Affecting Adoption of Travel Agencies: A Comparative Study
Dr. Reeti Gupta
Assistant Professor (Commerce)
Israna (Panipat), Haryana
Affecting Adoption of Travel Agencies: A Comparative Study
aims to investigate the key reasons that influence the adoption of services
offered by offline or online travel agencies among travelers in India. It
elucidates and categorises those factors
that exactly motivate the travelers towards offline and online travel agencies. The paper concludes that personalised counseling services and human interface are
two most influencing and primary reasons for the choice of offline travel agency
as an intermediary whereas anywhere anytime services and large variety of
offerings are the two most influencing and primary reasons for the choice of
online travel agency as an intermediary.The findings
of the paper provide a valuable source
of information to offline and online travel agencies to design strategies that
could convince travelers’ for the usefulness and added value of their travel
offerings. This paper develops an argument that both the
traditional and new intermediaries can co-exist by focusing on those reasons
that influence the traveler to adopt the services offered by them.
JEL Classification: M31, L83
Travel Agent, Online Tourism, Distribution Channels, Multidimensional Scaling.
Affecting Adoption of Travel Agencies: A Comparative Study
The widespread use of Information and
Communication Technologies (ICTs) and internet in travel business has
transformed the roles and relationships in travel industry. This development
has also altered the role of tourism intermediaries ( Kracht & Wang, 2009) as well as the structure of
tourism distribution channels (Buhalis & Law,
2008; Berne et al., 2015). The World Tourism Organization (WTO, 1975, cited by Buhalis, 2000: 114) describes distribution channel as “a
given combination of intermediaries who co-operate in the sale of a product. It
follows that a distribution system can be and in most instances is composed of
more than one distribution channel, each of which operates parallel to and in
competition with other channels.’’ These intermediaries can be the tour
operators (wholesalers) and the travel agencies (retailers) (Salvado, 2012)and can follow varied routes such as online,
offline, direct and indirect channels in any number of combinations (ITIC, 2010).
Earlier, travel intermediaries such as offline tour operators and travel agencies
used to play a major role in the value chain but gradually a new form of travel
intermediaries driven by the internet termed as tourism “eMediaries”
has evolved (Buhalis& Licata, 2002). Offline
travel intermediaries such as tour operators or travel agencies uses phone,
fax, post or email etc. to sell and market travel product and services whilst new
online travel intermediaries uses travel websites enriched with essential
information and online booking capabilities to sell and market travel product
In addition, due to advent of internet
the dependence of suppliers on travel agencies as a distribution channel has
decreased (Poon, 2001). Internet has made possible
for suppliers of travel product and services to communicate and sell directly
to customers in order to save commissions of intermediaries and to reduce
distribution costs. The use of internet as a service delivery channel has
aroused a question of disintermediation of tourism distribution channel. Disintermediation can be defined as “the reduction or elimination
of the role of retailers, distributors, brokers, and other middlemen in
transactions between the producer and the customer (Atkinson, 2001)”.The
arguments in favor of disintermediation highlighted the benefits of greater
flexibility and variety offered by Internet technologies, incompetence of
travel agency personnel and discrimination of suppliers based on commission by
these agencies (Buhalis, 1998; Barnett &
Standing, 2001). On the other side, the arguments put forth against
disintermediation included the time saving feature of travel agencies, the
human interface they offer, professional services they provide and the
reduction in uncertainty and insecurity due to their commitment for all travel
arrangements (Buhalis, 1998; Palmer &McCole 1999). However, the views of travelers are unclear
regarding the reasons affecting the adoption of services offered by offline or
online travel agencies. The knowledge of
these reasons is essential to acquire to foster an understanding about the
needs and preferences of existing and potential customersto
better market their offerings and to make informed strategic decisions.
