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Factors Affecting Choice of a Travel Agency forDomestic TourismVincent C. S. Heung a & Phoenix Zhu aa School of Hotel and Tourism Management , The Hong Kong Polytechnic University , HungHom, Kowloon, Hong KongPublished online: 10 Oct 2008.

To cite this article: Vincent C. S. Heung & Phoenix Zhu (2005) Factors Affecting Choice of a Travel Agency for DomesticTourism, Journal of Travel & Tourism Marketing, 19:4, 13-25, DOI: 10.1300/J073v19n04_02

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Factors Affecting Choice of a Travel Agencyfor Domestic Tourism:

The Case of Shanghai Residents in China

Vincent C. S. HeungPhoenix Zhu

ABSTRACT. The primary purpose of this study is to explore the important factors affectingShanghai residents’ selection of a travel agency for domestic tours. Through a survey of 493 Shang-hai residents, the study identified “Tour security and safety” as the most important attribute in the se-lection of a travel agency, followed by “Credibility of the travel agency” and “Agency reputation.”Six factors of travel agency selection were derived: Interactive ability, guest satisfaction, servicequality, tour facility estimation, travel agency image and service characteristics. The relationshipsamong demographics and the six factors were examined. Results reveal that the six travel agency se-lection factors are found to have significant differences in relation to five demographic characteris-tics: gender, marital status, age, occupation and general household income level. It is suggested thattravel agencies in China can make use of this information to formulate appropriate marketing strate-gies to cater for their customers and succeed in an increasingly competitive environment. [Articlecopies available for a fee from The Haworth Document Delivery Service: 1-800-HAWORTH. E-mail ad-dress: <docdelivery@haworthpress.com> Website: <http://www.HaworthPress.com> © 2005 by The HaworthPress, Inc. All rights reserved.]

KEYWORDS. Travel agency selection, domestic tourism, Shanghai, China

INTRODUCTION

With rapid economic development, politi-cal and social reform, and the accession to theWorld Trade Organization (WTO), China hasbecome one of the major tourist generatingand receiving countries in the world. The tour-ism industry in China has been maintaining re-markable momentum with its annual growthrate reaching two digits. With the rising stan-dard of living and more disposable income avast tourism market is emerging. This lucra-

tive market is attracting an increasing numberof competitors and the trend is expected to con-tinue following China’s entry into the WTO(HKTA, 2000). Furthermore, the “five work-ing days” policy that took effect on May 1,1995, has provided people in China with moreleisure time to travel. The introduction of threeseven-day public holidays (Chinese New Year,Labor Day and National Day) by the ChineseGovernment also provides more opportunityfor travel (Zhang & Qu, 1996). Domestic travelwithin China is growing rapidly. The metrop-

Vincent C. S. Heung is Associate Professor, School of Hotel and Tourism Management, The Hong Kong Poly-technic University, Hung Hom, Kowloon, Hong Kong (E-mail: hmvheung@polyu.edu.hk). Phoenix Zhu is a gradu-ate of the School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hung Hom, Kowloon,Hong Kong.

Journal of Travel & Tourism Marketing, Vol. 19(4) 2005Available online at http://www.haworthpress.com/web/JTTM

© 2005 by The Haworth Press, Inc. All rights reserved.doi:10.1300/J073v19n04_02 13

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olis areas are the main birthplace of domestictravelers (Liu, 2000; Wang, 2001) and are alsothe destination for many of them (Liu). Mostregions with a fast-growing travel industry arelarge- to medium-sized cities that boost the de-veloped economy with convenient transporta-tion and rich cultural resources. In 1998, do-mestic tourism receipts accounted for 3% ofChina’s Gross Domestic Product (GDP) (“TheStatus Quo of China Domestic Tourism,”2001). In terms of travel support services,there were altogether 8,993 travel agencies in2000, and 7,725 of them were domestic travelagencies, nearly treble the number in 1990(“Where is the Sunshine of Holiday EconomicBlazing?” 2000). The increase in holiday travelnot only creates an opportunity but also posesa severe challenge for travel agencies in China.Though tourism plays a significant role inChina’s national and international economyand is growing at an enormous rate, little isknown about the Chinese tourists’ behavior,particularly from a domestic and urban tour-ism perspective.

In order to gain an understanding of the do-mestic and urban tourism market in China, astudy was conducted to investigate the influ-encing factors in choosing a travel agency forleisure travel in China. The findings providemanagement of travel agencies in China withinformation and knowledge about Chinesetourists’ choice behavior and help them to for-mulate marketing strategies for the domesticmarkets in a highly competitive business envi-ronment. The primary purpose of the study isto explore the perceived important factors byShanghai residents in the selection of a travelagency for domestic travel. Specifically, theobjectives are to (1) identify the important at-tributes perceived by Shanghai residents in theselection of a travel agency, (2) explore the un-derlying dimensions (factors) of travel agencyselection attributes, and (3) assess the signifi-cant differences between the demographicvariables and selection factors.

