Development Return on Investment in Hospitality Industry

Based on Website

Budhi Pamungkas and Nanang Fattah

Management Study Program, Faculty of Economics and Business Education, Universitas Pendidikan Indonesia, Jl. Dr.

Setiabudhi No. 229, Bandung, Indonesia

budhipamungkas@upi.edu

Keywords: ROI, Enhanced ROI, Websites, Hotel.

Abstract: In Indonesia, a web-based business has become a natural thing, but investing using information technology is

still rare. Without using a clear basis for calculation, the majority of businesses lay in Indonesia provides

jugdement that the use of information technology in business is a complicated thing to do, wasting money,

and not important. Therefore, it takes a special technique for assessing the investment in information

technology. One of the easiest techniques is using Enhanced ROI (Return on Investment). The purpose of this

research is (1) Obtaining a picture / description about the growth of the hospitality industry in Bandung, which

uses e-commers. (2) Identify driving factors and obstacles in the implementation of ROI models development

of the hospitality industry in Bandung, which uses e-commers. (3) Formulate a strategy to implement a

development model ROI, 4) The application of the model development Enhanched ROI. (5) Trial ROI model

development in the hospitality industry in Bandung, which uses e-commers. (6) Develop a ROI model in the

hospitality industry in Bandung, which uses e-commers.

1 INTRODUCTION

In the era of globalization that is as sophisticated as

the current spread of information will be more easily

and quickly by using media based on information

technology, not least the information about the

business. Shopping items online has started bustling

in various groups, from children, teenagers, and

adults. Consumers no longer have to deal with having

to visit the product directly, they can reach the

product wherever and whenever he wants. By using

online media, businesses not only bring these

products closer to the internal market, but also was

able to bring to the world market. In this way, use of

information technology investment in the business is

considered to be an easier way and lucrative

investment than offline by holding direct sale to a

customer by a salesman. Business in Indonesia is

indeed a matter of course, but it is unfortunate invest

using information technology (IT) are still rare.

According to McLeod and Schell (2008)

Management Information System is a computer-

based system that provides information for some

users of the needs similar. Such information is

available in the form of periodic reports, special

reports, and outputs from the simulation of existing

information. Without using a clear basis for

calculation, the majority of businesses lay in

Indonesia Provides jugdement that the use of

information technology in business is a complicated

thing to do, wasting money, and not important.

Procurement of information technology investment

company considered a kind of website can create

swell spending and declining profits. The above

judgment is not entirely wrong, and not entirely true.

Procurement of information technology investment

that is not appropriate will indeed cause swelling loss

of business, but also vice versa investment right

information technology can help businesses in

developing their business advantage.

In this globalization era, the population of Internet

users in Indonesia is increasing rapidly. Tourism and

hospitality industry is always there in the first row to

take advantage of the latest technology, including

using the Internet as the main tool for promotion and

increase sales role in the hospitality industry. E-

commerce plays an important role in the hospitality

industry. The emergence of e-commerce in the hotel

industry creating an urgent need with a simple

solution is to focus on speed and accuracy of the

benefits of using the website or social media.

Management of e-commerce and website is one of the

864

Pamungkas, B. and Fattah, N.

Development Return on Investment in Hospitality Industry Based on Website.

In Proceedings of the 1st International Conference on Islamic Economics, Business, and Philanthropy (ICIEBP 2017) - Transforming Islamic Economy and Societies, pages 864-869

ISBN: 978-989-758-315-5

main tools to promote and increase sales in the

hospitality industry.

Based on BPS’s data on the number of inns and

hotels in Bandung can be seen that Bandung has

adequate provision of accommodation services to

accommodate tourists who come to Bandung both

foreign tourists and domestic tourists by total rooms

available as much as 16.150 rooms. With these

conditions, the city of Bandung as one of the busiest

cities in West Java is good for business, education and

tourism has demonstrated its readiness in the process

of development of tourism industry in Indonesia. The

increasing market potential of e-commerce in

Indonesia, become a reason for the importance of

utilizing e-commerce in the hotel industry, because it

can be a solution for consumers to book hotels

without being confined by space and time and the

majority of tourists use the Internet and social media

to make hotel reservations.