This research is
directed towards understanding the reasons influencing Indian customers’
adoption of online and offline travel agencies. Indian tourism industry has
emerged as a major service sector of the country, which is contributing
significantly in the growth of economy. Travel and tourism has become the third
largest foreign exchange earner for India. According to India Brand Equity
Foundation report (2015), India earned foreign exchange earnings of USD 19.7 billion from tourism in 2014. Foreign exchange earnings
increased at a CAGR of 10.9 percent during 2006–14. Tourism has also been
fulfilling long-lasting socio-economic objectives of Indian economy by
integrating the people at national level and creating international sensitivity
(Gupta, Reeti 2015). Indian travel industry is transforming
as Indian customers are growing in awareness and confidence to make online
transactions. According to report of Research and Markets (2012), Indian
customers are aware about online travel portals, new information sources such
as social media, online communities, and ready to pay for the convenience and
better service. These changes are compelling travel agencies to embrace an
electronic medium to cater the potential demand of e-savvy customers. Over 250
offline travel agents in India (Approved by Ministry of Tourism, GOI) are
coming across a question constantly i.e. “Does every travel agent need to have
an online presence?” These travel agencies are transforming themselves into
dynamic and techno-savvy organization to capture new markets and customers. On
the other hand, online travel agencies such as IRCTC/ Rail tourism India, Make
My Trip, Yatra Online, Jet Airways, Trip Advisor
Media Group, Clear Trip, Expedia, Travora Media, and
Must See India are competing with each other to reach out to customer. The
website of Indian Railway Catering and Tourism Corporation Limited (IRCTC)
ranked as the largest travel website in Asia Pacific in terms of transactions.
According to the report by eMarketer, this portal is
holding a dominant position in the online ecommerce market in India and
occupying the greatest reach among all travel sites in India. This portal,
being an authenticated government service portal, has changed the perception of
travelers towards online purchasing of travel services. Few other homegrown
online travel agents are also gaining market share as MakeMyTrip
records 11.6 per cent reach, and Yatra Online
witnesses 8.3 per cent reach among Indian customers.
Thus, changes in Indian travel market
are compelling offline travel agents to embrace an electronic medium to cater
the potential demand of e-savvy customers whereas online travel agents, being
comparatively new in India, are striving to attract customers toward them. In
this scenario, there is a need to decipher opinions of Indian customers towards
those strengths of offline as well as of online travel agents, which can become
their competitive advantage.
2. Research Gaps and
Objectives of the Study
Stating over the issue of
disintermediation various studies are convergent on some issues but there is no
strong level of agreement. Some studies (Buhalis,
1998; Barnett & Standing, 2001)
dealing with travelers’ perception on the issue of disintermediation of
travel agencies due to advent to online travel services inferred the decline in
importance of travel agencies, while other studies (Palmer &McCole 1999; Buhalis& Licata
2002; Law et al. 2004) indicate towards secure presence of travel agencies.
There are many reasons affecting the adoption of online mode of purchasing
travel products and services. Consumers’ perception of innovation features such
as relative advantage, complexity, and compatibility of online air travel
shopping affects the adoption of online mode of travel distribution (Christou&Panagiotis, 2003). There is a relationship quality-loyalty
link between online and offline travel retailers and the quality of the
relationship between customers and service firms is a major driver of customer
loyalty in both online and offline service contexts (Walsha
et al., 2010). Demographic and travel characteristics of customers such as age,
gender, country of residence, reason of visit, and mode of booking influence
the choice of online or offline mode for hotel room reservations. The choice of
online and offline booking depends on the reason of visit. Those who travel for
business purposes book through travel agencies whereas leisure guests and
conference visitors prefer online booking (Crnojevac
et al., 2010). Customers prefer the offline mode to buy national tourism
product but prefer travel websites to buy international tourism products (Cosmaet al., 2012). Travel agencies are providing better
service in terms of risk reduction in travel purchase and extending
professional counseling to travelers whereas travel websites are a more
flexible channel to search for information and make reservations (Chiappa, 2013).
In India, both offline and online
distribution channel exists which are affected by varied socio-demographic
characteristics such as age, gender, education, industry, as well as lifestyle,
their frequency of travel, and nature of their exploratory, task and internet
value orientation. Young and well-educated tourists, which are frequent
travelers and internet users, have a positive attitude towards online mode of
travel purchase (Beldona et al., 2011). Internet
value perception is also a significant predictor of channel choice. The greater
the travelers perceive the value of internet, the greater the selection of
online options in the purchase of air travel tickets (Beldona
et al., 2011). There is ‘lack of trust’ on online services in attitude of
Indian customers due to their unawareness about the technical aspects (Khare&Khare, 2010). Financial security of the
transactions is one of the strongest determinants of more prolific online behaviour of Indian consumers with regard to travel product
and services (Singh &Khare, 2012). Purchase
intention is a prerequisite of their attitude towards online travel buying
decision in both metro as well as non-metro cities of India (Khandelwal et al., 2012).
