From E-business opportunities in Tourism to an island-wide E-Business Policy Framework for Curaçao
Willemstad, Curaçao, N.A., September 1st 2003
By: Klaas Jan Oldenburger
Supervisor University: Drs. A. B. W. Mintjes Co-supervisor University: Drs. D. F. F. R. Maccow Internal supervisor: Drs. M. Raphaëla-Boezen
‘Rijksuniversiteit Groningen’
Faculty of Management & Organization
From E-business opportunities in Tourism to an island-wide E-Business Policy Framework for Curaçao
Willemstad, Curaçao, N.A., September 1st 2003
By: Klaas Jan Oldenburger
Supervisor University: Drs. A. B. W. Mintjes Co-supervisor University: Drs. D. F. F. R. Maccow Internal supervisor: Drs. M. Raphaëla-Boezen
‘Rijksuniversiteit Groningen’
Faculty of Management & Organization
Index
Index ... 3
Management summary ... 5
Preface... 9
Chapter 1 - Introduction, background and methodology... 10
1.1. Introduction ... 10
1.2. SMEs on Curaçao ... 10
1.3. ICT use on Curaçao ... 10
1.4. Stimul-IT... 11
1.5. Background... 13
1.6. Research Methodology ... 15
1.7. Research methods ... 18
1.8. Business relevance: ... 19
1.9. Scientific relevance: ... 19
1.10. Timescale ... 20
1.11. Conceptual framework ... 21
Part 1 ICT opportunities in Tourism ... 22
Chapter 2 - Sector analysis Tourism... 23
2.1. Introduction ... 23
2.2. Research method... 23
2.3. Tourism organizations... 24
2.3.1. CTB... 24
2.3.2. CHATA... 25
2.3.3. CASHA ... 25
2.4. Sector analysis... 25
2.4.1. Tourism ... 26
2.4.2. CTB... 29
2.4.3. CHATA... 30
2.4.4. CASHA ... 31
2.5. Conclusion ... 32
Chapter 3 – Tourism SME Research ... 33
3.1. Introduction ... 33
3.2. Theoretical background and methodology... 33
3.2.1. E-business measurement ... 33
3.2.2. Adjustments for the E-business process support measurement... 37
3.2.3. Online transactions... 38
3.2.4. E-commerce opportunities for Tourism ... 38
3.2.5. E-commerce business model for Tourism and barriers to adopt ... 40
3.2.6. Barriers to E-business adoption ... 41
3.2.7. Impact of E-business application use ... 43
3.3. Research results ... 44
3.3.1. E-business application use ... 44
3.3.2. Specific E-business application use ... 47
3.3.3. Electronic payments ... 49
3.3.4. Internet sales & purchasing ... 51
3.3.5. Impact of current ICT use ... 53
3.3.6. Reasons to start offering product online... 55
3.3.7. Online travel engine use ... 56
3.3.8. Distribution of reservations & Information requests ... 58
3.3.9. Barriers for optimal E-business use: ... 60
3.4. Conclusion ... 61
Chapter 4 - Tourism project definition ... 63
4.1. Introduction ... 63
4.2. Tourism project(s) ... 63
Part 2 E-Business Policy Curaçao... 66
Chapter 5 - E-Business Policy Analysis ... 67
5.1. Introduction ... 67
5.2. E-business policy framework... 67
5.3. Regional benchmarking... 70
5.4. Current E-business policy ... 73
5.4.1. E-business ... 73
5.4.2. E-business awareness raising and training ... 74
5.4.3. E-business support networks for SMEs... 75
5.4.4. Helping SMEs to use internet platforms ... 75
5.5. Differential characteristics of an E-business policy for Curaçao... 76
5.5.1. SWOT analysis Curaçao ... 76
5.5.2. General e-business policy characteristics of the Caribbean... 79
5.6. Current barriers for (E-business) ICT usage... 80
5.7. Conclusion ... 81
Chapter 6 - E-business policy Framework Curaçao ... 83
6.1. Introduction ... 83
6.2. Set up of framework ... 83
6.3. E-business policy Curaçao... 85
6.4. Independent awareness raising and training ... 87
6.5. E-business support networks for SMEs... 90
6.6. Helping SMEs to use internet platforms ... 93
Conclusion... 95
Recommendations... 96
References ... 98
Appendices 1 t/m 8... 100
Management summary
This research is based on a general SME ICT use assignment provided by Stimul-IT in december 2002. This research assignment was primary focussed on qualitative SME research on which future policy actions could be based. Besides to this general focus, this research was also targeted on the identification of sectoral ICT projects.
During the need identification, this research developed towards a specific focus on ICT opportunities in Tourism (Part 1). Findings with regard to part 1 led to a second part focusing on a need analysis and set up of an E-Business Policy for the island of Curaçao.
Part 1 – ICT opportunities in Tourism
The research objective of the first part was: To improve the competitive edge in Tourism on Curaçao by initiating potential sector ICT projects based on sector analysis (sector organizations) and analysing businesses in the sector.
The first step was the execution of a sector analysis focusing on two sectors: Transport &
Distribution and Tourism. This sector analysis was based on semi structured interviews with key persons in the specific sectors. Opportunities identified with regard to Transport and Distribution were related to large companies and Customs which are not included in Stimul-IT’s strategy focussing on SMEs. This is why it was decided to focus this research on Tourism. The Tourism sector analysis included the Curaçao Tourist Board (CTB), CHATA (association also representing large hospitality companies) and CASHA (association representing small hospitality companies). The executed sector analysis resulted in two main opportunities for the sector Tourism: Increased use of E-Business applications and increased use of the fast growing online travel market.
The second step, the Tourism SME research, targeted at the CHATA and CASHA hospitality members, was based on mailed questionnaires and was focussing on getting more information about individual E-business usage in relation to business processes, use of the online travel market and impact/barrier analysis. The most important difference between CHATA and CASHA was the average size of their members. CASHA members were all small companies while CHATA members all could be identified as medium sized.
