Abstract
Information and communications technology (ICT) are widely used by enterprises to enhance their competitiveness. Travel agents (TAs) are among service providers for whom their integration of ICT and Internet technological capabilities could be the best marketing device and a potential promoter for enhancing their competitive positioning in the tourism sector. The study contextualizes ICT usage patterns in an underexplored context, the Middle East countries. This study provides an overview of the current state of affairs of the ICT adoption in small- and medium-size TAs in Dubai in United Arab Emirates. It investigates the usage patterns of the Internet by Dubai TAs, reasons for using the Internet, features of agents’ website content, and perceived significant benefits of e-commerce and barriers to adoption. It is found that the majority of TAs use the Internet for several reasons, ranging from customizing services, attracting customers, communicating with customers, gaining access to international markets, providing TAs with information and finding out about suppliers and competitors. The significant perceived benefits identified in this study are establishing a reputation in the global markets, increasing sales, revenues and profits, improving distribution channels, increasing competitive advantage and customizing services to customer needs. On the other hand, it was found that the principal barriers hindering e-commerce adoption are limited resources versus the high cost of e-commerce adoption, online security concerns, lack of skilled information technology labour, a lack of customer readiness, and a lack of advice and support. The study identified the need for more training facilities for adopting e-commerce in TAs and the need for the government to provide incentives, professional advice, and guidance regarding appropriate e-commerce products and services at an affordable cost for TAs operating in the emirate.
Introduction
The Internet remains one of the most revolutionary inventions in the history of humankind (Andreau et al., 2010). It is a technological development whose capability has found significance in almost all spheres of life of the modern society (Andreau et al., 2010; Buhalis, 1998; Buhalis and Law, 2008; Zhang and Morrison, 2007). From information processing and sharing and social networking to online commerce, virtually nothing seems impossible with Internet (Andreau et al., 2010; Kumar and Becerra Fernandez, 2007; Stamboulis and Skayannis, 2003; Wu et al., 2007). Although the Internet has become a universally available technology, recognition of its functionality, means and capability is still essential (Abu-Shouk et al., 2013; Alexander, 2000; Beekhuyzen et al., 2005; Karanasios and Burgess, 2008). Travel and tourism industries are, information oriented, thus highly receptive to the advantages of utilizing Internet (Andreau et al., 2010; European Commission, 2006; O’Connor, 1999). An important competitive feature of the Internet is e-commerce, which is gradually finding growing acceptance for application in a wide range of industries (Dyerson and Harindranath, 2007; Jin, 2007; Kim, 2005; Zheng et al., 2004) including tourism (Abou-Shouk et al., 2013; Alrashid, 2012; Longhi, 2011; Harindranath et al., 2008; Zheng et al., 2004).
As a stage for e-commerce, the Internet continues to be a significant tool for use in the travel and tourism industries (Andreau et al., 2010). Utilization of the Internet is gaining increased acceptance among major stakeholders in the industry, including travel agencies (TAs) (Abou-Shouk et al., 2013). Both tourism academics and industry practitioners are exploring the use of the Internet as an important knowledge-based invention (Andreau et al., 2010; Kumar and Becerra Fernandez, 2007; Wu et al., 2007). Utilizing the Internet in a broad range of different segments in the tourism industry service is expanding, particularly over the past two decades, where the use of cyberspace has gained increasing popularity (Andreau et al., 2010; Buhalis and Law, 2008). Companies including TAs are using the Internet to achieve commercial objectives as they market themselves locally and internationally, collecting necessary information, delivering service and support for their customers, and most importantly, making electronic transactions (Abu-Shouk et al., 2013; Bourgouin, 2002; Harindranath et al., 2008; Karagozoglu and Lindell, 2004). Despite indications of slow rates of embracing Internet in tourism in some countries, the future prospects of the tourism industry appear to be significantly reliant on this technology (Alrashid, 2012).
On the other hand, innovations in the information and communications technology (ICT), over the past two decades, particularly the growth of the Internet, have had a significant impact on the tourism industry all over the world (Al-Khouri, 2012; Alrashid, 2012), including the Gulf Cooperation Council (GCC) countries. Although the use of e-tourism in the GCC countries is still relatively low compared to other societies in the industrialized world, the United Arab Emirates (UAE) in particular is investing heavily in adopting and implementing (ICT) in its governmental sectors. The UAE leads the Middle East and North Affrica (MENA) region in adopting and implementing ICT to enhance economic diversification and global competitiveness (Kalesar, 2010).
