Chapter 1

The Problem and Its Setting

Introduction

Travel agencies face varied problems nowadays in terms of

economic, social, and business aspects as they serve the 21 st

century customers. In fact, some travel industry insiders believe

traditional travel agents are set to experience a challenges due

to renewed interest from millennial travelers, while others

believe traditional travel agents have long outlasted their

utility in an online-driven industry . These challenges make

negative impact to their performance as travel companies and

create challenges to continue as an stable business entity.

Nowadays, potential travelers are certainly not short of

options when it comes to researching and arranging their trips.

With more deals, agencies and service offerings than you could

ever fully consider, shopping for travel services has become

about cutting through the noise rather than discovering something

authentic. One of the major factors affecting travel business is

the economic crises experience nationwide. This resulted to more

expensive prices of travel services which adds burden to the

customers. Further, travel agencies have increasing competitors

in the field which make it harder to attract customers. Their

efforts to win customers give more challenges to maintain the

performance of their travel business. Moreover, independent

travelers prefer to organize their own travels because of this

financial and economic issues

In addition to economic crises, professionalism is also one of

the issues in terms of maintaining a successful travel agencies.

Frequently, customers complain about the experience they had in

travel agencies specifically to the treatment they received. The

attitude and communication skills of the travel agents are just

some of these experiences. They often demand for lower ticket

price, inexpensive hotel accommodations, and cheap promos.

Travelers are often frustrated if these things are not met. Left

unsatisfied, these customers lose their loyalty and trust which

make them choose other travel agencies. Hence, customers are

more attracted to skilled travel agents and companies who can

give more interesting and exciting offers.

With more holiday bargains on the internet than you can

imagine, along with a host of small agencies and big hitters

vying the attention of potential travellers, loyalty is a rare

thing in today’s market. If you’re not offering something

original, authentic and worth returning to, customers will have

no problem taking their business elsewhere.

Moreover, different travel companies often experience

difficulties in attracting possible clients because of the

existence of online travel services. These online booking

attracts more customers overwhelming the traditional way of

travel reservations. Many travel enthusiasts prefer the online

travel services because it is hassle-free and more convenient. In

addition, visa assistance cannot be given efficiently giving more

stress to travelers. Further, some customers always thought of

their security so they prefer accredited travel agencies and

online travel agents.

Huge competition in the travel industry has been the catalyst

for many bold claims, and it may well be that travellers

appreciate the authenticity of peer to peer services.

Travel agencies have resisted change for decades.The

successful travel agency of tomorrow will be very different to

the successful travel agency of yesterday (Solutions to the

Travel Agency Problem, 2002).

Hence, the researchers are interested to discover the

economic, social, and other business related factors which serve

as major problems affecting the travel agencies in general. These

problems are overwhelming enough and they are interesting points

of study to investigate other factors that might hinder a travel

agency to function successfully. Moreover, it is also a good

point to discover the possible solutions to the numerous problems

faced by different travel agencies.

Theoretical Framework

The Disruptive Innovation Theory (1995) by Clayton

Christensen, Michael Raynor, and Rory McDonald has proved to be

a powerful way of thinking about innovation-driven growth. Many

leaders of small, entrepreneurial companies praise it as their

guiding star; so do many executives at large, well-established

organizations. It's the idea that smaller, weaker, but more

innovative competitors break into markets and eventually disrupt

and completely overtake their competitors.

“Disruption” describes a process whereby a smaller company

with fewer resources is able to successfully challenge

established incumbent businesses. Specifically, as incumbents

focus on improving their products and services for their most

demanding (and usually most profitable) customers, they exceed

the needs of some segments and ignore the needs of others.

Entrants that prove disruptive begin by successfully targeting

those overlooked segments, gaining a foothold by delivering more-

suitable functionality—frequently at a lower price. Incumbents,

chasing higher profitability in more-demanding segments, tend not

to respond vigorously. Entrants then move upmarket, delivering

the performance that incumbents’ mainstream customers require,

while preserving the advantages that drove their early success.

When mainstream customers start adopting the entrants’ offerings

in volume, disruption has occurred.