The SME research made clear that, for both organizations, knowledge was the most important barrier for not making use of the full E-business opportunities. This barrier is recognized different for both organizations. General Managers of CHATA members translated this barrier in ‘lack of skilled personnel’ because they did not see their personal lack of knowledge as a barrier. In contradiction to CHATA members, CASHA members are small businesses in which the general manager/owner’s knowledge is most important for the company. These managers recognized their personal lack of E-business knowledge as the most important barrier. This resulted in the first overall project, E-Business workshops. These workshops, for which material is provided by Syntens Netherlands and which are currently being used in their NGD project, are also integrated in the E-business Policy Framework in part 2 of this research and can be provided to the hospitality members as a pilot project. The individual E-business measurement results can be used to identify and offer specific (adjusted NGD) workshops as well as individual subscription by members based on their own needs.
The second project is focussing on CHATA members. The overall E-business usage should be further enhanced/increased to improve the members’ competitiveness. This project, the CEO Bootcamp, was set up to increase the awareness of general managers about the importance and way to set up and execute a company-wide E-business strategy. This Bootcamp should offer E-business expert information related to tourism and suitable for
implementation on the management level at relatively large hospitality companies. This in combination with the overall E-business workshops for employees and/or managers should increase and enhance E-business usage.
The third project was set up for CASHA members. CASHA members, in contradiction to CHATA members, are not making use of the fast online travel market. Almost all CASHA members are not selling their tourism services online. The CASHA E-Commerce project was set up to increase online sales of CASHA members. This project includes an initial sector specific E-commerce awareness workshop, an online travel engine feasibility study for members and a potential CASHA capacity planning system which can be linked to the members’ individual websites and possible online travel engines.
Part 2 – Set up of an E-Business Policy Framework for Curaçao
The second part of this research discusses the potential need for and set up of an island- wide E-business Policy for SMEs. The research goal for this second part was: To come up with recommendations to improve the overall E-business policy on the island of Curaçao based on a policy need analysis and the potential set up of an island-wide E-Business Policy.
The need analysis and the following set up of an island wide E-business Policy was based on the guidelines identified by the E-Business Policy Group of the European Commission.
This group consists of European E-Business experts that set up the guidelines based on benchmarking of European E-Business Policies. They came up with an E-Business Policy Framework and an E-Business Policy making process model which could be used for the final set up of the E-Business Policy Framework for Curaçao.
First of all, an E-business Policy should be seen as an umbrella policy that addresses the issue of promoting the use and benefits of E-business for SMEs. This umbrella policy should include an overall policy with clear and ambitious targets and three important elements:
awareness raising and training, E-business support network for SMEs and third, helping SMEs to use internet platforms. Based on this knowledge, the need for such an E-business Policy Framework had to be identified and also specific local and regional characteristics on which this potential framework should to be based. The following steps were used to identify this need and local and regional characteristics.
The first step was a regional comparison. This comparison was based on the criteria used with regard to E-business usage in the Global Information Technology Report. The regional comparison included: Jamaica, Trinidad & Tobago, The Dominican Republic, Honduras and Haiti (all included in the GIT Report) in relation to Curaçao. This comparison made clear that Curaçao is lagging behind its region. Policy actions were necessary if Curaçao wants to become and remain the most E-business using island in the Caribbean.
The second step was the evaluation of the island’s current E-Business Policy. With regard to an umbrella policy and the above mentioned framework elements, Stimul-IT and the Government are recognizing the importance of ICT use stimulation activities but there is no island-wide umbrella policy based on a clear rationale focussed on E-business.
The third step was to identify local/regional characteristics on which a future policy should anticipate. Stimul-IT has to cope with a high dependability on a third party, the government.
This dependability can be a threat for future funding (continuity). A second very important internal weakness is the lack of financial and human resources. A third important characteristic (threat) is the lack of cooperation and lack of coherent island-wide policies.
These characteristics resulted in the following issues with regard to the set up of a new island-wide policy.
Because of their relatively low resources, Stimul-IT should implement cooperation to be able to execute the needed island-wide policy. Besides to this, formalization of the E-business policy is necessary to assure government support and the needed cooperation on the long term. Finally, the setting up of an ‘umbrella policy’ should result in a coherent set of island- wide stimulation activities. Stimul-IT should be the initiator of this new policy. By setting up the island-wide E-business Policy Framework as an initiator, Stimul-IT can build on its opportunity to develop towards an even more island-wide respected organization.
The fourth step was the identification of current barriers based on internal SME research reports. The most important barriers on which future policy actions should be based are:
‘Lack of awareness’ and ‘lack of knowledge’.
Based on these analyses, an E-business Policy Framework was set up by making use of the E-business Policy Group guidelines and their Policy Making Process model.
The overall E-business Policy should focus on becoming the most E-business using island in the Caribbean. This overall E-business policy and the three elements should be integrated in the Multiyear Economic Programme of the Department of Economic Affairs. In this programme, the needed cooperation with other organizations should be formalized and include detailed tasks and responsibilities.
Awareness raising and training:
As the most important element, based on the identified barriers, E-business should be fully integrated into the current awareness activities and training. With regard to awareness, Stimul-IT should integrate it into their complete communication spectrum (newsletters, seminars, brochures, website and the awareness campaign that is currently being set up).
With regard to training, Stimul-IT should cooperate with SESNA to integrate adjusted E-business workshops, provided by Syntens in the Netherlands, in their SME training programme.
SME-Support network:
Stimul-IT should cooperate with the Chamber of Commerce and SESNA as the most important partners with regard to this E-business Policy Framework. This cooperation should lead to an E-business Support Network. This network includes Stimul-IT as the most important E-business information contact point for SMEs. This support network includes, General E-Business information and advice (Stimul-IT, Chamber of Commerce and SESNA), E-business Training and expert advice (SESNA), E-business related product or service related SME demands (Stimul-IT) and finally financial support in relation to E-business related investments (Stimul-IT, SESNA and the Chamber of Commerce). This support network should also be integrated in the SME Portal that is currently developed by the Chamber of Commerce and Stimul-IT.
