Category: Tourism trends

Trends shaping the present and future of the tourism industry and case studies

StrategyStrategy planning & executionSustainabilityTourism marketingTourism trends

A theoretical approach to cluster development

As introduced in the first point, tourism clusters are created to leverage the unique resources of a location or in some cases to gather artificial resources in the same location. In both cases, they improve the value of the location to end up making the location a key strategic factor.

To make a cluster competitive there are many key success factors that should be considered by the cluster members:

  • Transport infrastructure within, and to access the cluster from the target markets
  • Solidarity and cooperation spirit among players
  • Cooperation between the Government and the private players
  • Creating a welcoming atmosphere to attract international talent
  • Foresee space for attracting new businesses and expanding the cluster

A very specific key success factor is the existence of a governance structure to promote collaboration and joint projects, fostering innovation and promoting the cluster internationally. This governance body should be also responsible for:

  • Attracting new businesses
  • Performance monitoring
  • Intelligence research
  • Identifying needs for improvement and training
  • Representing the cluster players internationally
  • Organizing networking events and conferences
  • Coordinating players to design and implement the cluster development strategy

As mentioned before, there may be many types of players within a cluster, and so the types of cooperation between them may also be different. There are at least two types of cooperation:

  • Value chain cooperation: between players from different sections of the value chain, to gain efficiency or to add new value.
  • Coopetition: competitors sharing resources and costs that are not afordable for each one alone.

Research has shown that tourism development is a venue in which cooperation is often more important than competition (Inman et al. 1998). A cluster based development should try to build the value chain within each cluster in the region. A cluster strategy places all public and private stakeholders in the position of being producers and suppliers to one another, and seeks for constructive ways to define and carry out mutually beneficial action. The value chain is central to the tourism cluster concept, as it demonstrates how tourism can generate benefits to the economy beyond the tourism sector through linked industries (Gollub et al. 2002).

Do you think of other key success factors to make a cluster competitive?

StrategyStrategy planning & executionSustainabilityTourism trends

What is a cluster and why are they created?

One of the key strategies to develop in any Tourism Development Plan consists of structuring the territory in different areas according to the kinds of activities to be carried out in each one. The clustering strategy is essential for the tourism development regardless of the dimension of the territory: clusters exist within countries, regions and even towns.

A cluster may be defined as a concentration of interconnected businesses and institutions in a limited geographical area. In most cases, such businesses and institutions belong to the same sector; but, as we will see in some case studies, sometimes there are new business sectors that flourish in a cluster to take advantage of assets related to other sectors in the cluster.

It may also be defined as an area characterised by a set of distinctive tourism assets which all together create a unique value system capable of attracting tourists and competing with other destinations. Many industry players settle down in the same location to cooperate in the search for synergies that improve their competitiveness:

  • Need for specific infrastructures to be leveraged by many industry players
  • Need for collaboration between industry players to create economies of scale and scope
  • Cooperation in joint marketing

Clusters also arise because they help businesses increase their productivity by sharing many strategic resources, diminishing trading costs between suppliers and clients, and fostering innovation thanks to proximity of a sector’s stakeholders. In the case of tourism destinations, clusters are the result of a concentration of operators exploiting a cultural or natural resource, or a concentration of operators developing artificial and complementary attractions.

Clusters are areas that can be considered as being internally homogeneous with specific traits that differentiate them from others. The goal of the clustering strategy is to structure the location of all tourism activities in accordance with the types of experiences and feelings they offer or the characteristics of the physical environment, and also to define a clear identity for every cluster and communicate it clearly to the visitors.

As Michael Porter says “Clusters are not unique, they are extremely typical –and therein lies the paradox: the enduring competitive advantages in a global economy lie increasingly in local settings which distant rivals cannot compensate. In a cluster, interconnected companies, firms in related industries and associated institutions both compete and cooperate”.

The term cluster may apply to many different destination dimensions: at a national, regional or local level. We may use clusters to distinguish several geographical areas within a country, each of which is specialized in a different type of experience, but also within each of these clusters there may be –and usually there are- sub-clusters according to smaller geographical areas with specific characteristics that are different from the rest, so long as these characteristics are relevant to be leveraged for a distinct tourism experience. At the lower scale, we distinguish clusters within local destinations, so long as these comprehend different areas providing unique or clearly differentiated atmospheres, resources and experiences.