Thus, different studies have declared
some common and many differential versions to customer’s perception towards
offline travel agencies as well as online travel agencies. There is no clear
indication regarding the factors that exactly motivate them towards or away
from offline and online travel agencies. The present study aims to fulfill the
apparent research gaps in existing studies by exploring the key reasons that influence the adoption of services offered by
offline or online travel agencies among travelers in India. It elucidates and categorises those factors that exactly motivate the
travelers towards offline and online travel agencies.
3. Research Methodology
of the Study: The present study conceptualises
various variables, on the basis of detailed study of existing literature
available as stated above, which proposed to influence Indian customers’
adoption of online and offline travel services. Sixteen variables have been selected after an in-depth review of literature, which
are reasons given by customers for choosing offline and online travel agencies.
Offline Travel Agencies Offline
Online Travel Agencies
counseling and advices to their customers.
up-to-date and correct information.
Provide customers a human
interface with the other stakeholders of the industry.
Convenient as provides anywhere anytime services.
Reliable as they take
responsibility for all the travel arrangements.
Provides variety of choices for travel products and
More popular due to less dependence on computer and internet.
economical and transparent pricing system.
Keep the personal
information of the customers safe.
compare different travel products and services online.
Assist the customers to
evaluate the offers of different service providers at one place.
Easy and simple to purchase travel products and
Easy to use as people are aware about their functionality.
flexible to purchase products and services online.
involve in monetary transactions.
environmental friendly as less use of paper.
Design: The present research is descriptive in nature as it
attempts to discover the significant reasons influencing Indian customers’
adoption of online and offline travel services. Sampling unit for this survey
is those consumers who are aware of both online and offline travel agencies.
The study carried out survey to collect the primary data using a structured
self-administered questionnaire during April-June 2015. A Convenient and
judgment sampling method is being followed for the
administration of the survey. The target population of the study is the
customers in National Capital Region (NCR), which is one of the largest
National Capital Region of the World, and hence can better represent Indian
Instrument: Questionnaire used in the survey
started with a set of questions to elicit the information related with
demographic details of respondents including gender, age, education,
occupation, income, internet access, and internet usage. Questions are asked to know the frequency of using offline mode for
travel purchasing as well as online mode of travel purchasing and the reason of
travelling. The Second section of the questionnaire includes variables
extracting from the literature reviewed to examine the perception of customers
about Online and Offline Travel Agencies. A five-point Likert
scale ranging from 1 to 5 or strongly disagree to strongly
agree is used for the perceptual mapping of varied variables.
Researcher intercepted the targeted respondents at different metro railway
stations of national capital region and offices of tour operators to get the
questionnaires filled up. This effort resulted in collection of more diverse
information in terms of socio-demographic information. Among the entire
distributed and filled up questionnaires those 200 questionnaires that found to
be consistent with the study selected for further analysis.
Analysis: To check the reliability of the collected data on
perception of reasonsinfluencing customers to adopt offline
or online travel services, reliability analysis method was employed using Cronbach’ Alpha Model technique. An alpha value of all eight
variables concerning offline travel agencies found to be 0.805 and regarding
online travel agencies found to be 0.727 which is above the commonly accepted
threshold of 0.60 (Hair et al., 1998). Therefore, all variables deemed to be
reliable and used for subsequent analysis.
and Techniques: Responses to the statements are first analysed with the help of descriptive statistics followed
by the inferential statistics to better understand the
phenomenon. Descriptive analysis has been done in
order to gauge the intensity of different reasons affecting the choice offline
or online travel services on aggregate level by computing mean scores for each
of the sixteen variables. The responses further mapped perceptually with Multidimensional
Scaling (MDS) with ALSCAL (Alternating Least Squares Algorithm) Procedure. MDS
technique has been used to portray the critical
elements that influence the decision of customers during the selection of
travel agencies and to present the relative positions of these driving forces
in a pictorial format. To exercise these statistical techniques SPSS
(Statistical Package for Social Science) version 17 for windows have been employed.
4. Perceptual Mapping
(RSQ) and residual stress have been calculated to measure the goodness of fit.
RSQ values indicate the proportion of variance of the optimally scaled data
(disparities). Higher the RSQ value, the better the model explains the
variation of the scaled data. Stress values indicate about the fit between the
optimally scaled data and their corresponding distances. The smaller the stress
function, the better the model represents the input data. For multidimensional
scaling model of offline travel agencies, the higher value of RSQ (0.98858) with
a fairly low value of residual stress (0.05326) indicatesgoodness of fit. Furthermore, for multidimensional
scaling model of online travel agencies, the higher value of RSQ (0.96309) with
a fairly low value of residual stress (0.09061)
indicates a reasonably good fit.