Helping SMEs to use internet platforms:
Currently, the Chamber of Commerce is cooperating with SESNA on the introduction of an SME internet platform. This cooperation includes all elements like awareness, support and helping SMEs with access, but still is in the initial phase of development.. The primary goal of this element is to increase the number of SMEs that is selling their product online. This can be accomplished by the current cooperation between the Chamber and SESNA, but Stimul-IT, as the initiator of the island wide E-business Policy should thoroughly monitor and evaluate this project. Another important issue necessary to reach the target is to improve the island-wide E-commerce conditions which should be executed by Stimul-IT in cooperation with the Chamber. E-commerce conditions should continually be monitored and evaluated to improve the E-commerce environment for the local SMEs.
The E-business Policy as explained above should include a well developed evaluation mechanism. This evaluation mechanism was set up and included in this research (appendix 8). By making use of this questionnaire, the effectiveness and improvements can be measured on which the overall and element policy rationales can be adjusted if necessary.
This research led to several recommendations based on both parts of this research which are presented on page 96 of this report.
Preface
This research was conducted for Stimul-IT Curaçao. Stimul-IT is the secretary bureau of the C.I.S.P., the ‘Curaçao Informatica Stimulerings Plan’. This programme was set up in 1997 by the Department of Economic Affairs to stimulate the use of ICT in small and medium sized enterprises on the island of Curaçao. Stimul-IT is executing the island-wide ICT use stimulating activities.
The research is based on a general SME ICT use assignment provided by Stimul-IT in december 2002. This research assignment was primary focussed on qualitative SME research on which future policy actions could be based. Besides to this general focus, the focus of this research was also targeted on the set up of sector ICT projects.
During the need identification, this research developed towards a specific focus on ICT opportunities in Tourism, an analysis of the overall E-business policy on Curaçao and finally the set up of an E-business Policy Framework for Curaçao.
Internally, this research was supervised by Mrs. Raphaela-Boezen who I would like to thank for providing the needed research support and knowledge of the local situation with regard to ICT use and SME stimulating policies. I would also like to thank Mr. Ricardo and Mrs. Kuwas.
Mr. Ricardo for his cooperation in the executed sector analysis and Mrs. Kuwas for her daily support.
I also would like to thank Syntens, the ICT stimulating organization in the Netherlands, and especially Mrs. Van der Veen. Based on this relation, I was able to get the necessary information and documentation to set up the final E-Business Policy Framework for the island of Curaçao. Syntens even provided E-business workshop material which can be used as part of the awareness raising and training element in the E-Business Policy Framework for Curaçao.
As a Small Business and Entrepreneurship & International Business student at the Faculty of Management and Organization of the University of Groningen, this research was supported by Mr. Bernd Mintjes who is also employed by Syntens. I would like to thank him for his support and necessary feedback with regard to my research process and final research report. I would also like to thank Mr. Maccow who provided the necessary feedback in the final phase of this research as the co-supervisor.
Chapter 1 - Introduction
1.1. Introduction
Before the methodology of this research is discussed (paragraph 1.6), it is very important to get a clear picture of businesses on Curaçao, the latest results in relation to ICT use of SMEs on the island, Stimul-IT as an organization and the background of this research. These issues will be outlined in the following paragraphs.
1.2. SMEs on Curaçao
As an introduction, it is important to get a clear picture of businesses on Curaçao and their distribution based on the company size.
The SME sector is very important for the island. According to research conducted in 2001 (most recent figures), almost 97% of all local businesses are SMEs, based on the CBS Curaçao definition (businesses with less than 50 employees). As stated in paragraph 1.6, the Dutch CSB definition of SMEs and its distribution is used for this research. This means businesses with less than 100 employees distributed in small (less than 10 employees) and medium businesses (more than 10, less than 100 employees). CBS Curaçao was asked to redistribute the CBS Curaçao distribution into the Dutch CBS distribution which led to the following distribution. Based on these figures, the underneath distribution of SMEs on Curaçao shows a SME percentage of 99%.
Type Small Medium Large Total Total
Nr. of employees <10 10-<100 MKB Curaçao
Total 3746 597 65 4343 4408
% SMEs 86% 14% 100%
% total Curaçao 85% 14% 1% (99%) 100%
Figure 1, Distribution Businesses on Curaçao (Source: CBS Curaçao)
Small businesses account for 86% of all SMEs and 85%% of all businesses on Curaçao and are very important and characteristic for the local economy. For this research it is important to know the relative importance of the tourism sector. Based on CBS Curaçao figures, the tourism sector accounts for 16% of the local SME sector. There are no exact figures about the percentage of small en medium businesses in tourism in relation to the total SME sector, but according to the CBS Curaçao, about 75% of all tourism SME companies are small.
1.3. ICT use on Curaçao
Like stated in the latest report about the ICT use in SMEs on the island Curaçao
1
, the SMEs on Curaçao still stay behind if compared with the developed countries in the rest of the world with regard to the use of internet for several business processes. Also stated in this report is the percentage of non (ICT) users on Curaçao which is still 27% compared to, for example, 7% in the Netherlands. When we take a look at the company use of ICT, it can be concluded that although the number of organizations with 5 or more employees is up to par2, the ways1 Stimul-IT, (ICT use in SMEs) 2003
2 CICA, 2002
in which ICT is used is not. ICT is mostly used for support: financial administration, payroll and client registration3.
Besides to this, indications are that ICT use in SMEs with less than 5 employees is significantly lower. Based on these facts it can be concluded that SMEs on Curaçao still do not use the ICT possibilities in their business operations in an optimum way. The SMEs have to be further stimulated to improve their use of ICT.
Information and communication technologies (ICT) are fast becoming the basis for economic development because of its positive influence on efficiency, effectiveness and globalization.