The Internet has played a significant role in the tourism industry in UAE, not only through its use as an improved source for information sharing but also through the concept of e-commerce (Alrashid, 2012). The impact of ICT in tourism industry has been substantial enough to make the future of this industry significantly dependent on the adoption of the ICT (Balasubramanian, 2010). Consequently, research on Internet adoption in tourism in the UAE is significant, given that most research on the e-commerce and Internet adoption in tourism has focused primarily on Europe and North America. Little research at present has focused on ICT and Internet adoption in the tourism industry within the GCC (Alrashid, 2012; Al-Rawi et al., 2008), particularly the UAE. Thus, the three main objectives of this article are identified as follows: first, to investigate the patterns of use of the Internet by Dubai TAs, reasons for using the Internet, and features of agent website content. The second objective is to explore perceived significant benefits of e-commerce. The third objective is to explore perceived significant barriers of e-commerce. The logistic regression model is used to examine the major benefits and barriers of e-commerce among TAs adopting e-commerce versus non-adopters. This is the first study to examine the status of ICT adoption and usage by TAs in the Emirate of Dubai. The findings of this research may provide a foundation for future research and can help policy makers, not only in Dubai but in other Middle Eastern Countries, in designing policies to further endorse the use of Internet technologies and e-commerce adoption in small- and medium-sized travel agencies (SMTAs). These policies will lead to improvement in marketing and internal efficiency, which is in turn reflected in improved productivity and competiveness.
Dubai as a particular case study is significant for several reasons; first, Dubai, at present, is well positioned on the international tourism map as one of the world’s top tourism destinations (Alhosani and Zaidan, 2014; Bageen, 2007; Sharply, 2008). Second, Dubai is taking significant steps to diversify its economy so as to decrease its dependency on dwindling oil supplies and to increase the non-oil sector’s contribution to the country’s gross domestic product by the year 2030 (Zaidan, 2015). The government has been increasingly adopting ICT to enhance its global competitiveness (Al-Khouri and Bal, 2007; Al-Khouri and Bachlaghem, 2011), particularly in the tourism industry (Alrashid, 2012). A gap may have been created between the governmental agencies involved in tourism and the private sector, which may be still falling behind the government in their adoption of ICT in their enterprises, including the Internet (Alrashid, 2012; Al-Khouri, 2012). Third, Dubai has experienced a positive upward trend in tourist arrivals over recent years and aims to increase tourist arrivals into the Emirates to 20 million by 2020 (Al-Hosani and Zaidan, 2014). Accordingly, this study may contribute to research about developing strategies for achieving the Dubai tourism vision 2020 of attracting 20 million tourists.
Literature review
ICT have significantly changed the ways through which governments and businesses provide their services (Al-Khouri, 2012). The rapid spread of the ICT including the Internet demonstrates how prevalent and powerful these technologies have become (Al-Khouri, 2012; Harindranath et al., 2008; Migiro and Ocholla, 2005). Today, they are considered one of the fundamental building blocks for developing modern societies and digital economies (Al-Khouri, 2012; Castells, 2009; Varian et al., 2005).
The Internet is a dominant and trusted source of travel information at present (Abou-Shouk et al., 2013; Jin, 2007; Kim, 2005). In most global markets, Web search now plays a more significant role than personal recommendation (Andreau et al., 2010). According to International Telecommunication Union (2012), the United States was the first country worldwide to adopt the Internet, followed by Europe 3 to 4 years later. Continuing rapid growth in the use of the Internet globally is expected, especially in Asia (International Telecommunication Union (2012). According to the International Telecommunication Union (2012), there were 111,721,020 Internet users in 18 Arab countries in 2012, growing at a rate of 18.98% as compared to 93,896,216 in 2011. The number of Internet users in the region is expected to increase to about 197 million by 2017 (International Telecommunication Union, 2012). Internet penetration in the Arab world is expected to surge from 32% in 2012 to 51% in 2017, amounting to 3% above the world average (Arab Knowledge Economy report, 2014: 1).
The 2011 Internet Price Basket (IPB) published by the International Telecommunication Union (2012) ranks a total of 161 economies according to affordability of ICT services. This report shows that there are major differences in ICT prices between countries around the world. IPB values range from a low (i.e., relatively affordable) 0.3 in Macao (China) to a high (and relatively unaffordable) 64.6 in Madagascar. The IPB also shows that the countries with the highest income levels have the most affordable ICT services. Given the fact that the IPB is calculated as a percentage of Gross National Income (GNI) per capita, the top 10 list is dominated by economies with very high monthly GNI per capita levels (International Telecommunication Union, 2012). Certainly, Norway, Qatar, Luxemburg, Denmark, Sweden and the UAE rank in the top 10 of the IPB as shown in Table 1 (International Telecommunication Union, 2012).
ICT Price Basket and sub-baskets, 2011 and 2010.
ICT: Information and communications technology; IPB: Internet Price Basket.
Note: GNI and PPP$ values are based on World Bank data.
Regarding the region of the Arab states, Table 2 shows that the 2011 ICT Price Basket values range significantly, between 0.5 in Qatar and the UAE, which rank fourth and sixth globally, to 45.9 in Comoros, ranked 152nd out of 161 economies (International Telecommunication Union, 2012). These large disparities in IPB values and global rankings may be explained by the diversity of the Arab world in terms of income and development levels. It should be taken into consideration that ICT services are relatively more affordable in high-income economies (Alrashid, 2012, Al-Khouri, 2012; International Telecommunication Union, 2012). The table shows that all countries (ranking in the top 40) of the global IPB, such as Qatar, the UAE, Bahrain, Saudi Arabia and Oman have quite high-income levels. For example, Qatar which ranks fourth globally, and has the most affordable prices in the region, as low as 0.5% of average monthly GNI per capita. Next comes the UAE, followed by Bahrain, Oman and Saudi Arabia. On the other hand, in Arab states with lower incomes, such as Lebanon, Tunisia, Egypt, Algeria and Jordan, the IPB represents about 4% of GNI per capita. Furthermore, in Arab countries with low incomes where ICT services remain mostly unaffordable, the IPB represents more than 20% of GNI per capita, as exemplified in Mauritania, Iraq and even reaching more than 45% in Comoros.
