International Journal of Contemporary Hospitality Management

Emerald Article: Factors affecting the online travel buying decision: a review Ivan Wen

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To cite this document: Ivan Wen, (2009),"Factors affecting the online travel buying decision: a review", International Journal of Contemporary Hospitality Management, Vol. 21 Iss: 6 pp. 752 - 765 Permanent link to this document: http://dx.doi.org/10.1108/09596110910975990 Downloaded on: 24-04-2012 References: This document contains references to 102 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 4762 times.

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RESEARCH IN BRIEF

Factors affecting the online travel buying decision: a review

Ivan Wen
School of Travel Industry Management, University of Hawaii at Manoa, Honolulu, Hawaii, USA
Abstract
Purpose The purpose of this paper is to review the literature on theories affecting consumers online purchase intention of travel products. It seeks to explore the literature on the theoretical foundation of factors inuencing customers online purchase intentions in general and in the travel industry specically. It also suggests areas for further research on online travel buying decisions. Design/methodology/approach The conceptual framework of factors affecting customer online buying decisions including customers attitudes, quality of web site design, customer satisfaction, and customer trust is developed by examining the theoretical foundation for each online purchase intention of travel product. The theoretical foundations and literature review include discussions of the theory of planned behavior, consumer trust literature, quality of travel web site design, and consumer satisfaction literature. Findings The paper identies antecedents of consumers online purchase intention, including three domains of measuring e-commerce web site design consumer trust, consumers attitude perception, and consumer satisfaction and applies them to the travel and tourism eld. Originality/value The paper proposes a conceptual framework of factors affecting online consumer travel purchasing. Using actual data, researchers can empirically test relationships among the factors in this framework and identify possible future research areas for each factor. Keywords Electronic commerce, Worldwide web, Internet, Tourism, Hospitality management Paper type Research paper

752
Received 7 August 2008 Revised 8 August 2008 1 April 2009 Accepted 15 April 2009

International Journal of Contemporary Hospitality Management Vol. 21 No. 6, 2009 pp. 752-765 q Emerald Group Publishing Limited 0959-6119 DOI 10.1108/09596110910975990

Introduction In the last decade, the internet has radically changed many industries. Most studies have focused on the impact of the internet on business in general, including impoverished service relationships (Meyronin, 2002) and business impact (Koutsoutos and Westerholt, 2005). For the travel industry, the positive impacts of the internet include more effective distribution channels (Carroll and Siguaw, 2003; Dale, 2003; OConnor and Frew, 2004) and disintermediation (Buick, 2003; Garces et al., 2004; Tse, 2003; Vich-i-Martorell, 2004). But the internet also has negative impacts on the industry, such as online pricing transparency (Enz, 2003; OConnor and Frew, 2004), price competition (OConnor, 2003), and reduced customer loyalty (OConnor and Frew, 2004). To address these problems, scholars have suggested that an effective e-commerce strategy should revolve around a strong collaboration between the companies and their customers (Hax, 2005) because close relationships between customers and suppliers web sites can reduce the danger of substitution and help to insure long-term protability (OConnor and Frew, 2004). In other words, the primary goal is to establish