1: Multidimensional Scaling: Offline Travel
It is evident from the perceptual
mapping (Figure 1) of travelers’
perception of the reasons influencing the adoption of offline travel agencies
that personalised counseling services and human
interface are more influencing and primary reasons for the choice of travel agency
as an intermediary. A number of studies (Walle, 1996;
Buhalis, 1998; Palmer &McCole,
1999; Law et al., 2004; Chiappa, 2013) have presented
the argument that these two reasons are the most influential reasons for
choosing the services of travel agencies by customers. Reliability feature of
travel agencies is pinpointed as another most
influencing but secondary reason of choosing the services offered by travel agencies.
Safety of personal information while dealing with travel agencies and security
of monetary transactions, are discovered as less
influencing reasons in explaining the adoption of services offered by travel agencies.
A closer examination of the results further reveals that high awareness about
functioning of traditional travel agencies, less dependence on computer and
internet technologies, and comparison among varied product and services, are
having very weak relationship with the adoption of services offered by travel agencies.
2: Multidimensional Scaling: Online Travel Agencies
It is observed from the perceptual
mapping (Figure 2) of travelers’
perception of the reasons influencing the adoption of online travel agencies
that anywhere anytime services and a large variety of tourism products are more
influencing and primary reasons for the choice of online travel agencies as an
intermediary. A number of studies (Olmeda&
Sheldon, 2001; Buhalis& Licata, 2002; Christou&Panagiotis, 2003; Anckar,
2003; Law, 2004) have presented the argument that these two reasons are the
most influential reasons for choosing the services of travel agencies by
customers. Timely and up-to-date informationas
well as easy evaluation of varied tourism productsis highlighted
as more influencing but secondary reason of choosing the services offered by
travel agencies. Transparent pricing system is pointed
out as less influencing but primary reason in explaining the adoption of
services offered by online travel agencies in pictorial presentation. A closer
examination of the results further reveals that other three factors such as
easy and simple, quick and flexible, and environment friendly are having very
weak relationship with the adoption of services offered by travel agencies.
5. CONCLUSIONS AND RECOMMENDATIONS
Considering that the Indian online
travel market is expected to grow substantially over
the next few years (RedSeer Analysis, 2012) along
with findings and conclusions derived from the research, the study offers
several recommendations for practitioners in the travel and tourism industry.
First, the role of offline travel agencies
would remain secure as travelers perceived them important especially in terms
of the human interface and personalised
services. Travel agencies can even
expand their business in tier-II and tier-III cities given that the reach of
internet is low in these cities. Major players of the travel industry in India
are following mergers and acquisitions strategy (RedSeer
Analysis, 2012) so travel agencies can initiate collaborating with large-scale
internet based companies to hold a competitive position in the distribution
Second, travel agencies need to
integrate an e-commerce model in their business framework to keep pace with the
fast changing distribution environment. Online marketing should
be used to distribute up-to-date information at mass level and to
attract the potential tech-savvy customers.
Third, the study recommends the offline
travel agencies to emphasize on the advantages of purchasing products and
services from them in terms of personalised
counseling facility and human interface benefit in their promotional efforts.
In addition, they need to make the travelers realize that they are more
reliable as compare to internet.
Lastly, online travel agencies can
achieve a substantial place in distribution system by offering innovative personalised tourism products and services to travelers.
The participants of this sector need to highlight the relative usefulness of
their services in terms of provider of anywhere anytime services and large
variety of tour packages during promotion. Moreover, it is difficult to make
comparison among varied tourism products due to their intangible nature so
substantial emphases need to be put on evaluation
facility and up-to-date information feature of online services to attract
customers towards online travel agencies. User generated contents are very
important as service consumers generally rely on word of mouth rather than
advertising (Kotler, 2003). Therefore, online travel agencies
need to focus on social networks and online communities of tourists for
building and nurturing their image.
6. LIMITATIONS AND
DIRECTIONS FOR FUTURE RESEARCH
Like all studies, this research study is
not without limitations. This study covers a limited area i.e. only those travelers
who have heard about online travel agencies. Thus, due caution is required
while generalising the research findings to travelers
across the Indian travelers as whole. Second, the present research selects only
sixteen variables for the study but there can be otherpossible
variables affecting adoption of online or offline travel agencies. Further
research involving more variables could be fruitful. Thirdly, this study can be
extending to describe the effect of demographic variable on adoption of online
vs. offline travel agencies by travelers with a broader sample size. In
addition, research issues addressed in this study can be investigated
in context of other developing and developed economics to gain comprehensive
understanding of driving factors of online vs. offline travel agencies across
Atkinson, R., (2001).The revenge of the Disintermediated: How the middleman
is fighting e-commerce and hurting consumers. Progressive Policy Institute,
Washington, DC. Retrieved August 23, 2014 from www.academia.edu /3146048/
Standing, Craig (2001). Repositioning travel agencies on the internet.Journal of Vacation Marketing, 7(2), 143-152.