Furthermore, it has been argued that the future economic health of regions and countries will depend upon their active participation in such technological developments and that failure to participate will have important negative consequences mainly based on the resulting technological gap4. This is why Stimul-IT should focus on increased participation of the local businesses with regard to these technologies which is necessary based on the current percentage of non ICT users and the way in which ICT is used.
Besides the increased importance of ICT for economic development, there is also the competition in the region which makes ICT stimulation very important. Direct competition on ICT use from islands and countries in the region is increasing. Examples are Barbados, Trinidad and the Dominican Republic. Stimul-IT wants Curaçao to be the most ICT developed island in the region. Stimul-IT worked hard on conditions for ICT use (for example the reassessment of import duties on ICT related imports), but has to watch these Caribbean islands’ ICT use developments.
1.4. Stimul-IT
The government on Curaçao also recognized the fact that ICT is very important for the economic development of the island. In their policy the government states two spear points for economic development:
1. The necessity of the development towards an open knowledge economy (ICT).
2. The emphasis on the SMEs as a target group that deserves special attention (SME).
The ‘Curaçao Informatics Stimulating Plan’ (CISP) is an initiative taken by the
‘Bestuurscollege (BC) van het Eilandgebied Curaçao’. The main objective is based on the above mentioned government policy and is primary focussed on SMEs:
“To improve the competitive position of Curaçao by effectively and efficiently applying information- and communication technology (ICT) by which possibilities of increased company earnings and reduced company costs are created”.
The CISP is executed by the ‘Stichting Secretariaat CISP”. This foundation consists of a foundation board and the secretariat bureau. The secretariat bureau is operational since 1997. The board is managing and coordinating the program and the secretariat bureau is applying the board’s policies on a daily level. The secretariat bureau operates under the name: ‘Stimul-IT’.
Based on the just mentioned objective Stimul-IT has been offering island-wide advice and information on ICT use since 1997. Stimul-IT is located in the WTC Curaçao (Willemstad) where 5 employees are continuously active to improve the use of ICT on the island. Since the start of the ‘Zorgovereenkomst 1999/2000’ the BC has acknowledged Stimul-IT’s
3 Stimul-IT, (ICT use in SMEs) 2003
4 Gibbs and Tanner, 1997:765
activities as a primary government ‘care-task’. Based on this agreement Stimul-IT supplies three stimulating services5:
1. To inform the businesses of Curaçao about ICT and the meaning of ICT for their operations:
With seminars and publications Stimul-IT is informing the businesses on Curaçao about the advantages they can achieve when they make use of specific ICT applications in their total operations. Stimul-IT is also focusing sessions on the technical use of ICT.
2. To improve the conditions for ICT use:
At this moment, the government is primary responsible for creating conditions for an optimum business-climate. The ICT-infrastructure, nowadays, is an important part of our business climate. Stimul-IT supports the government with her policy-task to improve the ICT-climate on Curaçao. Besides to this, Stimul-IT is also stimulating the private sector to improve the ICT-infrastructure on the island.
3. To initiate and support (sector-specific) ICT-projects within sectors which add value to the competitive position of business on Curaçao:
Several concrete projects can be identified which directly improve the competitive position of businesses on Curaçao. At these projects, Stimul-IT operates as initiator and/or project manager.
The above Stimul-IT services are shown in figure 2.
Figure 2, Stimul-IT services based on ‘Zorgovereenkomst 1999/2000’
For a good understanding of what Stimul-IT stands for, Stimul-IT’s strategy towards the future will now be explained6.
5 Stimul-IT, 2002 (Jaarplan 2003)
6 Stimul-IT, Strategy 2003-2005, 2002
C.I.S.P.
A- Inform SMEs on Curaçao about ICT
possibilities
B- Improve conditions for ICT
use
C- Initiate and support (sector) ICT projects that improve the competitive position of Curaçao
Transport
&
Distribution
Tourism Financial
services
Stimul-IT’S mission:
“Improving the competitive position of Curaçao by the effective and efficient use of ICT.”
Stimul-IT’s Vision:
“Become an ICT knowledge center, that stimulates the creation of a knowledge society and
that’s effective, well known and respected by the business community, the community at large, and government.”
This mission and vision resulted in the following strategic goals:
• Inform: become the ICT knowledge center where people go first.
• Be a catalyst: Pro-actively stimulate high quality and innovative use of ICT.
• Stimulate: Identify and pilot ways in which ICT can be used toward economic development.
• Provide assistance and advice: Become a discussion partner for public and private organizations.
This research should contribute to one or more of these strategic goals on which will be referred in paragraph 1.6.
1.5. Background
In the yearplan 20037, Stimul-IT concludes that in the last two years, a lot of attention was paid to the improvement of ICT conditions while they should be focussing more on initiating and supporting ICT (sector) projects.
Based on this conclusion, initially this research will focus on the third Stimul-IT service according to the ‘Zorgovereenkomst 1999/2000’, initiating and supporting (sector) projects.
At this moment, specific projects should be identified which directly improve the competitiveness of businesses on Curaçao. As mentioned in paragraph 1.4, at these projects Stimul-IT operates as the initiator or/and as project-manager. As shown in figure 2 Stimul-IT focuses her sector projects on three specific sectors: Transport & Distribution, Financial Services and Tourism.
Because the ICT-use in the financial services sector is up to par with the rest of the world, special attention is needed for Transport & Distribution and Tourism8.
At first sector analysis on Transport & Distribution and Tourism were started. In the beginning of the analysis it became clear that there were only real opportunities in Tourism. There were also some opportunities for Stimul-IT at Transport & Distribution but they were mainly focussed on large companies and Customs which are not in line with Stimul-IT’s strategy focussing on SMEs. Based on these initial results, this research will focus on the sector Tourism.
Based on the results of the sector analysis, further research was necessary. A clear picture of the current ICT-use in the tourism sector and barriers for ICT-opportunities were needed.
Chapter 2 will discuss the sector analysis and its outcomes. Chapter 3 will focus on the SME research in Tourism and in Chapter 4, the tourism project will be defined based on international policy material and policy guidelines.
