Value Revelation of Differentiated Goods in the Travel Industry

The market for hotel and travel-related services can be seen as one in which the goods are differentiated products. Classification by the information content of goods – search goods, experience goods, post-experience goods and credence goods applies well to this market. Corrective measures are suggested for the market imperfections implied by asymmetry of information and transactions costs. Implications of this characterization for national policies and private business strategies in travel-related industries are examined, specifically for Thailand. Mass media marketing campaigns for tourism expansion, over-utilizing our natural resource and commoditizing travel products and cultural tourism, are not advocated. Efforts to achieve balance between demand and capacity through local involvement are more productive for sustainable tourism; examples are given. Innovative development, niche marketing, and high value endeavors are critical elements of a value enhancement business strategy. Internet usage aids in the reduction of informational imperfection. In order that online advertising be effective and directed at the relevant customer needs, it must make use of search engine marketing in the proper context. JEL keywords: theory of choice, economics of information, asymmetric information π The contents of this paper in part or in whole are entirely those of the authors and do not represent the views and opinions of Sasin of Chulalongkorn University and any organization associated with the authors. Comments are welcome. All correspondence is directed to Pongsak Hoontrakul, Research Fellow, Sasin-GIBA, Chulalongkorn University, Sasa Patasala Building, 8 floor, Soi Chulalongkorn 12 (2), Phyathai Road, Bangkok 10330, Thailand. Private Tel. (662) 954 1689 ; Fax (662) 954 1690 ; Email : [email protected] URL : www.Pongsak.Hoontrakul.com