industry.
Logistics activities in the tourism industry have the
properties of accompanying services. The specific features of
logistics services in the tourism industry are determined by
the need to synchronize tourist traffic with the flows of goods,
information, and finance in order to meet the needs of those
consuming tourism products, first at the stage of developing
a tourism product and then at the stage of its consumption.
The development of digital infrastructure is a natural stage
in the integration of technical, structural, and organizational
components of systemic transformation into the economy.
Digital infrastructure of logistics flows, which puts together
different platforms used in tourism-related industries, leads
to a decrease in transaction costs in a world where contracts
are becoming more complex and the amount of information
being exchanged is growing.
IV. DISCUSSION
A. Service products in tourism and their logistics support
Today, there is no service industry which provides the
consumer with a service in its pure form without connecting
it to other goods or services. The opportunity of making one
service product which will combine several goods and
services interconnected in terms of their value for the
consumer is becoming the most important source of
competitive advantages for companies and organizations in
the tourism industry.
The development of service products in tourism is
influenced by the following features of tourism services:
the provision of a number of services implies the
consumption of certain material things which are
often closely linked to these services. For example, if
a tourist needs a transport service to get to a
destination, they need to buy a railway or airplane
ticket. If a tourist needs to use some online booking
services, they will need a special device (a
smartphone, tablet, etc.) and a SIM card;
the main service (accommodation, food, and
transportation) is accompanied by the opportunity to
use other goods and services. For instance, airplane
passengers can buy duty-free goods on board and
tourists staying at hotels can book tickets for concerts
using hotel services;
almost any service in the tourism industry is
accompanied by online financial operations, such as
booking and paying for a tour, checking in for a flight,
booking an excursion, etc.
From the consumer’s point of view, the following types
of utility can be distinguished in the service product:
basic (primary) utility, which correlates with meeting
the need which spurred the customer to purchase a
particular tourism product;
additional (secondary) utility, which enhances the
utility of a product in the customer’s eyes. It can be
objective (functional), for example, a decrease in time
spent waiting, or subjective (emotional), as is the case
with a hotel upgrade.
A key role in the development of a service product and its
logistics support in the tourism industry is played by the
shifting nature of the primary utility. The shifting nature
means that, firstly, different goods and services will or will
not have basic utility depending on different tourists, and
secondly, consumer preferences can change under the
influence of various factors. There is therefore an important
attribute of the tourism product in terms of its quality and
customer satisfaction, which is interdependence between all
components.
There is another important attribute of the service product,
which is interdependence between all its parts. The results of
studies in the field of assessing the quality of services confirm
that the perception of a service product in the customer’s eyes
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depends on how high each of its components scores in the
process of consumption.
Competition between services having primary utility has
already led to a situation where further improvement of their
quality depends on investing in product and technology
innovations. This is why opportunities for gaining
competitive advantages associated with the way the
consumer perceives the utility of a service product lie in the
additional components of the product, which differ
depending on the service company. In other words, they lie
in secondary utility.
In order to understand what a service product is made of
in terms of secondary utility, it is worth distinguishing
between three types of services:
additional services;
derivative services;
accompanying services.
Additional services can be divided into two groups:
compulsory services, which are provided by
companies in the tourism industry because the lack or
low quality of these services negatively influence
consumer opinion;
non-compulsory services, which enhance consumer
perception and make the company stand out from its
competitors.
Derivative services include services which are provided
due to the rules for the provision of services preceding
derivative ones in accordance with their nature and purpose.
The need for derivative services arises when the consumer
has the right to use the main service. Along with this right
goes the right to make use of different derivative services,
both commercial and those already included in the price of
the main service. For example, when staying at a hotel,
derivative services provided to the tourist are food services in
different forms (breakfast; breakfast and lunch; breakfast and
dinner; full board; all inclusive).
The number of compulsory and non-compulsory
additional services determines the category of the place
where tourists stay and the set of derivative services
determines the level of service chosen by the tourist.
Accompanying services cannot be found on the market as
independent items. They are provided to tourists as free
supplements because their price is included by the seller in
the market price of the service product instead of being paid
by the customer separately. Accompanying services in the
tourism industry take different forms (information, financial,
transfer, visa, and insurance services) and are provided at
different stages of service provision (Table II).
TABLE II. STAGES OF PROVIDING ACCOMPANYING SERVICES IN
TOURISM
The name of
the stage
Types of services
Preparatory
Marketing research on tourism services.
Development of tourism products,
including customized ones. Information
support.
Sales of tourism products, paperwork, and payment
services.
Main
Transport and accompanying services on the way to
and from the destination. Accommodation services.
Excursion arrangements and other
types of arrangements.
Solving customers’ problems in emergency situations.
Supporting
Receiving and processing feedback.
Developing and offering loyalty programs, individual
discounts, and club membership cards.
Sharing information about promotional events, etc.