7 Stimul-IT, Yearplan 2003: 2002
8 Stimul-IT, Strategy 2003-2005, 2002
After the first part of this research: tourism sector analysis, tourism SME research and project definition, it was concluded that Curaçao is missing an overall E-business policy. Based on this conclusion, part 2 (Chapter 5 & 6) of this research will focus on an evaluation of Stimul- IT’s current ICT policy, the need for a thorough E-business policy framework, benchmarking Curaçao with its region and other international countries and finally, recommendations based on these findings.
Figure 3, Structure research report STRUCTURE RESEARCH REPORT Introduction
Part 1 – ICT Opportunities in Tourism Chapter 2
• Sector analysis Tourism o Methodology o Results o Conclusions Chapter 3
• Tourism SME research
o Methodology & theoretical background o Results
o Conclusions Chapter 4
• Tourism project definition
Part 2 – E-business Policy Curaçao Chapter 5
• Analysis E-Business Policy Need Curaçao o Regional comparison
o Evaluation E-business policy Curaçao o Analysis of regional and local
characteristics o ICT use barriers Chapter 6
• E-Business policy frameworks in general
• Set up of an E-business Policy Framework for Curaçao
1.6. Research Methodology
Now the background of this research has been defined, the research methodology will be discussed. The first part of this research will focus on ICT opportunities in Tourism. The second part of this research is partly based on the conclusions and needed policy actions with regard to the first part and focuses on a potentially needed island wide E-business policy.
For both parts of this research, the research objectives will be given, based on the Stimul-IT strategy and evaluation in the Year plan 2003 and the conclusions in the first part of this research, second the main research questions followed by the sub-questions which need to be answered to achieve the two research objectives.
At the end of this paragraph the conceptual framework (combining part 1 & 2) of this research will be given.
Objective Part 1:
“To improve the competitive edge in Tourism on Curaçao by initiating potential sector ICT projects based on sector analysis (sector organizations) and analyzing businesses in the sector”.
Main research question:
“Which projects can be set up to improve the competitive edge in Tourism?”
Sub-questions:
In order to reach this first research objective, the following questions need to be answered:
1. What are the main developments in the sector (in relation to business and ICT)?
2. Which initial ICT opportunities exist for further improvement of the competitive edge for businesses in the sector (Tourism)?
3. What is the current ICT use in the sector with regard to the defined opportunities?
4. How can this ICT use be evaluated internationally?
5. Which projects can be initiated based on the above mentioned opportunities and evaluation?
Objective Part 2:
“To come up with recommendations to improve the overall E-business policy on the island of Curaçao based on a policy need analysis and the potential set up of an island-wide E- Business Policy.”
Main research question:
“How can Stimul-IT’s E-business policy be improved?”
Sub-questions:
In order to reach this second research objective, the following questions need to be answered:
1. What can be concluded about E-business policies and policy frameworks in general?
2. What is Curaçao’s relative position in comparison to the Caribbean region with regard to E-business usage?
3. What can be concluded about Stimul-IT’s current E-business policy?
4. Which local characteristics are important for future policy actions?
5. What recommendations can be made for Stimul-IT’s future E-business policy?
Operationalisations:
1. SME
For this research, the Dutch CBS definition of SME (Dutch: ‘MKB’) will be used to be able to make comparisons with The Netherlands which will be the most important benchmark country with regard to ICT-use and policy.
SMEs are all businesses with less than 100 employees. This group can be distinguished in small and medium businesses where small businesses have less than 10 employees and medium businesses 10 till 100 employees9.
The local CBS uses the same definition, but large businesses start from 50 employees. The description of the local SMEs in Chapter 1 is based on this local CBS definition.
There are a lot of differences between small and medium businesses why this separation is very important for the analyses.
2. Sector Tourism
After the sector analysis, it was decided to take all the hospitality businesses in the sector.
So when ‘tourism’ is used in this research, it stands for all hotels, small hotels, apartments, bungalows & resorts. For example, car rentals and local attractions are not included.
3. E-business
In this research, the definition of electronic business is based on the assumption of the Dutch EZ-department that it is not limited to the use of internet-related applications and e-mail. In this view, electronic business means that:
“A firm, with the help of applications like e-mail and internet, electronically:
Offers or gets data Exchanges data and/or
Enters into or concludes an agreement
with another party in order to improve business processes10”.
As often sited, E-business can be seen as the principal gateway for SMEs to take a greater advantage of opportunities in (global) markets. E-business should be supported by ICT as leading-edge business tools.
4. E-commerce
E-commerce is just a part of the above mentioned definition of E-business.
According to Laudon and Laudon it is the process of buying and selling goods and services electronically involving transactions using the Internet, networks and other digital technologies11.
E-business is a wider term and can be used for all business activities (information, interaction
& transaction).
9 CBS, 2003
10 EZ, 1998
11 Laudon & Laudon, 2000:25
5. E-business policy
In this research, an E-Business Policy is seen as a comprehensive set of policy elements focussed on stimulating the use of E-business applications in SMEs12.
6. E-business policy framework
There is no clear definition, but as stated in the European Benchmark Report, a national E- business framework policy often includes:
• Clear and ambitious targets.
• Establish policy coordination mechanisms to ensure that the various component initiatives are serving common goals.
• Broad spectrum of initiatives from awareness actions to establishing SME support networks and providing consultancy and customized services to SMEs13.
According to the E-Business policy group, an E-business policy framework includes:
1. Independent awareness raising and training 2. E-business support networks for SMEs 3. Helping SMEs to use internet platforms
These elements in combination with the overall E-business policy based on a clear rationale form the E-business policy framework.
12 EC, 2002: 15
13 E-business Policy Group, 2002: 4
1.7. Research methods
These research questions will be answered by making use of combined research methods14. For the first and second research objective an Inductive research approach was necessary.
With an inductive research approach, the researcher is able to build a theory upon analysis of research results. Theory will follow data from the three phases of the research process.
Based on this insight, the research strategy will be a multi method approach.
