Welcome to

Competitive Tourism DestinationConceptual Models Developed to enhance Competitiveness

Dr. Myrza Rahmanita, SE, M.Sc

COMPETITION AND THE TOURISM DESTINATION

The idea of the competitive destination contains two elements

Destination 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 is

Model Competitive Forcesof M. Porter?

MODEL COMPETITIVE FORCES OF M. PORTERThe price-competitiveness

approach of Dwyer, Forsyth and Rao

The Bordas demand model

The WES approach

The 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 advantage2

MODEL COMPETITIVE FORCES OF M. PORTER

3 The Poon concept

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

𝐶𝑃𝐼 𝑐𝑜𝑢𝑛𝑡𝑟𝑦 𝑋

𝐶𝑃𝐼 𝑐𝑜𝑢𝑛𝑡𝑟𝑦 𝑌]

MODEL COMPETITIVE FORCES OF M. PORTER

4

MODEL COMPETITIVE FORCES OF M. PORTER

4 The WES approach

The Bordas demand modelMODEL COMPETITIVE FORCES OF M. PORTER

5

• 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. PORTER

6

MODEL COMPETITIVE FORCES OF M. PORTER

7 The conceptual model of destination competitiveness of Ritchie and Crouch

MODEL COMPETITIVE FORCES OF M. PORTER

8

MODEL COMPETITIVE FORCE OF M.PORTER

The price-competitiveness approach of Dwyer, Forsyth and Rao

Price competitive index = 𝑒𝑥𝑐ℎ𝑎𝑛𝑔𝑒 𝑟𝑎𝑡𝑒

𝑃𝑃𝑃X 100

1

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

2 The 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

2 The 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

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 MANAGEMENT8. 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