Different to investment in general that pivot on

tangible benefits, such investments online, many

pivot on intangible benefits. Therefore, it takes a

special technique for assessing the investment in

information technology. One of the easiest technique

is to use a method Enhanched ROI (Return On

Investment). Enhanced ROI is a valuation technique

based on the theory of information technology

investments Economic Information

Enhanced ROI ever used in a study conducted by

Chandra (2012) in the retail industry at Jumbo

Supermarkets Manado illustrates that the use of

enhanced ROI in the assessment of investment in

information technology is an effective technique. The

same is done by Hendri Sopryadi at the College of

ABC illustrates that e-learning is an effective project

to improve services to students.

Based on the phenomenon of the increase in the

potential of internet users in Indonesia, but the use of

investing using information technology (IT) are still

rare. Without using a clear basis for calculation. So

researchers interested in studying about ROI Model

Application Development in the Hospitality Industry

Website Based on the Hospitality Industry in

Bandung.

2 LITERATUR REVIEW

2.1 Definition and Benefits of E-

Commerce

Based on the marketing mix, promotional products

can be made through e-commerce. According

Varmaat (2007) E-commerce or electronic commerce

stands (in the electronic trading), is a business

transaction that occurs in the electronic networks,

such as the internet. Anyone who can access a

computer, has a connection to the internet, and have

a way to pay for goods or services they buy, can

participate in e-commerce and According Wong

(2010) understanding of electronic commerce is the

purchase, sale and marketing of goods and services

through electronic systems. Such as radio, television

and computer network or internet.

E-commerce has some merit, be it organizations,

companies and society itself, following some of the

benefits of e-commerce (Suyanto, 2003). For

organizations ecommerce owners can expand the

market place to the market of national and

international, can easily find more customers,

suppliers better and business partners that best

matches from all over the world, lowering the cost of

manufacture, processing, distribution, storage, and

search information using the papers, and the time

between capital outlay and acceptance of products

and services.

For consumers, e-commerce allows customers to

shop or conduct transactions 24 hours a day

throughout the year from almost any location,

providing more choice to customers, they can choose

a variety of products from many vendors, provides

products and services that are not expensive to

customers with how to visit many places and conduct

quick comparisons, customers can receive the

relevant detailed information in seconds, not days or

weeks and the benefits to the community, e-

commerce allows people to work in the house and not

have to leave the house to shop. This results in

lowering the density of traffic flow and reduce air

pollution streets, allowing people in third world

countries and rural areas to enjoy the variety of

products and services that will be difficult they get no

e-commerce.

2.2 Financial Performance

Measurement

According to Sutrisno (2009) "the company's

financial performance is an achievement achieved by

the company in a certain period that reflects the level

of the company's health."

The final result of the process of financial

recording is, the financial statements. The financial

statements are a reflection of the achievements of the

company's management at a certain period. "To

understand the condition of the company, the

necessary analysis of the company's financial

statements" (Suad and Enny, 2006).

Development Return on Investment in Hospitality Industry Based on Website

865

The factors that affect the company's financial

performance by Susan (2006) are:

2.2.1 Liquidity Performance

"Liquidity is the ability of companies to repay all

short-term obligations at maturity" (Susan).

Measurements contained in liquidity are as follows:

 Current Ratio;

 Quick Ratio;

 Cash Ratio;

 Working Capital to Total Assets Ratio.

2.2.2 Leverage Performance

"Leverage shows how much the company needs

funds financed by a loan" (Susan, 2006).

Measurements contained in leverage that is, as

follows:

 Total Debt to Total Assets Ratio;

 Total Debt to Total Equity Ratio;

 Time Interest Earned Ratio;

 Fixed Charge Coverage Ratio;

 Debt Service Coverage Ratio.

