Transcript COMPETITIVE DESTINATION STRATEGY

Tourism Destination
Management
World Tourism Organization
Manila, 20 – 22 March 2006
M Fabricius
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!
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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
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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.
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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 other towns 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.
Lamu
•Economy slow –
unemployment
•Traditional Fishing
town
•Youth/adult mix;
•Church centre
•Big disparities rich
and poor
Lostus
•Economy slow unemployment
•Traditional sheep
farmers
•Youth;
•University town
•Family life important
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Luso
•Economy slow unemployment
•Traditional Artisans
•Middle aged
•Cultural centre
•Nature oriented
Pikachoe
•Skin very
valuable – shoes
•Love cabbage &
vegies
•Good sense of
smell
•Come out at
night unpredictable
Pomachoe
•Saliva very
valuable –
medicine
•Love music
•Good hearing
•Only use certain
routes
1. Introduction to Tourism
Policy and Strategy
World Tourism Organization
Manila, 20 – 22 March 2006
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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.
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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)
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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
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THE STRATEGY CONTEXT
DIMENSIONS OF A DESTINATION
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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.
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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
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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
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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
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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
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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
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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
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THE STRATEGY CONTEXT
STRATEGY: THE LINK BETWEEN THE
DESTINATION AND ITS ENVIRONMENT
MACRO ENVIRONMENT
Economic
Environment
THE DESTINATION
Goals and values
Resources and
capabilities
Organization:
structure, systems
and style
STRATEGY
INDUSTRY
ENVIRONMENT
Technology
Demographic
structure
Suppliers
Customers
Competitors
Complementors
Government/
political
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Natural
Environment
Social
structure
THE COMPETITIVE CONTEXT
WHAT’S HAPPENING
AROUND US? Natural
WHERE ARE WE
NOW?
Economic
Trends
What are our main goals
as a destination?
WHAT’S HAPPENING IN
OUR INDUSTRY
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?
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Environment
Products – expansion, prices, etc.
WHERE
WOULD WE
LIKE TO BE?
HOW DO WE
GET THERE?
Tourists – demands, preferences, etc
Technology
Travel Trade – distribution channels,
commissions, etc.
Competing destinations – new
entrants, campaigns, repositioning, etc.
Potential Partners – regional
partners, joint opportunities, etc.
Government/
political
Social
structure
THE COMPETITIVE CONTEXT
“CRAFTING” STRATEGY
TOOLBOXES
for strategic
analysis and
understanding
of competitive
environment
and destination
resources
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S
T
R
A
T
E
G
Y
THINKING
processes,
creativity,
passion and
mindset to
become a
winning
destination
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
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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?
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.
Destination Policy
Macro-environment (PEST)
SWOT analysis
Vision, Objectives, Targets
Competitive Positioning
Principles of tourism development
Strategic Guidelines
Organization Structure
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
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DMO Annual Business Plans
THE COMPETITIVE CONTEXT
STRATEGY
vs
TACTICS
A planning process
Contact process
War on Paper
Actual battle
Doing the right things
Doing things right
Mental process
Action process
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DYNAMICALLY CHANGING
COMPETITIVE ENVIRONMENT
THE CHANGING TOURISM LIFE CYCLE
Airline
deregulation
Sun-lust
tourists
New Tourism
Cheap oil
Mass
consumers
New
technologies
Limits to
growth
Mass Marketing
Jet
aircraft
Diagonal
Integration
New Tourists
Mass production
Segmentation
Paid
holidays
End of
WWII
Charter
flights
Computer
technology
Packaged
Tours
Entry of
MNC’s
Declining
acceptance of
mass tourism
Old Tourism
More destination
planning &
control
Economic
growth
Source: Poon
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1945
1958
1968
Sustainable
development
1978
2000
2020
Year
DYNAMICALLY CHANGING
COMPETITIVE ENVIRONMENT
OLD TOURISM
Consumers
- Sun-lust
- Inexperienced
- Mass consumption
- Newly found prosperity
Management
- Sameness of hotels
- Hotel & holiday branding
- Promotional airfares
- Mass marketing
- Credit cards
Source: Poon
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“Old Tourism”
Mass, standardised
& rigidly packaged
Technology
- Jet aircraft; automobile
- Computers, telephone
- Limited reservations
systems
- Accounting systems
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
DYNAMICALLY CHANGING
COMPETITIVE ENVIRONMENT
NEW TOURISM
Consumers
- Experienced travellers
- Changes in values & lifestyles
- Flexible
- Independent
Management
- Mass customisation
- Yield management
- Market segmentation
- Innovative pricing
Source: Poon
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“New Tourism”
Flexible, Segmented,
environmentally
conscious
Technology
- Information technologies (SIT)
- Rapid diffusion
- Adoption is industry wide
- Technologies talk to each other
- Computers, telephone
- Internet
- Limited reservations syst.
- Accounting systems
Production
- Production flexibility
- Integrate marketing & product
development
- Innovation, consumer-driven
- Charter flights; Packaged tours;
Airline Alliances
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
DYNAMICALLY CHANGING
COMPETITIVE ENVIRONMENT
A WORD ON 3 KEY FACTORS….
•A Changing Society
•A World in Flux
•New Technologies
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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
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Source: Boniface
DYNAMICALLY CHANGING
COMPETITIVE ENVIRONMENT
A CHANGING SOCIETY – EFFECT ON TOURISM
• 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
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DYNAMICALLY CHANGING
COMPETITIVE ENVIRONMENT
THE WORLD IN FLUX
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DYNAMICALLY CHANGING
COMPETITIVE ENVIRONMENT
THE WORLD IN FLUX – TOURISM AFFECTED
International tourist arrivals
750
700
million
650
600
550
500
450
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19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
*
20
03
*
19
90
400
DYNAMICALLY CHANGING
COMPETITIVE ENVIRONMENT
NEW TECHNOLOGIES
Number of Internet Users Worldwide by region
as in March 2005 (in million)
Africa
13.5
Oceania/Australia
16.3
Middle East
19.4
Latin America/Caribbean
56.2
North America
221.4
Europe
259.7
Asia
302.3
0
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50
100
150
200
250
300
350
DYNAMICALLY CHANGING
COMPETITIVE ENVIRONMENT
NEW TECHNOLOGIES - ACROSS AGE GROUPS
• 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
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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
Adapted from
Werthner and Ebner
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ACCOMMODATION AT
DESTINATION
Group/
Consortium
CRS
Air Travel Car Hire
Rail/
Bus
© TEAM 1999
DYNAMICALLY CHANGING
COMPETITIVE ENVIRONMENT
THE EMERGING VALUE NET
CONSUMER
Travel Agent
GDS/CRS
National Tourism
Organisation
Regional
Tourism
Organisation
The
Internet
Incoming
Agent
Area/Local
DMO
Based on a concept from
IFITT Workshop, Sept 1998
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Tour Operator
Switch
Group/
Consortium
CRS
ACCOMMODATION AT
DESTINATION
Air/Rail/Bus + Car Hire
© TEAM 1999
DYNAMICALLY CHANGING
COMPETITIVE ENVIRONMENT
THE IMPORTANCE OF ENVIRONMENTAL
ADAPTATION
•
THERE ARE TWO REALITIES
–
–
•
The KEY CHALLENGE IS TO SCAN AND
RESPOND
–
•
The environment is changing at an escalating rate
This change is largely outside the control of the
destination marketer
What are the trends, possible implications and what can
the response be?
THE ENVIRONMENT NEEDS TO BE EVALUATED
AT THE MACRO AND INDUSTRY LEVELS
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THE COMPETITIVE CONTEXT
Thank you!
M Fabricius