IPB and sub-basket (USD, PPP$ and as a percentage of GNI per capita), 2011, Arab states.
IPB: Internet Price Basket.
Note: GNI and PPP$ values are based on World Bank data.
*2009; **2008.
High-income states in the Arab world such as UAE, and more specifically Dubai, have invested considerably in their tourism industry. The Department of Tourism and Commerce Marketing (DTCM) in Dubai, which is part of the Dubai government, is extensively using the Internet to enhance its market share of international leisure and event tourism (Alrashid, 2012, Al-Khouri, 2012). DTCM is the principle authority for tourism planning, development and marketing in Dubai Emirate. The chairman of the DTCM is Dubai’s ruler, Mohammed Bin Rashid Al Maktoom. DTCM has integrated the Internet use to enhance its sales for various tourism products and services (Government of Dubai, 2014a). By exploring the DTCM official website, it is noted that a wide range of e-services exist, including hotel reservations and opportunities for individuals and business entities to register as agents for conducting special promotions for the tourism products and services of Dubai (DTCM website). In addition, the website provides options for clients to post ideas, suggestions, or complaints in order to obtain feedback on the quality of services provided. Another governmental website (dubai.com) is considered a good information source for potential users. The website provides tourists with information on flights, hotels, and other tour-related services offered by various actors in the country’s tourism industry.
Furthermore, Dubai is recognized globally as a tourist destination where most of its tourist organizations are engaged in online promotion and marketing of tourism products and services, and sales are conducted through e-commerce (Alrashid, 2012; Kalesar, 2010). According to the Government of Dubai (2014b), in September 2013, Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai, issued a decree regarding the implementation of a fully integrated e-Permit and e-Ticketing system. The main objective of developing and implementing this online system is to support and enhance the events sector, which is a key pillar underpinning the Dubai Tourism Vision 2020 of welcoming 20 million visitors per year by 2020. The decree states, ‘DTCM will be responsible for the development and management of an online system through which all procedures related to the application, processing and licensing of event permits will be operated. The system will also include a centralized platform for the sale and distribution of tickets for all events in Dubai’ (Government of Dubai, 2014b: 1). The above examples represent competitive uses of the Internet that Dubai has incorporated. However, the question that may rise here is whether the government tourism organisations in Dubai are way ahead of the average small- and medium-sized enterprises (SMEs) in the emirate. This study may contribute to the debate that can ensue in exploring this question.
According to the World Tourism Organization (2001), electronic business provides small and medium-sized tourism enterprises significant opportunities to improve their business in an innovative and cost-effective manner (Abou Shouk et al., 2013; Andreau et al., 2010; Lichtenthal and Eliaz, 2003). Andreau et al. (2010: 778) state that, ‘the accessibility of online travel websites reduces the relevance of travel agencies, and this might ultimately result in travellers bypassing traditional travel agencies’. On the other hand, they also state, ‘a key strength of traditional travel agencies is their ability to provide information and advice to travelers. Consequently, for travel agencies that position themselves as travel advisors … the adoption and exploitation of the IT in the business processes is one of the key success factors’.
Accordingly, TAs rely heavily on up-to-date and precise information. Therefore, TAs make extensive use of a range of information systems for different purposes; reservations, making transactions and inventory management (Barnett and Standing, 2001). Literature surveys have shown that adopting the Internet provides access to helpful information on tourism products and services and facilitates interaction with business stakeholders; it improves customer services while easing and accelerating the ways through which business is being done (Abo-Shouk et al., 2013; Karanasios and Burgess, 2008; Khanchouch, 2005; Teo et al., 2009; Usoro, 2007). As identified in Abou-Shouk et al. (2013), TAs widely use global distribution systems, which are one form of information systems for making reservations, reporting, searching for information and for client management.
Likewise, TAs also use organizational information systems for different purposes, such as accounting, billing, reporting and record management (Abou-Shouk et al., 2013; Alvarez et al., 2007). The most significant benefits as determined by Internet adoption experts for tourism and hospitality companies are last-minute bookings, lower distribution costs, improvement in marketing and increased internal efficiency; this is reflected in turn to improving performance (Abou-Shouk, 2013; Alvarez et al., 2007; Dyerson and Harindranath, 2007; Jin, 2007).