As a rule, both basic and additional utility is created and
offered by a group of participants in the tourism market rather
than one company. For example, the tourism product
provided by one country consists of integration services
provided by tour operators and travel agencies, transport,
accommodation, and sightseeing services, services in other
sectors such as finance, banking, security, and insurance,
goods for tourists (souvenirs, food items, etc.), geographic
and climatic resources, landmarks, and attractions. It should
be noted that one and the same tourism product can be
valuable from the sightseeing perspective in one situation and
from the leisure perspective in another. This attribute makes
it possible to combine the model of a product with basic and
additional utility with the model of creating value chains in
the industry.
The division of services into basic, additional, derivative,
and accompanying ones can be used by tour operators with
the aim of optimizing the package of services when
developing tours which will be provided to tourists as a single
product. If it is a package tour which includes all kinds of
services regarding food, accommodation, sightseeing,
transportation, healthcare, and others, all tourism services
that the customer needs are included in the package during
the planning process as basic ones. For instance, they may
include visits to medical centers with tourists accompanied
by an interpreter. Inclusive tours offer a range of the most
popular basic and derivative services, and, as a rule, take the
form of a trip with the itinerary, dates, destinations, and
services specified in advance and sold as a single product at
a total price. Consumers buy additional services only when
they need them, which usually reduces the cost of the tour.
In both cases, tourists are provided with accompanying
services, but the forms of their provision may be different due
to the division of labor in the logistics system. For example,
a visa can be obtained simultaneously with the purchase of a
tour and be part of the tourism product, or it can be obtained
by a tourist after applying to a consulate or using services
provided by an intermediary organization.
One of the types of support provided to service products
is logistics support. Logistics is the management of objects
which, when static, form resources and, when dynamic,
become flows. In addition to resource flows, service logistics
is aimed at managing customer flows. In the tourism industry,
its function is to synchronize transport operations, as well as
corresponding material and staff flows, in the place where
tourism services are produced and consumed.
The importance of logistics support to tourism products
stems from the fact that the efficiency of tourism services is
directly dependent on coordination between all participants
in the service: tour operators, service providers, and tourists
themselves. The institutionalization of logistics services in
tourism is carried out by integrating previously unrelated
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types of services into a single cycle of customer service and,
as a result of the growing complexity of contractual relations,
by separating it into an individual line of service activities
which is quickly evolving. The result of providing logistics
support is the integration of functional areas related to the
movement of resources into a single resource flow system of
the service industry.
Service flows in tourism can be divided by the position
they occupy in service support into:
pre-sales flows, which are connected with the
development and promotion of tourism products and
cover market research, including the development of
new products and services, experimental evaluation
of a new tourism product, drafting papers and signing
contracts with the participants in the logistics chain,
personnel training in promoting tourism products,
marketing and sales of new tourism products;
post-sales flows, which are connected with
performing logistics operations in the provision of
services that are part of the tourism product.
B. Digital infrastructure for logistics support
The emergence of the digital economy is a process of
systemic transformation in which two interrelated
components can be distinguished:
technical component, which includes an ordered set of
tangible and intangible resources, i.e. a combination
of technologies and equipment;
organizational component, which is a combination of
methods, forms, and mechanisms responsible for
economic efficiency that are used to put together
tangible and intangible resources including risks
associated with the opportunistic behavior of
participants in organizational relationships.
The first component lays the groundwork for the second
one. The technological transition in the form of digitalization
has led to changes in the forms and mechanisms of interaction
between economic agents. The industrial economy is
characterized by the division of the process of creating goods
into separate production functions. These functions were
carried out using a system of machinery and equipment in
order to process natural resources with a gradual replacement
of manual labor with technology. Machinery acted as an
intermediary between the laborer and the process of creating
material goods, and its priority manifested itself in the fact
that the worker adapted to the machine and also ensured and
maintained its operation. The main form of economic
organization in such conditions was a large production or
processing company.
In the digital economy, not only the main but also
auxiliary service functions and processes are becoming more
universal. As part of the spread of digital technologies and
platforms, service functions and processes become more
efficient as they are performed beyond the limits of one
company responsible for the main production process. The
provision of such services to many partners creates a
foundation for improving their quality through specialization
and the division of labor in the service sector. As a result, the
development of the digital economy is characterized by a
seismic shift from the technical component to the
organizational one. At present, it manifests itself in the
separation of large companies into individual services using
digital technologies and platforms.
The fact that there is a large number of tourism
companies, which are usually quite small, along with the
differentiation of the tourism products they provide, leads to
an increase in transaction costs due to an increase in the
number of contracts and the amount of information. This
situation can be changed if digital technologies become
standardized and are used as a foundation for digital
infrastructure.
Digital infrastructure in the tourism industry is a
combination of technologies and products created with
the help of these technologies which make it possible to
collect, transmit, and store data in a safe way using
information systems in order to meet the needs of consumers,
tourism organizations, and regulatory bodies operating in this
area.
