Tourism Destination Management

1. Tourism Destination Management World Tourism Organization Manila, 20 – 22 March 2006

2. WELCOME! WHAT ARE THE MAIN GOALS FOR THESE 2 DAYS ON POLICY AND STRATEGY? • Understand the basic aspects and processes involved in devising marketing strategies and management policies for tourism destinations. • Develop a mindset and tools to attract our rightful share of the tourism market. • Share examples and ideas among ourselves. • Practice a bit. • Have fun!

3. WELCOME! MODUS OPERANDI? • Theoretical framework and concepts • Case studies and examples • Work group short assignments • Sharing our thinking • The rules of engagement • Informal – welcome to loosen your tie, no cell phones please • Participation • Assume positive intent • No “wrong” of “ridiculous” inputs

4. WELCOME! YOUR ASSIGNMENT • Form working groups • Find a suitable group of 7 other colleagues • Select a name for your group • Select a group leader for this assignment • Tackle the first assignment: • Devise the best plan to achieve maximum benefits for the town of Luso, based on the information contained in the slide and motivate your answer.

5. You are a leader in Luso, a town on the edge of a forest that has been relying on carpentry/furniture making for years, but demand has declined and as a result the economy is slow and unemployment is high. A local naturalist has discovered 2 species of frogs (Pikachoe and Pomachoe) in the forest, both of which are extremely valuable for different reasons. They live in holes and are very difficult to find. He has told a few of the town leaders about it. There are various othertowns in the area, of which 2 (Lostus and Lamu) have also become very aware of the frogs and who will be competing for this resource. • Luso • Economy slow - unemployment • Traditional Artisans • Middle aged • Cultural centre • Nature oriented • Lamu • Economy slow – unemployment • Traditional Fishing town • Youth/adult mix; • Church centre • Big disparities rich and poor • Pikachoe • Skin very valuable – shoes • Love cabbage & vegies • Good sense of smell • Come out at night - unpredictable • Lostus • Economy slow - unemployment • Traditional sheep farmers • Youth; • University town • Family life important • Pomachoe • Saliva very valuable – medicine • Love music • Good hearing • Only use certain routes

6. 1. Introduction to Tourism Policy and Strategy World Tourism Organization Manila, 20 – 22 March 2006

7. THE STRATEGY CONTEXT TOURISM DESTINATION THE TOURISM DESTINATION • Destinations offer an amalgam of products and services under the destination brand • The fundamental unit on which all the many complex dimensions of tourism are based • Basic unit of analysis in tourism • A focal point in the development and delivery of tourism products and the implementation of tourism policy • Destinations within destinations – continent, region, country, district, route, city, town, attraction, etc.

8. THE STRATEGY CONTEXT THE TOURISM DESTINATION (cont.) • Range of destination products and services covers the entire tourism value chain • Serviced by both public and private sector – highly interdependent • Destinations are physical, but also intangible (image, identity, personality) • Often perceptions overshadow reality (cheap vs exclusive; safe vs dangerous)

9. THE STRATEGY CONTEXT TOURISM DESTINATION: A WORKING DEFINITION “A local tourism destination is a physical space in which a tourist spends at least one overnight. It includes tourism products such as support services and attractions and tourist resources within one day’s return travel time. It has physical and administrative boundaries defining its management, and images and perceptions defining its market competitiveness. Local destinations incorporate various stakeholders often including a host community, and can nest and network to form larger destinations.” WTO Think –Tank 2-4 December 2002 Madrid

10. THE STRATEGY CONTEXT DIMENSIONS OF A DESTINATION

11. THE STRATEGY CONTEXT IMPLICATIONS FOR DMO’S This definition enables Destination Management Organisations (DMO’s) to be accountable for the planning and marketing of the area and to have the power and resources to undertake actions towards achieving its objectives.

12. THE STRATEGY CONTEXT THE STAKEHOLDERS • Destinations comprise a complex and diverse group of stakeholder interests • A tourists overall experience in a destination is comprised of a variety of small encounters with a number of suppliers - affecting the overall experience image. • Key stakeholders in a destination include: • Tourism businesses • Public sector stakeholders • Host communities • The tourists themselves

13. THE STRATEGY CONTEXT BROAD STRATEGIC MANAGEMENT GOALS TO BE PURSUED • Adding value to the longer-term prosperity and development of the local communities • Ensuring satisfactory visitor experiences (ideally the expectations of visitors will be exceeded) • Optimizing the profitability objectives of the business sector (which is often the lifeblood of any destination's tourism industry) • Optimising the economic, social and environmental impacts by ensuring a responsible and sustainable balance between economic, socio-cultural and environmental interests