With regard to tourism marketing, the Internet has produced a revolution in marketing tourism destinations (Andreau et al., 2010). According to a study by Xiang and Gretzel (2010) who investigated the role of social media in online travel information search, travellers use the Internet to search information on potential travel destinations as well as to take direct action by booking online. Access to unlimited information, combined with the tools to stay connected to others, has generated a huge shift in the types of trips people take, how they book, and what activities they undertake while on vacation. Tourists today can make personal travel itineraries, customized to their individual preferences. Several years ago, it was expensive for a TA to build and maintain a website and it required technical expertise. The authors further explained that today, new tools have made publishing easier and at a lower cost. Search engines and online advertising provide operators with access to the right customers for their business. Since online marketing is easily accessible and cost-effective, it has opened up global competition (Xiang and Gretzel, 2010). Today, no business and enterprises can manage without capitalizing on the opportunities the Internet presents (Andreau et al., 2010; Kim, 2005; Poon, 1993; Poon and Joseph, 2001).
However, the adoption of e-business implies both benefits and challenges (Andreau et al., 2010; Lichtenthal and Eliaz, 2003; Poon and Joseph, 2001) that have not been explored as yet in the academic literature. Most of the studies that have examined the adoption of the Internet by TAs did not provide empirical evidence and were mainly descriptive (such as Al-Rashid, 2012; Heung, 2003; Law et al., 2004). As identified in Andreau et al. (2010), the necessity for having scientific research on this phenomenon can be justified due to the occurrence of ‘disintermediation’ and ‘reintermediation’ in travel industry. Disintermediation phenomenon saw a decline in the role of long established intermediaries in the supply chain of the tourism industry due to an increase in direct interaction between consumers and suppliers, which is made possible using electronic means. The reintermediation phenomenon has seen a rise in online travel intermediaries such as Expedia, Travelocity, and so on. in lieu of long established intermediaries. Some of these online intermediaries have experienced remarkable growth leading to a call for rethinking the role of long established intermediaries (Andreau et al., 2010: 778–779).
This study helps to shed further light on this significant phenomenon in the tourism industry, which remains one of the fastest growing industries across the world and among the most promising economic resources across the globe (Al-Rashid, 2012). Therefore, this article focuses on the use of Internet technologies by SMTAs in Dubai as a case study. The article also examines the opportunities and challenges it offers as seen by the managers of the TAs in the emirate.
A review of the literature relevant to tourism SMEs in the Middle Eastern countries and the use, benefits and challenges of Internet adoption in the tourism industry point to a scarcity of research into the Internet marketing practices of tourism SMEs in this region and prompted this research that will contribute to knowledge in this area. The article discusses the practical implications of the findings for the tourism SMEs.
SMEs are the backbone of Dubai’s economy, representing 95% of all establishments in the Emirate. According to a report published by Dubai SME (2013: 7), the SME businesses account for 42% of the workforce and contribute about 40% to the total value add to Dubai’s economy. Government of Dubai is developing different initiatives aiming at enhancing the contribution and performance of the SMEs sector to make them comparable to their counterparts in other developed and high-income countries. However, the formulation of such initiatives aimed at the development of the SME sector and enhancing support for SMEs have to be based on thorough research assessing their current state and development needs.
The situation regarding the small- and medium-sized enterprises involved in the tourism and hospitality sector in Dubai in UAE is similar to their counterparts in other Arab countries in the Middle East and is quite different than in the developed countries. Despite the fact that the Internet would enable SMTAs to communicate efficiently with their clients and stakeholders and provide them with a new world wide distribution channel, as well as success in their business (Al-Allak, 2010), these SMTAs still lack mechanisms to establish formal Internet-based marketing.
In Dubai, which is a major tourism destination in the Middle East region, the Internet is not used by all tourism SMEs for promotional activities and as a main marketing tool. Some SMEs and TAs use Internet for information gathering on ad hoc basis (Al-Allak, 2010). Being family business, SMTAs in Dubai like in other Arab countries in the Middle East, have short-term business horizons and limited resources and channels of maintaining business relations (Al-Allak, 2010). SMTAs in Dubai often have limited knowledge of the business environment and are commonly managed by Asians (Indians and Philippines) to cater to Asian visitors and Asian migrant workers, in particular Indians and South East Asians. India is identified by the DTCM, as the second top tourism market for Dubai, first is Kingdom of Saudi Arabia. However, African visitors and migrant workers considered as customers to tourism SMEs in Dubai.
The activities of these TAs are mainly booking plane tickets, hotels, finding tourism packages as desert safaris and cruise packages. They sometimes provide complementary services as transport and inbound tours. The main competitors for SMTAs in Dubai are the online agencies and the global enterprises in the tourism and hospitality sector (Dubai SME, 2013).
These TAs were largely established in the 70s and 80s. The Internet has significantly affected their business. Since the 90s until today, the continuing advancement of information technology (IT), with the widespread public use of the Internet and the rise of the online booking have had a significant impact on the TA service industry in Dubai. These agencies have traditionally relied on being perceived as an essential intermediary between travellers and the services they require. However, airline and hotel executives merrily have cut out the agency and the commissions by creating direct relationships with their clientele and allowing them to book plane tickets and lodging right from their sites. As a result, some of these TAs have shut down their business. On the other hand, many of them have had to make some adaptations to remain solvent and relevant. Although these adaptations still need improvement, these TAs are still in business. Agents in Dubai who embraced technology to improve their performance and their customers’ experience have substantially improved their chances of survival.
