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1. Selection and peer-review under responsibility of the Organizing Committee of 12th
APacCHRIE Conference 2014.
* Paper presented at 2014 APacCHRIE Conference, Kuala Lumpur, Malaysia
12th
APacCHRIE Conference 2014
Augmented Reality (AR): Business Models in Urban Cultural
Heritage Tourist Destinations
Ella Cranmer, Timothy Jung*
Manchester Metropolitan University, Righton Building, Cavendish Street, Manchester M15 6BG, United Kingdom
Abstract
Business modelling has been used for years, and its benefits are widely acknowledged. Tourism is often used as a
tool for economic development; however the industry is becoming increasingly competitive, spurred by the rise of
digital technologies. This is heightening the importance for tourism businesses to seek out new opportunities in the
fight to survive. Augmented Reality (AR) technology has become a buzzword of the modern technological industry
and presents many immensely promising opportunities to the tourism industry, however its potential is still not fully
understood. This paper aims to identify the importance of using a business model to understand the opportunities
and implementation of AR in Urban Cultural Heritage tourism.
Keywords: Business model, augmented reality, urban cultural heritage tourism
1. Introduction
Tourism is often used as a tool for development and economic growth (Ko and Stewart, 2002), as a multifaceted
product, it requires large partner networks and supply systems. The tourism industry is characterised by Small to
Medium sized Enterprises (SMEs) (Livi, 2008), which are continually fighting to survive and keep up with the rapid
changes spurred by the growth of the internet. The internet has changed many of the traditional distribution
processes of the tourism product (Livi, 2008), resulting in the emergence of new exciting opportunities for business
expansion and an innovate range of possibilities for communicating with and reaching customers (Rabanser and
Ricci, 2005). However, despite these new opportunities, many SMEs have struggled to survive and respond to the
changes (Morris, 2011) and there is a mounting pressure for them to engage with ICT (Dixon et al, 2002), to
maintain and achieve growth in the current economic climate (Taylor and Murphy, 2004). To regain
competitiveness, Garcia-Crespo et al. (2009) suggest the industry is in need of a new technology, to offer value-
added services such as, interactivity and entertainment, to the tourist experience. As a solution, AR technology can
be used to provide tourists (and residents) with personalised content and services tailored to their specific needs
(Kounavis et al., 2012), thus improving the tourist experience (Kalaway et al. 2000). This study will identify the
opportunities AR presents to Urban Cultural Heritage tourism and outline the importance of developing a business
model to understand, implement and provide a holistic overview of the components and stakeholders involved.
* Corresponding author: Dr. Timothy Jung. E-mail address: t.jung@mmu.ac.uk

2. 2. Literature Review
2.1. Augmented Reality (AR)
Augmented Reality (AR) “is a technique that combines a live view in real-time with virtual computer-generated
images, creating a real-time ‘augmented’ experience of reality” (Kleef et al., 2010:1). AR is not a new concept
(Bernardos and Casar, 2011), however, factors such as increased smart-phone ownership, improved bandwidth
capabilities, increased use of mobile devices to drive commerce, and improved technological capabilities have
contributed to the recent interest and growth of AR (Johnson, 2012). The number of AR-capable devices is rapidly
rising; for example, in 2010, 72% more, AR-capable smart phones were sold in comparison to 2009 (Gartner
Report, 2011). Developments in wearable computing, such as Google Glass (Wrenn, 2012) are also contributing to
the growth of AR technology (Kleef et al. 2010). The use, benefits and possibilities of AR are immensely promising
and increasingly feasible, however they are still not fully understood. Research suggests that using AR significantly
improves brand engagement, enticing and attracting customers (Juniper Research, 2011) and facilitating a new
medium through which businesses can reach mass audiences in a more engaging way (Neagle, 2013). For example,
Lego implemented AR into their stores to provide shoppers with a 3D view of what products look like once
assembled, and as a result claim a 15% increase in sales (Neagle, 2013).
AR facilitates the seamless combination of the physical world with virtual information (Thinkdigital, 2013),
allowing individuals to perceive this information as existing in their surroundings (Höllerer and Feiner, 2004),
leading to an enhanced experience of reality in their immediate environment (Kounavis et al., 2012), and a digitally
enhanced view of the world, connecting individuals with more meaningful content in their everyday life (Layar,
2013). Hereby, Sviokla (2009) and Kleef et al., (2010) claim that despite its high potential, hindering technological
capabilities, a lack of understanding and concerns over social acceptance are delaying the mass implementation of
AR and therefore there remains, at present “few business models successfully exploiting augmented reality
technology” (Kleef et al., 2010:3).