Do you think of other reasons to explain the creation of clusters?

Co-creationMarketing 3.0StrategyTourism marketingTourism trends

Cross-destination competitiveness programs: enhancing marketing

Route partnering with neighbor destinations. Regardless of whether nearby destinations are within the same country or not, for some tourism sectors such as International touring or Fly & drive, marketing an attractive route encompassing a selection of interesting destinations is likely to be far more efficient and effective than marketing these destinations independently. Further, it makes the product far more competitive.

This partnership may be also attractive for some types of Special Interest travel, especially in the case of the long haul markets, whose tourists are more likely to do long routes once they land at the destination. The sum of Special interest attractions of the same kind within a route makes it an attractive product to justify a trip for many of these long-haul travelers. This is also an opportunity to develop new products for many destinations in the same area, making it a win-win development project.

Therefore it is convenient to explore partnership agreements with neighbor destinations which are suitable for adding value to the final product, so as to share marketing costs while creating a more attractive product. Even if many tour operators create these routes themselves, the marketing activities not only directed to tour operators (fam-trips, workshops, etc.), but also to the final client, are likely to increase the results of the marketing efforts.

New flight connections. A key program to develop is connecting the destination with all target markets, by all possible means, but mostly focusing on flight connections. Accessibility is a key factor for competitiveness, and so enhancing the capacity and the competition among transport operators benefits also the destination competitiveness.

Attracting new flight connections is not at all an easy challenge. First, and most importantly, the destination has to arouse sufficient demand to make the airline operator identify a business opportunity. To do so –whenever the destination is also an outbound market for the other- it is convenient to join efforts with the other destination’s DMO and Government in order to boost demand to clearly creating a profitable opportunity.

The Government and DMO should share with the airline operator the Tourism development plan, to build confidence and make them envision the business growth they can take advantage of, highlighting the marketing activities planned for their market. It is important to highlight that the intervention of the Government executives is very recommended, even in the cases when it is not strictly necessary, so as to build trust from the very beginning.

Destination App. Apart from the tourist information offices and guides, modern tourists like to have all or most of the information in their smartphone. Apps provide excellent information services, being able to provide tailored information on demand, high quality pictures and videos, downloadable maps, and many other features.

In the case of Tourism 3.0, Apps may be also a tool to foster tourist contribution to the content marketing system and product co-creation. Apps can operate like a channel through which the tourist provides service reviews and ratings, creative reviews about products, pictures, videos and text based stories, etc. It is important to point out that the destination should count on many free wifi areas to empower the Apps in providing all the possible services and up to date information.

Finally, Apps may also be a sales channel, providing access to the destination branded souvenirs online store, booking service, and also offering special deals near the location of the tourist through the geolocalization technology. Altogether, it is a very powerful tool, which is actually likely to become the main information supplier and the main channel to connect tourists with the destination operators. Closely related to the App services, the new technologies for augmented reality should also be included to provide a higher experiential value to the tourists through their mobile devices.

Which other programs would you consider to enhance the destination marketing?

Business model innovationCo-creationCollaborative business modelsEnvironmental sustainabilityInnovation

Story innovation concepts: added value & crowd game driven experiences

Beyond the explained details of the four prototypes, there may be many other added value experiences to support the main one in fostering its popularity and conveying new contributions both in virtual and real world platforms. Some of these story related experiences could be video games (in the case of the prototypes 3 and 4 the video game is an essential component), comic based stories, theater plays, board games, movies, spin-off stories, merchandise products, etc. This is actually what film series such as Harry Potter, Star Wars or Lord of the rings have done to some extent, trying to satisfy the desires of their followers for more story related experiences.

With regards to the crowd game driven experiences, the environmental challenges would be driven by volunteers, usually entailing some kind of field work to achieve a certain goal in relation with the environment protection in the form of a game driven experience to make it more fun and stimulating. In the case of the creativity & cooperation challenge, it would be driven by contributors willing to prove their creative skills, in the form of a game driven experience where participants also have to prove teamwork capacity by solving one or more innovation challenges related with the mission purpose, which also serves as an educational experience in collaborative innovation. Finally, the educational fun experience is for tourists willing to entertain while taking away some significant learning outcomes related to skill development or social consciousness, for instance.