TOURISM IN CHINESE MAJOR CITIES

With the sustained development of China’seconomy and the stable political environment,China’s domestic travel industry has gradually

matured. In 2000, the domestic travel industrygrew in various directions, characterized by agreat increase in travelers, the expansion ofhotspots, and the lengthening of the peak sea-sons for travel which comprise three holiday“Golden Weeks”: “Spring Festival,” “LaborsDay,” and “National Day.” According to “TheStatistical Communique of the China TourismIndustry in 2000” from CNTA (2001), thenumber of travelers in the whole country hadreached 0.744 billion, with an annual increaseof 3.5%, among which city residents were re-sponsible for 0.329 billion or 44% of the total.The whole country’s domestic travel revenuewas 317.554 billion RMB with an annual in-crease rate of 12.1%, among which the travelconsumption of city residents took up 223.526billion. The average individual expenses ofthe domestic traveler was 426.6 yuan with anannual increase rate of 8.3%, while that of thecity domestic travelers was 678.6 yuan.

City residents have played the principal rolein domestic travel consumption. According tothe nationwide spot checks on domestic travel,conducted by the China National Tourism Ad-ministration (CNTA) in cooperation with the“City Socio-economic Investigation Team” ofthe China State Statistic Bureau (CSSB), thecurrent ratio of Chinese city residents travel-ing has reached 90% (“The Status Quo ofChina Domestic Tourism,” 2001). There are12 cities: Shenzhen, Guangzhou, Xian, Amoy,Qingdao, Ningbo, Kunming, Beijing, Guiyang,Shanghai, Taiyuan, and Fuzhou, whose ratioof this kind is above 100%.

TOURISM DEVELOPMENTIN SHANGHAI

As the largest financial center in China,Shanghai plays an important role in the coun-try’s social and economic development. In2000, the municipal GDP was 455.115 billionyuan and per capita GDP reached 34.6 thou-sand yuan, namely US$4180 under the thenexchange rate, which made Shanghai the firstprovincial region excepting Hong Kong, Macau,and Taiwan with its per capita GDP exceedingUS$4000, equal to that of medium-incomecountries and regions (Shanghai Statistic Bu-reau, 2001). In the1990s, the Communist Party

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and State Council of China made a strategicdecision to quickly transform Shanghai intoone of the world’s economic, financial, andtrade centers so that it would play a leadingrole in bringing about a new economic leap forthe Yangtze Delta and the region of the Yang-tze valley as a whole. To achieve this target,international tourism in Shanghai must takethe lead (Wang, 2001).

According to the statistical data of 2000, theShanghai travel industry achieved an increas-ing value of 23.637 billion yuan, and its pro-portion to the city’s gross products rose from4.9% to 5.2% with an annual increasing rate of16.1%. The foreign exchange income of inter-national travel in 2000 was US$1.613 billion,increasing by 18.3%; domestic travel main-tained its momentum with a guest capacity of78,481,000 and a turnover of 77.5 billion yuan(Shanghai Statistic Bureau, 2001). Many ex-perts hold that China’s entry to the WTO willpresent “more chances than challenges” forShanghai’s travel industry as a whole, whilethe rapid developing Shanghai travel industryis sure to experience a heavy impact with “afragile sampan running into a strong aircraftcarrier” as a likely portraiture of the future(Zhou, 2001).

With booming holiday travel, the city resi-dents’ travel behavior and selection will be-come one of the core factors directly affectingthe development of tourism enterprises.

TRAVEL AGENCY SERVICE IN CHINA

By the end of 2000, there were altogether8,993 travel agencies in China, among which7,725 were domestic ones (“Where is the Sun-shine of Holiday Economic Blazing?” 2000).Most travel agencies in China are small withlimited resources, loosely organized and lack-ing in management expertise. They try to caterto similar markets, selling their products andservices to the same travel groups, adoptingidentical competing strategies instead of de-signing and offering various tour products andservices to different market segments. There-fore, without making full uses of rich travel re-sources, it seems that there is an oversupply oftravel agencies competing in a confusing mar-

ket (“Where is the Sunshine of Holiday Eco-nomic Blazing?” 2000).

The increase in holiday travel creates a goldenopportunity but also poses a severe challengefor the travel agencies for they must confrontvicious price-cutting competition, a civil avia-tion discount-forbidden policy, and the rise oftravel electronic commerce. In recent years,the profit-making capability of China’s travelagencies has been on the decline with theprofit margin reduced at one stage to 1.33%,which, although recovering a little, still re-mained below 2% in 1999 (“Where is the Sun-shine of Holiday Economic Blazing?” 2000).Statistics show that the international travelagencies make up 14% of the total number oftravel agencies in China, but account for 98%of the profits, while the domestic travel agen-cies, making up the other 86%, survive onsmall profit margins (Mei, 2001).

