The Competitiveness of a Tourist Destination: One Answer or two?
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1 The European Institute of Retailing and Services Studies Recent Advances in Retailing and Service Science July 15-18, 2011 The Competitiveness of a Tourist Destination: One Answer or two? Authors: Fridrik Eysteinsson, University of Iceland (fridrike@hi.is) School of Business, Gimli v/saemundargata, 101 Reykjavik, Iceland Thorhallur Gudlaugsson, University of Iceland (th@hi.is) School of Business, Gimli v/saemundargata, 101 Reykjavik, Iceland
2 ABSTRACT Scholars have developed general models of destination competitiveness that are not specific to particular destinations or attributes. Earlier research, using the genearl models of destination competitiveness as frameworks, has used expert judgements (managers and/or academics). The models involve both cause and effect. Therefore the rational was that only experts had the required knowledge and/or experience to judge how import the various attributes are to the competitiveness of destinations or how the destination (or competing destinations) should be rated on those attributes. The authors reseach aims to answer the research quesiton: Do experts and tourists rate destination competitiveness the same way? The methodology is quantitative. What is different from earlier research on destination competitiveness is first of all that the questionnaire used only contains ten attributes which latest research has shown, to be the determinant attributes, that is, the ones exerting the greatest influence on the decision to visit a destination. And secondly, both experts and tourists participate in the research. The populations of interest were, on the one hand, members of The Icelandic Travel Industry Association and, on the other, foreign tourists coming to Iceland from four major market areas. The surveys were done in the summer of The results show that the experts and tourists do not rate the competitiveness of Iceland as a tourist destination in the same way. This research contributes to theory by showing that there can be a difference between the perceptions of experts and tourists in destination competitiveness research and therefore that care should be taken when using expert judgements as proxies for tourist perceptions. The research s contribution to practie is that using the study s methodology can help policymakers and managers in tourist industries decide on the best route(s) to improve their destination competitiveness. 1
3 INTRODUCTION Tourism contributes to a nation s income and employment and can therefore be a major sector of the economy and economically very import for the nation. To succeed, however, tourist destinations must ensure that their overall attrativeness to visitors must equal or surpass that of competing destinations. Scott and Lodge (1985) viewed national competitiveness as a country s ability to create, produce, distribute, and/or service products in international trade while earning rising returns on its resources. As viewed by Newall (1992) competitiveness is about producing more and better quality goods and services that are marketed successfully to consumers at home and abroad. Finally Crouch and Ritchie (1999) define competitiveness of a destination as the ability of a destination to provide a high standard of living for residents of the destination. In other words the competitiveness of a nation is related to the ability of its firms to provide a high and rising standard of living. 1 DESTINATION COMPETITIVENESS Factor conditions (e.g. physical, historical, cultural and recreational) are important determinants of destination attractiveness as the tourist is required to travel to a destination to receive the destination expericene. The theory of comparative advantage (the ability of a nation to produce a particular good or service at a lower opportunity cost than another nation) (Ricardo, 1817) could therefore be expected to help explain the competitiveness of tourist destinations. Porter s (1990) theory of competitive advantage should also be expected to be of help in explaining destination competitiveness since it is concerned with a destination s ability to use its resources effectively. There are three main streams of destination competitiveness research (Crouch, 2010). The first research stream has the aim of diagnosing the competitive positions of specific destinations. The second has focussed on particular aspects of destinations competitiveness. And the third stream has sought to develop general models and theories of destination competitiveness that are not specific to particular destinations or attributes. This paper is concerned with the third research stream. Crouch and Ritchie (1999) began to study destination competitiveness in Dwyer and Kim (2003) and Dwyer, Mellor, 2
