TOURIST DESTINATION COMPETITIVENESS : MARKET …



27th International Conference on Organizational Science Development

KNOWLEDGE FOR SUSTAINABLE DEVELOPMENT

March 19 – 21, 2008, Portorož, Slovenia

Tourist destination competitiveness: market challenges and evaluation systems*[1]

Ines Milohnić, Ph.D., Assistant Professor

Faculty of Tourism and Hospitality management Opatija, Croatia

ines.milohnic@fthm.hr

Dora Smolčić Jurdana, Ph.D., Assistant Professor

Faculty of Tourism and Hospitality management Opatija, Croatia

dora.smolcic@fthm.hr

Abstract

Quality in tourism as a key factor of competitiveness and market competition implies continuous monitoring of market trends. Therefore, a need for constant comparison with the best competitors in tourist market occurs.

Prosperous relation 'Value for Money’ is implied, moreover, tourist expect 'Experience for Money' i.e. 'Emotion for Money'. All destinations which intend to keep and increase their market share, i.e. to remain competitive in the demanding tourism market, need to direct themselves towards that aim.

This paper proposes integrated approach towards strategic management as the most appropriate concept for Croatian tourism and hospitality development. New form of development is based on integrated approach, horizontal and vertical integrating of all subsystem elements of the entire controlling system, along with the quality partnership relations establishment at the level of tourist destination.

Quality of each particular segment of tourist offer is indisputable, yet in the end, the guest attributes quality to the destination as a whole. Only cooperation of all participants and joined efforts within the destination can result in a quality and consistent offer and positive destination image.

Benchmarking as a modern method of comparison with the best competitors, 'Interactive Destination Evaluation System (IDES)' diagnosis system as a tool for internal and external benchmarking and Balanced score Card (BSC) will be elaborated according to the paper subject.

Key words: tourist destination, competitiveness, quality, partnership

1 Introduction

Contemporary tourists are more experienced and demanding than ever before. Tourist market, by its dynamics, makes the offer and demand interact, condition and change accordingly. Many destinations raise their standards and tourists' expectation level by improving their tourist offer.

Guest today usually does not differentiate according to various offer carriers, but according to offer and ascribes its quality to the destination level. Precisely this makes the destinations develop process orientation for all carriers of destination tourism product (Magaš, 2003.).

Prosperous relationship Value for Money is more and more implied and mere characteristics of successful and good relaxation are not good enough. Tourists expect Experience for Money, that is, Emotion for Money (Strategija razvoja ..., 2004.).

2 Tourist destination competitiveness

Balanced development of tourism implies creation of developmental model, i.e. strategies which have been adapted to guests’ needs and expectations, all in favor of local community progress.

Developmental model includes defining:

• General aim

• Future scenarios development.

General aim of tourist destination competitiveness strategy is the increase of life quality. Development and competitiveness are stressed as the most important parameters of economy progress improvement.

Development includes the increase of employment rate, production, property value and new investments, while competitiveness includes salaries increase, investments cost effectiveness, sustainability, and above all, productivity.

Prosperity feeling is accomplished through physical and psychical prosperity of population; physical prosperity includes, above all, physical security, environment quality and everyday amenities. Accordingly, psychical prosperity takes into account the following parameters: local identity, security, local population feeling of pride etc.

Future scenarios development should be based on prominent examples of tourism development model in the Mediterranean area, and also in other parts of the world, on stands and initiatives of tourism development carriers.

Destination competitiveness depends on (Ritchie & Crouch, 2003.) :

• capabilities to increase the tourism incomes,

• capabilities of constant attraction of tourists

• providing pleasure and experience/adventure to cherish

• profitability

• ensuring life quality for locals and

• natural environment protection.

Tourist destination development evaluation has so far been mostly based on using the information of arrivals and overnight stays in the destination, which is absolutely inadequate for creating accurate estimations.

First step in grading the competitiveness is the evaluation of present state in tourist destination, which demands vast analysis with the aim of locating weaknesses, but as well creating the possibilities for shaping the propositions of destination competitiveness.

Magaš describes competitive advantages of tourist destinations as capabilities of a tourist destination management to develop and optimally combine derived and natural elements of tourist offer at all levels (Magaš, 2003).