 The Disruptive Innovation Theory Model

The diagram contrasts product performance trajectories (the

red lines showing how products or services improve over time)

with customer demand trajectories (the blue lines showing

customers’ willingness to pay for performance). As incumbent

companies introduce high quality products or services (upper

red line) to satisfy the high end of the market (where

profitability is highest), they overshoot the needs of low-end

customers and many mainstream customers. This leaves an

opening for entrants to find footholds in the less profitable

segments that incumbents are neglecting. Entrants on a

disruptive trajectory (lower red line) improve the performance

of their offerings and move upmarket (where profitability is

highest for them, too) and challenge the dominance of the

incumbents.

Conceptual Framework

Based on the Disruptive Innovation Theory, a conceptual

framework is formed showing the independent and dependent

variables of the study. The application of the theory shows the

independent variable as the performance of the company which may

be affected by problems which are economic, social, and business

factors in nature. In addition, the profile of the respondents

which are the age, sex, civil status, and occupation may affect

their perception on an efficient travel agencies. Moreover, the

solutions to problems encountered by travel agencies, if applied

on actual situations, might improve the performance of travel

agencies. Hence, the smaller travel agencies, like the “entrants”

in the disruptive innovation theory, can compete with current and

big travel agencies by improving their performance on the

market.

Therefore, the variables of the study are shown in the

following diagram showing the causal relationship of the study.

It also emphasize how the performance of the travel agency is

affected by several factors especially the problems they

encounter in their travel business.

Figure 1. Research Paradigm of the Study

 Figure 1 shows the independent variables and dependent

variables of the study. The independent variables causes changes

to dependent variables. In the instant study, the variables like

profile of the respondents, problems encountered by travel

agency, and the solutions to these problems may directly affect

the over all performance of a travel agency.

Statement of the Problem

This research aims to determine the Problems Encountered by

Travel Agencies in Cabanatuan City, Nueva Ecija. Specifically, it

sought to answer the following questions:

1. How may the profile of the respondents be described in terms

of:

1.1 Age;

1.2 Sex; and

1.3 Civil Status?

2. What are the problems encountered by the Travel Agencies in as

perceived by the customer-respondents in Cabanatuan City, Nuev

Ecija in terms of:

2.1 Economic Aspect;

2.2 Social Aspect; and

2.3 Services Offered?

3. What are the solutions to the problems encountered by the

Travel Agencies as perceived by customer-respondents in

Cabanatuan City, Nueva Ecija?

4. Is there a significant relationship between the profile of the

customer-respondents and their perception on the problems

encountered by Travel Agencies in Cabanatuan City, Nueva Ecija in

terms of:

4.1 Economic Aspect;

4.2 Social Aspect; and

4.3 Services Offered Aspect?

5. Is there a significant relationship between the profile of the

customer-respondents and their perception on the solutions to the

problems encountered by Travel Agencies in Cabanatuan City, Nueva

Ecija?

6. What are the problems encountered by the Travel Agencies as

perceived by the travel agency owners in Cabanatuan City, Nuev

Ecija in terms of:

6.1 Economic Aspect;

6.2 Social Aspect; and

6.3 Services Offered?

7. What are the solutions to the problems encountered by the

Travel Agencies as perceived by travel agency owners in

Cabanatuan City, Nueva Ecija?

8. Is there a significant relationship between the profile of the

travel agency owners and their perception on the problems

encountered by Travel Agencies in Cabanatuan City, Nueva Ecija in

terms of:

8.1 Economic Aspect;

8.2 Social Aspect; and

8.3 Services Offered Aspect?

9. Is there a significant relationship between the profile of the

travel agency owners and their perception on the solutions to the

problems encountered by Travel Agencies in Cabanatuan City, Nueva

Ecija?

Hypotheses

Based on the statement of the problem, the researchers

formulated the following research assumptions:

1. There is no significant relationship between the profile of

the customer-respondents and their perception on the problems

encountered by the Travel Agency

2. There is no significant relationship between the profile of

the customer-respondents and their perception on the solutions to

the problems encountered by the Travel Agency

3. There is no significant relationship between the profile of

the travel agency owners and their perception on the problems

encountered by the Travel Agency

4. There is no significant relationship between the profile of

the travel agency owners and their perception on the solutions to

the problems encountered by the Travel Agency

Scope and Limitation of the Study

This research focuses on the problems encountered by the

Travel Agencies as perceived by customer-respondents and 5 Travel

Agency owners in Cabanatuan City, Nueva Ecija. Specifically, it

will determine the economic, social, and services aspects of the

problems and its impact to the performance of the Travel Agency.