4 Livaic, Edwards and Kim (2004) also contributed to the development of a general model of destination competitiveness as did Heath (2002. The forth contribution has been the Travel & Tourism Competitiveness Index. Crouch and Ritchie (1999) model was adopted for the purpose of this study as it is the most cited model of this type. Their aim was to, develop a conceptual model based on the theories of comparative advantage and competitive advantage tailored to the distinctive characteristics of destination competitiveness. Their model is based on a destination s resource endowments as well as its capacity to deploy resources. Previous empirical studies that have applied this general model have found strong support for it (Enricht and Newton, 2004, 2005). Earlier research, using the general models of destination competitiveness as frameworks, has used expert judgements (e.g. managers and/or academics) (See for example, Enright and Newton, 2004; Enright and Newton, 2005; Gomeselj and Mihalic, 2008; Crouch, 2010). Some authors (Evans and Chon, 1989; Faulkner, Opperman and Fredline, 1999) have argued that stakeholders views constitute accurate measures of attractions. The models involve both cause (attributes that can increase competitveness) and effect (attributes that can be used to measure competitiveness). Therefore the rational was that only experts had the required knowledge and/or experience to judge how important the various attributes are to the competitiveness of destinations or how the destinations (or competing destinations) should be rated on those attributes. The general models of destination competitiveness that have been developed indicate that there is an extensive list of competitiveness attributes. They are, however, unlikely all to be of equal importance in determining how competitive destinations are. The impact of a competitiveness attribute on the relative performance of a destination is a function of both the importance of the attribute as well as the degree to which destinations vary on the atribute. Although an attribute may be considered important, it will not be a determinant of competitiveness if there is little difference among destinations on the attribute. Crouch (2010) has identified the attributes that exert the strongest influence on tourist destinations. These ten determinant attributes are: physiography and climate, culture and history, tourism superstructure, mix of activities, awareness/image, special events, entertainment, infrastructure, accessibility and positining/branding. Only one of these attributes can only be judged by experts. Tourists do not know how a destination intends to position it self or how it goes about its branding. What they can observe 3
5 is the effects of those efforts i.e. awareness and image. The positioning/branding attribute is redundant since its effects are measured. This simple observation makes it possible to do a research comparing the views of experts and tourists on the determinant attributes. See table 1 for other minor changes. Determinant attributes Physiography and climate* Culture and history** Tourism superstructure Mix of activities Awareness/Image*** Special events Entertainment Infrastructure Accessibility Positioning/Branding Table 1: Destination competitiveness attributes Attributes used in the current research Nature Culture Tourism superstructure Mix of activities Awareness Special events Entertainment Infrastructure Accessibility Image *Physiography includes nature and nature includes climate **A doble barrelled question. Culture is more important for Iceland as a tourist destionation. History is therefore omitted. ***A double barrelled question. Is split into two. The above observation makes it possible for the authors to answer the research question, Do experts and tourists rate destionation competitiveness the same way? 2 METHODOLOGY The methodology is quantitative. Two surveys were conducted. kannski mætti segja örítið meira hér? 2.1 POPULATION The populations of interest were, on the one hand, members of the Icelandic Travel Industry Association (TITIA) (N=306) and, on the other, foreign tourists (n=200) coming to Iceland from four major market areas (North-America, U.K., Nordic countries and Middle and South Europe). 4
