Destination Competitiveness

Destination Competitiveness: Determinants and Indicators

Larry Dwyer

Qantas Professor of Travel and Tourism Economics, University of New South Wales, NSW, 2052, Sydney, Australia

Chulwon Kim

Professor, College of Hotel and Tourism Management, KyungHee University, Soeul, Korea

The paper develops a model of destination competitiveness that will enable compari-sons between countries and between tourism sector industries.The model seeks to capture the main elements of competitiveness highlighted in the general literature, while appreciating the special issues involved in exploring the notion of destination competitiveness as emphasised by tourism researchers.Associated with the model is a set of indicators that can be used to measure the competitiveness of any given destina-tion.These indicators,comprising both objective and subjective measures,were iden-tified from the major elements comprising the generic destination competitiveness model and also from discussions at workshops held in Korea and Australia.This paper has four major objectives:to develop a model of destination competitiveness that iden-tifies key success factors in determining destination competitiveness;to develop an appropriate set of indicators of destination competitiveness;to highlight the advan-tages and limitations of the model;and to identify areas for further conceptual and empirical research.The development of a model of destination competitiveness and an associated set of indicators allows identification of the relative strengths and weak-nesses of different tourism destinations,and can be used by industry and governments to increasetourism numbers and expenditure,and enhance socioeconomic prosperity.

Keywords:Tourism industry,destination competitiveness,competitiveness indicators

Introduction

To achieve competitive advantage for its tourism industry,any destination must ensure that its overall‘appeal’,and the tourist experience offered,must be superior to that of the alternative destinations open to potential visitors.Existing and potential visitation to any destination is inextricably linked to that destina-tion’s overall competitiveness, however that is defined or measured.

A major aim of the paper is to develop a model and indicators of destination competitiveness that will enable comparison between countries and between tourism-sector industries.Since a range of factors influence destination competi-tiveness,including price and non-price factors,there is a need to develop indica-tors which reflect this.The development of a set of competitiveness indicators would serve as a valuable tool in identifying what aspects or factors influence tourists in their decision to visit other countries.The development of an associ-ated set of indicators will allow identification of the relative strengths and weak-nesses of different tourism destinations,and can be used by industry and

1368-3500/03/05 0369-46 $20/0? 2003 L. Dwyer & C. Kim Current Issues in Tourism Vol. 6, No 5, 2003

369

370Current Issues in Tourism governments to increase tourism numbers,expenditure,economic impacts,and quality of life for residents.

This paper has four major objectives:

′to develop a model of destination competitiveness that identifies key success factors in determining destination competitiveness;

′to develop an appropriate set of indicators of destination competitiveness;

′to highlight the advantages and limitations of the model; and

′to identify areas for further research.

The paper proceeds as follows:first,a review of the literature on‘competitive-ness’is undertaken.While the frameworks of competitiveness appearing in the wider literature are useful in highlighting the various determinants of‘firm’or ‘national’competitiveness they do not address the special considerations rele-vant to determining ‘destination’ competitiveness.

Second,a review of the literature on tourism destination competitiveness is undertaken.It is argued that none of the models of destination competitiveness that have been proposed to date are entirely satisfactory.In particular,they do not provide a comprehensive treatment of the various issues surrounding the notion of‘competitiveness’that are being explored in the wider literature and that must be taken into account in developing a comprehensive framework of destination competitiveness.

Third,a model of destination competitiveness is developed.The model seeks to capture the main elements of competitiveness highlighted in the general litera-ture,while appreciating the special issues involved in exploring the notion of destination competitiveness as emphasised by tourism researchers.

Fourth,a set of indicators is developed to measure the competitiveness of any given destination.These indicators comprise both objective and subjective measures and are identified from the major elements comprising the generic destination competitiveness model and also from discussions at workshops held in Korea and Australia.

Fifth,the advantages and limitations of the model are highlighted,and issues for further research are explored.

Perspectives on ‘International Competitiveness’

The notion of destination competitiveness should be consistent with the notion of‘competitiveness’in the international economics and international business literature.Accordingly,the literature on international competitiveness was critically reviewed with a view to developing a framework suitable for tourism research.

Although it is widely acknowledged that economic growth and competitive-ness involve a complex interactive process of social,political,and institutional change,no one general theory supports this phenomenon.Rather,various explanations have been offered from different disciplines.The literature reveals a variation in perspective in defining,understanding,and measuring competi-tiveness.Perspectives from various disciplines reveal that competitiveness is a multi-faceted concept.We can regard the notion of competitiveness as associated with three major groups of thought. These are:

Destination Competitiveness: Determinants and Indicators371

(1)Comparative advantage and/or price competitiveness perspective(Bellak,

1993;Cartwright,1993;Durand&Giorno,1987;Fagerberg,1988;Fakiolas, 1985;Hilke&Nelson,1988;Hodgetts,1993;Porter,1990;Rugman,1991;

Rugman & D’Cruz, 1993).

(2)A strategy and management perspective(Day&Wensley,1988;D’Cruz&

Rugman,1993;Ghoshal&Kim,1986;Grant,1991;Kogut,1985;Mahmoud et al.,1992;Mahoney&Pandian,1992;Mathur,1992;Parsons,1983;Peters, 1988;Porter,1985,1990,1999;Porter&Millar,1985;Powell,1992a,1992b;

Yip, 1989).

(3)A historical and socio-cultural perspective(Aaker,1989;Franke et al.,1991;

Hofstede,1980,1983;Hofstede&Bond,1988;Kennedy,1987;Porter et al.,2001)

While economists have placed emphasis on price and the country-specific economic characteristics of competitiveness,the management and strategy researchers have focused on the firm-specific characteristics,while the focus of sociologists and political theorists has been on various social,political and cultural characteristics underlying the notion of competitiveness.Moreover, each group has suggested different indicators to explain or measure competitive-ness (Moon & Peery, 1995; Waheeduzzaman & Ryans, 1996).

The definitions offered in the literature provide both a micro and a macro connotation of ‘competitiveness’.