REASONS FOR CHOOSINGA TRAVEL AGENCY

A number of studies have explored travel-ers’ mode of travel and the use of the servicesof travel agencies (LeBlanc, 1992). Duke andPersia (1993) state that travelers expect a tourto be the best method of seeing as much aspossible in a congenial atmosphere, along withcomfort, scenery, and experienced tour guides.Travelers joining an all-inclusive tour by pay-ing a lump sum in advance have a tendency toexpect a good experience and a high-qualityproduct (Philips & Webster, 1983). Most ofthem take trips because they want to in-crease their knowledge, and to enjoy high-quality restaurants, first-class hotels, resortareas, well-developed entertainment, and guidedtours that enable them to see all the sights.Package travelers prefer to leave their arrange-ments to travel agents and co-travelers (Heung& Chu, 2000). Similarly, travel agents them-selves believe that many travelers rely heavilyupon agencies to help them make the finalchoice of a travel package (Kent, Meyer, &Reddam, 1987).

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TRAVEL AGENCY SELECTIONCRITERIA

Little empirical evidence has been presentedon the process consumers adopt to evaluateagencies and the quality of their services. Thislack of research, along with the attention givento the concept of service quality in the presentcompetitive environment, formed the bases ofthe present study. Service quality is an impor-tant trait throughout the whole process of ser-vice delivery and hence a determinant in theselection of a travel agency (LeBlanc, 1992).It is mostly determined by the customer-per-sonnel interactions that take place duringthe service encounter (Solomon, Surprenant,Czepiel, & Gutman, 1985; Brown & Swartz,1989). Olshavsky (1985) mentions that ser-vice quality is important in the overall evalua-tion of a product or service. Consumers evalu-ate travel agency performance based on fivegeneral service aspects: information search,technical booking skill, physical quality, cor-porate quality, and interactive quality (Persia& Gitelson, 1993). The quality of counselingprovided by travel agents is an important fac-tor of differentiation among competing agen-cies (Hruschka & Mazanec, 1990). The key toretaining customers is improving service qual-ity (Berry, 1995; Poon, 1993). However, theservices marketing literature reveals that re-search on the process by which customersevaluate service quality is still at an embryonicstage and that the concept of service quality ismainly undefined and unresolved.

Being closely linked to service quality,Gronroos (1982, 1984) considers that corpo-rate image is an important determinant of ser-vice quality and establishes a distinction be-tween functional quality, or what is receivedby customers, and technical quality, or themanner in which the service is provided. Cor-porate image is best described as the totalimpression made on the minds of customers(Dichter, 1985), and it is closely tied to themanner in which a service offering is posi-tioned in the minds of market segments(Reilly, 1990). Corporate image is also linkedto an organization’s positioning statement andto promises of customer satisfaction (Lewis,1984; Reilly).

Customer satisfaction directly influencesthe general evaluation and selection of atravel agency. Theoretically, satisfaction isthe result of a subjective comparison betweenexpected and received product attribute levels(Andreason, 1977; Day, 1977; Oliver, 1977,1981), and consistent expectations and perfor-mances should increase the probability of cus-tomer satisfaction (Brown & Swartz, 1989).As a comparison, when customers considerwhether they are satisfied with the service of atravel agency or not, they may use their pastexperience as a criterion to rate the final per-formance, so as to subjectively restrict theevaluation. To this extent, more positive cus-tomer experiences can be achieved by creatingrealistic expectations through promotional ac-tivities or controlling the behaviors and per-formances of travel agents (LeBlanc, 1992).So the above statement proves a survey byTouche Ross and Company (1978) that travelexpertise can be ranked as the most importantreason for agency usage.

DEMOGRAPHIC VARIABLESAND SELECTION CRITERIA

When tourists consider whether to selectthe service of travel agencies or not, the demo-graphic characteristics will have a vital influ-ence on tourists’ decisions. For example, theage level of travelers will directly determinepatterns of travel. Quiroga (1990) considersthat tourists older than age 45 appear mostlikely to choose a package holiday and peopleover 50 are more likely to use the services oftravel agents (Gitelson & Crompton, 1983).Gitelson and Crompton also suggest that book-ing assistance is significantly more importantfor the older traveler. On the other hand, trav-elers over 60 years of age do not considertravel agents as an important role in destina-tion decisions (Capella & Greco, 1987). Shoe-maker (1984) remarks that while travel agentsdo not influence the destination decisions ofolder travelers, they are consulted for such de-cisions such as travel modes, attractions, andlodging. Cosenza and Davis (1981) find thatthroughout the family life cycle, decisions re-lated to travel are primarily made by women,and Persia and Gitelson (1993) state that women

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rate information search, physical aspects ofthe agency, and buyer value as more importantthan do men. Furthermore, the occupation, ed-ucation and income level of travelers also af-fect the selection of a travel agency. Woodsideand Ronkainen (1980) conclude that upscalewhite-collar travelers and those traveling byair tend to use travel agencies extensively.Andereck and Caldwell (1993) mention thatpeople with lower educational levels tend torate the media as more important in selectingtravel agencies than do those with higher edu-cation levels. Finally, individual income levelmay influence consumer behavior in deci-sion-making. People with higher incomes andeducation levels tend to search for more prod-uct or service information (Runyon & Stewart,1987).