In the case of contributors in creativity & cooperation challenges and also in the case of story making contributors, there should be a system that not only facilitates but also rewards contributors based on a reputation and incentive system, in order to stimulate talented followers to bring in their passion and imagination to build the story world. This is not only crowd sourcing but also providing the audience members an opportunity to live a life-changing experience by exploiting their skills. The Whitepaper “Envisioning Open innovation in destinations” is to further develop the idea of the incentive and reputation system for contributors.

Do you envision other story innovation concepts to enhance the aforementioned ideas or to inspire new story based experiences?

Business model innovationCo-creationInnovationMarketing 3.0Open innovation

Story innovation concepts: story platform

A key idea to understanding the aforementioned prototypes is that of the story platform. In this concept there is one principal author who drafts the main guidelines of the story, like the location, the value proposition, a basic plot, and some of the main characters. This could also be called the story backbone or the story constraints.

 Taking this platform story as a starting point, the free contributors –working individually or in groups- may create their version of the story by filling all the gaps that the backbone leaves to develop the contributors’ imagination, adding new characters and sub-stories that shape its uniqueness. As a result, there end up being many different stories with a common purpose related to the mission for which tourism is being developed in the destination. This is the case of prototype 2.

In the case of prototypes 3 and 4, there would also be a platform story with constraints and pre-determined ingredients. But the difference is that they are game driven experiences applicable to many kinds of missions that are created to draw flows of contributors, volunteers or tourists in taking real action in benefit of the mission purpose.

 Further, in these cases the roles of the participants are all pre-determined and every individual decides what type of role he or she wants to play in the story, with freedom to develop the role with his or her skills, ideas and knowledge.

Do you envision other types of story platform to develop story based experiences?

Marketing 3.0StrategyTourism marketingTourism trends

Key tourism industry players

There are 3 groups of players: first level suppliers, service operators and marketing operators:

1st level suppliers. Human resources, land owners, infrastructure operators, utility operators, government as license supplier and the construction sector are the basic suppliers for the tourism industry operators. As we have seen in the five forces model, they play a key role in defining the industry’s profitability when tourism is not so developed in a territory or we are analyzing the attractiveness of a tourism sector that would require the construction of new facilities and services. We may take into account Governments as active players in the industry whenever they are in charge of marketing the destinations.

Service operators. Food & beverage, accommodation, transport and activities providers are the key operators of the industry, as service providers. Whenever we analyze the attractiveness of tourism business that would be based on existing services and facilities, we will consider them as suppliers, except for the activities’ operators, which could be considered as incumbents in this case.

Marketing operators. Here lies the complexity of the tourism industry, where we define several kinds of operators, which may be either competitors or partners.

  • Booking centers & portals: online and/or telephone based commercial platforms managing bookings for one or more kinds of services operators –mostly focused on accommodation and also activities-, usually gathering the tourism services offered within a local or regional territory. They usually get their profits by keeping a percentage of the business they bring to their local service suppliers. In this concept we can also include new business models like Airbnb, whose service suppliers are local householders marketing their spare rooms.
  • Incoming agencies: operators located in the destination in charge of creating packages including accommodation, transportation and activities. These are the most genuine marketing operators, as they are in charge of product development, combining services and experiences available in the destination for the satisfaction of every target. They may sell their packages to tour operators, travel agencies or directly to the final customer. In many cases, they are also the activity providers.
  • Tour operators: operators located in the outbound market in charge of creating packages, usually marketing several destinations and several kinds of products. However they may be tour operators specialized in one destination and more often in one kind of product (golf, ski, sun & beach, cultural touring, incentive trips, etc.). These may deal directly with the service operators or with the incoming agencies, and then sell their packages to the travel agencies or directly to the final customer. They usually buy service capacity long in advance to the service operators or incoming agencies at a lower price ensuring them business, and then have to sell this capacity to the outbound markets.
  • Travel agencies: service retailers usually located near to the customer, selling either incoming agencies’ or tour operator’s packages, or directly booking to the services’ operators. Many travel agencies sell through the internet. Their value is based on the confidence of the customer, offering packages from different operators and sometimes specialization in certain products.
  • Travel social media sites: even if they are not included in the previous scheme as business players, sites like Tripadvisor and many similar models are key influencers in the decision making process of both the chosen destination and mostly the chosen operators within, therefore they deserve a relevant mention as key players in the tourism industry.