Beldona, Srikanth et al. (2011). To buy or not to buy: Indian
consumers' choice of online versus offline channels for air travel purchase.Journal of Hospitality Marketing & Management,
et al. (2015). The effect of ICT on relationship enhancement
and performance in tourism channels. Tourism
Management, 48, 188-198.
Buhalis, D. (2000).
Relationships in the distribution channel of tourism: Conflicts between
hoteliers and tour operators in the Mediterranean region, in Crotts, J. C., Buhalis, D.,& March, R. (eds.), Global Alliances in Tourism and
Hospitality Management, Haworth Hospitality Press, Binghamton, 113-139.
Buhalis, D.,& Law, R. (2008) Progress in information technology and
tourism management: 20 years on and 10 years after the internet: The state of etourism research. Tourism
Management, 29(4), 609-623.
Buhalis, D., & Licata, M. C. (2002). The future etourism
intermediaries.Tourism Management, 23(3), 207-220.
Chiappa, Giacomo Del (2013). Internet versus
travel agencies: The perception of different groups of Italian online buyers.
Journal of Vacation Marketing, 19(1),
Christou, Evangelos,&Kasianidis, Panagiotis (2003). Adoption of e-shopping
for air travel services: an investigation of consumers’ perceptions.
International CHRIE 2003 Proceedings Manual, 92-99. Retrieved November 10, 2013 from
Cosma, Smaranda et al. (2012). Study about Customer Preferences in
Using Online Tourism Products. Procedia Economics and Finance, 3, 883-888. Retrieved
Crnojevac, et al. (2010). eTourism:
A comparison of online and offline bookings and the importance of hotel
attributes. Journal of Information and Organisational
Sciences, 34 (1), 41-54.
2012, Retrieved 10th Nov. 2013 from http://www.newmediatrendwatch.com
Gupta, Reeti (2015). Tourism, FDI and Inclusive Growth in India. Pacific Business Review
International. 7(12), June, 108-114.
ITIC - Irish Tourist Industry
Confederation, (2010). Tourism and travel distribution
in a changed world. CHL Consulting & AMAS report, Retrieved December
20, 2013, from http://www.itic.ie/research-2010.html
Khandelwal, Utkal et al. (2012). Purchase intention of Indian consumers
on online travel buying decision: A comparative study on metro and non-metro city.International Journal of Hospitality and Tourism Systems,
Anshuman (2010). Travel and tourism
industry yet to exploit the internet fully in India.Database
Marketing and Customer Strategy Management, 17(2), 106-119.
Kracht, J,& Wang, Y (2009). Examining the
tourism distribution channel: Evolution and transformation. International Journal of Contemporary
Hospitality Management, 22(5), 736-757.
Law,Rob et al. (2004). The impact of the internet on travel
agencies. International Journal of
Contemporary Hospitality Management, 16(2), 100-107.
Li, Hongxiu,&Suomi, Reima (2007), Customer’s perceptions and intentions on
online travel service delivery: An empirical study in china. Integration and Innovation Orient to
E-Society.2, Springer US, 113-122.
P. (1999). The virtual re-intermediation of travel services:
A conceptual framework and empirical investigation. Journal of Vacation Marketing, 6 (1), 33-47.
Poon, A. (2001). The future of travel
and Tourism Analyst. 3, 57-80.
Research and Markets (2012).
Retrieved on 16 August 2014 from http://www.researchandmarkets.com/reports/2059208/
Singh, Shveta, & Khare,
Arpita (2012). Focus group technique to study customer attitude towards online travel
services in India. International Journal of Information Systems
in the Service Sector, 4(2), 33-47, April-June.
Salvado et al. (2012). Travel agencies: From
online channel conflict to multi-channel harmony. FP-148, 957-974.
Retrieve July 15, 2014 from http://hdl.handle.net/10174/8494
Walsha et al. (2010). Does relationship quality matter in
e-services? A comparison ofonline
and offline retailing. Journal of Retailing and Consumer Services,