From a macro perspective,competitiveness is a national concern and the ulti-mate goal is to improve the real income of the community.On this perspective, competitiveness is a very broad construct encompassing all social,cultural,and economic variables affecting the performance of a nation in international markets. Reflecting this macro perspective, competitiveness may be defined as

the degree to which a country can,under free and fair market conditions, produce goods and services which meet the tests of international markets while simultaneously maintaining and expanding the real incomes of its people over the longer term(Global Competition:The New Reality.Report on the President’s Commission on Industrial Competitiveness, 1985).

On the other hand,from a micro perspective it is seen as a firm-level phenome-non:firm-specific behaviours determine competitiveness.Porter’s competitive analysis framework(Porter,1980)emphasises industry attractiveness and its characteristics,such as the potential to enhance the firm’s power visàvis buyers and suppliers,thwart potential entrants and outposition competitors,as being the key determinants of competitive advantage and long-term profitability.By contrast,the‘resource-based’approach emphasises that the roots of competitive advantage reside in the acquisition and maintenance of the core competencies of an organisation.‘Resource-based’theorists have emphasised inimitable firm ‘resources’and the distinctive capabilities and competencies resulting from combining these resources as being central to obtaining a sustainable competi-tive advantage(Barney,1991;Grant,1991;Prahalad&Hamel,1990).Barney (1991)defines a firm’s sustained competitive advantage as the implementation of a value-creating strategy not simultaneously being implemented by any current or potential competitors and when these competitors are also unable to duplicate the advantages based on such a strategy.Core competence provides potential

372Current Issues in Tourism access to a wide variety of markets,makes a significant contribution to the perceived customer benefits of the end products,and is difficult for others to imitate.Core competencies are sustained through some kind of‘isolating mecha-nisms’maintained by firms (Prahalad & Hamel, 1990; Rumelt, 1984).

On the micro perspective,in order to be competitive,any organisation must provide products and services for which customers or clients are willing to pay a fair return or price.In the long run,in a free enterprise system,competitiveness is measured by the ability of the organisation to stay in business and to protect the organisation’s investments,to earn a return on those investments,and to ensure jobs for the future.

Thus,despite the extensive literature on competitiveness,no clear definition or model has yet been developed.It is a complex concept because a whole range of factors account for https://www.360docs.net/doc/bd8326950.html,petitiveness is both a relative concept(https://www.360docs.net/doc/bd8326950.html,pared to what?)and is multi-dimensional(i.e.what are the salient attributes or qualities of competitiveness?)(Spence&Hazard,1988).On both the micro and macro perspectives there is recognition that firms and nations face very different chal-lenges and priorities as they move from resource-based to knowledge-based economies.Thus,the principal factors that contribute to global competitiveness, and thereby improve living standards,will differ for economies at different levels of development (Porter et al., 2001).

Regardless of the specific definitions offered,the notion of competitiveness does,however,appear to be centred on human development,growth and improved quality of life(Newall,1992).For a company,competitiveness means the creation of new growth options that create value for shareholders.For a society,improved competitiveness translates into new jobs and better living conditions(World Economic Forum,2001).Wealth creation is the engine of economic growth and a mainspring of innovation.The ultimate goal of competi-tiveness is to maintain and increase the real income of its citizens,usually reflected in the standard of living of the country.From this perspective,the competitiveness of a nation is not an end but a means to an end;its ultimate goal is to increase the standard of living of a nation under free and fair market condi-tions (through trade, production, and investment) (Cho, 1998).

Lessons from the wider literature

While the discussions of competitiveness in the general literature are useful in highlighting the various determinants of‘firm’or‘national’competitiveness, they do not address the special considerations relevant to determining tourism ‘destination’competitiveness.The discussion of competitiveness in the general literature has tended to stress competitive advantage(resulting from value-added activities by firms and organisations),while de-emphasising comparative advan-tage as a source of international competitiveness.For a tourism destination, comparative advantage would relate to inherited or endowed resources such as climate,scenery,flora,fauna,etc.,while competitive advantage would relate to such created items as the tourism infrastructure(hotels,attractions,transport network),festivals and events,the quality of management,skills of workers, government policy and so on.Since the core attractive resources that a destina-tion possesses do not necessarily suffer depletion,despite the fact that people have paid for their use,‘the tourism phenomenon represents a fundamentally

Destination Competitiveness: Determinants and Indicators373 different form of economic exchange than does the sale of physical resources’(Ritchie&Crouch,1993:35–6).In the context of tourism,both comparative advantage and competitive advantage are important and a model of destination competitiveness must recognise this.

A major reason for attempting to develop a model of competitiveness that focuses specifically on the tourism sector is that there appears to be a fundamental difference between the nature of the‘tourism product’and the more traditional goods and services for which the above models were developed.In contrast to a specific manufactured product,for example,a tourism destination may be regarded as‘an amalgam of individual products and experience opportunities that combine to form a totalexperience of the area visited’(Murphy et al.,2000:44).

It is appropriate to inquire,however,as to the lessons that can be learned from the competitiveness literature in developing a framework of destination compet-itiveness.

Price competitiveness

From the literature on comparative advantage and price competitiveness comes recognition of the potential importance of destination price competitive-ness in influencing visitor flows.Studies by tourism researchers indicate the price sensitivity of travellers is high in certain markets(Lee et al.,1996).Empirical studies highlight the importance of levels of technology,exchange rates,govern-ment policies,industry competition,and the influence of multinational enter-prises as factors influencing the price competitiveness of tourism firms(Dwyer, Forsyth & Rao, 2000a,b, 2002).