2.2. Use of AR in Urban Cultural Heritage Tourism
Cultural and heritage tourism are forms of tourism motivated by an interest in the historical, artistic, scientific
and cultural offerings of a community, region, group or institution (Lord, 1999), a desire to seek authenticity
(Brown, 1998), and to experience native culture (Sharpley, 2002). Urban destinations are considered inherently to be
of interest to cultural and heritage tourists. Urban tourism is largely fuelled by it economic benefits (Chang et al.,
1996), whereas developing cultural heritage tourism produces many benefits, such as rekindling traditional arts and
crafts (Var and Kim, 1990), revitalising cultures through reviving dying customs (Wang et al., 2006) and increasing
demand for local arts, leading to a preservation of culture (Besculides et al., 2002). However, the development of
urban cultural heritage tourism has led to problems, regarding the use of space. This has a direct impact upon both
the experience of the tourist and the living space of local residents (Nasser, 2003). Since, tourism is an expression of
human behaviour (Kim, 2002), the success and sustainability of any development depends upon the active support
of the local populations and business collaboration (Kim et al., 2012; Gursoy and Rutherford, 2004). AR has been
posed as a solution to problems regarding the utilisation of space, for example Kalay et al. (2007) suggest the
potential of using AR to build a virtual space, storing and showing information relevant to tourists. Society and
culture are an integral part of the product that attracts tourists to a destination (Lawson et al., 1998) and it is
therefore important to honour the relationship between tourists, local businesses and residents, whilst also seeking to
improve the tourist experience. AR in tourism can be used to “help tourists in accessing valuable information and
improving their knowledge regarding a touristic attraction or a destination, while enhancing the tourist experience
and offering increased levels of entertainment throughout the process” (Kounavis et al., 2010:2).
As an information-intensive industry, often tourists are bombarded with large volumes of irrelevant information.

3. However, AR provides a resolution with the potential to revolutionise the way in which information reaches
individuals, enabling it to be delivered interactively, enhancing, improving and contributing to a more enjoyable
experience (Kounavis et al., 2010). Väänänen-Vainio-Mattila (2011) believe that AR devices have the capability to
replace traditional tour guides and become the next generation personalised guide, as personal service is gaining
popularity across the service sector. AR can help provide personalised content, tailoring services to individual’s
needs, knowledge level, interests, age, profession and so forth (Kounavis et al., 2010), whilst offering social
interaction, sharing and connectivity, personalising the tourist visit according to an individual’s desires and
expectations (Sparacino, 2002). AR delivers information upon request, therefore avoiding information overload.
This can help museums, heritage sites, cities and tourist professionals, in organising and transmitting relevant
information upon request
(Kounavis et al., 2010). Research shows AR has a high potential of becoming a mainstream technological tool in
tourism, due to its indoor and outdoor capabilities and portability (Fritz et al., 2005).
Thinkdigital (2013) examined the benefits of AR to increase museum interactivity by creating a compelling
educational environment, and supplying a “tangible interface which stimulates both mental and motor activities
through an intuitive interaction with unfamiliar content”. AR has been praised for its facility to educate and provide
a dynamic experience with hands-on interaction (Horn, 2006). AR also has the ability to take navigation one step
further, to include information about objects in a mobile person’s environment that are of interest to tourists
(Höllerer and Feiner, 2004). This, especially in the case of Urban Heritage Tourism is a promising prospect,
replacing signage and guide books. For example, if a tourist wants information on a church “AR can make the air
around the church come alive with information: 3D models or related art or architecture, the life and work of the
architect, or architectural changes over the centuries can be documented in-situ with overlays” (Höllerer and Feiner,
2004:8). However, regardless of its possibilities the proper use of AR in Cultural Heritage and Urban Tourism are
still largely under-researched and it is yet to be fully investigated how AR can be used to enhance the tourist
experience (Fritz et al., 2005). Research in the field of using AR to enhance Urban Cultural Heritage Tourism is still
limited and there is a long way to go (Liarokapis et al., 2006).
2.3. Business Models
External pressures from the global business environment, driven by globalisation, deregulation and technological
change, are increasing the competitive game and forcing businesses to analyse their competitive environment
(Casadesus-Masanell and Ricart, 2009:1). This, coupled with the dot.com boom during the 1990s has led to an
increased interest in business models (Stewart and Zaho, 2000). Firms have begun to analyse how they intend to
make and sustain long-term profitability (Margretta, 2002; Shafer et al. 2005), analysing their competitive
environment, defining their position, developing competitive advantages and understanding competitive threats
(Casadesus-Masanell and Ricart, 2009:1), through the use of business models. Models are important to help firms
reflect their hypotheses about what their customers want, how they want it, how they can organise to best meet these
needs and above all make a profit (Teece, 2010). “Business is fundamentally concerned with creating value and
capturing returns from that value, and a model is simply a representation of reality” (Shafer et al. 2005:2). Research
by the IBM CEO survey (2008) found that businesses actively seeking to innovate and explore new opportunities
through their business model generally perform better than their competitors. Johnson et al. (2008) argues that
models can be used to reshape entire industries and drive spectacular growth.