2.2.3 Performance Activities

"Activities that is, to measure the performance of

asset utilization effectiveness in generating sales of an

enterprise" (Susan, 2006). Measurements contained

in that activity, as follows:

 Total Assets Turnover;

 Receivabel Turnover;

 Receivabel Collection Period;

 Inventory Turnover;

 Average Day’s Inventory.

2.2.4 Performance Activities

"Activities that is, to measure the performance of

asset utilization effectiveness in generating sales of an

enterprise" (Susan, 2006). Measurements contained

in that activity, as follows:

 Gross Profit Margin (GPM);

 Operating Profit Margin (OPM);

 Net Profit Margin (NPM);

 Return On Asset (ROA);

 Return On Equity (ROE);

 Return On Investment (ROI);

 Earning Per Share (EPS);

2.2.5 Performance Market Value

"The performance of the market value used to

measure the extent to management's ability to create

a market value that exceeds the cost of capital"

(Susan, 2006: 64). Measurements contained in market

value are as follows:

 Price Earning Ratio (PER);

 Price to Book Value (PBV).

From the above it can be concluded that the

financial ratios reflect certain aspects. Financial ratios

are very helpful to facilitate the analysis of financial

performance used by internal and external parties in

decision-making.

2.3 Profitability

One of the goals of the company is to benefit as

much as possible. Thus, to determine a company's

profits have been achieved or not, the need for a

measuring instrument. It stretcher in line with the

statement Arfan and Teddy (2009) "profitability is the

company's main objective in generating a return on

capital that had been planted by the investor or owner

of the company."

Profitability measurement tool is as follows:

2.3.1 Gross Profit Margin (GPM)

"This ratio indicates the company's ability to generate

gross profit (because the value is taken numerator is

the gross profit) on sales" (Alexandri, 2009).

2.3.2 Operating Profit Margin (OPM)

"This ratio describes what is commonly called" pure

profit "earned on any income received from sales

made" (Syamsuddin, 2007).

2.3.3 Net Profit Margin (NPM)

NPM calculates the extent to which the company's

ability to produce a net profit at the level of certain

sales. Profit margins are high indicates the company's

ability to generate high profits at a certain level of

sales. "In general, a low ratio indicates inefficiency of

management" (Susan, 2006).

2.3.4 Return on Assets (ROA)

"This ratio measures a company's ability to generate

profits based on the level of certain assets" (Susan,

2006).

ICIEBP 2017 - 1st International Conference on Islamic Economics, Business and Philanthropy

866

2.3.5 Return On Equity (ROE)

"This ratio measures a company's ability to generate

profits based on the share capital of certain" (David

and Kurniawan, 2010). According to James and John

(2009) "Return On Equity (ROE) is the ratio of net

income to total capital, which measures the rate of

return on the investment made by the investor."

2.3.6 Return On Investment (ROI)

"This ratio shows the company's ability to generate

net profit by its assets" (David and Kurniawan, 2010).

2.3.7 Earning Per Share (EPS)

"EPS describe the amount of benefits to be obtained

for each share," (Susan, 2006). From the above

statement, then the company's profitability is

efficiency in using its assets and capital to generate

profits. The better a company manages its capital and

assets, the profit generated will be increase well.

3 METHODOLOGY

The method used in this research is quantitative The

research was conducted in 2017. The location and

object of the study was conducted in the hospitality

industry in Bandung City. Sampling is done by

purposive sampling method. Respondents selected

were respondents who had the following

characteristics: (1). hotel business actors, (2). know

clearly about the variables studied. Qualitative

research usually uses non probability sampling

(including in the purposive sampling) (Arikunto,

2010; Riduwan, 2010).

Based on its purpose, this research is descriptive.