customer bonding leading to a constructive and enduring relationship based on mutual trust, collaboration, and joint benets (Sheth and Parvatiyar, 1995). The enduring relationship can be an effective solution for travel companies in dealing with the challenges in e-commerce. The essence of creating a strong relationship bond with the customers is to consider how customers make online purchases and what factors inuence their online purchase intentions. Therefore, it is necessary to identify possible antecedents of customer online buying decisions of travel products through a large scale database search. The target journals for this literature review include generic Management Information System journals, e-commerce journals, generic marketing journals, and hospitality and tourism related journals. The key words being used include e-consumer trust, impact of the Internet, quality of information system design, quality of web site design, customer satisfaction, e-consumer behavior, and consumers online purchase intention, in order to identify the important factors which might inuence customers online buying decision of travel products. The goals of this research are to develop a conceptual framework of factors affecting customers online purchase intentions so that future studies can use multivariate statistics to analyze empirical studies, and to identify possible research directions in the elds of tourism and hospitality. Based on the literature review, those antecedents include customer attitudes, consumer trust, quality of web site design, and customer satisfaction. The following theories, based on existing research, pertain to understanding the antecedents of consumer purchase intentions: the theory of planned behavior (TPB), consumer trust, quality measurement of a travel web site design (information, system, and service quality), and customer satisfaction. Conceptual framework of online travel buying decision Theory of planned behavior Predicting how attitudes affect consumer behavior is the most important concern for most people interested in consumer behavior (Petty et al., 1991). Various situational and dispositional factors enhance the consistency of attitudes with behavior and researchers have found that attitudes are more predictive of behavior in certain situations (Evans et al., 1996; Njite and Parsa, 2005; Shim and Drake, 1990; Shim et al., 2001). In the past three decades, several theoretical models of behavior have been proposed. Perhaps the two best known are the theory of reasoned action (TRA) and the theory of planned behavior (TPB). Building on the TPB, Shim et al. (2001) developed a model to study factors which could inuence consumers online pre-purchase intention. Though Shims study ndings are consistent with nding of TPB (Ajzen, 1985, 1991) i.e. attitudes are determinants of behavioral intentions, it is questionable about appropriateness of applying the ndings in the travel industry. Later on, research ndings (Barkhi et al., 2008; Njite and Parsa, 2005) concluded that attitude towards online shopping for travel products has the strongest effect on the customers online purchase intentions. However, it is not clear about role of each surrogate for attitude in customers decision making process. Attitude toward online shopping includes various aspects. Originally, Shim et al. (2001) proposed four factors transaction services, convenience, sensory experience, and merchandise to measure the structure of attitudes. Only one factor, transaction

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services, was included in the nal model (Shim et al., 2001): The exclusion of the other factors (convenience, merchandise, and sensory experience) from the model should not be interpreted as an indication that these factors are unimportant in determining consumers intention to use the internet. With only one factor being used as a surrogate for attitude in Shims model, this approach may not reect the exploratory value of attitude in TPB in the travel industry. Travel products are unique due to their heterogeneity, intangibility, and perishability (Sheldon, 1997). Given these unique characteristics, the factor of sensory experience does not t well in the travel industry. On the other hand, studies identied attitudes related to both convenience and merchandise as important factors inuencing consumers online shopping behavior (Ernst & Young LLP, 2001; Hernandez-Ortega et al., 2008; Szymanski and Hise, 2000). Based on the reasoning above, this paper proposes to use three sub-factors of attitude perceived convenience, perceived travel product options, and perceived transaction service as surrogates for attitude toward online shopping for travel products. Given the different surrogates for attitude being proposed, this research paper expects to get different ndings in empirical testing in the future. This should help in assigning relative weights to these three surrogates for attitude. Marketing managers can thus develop effective e-strategies to emphasize the most weighted surrogates to inuence travelers attitude. With empirical testing, the researcher can understand the effects of customers attitudes and their online purchase experience. Consumer trust in e-commerce Trust is the belief that a partys word or promise is reliable and that the party will fulll his/her obligation in an exchange relationship (Schurr and Ozanne, 1985). Fishbein and Ajzen (1975) wrote, Whereas attitude refers to a persons favorable or unfavorable evaluation of an object, beliefs represent the information he has about the object (p. 12). Belief will lead to behavioral intentions (Fishbein and Ajzen, 1975). Researchers (Jarvenpaa and Tractinsky, 1999; Reichheld and Schefter, 2000; Rose et al., 1999) have pointed out that a lack of online customer trust is the main barrier to consumer participation in e-commerce. Studies show that trust is the most effective uncertainty reduction method in e-commerce (Doney et al., 1998; Gefen, 2002b, 2002c; Hart and Saunders, 1997; Mayer et al., 1995) and plays a critical role in purchasing processes where consumers look for high quality goods or services (Gefen, 2000). The degree of risk inherent in a particular e-commerce environment is offset by the degree to which one party maintains trust. Trust serves to reduce perceptions of risk and is a vital antecedent (McCole and Palmer, 2001; Morrison and Firmstone, 2000; Urban et al., 2000) for consumer online purchase intention and an important ingredient for building relationships with consumers (Gefen et al., 2003; Liu et al., 2000; McCole, 2002). According to Fam et al. (2004), basic factors for building trust in e-commerce in the tourism and hospitality industry include calculation, predictability, intentionality, capability, transference, tangibilization, and interactivity. However, industry operators and customers show signicant discrepancies on perceived criteria of trust (Fam et al., 2004). In the future, researchers should rst attempt to identify a more complete list of factors for building trust in e-commerce. Because it is imperative for both vendors and customers to build mutual understanding on those factors in order to have a successful