Firm-specific factors

From the strategy and management perspective comes a recognition of the importance of the firms’resources in influencing the achievement and mainte-nance of sustainable competitive advantage.The basic premise is that the competitiveness of a nation stems from companies within that nation,so firm-specific factors that lead to competitiveness should be identified.In order to achieve competitive advantage,the focus should be on the‘development and maintenance of meaningful assets and skills,the selection of strategies and competitive arenas to exploit such assets and skills and neutralising of competi-tors’assets and skills’(Aaker,1989:105).Resources of the firm that are consid-ered to offer competitive advantage include:the skills of the employees,assets, cash-flow,capital/investment(human,non-human and strategic),structure of the organisation(flexibility,balance,and dynamic aspects),organisation-environmental interface(source and positional advantage,organisational align-ment,generic strategy,strategic planning,and customer-oriented offering),and many firm-specific variables(core competencies,imitability of products,infor-mation,intelligence system,value added by the firm,and quality).Day and Wensley(1988)have argued that competitive superiority results from the possession of‘source’and‘positional’advantage.Source advantage refers to the basic ability of the organisation that may come from superior skill(human resources),superior non-human resources or a combination of the two.Posi-tional advantage is a more market-oriented phenomenon.In order to be competi-tive a firm needs to manoeuvre both source and positional advantage.Since the competitiveness of a destination must somehow be essentially linked to the

374Current Issues in Tourism competitiveness of its constituent firms,these variables must be recognised in a model of destination competitiveness.

Cultural and related factors

From the literature on history,politics and culture comes a recognition that, just as the competitiveness of nations can be influenced by climate,morals, power of the state,cultural values and moral discipline,so too may destination competitiveness be influenced by such variables(Franke et al.,1991;World Economic Forum, 2001).

Subjective factors

From the attempts to develop indicators of national competitiveness such as those developed by the World Economic Forum(2001)comes a recognition of resident prosperity as the end result of competitiveness and the importance of consumer perceptions of competitiveness.That is to say,not all the influences on competitiveness are objectively quantifiable.In the tourism context an important distinction will involve the reality of the situation,as indicated in objective measures of competitiveness(e.g.measures of price competitiveness,crime statistics involving tourists as victims),and traveller’s perceptions(e.g.percep-tions of relative price levels,perceptions of safety/security,views about comfort levels and the aesthetic appeal of different types of tourism resources).Indeed, the importance of tourists’perceptions is such as to warrant separate recognition in a model of destination competitiveness.

Perspectives on Destination Competitiveness

Destination competitiveness would appear to be linked to the ability of a destination to deliver goods and services that perform better than other destina-tions on those aspects of the tourism experience considered to be important by tourists.Dwyer,Forsyth and Rao(2000a)state that‘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’(Dwyer et al., 2000a: 9).

Recently,two international tourism journals have devoted entire issues to the theme of destination competitiveness.The journal Tourism in a special issue, Competitiveness in Tourism and Hospitality(Volume47(4),1999),featured articles which addressed price competitiveness by journey purpose(Dwyer et al.),the international competitiveness of Croatia’s hotel sector(Cizmar&Seric; Osmagic-Bedenik);the role of public administration in the competitiveness of Spain’s tourism industry(Bueno);and the competitiveness of Alpine destina-tions(Pechlaner).The journal Tourism Management,in its special issue The Competitive Destination(Volume21(1),February2000),included articles that address destination price competitiveness(Dwyer et al.),competitiveness vari-ables in the area of destination policy,planning and management(Crouch& Ritchie),overall destination competitiveness(Buhalis;d’Hauteserre;Go& Govers),competitiveness and transport(Prideaux),and competitiveness and the environment (Mihalic).

A large number of variables appear to be linked to the notion of destination

Destination Competitiveness: Determinants and Indicators375‘competitiveness’.These include objectively measured variables such as visitor numbers,market share,tourist expenditure,employment,value added by the tourism industry,as well as subjectively measured variables such as‘richness of culture and heritage’,‘quality of the tourism experience’etc.Thus,for example, competitiveness has been defined as‘the ability of a destination to maintain its market position and share and/or to improve upon them through time’(d’Hartserre,2000:23).Hassan defines competitiveness as‘the destination’s ability to create and integrate value-added products that sustain its resources while maintaining market position relative to competitors’(Hassan, 2000: 239).

According to other researchers,destination competitiveness is associated with the economic prosperity of residents of a country(Buhalis,2000;Crouch& Ritchie,1999).This is consistent with the view espoused by the World Economic Forum(Porter et al.,2001).Development designed to attractinternational visitors may have a range of purposes.Ultimately,however,it seems reasonable to focus attention on economic prosperity.That is,nations(or destinations)compete in the international tourism market primarily to foster the economic prosperity of residents.Other objectives may hold,of course–the opportunity to promote the country as a place to live,trade with,invest in,do business with,play sport against,etc.Tourism may foster international understanding,peace,and good-will.But,in long term,the economic well-being of residents is of central concern to the notion of destination competitiveness.

Although the end result of achieving destination competitiveness might well be enhanced economic prosperity for residents,it should be emphasised that the link between tourism market share and economic contribution is not always obvious.Thus recent studies of tourism’s economic contribution to an area using Computable General Equilibrium modelling reveals that the expansion of tourism will often‘crowd out’other economic sectors,resulting in a change in the compositionof industry rather than an expansion of economic activity(Adams& Parmenter,1992;Dwyer&Forsyth,1998;Dwyer,Forsyth,Madden&Spurr, 2000;Dwyer,Forsyth&Spurr,2003).More specifically,the economic impact of tourism will depend upon variables over and above market share,including an economy’s situational conditions such as factor constraints,industry structure, profile of traditional exports and import-competing industry,exchange rate regime and current government macroeconomic policy stance(fiscal,monetary, labour market) (Dwyer et al., 2000).

Poon(1993)suggests four key principles which destinations must follow if they are to be competitive:put the environment first;make tourism a leading sector;strengthen the distribution channels in the market place,and build a dynamic private sector.Clearly these principles are too broad and general to be meaningful to tourism stakeholders and policy makers.Go and Govers(1999),in a study of conference site selection,measure a destination’s competitive position relative to other destinations along seven attributes:facilities,accessibility, quality of service,overall affordability,location image,climate and environ-ment,and attractiveness.The selected attributes appear not to be based on any model of competitiveness and,in any case,apply specifically to the conventions sector of tourism.

