The study aims to investigate the economic effects of digitalization on the success of tourism and the factors hindering the implementation of digitalization in the tourism industry. The study used the primary data gathered through interviews with the experts and the stakeholders of the tourism industry.The study is qualitative in nature and has attempted to discuss all the possible aspects related to the digitalization of tourism and the possible challenges faced by businesses while adopting digitalization in the tourism industry.The study found that there are several types of factors affecting the digitalization in the tourism industry, which include factors related to the environment, technological, economic, political and legal, cultural and social too.Then there are some specific environmental factors which include competitor identification and competitor analysis,relationship with customers and suppliers and partners and associates.Other than external factors, internal factors were also found. Some of them are convenience of use and technical availability, cooperation between firms, and firm level support to stakeholders. The study concludes that if these factors are addressed successfully, then the local economy can grow at a faster rate through tourism.