14. THE STRATEGY CONTEXT DESTINATION STRATEGY - CRITICAL SUCCESS FACTORS • Positioning and differentiating the destination and image management are key factors • Knowledge and understanding of the needs of our target markets and the new tourist • Providing “through-the-chain” positive visitor experiences • Continuously adapting to the dynamically changing macro, competitive and market environments • Product innovation and management • Professionalism in service levels and overall HR management • Creating meaningful public-private sector partnerships • Capitalizing on the opportunities provided by new technologies • Balancing the strategic goals of the stakeholders and optimising the economic, social and impacts on the destination

15. THE STRATEGY CONTEXT THE IMPORTANCE OF RESEARCH AND INFORMATION MANAGEMENT • Need up to date, reliable information to analyse competitive environment • Competitor intelligence • Understanding and segmenting the market • Global and local travel trends • Monitoring market performance • Economic, social and environmental impacts • Supply trends and product changes

16. THE STRATEGY CONTEXT COMPETITIVE STRATEGY • The quest for competitive advantage: to grow the tourism pie and attract the biggest slice • Rationale: establishing a position of sustainable advantage over rival destinations • Goals: Grow, outwit, outsmart, survive… • Strategy in the absence of competitive thinking = competing in a race without an achievement in mind • Never stagnant: mapping the direction in an ever-changing tourism landscape • Often messy: requires flexibility, team effort, alliances, success dependent upon all stakeholders

17. THE STRATEGY CONTEXT WHY A COMPETITIVE FRAMEWORK? • The invisible export – product not delivered to market - destination as a “virtual” brand – market failure • Tourists first decide on destinations and then purchase products • Destination experience = a multitude of public and private products & services • Shareholders are society at large • Highly competitive and many travel choices

18. THE STRATEGY CONTEXT STRATEGY: THE LINK BETWEEN THE DESTINATION AND ITS ENVIRONMENT MACRO ENVIRONMENT THE DESTINATION Goals and values Resources and capabilities Organization: structure, systems and style Economic Environment Natural Environment INDUSTRY ENVIRONMENT Suppliers Customers Competitors Complementors STRATEGY Demogra-phic structure Technology Government/political Social structure

19. THE COMPETITIVE CONTEXT WHERE ARE WE NOW? What are our main goals as a destination? What values are dear to us? What do we have to offer our customers? What are we good at and not so good at? Where could we improve? How well are we organized? WHAT’S HAPPENING AROUND US? Natural Environment Economic Trends WHAT’S HAPPENING IN OUR INDUSTRY Products – expansion, prices, etc. Tourists – demands, preferences, etc Travel Trade – distribution channels, commissions, etc. Competing destinations – new entrants, campaigns, repositioning, etc. Potential Partners – regional partners, joint opportunities, etc. WHERE WOULD WE LIKE TO BE? HOW DO WE GET THERE? Technology Government/political Social structure

20. THE COMPETITIVE CONTEXT “CRAFTING” STRATEGY TOOLBOXES for strategic analysis and understanding of competitive environment and destination resources STRATEGY THINKING processes, creativity, passion and mindset to become a winning destination

21. THE COMPETITIVE CONTEXT STRATEGY - POLICY • Sustainable Tourism = Government Led • Private Sector Drive • Community Based • Macro Tourism Strategy for country/region – Government should lead • Policy = Formal Expression of Macro (long-term) Strategy • Policy is a set of Macro Strategic “Rules” to guide tourism forward into the future • Formally endorsed by the Government and can be ensconced in Tourism Legislation

22. THE COMPETITIVE CONTEXT STRATEGY LEVELS Macro (long-term) Strategy Where should the destination position itself in the marketplace, what type of tourism should be promoted, what principles should be followed, what is the vision, growth targets and organization system for tourism? Destination Policy Macro-environment (PEST) SWOT analysis Vision, Objectives, Targets Competitive Positioning Principles of tourism development Strategic Guidelines Organization Structure Business Strategy (medium-term) How can the destination differentiate itself from its competitors, how should it be branded, what are the target markets, what product should be developed for them, what promotion should be done, etc. DMO Marketing/ Development Plans Target Markets Branding Development Strategy: HR, Attractions, Quality Standards, Infrastructure, etc. Marketing Strategy: Product, Promotion, Distribution, Price Operational Strategy (short term) What actions, How, When, Who, How Much DMO Annual Business Plans

23. A planning process War on Paper Doing the right things Mental process Contact process Actual battle Doing things right Action process THE COMPETITIVE CONTEXT STRATEGY vs TACTICS

