Research Note
Tourism destination competitiveness: Towards a performance-based approach
Tourism Economics 2016, Vol. 22(3) 629–636 ª The Author(s) 2014 Reprints and permission: sagepub.co.uk/journalsPermissions.nav DOI: 10.5367/te.2014.0446 te.sagepub.com
Mohd Hafiz Hanafiah Universiti Teknologi MARA, Malaysia
Mohamad Abdullah Hemdi Universiti Teknologi MARA, Malaysia
Ismail Ahmad Universiti Teknologi MARA, Malaysia
Abstract Determining destination competitiveness is vital to appraise the performance of a destination compared to its competitors. With the rapid growth in the tourism industry and optimistic travelling trends, the destination competitiveness concept brings tourism economics theory and practices into sharper focus. The purpose of this study is to design performance-based destination competitiveness measurement for tourist destinations, grounded by competitiveness theory. This article asserts that a significant measurement of destination competitiveness is performance. The article integrates previous research in the field and proposes a conceptual framework of performance-based destination competitiveness. Indicators of tourism performance and future research directions are also presented. Keywords competitiveness, destination, performance, tourism
Preamble There are many forces and factors that affect tourism destination competitiveness (TDC). Since the 1990s, some research efforts have been directed at developing a theoretical and conceptual foundation for measuring competitiveness. However, the mainstream literature struggles with the
Corresponding author: Mohd Hafiz Hanafiah, Faculty of Hotel and Tourism Management, Universiti Teknologi MARA, 40450 Shah Alam, Selangor, Malaysia. Email:
[email protected]
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vagueness of the concept and complex elements, which are challenging to measure. Even though various TDC models have come up with several factors that influence competitiveness, the construct involves many different attributes (Crouch, 2010). This conjuncture has been confirmed by various authors who have provided the theoretical and conceptual foundations for most of the TDC literature (Dwyer et al., 2002; Dwyer and Kim, 2003a, 2003b; Gooroochurn and Sugiyarto, 2005; Inskeep, 1991; Kozak and Rimmington, 1999; Poon, 1993; Ritchie and Crouch, 1993, 2010; Vanhove, 2012). Since then, interest in TDC research has moved from the development of definitions and conceptual models to empirical models. The dynamics of destination competitiveness create further challenges and the need for ongoing research and development of indicators. Even though tourism researchers are aware that the determining factors of TDC are based on comparative and competitive advantages (Dwyer and Kim, 2003), many tourism studies exclude crucial external aspects, such as globalization, tourism price, the state of economic development and the degree of dependence on tourism (Croes and Rivera, 2010). Kim and Wicks (2010) argued that the current TDC theory also contains weaknesses, where it overlooks and underestimates the roles of globalization and foreign direct investment in measuring destination competitiveness. Meanwhile, Croes and Kubickova, 2013 claimed that a significant measurement of destination competitiveness should include the assessment of destination performance. In order to develop excellent policies and business decisions, it is critical to acknowledge the current state of tourism industry performance in the competitiveness measurement (Croes, 2006). Although the tourism literature has published many conceptual tourism competitiveness models (Crouch and Ritchie, 1999; Dwyer and Kim, 2003; Enright, 2005; Kozak and Rimmington, 1999), few studies have not proposed a comprehensive TDC model that takes into account the context of tourism performance (Croes and Kubickova, 2013; Kim, 2012; Mazanec and Ring, 2011). To fill the current research gap, this article, therefore, reviews the previous literature pertaining to destination competitiveness and constructs a tailored framework that adapts and extends the theoretical and empirical evidence of the structural relationships between the preceding TDC constructs.
