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Chapter 2

THEORETICAL BACKGROUND

Review of Related Literature

2.1 The Adoption of Internet in Travel Industry

The Internet was critical to the tourism sector because it provided a new

environment in which to conduct business, shifting beyond an advertising perspective to a

media standpoint. Modern technological advances in communication and the growing

number of possibilities within travel services as well as associated tourist items on the

Internet in recent years attempted to encourage travelers to use travel organizations (Zaki,

2016). It had a massive processing of data file that had the capacity designed for linking

any activity, involving people in general, effectively adapting and activating its contents

and accessible sources of information in the marketplace as a whole, and ultimately

choosing the system's general advancement in the travel industry (Friess & Vermesan,

2013). Several travel-services websites were currently utilizing the Internet to access a

wide range of travel-related services such as trip planning, flight information distribution,

and hotel bookings. The past activity of Tour Operators showed that these internet-based

travel providers had easy access to the traveling public, implying both traditional travel

agencies and virtual/online travel agencies interacted largely (Maravilla & Gantalao,

2019), as stated in Namin et al. (2013).

According to Ivica (2013), in the context of contemporary tourism, the internet was

a critical "communication channel." All tourism business owners possessed the ability to
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efficiently promote and market their products and services on the internet, as well as

respond to the needs and wants of consumers of that time.

The Internet proved to be an effective platform for the advertising and marketing

of tourism in the travel agency sector. As a consequence, the distribution of goods and

services was no longer determined by the number of displayed catalogs and leaflets;

instead, data pertaining to products and services associated with tourism was available to

millions of Internet users, and overbooking virtually vanished as a result of the relocation

of all communication issues. Its revolutionary influence went far beyond conventional

marketing, fostering multiple identities, enhancing productivity, and making it easier to

create value-added products and services within the continually modified travel industry.

The development of new tourism services and products, along with a rapid increase

in tourism demand, led to widespread acceptance of the Internet in general, and the Internet

as an electronic intermediary in particular (Saraswati et al., 2016). The rapid expansion of

the travel industry necessitated the adoption of the Internet for handling the increasing

amount and quality of tourist traffic. As stated by Sigh (2016), the Indian Internet travel

industry continuously expanded to greater client knowledge and confidence in online

transactions. The Indian market with Internet tourism continued to develop as customer

confidence and awareness in internet transactions increased. Today, the rise of India's

Internet Travel Market was an essential variable in e-Commerce, and it was projected to

keep on expanding. The Travel Agency's different deals and price reductions made the

industry extremely beneficial for customers, resulting in increased competition. According

to Gupta-Reeti (2016), the Indian tourism industry had proven to be a substantial

contributor to the country's economic growth. Travel and tourism had grown to be India's
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third-biggest generator of foreign exchange. The adoption of the Internet as a means of

providing services in India created worries about the possible disintegration of tourism

distribution networks. The arrival of the Internet reduced India's dependency with suppliers

and travel agents as distribution channels.

The adoption of the Internet and computer reservation systems (CRS) in travel

companies in the Philippines resulted in improvements in their day-to-day operations.

These organizations then used centralized information through their websites, as well as

business intelligence systems, to streamline operations, minimize response times, and

improve client satisfaction. The Global Distribution System (GDS) was a communication

and information platform used to offer travel services. On the one hand, it connected

providers and distributors of tourism-related products and services, or travel agencies

(Jovic et al., 2016). Global Distribution Systems (GDS) connected airlines, travel agencies,

and other relevant businesses online, allowing for easy access to information on

availability, tariffs, bookings, and ticket sales. The use of CRS technology allowed travel

companies to give travelers on business a centralized location for all their needs including

information on pricing, scheduling as well as additional products and services like currency

conversion or passport help. In Batangas City and Lipa City, all travel agents used Abacus

as their central reservation system provider. This decision considerably increased

efficiency and production while attracting customers and providing satisfaction among

clients with value-added services (Felicen & Ylagan 2016).

