The relation between information systems, innovation and business performance is a critical question for both researchers and practitioners. This paper provides an empirical investigation of this issue in the tourism sector by conducting an analysis of the relations between: I) the exploitation level of two widely adopted types of IS, namely internal and e-sales systems (first level); II) the extent of business innovation and benefits from ICT (second level); and III) business performance (third level). This study has been based on firm-level data from 2665 European tourism firms, which have been used for constructing a structural equation model (SEM) and estimating the interrelationship amongst these constructs. The model provided evidence of a positive impact of the exploitation level of both IS (internal and e-sales) on innovation, with the former being a stronger driver of innovation than the latter. The exploitation levels of the internal and e-sales IS were also found to have both a positive impact on the business benefits that the tourism firms achieve from their ICT infrastructures, which impact is also mediated by innovation; internal IS were found to have a higher impact on ICT business benefits than the e-sales IS. Furthermore, these ICT benefits and innovation (both directly and indirectly through the ICT benefits) were found to have an ultimate positive impact on business performance. Consequently, the findings suggest that tourism firms should combine the development of internal ICT and e-sales IS with innovation if they wish to get more IS driven business benefits and ultimately increase their business performance.