In this table are summarized the main features that define each of the marketing operators:

Marketing operators conceptual features
 

Location

Product development

Dealing with final customer

Marketing focus

Booking center

Destination

No

···

One destination. One or many products
Incoming agency

Destination

Yes

·

One destination. One or many products
Tour operator

Outbound market

Yes

·

Many destinations.  One or many products
Travel agency

Outbound market

No

···

Many destinations.  One or many products
Travel social site

Internet

No

···

All destinations.

All services

 

Being that this conceptual outline is representative for most of the industry operators’ models, we should also note that many operators have developed business models integrating several concepts and functions altogether, in most cases as a result of a forward integration process.

Would you consider other key players when analyzing the tourism industry structure?

Business model innovationCo-creationCollaborative business modelsInnovationMarketing 3.0

Destination story based experience prototypes

Needless to say that many more possibilities for each variable may be envisioned, but these are just some examples to help the reader understand the innovation method. Based on these ideas, we have drafted four story driven prototype experiences to illustrate the type of result that the innovation method may produce.

  1. Personal awareness & Spiritual development journey, in line with pilgrimages and similar experiences. This is usually a journey that is carried out alone as of a process of self-reflection and discovery. The role of the protagonist is that of a tourist, so long as he or she is the only beneficiary of the experience, and may encompass both walking routes and static setting stays. In this case, the tourist is to write the story at the end of the experience, ideally with the support of a training workshop, but the protagonist should work on drafting the story from the beginning of the experience. The goals of writing the story are completing the self-awareness and discovery experience, and to inspire others in living their own transformational experience.
  1. Story driven development of a theme route, as in the cases where some novels or films have inspired the development of tourism routes for the fans of the story. This would consist of a story contest launched by the destination management organization (DMO) based on some constraints or even a story backbone. In any case, the story has to be developed based on the destination as the story platform. The contest should be open to both individual creations and group co-creations. At this point, many formulas could be envisioned to encourage the contribution of as many people as possible. The value proposition of the story driven experience should be in line with the tourism 3.0 principles, which means that it should have at least an educational or cultural transformation goal, without disregarding the fun or entertaining value.
  1. Crowd gaming ongoing experience consists of an ongoing story driven experience that takes place in a certain setting without a time limit. This experience takes the form of a mission driven game or challenge, and so the mission accomplishment is what keeps on driving the development of the story game. There is no foreseen end, as long as the mission is not fully accomplished. Such story would work like an MMO game where everybody is entitled to participate both in the virtual and the real world platform in the destination. The location could be any type of destination and the protagonists could either play the role of tourists, volunteers or contributors, depending on the type of challenge: educational fun for tourists, environmental protection challenge for volunteers, and creativity & cooperation challenge for contributors. In this story driven experience, the story plays the role of drawing tourists, volunteers or contributors to the story making and to visit the destination to participate in the real world experience.
  1. Crowd gaming event consists of a crowd sourced game driven story that is played like an MMO game with some real world experience along the story, but especially at the end of it. The events could take place in almost any type of location, including cities, nature settings, cultural destinations or theme parks –for instance- depending on the ultimate purpose and nature of the real-world experience. Such purpose could be for an environment protection challenge, creativity & cooperation challenge, or an educational fun experience. As in the case of the Crowd gaming ongoing event, the role of the protagonist is related to the purpose of the experience, and so could be a volunteer, contributor or tourist. In this type of story-driven experience, the story also plays the role of drawing attention, participation and contribution of individuals in the co-creation of the story, the contribution related to the purpose and in visiting the destination when the event takes place.

Out of the innovation parameters explained in the previous post, do you envision other story based experiences?

Marketing 3.0Tourism trends

The power of storytelling

Why do we like stories? We like them because they provide answers to our lives and a mechanism to shape our identity by connecting with the story characters. We connect emotionally with the story characters as long as they have similar challenges and values, and thus we regard them as a representation of ourselves.