Methodology
To examine the adoption and usage of Internet technologies (e-commerce) by SMTAs in Dubai, a structured questionnaire was developed as a tool for data collection. The questions included in the survey tool were based on existing literature (i.e., Andreau et al., 2010; Abou-Shouk et al., 2013), with minor modifications to better fit the context of the study. Moreover, some questions were based on a study about the Internet and e-commerce adoption by Canadian businesses conducted by Statistics Canada (2000).
The on-site survey instrument consists of three printed pages divided into three main sections: first, use of the Internet and its features and functions; second, questions about the benefits from their perception about adopting Internet in their business. Nine categories have been measured on a 5-point Likert scale (1 = strongly disagree, 5 = strongly agree). Third, questions about the challenges for adopting the Internet in their business, nine categories have been measured on a 5-point Likert scale (1 = strongly disagree, 5 = strongly agree). The questionnaire was first developed in English and then translated to Arabic. The TA has the option as to which language of the questionnaire to use. A list of all the certified and licensed TAs in Dubai that are classified as SMEs was obtained from the DTCM by email. The list contained 134 TAs with their addresses and phone and fax numbers. All these TAs were invited to participate in the study after thoroughly explaining to them its objectives. The ethics research office at United Arab Emirates University approves the survey instruments for the study and an explanatory letter accompanied the questionnaire.
The survey instrument was implemented by a carefully selected four research assistants who volunteered to administer the questionnaire. The volunteered research assistants were trained and then sent to the field for the purposes of distributing and filling in the questionnaires. This was done over a period of 8 weeks, ending 28 September, 2015. The research assistants contacted the TAs face to face unless the TA asked for a phone interview in order to fill in the questionnaire; 131 were completed, while 3 TAs refused to participate in the survey. The study is thus, based on a sample of 131 respondents.
To examine the significant perceived benefits and barriers of e-commerce adoption, a logistic regression model has been used to examine the major benefits and barriers for TAs adopting e-commerce versus non-adopters.
Discussion of results
The findings of the study show that TAs in Dubai widely recognize the significance of adopting Internet in their enterprises, since 92 agencies have a website while 39 do not (23 have email only and 16 have neither a website nor an email), as shown in Table 3. Thus, 70.2% of these agencies have a website, while only 17.6% do not have and 12.2% have email only. However, the survey results presented in Table 3 indicate that TAs in Dubai are aware of the benefits of using the Internet.
Travel agencies in Dubai using Internet.
Note: N = 131.
To cover the first objective of the study to examine Internet use among TAs in Dubai, results in Table 4 indicate that TAs use the Internet for several reasons, ranging from customizing services (92%) and attracting customers (91.2%) to bidding for contracts (53.2%). Other functions of Internet use cited by the TAs are communicating with customers (91.2), having access to international markets (89.4%), providing TAs with information (83.3%), finding out about suppliers (83%), finding out about competitors (78.5%), receiving customer bookings (67.3%), providing staff formal training (58.2%), monitoring hits on the website (54.9%) and bidding for contracts (53.2%).
Functions of Internet use by TAs in Dubai.
TA: travel agency.
For agents adopting Internet, Table 5 presents the content of their websites. It was found that the online presence of the TAs in Dubai is still informative for clients, as it focuses on emails (98.9%), home page (95.3%), providing information about the agents’ services (94.3% of surveyed agents’ websites), receipt of enquiries and comments (93.8%), online finder for tourists facilities (85.4%), interactive search facility (79.6%), online reservation request form (68.7%) and interactive trip planner (52.7%).
Features of websites of travel agencies in Dubai.
Although online transactions, virtual brochures and, most importantly, online booking are still in their early stages in Dubai’s TAs (39.6%, 38.7% and 32.7% of surveyed agents, respectively), this indicates that TAs in Dubai are not taking the best advantage of Internet opportunities to increase their competitiveness in the global travel market.
Furthermore, the results in Table 4 show that the most significant perceived feature of Internet by TAs in Dubai is the email function. This is not surprising as such results indicate that the more innovative features seem to be not highly demanded by the tourism SMEs or customers. This may be explained by the fact that the main clients of tourism SMEs in Dubai are Indian visitors or Indian working migrants who do not have access to the Internet.
On the other hand, survey results showed that adopting e-commerce by TAs in Dubai generated a number of benefits. Overall, results showed that the adopter TAs agreed to most of the perceived benefits of e-commerce as indicated in the survey tool. These benefits are as follows: establishing a reputation in the global markets (4.01), ease of carrying out transactions (3.55), improve customer satisfaction (3.42), improving distribution channels (3.63), enhance staff satisfaction (3.43), increasing competitive advantages (3.58), customizing services to customer needs (3.55), increasing sales, revenue and profits growth (3.68) and effective partnerships with supplier/partners (3.50).
On the other hand, Table 6 indicates that there is a significant difference between adopters and non-adopters in their perceptions of the benefits gained from Internet use. A χ 2 test was conducted to examine statistical differences among adopters and non-adopters of the Internet. The results of the χ 2 test indicated a significance difference at .05 levels. Furthermore, a T-test for equality of means was applied and the results revealed values of p < .05, which implies the rejection of the null hypothesis (H0) of no difference between the two groups of TAs (adopters and non-adopters) in their opinions regarding the benefits of using the Internet.