6 2.2 QUESTIONNAIRE The questionnaire for the members of the Icelandic Travel Industry Association was split into four parts. In the first part the members were asked to rank order the five countries they considered to be the closest competitors to Iceland as a tourist destination (this was an open question). In the second part they were asked to rate the importance of the ten determinant attributes for Iceland as a tourist destination and the competing countries on a 5 point Likert scale (1=very unimportant; 5= very important). The attributes were either described or explained giving examples (e.g. nature; environment, climate, flora and fauna, scenery). In the third part they were asked to rate Iceland on the same attributes in terms of its competitiveness compared to the closest competitors on a 5 point Likert scale (1=much worse; 5=much better). Lastly the participants were asked how long they had been working in the tourist industry and how their company was classified (car rental, restaurant etc.). The questionnaire was in Icelandic. The questionnaire for the foreign tourists was split into four parts. In the first part the tourists were asked to rank order the tourist destinations, besides Iceland, which they had considered before deciding to visit Iceland (this was an open question). In the second part they were asked to rate the importance of the ten determinant attributes for the countries they had considered visiting on a 5 point Likert scale (1=very unimportant; 5=very important). The attributes were either described or explained as before. In the third part the participants rated the competitiveness of Iceland as a tourist destination on the same ten attributes on a 5 point Likert scale (1=much worse; 5=much better). Lastly participants were asked their gender, age, nationality and their number one motivation for their holiday in Iceland. The questionnaire was in English. 2.3 PROCEDURE The suveys were conducted in August In the one among members of the Icelandic Travel Industry Association data was gathered via createsurvey.com. Two remainders were sent out. In the one among the foreign tourists data were gathered on the flybus from Keflavik to Reykjavik. The participants filled out the questionnaires while they were on board the bus. Data analysis was done in SPSS. 5
7 3 RESULTS Of the 306 members of The Icelandic Travel Industry Association 80 took part. The response rate was therefore 26%. Participation broken down by company type is shown in table 2. Table 2: TITIA members TITIA members % of participants Leisure 13.8% Car rental 5.0% Transportation 3.8% Accommodation Reykjavik 5.0% Accommodation outside Reykjavik 18.8% Restaurant Reykjavik 6.3% Restaurant outside Reykjavik 5.0% Travel agency 27.5% Airline 3.8% Other 11.3% The TITIA members considered Norway by far to be the closest competitor to Iceland as a travel destination. 57.7% of the participants put Norway as the number one competitor. Finland and New Zealand tied for second place with 5% putting each in first place. The results for the importance of the ten attributes for Iceland as a tourist destination and the competing countries were the following (see table 3) Table 3: Importance of destination competitiveness attributes Importance Attribute Average SD 1. Nature 4, Image 4, Tourism superstructure 4, Mix of activities 4, Awareness 4, Accessibility 4, Culture 3, Infrastructure 3, Special events 3, Entertainment 2,
8 Nature, image and tourism superstructure are the top three attributes and infrastructure, special events and entertainment are at the bottom. How TITIA members rated Iceland in terms of destination competitiveness on the same attributes can be seen in table 4. Table 4: Performance of Iceland compared to competing destinations Performance Attribute Average SD 1. Nature 4, Image 3, Mix of actitivies 2, Culture 2, Infrastructure 2, Tourism superstructure 2, Awareness 2, Entertainment 2, Accessibility 2, Special events 2, Iceland only scores better than the competing destinations in the minds of TITIA members on two attributes, nature and image. All other scores are below 3.0 which was the midpoint on the scale used which indicates that in the minds of TITIA members Iceland is scores worse than the competing countries on those attributes. Lokking at performance score in isolation is not enough. An attribute is a strength (weakness) if the focal destination gets a score for it that s higher (lower) than average for all its scores and if it is perceived to be above (below) average in importance. Iceland s strengths deducted from the anseres of the TITIA members are its nature, image and mix of activities. Its weaknesses are tourism superstructure, awareness and accessibility. Of the 200 foreign tourists who participated in the survey 16.5% came from North- America, 11.5% from the UK, 29.5% from the Nordic countries and 42.5% from Middle and South Europe. This is in line with percentages for each group in The tourists considered Norway (8%) and the USA (8%) to be the number one competitor to Iceland as a travel destination. Sweden was in thire place (6%). The results for the importance of the ten attributes for Iceland as a tourist destination and the competing countries were the following (see table 5). 7