Every natural or cultural attraction is a potential tourist attraction which adds to tourism development in a specific destination. It is possible to achieve tourist competitive destinations in all areas of Croatia using a quality approach and marketing, together with creation of “stories” or “experience”. Every region should be focused on development of the specific offer which will be based on the specifics of the area.

It is clear that the accent is put on the need of forming the indicators’ system in order to enable the evaluation of every tourist destination competitiveness.

It is possible to estimate the offer quality, as an element of competitiveness capability of a certain destination, with the help of objective (offer structure, income, expenditures etc.) and subjective information (grading guest’s satisfaction, price competitiveness-value for money). Important element of destination quality evaluation is also the relation of tourists’ expectations and tourists’ satisfaction during the visit to the destination.

It is necessary to ensure monitoring a specific destination competitiveness result using a special indicators’ system (score) (information, presentation, reports). Continuous research needs to ensure the advancement of methodology with a gradual introduction of benchmarking system to verify record and maintain tourist destination competitiveness.

3 Relevance of benchmarking method and tourist destination evaluation system

Quality in tourism as a key factor of competitiveness and market competition implies continuous evaluation of market trends. Therefore, a need for continuous comparison with the best-practice competitors in the market arises.

3.1. Tourist destination benchmarking

Benchmarking provides gradation and measuring results and sets up norms and standards. In those way service users, buyers are given valuable information on accommodation types of destinations in overall.

Benchmarking is one of modern, effective methods of adaptation to market changes and needs. Aim of tourist destination benchmarking lies in the possibility of comparison, evaluation and better results’ achievement when contrasted to its competitors.

Figure 1: Benchmarking elements in tourism (a model)

Source: Kozak, 2004.

The following figure shows basic characteristics of destination benchmarking. It is mostly based on quantitative measurement, but also respects quantitative indicators.

It implies continuous cooperation between public and private sector at the level of destination, as well as the vertical and horizontal integration between different stakeholders.

|CHARACTERISTICS |DESTINATION BENCHMARKING |

|Compulsory legal acts |No |

|Context |Rather vast |

|Number of characteristics |Many |

|Period of implementation |Longer |

|Repetition |Little |

|Distribution method |Short |

|Management |Aims more towards partnership of central and local authorities, private sector and |

| |international organizations |

|Results’ measurement |Mostly based on qualitative measurements |

Table 1: Basic characteristics of destination benchmarking

Source: Kozak, 2004., p.78.

When evaluating a specific tourist destination, besides the mentioned standards which are used in destination benchmarking, ‘evaluation systems’, with the aim of an early discovery of ‘destination deterioration’ are more and more used in practice.

3.2. Systems of destination evaluation

Althought there are different systems for a specific destination evaluation, this paper will tackle two systems: «IDES» i «BSC» (Milohnić, 2006.).

• IDES (Interactive Destination Evaluation System), is a holistic diagnostic system which can also be used to simulate different scenarios. This system can be used as a measuring tool for internal and external benchmarking, which enables certain destination dynamics’ monitoring and provides a comparison between different destinations, and after all, it can be used as a warning system.

From a set of selected indicators, a dynamic and user-friendly decision-making tool which summarizes the following three functions can be built:

1. gives destination managers strategic information about current situation and risk of decline that can be easily interpreted

2. in an effective way shows (by means of a series of snapshots) the evolution of the destination over time

3. simulated by means of images (created with a simple interface) the effect of changes in variables

Using the tools’ assistance, variables have been identified as adequate in order to achieve a successful implementation of IDES:

A. Tourists/Residents

B. Excursionist share

C. Economic role of tourism

D. Gini seasonality index

E. Gini demand structure index

Two other variables have been added to this list in order to acquire more comprehensive insight into the destination:

F. Co-operation. This variables can be expressed by “Degree of co-operation”, which is measured by the percentage of operators and organizations involved in all partnerships.

G. Environmental impact. This variable represents the physical pressure which affects the destination as a consequence of tourism, and can be expressed most easily by means of use intensity indicators (i.e. number of visitors / surface).