It would not deal with other extraneous factors affecting the

performance of the Travel Agency.

Significance of the Study

This research work is beneficial to the following:

1. Travel Agency - by knowing the problems and the solutions to

their difficulties, the travel agencies can improve their

performance and immediately cope with their business challenges.

2. Tourism Students - it will give them the knowledge and

understanding on the possible strategies to have a successful

business on travel agency

3. Department of Tourism - it may give the department ideas on

how to improve the marketing strategies based on the effective

approaches dealt with this study.

Conceptual and Operational Definition

In the light of this study, the following terms are defined

operationally:
1. Profile of the respondents - pertains to the basic information

of the respondents which may affect their perception on the

problems encountered by Travel Agencies and the Solutions to

these problems.

2. Age - pertains to the age of the respondents

3. Sex - deals if the respondent is male or female

4. Civil Status - shows if the respondents are single, married,

divirced, or widowed.

5. Occupation - pertains to the job or profession of the

repondents

6. Problems - pertains to the economic, social, and services

aspect of the challenges faced by Travel Agencies

7. Travel Agencies - pertains to the Travel Agencies in

Cabanatuan City, Nueva Ecija.

8. Solutions - deals with the solutions to the problems

encountered by travel agencies

9. Performance - shows the performnce of the travel agencies in

relation to their servies offered.

 Chapter 2

Review of Related Literature and Studies

This chapter presents a several literature and studies that have

significant relation to the present study. Some materials were

also reviewed to emphasize and justify the present undertaking in

terms of the problems encountered by Travel Agencies and the

solutions to these problems.

Foreign Literature

A. Economic, Social, and Services Aspect of Travel Agency

Economic Aspect

Ostdick (2016) states that for traditional travel agents, the

concept of business processes - a series of related business

actions or transactions resulting in a certain goal or objective

- can be a major pain point for agencies still relying on

outdated methods of completing transactions between wholesales,

suppliers, distributors, and customers. These methods - often

relying on manual data entry, management, and customer relations

- lack the flexibility, agility, and transparency travel agents

need to get the right products to the right people at the right

time.
 According to Ostdick, traditional travel agencies lack the

ability to access, adjust, and modify in real-time product

availability, inventory, and pricing information to provide

partners and customers the most accurate window into current

holdings and offerings.

Social Aspect

The lack of formal training means lack of quality control. If

travel agents were more consistently trained, then there would be

fewer 'bad' agents spoiling the reputation of the good agents,

and the overall appreciation of travel agents would be much

higher. (Solutions to the Travel Agency Problem, 2002).

Travel agencies need to specialize in one of several ways.

They need to perhaps specialize by type of travel (eg cruise only

agencies) or by destination (eg Australia specialists) or by type

of passenger (eg gay travel specialists) or perhaps (a new

concept), they need to specialize and sell in conjunction with

only one or two partner suppliers (even airlines). Perhaps they

might also specialize in providing contract travel services to

specific major customers, rather than general travel services to

the general public. (Solutions to the Travel Agency Problem,

2002).

Services Aspect

The ability to quickly return comprehensive and curated search

results is key in retaining customers and offering value added

services to partners, suppliers, and other parties working with a

travel agency. However, many of today’s travel agents still lack

the tools necessary to provide detailed search results in fast

and efficient ways (Ostdick, 2016).

Ostdick also emphasized the solution as how quickly a travel

agency can respond to customer inquiries has a direct impact upon

how likely a customer is to complete a booking. Today’s traveler

is bombarded with information and content each and every minute,

so the faster a travel agency can respond with booking options

tailored specifically to a customer’s needs, the more likely the

customer is to go ahead with a booking compared to if they had a

longer wait time. Quicker response times also help make the

business day more valuable and impactful for travel agents. A

recent poll indicated roughly 39 percent of travel bookings are

completed after normal business hours. For travel agents, this

means leveraging faster search solutions are critical to

maintaining a hold on the two-thirds of customers who lean toward

working with travel agents versus an online travel management and

tour company.