Part 1: Tourism
At first, the sector analysis is based on semi-structured interviews and secondary litarature.
Second, the SME research will be based on mailed questionnaires and the final project identification will be firmly based on the results of the SME Tourism Research.
Part 2: E-business policy analysis
Based on the first part of this research, it was suspected that there is a clear need for E-business use stimulation on Curaçao. First it was decided to compare Stimul-IT’s relative position with regard to E-business usage in comparison with the Caribbean region to define an initial need for change based on secondary literature. Second, Stimul-IT’s and Curaçao’s E-business policy were analysed mainly based on internal reports and interviews. Third, local characteristics needed to be analysed on which future policy actions could be based. These characteristics were based on internal reports, interviews and secondary literature. The final, fourth step of this part should be based on the above three steps. This fourth step is to set up an E-business policy framework for Curaçao (Stimul-IT) based on international E-business policy literature and guidelines based on benchmarking.
Figure 4, Multi method approach
14 Saunders, Research Methods, 2000 Sector analysis
SME research
Project/policy definition
Semi structured interviews
Mailed questionnaires
Based on overall and organizational needs (results of SME research) Part 1
Regional benchmarking of E-business use
Set up of an E-business Policy Framework for Curaçao
Part 2 Analysis of internal reports and
secondary literature
Regional benchmarking based on secondary literature
Based on international E-business policy literature and the above research steps (Part 2) Evaluation E-business policy
Curaçao
Analysis of local characteristics and barriers on which a future
policy should be based
Review of secondary literature, internal reports and interviews
The methodology of the different parts of this research will be discussed in the related chapters as shown in figure 3. In the specific Chapters, the detailed research methodology will also be discussed.
1.8. Business relevance:
This can be defined to relate the above mentioned research goals and questions to Stimul-IT’s strategic goals. This research contributes to:
‘Be a catalyst’:
First, by executing a sector analysis and SME research, Stimul-IT can define new ICT opportunities for the sector by which ICT use can be stimulated with potential projects.
Second, the needed E-business policy will directly contribute to the stimulation of high quality and innovative use of ICT. Stimulate and advance the use of E-business applications with regard to the overall business processes of SMEs.
‘Stimulate’:
By executing the sector analysis followed by the SME research, Stimul-IT can identify and pilot ways in which ICT can be used toward economic development. The sector analysis is primarily focussed on determining ways in which ICT can improve the competitive edge in Tourism followed by the SME research based on these ways to get a clear picture of the current situation. The final tourism project is the activity which should contribute directly to this strategic goal. The second part results in a needed E-business policy framework, the identification of the need and potential E-business policy is also directly contributing to the identification of ways in which ICT can be used towards economic development.
‘Provide assistance and advice’:
The sector analysis is based on conversations and discussions with key persons at the most important sector organizations. Their view on possible improvements is very important to get a clear picture of necessary support. The results of the sector analysis were even discussed during member meetings of sector organizations. The final projects identified directly contribute to the CHATA and CASHA members.
One of the most important elements of the E-business Policy Frameworks is the E-Business Support Network. Based on the analysis of a clear need for E-business Policy change, the resulting new E-business Policy Framework may directly contribute with this element to an improvement with regard to this specific strategic goal.
In general, it can be concluded that this research contributes to the above stated strategic goals. With the final Tourism project and a potential E-business policy framework, Stimul-IT is about to further improve the competitive position of Curaçao by the effective and efficient use of ICT (E-Business).
1.9. Scientific relevance:
There are several elements of this research that may have scientific relevance:
• The just set up E-business measurement instrument will be piloted on the sector tourism on the island of Curaçao and may be adjusted for sector specific use for future policy.
• How can the E-business measurement results be converted into effective project(s)?
• Which specific recommendations can be made about an E-business policy framework for a relatively small island with little resources?
1.10. Timescale
This research will be conducted in a time period of 7 months. The different tasks during the research are planned in the period form January till august 2003 and are shown in the timescale table and Gant chart underneath.
Research timescale:
Target date Month Number Assignments Start January
(NL) 1 Preparation Stimul-IT research
Start February (Cur) 2 Analysis research needs Stimul-IT Mid February
(Cur) 2 Sector analysis
March
(Cur) 3 Preparation questionnaires based on sector analysis
March
(Cur) 3 Sending and receiving questionnaires
April
(Cur) 4 Processing questionnaire data to results
May
(Cur) 5 Defining ICT project for Tourism
June (Cur)
6
Initiating ICT project for Tourism Stimul-IT E-business policy evaluation Writing research report
July
(Cur) 7 Stimul-IT E-business policy evaluation and potential set up
Writing research report August
(NL) 8 Writing research report
Figure 5, Research Planning
Gant chart research
Duration
Activity (months) Jan Feb Mar Apr May June July August
Preparation Stimul-IT research 1
Analysis research needs Stimul-IT 1
Sector analysis 1
Preparation questionnaires based on sector analysis 1
Sending and receiving questionnaires 1
Processing questionnaire data to results 1
Defining ICT project for Tourism 1
Initiating ICT project for Tourism 2
Stimul-IT E-business policy evaluation and set up 1,5
Writing research report 3
Figure 6, Gant Chart of research process
Conceptual Framework - Stimul-IT Research
C.I.S.P.
A Informing SMEs about
ICT possibilities
B Improving
ICT use conditions
C Initiate and
support (sectoral) ICT projects
Tourism
Financial Services
Transport
&
Distribution
CHATA CTB CASHA
ICT opportunities (sector analysis):
E-business use
E-commerce possibilities
SECTOR ANALYSIS Sector analysis
(related to business & ICT):
1. Trends in the sector 2. Opportunities/Threats 3. Critical success factors 4. Bottlenecks
SMB research (Tourism members) Current General
E-business Policy
Elements:
• E-business awareness raising and training
• E-business support networks for SMEs
• Helping SMEs to use internet platforms
SMB research:
1. E-business use in relation to values chain (Porter) 2. E-commerce use 3. Opportunity/barrier
recognition ICT project(s) Tourism
The need for and specific characteristics
of an E-business policy framework Regional
benchmarking (Regional
E-business criteria comparison)
Recommendations (setting up an E-business
policy framework for Curacao) International
E-business policies and
guidelines based on benchmarking
Specific characteristics
of an E-business
policy on Curaçao
Part 1 Part 2
1.11. Conceptual framework
Figure 7, Conceptual framework
Part 1 – E-business opportunities in Tourism
Part 1
E-Business opportunities in Tourism
Sector analysis, SME research and Project identification
Chapter 2 - Sector analysis Tourism
2.1. Introduction
This chapter will discuss the executed sector analysis. First the research method will be described followed by the results of this analysis.