24. Airline deregulation Sun-lust tourists New Tourism New technologies Cheap oil Mass consumers Limits to growth Diagonal Integration Mass Marketing New Tourists Jet aircraft Mass production Segmentation Paid holidays Declining acceptance of mass tourism Charter flights Computer technology Sustainable development End of WWII Packaged Tours Entry of MNC’s Old Tourism More destination planning & control Economic growth 1945 1958 1968 1978 2000 2020 Year DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT THE CHANGING TOURISM LIFE CYCLE Source: Poon

25. DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT OLD TOURISM Consumers - Sun-lust - Inexperienced - Mass consumption - Newly found prosperity Technology - Jet aircraft; automobile - Computers, telephone - Limited reservations systems - Accounting systems “Old Tourism” Mass, standardised & rigidly packaged Management - Sameness of hotels - Hotel & holiday branding - Promotional airfares - Mass marketing - Credit cards • Production • - Cheap oil • - Extensive hotel construction • Charter flights; • Airline oligopolies • - Packaged tours Frame conditions Post-war peace and prosperity, Paid holidays Government tourism promotion, Regulation of air transport, Generous incentives to attract hotel chains in developing countries Source: Poon

26. DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT NEW TOURISM Technology - Information technologies (SIT) - Rapid diffusion - Adoption is industry wide - Technologies talk to each other - Computers, telephone - Internet - Limited reservations syst. - Accounting systems Consumers - Experienced travellers - Changes in values & lifestyles - Flexible - Independent “New Tourism” Flexible, Segmented, environmentally conscious Production - Production flexibility - Integrate marketing & product development - Innovation, consumer-driven - Charter flights; Packaged tours; Airline Alliances Management - Mass customisation - Yield management - Market segmentation - Innovative pricing Frame conditions Safety and Security Concerns, Airline Economics and Deregu-lation; Environmental pressures; Consumer protection; Flexibility to take vacations any time; Actions by host countries; Disenchantment of host governments with the benefits & costs of mass tourism Source: Poon

27. DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT A WORD ON 3 KEY FACTORS…. • A Changing Society • A World in Flux • New Technologies

28. DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT A CHANGING SOCIETY • Features of modern society • Demand for more leisure: affluence, high work pressures, technology, legal conditions, longer lifespan • Short attention span & quick gratification • Complementarity: live in city, play in countryside • Knowledge, communications • Signs of change in travel • Information, creativity and experience • Spirituality and nourishment • “Green-ness” and “Brown-ness” • Flexibility • Protecting, conserving, sustaining Source: Boniface

29. The concept of the “average” tourist is becoming redundant. Increasingly tourists are: sophisticated and travel experienced more physically and mentally active environmentally and socially aware searching for value for money requiring customized packages and experiences Want to touch, taste, hear and experience the destination DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT A CHANGING SOCIETY – EFFECT ON TOURISM

30. DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT THE WORLD IN FLUX

31. DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT THE WORLD IN FLUX – TOURISM AFFECTED

32. DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT NEW TECHNOLOGIES

33. Study in the UK September 2005: 54% of online Britons visit a travel site; i.e. over 14 million every month, growing at 20% per annum 86% of British internet users 50> have visited a travel site in the last year 1.5 million over age 50 used internet to book travel in September 2005 Expedia, Lastminute.com, Ebookers, etc. collectively more popular than traditional brands of Thomson (TUI), Thomas Cook, MyTravel and First Choice DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT NEW TECHNOLOGIES - ACROSS AGE GROUPS

34. DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT TRADITIONAL DISTRIBUTION SYSTEMS CONSUMER Travel Agent National Tourism Organisation GDS/CRS Regional Tourism Organisation Tour Operator Switch Area/ Local DMO Incoming Agent Group/ Consortium CRS Air Travel Car Hire Rail/Bus ACCOMMODATION AT DESTINATION Adapted fromWerthner and Ebner © TEAM 1999

35. DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT THE EMERGING VALUE NET CONSUMER Travel Agent TheInternet GDS/CRS National Tourism Organisation Regional Tourism Organisation Tour Operator Switch Incoming Agent Area/Local DMO Group/ Consortium CRS ACCOMMODATION AT DESTINATION Air/Rail/Bus + Car Hire Based on a concept fromIFITT Workshop, Sept 1998 © TEAM 1999

36. THERE ARE TWO REALITIES The environment is changing at an escalating rate This change is largely outside the control of the destination marketer The KEY CHALLENGE IS TO SCAN AND RESPOND What are the trends, possible implications and what can the response be? THE ENVIRONMENT NEEDS TO BE EVALUATED AT THE MACRO AND INDUSTRY LEVELS DYNAMICALLY CHANGING COMPETITIVE ENVIRONMENT THE IMPORTANCE OF ENVIRONMENTAL ADAPTATION

37. THE COMPETITIVE CONTEXT Thank you!