customer relationship, both parties should attribute the same importance to those factors. Then, researchers might focus on nding effective ways to reconcile the discrepancies in perceived criteria of trust between customers and industry operators. Marketers can then capitalize on those factors in order to initiate, develop, and maintain consumer trust online, leading to a close relationship with customers, greater customer satisfaction, positive operational benets, and stronger loyalty (Connolly and Bannister, 2008; Reichheld and Sasser, 1990). Quality of travel web site design While there is no universal agreement on the denition of quality of web site design, in this study it refers to the effectiveness of three dimensions: system quality, information quality, and service quality of a travel web site design. An e-commerce web site is an information system (Jahng et al., 2000) and measuring the quality of an information system can be traced back to Shannon and Weavers (1949) communication theory. Building on the communication theory, scholars (DeLone and McLean, 1992; Pitt et al., 1995) developed a measurement to evaluate the effectiveness of an information system design. A good e-commerce web site design will strengthen customers trust (Lowry et al., 2008), increase customer satisfaction (Law and Bai, 2008), attract consumers, and elicit purchases from them (Kuan et al., 2008; Schmidt et al., 2007). When analyzing the effectiveness of these three dimensions, studies showed that signicant impacts of three dimensions of quality of web site design, system quality (Liu et al., 2000), service quality (Yi and Gong, 2008), and information quality (Jeong et al., 2003), on travelers purchase intention. For research review, each dimension of quality of web site design will be discussed in the following sections. System quality System quality has signicant inuence on travelers online purchase intention (Liu et al., 2000). The evaluation of system quality comes originally from measuring contributions of information systems to individuals and organizations (DeLone and McLean, 1992). Currently, there is no convergent measurement of web site system quality in the tourism and hospitality literature. Jeong and Lambert (1999, 2001) rst proposed six potential dimensions of web site quality, including information accuracy, completeness, relevancy, clarity, ease of use, and navigation quality. Later, Law and Ngai (2005) proposed web site usability, which includes ve dimensions: language, layout and graphics, information architecture, user interface and navigation, and general. For these two studies, some dimensions are consistent with the dimension of information quality but some belong to dimensions of system quality, making it difcult to evaluate the valid relationships among information quality, system quality, and service quality. System quality is measured in this paper in terms of desired technical characteristics of a web site design from the customers perspective. Those desired technical characteristics include usability, availability, reliability, adaptability, and response time that are examples of qualities that are valued by users of an e-commerce system (DeLone and McLean, 2003). The proposed scale can consolidate three dimensions of web site usability (Law and Ngai, 2005) and two dimensions of web site quality in Jeongs study (Jeong et al., 2003). By using measurement of system quality, it is possible to compare the relative weight of system quality to the other two quality