2.2. Research method
This part of the research should result in understanding the most important developments in the sector Tourism and the preliminary ICT opportunity recognition. The research strategy is exploratory. To get new insights based on the expert (key person) interviews15.
The sector analysis was executed with semi-structured interviews with key persons from Tourism organizations on the island. For this research, it was very important to develop access to the sector on an incremental basis16. Before it was possible to get a detailed picture of ICT-use in the sector, two objectives needed to be accomplished:
• To get access to the target group (SMEs in Tourism)
• To get insight in the most important developments and preliminary ICT opportunities in Tourism.
Based on this insight, it was important to work with a multiple stage strategy as provided by Johnsen17. The first stage is necessary to achieve the above mentioned objectives. This could be achieved by making use of semi-structured interviews with key persons in the sector and to explain our research goals and added value for the sector to those key persons. This first stage provides several advantages to reach the final research objective.
First, initial in depth research may have caused the target group to decline access. Second, using an incremental strategy at least gives access to a certain level of data and third, this strategy allows you to build a positive relationship with those who are prepared to grand initial access of a restricted nature. Credibility can be established so you can build a fuller level of access and be able to cooperate with the several key persons and organizations.
The questions of the semi-structured interviews (see appendix 2) are based on a general sector trend recognition and opportunity and threat recognition both related to business and ICT. It was very important to really let the key persons free in their answers to get sufficient information to be able to start a focussed SME research. Stimul-IT already had connections with key persons in the sector so it was relatively easy to make appointments with them.
Working on an incremental basis means: getting access by first contacting key persons on a high sector level. So it was necessary to get top down access to the sector as shown in the model on the next page.
15 Saunders, 2000: 97
16 Saunders, Research Methods, 2000
17 Johnsen, ,1975
Figure 8, Tourism on Curaçao: Organizations/research process and initial research population
2.3. Tourism organizations
There are several Tourism organizations on Curaçao. The most important organization is the Curaçao Tourist Board (CTB, former CTDB; Curaçao Tourism Development Bureau). The CHATA & CASHA together are both tourism associations with island-wide members. The several tourism organizations will now be discussed.
2.3.1. CTB18
In 1989, the Curaçao Tourism Development Bureau was formed. It reports to a non- Governmental foundation entitled the Curaçao Tourism Development Foundation (CTDF).
A board comprised of no less than 5 and no more than 7 persons manages the foundation.
The chairman of the board is the Commissioner of Tourism.
The broad purpose of the CTDF is stated to be “to promote tourism development in Curaçao”19. In the past the focus of CTDB appears to have been on stimulating and encouraging investment in the sector. This has resulted in some new developments and construction of rooms, as well as a number of expressions of interest to construct rooms, but it has also resulted in lack of attention to marketing the destination. As a result, the destination has seen consistently declining numbers and substantial loss of market share in most key markets over the past decade.
It is the view of present management that the purpose of the CTB (former CTDB) can be best achieved by focusing much more on the marketing of the destination and that the role of the encouragement of investment in the sector should be transferred to other organizations like the CHATA. Secondarily the role of the CTB should be to sensitize the local population as to the importance of tourism and the role each person within the community can play to successfully grow the industry20.
So the Curaçao Tourist Board’s task is to improve the island’s world-wide image. CTB’s work can be seen as a cooperation with the private tourism sector. They are doing their promotional work with and are recognizing the two associations CHATA and CASHA.
18 http://www.curacao-tourism.com; 15/03/2003
19 CTB, 2003: 27
20 CTB, 2003: 27
2.3.2. CHATA21
The Curaçao Hotel And Tourism Association (CHA) was established on April 3, 1967.
Because in 1982, the Constitution was amended, the association had to change to Curaçao Hospitality and Tourism Association (CHATA) to allow the participation of non-hotel tourism partners. Finally, the organization changed its name in 1998. This change illustrated the development of the association towards becoming the representative organization for the entire hospitality and tourism industry in Curaçao.
At this moment, CHATA’s membership includes hotels and apartments, airlines, car rentals, restaurants and many other tourism related businesses.
CHATA’s goal is to become the unifying force for the hospitality and tourism industry and its members’ primary resource for industry education, knowledge exchange and business services.
2.3.3. CASHA22
The Curaçao Apartments & Small Hotels Association (CASHA) is an association of apartments and small hotels on the island of Curaçao. The accommodations all represent the organizations quality and comfort norms. Like CHATA, CASHA is also recognized and supported by the Curaçao Tourist Board and promoting the interests of its members.
CASHA has been independent from CHATA until today. According to executive director, Mr.
Griffith, CASHA has complete different interests in comparison with CHATA. In the past, several times, there was a discussion about integrating CASHA into the CHATA association.
Mr. Griffith states that CASHA is a typical small business association with more personal contact with customers and other important organizational specific interests.
2.4. Sector analysis
The research was started and interviews were conducted with key persons from the above mentioned organizations (see appendix 1). The questions (see appendix 2) of the semi- structured interviews are based on:
• Trends in the sector
It’s very important to get good insight in the sector Tourism on Curaçao. The SME research should be based on general developments in the sector and should be adjusted to local wishes and island-wide policies.
• SWOT-analysis (OT)
The (SW)OT is focussing on Opportunities and Threats because they are focussing on new opportunities (ICT and business related) in the future and possible treats related to this new actions for future success.