Based on the above discussion, the follow-ing hypotheses are postulated:

H1: There is a significant difference be-tween male and female travelers of theperceived important factors in the se-lection of a travel agency.

H2: There is a significant difference be-tween the single and married travel-ers’ perceived important factors in theselection of a travel agency.

H3: There is a significant difference be-tween the different age groups of trav-elers’ perceived important factors inthe selection of a travel agency.

H4: There is a significant difference be-tween different education levels of thetravelers’ perceived important factorsin the selection of a travel agency.

H5: There is a significant difference be-tween different income levels of trav-elers’ perceived important factors inthe selection of a travel agency.

METHODOLOGY

The primary data was collected through asurvey. The target respondents were Shanghaipermanent residents who like to enjoy domes-

tic tours for different purposes. A structuredquestionnaire consisting of four parts was de-veloped for the research. The first part com-prised some screening questions. The secondpart asked about general information relatingto the travel preferences and travel character-istics. The third part consisted of 38 attributescovering various aspects of the agents’ serviceoffering, including product and service fea-tures, price and value, operational environ-ment, and communication channels.

The 38 attributes were derived from an ex-tensive review of the relevant literature aboutfactors affecting travel agency selection in-cluding LeBlanc’s (1992), and Heung andChu’s (2000) studies. In addition, personal in-terviews with the managers of travel agenciesand travelers’ suggestions helped to modifyand refine the attributes. These attributes weremeasured on a five-point rating scale, rangingfrom 1 (least important) to 5 (very important),where respondents indicated the extent to whicheach attribute influenced their evaluation ofthe agency’s selection. The questionnaire wasdeveloped in English and was then trans-lated into Chinese using the back-translationmethod. A pilot test was carried out with 50Shanghai residents to ensure the clarity, valid-ity and reliability of the research instrument.The pilot test did not reveal any problems. Thecoefficient (Cronbach) alpha was computed,which was 0.87. According to Nunnally (1967),coefficients greater than or equal to 0.50 aregenerally acceptable and are a good indicationof construct reliability. An Alpha value of atleast 0.70 should be considered acceptable asthe minimum estimate of reliability for basicresearch (Churchill, 1979). Hence, the mea-surement scales of the 38 travel agency selec-tion attributes achieved a satisfactory level ofreliability. The final part solicited informationon the demographic characteristics of the re-spondents such as respondents’ gender, age,marital status, education level, occupation andhousehold income level.

Due to the difficulties of applying randomsampling techniques, convenience samplingmethod was employed to identify the target re-spondents for the survey.

The target population for the study was allthe Shanghai residents who visited four majortravel agencies during the survey period: China

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International Travel Service (CITS), ChinaTravel Service (CTS), China Youth TravelService (CYTS), and Shanghai Spring Inter-national Travel Service (SSITS). It is esti-mated by observation that 8,400 residents vis-ited the four travel agencies in a normal weekduring the survey period. Six hundred and tenShanghai citizens were approached and fourhundred and ninety three were successfully in-terviewed and their questionnaires completed.The response rate was 59%, which is quitehigh in China. A small gift was provided toeach respondent for completing the question-naire as an incentive.

Data were analyzed initially with descrip-tive statistics including frequencies and meanratings. Principal component factor analysiswith VARIMAX rotation was then applied tothe 38 travel agency selection attributes to de-termine whether there existed any underlyingdimensions or factors. Reliability analysis wasalso used in order to assess the internal consis-tency of the variables retained in each dimen-sion. Finally, independent sample t-test andone-way analysis of variance (ANOVA) wereemployed to test whether the mean ratings ofthe underlying dimensions of travel agency se-lection attributes (derived from factor analy-sis) differed significantly according to the de-mographic profile (gender, age, education andincome levels) of the respondents.