Dwyer et al.(2000a,b;2002)have provided the most detailed study of tourism price competitiveness published to date.Measures of price competitiveness may

376Current Issues in Tourism be expected to play an important part in any framework of overall price and non-price tourism competitiveness.Hassan has recently introduced a new model of competitiveness that focuses on environmental sustainability factors associated with travel destinations(Hassan,2000).Hassan posits four determi-nants of market competitiveness.These are:comparative advantage(includes those factors associated with both the macro and micro environments that are critical to market competitiveness);demand orientation(the destination’s ability to respond to the changing nature of the market demand);industry structure(exis-tence or absence of an organised tourism-related industry);and environmental commitment(the destination’s commitment to the environment).Underlying his model is a conviction that‘a global perspective to understand key determinants of market competitiveness is critical for the tourism industry to sustain its growth and vitality’ (Hassan, 2000: 239).

The most detailed work undertaken by tourism researchers on overall tourism competitiveness is that of Crouch and Ritchie(1995,1999)and Ritchie and Crouch(1993,2000).They examined the applicability to tourism destinations of competitiveness research and models in other contexts spanning companies and products,national industries,and national economies,as well as competitive-ness related to service industries.They claim that,in absolute terms,the most competitive destination is one which brings about the greatest success;that is, the most well-being for its residents on a sustainable basis.And that‘competi-tiveness is illusory without sustainability’(Ritchie&Crouch,2000:5).They claim that‘to be competitive,a destination’s development of tourism must be sustain-able,not just economically and not just ecologically,but socially,culturally and politically as well’(5).Ritchie and Crouch focus on long-term economic prosper-ity as the yardstick by which destinations can be assessed competitively.Thus the most competitive destination is that which most effectively creates sustain-able well-being for its residents.

A model of destination competitiveness has been developed by Ernie Heath who claims that:

existing models do not appear to adequately provide an integrated treat-ment of the various issues surrounding the concept of‘competitiveness’and do not place sufficient emphasis on the key success drivers(people) and the vital linkages(https://www.360docs.net/doc/bd8326950.html,munication and information management) that need to be considered when developing a comprehensive framework of sustainable destination competitiveness (Heath, 2003).

Heath’s model is presented in the form of a house with foundations,cement, building blocks and roof:

′The Foundations provide an essential base for competitiveness.These include:Providing and Managing the Key Attractors(e.g.history,culture, climate,events,entertainment,etc.);Optimising the Comparative and Compet-itive Advantages;Addressing the Fundamental Non-negotiables(e.g.personal, safety and health issues);Providing the Enablers(e.g.infrastructure (airports,roads,signage,etc.),managing capacity);Capitalising on the‘Value Adders’(e.g.location,value,and destination linkages);Ensuring Appropriate Facilitators(e.g.appropriate airline capacity,accommodation,distribution

Destination Competitiveness: Determinants and Indicators377 channels,etc.);Focusing on the Experience Enhancers(e.g.hospitality,service excellence, authentic experiences).

′The Cement binds and links the respective facets of competitiveness.These include continuous and transparent communication channels;balancing direct and indirect stakeholder involvement and beneficiation;information management,research and forecasting;managing competitive indicators and benchmarks.

′The Building Blocks are essential to make tourism‘happen’in a destination.

These include a Sustainable Development Policy and Framework(policy and legislative framework,organisational and financing framework,resources and capabilities,investment climate,sustainable environmental princi-ples)and a Strategic and Holistic Destination Marketing Framework and Strat-egy(destination image and branding,competitive positioning,target marketing/demand management,innovative marketing strategies,visitor satisfaction management).

′The Roof(the key success drivers)comprises the‘people’part of destination competitiveness.These include a shared tourism vision and leadership, guiding values and principles,placing strategic priority on the‘people’factor(political will,entrepreneurship,community focus and human resources development).

A model of destination competitiveness has been developed by the present authors.This model is displayed schematically in Figure1.The model brings together the main elements of national and firm competitiveness as proposed in the wider literature and the main elements of destination competitiveness as proposed by various tourism researchers,Crouch and Ritchie in particular.The integrative model proposed here contains many of the variables and category headings identified by Crouch and Ritchie(1995,1999)and Ritchie and Crouch (1993,2000)in their comprehensive framework of destination competitiveness, but differs some important respects.The present model explicitly recognises demand conditions as an important determinant of destination competitiveness.It also explicitly recognises that destination competitiveness is not an ultimate end of policy making but is an intermediate goal towards the objective of regional or national economic prosperity.

In Figure1,the Resources category is divided into two types:Endowed(inher-ited)and Created.Endowed Resources,in turn,can be classified as Natural (mountains,lakes,beaches,rivers,climate etc.)and Heritage or Cultural(cuisine, handicrafts,language,customs,belief systems etc.).Created Resources include tourism infrastructure,special events,the range of available activities,entertain-ment and shopping.In the model presented here,Supporting Resources(or enabling factors)include general infrastructure,quality of service,accessibility of destination,hospitality and market ties.Endowed and Created Resources are each allocated their own box,as is Supporting Factors and Resources.As Crouch and Ritchie state,‘Whereas the core resources and attractors of a destination constitute the primary motivations for inbound tourism,supporting factors and resources exert more of a secondary effect by providing a foundation upon which a successful tourism industry can be established’(1999:148).These include general infrastructure,quality of service,accessibility of destination,

F

i

g

u

r e

1

T

h

e m a i n e l e m e n t s o

f d e s t i n a t i o n c o m p e t i t i v e n e s s 378Current Issues in Tourism

Destination Competitiveness: Determinants and Indicators379 hospitality and market ties.In the integrated model presented here,these three boxes are,in turn,grouped within a larger box,indicating that destination competitiveness depends on the value added to core resources by these other factors.

