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As these preferences are determined, the algorithm then determines the best invitations to treat to present to the consumers. Today, these processes are powerful and can drive business at these websites, but they do not yet constitute bona fide interaction between the travel provider, the agent (website) and the consumer. Rather, the algorithms merely produce smarter sales pitches. At such a point when algorithms can literally cater to consumers' needs based upon the consumers' interactions the travel industry will be on the cusp of experiencing genuine co-creation. Co-creation at this point, however, is not an automated process. It must be conducted by humans. Given that more people are purchasing travel online than ever before, this would point to a decline in co-creation. It may be, however, that this technology will emerge in the next few years and truly transform the travel industry into one where co-creation is the norm.
Li and Petrick (2008) view co-creation as a future potential as well. They study the ways in which new marketing concepts have become integrated by the tourism industry. They found that while many new concepts have begun to be integrated, this has not yet happened in any broad, strategic fashion. Given that co-creation as Binkhorst has conceptualized it is a strategic choice, this would indicate that it has yet to be adopted by the industry as a whole. Technology has adopted the marketplace, but it has not inherently changed the market. Co-creation as a strategy choice would be a differentiated service, to use Porter's generic strategy typologies. With high value-added, co-creation would be a service function ancillary to the mass market travel that dominates the current landscape -- cruises, all-inclusives and online booking engines. The industry shift towards co-creation, therefore, will need to occur at the strategic level. Ultimately, this will need to be driven by consumers and a desire to gain unique experiences. This desire for unique experiences is assumed in the co-creation literature, rather than explicitly proven. The market statistics are the proof, and they still point to mass market tourism. The implication for the tourism industry is that there is room for a successful co-creation model. It may begin as a niche but over time has strong growth potential because of the value added.
This begs the question of why progressive marketing techniques like co-creation have yet to be adopted. Part of the answer lies in the willingness of consumers to adopt it, but this is not a satisfactory explanation in and of itself. If any market existed -- and we know that it does because independent travelers have been the authors of their own experiences since the days of Marco Polo and Ibn Battuta -- surely a company would have established dominance of that niche. The issue appears to lie in the slow pace of adoption of information technology by the travel industry. This slow adoption explains the rapid rise of online booking engines -- none of which had significant market share until perhaps a decade ago. Indeed, Murphy and Tan (2002) found that during the early part of the last decade most travel companies struggled with utilizing email, much less the complex algorithms needed to properly execute the co-creation paradigm. Poor technological savvy in the industry can also contribute to the findings of Li and Petrick that the travel industry is behind the curve in the implementation of new marketing concepts.
The move to a co-creation model would be spurred by improvements in the technology -- at some point a company would take advantage of the opportunities presented in the marketplace. Hu (2008) contributed an algorithm to aid in the development of software applications capable to transforming the travel industry to a co-creation model. Chiu (2007), having identified that the current websites are poor even at providing useful information much less taking a proactive approach to assisting tourists, has proposed a Collaborative Travel Agent System (CTAS) to resolve the issue. This system uses semantic web technologies and using agent clusters. The agent clusters may "comprise several types of agents to achieve the goals involved in the major processes of a tourist's trip." The difference between this paradigm and the current paradigm offered by booking engines is stark.
The CTAS design proposed by Chiu et al. (2007) features multiple agents, each of which bears a specialty. The current systems at work on Expedia, Travelocity, Priceline and other booking engines may feature one agent at a time -- hotels, airlines, car rentals -- but when these agents are combined, they set the terms in the form of a "take it or leave it" invitation to treat. The buyer can either make the offer or not. There is at best the illusion of interaction or co-creation. What Chiu et al. propose is that these agents function together. If the algorithm is sufficiently sophisticated as to function on an intuitive level -- as proposed by Hu - then the result will be that the consumer can enter parameters and receive a response containing a wide variety of options. Negotiations over features and terms would continue from there. The degree of ambiguity in such a process would require highly sophisticated algorithms that exist more on a theoretical level but are well within the range of possibility for today's mathematicians. Indeed, there is likely the means right now to surpass the current booking engines in terms of their ability to recognize the subjective preferences of the consumer.
Such technology would be the first non-human realization of Binkhorst's vision, shared by Prahalad and Ramaswamy. It is possible, however, that the integration of current technology and the human brain can produce these results already. That this does not occur more frequently is not a condemnation of the idea of co-creation, but rather a recognition that until the technological environment improves to the point where co-creation in tourism is easy for the consumer, it will not become mainstream.
While the technological development that will make co-creation possible is in development, the travel industry needs to consider what true co-creation will look like. Remember that the foundation of co-creation in travel is the idea of the experience economy. Morgan et al. (2008) explain the experience economy as "a view of consumer behavior which stress (es) the emotional, aspirational and participative over the functional and rational." The travel industry today can be seen as having mastered two elements of the experience economy. Travel marketing today is highly oriented towards the aspirational and the emotional, with all type of travel promotion featuring evocative imagery of idyll, of fun and of unique experiences. Tourists aspire to luxury, to adventure, to live the life found on the Travel Channel or in the pages of a Lonely Planet book. Where the experience economy has been slow to develop in tourism marketing is in the participative element.
Morgan presents the idea that the experience economy means that memorable experiences become a source of competitive advantage. The tourism industry has taken this lesson and applies it liberally in its promotions. Yet, the memorable experiences being marketed are broad-based, the consumer typecast, at least for large destinations and promotions in mass media. The idea that the consumer may wish to be the co-creator of his or her own experience is not foreign to the industry. Many major destinations use the ability to create multiple different types of memorable experiences as a source of competitive advantage. Such destinations have differentiated the experiences that they offer in order to appeal to more market segments -- consider Las Vegas adding shows, shopping, food, family-friendly entertainment and even desert/mountain ecotourism to its core gambling offering. This makes it clear that many tourism operators and destination managers understand the value of co-creation, but at this point they do not have a sophisticated means of developing it. The current model is focused more on providing options and allowing the consumer to choose from them, rather than a truly collaborative approach that would see the consumer work in an active way with the destination to create his or her own personal memorable experience. That would be true co-creation.
Another element of the experience economy or co-creation paradigm in the tourism industry is with respect to electronic word-of-mouth. Litvin et al. (2008) presents a study of this element of consumer behavior and its implications for tourism marketers. Consumers, Litvin notes, are heavily influenced by interpersonal influence. In tourism marketing today, that influence is almost entirely peer-based. Websites such as Tripadvisor.com provide an avenue for gathering of different information about destinations during the planning stages of a vacation. For tourism marketers, Litvin argues, managing these interactions is an important consideration in their business. For consumers, interpersonal influence helps to mitigate the risk associated with the major of an expensive but perishable commodity.
Tourism marketers, when designing their co-creation systems, must take into account the role that interpersonal influence plays. Their algorithms must include, for example, the verdicts of consumers on sites such as…[continue]
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