Other indicators which could prove useful to express environmental impact are represented by waste levels, water consumption and air pollution.

In practice, most frequently used display for tourist destination evaluation are: spider plots, life-cycle and tourist flow seasonality.

• Characteristics of a Spider plot are: a “Static image” (like a photo) of the destination, in contrast to a “Dynamic description”, when a chronological sequence is available.

[pic]

Figure 2: Spider plot of a tourist destination 'X'

Source: European Commission, 2002.

• Destination life cycle. Tourist destination passes through different stages of development, which are referred to as destination life cycle. According to a general model in a tourist theory, it passes through the following phases: research, engagement, development, consolidation, stagnation, and after that, the options of total decline or rejuvenation. Of course, the aim is to ensure its rejuvenation and maintain the competitiveness in a tourist market.

• Tourist flow seasonality. The Lorenz curve and Gini index are tools for measuring seasonality. This is an important strategic variable since excessive tourist peaks in a destination can have adverse social and environmental impacts. Larger seasonality is the most typical for coastal destinations, and tourist flows are mostly concentrated in the summer.

«BSC» - Balanced Score Card is a “tool for regional development”, and is used as an early warning system, to control or prevent the decline of a tourist destination (Kaplan. & Norton, 1996.).

The foundations of a BSC were given by Kaplan and Norton: “What cannot be measured, cannot be controlled” (Kaplan. & Norton, 1992.).

BSC approach tries to contribute the management through a set of combined measures in order to see the overall picture. Ritchie warned in 2004 that the future of benchmarking in tourism has become a necessary reality (Ritchie, 2004.).

Benchmarking method is not used enough in tourism practice, weather talking about tourist organizations or tourist destinations; it has not been explored nor exploited enough as learning-from-the best-practice tool.

The aim of the evaluation is determining the direction of a future destination development system, i.e. ensuring its sustainability in a long run. In those aims, a great support could be provided by benchmark standards, as well as the systems for tourist destination evaluation.

4 Integrated approach towards strategic management in tourism

Complexity of relationships in an international tourism market, exceptional competitiveness and a constant rise of new tourist destinations set new challenges for tourist destination management. Complex nature of tourism demands an integrated approach towards strategic management and cooperation (formal and informal) between the offer carrier, local community and other stakeholders at the destination level.

Concept of strategic management includes a variety of management decisions and actions, which, in a long run, have a job of determining business of subjects within the managerial system of tourist destination.

Strategic management also takes into account leadership of business subjects, together with key influence from the surroundings and all intern factors (Stacey, 1997; Wheelen & Hunger, 1995).

Strategic management of tourism and as a sector needs an integrated approach at all management levels taking into account all their interests, with a constant striving to reach optimum balance of interests in a long run.

Management matrix of the tourism consists of following levels (Milohnić, Perić, Cetinski, 2006):

• National (macro level)

• Regional and destination (mezzo level) and

• Hospitality companies (micro level).

Coherence of strategic management process has central place in the umbrella management strategy on national level, though this work focuses on strategic management on destination level.

Integrated approach to strategic management represents the best concept for Croatian model since it is possible to get permanent and positive results only by horizontal and vertical connecting of elements in all subsystems of overall management system. The results will be measurable in both market and financial sense and refer to all business’ subjects that are included in the strategic management process in tourist destination on three basic management levels.

Efficient system management will determine the rhythm and potential tourist destination growth, its capability of attracting confident investments and prosperity between local population and visitors, which includes implicit system sustainability in a long run.

Strategic management in tourism destination represents a platform for vertical integration of a tourist destination on regional and national level, but also a framework for development of tourist destination on micro level, i.e. in hospitality companies (Cetinski, 2005).

Outlining competitive offer of each tourism destination in Croatia should be based on perception of strategically defined business entirety. Therefore, tourist destination should be conceived as a business system that would recognize all the relevant demands present in system of globalization, but, at the same time, be recognizable by its specific offer.

Demands of tourist destination are based on previously mentioned starting points; destination becomes a business unit of tourism offer and should be managed on new bases and create basic presumptions for converting comparative into competitive advantages as starting points of its better positioning in the world tourism market.