Moreover, travel agencies are most concerned - and rightfully

so - with completing bookings; yet, even so, many travel agencies

do not possess the proper tools for optimized booking management.

This means travel agencies often find themselves struggling with

organizational silos that can hamper overall efficiency and

functionality across an agency’s entire value chain

Travel agents have to provide more directly travel related

services - integrating theatre ticket booking, limo transfers,

day touring and other services into the products they offer.

Which again means a need for greater training and knowledge.

(Solutions to the Travel Agency Problem, 2002)

Local Literature

B. Performance of Travel Agencies

The Philippine Travel Agencies Association (PTAA), a group

established in 1979 to foster unity in the travel industry and

promote the welfare of its members and the traveling public, has

been seeing its membership grow every year, its president,

Marlene Dado Jante, told BusinessWorld in an interview. There are

currently 623 travel agencies that belong to PTAA. In January of

this year alone, the association inducted 18 new members. The

increase is even more astonishing considering that PTAA has

strict requirements like physical office in a commercial area. In

addition, Ms. Jante said, “You need to show that you are actually

paying government taxes.” (Travel Agencies’ Digital Dilemma,

2018).

Travel agencies are being bombarded from every angle. The

challenges facing travel agencies worldwide has forced many many

of them to downsize considerably or even throw in the towel and

close down because of the mentioned challenges. Travel agencies

can no longer rely on a loyal customer base, and the days where

customers would use their local travel agent around the corner

are long gone. A handful of huge Online Travel Agencies (OTA’s)

or booking portals have got a firm grip on customers with user-

friendly booking flows and great prices. (Beach Meter, 2016)

While the number of travel agencies worldwide has been

reduced, some agencies seem to have found the key to surviving,

and new travel agencies opening up their doors, ready to face the

challenges. Not all development is going against the survival of

travel agencies either. For example, the two trends that 1) the

potential customer base is growing – people from all over the

world generally travel more, and 2) there is a growing segment of

customers whose requirements and wishes are becoming increasingly

specialized, presents opportunities for travel agencies.

Relationship of Literature to Present Study

The majors factors and problems associated to Travel Agencies

are well shown in the literature presented. The major variables

of the study are also investigated where the independent and

dependent variables are defined. These information further

justified that Travel Agencies face several challenges as they

serve varied customers in the field.

Justification of the Study

After reviewing the literature and studies, the researchers

decide to further study the problems, challenges, and issues

faced by Travel Agencies and to discover the possible solutions

in order for these agencies to survive. In addition, the factors

affecting the performance of travel agency are justified making

it more clear to identify the cause of the problems they

encounter. Hence, this makes the research more interesting to

investigate.

Chapter 3

Research Methodology

This chapter presents the research method, locale of the

study, respondents and sampling procedure, instruments procedures

to gather, collect, and analyze research data, and the

statistical techniques used for treatment of data.

Research Method

The descriptive and correlation research methods are used

this study. The descriptive research is a research designed to

provide a snapshot of the current state of affairs. Correlational

research is research designed to discover relationships among

variables and to allow the prediction of future events from

present knowledge.

Descriptive research is research used to “describe” a situation,

subject, behavior, or phenomenon. It is used to answer questions

of who, what, when, where, and how associated with a particular

research question or problem. Descriptive studies are often

described as studies that are concerned with finding out “what

is”. It attempts to gather quantifiable information that can be

used to statistically analyze a target audience or a particular

subject. Description research is used to observe and describe a

research subject or problem without influencing or manipulating

the variables in any way. Hence, these studies are really

correlational or observational, and not truly experimental. This

type of research is conclusive in nature, rather than

exploratory. Therefore, descriptive research does not attempt to

answer “why” and is not used to discover inferences, make

predictions or establish causal relationships

Research Locale

This study is conducted in Cabanatuan City, Nueva Ecija

specifically in Wesleyan University, Philippines.

Geographical location of Wesleyan University-Philippines in Cabanatuan City.