Situational Conditions are forces in the wider external environment that impact upon destination competitiveness.Situational conditions relate to economic, social,cultural,demographic,environmental,political,legal,governmental, regulatory,technological,and competitive trends and events that impact on the way firms and other organisations in the destination do business,and present both opportunities and threats to their operations(David,2001).These condi-tions correspond to the Qualifying and Amplifying determinants as identified by Crouch and Ritchie(1999).For present purposes it is useful to regard the situa-tional conditions as falling within one of two interactive and interrelated contexts of organisations operating in the destination–the operating environ-ment and the remote environment.The operating environments of the different private-and public-sector institutions in a destination are important because,to a large extent,the conduct and performance of these institutions depends on the overall structure of the industry in which they are situated(McGee,1988;Porter, 1980,1990).The remote environment comprises those forces and events outside the destination that constrain the strategic options of organisation managers but over which management have no control(Johnson&Scholes,1997:89;Tribe, 1999: 158).

Destination Management factors are those that‘can enhance the appeal of the core resources and attractors,strengthen the quality and effectiveness of the supporting factors and resources and best adapt to the constraints imposed by the[situational conditions]’(Crouch&Ritchie,1999:149).The category includes the activities of destination management organisations,destination marketing management,destination policy,planning and development,human resource development and environmental management(Ritchie&Crouch,2000).In the model presented here,a distinction is made between destination management activities undertaken by the public sector and Destination Management under-taken by the private sector.Included among the activities of the public sector we would find the development of national tourism strategies,marketing by the NTO,national and regional manpower programmes,environmental protection legislation etc.Included among the activities of the private sector we would find those of tourism/hospitality industry associations,industry involvement in and funding of destination marketing programs,industry training programmes, industry adoption of ‘green’ tourism operations and so on.

The model contains a separate box for Demand Conditions.This category comprises three main elements of tourism demand-awareness,perception and preferences.Awareness can be generated by various means including destina-tion marketing activities.The image projected can influence perceptions and hence affect visitation.Actual visitation will depend on the match between tourist preferences and perceived destination product offerings.A destination’s product must develop in a way that‘matches’the evolving consumer prefer-ences, if the destination is to enhance or even maintain competitiveness.

The single direction arrows from Supporting Resources to Endowed Resources and Created Resources indicates that the mere existence of such

380Current Issues in Tourism resources is insufficient to generate visitation to a destination in the absence of tourism infrastructure(accommodation,transportation,restaurants),organised activities,entertainment,shopping and so,on which enable or facilitate visita-tion.Such attributes represent‘value added’by organisations in the destination to the overall tourism product.

There are two-directional arrows linking both Created Resources and Supporting Resources to Demand and to Destination Management.These arrows indicate a two-way causal link.Thus,specific features of Created Resources and Supporting Resources influence Demand,whilst the nature of Demand Conditions,specifically tourist preferences and motives for travel, influence the types of products and services developed within a destination.In similar vein,specific features of Created Resources and Supporting Resources influence Destination Management to achieve and maintainsustainability whilst the activities of public-and private-sector tourism organisations influence types of products and services developed.

The box representing Destination Competitiveness is linked backwards to the various determinants of competitiveness and forwards to one representing Socioeconomic Prosperity,indicating that destination competitiveness is itself an intermediate goal towards a more fundamental aim of socioeconomic well-being for residents.Each of these objectives is associatedwith a set of indicators.Indica-tors of destination competitiveness are many and varied and comprise both subjective attributes(destination‘appeal’,‘scenic beauty’)as well as those that are more objectively determined(destination market share,foreign exchange earnings from tourism).Indicators of Socioeconomic Prosperity relate to key macroeconomic variables including productivity levels in the economy,aggre-gate employment levels,per capita incomes,rate of economic growth and so on.

We now discuss the various elements of the integrative model.

Core Resources

Included under this heading are various characteristics of a destination that make it attractive to visit.Crouch and Ritchie regard core resources and attrac-tors as‘the primary motivation for destination appeal’(Crouch&Ritchie,1999: 146).Of course,different resources have different appeal to different tourists. Tourist motivations can be classified in several ways,and core resources are only a ‘pull factor’ for some types of tourism.

Resources can be divided into two types:endowed(inherited)resources and created resources.

Endowed resources

Natural resources

The natural resources of a destination define the environmental framework within which the visitor enjoys the destination.They include physiography, climate, flora and fauna, scenery and other physical assets.

While Porter and others have emphasised‘factor creation’as a source of competitive advantage,a destination’s endowment of natural resources is crucial for many forms of tourism and visitor satisfaction(Buckley,1994;Dunn& Iso-Ahola,1991).While in the context of manufacturing competitiveness

Destination Competitiveness: Determinants and Indicators381 emphasised by management theorists resource disadvantages can be overcome by adding value to the goods and services produced,in the tourism context natural resources have a substantial capacity to attract visitors,regardless of any ‘value added’ by human providers.

Heritage and Culture

The heritage and culture of a destination,its history,institutions,customs, architectural features,cuisine,traditions,artwork,music,handicrafts,dance etc., provides a basic and powerful attracting force for the prospective visitor(Cohen, 1988;Murphy et al.,2000;Prentice,1993).Past research has examined the great number of dimensions of culture that enhance the attractiveness of a tourism destination (Ritchie & Zins, 1978).

We know that individuals may disagree in their perceptions of the same ‘objective’reality(Carroll&Chang,1970;Wish,1971).Similarly,there may be differences between the way in which industry views the‘richness’of culture as opposed to how consumers perceive it.As Ritchie,Crouch and Hudson(2000) point out in an example,merely counting of museums and historic sites,while of some help in measuring a destination’s heritage endowment,may well mask the quality of these attractions.

Created resources

Porter(1990)and others note that strengths in other parts of‘the diamond’can overcome factor disadvantages.The literature search undertaken in the present study revealed the importance of‘created resources’in determining firm or national competitiveness.There would seem to be at least five types of‘created‘or‘built’resources that influence destination competitiveness:tourism infra-structure,special events,range of available activities,entertainment and shop-ping.Of course,many cultural/heritage attractions of a destination may be ‘created’or‘built’(e.g.the Great Wall of China,the Taj Mahal),but these historic sites are more appropriately regarded as comprising elements of destination (inherited) culture and heritage.