For tourism, business models encourage firms to take a holistic overview (Gleeson, 2013), of the components and
stakeholders involved in producing the end tourism product (Rabanser and Ricci, 2005). Tourism business models
help firms focus on and develop their positioning and differentiation, intelligent pricing, innovative cost cutting
measures and cooperation (Little, 2009). In order to produce the end tourist product and satisfy entire tourist needs,
there is a long, often confusing, process involving numerous stakeholders, from both the public and private sectors,
usually connected via the internet. Often these networks of stakeholders can become unclear. However, business
models provide a way for firms to analyse the relationship between these stakeholders, allow players to share their
resources and knowledge, define the benefits each stakeholder receives, outline the role and responsibility of each

4. player and, importantly, build trust (Joo, 2002). Similarly, they provide a framework to review the value creation
process, highlighting potential areas in need of a re-engineering of operations in the value-chain, emphasising the
resources, competencies, and capabilities required for the business to remain competitive and develop sustainable
advantages (Livi, 2008). Tourism business models “increase transaction effectiveness and efficiency within the
tourism market, and provide one stop services to customers” (Joo, 2002:58). According to Livi (2008) research
demonstrates a positive correlation between business models in tourism and the development of technical
competencies, product innovation and flexible cooperation among players.
2.4. AR Business Model
AR, is still a relatively new concept and therefore, as Juniper (2011) suggest, an optimal business model for AR
is yet to crystallise because the technology is constantly evolving and developing. Kleef et al., (2010:4) believe
“value is the key concept of a business model, it is what a business trades with its customers”, in the case of AR,
they suggest this value is likely to be non-financial. Osterwalder (2004) proposes that value can be gained through
the collaboration of organisations, supporting each other to deliver an end-product to the customers. However,
research into successful business models in AR is still limited and requires further exploration. There are an array of
requirements and components needed to successfully implement AR technology that seek further investigation
(Höllerer and Feiner, 2004). AR is a complex technology, requiring many partners to work collaboratively to deliver
the end product. Inoue and Sato (2010) discuss several potential options of how to use AR to generate profit, but
these are mostly adaptations of existing business models and not developed specially for AR.
3. Methods
This research aims to empirically test and understand the requirements of a business model for implementing AR
in Urban Cultural Heritage Tourism. There are numerous potential methodologies to achieve this. For example
document analysis, through studying literature and past studies regarding business models, mobile business models,
tourism business models and AR business models, it would be possible to qualitatively analyse the secondary data to
establish the requirements, components and success factors of each of these areas of business modelling. This
information could then be grouped and organised to highlight areas of importance when developing an AR business
model for implementing Urban Heritage Cultural Tourism. However, this would not be the most effective
methodology, since it would not take into account the changeable nature of the technology or multi-stakeholder
views and requirements.
A mixed-method approach combining both qualitative and quantitative data would produce stronger and more
definitive results. Whereby, one methodology is used to support the other, providing a richer theoretical
understanding of the subject area (Veal, 2011). Qualitative data analysing secondary sources and past studies could
be used to critically review the theory of business models, their necessary components and requirements. Similarly,
conducting interviews or focus groups with players involved or interested in AR would produce strong primary data
which could be used to support quantitative findings. Often these methods are advantageous as they promote and
encourage further discussion therefore producing stronger primary data.
Quantitative primary data could be collected from numerous sources such as surveys and questionnaires, of those
involved in AR or with an interest. Data could be analysed using SPSS to test different hypothesis and ideas. This
would highlight the requirements of developing a business model for AR in Urban Heritage Tourism. Importantly
using a mixed-method approach would include multi-stakeholder views, taking into account their individual
requirements, benefits and involvement. This would help to develop a multi-stakeholder and holistic business model
for implementing AR.

5. 4. Conclusion and Future Research
The aim of this study was to put into context the opportunities AR presents for Urban Cultural Heritage Tourism
and the importance of using a business model to understand and implement these new opportunities. The study
identified the importance of using a business model to “articulate the value proposition, identify a market segment,
define the structure of the value chain, estimate the cost structure and profit potential, describe the position of the
firm within the value network, and formulate the competitive strategy” (Casadesus-Masanell and Ricart, 2009:9).
Helping firms take a holistic view of their business and how each of their components interlock and relate (Gleeson,
2013). Johnson et al., (2008:60) argue 9that “every successful company is already fulfilling a real customer need
with an effective business model, whether that model is explicitly understood or not”. Tourism is a multifaceted
product hinging around selling an experience rather than a tangible product (Livi, 2008). The tourist system is a built
of major components, intermediaries, businesses and stakeholders (Gunn, 1994) and it is therefore important to
implement a business model to map out the relationship and value of each of these components to all involved. “A
business model’s great strength as a planning tool is that it focuses attention on how all elements of the system fit
into a working whole” (Magretta, 2002:6). As highlighted, in the case of Urban Cultural Heritage Tourism, AR
provides solutions to industry problems, whilst improving the tourist experience. As Garcia-Crespo et al., (2009)
argue, the tourism industry is in need of a new technology, to provide value-added services to the tourist experience,
it is apparent that AR can do just that with the right planning, understanding, and business model backing.
However, many aspects of the use AR in tourism still require research in order to fully understand and exploit its
potential. Future research should focus upon developing a business model for the implementation of AR in an urban
cultural heritage tourism context. Overall, AR offers many opportunities to the industry, but these need further
exploration in order to fully understand how AR can be used to enhance the tourist experience, while also benefiting
local SMEs and residents and above all, generating a profit.
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