Prior study Competitiveness is an essential element of the tourism industry underpinning and has been one of the key issues in the field of economics, business and development as well as tourism and hospitality. The study of TDC continues to attract interest from among tourism researchers, policymakers and organizations. Many researchers have applied the competitiveness theory as a critical concept to explain tourism development, destination management and tourism strategies (Buhalis and Spada, 2000; Crouch and Ritchie, 1999; Hassan, 2000; Heath, 2003; Kozak and Rimmington, 1999; Mazanec et al., 2007; Mihalicˇ, 2000). The concentration of TDC literature has been mainly on the sustainability of destination competitiveness in maintaining a favourable market position against other destination. Despite its heightened attention, the mainstream literature struggles with the vagueness of the concept reflecting a multiplicity of meanings and applicability. Whilst there seems to be a consensus in the literature on the definition of competitiveness, tourism researchers are confused about the establishment and measurement concerns of TDC due to the complexity of influencing factors. Determining the level of competitiveness of a destination requires a comprehensive understanding of the basic construct of the previous competitiveness model. As destination competitiveness cannot be measured directly, studies have used indicators for determining the level of competitiveness. Tourism researchers hence have developed competitive models using various indicators to measure TDC (Crouch and Ritchie, 1999; Dwyer and
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Kim, 2003; Gooroochurn and Sugiyarto, 2005). To date, the conceptual models on TDC have been designed with restricted empirical studies to validate the indicators. The conventional tourism competitiveness studies are based on the traditional marketing positioning research with the aim of diagnosing the competitive position of a specified destination (Ahmed and Krohn, 1990; Baker et al., 1996; Bordas, 1994; Buhalis and Spada, 2000; Gomezelj and Mihalic, 2008; Inskeep, 1991; Kayar and Kozak, 2010). The second type of research has employed survey instruments to measure TDC, treating tourist perception as a valuable input to explain TDC (Craigwell, 2007; Crouch, 2010; Crouch and Ritchie, 2006; Dwyer et al., 2002; Echtner and Ritchie, 1993; Faulkner et al., 1999; Hudson et al., 2004; Huybers and Bennett, 2003). Finally, the third type of research on TDC has focused on the external factors such as price competitiveness, economic factors affecting tourism demand, efficiency, quality management, environment and destination marketing (Assaf and Josiassen, 2011; Assaker et al., 2011; Croes, 2006; Croes and Kubickova, 2013; Hassan, 2000; Heath, 2003; Ivanov and Webster, 2013; Kim and Wicks, 2010; Mihalicˇ, 2000). Evidently, little attention has been paid to empirical studies testing the TDC model. TDC literature review revealed that there is still no fully satisfactory study in measuring and identifying the destination competitiveness determinants. Most of the conceptual models that have been developed include various factors that play essential determining role on TDC, but the order of importance has not been adequately acknowledged. Also, current factors proposed in previous TDC models cannot be applied universally owing to the unavailability of databases at other destinations. Some of the destination competitiveness measurement studies did not allow for a comparison of different destinations, whilst others dealt with limited perspectives of destination competitiveness (e.g. supply-side perspective only, demand-side perspective only or focused on one factor only) and the rest had results inconsistent with the real tourism dynamics. Results from earlier studies have suggested numerous TDC models and frameworks. The most detailed examination or study of TDC to date was by Crouch and Ritchie (1999). They designed a model encompassing almost all the factors associated with the TDC literature, including essential factors linked together with the macro and micro-environment factors. However, Crouch and Ritchie’s model did not pinpoint the factor’s causal relations. Furthermore, a number of other studies were confused over the explicit attributes of TDC and most of the attributes were not based on any empirical model of competitiveness. Go and Govers (2000) used seven attributes, namely facilities, accessibility, quality of service, overall affordability, location image, climate and environment, and attractiveness. Conversely, Hassan (2000) posits the following four determinants: comparative advantage, demand orientation, industry structure and the destination commitment towards the