Tourism infrastructure

Tourism infrastructure includes features such as accommodation facilities, food services,transportation facilities,themed attractions,fast food outlets, taverns/bars and receptive tourism plant,tour wholesalers,tour operators, travel agents,car rental firms,local convention and visitor bureaux.Tourism also relies on the provision of numerous ancillary services.Related services infra-structure includes retail shopping facilities,food stores,garages(car mainte-nance,petrol stations),pharmacies,bookstores/newsagents/kiosks,laundries, hairdressers,administrationoffices(police,courts etc.).In the eyes of many tour-ists,and certainly for so-called‘mass tourism’,destinations function more effec-tively when these services are abundant.Mo et al.(1993)have argued that destination service infrastructure is,after‘destination environment’,the most important factor in an international tourist’s experience of the destination product.Murphy et al.(2000)found that the level or lack of infrastructure affects tourist experiences and that‘tourism infrastructure’is an important predictor of both destination‘quality’and perceived trip‘value’.This does not,of course, deny the existence of those forms of tourism(nature-based,cultural/heritage,

382Current Issues in Tourism adventure tourism etc.),in which the tourism experience is enhanced by the lack of created tourism infrastructure.This reinforces the importance of the demand side as a determinant of destination competitiveness (see below).

Special events

This category is intended to capture those happenings where the visitortends to be highly involved as a participant(e.g.a Mardi Gras,a World Fair)or those events where simply‘being there’is significant(royal weddings,papal coronations,the investiture of a world leader,Wimbledon tennis).The capacity of special events to generate tourism expenditure is well documented although the economic impacts and net benefits are often exaggerated(Dwyer,Forsyth,Spurr&Ho,2003).Festi-vals and events are recognised internationally as making a valuable economic contribution to tourism destinations,and also as having significant growth poten-tial.Economic impacts include the contribution to employment and income, nationally and regionally.Events tourism is also regarded as associated with a range of other benefits(and costs)of a more‘intangible’nature that impact on local communities as well as entire regions.These include associatedsocial and cultural benefits to a destination,the exchange of ideas,fostering business contacts,provid-ing fora for continuing education and training,facilitating technology transfer and so on(Dwyer,Mellor,Mistilis&Mules,2000).

Range of available activities

The mix of activities possible within a destination are important tourism attractors.These can include recreation and sports facilities–summer facilities (golf,tennis etc);winter facilities(skiing);water sports(swimming,boating, fishing);night clubs/night life;facilities for special interest visitors such as adventure tourists, ecotourism, cultural/heritage tourism and biking trails.

The more diversified a destination’s portfolio of tourism products,services and experiences the greater is its ability to attract different tourist market segments.A climate of competition stimulates improvement and discourages stagnation.For example,the continuing development and expansion of Las Vegas casinos and more recent diversification beyond gambling to encompass a broader range of entertainment and family-oriented activities has enabled Las Vegas to continue to evolve and develop as a destination.Moreover,a destina-tion’s seasonal constraints may be partly overcome when tourism enterprises expand the range of seasonal experiences available.

Entertainment

This category primarily encompasses behaviours where the visitor assumes a rather passive‘spectator’role such as the theatre and film festivals(Crouch& Ritchie,1999).Entertainment can be found in many forms.From a consumer perspective,the amount of entertainment available at a destination is probably less important than its perceived quality or uniqueness.Even more important for destination competitiveness is the degree to which the entertainment offerings are‘appropriate’to the destination.Ritchie,Crouch and Hudson(2000)cite the Oberammergau Passion Play as uniquely associated in the consumer’s mind with the destination,even though it could be staged practically anywhere.They thus claim that the competitiveness value of this event exceeds its entertainment value as a mere ‘religious’ event (11).

Destination Competitiveness: Determinants and Indicators383 Shopping

Shopping can be regarded as a form of entertainment or,possibly,a necessary chore for many tourists.For some cultures,e.g.Japanese and Koreans,gift giving upon returning home is an important element of the entire travel experience (Hobson,1996).In various parts of the world,the opportunity to shop for duty-free items has provided,in itself,a major motive for travel.For many tour-ists,the opportunity to shop in an exotic location,or‘duty free’,is an important ‘pull factor’of outbound travel.Destinations such as Hong Kong and Singapore have at times marketed themselves as‘shopover’destinations.Over50%of visitor expenditure in Singapore is on shopping items(Singapore Tourism Board,2000).

Given the importance of shopping in tourist expenditure generally,and in the purchasing behaviour of Asian tourists in particular,this category is identified separately in the destination competitiveness model.

Supporting factors and resources

Supporting factors and resources underpin destination competitiveness. Private-and public-sector organisations‘supporting’tourism activity that possess a collection of specific skills not easily imitable by rivals can be an impor-tant source of sustained competitive advantage(Barney,1991;Prahalad& Hamel, 1990).

General infrastructure

A destination’s general infrastructure includes road networks,airports,train system,bus system,water supply,telecommunications,sewerage,health-care facilities,sanitation,the electricity generation system,financial services,and computer services.

Smith(1994)claims that service infrastructure is housed within the larger macro-environment or‘physical plant’of the destination,while Watson and Kopachevsky(1994)have argued that tourist experiences cannot be properly understood unless we take into account the larger context and setting in which these encounters take place.Consumer research on service experiences also confirms this notion (Bittner,1990).

Quality of service

The service dimension of the tourism experience is vital.Efforts must be made to ensure quality of service and there is now recognition of the need to take a total quality of service approach to visitor satisfaction(Go&Govers,2000).Provision of reliable and responsive visitor services enhances a destination’s competitive advantage.Initiatives to enhance the quality of the experience provided by a tourism destination include:establishment of standards for tourism facilities and performance of personnel;programmes to objectively and subjectively monitor the quality of experiences provided;and monitoring of resident atti-tudes towards visitors and towards development of the tourism sector.

Some researchers stress the relevance to destination competitiveness of the concept of the integrity of visitor experiences(Go&Govers,1999).This concept is intended to convey the idea that the quality of the experience actually provided should be appropriate to the situation and the price charged.It also implies that the service provider delivers the quality of experience that is promised to a given

384Current Issues in Tourism situation since different levels of quality may well be appropriate for a given cost level in different situations or settings.