The internet provided considerable benefits to the tourist industry, prompting the

inclusion of social media as a critical component in tourism promotion and planning at

both the national and state levels (Samanta & Bg, 2020). For more than 25 years, tourism
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has proven intimately linked to technology advancement. The Internet and information

technology were critical at the functional, fundamental, advertising, and strategic levels,

facilitating global contact among travel agencies, clients, and staff (Li et al., 2023).

According to Usman and Kumar (2020), 'undoubtedly, technology for the internet has

become vital within the worldwide growth of the economy process since it provided vast

prospects.

2.2 Role of Technology Acceptance Model

Fred Davis developed the Technology Acceptance Model (TAM) in 1989 and

emerged as a prominent framework for examining the factors that influenced user

acceptance of technology. TAM proposed that perceived ease of use and perceived

usefulness operated as mediators in the complex connection between system characteristics

(external variables) and the likelihood of system utilization. According to Chang et al.

(2017), TAM has been used in a variety of research studies and gained prominence in the

literature on technology acceptance. The utilization of the Technology Acceptance Model

(TAM) in this study held significant importance in measuring the level of Internet usage in

Tourism Business Performance. TAM emphasized perceived ease of use and perceived

usefulness that were included in the research variables which enabled the researcher to

comprehend how users interacted with internet technologies. This model offered insights

into the likelihood of user acceptance, providing valuable information. Based on the recent

systematic review, The implementation of TAM in educational technology acceptance has

been shown to be effective when compared to other theoretical models, and it has

developed into a robust model capable of predicting the adoption of a variety of

technologies (Al-Qaysi et al., 2018).

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2.3 Internet to Travel Agency

The Internet transformed marketing methods and the interactions between tourist

destinations and service providers (Cavia et al., 2020). This transformation changed the

way communication, advertising, and consumer engagement, as the internet became

essential in shaping the way travelers discovered, planned, and booked their travels.

According to Chamboko-Mpotaringa & Tichaawa (2021), tools such as websites, social

media, and mobile travel applications assisted tourism businesses in bringing their

customers closer to their company. The Internet became a means by which travel agents

and tour operators offered travelers an independent choice of tourist products and services.

According to Min & Lee (2020), travel agencies used online tools to change the paradigm

of how trade was performed. An online travel agency offered the same services as the

traditional travel agency, such as hotels, transportation, guided tours, reservations, and

more, but via an internet platform.

Online tourism became one of the most effective competitive markets, with 64% of

transactions made via the Internet, compared to 30% to 40% in the rest of the world. The

internet quickly took up a larger share of the tourist sector. Travel agents, airlines, hotel

chains, and other businesses collaborated and offered online booking (Kayumovich, 2019).

Digital platforms provided agencies, customers, and vendors with a broad reach,

accessibility, and ease. Unlike conventional methods of marketing, this approach allowed

them to reach larger audiences fast and easily. In addition, digital technologies made it

easier to communicate with new customers and vendors (Sharma et al., 2020).

2.4 The Risk Usage of Internet

The adoption of the Internet into the operations of businesses has ushered in
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numerous advantages (Sulaiman et al., 2015; Taher, 2021; Wanniarachchi & Rajakaruna,

2022), particularly in the tourism industry (Jimenez et al., 2020; Chamboko-Mpotaringa &

Tichaawa, 2021). yet it is not without its share of risks and disadvantages. One primary

concern is the vulnerability to cyber threats, such as phishing attacks and data breaches

(Zwilling et al., 2020), which can compromise the personal information of travelers and

reduce trust in the tourism industry. The reliance on online booking systems and digital

platforms also exposes tourism businesses to potential disruptions caused by technical

glitches or cyberattacks, impacting reservation systems and leading to customer

dissatisfaction.

According to Blank & Lutz (2016), individuals who encounter negative experiences

such as viruses, misrepresented products, or credit card theft might view these incidents as

part of using the internet. The interconnected nature of the internet in the sector of tourism

heightens the risk of misinformation spreading rapidly, potentially harming the reputation

of destinations, hotels, or tour operators. Intellectual property theft, particularly in the

context of unique travel experiences or proprietary booking technologies, poses another

significant risk. The collection and storage of extensive customer data for personalized

services raises privacy concerns, requiring a strong commitment to data protection

regulations to maintain the trust of travelers and avoid legal repercussions. The adoption

of the Internet in tourism businesses, particularly by travel agencies, comes with its risks

and disadvantages. Given the advantages and risks, it is important to measure the level of

internet usage in the business performance of travel agencies, and understanding the role

of internet technologies in various aspects of operations is important.