• Critical success factors and bottlenecks
Critical success factors and bottlenecks are also related to new ICT opportunities and general sector specific developments.
• ICT opportunity recognition
Finally the ICT opportunities should be defined in cooperation with key people of the Tourism organizations to get enough cooperation for further research and projects.
This part of the sector analysis will be discussed in paragraph 2.X.
21 http://www.chata.org; 15/03/2003
22 http://www.apartments-curacao.com; 16/03/2003
The results of the interviews are being discussed for the three different organizations. First the general global and local tourism trends and developments will be discussed based on the interviews and secondary literature.
2.4.1. Tourism
To get a clear picture of the sector, it’s very important to look at the economic development of the sector. How does Curaçao as an island compete to its region and other competitors?
What are the global trends in tourism? The following trends and developments in the international travel market and the Curaçao travel market are based on secondary literature and the interviews with key persons in the sector.
Tourism and it’s economic importance:
At first, it can be concluded, that tourism is very important for the economic development of the island. As stated by Werthner and Klein23, travel and tourism constitute a higher portion of the value of exports than any other sector. Estimated relative importance of tourism in world markets will be 11% of the global GDP in 2007. At this moment, tourism on Curaçao already stands for 10% of the island’s GDP. This 10% stand for the direct income related to tourism. Indirect income is related to tourist spending in other sectors, like for example food and beverages, and are creating important added value for the island’s economy.
The relative importance of the sector tourism for the local economy can be based on 2001 figures. In 2001 the GDP for Curaçao was estimated to be about NAF 3,14 billion. As with many Caribbean islands Curaçao produces little either for export or for domestic consumption and thus relies heavily upon its service industries to earn foreign exchange to buy necessary imports to sustain its population24. In 2001 the tourism sector contributed about 30% to the total amount of foreign exchanges. A very important sector for the local economy.
23 Werthner & Klein, 1999
24 CTB, 2003: 3
Tourism on Curaçao:
To get a clear picture of Tourism on Curaçao, 2002 analysis numbers of the CTB were converted into the underneath graphs.
18,9%
24,3%
19,9%
31,2%
5,7%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
North America South America Caribbean Europe Rest World
Market distribution visitors Curaçao 2002
Figure 9, Distribution of Curaçao visitors over international markets (source, CTB 2002 analysis)
The most important markets for Curaçao are Europe and South America, which form almost 60% of the tourism market, followed by North America and neighbour islands in the Caribbean. Europe is dominated by The Netherlands. 82% of the European visitors are Dutch. Another very important visitor country for Curaçao is Venezuela. 14% of all visitors are residents of this country.
The Caribbean market is important for a competitive strategy. Of course, CTB’s goal is to become one of the largest tourism islands of the Caribbean. At this moment, the top three destinations are: Aruba, The Dominican Republic and Jamaica.
If the above stated most important markets are shown over the last 5 years (see graph beneath) it can be concluded that:
The Dutch and Venezuelan markets are relatively stable over time.
The US and Caribbean are becoming more and more important.
Figure 10, Tourism market developments 1998-2002 (Source: CTB 2002 analysis)
The next important aspect of tourism for this research is the distribution of visitors over the several accommodations. According to figures of the Curaçao Tourist Board (see graph beneath), large hotels host 36% of all Curaçao visitors and small hotels, bungalows and apartments host 22%. Private homes account for 31% of all visitors which can be explained by relatives visiting family on Curaçao. This research is focussing on the large and small hotels, the small bungalows and apartments. The large hotels like for example Marriott and Hilton are hosting 36% of all international Curaçao visitors. Especially the US market is important for these large hotels. 36% of all large hotels visitors are from the US.
Figure 11, Distribution visitors Curaçao through type of accommodation (source, CTB 2002 analysis) 36,3%
22,6%
1,0%
31,1%
8,9%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
40,0%
Large hotels Small hotels, bungalows and
apartments
Guest homes Private homes Others
Accommodation distribution visitors Curaçao 2002
2.4.2. CTB
General Trends:
According to James Hepple, executive director of the Curaçao Tourist board, there are several (ICT related) trends in the sector:
Enormous growth of internet related tourism.
There is an enormous increase of online reservations. The online reservation market is a fast growing and relatively new market. Tourism on Curaçao should make optimal use of these possibilities. Large hotels with worldwide policies are relatively used to work with such systems but Tourism companies like small hotels and apartments are not presented at online booking engines or other E- commerce tourism sites.
Promotion of Tourism websites is very important to create tourist awareness on the internet.
Curaçao stays behind in growth compared to other Caribbean island mainly caused by not using the full possibilities of the new online tourism market.
There is an increase in the use of email and other electronic communication.
These applications are reducing costs and improving marketing efforts. These advantages are very important with a lot of hotels and apartments with low profitability. Appendix 3 shows the profitability of an average hotel (CHATA member). An average hotel on Curaçao earns only 2,4% EBITDA before debt services.
Quick response to reservations more and more important. On average, world wide reservations are made very close before departure date. Problems with insight in availability and transaction time.
Large hotels have their own websites with booking engine. On average, they are not interested in online travel engines because they fear price competition.
In the future there deals should be made between online booking engines and these international hotel chains.
Opportunities and Threats / Critical success factors and bottlenecks:
Based on the above mentioned general (ICT related) trends, the most important opportunities, threats, critical success factors and bottlenecks for Tourism on Curaçao are shown in the table beneath.
Opportunities
o Huge potential of online travel market.
o Improving efficiency and marketing efforts by the use of E-business applications.
Threats
o Price competition due to online supply of tourism services.
Critical success factors
o Being proactive by making use of the full E-business and E-commerce possibilities.
o Quick response to potential customer.
Possible bottlenecks
o No proper knowledge of E-business possibilities.
o No faith in online booking engines (security)
Figure 12, Table @, Opportunities / Threats / CSF’s and Bottlenecks for Tourism (Jim Hepple, CTB)