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dimensions underlying site design. There is ample evidence that system quality has signicant impact on end users (Teo and Wong, 1998; Wixom and Watson, 2001). Because more travelers are making use of the choices offered by the Internet, they are less willing to tolerate poor system quality. Thus, consistently high system quality becomes a necessary criterion in todays e-commerce. Information quality Travel products are unique and require communicating a large amount of diverse information from supplier to consumer (Sheldon, 1997). A web site is a perfect medium for tourism and hospitality companies to use in building effective communication channels with travelers. Travelers usually surf the Internet to look for information about specic travel products or tourism destinations. In the search process, a user may encounter stimuli that activate or create a need. From a promotional perspective, marketers for travel products need to ensure that an internet search for information about travel products will lead to useful and favorable information about their companys product or destinations image. Information that users encounter should create awareness and interest while creating a favorable image of the companys offerings or destinations perceptions. Despite considerable research on travel web site development, there has been little investigation of information satisfaction. Jeong et al. (2003) studied the relationship between online information and behavioral intention, asserting that information satisfaction is a major determinant of behavioral intentions. Visitors information needs must be met in order to solicit online transactions (Jeong et al., 2003). To improve customer perceptions of information completeness, companies need to identify and present information that can aid customer purchase decisions and offer detailed information about reservations. If a travel web site does not provide the needed information, the traveler will be dissatised and will look to other web sites. It is clear that information quality also plays an important role in travelers decision-making processes. Thus, quality and quantity of information are imperative in the e-commerce environment. If travelers consider information to be unreliable or inaccurate, they will reduce their usage or avoid the site completely. The information quality of a travel web site is a potentially measurable, and generally acceptable, surrogate for utility in traveler decision making. For future research, qualitative methodologies can be used to dene web visitors information needs and preferences. It will also be necessary to dene the different information needs and perceived information quality across different groups of travel website visitors (Jeong et al., 2003). The results of those studies can help industry operators develop effective e-commerce strategies to target their market segments. Service quality Recent research shows that service quality delivery has a signicant positive impact on customers attitudes and behavioral intentions and on a companys nancial outcome (Cronin et al., 2000; Rust et al., 2000). Because of high transparency of price, consistent delivery of high service quality becomes a primary determinant of advantage for companies competing in e-commerce (Fassnacht and Koese, 2006). Although service quality is very important, it is largely ignored in studies on e-commerce. The few existing study attempts to capture the dimension of e-service

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quality in the measurement of e-commerce web site quality (Fassnacht and Koese, 2006). Parasuraman et al. (1985) have dened service quality as a comparison between what customers feel should be offered and what is provided. Following the framework of Churchill (1979), Parasuraman et al. (1988) operationalized their conceptual model of service quality to develop measures of marketing constructs. Eventually, Parasuraman et al. (1988) created a 45-item instrument SERVQUAL used to evaluate customer expectations and perceptions of service quality in service and retailing organizations. The instrument includes ve dimensions: tangibles, reliability, responsiveness, assurance, and assurance. Parasuraman et al. (1988) claimed that customers use those ve dimensions to assess service quality regardless of the type of service. In the e-commerce environment, the delivery of high e-service quality is essential for customer satisfaction and loyalty (Fassnacht and Koese, 2006). Although a distinguished web presence and low price may help a company attract more customers, they are not sufcient to win customer loyalty and gain a competitive advantage. E-service quality is another important domain of e-commercial web site quality and has a large impact on customer satisfaction and online purchase intention (Yi and Gong, 2008). This paper suggests that future research can explore possible effects of stickiness (Lin, 2007) or inuences of value-added services, such as agent-based search engines, push-based services, links, and location-based services on mobile terminals, that are preferred by e-travelers (Nysveen et al., 2003). It is possible to present value to satisfy individual customer needs as well as to create customers online stickiness with the travel web site. Customer satisfaction in e-commerce The satisfaction construct can be traced back to Olivers (1980) groundbreaking work on the relationship between consumer attitudes and the disconrmation of expectation. Customer satisfaction is dened as a customers evaluation of a product or service with their needs and expectations (Oliver, 1980). In the e-commerce environment, e-satisfaction has been dened as the contentment of the customer with respect to his or her prior purchase experience with a given electronic commerce rm (Anderson and Srinivasan, 2003, p. 125). Research has shown that customer satisfaction leads to initial and repeat purchase intention as well as customer loyalty (Anderson and Fornell, 1994; Kim and Lim, 2001; Koivumaki, 2001; Oliver, 1999; Pont and McQuilken, 2005; Ranaweera et al., 2008). This positive relationship is also true in the e-commerce environment (Anderson and Srinivssan, 2003; Gommans et al., 2001; Law and Bai, 2008). It has been conrmed that customer satisfaction has a positive impact on customers purchase intention (Bai et al., 2008) but scholars are still seeking a well-developed measurement of customer satisfaction. Once a sound measurement of customer satisfaction emerges, travel enterprises can properly design, administer, and analyze the process of monitoring customer satisfaction. In the e-commerce environment, some important factors have mediating effects on purchase intention through customer satisfaction. Meditational inuence of customer satisfaction is unknown in hospitality e-commerce. Future research can explore the mediating effects of other factors, such as the three dimensions of quality of web site design and the three dimensions of consumers attitude, through customer satisfaction and decompose the effects of those factors to obtain a much clearer picture of mediation effects.