environment. On the other hand, Dwyer et al. (2000) emphasized exchange rates and highlighting tourism price levels as the vital factors affecting TDC. Mazanec et al. (2007) opted for heritage and culture, communication facilities, social competitiveness and education as the determinants of destination competitiveness. Gomezelj and Mihalic (2008) used inherited resources, created resources, supporting factors, destination management, situational conditions and demand conditions in assessing TDC. Meanwhile, Assaf and Josiassen’s (2011) study encompassed the most competitive determinants which are tourism and related infrastructure, economic conditions, security, safety and health, tourism price competitiveness, government policies, environmental sustainability, labour skills and training. Subsequent studies have shown no consensus on the TDC attributes. Assaker et al. (2011) adapted the Competitive Monitor framework and suggested the economy, infrastructure, environment and tourism as determinants towards explaining destination competitiveness. The most recent study to date by Croes and Kubickova (2013) includes tourist arrivals, tourism receipts,
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Table 1. Literature on TDC determinants. Author/s
Determinants
Croes, and Kubickova (2013) Assaker et al. (2011) Assaf and Josiassen (2011)
Tourist arrivals, tourism receipts, GDP, population, performance
Gomezelj and Mihalic (2008) Mazanec et al. (2007) Gooroochurn and Sugiyarto (2005) Heath (2003) Dwyer and Kim (2003) Hassan (2000) Go and Govers (2000)
Economy, infrastructure, environment, tourism Tourism and related infrastructure, economic conditions, security, safety and health, tourism price competitiveness, government policies, environmental sustainability, labour skills and training Inherited and created resources, supporting factors, destination management, situational conditions, demand conditions Heritage and culture, communication facilities, social competitiveness, education Prices, economic openness, technological developments, structure, human development in tourism, social development, environment and human resources. Foundations, building blocks, the cement, the roof Inherited and created resources, destination management, situational conditions, demand conditions, destination competitiveness, socio-economic prosperity Comparative advantage, demand orientation, industry structure and environmental commitment Facilities, accessibility, quality of service, overall affordability, location image, climate and environment and attractiveness Travel cost, ground cost, price competitiveness
Dwyer, Forsyth and Rao (2000) Crouch and Ritchie (1999) Basic resources and attractions, destination management and supporting factors, tourism policy, planning and development GDP: gross domestic product; TDC: tourism destination competitiveness.
national income and population as the performance indicators of a destination using a causal relationship. Nevertheless, despite the vast discussions and studies on TDC, no comprehensive model and determinants have yet been developed as the current ones keep on evolving (Croes and Kubickova, 2013; Crouch and Ritchie, 2000; Dwyer et al., 2002; Dwyer and Kim, 2003a, 2003b; Echtner and Ritchie, 1993; Gooroochurn and Sugiyarto, 2005; Ivanov and Webster, 2013; Ritchie and Crouch, 2010; Webster and Ivanov, 2014). Table 1 summarizes the literature on TDC determinants. In contrast to the earlier studies, this study contends that TDC integrates elements of efficiency, profitability and productivity, and every single concept seem to agree that the end result of competitiveness is enhancing standards of living and increasing social welfare. At present, little is known about the causal relationship between tourism performance and destination competitiveness. Even though an increasing number of researchers have investigated that relationship from econometric and structural perspectives, a considerable proportion of these studies are solely based on panel data to analyse the effects of tourism on economic growth across a large number of countries. To answer the important question of how well a destination is performing compared to other destinations, the primary focus should not be only on the resource availability, but also on how much the destination has grown over a specified period of time, on the incomes, the income inequality and living standards. Thus, it is important here to decide on a scale of quantifying the aforementioned criteria and on a measure or measures that can be used. Therefore, the best way to
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administer the various indicators’ impacts on destination performances is to contain them into a well-defined theoretical framework.