Perceived benefits of Internet adoption by travel agencies in Dubai.
Therefore, a binary logit model was utilized for developing significant benefits of e-commerce adoption by TAs. This model is characterized by its simple probabilistic choice function, clarity in the algebraic manipulations related to the derivation of the final probabilistic choice function, and the ease of interpreting the estimated result. The use of this technique deepens the understanding of the choice behaviour of TAs in adopting the Internet.
Explanatory variables for the model have been assessed to identify which of these variables most effectively augment the data for TAs’ choice in using the Internet. Some of the variables (i.e., increasing sales, revenues and profit growth, increasing competitive advantages, improving distributing channels…) included in this study are considered significant in modeling the e-commerce adoption choice. A binary logit model has been designed for two alternatives, mainly adopters and non-adopters, to compare the significant differences in perceiving the benefits of adopting the Internet.
All explanatory variables in the model were considered key variables affecting a TA’s choice of e-commerce use and were statistically significant at p = 0.05 level. Table 7 shows the results of the model for adopting or not adopting Internet, presented as two different main groups. Overall, the model fits the data. The results of running the logistic regression model to identify the significant benefits of adoption by TAs show that there are four significant benefits gained from the adoption of e-commerce (Table 7). These benefits are establishing a reputation in the global markets, increasing sales, revenues, and profits, improving distribution channels, increasing competitive advantages and customizing services to customer needs.
Model parameter estimates.
Using −2 Log likelihood and chi-square test, the inclusion of predictors in the regression model reduced the −2 likelihood by 110.540. The chi-square value of Hosmer and Lemeshow (11.08), df of 8, and p > 0.05, which implies acceptance of the null hypothesis of no difference between observed and predicted values of dependent variable, thus suggested that the model fits the data. Furthermore, the R 2 values indicated that the model has moderate explanatory power, since the variables included in the model accounted for 71.4% of the variation for Negelkerke and 53.3% for Cox and Snell, indicating that the model offers a good explanation of variance.
From Table 7, it was found that establishing a reputation in the global markets is the greatest perceived benefit of adoption of e-commerce. Increasing sales, revenues and profits comes next, then improving distribution channels, increasing competitive advantage, and customizing services to customer needs. To interpret the results using logit values: Logit e.com.adoption = −7.847 + 2.950 × agents agree to establish new reputation in global markets, + 2.889 × agents agree to sales, revenue and profit growth, + 2.850 × agents agree to improving distribution channels, + 2.752 × agents agree to increasing competitive advantages, and + 2.667 ×agents agree to customizing services to customer needs. These results show that agents perceive establishing a reputation in the global markets as the greatest benefit, followed by increasing sales and revenues, improving distribution channels, increasing competitive advantages, and last, customizing services to customer needs.
Since the third objective of the study seeks to identify the barriers to adopting e-commerce by TAs in Dubai, Table 8 presents some of the perceived barriers faced by TAs when using the Internet. In the main, non-adopter TAs largely agree regarding the barriers to e-commerce adoption in this study. These barriers are lack of advice and support (mean value of opinions is 3.56), lack of customer readiness (3.66), lack of public infrastructure readiness (3.41), no wish to expand (3.15), Internet is not relevant to business (3.10), security concerns (3.82), limited resources versus high cost (3.95), lack of IT skilled labour (3.64) and no online competitors (3.59). On the other hand, adopters of e-commerce have neutral opinions regarding the barriers to adoption.
Perceived barriers to Internet adoption by travel agencies in Dubai.
The T-test for equality of means confirms that there is a significant difference in opinions of adopter and non-adopter TAs regarding the barriers to e-commerce (Table 8). Furthermore, running the logistic regression model of barriers of e-commerce highlights four significant barriers obstructing the adoption of e-commerce by TAs in Dubai (Table 9). These barriers are limited resources compared to the high cost of e-commerce adoption, online security concerns, unskilled labour and lack of customer readiness.
Variables in the equation-significant perceived barriers to Internet adoption by travel agencies in Dubai.
Some apparent contradictions exist in the results of this study, for example, 89.4% of TAs (see Table 4) state that the Internet gives them ‘access to international markets’ yet the mean value of opinions is 3.10 (see Table 8) for ‘Internet is not relevant to business’. Such contradiction maybe explained by the fact that TAs in Dubai recognize that the adoption of Internet will give them access to extra market share, but their current market does not require working online or using advanced features of the Internet. This is related to the fact that the main clients of tourism SMEs in Dubai are Indians, Philippines, or African visitors or working migrants who do not have access to the Internet. This appears to be reflected in the fact that only 39.6% (see Table 5) do ‘online booking’. This indicates that 60.4% almost two-thirds of their business is done over the phone or by mail or by a visit from the client to the TA.