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Hypothesis Development

H1: Perceived Risk has direct influence on Attitude Towards Use

In the context of the study, perceived risk is defined as an uncertain phenomenon

encountered by the travel agency in the course of its operations due to incorrect or

unsuitable decisions resulting from subjective assessments in the decision-making process.

(Choon et al., 2011). As stated by Mustafa and Yaakub (2018), the complexity of the

business's process of changing ideas, tools, and machines into new or upgraded products,

services, and processes poses a danger to innovation and technology adoption. According

to Ozbek et al., (2015), financial risks, low product performance risks, frustration, or

disclosure of personal information related to psychology are the four types of potential

risks that travel agencies and online customers may encounter are risk, possible delays, and

difficulties associated with time or convenience. With regard to online reservations, due

to limited resources, online booking sites and travel agencies are not able to guarantee

clients' safety in online transactions, causing visitors to be concerned about the loss of

personal data and money. Increased competition and the potential to drive down prices are

the potential risks of Internet adoption in travel agencies (Sharma & Chaudry, 2020). Thus,

the attitude of users toward using the Internet is positively and directly influenced by the

perceived risk of Internet technology (Shen & Chiou, 2010).

H2: Perceived Usefulness has direct influence on Attitude Towards Use

One of the main factors in technology usage and adoption is perceived usefulness

(Tarhini et al., 2016). Studies from previous research claim that there is an effect of

Perceived Usefulness on Attitude Toward Use (Siringoringo, 2014). In the context of this

study, it can refer to the possibility that the internet is perceived as a valuable resource for
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accessing information about travel destinations, accommodations, and activities, which

positively impacts users’ attitudes. Studies from (Kanchanatanee et al., 2014; Ali, H., &

Indarsin, T., 2017) also claim that Perceived Usefulness affects the Attitude Toward Use.

The convenience of online booking and planning, along with the ability to personalize

travel experiences, enhances overall perception of the Internet’s utility in the context of

tourism. Cost savings and access to user reviews and feedback contribute to this perceived

usefulness (Park et al., 2018), and the efficiency and convenience of online processes, such

as e-tickets and e-check-ins, play a vital role in shaping attitudes. Effective communication

with travel agencies and fellow travelers via the Internet reinforces the perceived

usefulness, leading to more favorable attitudes and increased use of online travel services,

according to the study by Mouakket (2015) and Wu & Chen (2017).

H3: Ease of Use has direct influence on Attitude Towards Use

Usability, often known as ease of use, is defined as the internet’s ability to be utilized

easily and effectively (Martinez et al., 2020). According to Huang (2020), “usability plays

a role in the success of the tourism internet because it affects usage and acceptance and

increases users’ interactions with the internet”. Based on the study of Asefa (2020),

usability is a requirement for being successful. People stop using it if it is difficult to use.

The absence of usability may result in the end user needing additional help, as well as

having an unfavorable opinion towards a software application or Internet site, which will

lead to reduced program satisfaction for the End User. Sharma & Tripathi (2023), claims

that users are more likely to be attracted and retained by digital technologies that are easy

to use, navigable, and offer a pleasant user experience. This may result in more

involvement, a higher conversion rate and ultimately increased profits for businesses.
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Therefore, organizations should prioritize user experience to ensure providing the

customers with the best possible experiences while at the same time meeting marketing

objectives when developing and optimizing the technology. The ease of use of internet

technologies thus impacts positively and directly on the user's attitudes towards using or

accepting this technology (Low et al., 2020).

H4: Efficiency has direct influence on Attitude Towards Use

Efficiency of internet-based services, such as online booking platforms, itinerary

planning tools, and real-time updates, significantly influenced attitudes towards the

continued relevance and utility of travel agents within the evolving landscape of travel

agencies. Specifically, when internet services were perceived as efficient in providing

tailored recommendations, smooth transactions, and immediate assistance, customers were

more inclined to perceive travel agents as valuable intermediaries in the travel planning

process, which was supported by the study of Ramírez-Hurtado et al. (2017).