The perceived quality of tourism services appears to be crucially linked to the context of service experiences(Johns,1993).In consumer settings,both the focal (service)and the contextual(environmental)dimensions of a product play a significant role in determining quality(Gotlieb et al.,1994).These findings support the view that both the destination’s macro-environment and its service dimension affect tourist perceptions of quality.Murphy et al.,(2000)found that ‘destination environment’in terms of climate,scenery,ambience,friendliness and, to a lesser extent, cleanliness, is a key predictor of destination‘quality’.

Destinations have become increasingly reliant on the delivery of quality prod-ucts and services.Since meeting visitor needs and achieving business goals are increasingly inseparable,a commitment to quality by every enterprise in a desti-nation(public or private)is necessary to achieve and maintain international competitiveness(Go&Govers,2000:80).Indeed,it has been argued that the quality of service production and delivery deserves‘a comprehensive approach and a definitive integration among its key stakeholders(residents,visitors, trade)and an in-depth knowledge of their needs and expectations’(Go&Govers, 2000:80).The need for integration relates to the network of different organisa-tions that require interaction to cater effectively and efficiently to consumer needs and expectations and to minimise the potential negative sociocultural, economic and ecological impacts on the host community.

Accessibility of destination

McKercher(1998)demonstrates the link between market access and destina-tion choice.The accessibility of the destination is governed by a variety of influ-ences including the frequency,ease and quality of automobile,air,bus,train,sea access;aviation regulations,entry permits and visa requirements;route conces-sions;airport capacities;competition among carriers etc.Visas may be expensive in terms of monetary outlay and/or inconvenient to procure,thus deterring visi-tation.Countries may also impose restrictions on outbound travel by residents.

Prideaux(2000:56)notes that tourist choice between alternative destinations is influenced by inefficiencies in the transport system such as uncompetitive practices, safety concerns, comfort levels and journey time.

Ease of access to a destination may be facilitated through upgraded distribu-tion channels or through developing a more extensive network of sales contacts. Improving inter-modal linkages among transportation systems contributes to destination competitiveness.Following the Asian currency crisis in late1997, Ansett Australia,Qantas and Air New Zealand suspended services to Korea, demonstrating the effect of external variables on destination accessibility. Hospitality

Hospitality relates to the perceived friendliness of the local population and community attitudes towards tourists.It includes:warmth of reception by local population;willingness of residents to provide information to tourists;attitudes towards tourists and the tourism industry.Tourist guidance and information, including good signage,is important to visitors feeling‘valued’by residents of a destination.Resident support for tourism development fosters a competitive destination.The perceived hospitality of residents is a major social factor

Destination Competitiveness: Determinants and Indicators385 forming part of the macro-environment(Canestrelli&Costa,1991;Machlis& Burch, 1983).

Market ties

This category includes several dimensions along which a destination estab-lishes and builds linkages with people in origin markets.It includes ethnic ties underlying VFR travel business ties,and trade links underlying business tourism(Dwyer et al.,1995);economic and social ties including ongoing trade relationships,membership of professional and trade associations,historical and recent immigration flows, common culture and language, common religion.

Some tourism destinations have a dependency on others that is competitive or complementary in nature(Ritchie&Crouch,2000).For example,Macau tourism relies on tourism flows to Hong Kong,and tourism to Monaco is very dependent upon tourism numbers to the French and Italian Riviera.Similarly,international tourism to Tasmania is associated with visitor numbers to Australia.This type of dependency can also be considered as a form of market tie.

Destination Management

Five types of destination management activities have a potentially important influence on destination competitiveness:destination marketing management; destination planning and development;destination management organisation; human resource development; and environmental management. Destination marketing management

When implementing their marketing activities,destination management organisations(DMOs)can contribute to the achievement of sustainable tourism through various actions depending on whether their focus is a promotional or facilitation strategy.The marketing activities of DMOs are mainly centred on the promotion of the destination as a whole.However,a natural extension of such efforts is a facilitation role that typically includes collecting,analysing and disseminating market research data,establishing a representation in the main target markets of origin,participating in trade shows,organising and coordinat-ing familiarisation trips and supporting the private sector in the production and distribution of literature such as information relating to analysis of characteris-tics of key travel markets related to travel volume and associated spending (Lewis et al., 1995).

Hassan(2000)argues that to maintain tourism competitiveness,destination management should focus on a systematic examination of unique comparative advantages that provide a special long-term appeal to the target travel customer segments.He claims that‘destinations are winning competitive battles by careful analysis and response to the core values and needs of the segmented market-place’(Hassan, 2000: 240).

An important function of destination marketing managers is to create a desti-nation image,that is‘the sum of beliefs,ideas and impressions that people have of a place’(Kotler et al.,1993).Recent research has focused on the meaning and measurement of‘destination image’(Balogh & Brunberg, 1997).

Uysal et al.(2000)show the importance of positioning,branding,image,

386Current Issues in Tourism awareness etc,as determinants of destination market share and overall destina-tion competitiveness. They claim that

the challenge of destination marketing is that it is made up of many suppliers and service producers.Marketing a tourism region involves complex and coordinating action among the central attractions(both public and private)that draw tourists to a region,the transportation network to connect visitors to a variety of attractions,the hospitality services to fill basic needs while away from home,and information to help tourists meet needs and find their way in a new environment(Uysal et al., 2000:94).

Enhancing the appeal of a destination involves a programme of marketing efforts designed to influence the decision process of prospective visitors.These efforts may focus on increasing awareness of the existence of the destination or improving the perceptions of the features of the destination to different demographic,psychographic and behavioural market segments.Relevant activ-ities include:development of a strong destination image;creation of a high level of destination awareness and awareness of the destination’s specific products and service offerings;identification of high yield customer bases;development of strong links with tourism wholesalers and retailers;development of attractive, price competitive tour packages tailored to customer needs.