RESULTS

The demographic profile of the respondentsis shown in Table 1. There were 235 (47.7%)females and 258 (52.3%) males among the re-spondents. The main age group was between16-35, representing 56.8% of the respondents(the 16-25 age group had 31.6%; the 26-35 agegroup 25.2%). Almost 45 per cent (44.4%) ofthe respondents were unmarried, and 26.8%were married with children. The majority ofthe respondents (74.5%) had either a secondaryor post-secondary education. As for the respon-dents’ occupation, one in five (20.1%) of themwas an office worker. Students, medical person-nel and retired personnel represented 10.5%,11.4% and 13.8% respectively, and other cate-gories comprised less than 10%. In terms ofhousehold income, more than half of the fami-

18 JOURNAL OF TRAVEL & TOURISM MARKETING

TABLE 1. Demographic Profile of Respondents(N = 493)

Demographic Characteristics Frequency Percentage

Gender

Male 258 52.3%

Female 235 47.7%

Marital Status

Single 219 44.4%

Married 262 53.1%

a. Married with children 132 26.8%

b. Married without children 130 26.3%

Others 12 2.4%

Age Group

16-25 years 156 31.6%

26-35 years 124 25.2%

36-45 years 72 14.6%

46-55 years 72 14.6%

56-65 years 48 9.7%

66 years above 21 4.3%

Education Level

Primary 14 2.8%

Secondary 195 39.6%

Post-secondary 172 34.9%

College/University 96 19.5%

Postgraduate or above 16 3.2%

Occupation

Unemployed 20 4.1%

Factory worker 25 5.1%

Farm worker 1 0.2%

Student 52 10.5%

Teacher 11 2.2%

Military personnel 1 0.2%

Businessman 19 3.9%

Official 35 7.1%

Technician 34 6.9%

Medical personnel 56 11.4%

Company clerk 99 20.1%

Employee in service industry 38 7.7%

Consultant 9 1.8%

Retired personnel 68 13.8%

Others 25 5.1%

Total Individual Income Level (per Month)

less than Y1000 (US$125) 43 8.7%

Y1000-2999 (US$125-375) 149 30.2%

Y3000-4999 (US$376-625) 139 28.2%

Y5000-7999 (US$626-1000) 92 18.7%

Y8000-9999 (US$1001-1250) 29 5.9%

Y10000-19999 (US$1250-2500) 24 4.9%

Y20000 or above (US$2501 or above) 9 1.8%

Missing 8 1.6%

Total 493 100%

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lies were earning Y1000 (US$125) or above,amongst which Y1000-2999 (US$125-375)comprised 30.2%; Y3000-4999 (US$376-625):28.2%; Y5000-7999 (US$626-1000): 18.7%;Y8000-9999 (US$1001-1250): 5.9%; and aboveY10000 (US$1250): 6.7%; Y10000-19999 (US$1250-2500): 4.9%; Y20000 (US$2501) orabove: 1.8%.

MEAN RATINGS OF ATTRIBUTESFOR TRAVEL AGENCY SELECTION

In order to address the perceived impor-tance of travel agency selection attributes byShanghai permanent residents, the means andstandard deviations were computed. The re-sults are presented according to the ranking ofmean scores (Table 2).

The mean scores for all the 38 statementsranged from 4.71 to 3.54. The top three mostimportant attributes are “Tour Security andSafety (mean = 4.71),” “Credibility (mean =4.71)” and “Agency Reputation (mean = 4.68).”The bottom three important attributes for therespondents are “Promotion and Recommen-dation (mean = 3.54),” “Tour Products Of-fered (mean = 3.59)” and “Media Advertising(mean = 3.59).” Regarding the perceived im-portance of travel agency selection attributes,all thirty-eight pertinent attributes have meanscores higher than 3, ranging from 3.54 to4.71. This demonstrates that respondents per-ceived all the attributes as “generic impres-sion,” “more important” or “very important.”Based on the mean rating of the 38 attributes,it was found that the top concern for the re-spondents was related to intangible criteriasuch as tour security and safety, credibility,agency reputation, reliability, and staff qual-ity, etc. Differentiating from LeBlanc (1992),Heung and Chu’s (2000) explorative research,tour security and safety (mean = 4.71) wasrated by Shanghai residents as the top priorityin the overall importance of the total 38 vari-ables. This is probably because the study wasconducted right after the “9.11” terrorism at-tack in the USA. Although the impact of theterrorism attack towards the tourism industryin Mainland China was relatively small, peo-ple were still worried about the likelihood ofsuch an incident in China.

Vincent C. S. Heung and Phoenix Zhu 19

TABLE 2. Mean Ratings of Attributes for TravelAgency Selection (N = 493)