Performance-based TDC: A conceptual framework A competitive economy is one that is likely to grow faster over time and exhibit a superior performance. Wilde and Cox (2008) argued that performance is correlated with competitive advantages, and achieving an advantage will automatically result in higher performance. The ultimate goal of a destination is to increase the income and the standard of living of its local community (Wu et al., 2012). Destination competitiveness takes into consideration the internal and external factors which could enhance the overall destination performances. Moreover, destination competitiveness is regarded as an antecedent to the economic growth and prosperity of the resident population. Nevertheless, many have argued as to whether economic performance should be characterized as an indicator or whether it is better considered to be affected within the overall causal chain (Croes and Rivera, 2010). Furthermore, a performance-based measurement of tourism competitiveness will directly respond to the needs of tourism policymakers, such as the evaluation, promotion, learning and improving the decision-making process. Mazenec et al. (2007) suggested that destination competitiveness can be evaluated according to performance and efficiency criteria. Destination competitiveness must be linked to performance in a cause-effect articulation in order to relinquish the inconsistencies and confusion surrounding the concept. This argument is in line with Croes (2006) proposal that most of the destination competitiveness studies associate the competitiveness with industrial export performance. Recently, Croes (2006) designed a ranking system for tourism destinations, grounded by the competing theory and revealed that tourism performance can be used to determine tourism competitiveness. Furthermore, Croes (2013) proposed a performance indicator, scaled by the performance dynamism over time (tourism receipts growth rates), the size of the industrial base of the economic structure (tourism added value) and the quality of life standards over time, as the additional indicator. Differing from Mazanec et al.’s (2007) study, Croes (2013) assumed quality of life as tourism development’s primary goal. Based on the literature’s argument, this article considers the performance to be fundamentally related to TDC. The essential literature suggested that there is a significant way of performance application in measuring tourism competitiveness. Based on the explicit assumptions of TDC literature, a competitive destination will be more attractive, leading to greater tourist demand and spending, which eventually leads to increased income (gross domestic product (GDP)) and higher economic growth. Finally, it will positively affect the welfare of the local population. The TDC measurement is grounded in three key elements: satisfaction, productivity and quality of life. Based on the Travel and Tourism Competitiveness Index, higher-ranking countries have higher levels of quality of life, productivity and satisfaction levels. The human development index or the tourism direct gross domestic product (TDGDP) is used to measure quality of life and productivity, and tourism demand used to revealed satisfaction.
Discussion In this article, the relationship between destination competitiveness and tourism performance is discussed with a view to exploring the usefulness of performance indicators as policy tools. Although substantial interest has emerged on the concept of TDC, the review of tourism literature
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revealed that no comprehensive framework has been fully developed to apply to all country destinations. A thorough model of destination competitiveness would offer the tourism industry a mechanism for analysing, diagnosing, planning and communicating competitive strategies (Crouch and Ritchie, 1999). Based on the Crouch and Ritchie (1999), Heath (2003), Dwyer and Kim (2003) and Gooroochurn and Sugiyarto (2005) competitiveness model review, it can be concluded that TDC is a multi-faceted concept with numerous affecting factors. Vigorous numbers of studies on the TDC have been undertaken with efforts to identify a comprehensive TDC structural model since the proposal of Ritchie and Crouch’s and Dwyer and Kim’s model. Few researchers have focused on the methodology, and others tried to expand the TDC theory using different attributes and research settings. Nevertheless, there seems to be consent that economic prosperity and tourism performance are important issues for further TDC research. Moreover, the question has been raised whether economic performance may be characterized as an indicator or better considered to be affected within the overall causal chain (Croes and Rivera, 2010). The performance measurement of destination will directly respond to the needs of tourism policymakers, such as the evaluation, promotion, learning and improving the decision-making process.
Conclusion The proposed conceptual model incorporates the predictive relationships between the macroeconomic environment, and tourism in computing an overall tourism competitiveness score for a destination, using performance as a predictor. The proposed conceptual model under investigation offers a performance-based measurement of tourism competitiveness which directly responds to the needs of destination managers, such as the evaluation, promotion, learning and improving of the decision-making process to achieve the objectives of the destination management organization and the destination itself. Finally, understanding the drivers and dynamics of how tourism competitiveness is developed and maintained with the help of an integrated theoretical framework is critical to developing future tourism marketing strategies and destination branding success. Declaration of conflicting interests The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The work described in this study was funded by the Fundamental Research Grants Scheme (FRGS), Ministry of Education Malaysia (MOHE) and Universiti Teknologi MARA (UiTM) Malaysia.
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