5 Conclusion

Quality becomes a key element of tourist destination competitiveness. Therefore, all elements of tourist offer should offer the highest possible level of quality in the segment of the tourist product specificity which they have offered in the market.

New and changed standard of development is based on an integrated approach, horizontal and vertical connecting of the all sub-system elements of a total management system, together with the establishment of quality partnership relationships, which enable reaching the results measurable in market and financial sense.

Tourist destination state evaluation demands vast analyses with the aim of locating the weaknesses, as well as the creation of possibilities for shaping propositions for increasing the destination competitiveness. Benchmarking method implementation will ensure grading and measuring results, together with establishing norms and standards.

There is a wide range of reasons why benchmarking will gain on importance in development and effort of achieving better competitiveness of a tourist destination.

• constant government policy tries to create a more competitive surrounding

• there are clear market advantages in the global market; reputation, high standards and exploration of world-class results should be maintained

• new regime of quality guarantee will become an important factor in fast development and implementation of new approaches toward benchmarking

• benchmarking is a powerful method for exploration and learning about a good and effective practice.

Along with benchmarking, other systems of tourist destination evaluation have been developed.

References

Cetinski, V., (2005): Strateško upravljanje razvojem turizma i organizacijska dinamika, Fakultet za turistički i hotelski menadžment Opatija, Opatija

European Commission, (2002): Early warning system for identifying declining tourist destinations, and preventive best practices presentations/ SDTheme9June/Italy/291

Kaplan, R.S., Norton, D.P., (1996): The Balanced Scorecard: Translating Strategy into Action, pg. 9, Harvard Business Scholl Press, Boston

Kaplan, R.S., Norton, D.P., (1992): The balanced scorecard: measures that drive performance, Harvard Business Review, pg. 71-79 (1), Boston

Kozak, M., (2004): What is Benchmarking? Understanding its Philosophy, Benchmarking Forum, 14-16 March, rpts.tamu.edu/faculty/ petrick/abstracts/sessionII.pdf, Texas

Kozak, M., (2004): Destination Benchmarking: Concepts, Practices and Operations, pg. 78, CABI Publishing, Wallingford

Magaš, D., (2003): Management turističke organizacije i destinacije, Fakultet za turistički i hotelski menadžment Opatija & Adamić, Opatija-Rijeka

Milohnić, I., (2006): Menadžment konkurentskih prednosti malog poduzetništva u ugostiteljstvu (dissertation), Fakultet za turistički i hotelski menadžment u Opatiji, Opatija

Milohnić, I., Perić, J., Cetinski, V. (2006): Restructuring and Repositioning – the only Choice of SE in Croatian Hospitality, International Entrepreneurship-from local to global enterprise creation and development, pg. 199-214 (published on CD ROM), Institute for Small Business & Entrepreneurship & Small Business Service, Cardiff

Ritchie, J., Crouch, B., (2003): The Competitive Destination, pg.151, CABI Publishing, Wallingford

Ritchie, B., (2004.): One View on the Future of Benchmarking in Tourism, Tourism Benchmarking Form, Ritchie.pdf, /10.02.2005./, 14-16 March, Texas

Stacey, R.D., (1997): Strateški menadžment i organizacijska dinamika, MATE Zagreb, Zagreb

Strategija razvoja hrvatskog turizma do 2010. godine, (2004): mint.hr/Strategija /29.12.2004./ pg. 11, (final version)

Wheelen, T. L., Hunger, J. D., (2002): Strategic Management, Prentice Hall, New Jersey[pic][pic]

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* This article is the result of the scientific project ''Quality Models and Public – Private Sector Partnerships in Croatian Tourism'' (project nr.116-1162459-2456), suported by Croatian Ministry of Science Education and Sports

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Same-day visitor share

Innovation

Impact on local mobility

Significance of tourist

mobility for total mobility

Economic role of tourism

Urban Size

Tourists/Residents

Service sector

Quantitative measures

Management strategies

Action (politics, strategy and steps undertaking)

Generic benchmarking

(external quality, standards and rewards)

Effectiveness measurement

Internal

benchmarking

External

benchmarking

(information

exchange)

Qualitative measures

Management

strategies

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