On the one hand, although the UAE is the sixth cheapest country in the world for the affordability of Internet pricing, yet ‘high cost’ is perceived as a barrier to going online (see Table 8). It is apparent by the findings of this study that owners of tourism SMEs are slow in adopting ICT in their businesses due to resource constraints such as lack of training and capital and the fear of the ‘hidden costs’ of ICT adoption and usage, such as human resources (HR) training and upgrading software.
From Table 8, it can be seen that the limited resource versus high cost of e-commerce adoption is the greatest perceived barrier to adoption by TAs. Online security concerns come next, then lack of IT skilled labour, lack of customer readiness, and finally lack of advice and support. The results in logit format: Logite.com.adoption = −2.068 − 0.987 × agents agree to limited resources −0.776 × agents agree to online security concerns −0.688 × agents agree to lack of IT skilful labour −0.884 × agents agree to lack of customer readiness −1.475 lack of advice and support.
Using −2 Log likelihood and a chi-square test to evaluate the model fit, the inclusion of predictors in the regression model reduced the −2 likelihood by 330.840. The R 2 value of Hosmer and Lemeshow (13.15), df of 8 and p > 0.05, imply acceptance of the null hypothesis of no difference between observed and predicted values of dependent variable thus it is suggested that the model fits the data. Furthermore, the variables included in the model accounted for 44.4% of the variation for Negelkerke and 33.3% for Cox and Snell. The literature suggests that values of 0.2–0.4 for R 2 represent an excellent fit. The R 2 values indicated that the model has moderate explanatory power.
The key findings of this study are that tourism SMEs in Dubai appear to have at least a recognition of the necessity to adopt Internet and ICT in their business to a certain extend. The findings also show that tourism SMEs are slow in adopting Internet and ICT in their businesses due to resource constraints. These findings are similar to other studies in other countries in the Middle East such as Jordan (Al-Allak, 2010) and Egypt (Abou-Shouk et al., 2013). Tourism SMEs in these countries according to studies seem to have similar characteristics and patterns of behaviour.
Although, the results indicate that the extended use of Internet is slowly progressing among TAs in Dubai, the potential to gain a competitive advantage through Internet adoption seems to be given. This is considered to be vital given the fact that tourism SMEs in competing neighbouring countries (e.g. Qatar, Oman and Bahrain) are following the steps of Dubai in diversifying their one – commodity economy by investing in their tourism sector and thus are more likely to be relying more on Internet-based marketing intelligence. These Gulf countries as such are competing for attracting more tourists and visitors at the expense of Dubai tourism and hospitality SMEs.
Conclusions and implications
Internet and ICT adoption by TAs has been widely discussed in the literature; this article investigates Internet and ICT adoption by tourism SMEs in Dubai in the UAE. Dubai is a particular case, not only because it is in a specific geographic region that has been unexplored yet, but also because it is the fastest growing tourism destination in the world. Dubai is also the focus of this study because of its relatively growing economy, rapid modernization and westernization, and its political stability in a relatively unstable region. Accordingly, the study could provide enlightening insights, which might have implications in other GCC countries as well as other Middle Eastern countries.
The UAE has been identified as one of the leading counties concerning ICT adoption among the GCC countries. Remarkably, huge development has been made concerning the transfer to eGovernment in UAE particularly the Government of Dubai. In fact, the UAE may be recognized as one of the forerunners in the world for ICT usage (Al-Khouri, 2012). Nonetheless, the government agencies are well ahead of the average SMEs in the country including the tourism sector (Manochehri et al., 2012). This study contributes to this debate in presenting indicative evidence on the state of ICT adoption and usage patterns of the tourism SMEs in Dubai. The findings of this study suggest that policy makers in Dubai should be aware of a potential growing gap in terms of ICT adoption between the public and the private sector. If not addressed, this gap could further make the local population to become less enthusiastic to deal with the private sector. Local government has in this perspective a significant effect on ICT adoption and usage.
The findings of this research have provided revealing insights into the adoption of the use of the Internet by tourism SMEs in a Middle Eastern country as a potential promoter for enhancing the competitive positioning of the tourism sector in this region. The study offers an overview of the current state of affairs of the ICT adoption by TAs in Dubai.
In total, 28.8% of all SMTAs have no online presence, whereas 70.2% of the TAs have home pages. Overall, the results may signify that Internet use is at an advanced stage compared to TAs in other countries in the region, such as Egypt (Abou Shouk et al., 2013) and Jordan (Al-Allak, 2010). However, exploring the functions and uses of Internet emphasizes that adoption of the Internet by SMTAs in Dubai is still not mature and in its infancy stages, since it focuses on emails (98.9%), while online reservation requests constitute 68.7% and interactive trip planner is 52.7%. Furthermore, online transactions (39.6%), virtual brochures (38.7%) and, most importantly, online booking (32.7%) are still in their early stages in Dubai’s TAs. These results also indicate that TAs in Dubai are not taking the best advantage of the Internet opportunities to increase their competitiveness in the global travel market. It also indicates that the prospect of gaining a competitive advantage through the extended and advanced adoption of the Internet needs to be endorsed by local authorities and policy makers. Taking into consideration the increasing gap between the public and the private sectors in Dubai in terms of ICT adoption, it is suggested that policy makers should be aware of the significant value that the tourism industry of Dubai may enjoy from changes introduced by the Dubai government in terms of the Internet technologies.