Attributes for Travel AgencySelection

MeanScore

StandardDeviation

Rank

Tour Security and Safety 4.71 .65 1

Credibility 4.71 .70 2

Reputation 4.68 .77 3

Reliability 4.65 .82 4

Staff Quality 4.63 .74 5

Efficiency of Service 4.61 .81 6

Service Attitude 4.49 .81 7

Sightseeing Points Offered 4.48 .83 8

Escort and Guide's Service 4.42 .89 9

Friendly and Courteous Treatment 4.40 .79 10

Tour Package Price 4.39 .80 11

Courtesy 4.37 .80 12

Catering and Lodging Hospitality 4.36 .81 13

Tour Value for Money 4.35 .92 14

Tour Transportation Arrangement 4.31 .78 15

Journey Arrangement 4.28 .85 16

Responsiveness to Customer’sRequirements

4.28 .90 17

Tour Itinerary Arrangement 4.28 .90 18

Willingness to Provide PromptService

4.28 .85 19

Tourism Environmentand Atmosphere

4.27 .86 20

Agency’s Capacity to AdequatelySatisfy Expectations and Needsof Customers

4.26 .92 21

In-depth Knowledge and Skillsof Staff on Destination and Tour

4.24 .93 22

Agent's Service Characteristics 4.23 .88 23

Procedures Followed WhenServing Customers

4.20 .96 24

Ability to Understand theCustomer

4.15 .95 25

Convenient Locationand Distribution

4.04 .99 26

Interactive Communication withCustomer

4.04 .94 27

Interactive Relations 4.03 .95 28

Personalized Service Offered byAgents

3.99 1.00 29

Tour Resources 3.96 1.01 30

Market Competence 3.92 1.08 31

Product Categories Offered 3.83 1.11 32

Group or Family Discount Offered 3.82 1.06 33

Size of Travel Agency 3.80 1.01 34

Ability to Exploit Marketand Resources

3.77 1.02 35

Media Advertising 3.62 1.04 36

Tour Products Offered 3.59 1.11 37

Promotion and Recommendation 3.54 1.13 38

Note: Importance Ratings are based on the mean scores measuredon a rating scale from 1-5 (1 = Least Important, 5 = Very Important).

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TRAVEL AGENCY SELECTIONFACTORS

Results of factor analysis show that the 38travel agency selection attributes are condensedinto six dimensions. With 29 attributes de-rived from the original 38 variables, these sixdimensions explain 60% of the variance inoverall selected attributes, which are loadedmost heavily (loading � 0.50). These six fac-tors were identified to have an influence onShanghai residents’ choice of a travel agencyfor domestic travel, in order of importance,namely: Interactive ability in terms of com-munication and responsiveness, marketingability in terms of market promotion and me-dia advertising, reliability in terms of credibil-ity and efficiency, quality of tourist productsin terms of accommodation and tour arrange-ments, reputation and image in terms of sizeand characteristics of travel agency; and ser-vice delivery in terms of convenience andvalue (Table 3).

INFLUENCE OF DEMOGRAPHICDIFFERENCES

Significant differences were found betweenmales and females in two out of the six travelagency selection factors. These two factors areService Quality and Tour Facility Estimation.The results also reveal that females placedhigher mean ratings on these two factors thandid their male counterparts. This indicates thatthese two factors are more important to femaletravelers when they choose a travel agency for adomestic tour. It seems to support those ofCosenza and Davis (1981), Persia and Gitelson(1993) and of Heung and Chu (2000), whoconclude that ladies rate information searchand buyer value as more important than domen. Therefore, H1: There is a significant dif-ference between male and female of the per-ceived important factors in the selection of atravel agency; cannot be rejected.

An independent samples t-test was appliedto the married and unmarried groups. Signifi-cant differences were also found between un-married and married respondents in four out ofsix dimensions. These factors respectively are:Interactive Ability, Guest Satisfaction, Travel

Agency Image and Service Characteristics.Analysis reveals that unmarried people ratedthe four dimensions higher than those with afamily. This indicates that these four factorsare more important to single travelers whenthey choose a travel agency for a domestictour, whereas married people would be influ-enced by their family members and this is con-sidered to be a potentially important factor de-termining trip patterns. Based on the results,H2: There is a significant difference betweenthe single and married travelers’ perceivedimportant factors in the selection of a travelagency; cannot be rejected.

One-way ANOVA was applied to test whatare the differences in underlying dimensions.The results indicate that there were significantdifferences among the age groups in 5 of the 6factors. Different age groups with differentmean ratings revealed that Interactive Ability,Guest Satisfaction, Travel Agency Image andService Characteristics were more importantto the group of 25 years old or below thanother groups when they select a travel agency,while Service Quality was more important forthe age group of 46-55 than other age groups.Hence, H3: There is a significant differencebetween the different age groups of the per-ceived important factors in the selection of atravel agency; cannot be rejected. There wereno significant differences among differenteducation backgrounds and different incomegroups of the respondents with these six factors(Table 4). In this case, H4 and H5: There aresignificant differences between different edu-cation levels and income levels of the perceivedimportant factors in the selection of a travelagency; can be rejected. The results differfrom previous studies (Andereck & Caldwell,1993; Runyon & Steward, 1987) that differ-ences do not exist among the education levelsand income levels of the respondents. This isprobably due to the lack of knowledge aboutthe role of a travel agency in China and Chi-nese travelers are less experienced in travelingthan the Western counterpart.

