7.1. competition tourism destination new

Welcome toCompetitive

Tourism DestinationConceptual Models Developed to enhance CompetitivenessDr. Myrza Rahmanita, SE, M.Sc

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COMPETITION AND THE TOURISM DESTINATION

The idea of the competitive destination contains two elementsDestination and Competitiveness

DESTINATION

COMPETITION

Elements of destination competitiveness

Effects on destination competitiveness

After you have knowledge about elements idea of the competition, next you will learn model competitive forces of M. Porter.

What isModel Competitive Forces

of M. Porter?

MODEL COMPETITIVE FORCES OF M. PORTER

The price-competitiveness approach of Dwyer, Forsyth and

Rao

The Bordas demand model

The WES approachThe Poon concept

The conceptual model of destination competitiveness of

Ritchie and Crouch

The ‘Porter diamond’, or the determinants of competitive advantage

The competitive forces and generic strategies of M. Porter MODEL

COMPETITIVE FORCES OF M. PORTER

MODEL COMPETITIVE FORCES OF M. PORTERThe competitive forces and

generic strategies of M. Porter1

MODEL COMPETITIVE FORCES OF M. PORTERThe ‘Porter diamond’, or the

determinants of competitive advantage

2

MODEL COMPETITIVE FORCES OF M. PORTER3 The Poon concept

The WES approach( Exchange rate currency X in currency units Y)

MODEL COMPETITIVE FORCES OF M. PORTER4

MODEL COMPETITIVE FORCES OF M. PORTER4The WES approach

The Bordas demand model

MODEL COMPETITIVE FORCES OF M. PORTER5

• EC= economic/monetary cost (transportation, costs at the spot)• PhC= physical cost (tiredness

and stress)• PsC = psychological cost

(commercial and physical risk)• PuC = purchasing costs or cost

to get access to information and to the trade)• MS= magnetism of the sales

system (capacity of the sales

system to create interest in the destination and capability to attract customers)• CS= conductivity of the system

or the capacity to close a sale (which percentage of customers who were in contact with the sales system, decided to buy the destination)• PSSE= post-sale service

efficiency (creating loyalty and recommendation).

MODEL COMPETITIVE FORCES OF M. PORTER6

MODEL COMPETITIVE FORCES OF M. PORTER7 The conceptual model of

destination competitiveness of Ritchie and Crouch

MODEL COMPETITIVE FORCES OF M. PORTER8

MODEL COMPETITIVE FORCE OF M.PORTER

The price-competitiveness approach of Dwyer, Forsyth and RaoPrice competitive index = X

For further explanation see The Economic of Tourism Destinations page 125

The threat of entrantsNew entrants may stimulate more price competition, or more attention may be paid to product differentiation as they attempt to win market shares.

1

2The power of suppliers It is dominated by a few companies

(there is a degree of monopoly or oligopoly) and is more concentrated than the industry it sells to (e.g. air charter companies relative to tour operators)

The industry is not an important customer of the supplying group

The group’s product is differentiated, or it has built up switching costs

2The power of suppliers The group’s product is an

important input to the buyer’s business (e.g. flight costs for a tour operator)

The group poses a credible threat of forward integration (e.g. an air carrier starts a tour-operator’s business)

There are high costs of switching suppliers.

The power of buyers■ If a buyer group purchases large volumes relative to seller sales (the UK tour operator business in Benidorm and other resorts in Spain relative to the local hotel sector is a typical example)■ If the products a buyer group purchases from a sector are standard or undifferentiated (e.g. hotel rooms)

3

The threat of substitutesThe threat of substitutes can take very different forms.

4

Competitive Rivalry■ There is slow sector growth■ There are high storage costs or perishability■ There are high fixed costs■ There is lack of differentiation

5

Competitive Rivalry■ There is a high strategic stake (to be successful in one market)■ There are numerous or equally balanced competitors■ There is over-capacity or big changes in capacity■ There are high exit barriers.

5

COMPETITIVE FORCES APPLICATION TO THE CARRIBEAN

The threat of new entrants New seaside resorts in Caribbean countries – Cuba is only one example

The power of supplers Air carriers from the USA with regular flights to thedifferent countries in the Caribbean

The power of buyers The bargaining power of cruise carriers for mooring inthe individual countries

The threat of substitutes The Caribbean destinations have many competitivedestinations in Central America and the Canary Islands

Competitive rivalry The competition between destination is great, due toundifferentiated supply, overcapacity in severaldestinations and perishability of supplied products

Marketing startegy

DESTINATION MANAGEMENT

4. Information/research Competition and the tourism destination

3. Quality of service experiences (the destination should provide a high-quality visitor experience)

2. Marketing (traditional marketing tasks)

1. Organization (administrative and managerial tasks)

5. Human resource development

DESTINATION MANAGEMENT 8. Resource stewardship

(taking care of the tourism resource base)

7. Visitor management (e.g. visitor information centre, ability to deal with crowds)

6. Finance and venture capital

9. Crisis management.

Synthesis of the main variables