They respond to the human need to find idols and role models with whom we can identify ourselves. Stories not only help us in building our identity but also work like social glue, as they help us in connecting with others and building relationships. Stories are the most effective way to create an emotional connection between brands and consumers.

When assessing brands, consumers evaluate first the brands with which they have some emotional connection. Then, depending on the importance of the purchase, they search for more or less information to support the final decision. Furthermore, humans process information more efficiently when this is delivered through a story, and therefore this information is more likely to be remembered in the form of a story.

 The travel industry is not an exception to this consumer behavior; rather, the emotions play a more important role than in many other industries. In fact, destinations developing marketing 3.0 hold one of their main competitive advantages in appealing not only to the consumers’ emotions but also to their human spirit, outshining other destinations that have incorporated storytelling in their marketing strategy.

What stories about travel experiences do you remember that were really memorable?

Marketing 3.0StrategyStrategy planning & executionTourism marketingTourism trends

The Marketing Plan 3.0 infrastructure: online platforms and database

In relation to all the new strategies to deploy Destination marketing 3.0, there are their corresponding infrastructures and tactics to implement the strategic guidelines. As explained for every strategy, the existing tools and activities are to keep on functioning as long as they are profitable enough. Actually, one of the roles of the Open Innovation System is to keep on streamlining the marketing operations. When drafting this Operational Plan it necessary to explain for every infrastructure or tactic: its goals, its constituents, budget, priority level, person(s) responsible for its implementation and key success factors.

The new infrastructure consists of website, web-based platforms:

  • Corporate website is the main communication hub for all stakeholders. This is the hub where most of the “Call to action” featured in the content have to redirect, and so there has to be landing pages for every call to action. Furthermore, it is also the hub where contents are posted and linked to the social media channels for every target audience. It may include a blog, a forum, and the landing pages. It also contains the Booking platform, the Open Innovation platform and the Online Store.
  • Open innovation platform is the hub where innovators are called to be registered and to sign up for related events. In the case of non-professional contributors it is the place to submit their content or their ideas, whereas in the case of professional contributors this becomes an essential tool, as the innovation challenges for professionals are fully managed through this platform and entail more complex procedures than the non-professional ones.
  • Booking platform is one of the key infrastructures for the new marketing system as the intention is for it to become the main sales channel for tourism products. Through the delivered content, there is an increasing publicity of the booking platform –within the website-, thus increasing the target audience awareness of the new online channel and the overall sales through it. The goal is to make it the central sales channel as it is the most profitable for the destination and its businesses.
  • Online store is another new sales channel but for the merchandise products. Based also on the website platform it is to become the main distribution channel for the new merchandise products. Through advertising content in the social media and the expected popularity of the destination branded designs, this is to become an important source of revenue streams. It is also a way to collect data about the destination followers when they submit their order.
  • Network database. This is a crucial infrastructure, as important as it is to know our network members. As long as the followers, clients, contributors and other engaged individuals establish relationship with the destination it is convenient to register their data and add information on how they engage with the destination activities and contents. The better we know them the better we can optimize the marketing strategies to engage them.

Do you think of any other necessary marketing infrastructure?

Co-creationMarketing 3.0StrategyStrategy planning & executionTourism marketing

The Marketing Plan 3.0 Product strategy: developing life-changing experiences

The life-changing experiences are what sets the destination apart from others and somehow the main reason why the destination is to become popular through the stories. Along with the marketing contents, the life-changing experiences are developed through co-creation between local suppliers and creative stakeholders within the open innovation system.

Taking the value proposition and mission statement as the inspirational mantras, along with some reference benchmarks, the product innovation challenge is about leveraging the stakeholder imagination by stimulating contribution permanently, through creative reviews right after the experience and also through product development contests and co-creation workshops.

There has to be a Product Manager in charge of organizing these events and supervising the developed ideas to assess their feasibility and adequacy, and eventually to put them into practice.

Out of the aforementioned events, innovation is constantly encouraged by rewarding well elaborated ideas and customer reviews bringing in ideas on how the experiences could be improved. Furthermore, the proposed experiences are flexible and customizable for every client, hence generating a wider variety of stories and ideas for product development.

Would you consider other strategies to develop life-changing experiences?