Destination planning and development

Tourism planning takes place on many levels:site,destination,region, national,international.Planning is carried out by different agencies,organisa-tions,and businesses for different purposes and at different scales,possibly with the aid of external consultants.

In order to protect ecosystems and economic benefits and to distribute the latter equitably,tourism must be developed and managed within a hierarchy of controls,ranging from the local to the territorial or provincial,to the national, and even to the international level.The responsibilities at each level of control must be clearly identified and a process of accountability must be imple-mented.Tourism planning requires an understanding of the meaning of sustainable development and the guiding values for promoting sustainable tourism.It requires that communities be made to be sufficiently aware of,and to understand,the tourism industry and its impacts as well as the various processes to integrate and engage in participatory planning,consensus build-ing,and conflict resolution among all stakeholders.It is important to consider which sustainable development principles can be implemented through community control and which need to be implemented through controls at a higher level.

Hassan(2000)maintains that the diversity of industries involved in destina-tion planning and development requires the use of a competitiveness model that examines the relationships among all stakeholders involved in creating value-added products to sustain resources while maintaining a market position rela-tive to other competitors.Sustainable development outcomes should be pursued by tourism businesses,governments,local communities and other stakeholders. The integration and cooperation of organisations and individuals is complex

Destination Competitiveness: Determinants and Indicators387 which is why planning at a holistic level is required.The outcome can be a balance between needed development and economic benefits and social and environmental protection.

Destinations require strong,committed,and effective leadership by business, government and community leaders at all levels.A pro-active role,rather than a passive one,is required to ensure that environmental and heritage values are fully sustained.A sustainable tourism industry requires a commitment by all involved to sustainable development principles at all stages of development. Only through such widespread commitment can the prerequisite holistic emphasis necessary for long-term integration of social,environmental,and economic objectives be attained (Dutton & Hall, 1989).

The destination‘vision’provides a direction for development.According to Newsome et al.(2002:147)‘the basic task of planning is to visualise the area,that is the product,as visitors and managers wish it to be in the future’.Visioning is an important step in formulating a tourism plan.In the visioning step,community members attempt to look into the future and imagine what they would like their community to be.Such an effort involves identifying what is really valued or desired and including those elements in the shared image of the community.The image can help community leaders decide among alternatives that are likely to lead to the desired future and those that are likely to lead away from it.It helps a community decide how much of any type of development will fit within its vision and determine what levels of change are acceptable.

Once stakeholders have formulated a destination vision they must undertake a critical analysis,or audit,of the destination’s existing tourism resources and capabilities,as well as the current functioning of its tourism operations(Inskeep, 1991).The tourism audit covers the supply side(tourism products and support-ing factors and resources),the demand side(tourist preferences)as well as community attitudes to tourism development.This type of audit is necessary to determine,in the light of market trends,the strengths and weaknesses of the present state of the industry,and to highlight opportunities for tourism develop-ment,and the challenges that must be met for the destination and its component firms to achieve and maintain competitive advantage.

The actions of various industry associations,e.g.air transport associations, hotel associations,tour operator associations,restaurant associations,affect the deployment of tourism resources.These associations may differ in their percep-tions of the ecological,social,and cultural impacts of tourism development. Tourism resources are likely to be used more effectively when the different asso-ciations and industry groups share a common view regarding a destination’s strategy for tourism development (Inskeep, 1991).

Pechlaner(1999)stresses the need to undertake a‘future-oriented’evaluation of a destination’s development.He lists several‘destination potentials’including destination reputation for responsiveness to tourism demand,and preparedness for product and market changes.We agree with Pechlaner regarding the need to attend to the dynamics or ‘potentials’ of competitiveness

Destination management organisation

Various areas and levels of government are involved in the promotion, regulation,presentation,planning,monitoring,maintenance,coordination,

388Current Issues in Tourism enhancement and organisation of tourism resources.As Buhalis notes,destina-tion management organisations(DMOs),which include convention and visitor bureaux,national and regional tourism organisations,‘have overall responsibil-ity for the entire destination product and through incentives and policies facili-tate the development of products,and create local partnerships for the delivery of seamless experiences’(Buhalis, 2000: 108).

Many of the factors underlying destination competitiveness are‘public goods’and thus government has an important role to play in achieving and maintaining destination competitiveness(Bueno,1999;Dwyer&Forsyth, 2000).According to Mihalic(2000:66)‘a carefully selected and well executed program of destination management can serve to improve the tourism compet-itiveness of a destination’.

Three aspects of destination management organisation are especially impor-tant to competitiveness.These are:coordination,the provision of information, and monitoring and evaluation.

Coordination

There is increasing recognition of the importance of broad community partici-pation,of effective coordination and support between all involved parties as crucial to achievement of sustainable tourism and hence destination competi-tiveness.

The primary function of the DMO is to serve as a coordinating body for the many public-and private-sector organisations involved in tourism(WTO,1979). In some cases the DMO will also provide the leadership necessary to provide overall direction for tourism development within the destination.In all cases the function is to enable the many parts of the tourism sector to work together,and thus compete more effectively,design and implement public consultation techniques and processes in order to involve all stakeholders in making tourism-related decisions.The DMO can improve the management and develop-ment of tourism by ensuring coordination and cooperation between the different agencies,authorities and organisations concerned at all levels,and that,where such institutions exist,their jurisdictions and responsibilities are clearly defined and complement each other.It can also help to raise awareness of sustainable tourism and its implementation by promoting the exchange of information between governments and all stakeholders on best practice for sustainable tourism,and promote broad understanding and awareness to strengthen stake-holder attitudes,values and actions that are compatible with sustainable devel-opment.

Provision of information

Destinations that gather and use information effectively can improve their competitive position.An effective use of information systems can provide managers with the information required for understanding customer needs,and for appropriate new product development and marketing by tourism organisa-tions in both the private and public sectors.

Two categories of information are important;first,information that is internal to the destination provides an ability to better manage the performance of the destination’s product.The better the system of information management,the greater the ability of firms in a destination to manage different aspects of the