CMI Working Paper
| 2004
Risk and disintermediation in tourism
Bergen: Chr. Michelsen Institute (CMI Working Paper WP 2004: 6) 19 p.
How to cite this publication:
Arne Wiig (2004). Risk and disintermediation in tourism. Bergen: Chr. Michelsen Institute (CMI Working Paper WP 2004: 6)
Tourism is an information-intensive market, characterised by asymmetric information between service providers and the customer. Intermediaries have traditionally played an important role as certifiers of products, and the revenue retention rate has been low, particularly for service providers in developing countries. This article analyses the conditions under which direct marketing on the Internet facilitates disintermediation in tourism.
Disintermediation and the profitability of using the Internet differ across markets according to available complementary factors such as human capital, technology and social capital. I will show that direct marketing on the Internet must be complemented by trust-enhancing institutions. These institutions do not exist in many developing countries, making disintermediation less likely.
I have conducted an econometric analysis of the hotel industry in 120 countries, examining the relationship between direct marketing and risk. Direct marketing decreases with uncertainty, when controlling for third variables (such as income level, PC penetration and education).
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