H5: Attitude Towards Use has direct influence to Actual Use

Internet adoption by firms had created a great network among businesses,

customers, and suppliers (Siamagka, et al., 2015), making their services more accessible

and convenient through online platforms. Businesses in tourism could cater to the

preferences of internet-based travelers by providing online booking options and responsive

websites, which could affect users' attitudes towards the use of the internet. According to

the research conducted by Eusébio et al., (2018), it was found that individuals' views about

the growth of tourism were greatly influenced by their attitudes towards the development

of tourism. This meant that people's perceptions of the beneficial effects of tourism, such

as enhanced infrastructure, cultural enrichment, economic gains, or even the use of the
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internet, had a tendency to positively impact their attitudes toward the development and

growth of the tourism sector as a whole. The advantages stated by Eusébio et al. (2018)

were in line with both conventional elements and the realm of digital technology. By

offering a forum for information sharing, community involvement, and boosting of positive

stories about travel destinations, the internet had acted as a dynamic platform that shaped

and reinforced favorable attitudes toward tourist growth. This implied that a positive

attitude towards the use of the internet made the user more likely to accept and use it

(Peytcheva-Forsyth et al., 2018). Additionally, a study from Singh and Srivastava (2019)

had stated that internet use would only be affected if the user had the attitude towards use

to engage with the internet.

H6: Actual Use has direct influence to Tourism Business Performance

According to the findings of Odoom et al. (2017), internet usage significantly

influenced performance. This was also supported by previous studies by Tajvidi & Karami

(2021); Barlow et al. (2015), which found that the actual use of the internet had a significant

positive influence on performance. Businesses that adopted the use of the internet had

positively affected their revenue (Harrigan et al., 2017). A study from Rodriguez et al.

(2014) provided evidence that Internet technologies had a positive impact on the customer-

oriented processes that in turn affected the organization’s sales performance. Ferrer et al.

(2013) demonstrated that the adoption of Internet technologies enhanced an organization's

social capital and, thus, operated effectively. This was supported by findings from Kwok

and Yu (2012), who found that by using the internet, sales had been increased. In terms of

financial and other performance, it was expected to have a beneficial impact when

organizations used the internet.

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Theoretical Framework

The purpose of this study was to measure the usage of the Internet in the performance

of tourism business. To measure the level of adoption of Internet technology, researchers

had to adhere to the most fundamental theory or model that measures adoption, which was

the Technology Acceptance Model (TAM) introduced by Fred Davis (1989) as a result of

the development of Theory of Reasoned Action (TRA), which was first developed by

Fishbein and Ajzen in 1980. TAM was one of several models designed to study and

comprehend the factors that influence technological acceptance. TAM proposed that a

user's attitude toward utilizing technology, as well as their behavioral intentions and actual

usage, were predicted by how simple (perceived ease of use) and helpful (perceived

usefulness) they believed the technology to be. Perceived ease of use was considered to

have affected perceived usefulness of technology. The use of the Technology Acceptance

Model (TAM) in this study was crucial in determining the level of Internet usage in

Tourism Business Performance.

Figure 1. Technology Acceptance Model

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According to Al-Qaysi et al., a recent systematic review concluded that the

application of TAM in educational technology acceptance had proven its effectiveness

when compared to other theoretical models and had developed into a robust model suitable

for predicting the acceptance of several technologies.

Conceptual Framework

Figure 2. The Research Model

Figure 2 showed the research model employed in the study. It was a modified TAM

model, where Perceived Risk, Efficiency, Actual Use, and Tourism Business Performance

were added, while the External Variables were not included as there was no immediate

intention to investigate its effect on Perceived Usefulness and Perceived ease of use. This

study focused on the effects of Perceived Risk, Perceived Usefulness, Ease of Use,

Efficiency, Attitude Towards Use, and Actual Use on Business Performance in Travel

Agencies.