Wesleyan University-Philippines (WU-P) is a private, non-

stock, non-profit and non-sectarian university located in

Cabanatuan City, Nueva Ecija, Philippines and run by the United

Methodist Church (UMC). Founded in 1946 as the Philippine

Wesleyan College, it is named after John Wesley, the founder of

Methodism. The university offers pre-elementary, grade school,

high school, undergraduate, and graduate programs.It also

initiated the SHARE (Studentship Assistance for the Handicapped

and their Rehabilitation through Education) program, the first

school in Central Luzon to integrate hearing-impaired students

into mainstream classes.

The University was granted a five-year autonomy by the

Commission on Higher Education effective March 11, 2009.

Its acronym may be written as WUP or WU-P. It is one of the four

'Knowledge Eagle Universities of Nueva Ecija.'

Respondents of the Study

The respondents of this study are the selected teachers and

students of Wesleyan University-Philippines.Random sampling is

used to choose the respondents for this research.

Table 1 Number of Respondents

Schools Student Teachers

Wesleyan University-Philippines
Total

Table 1 presents the number of students and teachers who

participated in the study as respondents.

Data Gathering Instruments

Research questionnaire is the main research instrument used to

gather data. The questionnaire were formulated by the research

considering the facts related to the research problem. The

questionnaire formulated is divided into three (3) parts: (1) The

profile of the respondents, (2) The problems encountered by the

Travel Agencies, (3) The solutions to the problems faced by

Travel Agencies.
Data Gathering and Collection

The questionnaire devised is tested through dry-run

procedures. This dry run is conducted in Wesleyan University-

Philippines to test the validity and reliability of the

instrument. The purpose of dry run is to find corrections and

things to improve in the questionnaire before it is given to the

actual respondents.

After the dry run, the questionnaire will then be distributed

personally by the researcher to the respondents in their

respective schools. Then, the questionnaire will be personally

collected for analysis and interpretation.

STATISTICAL TREATMENT OF DATA

The researchers use the following statistical tool to

classify, tabulate, and analyze data with the objective of the

study.

The quantitative data such as the profile of the respondents

will be treated with varied statistical techniques like

percentage and frequency distribution.

Perception of the respondents will be analyzed using

weighted mean whereas the significant relationship will be

treated using correlation statistics.

The following are the series of actions regarding statistical

treatment of data for each statement of the problem.

1. Problem 1 which include the demographic profile of the

respondents will basically utilize the frequency distribution

and percentage.

A. Frequency Distribution. It is a systematic way to list a

series of observation of variables.

B. Percentage

P=F/N x 100

Where: P = percentage

F = Frequency
 N = number of respondents

2. The following problems will use the weighted mean for

analysis:

- Problem 2 which shows the perception of the respondents on the

problems encountered by Travel Agencies

- Problem 3 showing the perception of the respondents on the

solution to the problems encountered by Travel Agencies

C. Weighted Mean

WM = TFV/N

Where:

WM = weighted mean

TFV = total frequency value

FV = frequency value

N = number of respondents

3. Correlation statistics will be used to the following problems:

- Problem 4 showing the significant relationship between the

profile of the respondents and their perception on the problems

encountered by Travel Agencies

- Problem 5 showing the significant relationship between the

profile of the respondents and their perception on the solutions

to the problems encountered by Travel Agencies

Formula for Pearson Correlation:

Pearson Correlation Coefficient Value Interpretation

Exactly –1. A perfect downhill (negative) linear relationship

–0.70. A strong downhill (negative) linear relationship

–0.50. A moderate downhill (negative) relationship

–0.30. A weak downhill (negative) linear relationship

0. No linear relationship

+0.30. A weak uphill (positive) linear relationship

+0.50. A moderate uphill (positive) relationship

+0.70. A strong uphill (positive) linear relationship

Exactly +1. A perfect uphill (positive) linear relationship

Scoring

The responses were rated using the following scale:

Weight Rating Scale Verbal Description

5 4.21 to 5.00 Strongly Agree
4 3.41 to 4.20 Agree
3 2.61 to 3.40 Uncertain
2 1.81 to 2.60 Disagree

1 1.00 to 1.80 Never

Interval

The interval of each weight in determining the verbal

description is computed using the formula:

Interval = n - 1 / n

n = number of weight

1 = constant

Whereas:

n = 5

Therefore;

Interval = 5- 1 / 5

Interval = 0.8