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Conclusion This paper proposed a conceptual framework building on the following theories and related literature review: theory of planned behavior (TPB), consumer trust literature, consumer satisfaction literature, and quality measurement of an e-commerce web site design. Factors inuencing the consumer online buying decision include customers attitude (perceived convenience, perceived merchandise options, and perceived transaction), quality of web site design, information, system and service quality, customer satisfaction, and consumer trust (see Figure 1).

Figure 1. Proposed conceptual framework of factors affecting consumer online buying decision

Attitude concept can be used to explain customers actions since attitude is a behavioral disposition. The theory of planned behavior proposes three conceptually independent determinants of intention. Among those three determinants, attitude has being tested and conrmed as most signicant determinant which exert signicant inuence on consumers intention and behavior in various studies. Given limited surrogates of attitude being used in previous studies, evaluative dimension didnt catch the complexity of the attitude concept in e-commerce. In other words, the research ndings are not clear about roles of three dimensions of attitude perceived convenience, perceived travel product options, and perceived transaction service on travelers online purchase intentions. This study suggests that future research should incorporate three dimensions of attitude concept and to explore the inuences of each sub-factors of attitude. For example, which dimension of consumers attitudes will have most inuence on their purchase intentions and on their behaviors? With understanding of those dimensions of attitude concept, the industry can develop strategy which can inuence travelers attitude, intentions, and behavior. In consumers perception, a well design e-commerce web site should have high quality on three dimensions i.e. information quality, system quality, and service quality. Information quality is measurement of travelers information satisfaction. System quality is measured in terms of desired technical characteristics such as usability, availability, reliability, adaptability, and response time. Service quality is a comparison between what customers feel should be offered and what is provided. A good e-commerce web site design will inuence customers attitude, strengthen customers trust, increase customer satisfaction, attract consumers, and elicit purchases/repeat purchases from them. Despite many theories and studies on how to evaluate effectiveness of travel web site design, no single study measured three dimensions web site design concurrently; therefore, it is unknown about relative weight of each dimension in the measurement of web site design. It would be useful to have a standardized approach along with evaluation criteria for the tourism and hospitality industry so that the industry can benchmark and improve the effectiveness of web site design. Thus, the industry operators can attract new customers and retain current customers. Trust is the most effective uncertainty reduction method in e-commerce and plays a critical role in purchasing processes where consumers look for high quality goods or services. Trust serves to reduce perceptions of risk and is a vital antecedent for consumer online purchase intention and an important ingredient for building relationships with consumers. Unfortunately, there are signicant discrepancies between vendors and customers on perceived criteria of trust. Future research needs to focus on nding effective ways to reconcile the discrepancies in perceived criteria of trust between customers and industry operators. Marketers can then capitalize on those factors to initiate, develop, and maintain consumer trust online in order to create a close relationship with customers, greater customer satisfaction, positive operational benets, and stronger loyalty. In the e-commerce environment, e-satisfaction has been dened as the contentment of the customer with respect to his or her prior purchase experience with a given electronic commerce rm. Despite the importance of customer satisfaction, there is no well-developed measurement for it and meditational inuence of customer satisfaction is unknown in tourism and hospitality e-commerce. Future research should attempt to

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develop a standardized measurement of customer satisfaction. Once a sound measurement of customer satisfaction emerges, travel enterprises can properly design, administer, and analyze the process of monitoring customer satisfaction. Also, the researcher can study mediating and total effects of such factors as travelers attitude, quality of web site design on both traveler satisfaction and travelers online purchase intention. This paper provides a comprehensive review of research on travelers behavior online. It also identies research needs on each key theme. With appropriate empirical testing, results can be helpful for hospitality and tourism companies to develop a well-designed online transaction platform and effective marketing strategies as ways to bond with travelers. Knowledge of the factors affecting customers online buying decision may not be sufcient for the industry to create strong relationship bond with travelers but those knowledge can be important foundations for tourism and hospitality operators to developing and implementing e-commerce strategies to achieve long term goals of strong relationship bonds and excellent customer loyalty.
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