9 Table 5: Importance of destination competitiveness attributes. Importance Attribute Average SD S.E. 1. Nature 4, Culture 3, Image 3, Accessibility 3, Mix of activities 3, Awareness 3, Infrastructure 3, Tourism superstructure 3, Entertainment 2, Special events 2, Nature and culture are the top three attributes and tourism superstructure, entertainment and special events are at the bottom. How the tourists rated Iceland in terms of destination competitiveness on the same attributes can be seen in table 6. Table 6: Performance of Iceland compared to competing destinations Performance Attribute Average SD S.E. 1. Nature 4, Image 3, Mix of activities 3, Culture 3, Tourism superstructure 3, Awareness 3, Accessibility 3, Infrastructure 3, Entertainment 2, Special events 2, Iceland scores better than the competing destinations in the minds of tourists on all but two attributes. The two highest scores are that for nature and image. The only scores worse than the competition are those for entertainment and special events. Iceland s strengths as a tourist destination, deducted from the answares of the tourists, are its nature and image. Its weakness is accessibility. 8
10 4 DISCUSSION The TITIA members and tourists perceptions differed considerably when it came to competing destinations. The TITIA members believed Norway to be by far the closest competitor (57.7% put it in first place) while only 8% of tourists believed Norway to be the number one competitor to Iceland. It was also interesting how widely the perceptions of TITIA members and the tourists differed when it came to performance of Iceland as a tourist destination. Only two attributes were considered better than the competition, nature and image, when the TITIA s members were asked but eight attributes when the tourists were asked. Iceland s strengths and weaknesses as a destination as deducted from the answers of TITIA members and tourists differ somewhat. Two of the strengths are the same, nature and image. In addition TITIA members perceive mix of activities to be a strength. Both groups perceive accessibility to be a weakness. In addition TITIA members perceive tourism superstructure and awareness to be weaknesses. The research question was Do experts and tourists rate destination competitiveness the same? can now be answered. The answer is that how it is rated depends on who does the rating. This research contributes to theory by showing that there can be a difference between the perceptions of experts and tourists in destination competitiveness research and therefore that care should be taken when using expert judgements as proxies for tourist perceptions. This research s contribution to practice is that in order to gauge destination competitiveness, it is necessary to survey the tourists themselves. Otherwise the wrong improvement initiatives may be pursued. The limitations of this research are that it does not consider different target groups. In terms of future research it would be interesting to do a study among tourist both before and after their visit to a destination in order to be able to compare expectations with perceptions of performance and also in order to see if the experts perceptions are more in line with the tourists perceptions after their visit then before it. 9
11 5 REFERENCES Crouch, G.I. (2010). Destination competitiveness: An Analysis of determinant attributes. Journal of Travel Research XX(X), Crouch, G.I. and Ritchie, J.R.B. (1999). Tourism, Competitiveness, and societal prosperity, Journal of Business Research, 44, Dwyer, L. and Kim, C. (2003). Destination competitiveness: Determinants and indicators. Current Issues in Tourism, 6(5), Dwyer, L., Mellor, R., Livaic, Z, Edwards, D. and Kim C. (2004). Attributes of destination competitiveness: A factor analysis. Tourism Analysis, 9(1-2), Enright, M.J. and Newton, J. (2004). Tourism destination competitiveness: A quantitative approah. Toruism Management, 25(6), Enright, M. J. and Newton, J. (2005). Determinants of tourism destination competitiveness in Asia Pacific: Comprehensiveness and universality. Journal of Travel Research, 43(4), Evans, M.R. and Chon, R.S. (1989). Formulating and evaluating tourism policy using importance-performance analysis. Hospitality Education and Research Journal, 13(2), Faulkner, B. Oppermann, M and Fredline, E. (1999). Destination dompetitiveness: An exploratory examination of South Australia s core attractions. Journal of Vacation Marketing, 5(2), Gomezelj, D.O. and Mihalic, T. (2008). Destination competitiveness-applying different models, the case of Slovenia. Tourism Management 29, Heath, E. (2002). Towards a model to enhance destination competitiveness: A Southern African Perspective. Journal of Hospitality and Tourism Management, 10(2), Newall, J.E. (1992). The challenge of competitiveness, Business Quarterly, 56, Porter, M.E. (1990). The competitive advantage of nations. The Free Press, New York. Ricardo, D. (1817). On the principles of political economy and taxation. London: John Murray (3 rd edition, 1821). Scott, B.R, and Lodge, G.C. (1985). U.S Competitiveness in the World Economy. Harvard Business School Press, Boston, MA. 10
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