IMPLICATIONS AND CONCLUSION

This study identifies pertinent travel agencyselection attributes perceived by Shanghai per-

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Vincent C. S. Heung and Phoenix Zhu 21

TABLE 3. Results of Factor Analysis with VARIMAX Rotation on the Respondents’ Perceptions of TravelAgency Selection Attributes for Domestic Tours (N = 493)

Factor Loading

Travel Agency Selection Factor 1 2 3 4 5 6 Communality

1. Interactive Ability

In-depth Knowledge and Skills of Staffon Destination and Tour

.744 .715

Interactive Relations .736 .754

Responsiveness to Customer's Requirements .664 .663

Interactive Communication with Customer .643 .668

Courtesy .638 .686

Personalized Service Offered by Agents .618 .611

Friendly and Courteous Treatment .602 .655

Willingness to Provide Prompt Service .578 .661

Ability to Understand the Customer .575 .648

2. Guest Satisfaction

Tour Products Offered .724 .677

Group or Family Discount Offered .710 .650

Ability to Exploit Market and Resources .682 .685

Promotion and Recommendation .627 .663

Media Advertising .571 .655

Tour Resources .539 .579

3. Service Quality

Reliability .793 .762

Credibility .747 .717

Tour Security and Safety .663 .548

Efficiency of Service .654 .682

4. Tour Facility Estimation

Tour Transportation Arrangement .721 .627

Escort and Guide's Service .692 .591

Catering and Lodging Hospitality .634 .596

Tourism Environment and Atmosphere .590 .610

5. Travel Agency Image

Categories of Products .702 .657

Size of Travel Agency .674 .580

Service Characteristics of Agent .582 .576

6. Service Characteristics

Tour Itinerary Arrangement .561 .669

Tour Value for Money .545 .618

Convenient Location and Distribution .539 .568

Eigenvalue 14.9 2.6 1.8 1.4 1.3 1.1

Variance (%) 14.9 10.8 10.5 10.0 7.4 6.2

Cumulative Variance (%) 14.9 25.8 36.3 46.3 53.7 60.0

Cronbach's Alpha .92 .86 .85 .80 .72 .69

Factor Mean 4.20 3.72 4.63 4.33 3.95 4.22

Number of Items 9 6 4 4 3 3

Total Scale Reliability 0.9561

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manent residents. Six travel agency selectionfactors that significantly affect people’s choicesof a domestic trip were derived from the factoranalysis: Interactive Ability, Guest Satisfac-tion, Service Quality, Tour Facility Estima-tion, Travel Agency Image and Service Char-acteristics. The relationship between thesesix factors and the demographic characteris-tics such as gender, marital status, age, ed-ucation level, occupation, individual in-come level and general household incomelevel were analyzed. Results of the analysisreveal that the six travel agency selectionfactors were found to have significant dif-ferences (p � 0.05) in relation to five demo-graphic characteristics: gender, marital sta-tus, age, occupation and general householdincome level. In fact, female respondents andsingle travelers were more concerned about“Service quality” than were males and those

people with family. Moreover, female travel-ers and singles were more concerned about theagency’s interactive abilities than males andmarried people. It was naturally found thatthere are a few differences between groups. Nosignificant differences were found in relationto education and individual income level withregard to the six factors. Travel agencies inShanghai, and even in the whole of MainlandChina, tend to focus on the mass market fortheir domestic tours. However, whether on di-mensions or product characteristics, they arestill playing a role as retailer not wholesaler,and different requirements of customers arestill not satisfied. Travel agencies cannotdifferentiate themselves from their competi-tors and survive against keen competition inthe travel industry. Therefore, the key objec-tive for agencies should be to guarantee satis-faction over repeated service encounters,

22 JOURNAL OF TRAVEL & TOURISM MARKETING

TABLE 4. Results of Independent Sample t-Test and One-Way ANOVA on Mean Difference of the TravelAgency Selection Factors by the Demographic Profiles of the Respondents (N = 493)

DemographicProfile

InteractiveAbility

(Factor 1)

GuestSatisfaction(Factor 2)

ServiceQuality

(Factor 3)

Tour FacilityEstimation(Factor 4)

Travel AgencyImage

(Factor 5)

ServiceCharacteristics

(Factor 6)

Gender

MaleFemalet value

4.164.24

�1.29

3.653.79

�1.81

4.564.69

�2.35*

4.274.40

�2.08*

3.923.98

�0.79

4.174.28

�1.56

Marital Status

SingleMarriedt value

4.304.121.48*

3.843.612.43*

4.654.61

�0.14

4.354.320.72

4.123.802.71*

4.324.141.08*

Age

16-5526-3536-4546-5556-65F ratio

4.334.224.134.233.832.98*

3.893.683.583.693.482.42*

4.684.644.544.734.442.66*

4.384.284.284.414.260.69

4.184.043.743.803.612.97*

4.394.244.124.203.882.91*

Education

PrimarySecondaryPost SecondaryCollege/UniversityPost-graduateF ratio

4.084.164.244.184.230.73

3.863.693.763.683.580.55

4.544.614.654.594.710.69

4.524.354.314.314.310.68

3.783.854.054.004.061.65

4.054.134.334.214.340.79

Income Level US$

< 125125-375376-625626-10001001-12501251-2500F ratio

4.174.214.104.274.294.101.23

3.833.633.693.813.673.650.56

4.644.614.574.514.614.670.69

4.354.334.284.354.504.330.79

3.863.973.914.014.134.001.26

4.214.224.204.124.324.240.52

Note: Results were presented as the mean on a 5-point scale, from 1 (least important) to 5 (very important).*P � 0.05.