Through this type of descriptive research can be

obtained a description of how the effectiveness of the

ROI enhancement approach in the hotel industry in

Bandung and what are the driving factors and

inhibition arising from the ROI in the hotel industry

of Bandung with Enhanced ROI method.

4 RESULTS AND DISCUSSION

In the city of Bandung has a lot of spread-star hotels

as previously described. On the statistical data

recorded that the number of hotels in Bandung each

year has increased as follows:

Table 1: Total Lodging / Hotels and According to the

classification in Bandung.

Clasification

Total of Hotels

2015

2014

2013

2012

2011

stars Hotels

Melati

Hotels

275

Melati

Hotels

Melati

Hotels

122

117

107

Total

392

382

357

340

303

Source : BPS

From Table 1.1 it can be seen that the growth in

the number of hotels in the city experienced a

significant increase, from 2011 to 2012 increased 37,

from 2012 to 2013 increases 17. In addition other data

according to the Indonesian Hotel and Restaurant

Association (IHRA), West Java, the number of five-

star hotel in Bandung was as follows:

Table 2: Total Member Lodging / Hotels and According to

the classification in Bandung.

No.

Clasification

Total of Member

stars Hotels

Melati Hotels

145

Total

347

Source: Association of Hotel’s and Restaurant of Indonesia.

From both the data then obtained by the difference

in the number of five-star hotel. This happens because

the hotel registration as a member in the set is

voluntary while the statistical data is the data

collection shall be conducted by the city government.

Based on the description of the hotel classification

and the number of hotels that are not less then the

consumer is confronted by many diverse choices,

therefore, various kinds of ways to be able to market

of hospitality services in order to attract consumers,

Development Return on Investment in Hospitality Industry Based on Website

867

especially the tourists as the main target market.

Backed by the development of Internet technology

(IT), hospitality promotion now also experiencing

significant growth which promotions are made

through the website, with consumer expectations are

easier to reach out and get information about

hospitality as you wish. In other words, the website is

expected to provide added value and revenue for the

hotel itself.

In tune with previous studies, entitled ROI in

social media: A look at arguments, Fisher (2009)

stated that social media is a place that has the potential

to interact with customers and establish how they

think because customers are more valuable to the

company than just purchases made in early, so

companies need to be able to give a very important

factor for the impact that may provide future

customers through social media. The other reason is

that without realizing it, everyone especially the

competitors can certainly start to do it first.

Meanwhile, according to Mohammad (2013) in the

Enhanced Framework for Building Successful

Website for Informative Companies (2013) that no

doubt when companies use the internet as a medium

to sell their goods due to several reasons such as cost

effectiveness, reach more customers, identify

customer needs, comfort for customers, and

communicate with customers.

Supported by the results of a survey conducted by

Lonely planet quoted okezone.com shows that the

largest percentage of 16% is occupied by the

predilection of young people in the development of a

website to check for flight or hotel for six hours. That

they do this voluntarily to seek information from the

results of the recommendations they get via

instagram, of course, it can also indicate that the

enthusiasm of young people for technology and social

media today are very high. Therefore, it can be a great

opportunity for the hospitality business to further

spread its wings to reach consumers wherever they

are. So the hope of increasing hotel revenue can be

achieved.

5 CONCLUSIONS

Technological developments in the current era of

globalization led to the business world are also

involved with all the ease and speed in terms of

information dissemination. Therefore, consumers no

longer have to mess with having to visit the product

directly, they can reach the product wherever and

whenever he wants. By using online media,

businesses not only bring these products closer to the

internal market, but also was able to bring to the

world market.

One business that may be able to apply digital

marketing or digital promotions, namely the

hospitality business. As happened in the city of

Bandung, with the increasing number of star hotels

and five-star hotel occupancy demand higher

business growth led to the better-star hotel. Therefore,

especially the hospitality businesses are expected to

take advantage of this opportunity to increase ROI

(Return On Investment) as the financial performance

in order to measure the earnings of companies in the

form of assets.

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