Since the process of providing a service product in the
tourism industry was previously described as a combination
of synchronized logistics flows, it can be concluded that the
digital infrastructure of service logistics is a foundation for
the digital infrastructure of the tourism industry as a whole.
There are several advantages of digital infrastructure over
a set of separate digital platforms. Among them is the
integrity of a network used for information transfer, as well
as flexibility, scalability, ease of integrating different
functional platforms, standardized management procedures,
and a decrease in operating costs.
Digital infrastructure in the tourism industry influences
logistics flows in different ways depending on their types
(Table III).
TABLE III. DIGITAL INFRASTRUCTURE AND LOGISTICS FLOWS IN THE
TOURISM INDUSTRY
Flow type
Function
Influence
Tourist traffic
Delivering consumers
to the place where
they will be provided
with services
Provision of
information about
products and services
in order to expand the
market for tourism
products
Resource flow
Functional support for
service provision
Coordination of
activities with service
providers in order to
synchronize resources
in time and space
Information flow
Information exchange
between the suppliers
and consumers of the
tourism product
Transition to
electronic document
management, tracking
the movement of
service product
components to the
buyer, timely reaction
to problems
Financial flow
Cash movement
between the suppliers
and consumers of the
tourism product
Control over financial
flows, increase in the
speed of transactions
between parties,
increase in the speed
of paying taxes
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In order to ensure that the activities of service providers
in the tourism industry are coordinated, digital infrastructure
should include a number of platforms covering such
industries as transportation, hospitality, catering, leisure,
culture, entertainment, sports, healthcare, edutainment,
telecommunications, and multimedia.
The most important component of the digital
infrastructure of service logistics in the tourism industry is a
global distribution system (GDS). The largest systems of this
kind are GALILEO (1987, headquartered in Parsippany, New
Jersey, USA), SABRE (1964, headquartered in Tulsa,
Oklahoma, USA), WORLDSPAN (1991, headquartered in
Atlanta, Georgia, USA), AMADEUS (1987, headquartered
in Madrid, Spain), and others.
Examples of local digital infrastructure elements are
digital technologies used in the industry in order to improve
the quality of services provided to guests:
facial recognition systems used at check-in and
checkout stages as well as in service provision;
radio frequency identification (RFID) door locks that
provide access to rooms and other spaces in a hotel
with the help of a mobile phone eliminating the use of
keys;
voice and gesture controlled systems in hotel rooms;
an interactive television system, for example, IPTV;
high-speed wireless Internet access;
a power management system based on the Smart
Building concept;
a service management system and the use of robots
for cleaning rooms, for example.
The use of the digital infrastructure of service logistics
lets companies in the tourism industry:
develop tourism products which will be more
relevant, attractive, and affordable, and shorten the
periods of their development and promotion;
create and use a single automated system for
accounting, managing the movement of tourism
products, and managing financial and information
flows in order to reduce operating costs;
reduce the volume of documentation and the number
of errors in documents;
optimize staffing without sacrificing the speed and
quality of service.
V. CONCLUSIONS
The systemic transformation of the economy happening
today is reflected in two interdependent trends: digitalization
(the technical component) and servitization (the
organizational component). When analyzed in terms of their
structure and the resources they require, service products
appear as static models aimed at meeting the needs of modern
consumers. The analysis of how service products are
developed, promoted, and consumed requires the transition to
logistics flows as a dynamic form of presenting service
products. It should be expected that as the service industry is
expanding, the value of service logistics will increase.
The servitization of the economy is accompanied by an
increase in the number of relatively small companies which
interact with each other while customers consume goods and
services which are part of a service product. The higher the
degree of digital integration, the more pronounced are such
effects as resource conservation, including economies of time
and a decrease in information costs. All the things said above
show that it is natural for the development of digital
infrastructure to serve as a foundation for the servitization of
the economy and for service logistics to be a dynamic form
of the consumption of service products.
The tourism industry is an industry where the level of
development of logistics makes it possible to analyze all the
features of the static and dynamic presentation of the products
it creates, and the level of digitalization makes it possible to
give examples of how both global and local elements of the
digital infrastructure are used.
The authors suppose that further research can be done into
how the digital infrastructure of service logistics is developed
in other service industries as well as into identifying factors
which guide the evolution of technologies and platforms that
are part of the digital infrastructure.
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... This strand addresses questions that overlap with the ones discussed here, but does not present any view of (digital) logistics. There is also a strand of research concerned with "e-logistics" in the tourism industry, that is, how digital technology can enhance efficiency in the organization and supply of services and goods, and the transportation of people (e.g., Dima, Ţ enescu, & Bosun, 2014;Vasilenko, Lavrova, & Tokareva, 2019). In those studies, however, logistics is understood in its traditional sense, as a more or less "neutral" science of orderly flow management. ...
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