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since satisfaction over time would result inperceptions of service quality (Parasuraman,Zeithaml, & Berry, 1988). In the meantime,levels of service quality should also be takeninto account when segmenting markets to as-sure that what is delivered corresponds to theexpectations of the segments (LeBlanc, 1992).It should be ensured that services are renderedin a timely manner and that customer dealingswith the agency are kept private (LeBlanc). Itcould be argued that customers have somelevel of expected performance with regard tothese factors, and if the travel agency does notachieve those levels, both customer satisfac-tion (Oliver, 1981) and perceptions of the agencyshall be affected.

Through this research, it is hoped that thisstudy will be helpful to the travel industryand can supply some accurate information topilot travel agencies in actualizing appropri-ate strategies to match market demands. Thisexploratory study shows that tourists are satis-fied not only when gaining a good tour experi-ence, a high quality tour product (Philips &Webster, 1983), and making friends duringtravel activities, but to a greater extent, theyalso attach more importance to the ‘Tour secu-rity and safety’ supplied throughout the wholetravel process. Moreover, the interactive abil-ity of travel agencies offered to travelers isalso emphasized. The findings suggest thattour price was not a principal factor affectingthe tourists’ consideration of travel agency se-lection. There was a tendency to select travelagency for the main tour features, especiallyfor some segment markets like seniors, fe-males and upscale white-collar people. Cus-tomers may synthetically consider and reviewthe background of the travel agency, and as-sess the special services, which agencies cansupply. For travel agencies or travel operators,it is suggested by this research that they aim atthe above special subsections. The agenciesshould exploit different kinds of tour productsor services to match different market demandsand attract more tourists to select their ser-vices. Meanwhile, to survive in a competitiveenvironment, travel agencies must differenti-ate themselves from their competitors and sup-ply feasible products and services to distinctcustomers, amongst which offering securityand safety during tour activities must be an en-

hanced factor that is essential after the “9.11”terrorism attack.

From the statistical data, it is obvious thatthere are significant differences between un-married tourists and married travelers in thebehavior mode. As a result, this research sug-gests that when travel agencies consider offer-ing some appropriate products and services tocater to the requirement of tourists, it must paymore attention to taking care of families. Thedifference between unmarried and marriedpeople in their traveling behavior will directlyimpact their pattern of selection. In this study,whatever the past tour experience or futuretravel plan, many people are choosing familymembers as their main travel companions im-plying that in the coming few years, familytravel as a mode of traveling, will be the main-stream and will significantly affect the major-ity of customers’ judgment for travel patternselection. As travel agents, they are expectedto follow this trend closely and tailor-make ap-propriate packages for family travel. To con-clude, the results of the study are of value totravel agencies in China. They provide infor-mation on how customers select a travel agencyfor travel services in China. These agenciescan make use of the information to formulateappropriate marketing strategies for their po-tential customers so as to increase sales andimprove customer satisfaction. The study haslaid a foundation for future research on othermajor cities in China.

LIMITATIONS OF THE STUDY

As there are several limitations associatedwith this study, care must be taken when inter-preting and generalizing its results. First, thetravel agency selection attributes used in thestudy may not be complete. There may besome other attributes that can be perceived asimportant by respondents and were not in-cluded. The psychological and experience vari-ables may have an influence on choice behav-ior. Second, this study includes only Shanghairesidents who have undertaken domestic travelexperiences in the past three years or will havea domestic tour plan within the next two orthree years. The sample here therefore may

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not be representative of the selection criteriaof other people who may travel outside theseperiods. Third, this study only emphasizes theperceived importance of Shanghai residents’travel agency selection for domestic tours.Hence, it does not take into account the cus-tomers who select travel agencies for overseastravel and any perceptions of overseas travelare not identified. With regard to any furtherstudies, it is recommended that the most influ-ential travel agency selection attributes or fac-tors should be determined, with a larger sam-ple, particularly in relation to their impact ontravelers’ overall satisfaction levels; travelers’likelihood of reusing the service offerings; andtravelers’ likelihood of recommending the ser-vice offerings to others (Heung & Chu, 2000).By analyzing the key determinants, travelagents can tailor appropriate marketing strate-gies to meet the expectations or desires of thecustomers who travel nationwide or abroad forleisure.

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SUBMITTED: November 25, 2003FIRST REVISION SUBMITTED:

October 12, 2004FINAL REVISION SUBMITTED:

February 23, 2005ACCEPTED: February 28, 2005REFEREED ANONYMOUSLY

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