Destination Competitive Analysis
The notion of destination competitiveness must
be consistent with the notion of competitiveness
in the international economics and international
business literature.
Competitiveness is both a relative concept (ie.
compared to what?) and is multi-dimensional (ie.
what are the salient attributes or qualities of
competitiveness
CONT..
Destination competitiveness would appear to be
linked to the ability of a destination to deliver goods
and services that perform better than other
destinations on those aspects of the tourism
experience considered to be important by tourists.
Tourism competitiveness is a general concept that
encompasses price differentials coupled with
exchange rate movements, productivity levels of
various components of the tourist industry and
qualitative factors affecting the attractiveness or
otherwise of a destination
CONT..
Competitiveness has also been defined as ---the
ability of a destination to maintain its market
position and share and/or to improve upon them
through time .
Defines competitiveness as the destinations
ability to create and integrate value-added
products that sustain its resources while
maintaining market position relative to
competitors.
A COMPETITIVE DESTINATION
According to Ritchie and Crouch has the ability :
To increase tourism expenditure,
To increasingly attract visitors
While providing them with satisfying memorable
experiences and to do so in a profitable way,
While enhancing the well-being of destination
residents and
Preserving the natural capital of the destination for
future generations
PORTER: THE COMPETITIVE FORCES
PORTERS’ COMPETITIVE STRATEGY
Why firms based in a particular nation are able
to compete successfully against foreign rivals in
particular industries?
PORTER DISTINGUISHES BETWEEN:
The activities of individual firms in seeking
success in global industries (the five competitive
forces; generic strategies)
CONT..
The determinants of national competitive
advantage .
Taking offensive or defensive actions to create
a defendable position in an industry, to cope
successfully with the five competitive forces
and thereby yield a superior return on
investment for a firm.
CONT..
Firms have discovered many different
approaches to this end; best strategy for a
given firm is a unique construction reflecting
its particular circumstances
At the broadest level: three generic strategies
(can be used singly or in combination)
THE FIVE COMPETITIVE FORCES
POTENTIAL
ENTRANTS
Rivalry among
SUPPLIERS buyers
existing firms
Substitutes
THREAT OF ENTRY
Barriers
–economies of scale
–product differentiation (brand, customer loyalties)
–capital requirements
–switching costs( e.g. for the buyer)
–access to distribution channels
–government policy (e.g. limitations new ski areas)
• Reaction of existing competitors\
–retaliation
–experience
RIVALRY COMPETITORS
Numerous or Equally Balanced Competitors
Slow Sector Growth
• High Fixed Costs (Eg Tourism)
• Lack Of Differentiation
• High Strategic Stake ( To Be Successful In
One Market)
• High Exit Barriers
PRESSURE FROM SUBSTITUTE
PRODUCT
All firms in an industry are competing, in a
broad sense, with industries producing
substitute products
Substitutes limit the potential returns of an
industry by placing a ceiling on the prices firms
in the industry can profitably charge
Tourism: eg. domestic tourism, recreational
activities at home
BARGAINING POWER OF BUYERS OR
DEMAND
a buyer group is powerful if:
it purchases large volumes relative to seller
sales ( e.g. to hotel.
the products it purchases from the industry
represent a significant fraction of the buyer’s
costs or purchases ( hotel costs for a to) –the
products it purchases from the industry are
standard or undifferentiated (e.g. hotel rooms)
it earns low profits
BARGAINING POWER SUPPLIER
A SUPPLIER GROUP IS POWERFUL IF:
– it is dominated by a few companies and is more
concentrated than the industry it sells to
– the industry (e.g. to) is not an important
customer of the supplier group ( air carrier) – the
suppliers group’s products are differentiated
– the suppliers’ product is an important input to the
buyer’s business (e.g. flight costs for a to)
– the supplier group poses a credible threat of
forward integration
POSSIBLE APPROACHES
an effective competitive strategy takes
offensive or defensive action in order to create a
defendable position against the five
competitive forces. how?