The findings of the study also show that TAs use the Internet for several reasons, such as customizing services (92%), attracting customers (91.2%), communicating with customers (91.2), gaining access to international markets (89.4%), providing TAs with information (83.3%), finding out about suppliers (83%), finding out about competitors (78.5%), receipt of customer bookings (67.3%), provision of staff formal training (58.2%), monitoring of hits on the website (54.9%) and bidding for contracts (53.2%). These findings indicate that TAs in Dubai are apparently aware, to a certain extent, of the necessity of adopting the Internet.
On the other hand, the study has investigated the perceived significant benefits gained from adopting e-commerce and the barriers contributing to tourism agents’ reluctance in adopting e-commerce. The findings of the study are consistent with other similar studies. Empirical results of the regression model showed that establishing a reputation in global markets is the largest perceived benefit of e-commerce. Increasing sales, revenues and profits comes next, followed by improving distribution channels, increasing competitive advantage, and customizing services to customer needs. Overall, all these perceived benefits could be classified as marketing benefits.
In examining the factors that are significantly hindering e-commerce adoption in Dubai, non-adopter agents largely agree that limited resources versus the high cost of e-commerce adoption constitute the greatest perceived barrier. Online security concerns come next, followed by a lack of IT skilled labour, a lack of customer readiness, and a lack of advice and support. These barriers may be categorized as internal factors related to SMTAs, or external factors related to local authorities in the emirate.
With respect to internal barriers, this study suggests that TAs in Dubai could overcome disintermediation challenges in different ways, such as launching automation to attain competitive advantages. Technology and automated systems have been identified as vital to the achievement of service quality (Abou Shouk et al., 2013; Deng et al., 2000). Furthermore, it is essential that TAs in Dubai develop online booking systems as well as competent websites to attract new customers and to retain old ones. Furthermore, developing online travel services and adopting innovative ways through e-commerce will significantly contribute in expanding the customer base for Dubai TAs.
Taking into consideration that Dubai is becoming a business hub for meeting, incentives, conferences and events travellers, in addition to the family market share that is significantly growing, it is suggested that TAs in Dubai should offer customized services to identify and serve those niche markets as well as older travellers. There are also significant prospects for TAs to group together to improve the Web’s potential. For example, to overcome the security concern that is hindering Internet adoption, TAs in Dubai can form alliances in order to develop a more secure and effective transaction-based website. Additionally, creating alliances with other industry facilitators such as airlines, tour operators, hotel chains, international TAs and cruise lines will certainly increase their competitiveness and their market share. Another significant barrier that may be hindering e-commerce adoption is the lack of IT skilled labour. This could be overcome by sending employees in TAs to attend professional training courses and sessions related to ICT.
With respect to external factors hindering e-commerce adoption by TAs in Dubai, the study emphasizes the need for more training facilities for adopting ICT in SMEs, including TAs. The study results indicate that the high cost and lack of IT skilled labour are significant barriers that may be hindering e-commerce adoption. Accordingly, it is suggested that the government should provide guidance on appropriate e-tourism technologies, products and services at a reasonable cost for ICT and Internet technological capabilities. The government could also propose incentives to encourage e-tourism adoption, such as soft loans and providing professional advice and consulting at low or even no cost to TAs in the Emirate. This study may well be the first such study investigating the status of e-commerce adoption by SMTAs in the Emirate of Dubai.
There can be no doubt that the continued adoption of e-tourism by TAs will increase the strength of the tourism industry on the level of international competition. Simply put, Dubai Tourism Vision 2020 of attracting 20 million visitors by that year will depend on the acknowledgement of the importance of integrating ICT in the operations of the tourism industry. In fact, the rate of technological advancement in the public sector in GCC countries is so fast that small- and medium-sized enterprises are lagging behind in terms of fully exploiting the Internet technological capabilities, particularly when it comes to marketing the tourism products and services and online booking. Gaining the benefits associated with technology adoption in the tourism sector is not essential for traditionally known tourism destinations but also for emerging world tourism destinations in the Middle East countries.
While there are some strengths of tourism SMEs in the emerging destinations in the Middle Eastern countries, there are still many areas that need improvement. First, their competiveness, which is comparatively lower than their counterparts in high-income countries as Singapore, may be endorsed by online channels and reaching enormous markets that would never be accessible if working offline. Second, adoption of ICT in improving effectiveness, processes and services among tourism SMEs in the Middle East is still lacking. The public and private entities in high-income Middle Eastern countries should meet the needs of tourism SMEs in operating in global markets and attracting tourists and seeking business collaborations. These entities include the financial institutions such as banks; the firms involved in providing IT solutions and services, the human resource consulting and training firms, and many others. Third, tourism SMEs need to improve their HR competences by employing and rewarding the skilled and talented staff, and making their enterprises a pleasant place to work. Finally, in today’s knowledge-based societies, tourism SMEs should realize that investment in innovation and creating a culture of innovation are essential to ensure new markets, products and services.
Footnotes
Declaration of conflicting interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.