positioning (e.g. low cost) – improving the firm’s
relative position ( e.g. to raise brand
identification, vertical integration) –
diversification
Generic competitive strategie
In coping with the five c.f. there are three
potentially successful generic strategic approaches
to outperforming other firms in our industry
Firms Succeed If They Possess Sustainable
Competitive Advantages. Basic Types Are:
lower cost
– differentiation
– scope or the breath of a firm’s target within its
industry: product varieties/distribution
channel/segmentation/geographic areas
THREE GENERIC STRATEGIES
COST LEADERSHIP
lower cost than the competitor
• price reductions are achieved through cost
reductions
• requirements: – large market share
– aggressive price policy
– good infrastructure and organization
examples: thomson holidays; benidorm
DIFFERENTIATION
perceived as being unique along some
dimensions or attributes that are widely
valued (premium price)
• advantages: – loyalty/less price sensitivity
• how to differentiate? – design/brand
/costomer service/dealer network
• example hotel – functional utility or benefit
– symbolic utility( e.g. identification with a
group) – experience utility( e.g. friendliness)
FOCUS OR NICHE STRATEG
Concentration On One Or More Markets
Segments - Buyer Group • To Be A “ Big Fish
In A Small Pond”
BASED ON:
cost leadership –product differentiation (to
meet the needs of the particular target)
POON APPROACH
new tourism changes the rules of the game and
calls for new strategies to ensure competitive
success
• innovation - introduction of new products- is far
more important than low cost, differentiation or
focus.
• competitive strategies for industry players –
they have to follow a number of principles to
compete successfully
• strategies for tourism destinations
COMPETITIVE STRATEGIES FOR
INDUSTRY PLAYERS
Put Consumers First
• Be A Leader In Quality
• Develop Radical Innovations
• Strengthen Your Strategic Position
PUT CONSUMER FIRST
LINK MARKETING WITH PRODUCT
DEVELOPMENT :
Understand The Consumer
Be Honest/Deliver What Is Promised
Built Success From Repeat Business
SATISFY THE CONSUMER
be flexible ( sandals policy)
provide the experience consumers want
deliver ‘ high-touch’ services
DEVELOP A HOLISTIC APPROACH TO
THE HOLIDAY EXPERIENCE:
WHAT IS HOLISTIC APPROACH?
the holiday experience is not simply the bed
nights at the hotel
–influence the image and development of the
entire destination (e.g. dirty streets)
–control service delivery at all levels
• customs and immigration
• tours & attractions
• police
• harassment etc
BE A LEADER IN QUALITY
DEVELOP HUMAN RESOURCES
develop creative recruitment and personal
management
invest in education training/motivate/reward
IMPROVE PROCESSES CONTINUALL
empower the front line
–rely on feedback from the frontline to refine
production.
USE TECHNOLOGY CREATIVEL
free human resources for ‘high touch’ services
develop radical innovations
• don’t be afraid of new idea
– explore new markets
– provide new services
– develop new processes
Factors Affecting Destination
Competitiveness
In general, the competitive performance of
organisations is defined from the input and
output side.
The input measure is based on physical and
human capital endowment and research and
development expenses.
The output side covers profitability, market share,
productivity, growth and so on .
CONT..
Based on this grouping, the input side of
destination competitiveness could be physical
sources (tourist facilities, infrastructure and
environment), human capital endowment
(services), and marketing and promotion
expenses.
The output side is market share both in the
number of arrivals and the amount of tourism
receipts, productivity and so on
As Pearce (1997) implies, a competitive
analysis refers to comparative studies.
Therefore, destination competitiveness can be
evaluated both quantitatively and qualitatively.
Quantitative performance of a destination can
be measured by looking at numbers such as
annual numbers of tourist arrivals, amount of
annual tourism receipts, level of expenditure
per tourist, length of overnight stays.
CONT...
Battles could be both internal and external
barriers affecting the success of the
organisation or the destination and its
competitiveness in the marketplace. These
factors are explained in detail in the following
section.
Socio-economic Profile of Tourism
Demand and Changes in Market
The socio-economic and socio-demographic
profiles of tourism demand in potential
markets are a determinant for affecting the
choice to vacation and its direction towards
particular destinations.
The level of age, income, occupation, time,
whom to travel with and personality play a
significant role in determining destination
choice process .
CONT..
Consumers will be likely to choose destinations
where any or all of these variables are better
matched with what the destination offers.
Since every destination has a different product to
attract consumers from different markets, it
unlikely to say that all destinations are able to
compete for all market segments
Access to Tourist Markets (Distance)
How close a destination is to the tourist
markets is another determination of
destination competitiveness .
Research findings revealed that there is a
reverse relationship between perceived
distance and intention to visit and revisit a
destination.
CONT..
However, the distance sometimes may not
always be important in affecting the flow of
tourism demand to any destination.
Mature Tourist Destinations and
Consumer Psychology
By classifying the psychology of consumers in
tourism under two headings such as
'allocentric' (those who have active
personality) and 'psychocentric' (those who
have passive personality).
Plog (1974) suggested that such typology
could be effective in understanding why
destinations fall or rise in popularity.
Influences of Tourist Satisfactio
Understanding what a satisfied customer needs
and wants is the basic ingredient of a recipe in
arriving at successful marketing and improving
competitive advantage .
Attention is drawn to the importance of tourist
perceptions in successful destination marketing
since they influence the choice of a destination
the consumption of goods and services while
on holiday and the decision to return .
Marketing by Tour Operators and their Perceptions of
Destinations
Where package tours are concerned, the extent to
which a destination can attract the interest of tour
operators and how it can be included in their
brochures will be effective in reaching the market.
Tour operators feel themselves to be ahead of tourist
destinations as they, as international suppliers and /
or retailers, have to search for better products,
applications or destinations for meeting consumer
requirements and following changes in their wants
and needs.
CONT..
The image of the product (destination) is primarily
influenced by tour operators’ promotional activities in
the tourist generating country.
Depending on the volume of income or the appearance
of any problem, tour operators are likely to switch
their customers to alternative resorts / destinations .
Tour operators consider themselves to be responsible
for monitoring the situation in a destination; they offer
holidays to alternative destinations if any threat is
posed to their customers.
Destination Competitiveness Models
The are a lot models proposed, tested and validated
to measure the competitiveness of a given
destinations.
But it is claimed that none of those models are
comprehensive enough to demonstrate the holistic
approaches of destination competitiveness.
The Ritchie & Crouch ’s Conceptual Model of
Destination Competitiveness
The general conceptual model of destination
competitiveness developed by Crouch and
Ritchie (1999).
Well-known conceptual model of destination
competitiveness in tourism literature and has
been the starting point for many other research
studies about destination competitiveness.
The model distinguishes 36 attributes of
competitiveness classified into five key factors.
The model outlines a series of factors that play
a determining role in the competitiveness of a
tourist destination.
Core Resources and Attractions
Physiography and Climate
Culture and History
Market Ties
Mix of Activities
Special Events
Entertainment
Superstructure
Supporting Factors and Resources
Infrastructure
Accessibility
Facilitating
Resources
Hospitality
Enterprise
Destination Management
Marketing
Finance and Venture
Capital Organisation
Human Resource Development
Information/Research
Quality of Service
Visitor Management
Resource Stewardship
Destination Policy, Planning, Development
System definition
Philosophy
Vision
Audit
Positioning
Development
Competitive/collaborative analysis
Monitoring & evaluation
Competitive (micro) Environment
Global (macro) Environment
Qualifying & Amplifying Determinants
Location
Interdependencies
Safety/security
Awareness/image/brand
Cost/value
INTEGRATED MODEL
The integrated model includes some types of
determinants missing from the CrouchRitchie
model.
The integrated model explicitly recognizes Demand
Conditions as an important determinant of
destination competitiveness.
The integrated model explicitly recognizes that
destination competitiveness is not an ultimate end of
policy making but is an intermediate goal toward the
objective of regional or national economic prosperity.
INTEGRATED MODEL
Endowed Resources
Natural Resources
Cultural/Heritage Resources
Created Resources
• Tourism infrastructure
• Special events
• Range of available activities
• Entertainment
• Shopping
Supporting Factors and Resources
General Infrastructure
Quality of Service
Accessibility of Destination
Hospitality
Market Ties
Destination Management
CONT..
Destination Management Organisation
• Coordination
• Provision of information
• Monitoring and evaluation Destination
Marketing Management Destination Policy
Planning, Development Human Resource
Development Environmental Management
Situational Conditions
Destination Location
Competitive (micro)Environment
• Capabilities of Firms
• Strategies of Firms
• Industry Structure and Firm Rivalry
Global (macro) Environment
o political/legal/regulatory
o economic
o sociocultural
o technological
CONT..
Security/ safety
Price competitiveness
Demand Conditions
Tourist preferences
Awareness of destination
Destination image
There are a number of criteria to assess the
performance of tourist destinations on the
table of competitiveness.
